Matrix Asset Management Inc. Reports Year End Results, Declares Dividend and Announces Dividend Reinvestment Plan
(firmenpresse) - HALIFAX, NOVA SCOTIA -- (Marketwire) -- 03/29/12 -- Matrix Asset Management Inc. (the "Company" or "Matrix") (TSX: MTA) reported today its financial and operating results for the year and fourth quarter ended December 31, 2011 and announced that the next regular quarterly dividend of $0.015 per share would be payable on May 7, 2012 to shareholders of record on April 26, 2012. Matrix also announced the adoption of a dividend reinvestment plan (the "DRIP"). The record date for the next dividend has been set for April 26, 2012 to allow for time to implement the DRIP.
Highlights
2011 was a challenging year for Matrix. Relative to 2010, overall revenues were down approximately $6 million. Fee revenues were down approximately $4 million, mainly in the retail venture asset class, as portfolio performance of this class was adversely impacted by valuation declines. Additionally, institutional AUM departures were announced in late 2011. Although disappointing, the ratio of retail venture to institutional management fee rates is approximately 20 to 1 and consequently, small changes in the retail venture segment can have impacts equivalent to large changes in the institutional segment. Financial results for 2011 were also substantially impacted by one-time expenses associated with continued restructuring and merger and acquisition initiatives, which include an unsuccessful merger transaction by GrowthWorks Canadian Fund Ltd. to merge with five other retail venture capital funds.
For the year ended December 31, 2011, EBITDA was $(5.4) million. Recurring EBITDA was $5.5 million, underlining the strength of the core business after one time expenses, and Free Cash Flow was ($6.3) million. Net income for the year was $(10.2) million, and recurring (loss) income before taxes was $(0.1) million.
For the quarter ended December 31, 2011, EBITDA was $(2.6) million, or $0.3 million on a recurring basis, and Free Cash Flow was $(3.1) million. Net income for the quarter was $(9.1) million, and recurring (loss) income before taxes was $(1.5) million.
David Levi, President and CEO of Matrix, commented: "2011 was a year of challenges for Matrix but we remain optimistic that we can continue to build on our national asset and wealth management platform in 2012. We've continued to work on a number of initiatives to grow our business through acquisitions, new investment mandates and new products, including a strategic arrangement we entered into with First Affiliated Holdings in late 2011 and the recent proposed transaction with LeeSide Capital Management Inc., which will see three founders of LeeSide rejoin SEAMARK, part of our wealth management and high net worth division, where they previously spent a collective 40 years prior to forming LeeSide."
Corporate Overview
Matrix is a diversified, asset and wