Aston Hill Announces 2015 Fourth Quarter and Year End Results and Suspension of Quarterly Dividend

TORONTO, March 21, 2016 /CNW/ - Aston Hill Financial Inc. ("Aston Hill" or the "Company") (TSX:AHF) announces it has filed its Audited Consolidated Financial Statements for the year ended December 31, 2015 and related Management's Discussion and Analysis with Canadian securities regulatory authorities.

Year of Transition Complete

"2015 has likely been the most significant year in Aston Hill's history," said President and Chief Executive Officer, James Werry. "The on-going investments that have been made to create an expansive retail distribution platform and complete changes in the internal infrastructure provide the opportunity to drive meaningful profitability and growth in our proprietary products. With the corporate reorganization initiatives complete, we can focus on achieving this growth by executing our strategic business plan and increasing marketing and sales efforts, including our strategies specifically focused on Ben Cheng's new fund."

The highlights of the aforementioned reorganization during 2015 include:

  • Non-renewal of the sub-advisory agreement with IA Clarington, allowing for Ben Cheng to manage funds for Aston Hill exclusively for the first time beginning as of November 2, 2015.
  • Clearly defining our product line-up, which is focused on liquid alternative funds, including the November 2, 2015 launch of a new mutual fund, the Aston Hill High Income Fund, managed by Ben Cheng. Further information is available in the Company's press release, Ben Cheng Commences Managing Funds Exclusively for Aston Hill.
  • Completion of a non-brokered private placement of approximately $6 million at $0.45/share and a premium to the then current stock price.
  • Focus on capital preservation, including the Partial Redemption of $6 million Debentures. As such, Aston Hill is suspending its quarterly dividend as more fully described below.
  • Approval by 93% of voters to amend the Convertible Debenture, including extending the maturity date from July 31, 2016 to January 31, 2019, reducing the conversion price from $2.55 to $0.65 per share, and increasing the interest rate from 6.00% to 6.50% per annum effective November 16, 2015, resulting in a finance costs gain of $4.0 million.
  • Cost cutting initiatives and focus on managing the Company's cost structure, including the consolidation of corporate functions from the Calgary office to the Toronto office, which is expected to save over $2 million per year.
  • Closure of the Calgary office and transition to a new executive team all based in Toronto.

Subsequent to December 31, 2015, the transition was completed:

  • On February 11, 2016, James Werry was appointed President and Chief Executive Officer. As more fully described in the Company's press release, Aston Hill Appoints New President and CEO, Mr. Werry's extensive experience within the Canadian investment industry complements the Company in the areas of strategic development and execution, distribution relationships, and general oversight. As CEO, Mr. Werry will take an active role in leading the direction of the firm's strategy of becoming Canada's leading provider of Liquid Alternative mutual funds.
  • On March 11, 2016, as described in the Company's press release, Aston Hill Announces Signing of Agreement to Sell Securities Division, the Company entered into an agreement to sell its brokerage business, Aston Hill Securities. The transaction allows for further operational efficiencies and cost savings while also allowing the Company to focus on its core competency of managing retail mutual funds, closed end funds, hedge funds and segregated institutional funds. The transaction is expected to close on or about March 31, 2016.
  • On March 14, 2016, the Company announced a plan to merge three of its open end mutual funds, as more fully described in the Company's press release, Aston Hill Asset Management Inc. Announces Proposed Fund Mergers. This reorganization of funds accomplishes the key objectives of: putting more assets directly under the management of our CIO, Ben Cheng; reducing the operating expenses of the funds themselves; and further cost reductions to the Company.

Suspension of Quarterly Dividend

"We have gone through a lot of important change over the past twelve months and I believe we are a significantly better company today because of it," said Aston Hill President and Chief Executive Officer, James Werry. "As we continue into 2016, revisiting the way we allocate capital is part of our effort to position Aston Hill for this growth. The decision to suspend the dividend provides the opportunity for us to more flexibly allocate capital to other internal initiatives and reinvest in Aston Hill. Corporate initiatives that contribute to increasing assets under management as well as building on our relationships with investment advisors are key areas of focus for us."

The dividend suspension creates an additional $2.0 million of liquidity per year and is consistent with the Company's conservative approach to capital and risk management. The Board will continue to evaluate its dividend policy.

Financial Highlights


(in thousands of dollars, except assets under management and

per share amounts)


As at December
31, 2015

As at September
30 2015

As at December
31, 2014

Assets under management (in billions)

$

2.67

$

3.03

$

6.25

Total assets

72,110

93,996

97,884

Shares outstanding

98,849

96,474

88,988


For the three months ended

December 31,
2015

September 30
2015

December 31,
2014

Total revenues

$

7,579

$

8,508

$

11,710

Total expenses excluding finance expense

25,080

7,355

9,267

Total finance expense (income)

(2,382)

1,116

1,098

(Loss) income before income taxes

$

(15,119)

$

37

$

1,345

Income tax (recovery) expense

$

(2,860)

$

87

$

433

Net income (loss)

$

(12,259)

$

(50)

$

912

Net income to non-controlling interest

222

195

338

Net income (loss) to controlling interest

$

(12,481)

$

(245)

$

(481)










Per share – Basic

$

(0.125)

$

(0.003)

$

0.006


Per share – Diluted

$

(0.125)

$

(0.003)

$

0.006








Cash dividends declared per share

$

0.005

$

0.005

$

0.015

EBITDA

$

(16,439)

$

2,034

$

3,202

Adjusted EBITDA

$

(352)

$

1,451

$

3,448







For the year ended

December 31,
2015

December 31,
2014



Total revenues

$

36,594

$

47,420



Total expenses excluding finance expense

53,724


38,719



Total finance expense

852


4,273



Income before income taxes

$

(17,982)

$

4,428



Income tax (recovery) expense

$

(3,788)

$

1,878



Net income (loss)

$

(14,194)

$

2,550



Net income to non-controlling interest

782


1070



Net income (loss) to controlling interest

$

(14,976)

$

1,480












Per share – Basic

$

(0.162)

$

0.017




Per share – Diluted

$

(0.162)

$

0.017










Cash dividends declared per share

$

0.030

$

0.060



EBITDA

$

(14,269)

$

11,565



Adjusted EBITDA

$

3,602

$

12,228



Aston Hill's Assets Under Management, Advisory and Administration ("AUM") decreased 11.9% year-over-year from $3.03 billion to $2.67 billion at December 31, 2015.  The lower AUM is mainly the result of a reduction in institutional and sub-advisory assets and assets under administration. During the fourth quarter, gross sales of mutual funds were $70 million (net $75 million redemptions).  Full year mutual fund gross sales of $363 million (net $192 million redemptions) represented a decrease of 31% from the prior year.  The Company continues to focus its sales efforts on in-house managed funds, as they generate higher corporate average margins.

For the fourth quarter, Aston Hill's revenues were $7.6 million, a decrease of 35.0% from the prior year's fourth quarter revenues of $11.7 million. As well, fourth quarter revenues of $7.6 million decreased from the prior quarter total of $8.5 million. The revenue decrease was due to a reduction in revenues from sub-advisory mandates and institutional assets as well as net redemptions to open and closed end funds. Revenue generated by Aston Hill managed investment funds continues to increase as a percentage of total revenue (currently 79% compared to 65% in the prior year) as management remains focused on higher margin mutual fund growth. In-house mutual funds and closed end funds accounted for 82% of revenues for the fourth quarter.

Percent of Revenues by Source for Three Months Ended December 31, 2015

Aston Hill Managed Investment Funds

82%

Sub-Advisory Mandates

2%

Institutional and Other

6%

Aston Hill Securities

10%

Total expenses (excluding finance expense) for the fourth quarter were higher at $25.1 million as compared to $9.3 million for the fourth quarter of 2014. The higher corporate expense is mainly due to an impairment loss on intangible assets recognized in the quarter.   

Adjusted EBITDA (before stock-based compensation, impairment losses, and net investment gains or losses) for the fourth quarter was a loss of $0.4 million, a 131% decrease from the prior quarter adjusted EBITDA of $1.3 million due mainly to lower revenue in the fourth quarter. Net loss for the quarter was $12.5 million, reflecting the aforementioned intangible asset impairment loss, as compared to a net loss in the prior quarter of $0.2 million.

Significant Transactions Affecting Q4 2015 and Year Ended 2015 Results

  • Intangible asset impairment:
    • The annual intangible asset impairment test resulted in an impairment loss of $15.5 million, allocated first to goodwill ($3.9 million) with the remainder to other indefinite life intangible assets ($11.6 million).
  • Convertible debenture amendments:
    • The convertible debenture amendments that took effect in November 2015 were accounted for as an extinguishment and as a result a $4.0 million non-cash gain was realized.
  • Update to estimated onerous lease provision:
    • An update of economic factors used in estimating the provision made for an onerous lease, included in the larger restructuring cost provision recognized during the year, led to an additional $0.7 million expense being recognized in the fourth quarter.
  • Brokerage business held for sale:
    • Segregated on the Statement of Financial Position and resulted in an impairment loss of $0.4 million.
  • Change in estimated useful life of deferred sales commissions:
    • Analysis of the useful life of deferred sales commissions resulted in a change in the estimated useful life of deferred sales commissions from four years to three years and an adjustment to amortization of deferred sales commissions of $0.4 million.

Aston Hill Financial Inc. is a diversified asset management company with a suite of retail mutual funds, closed end funds, hedge funds and segregated institutional funds. 

The TSX has neither approved nor disapproved the information contained herein.

  1. Adjusted EBITDA and EBITDA:  Adjusted EBITDA and EBITDA are not standardized earnings measures prescribed by IFRS; however, management believes that most of its shareholders, creditors, other stakeholders and investment analysts prefer to use these performance measures in analyzing Aston Hill's results.
  2. Forward-Looking Statements: This news release contains certain "forward-looking statements" within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release.  Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.

For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's annual financial statements and management discussion and analysis for the year ended December 31, 2015, both of which are available at www.sedar.com.  The Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking statements.

SOURCE Aston Hill Financial Inc.

For further information: James Werry, President & Chief Executive Officer, Aston Hill Financial Inc., (416) 583-2300, james@astonhill.ca; Derek Slemko, Chief Operating Officer & Chief Financial Officer, Aston Hill Financial Inc., (416) 583-2300, derek@astonhill.ca


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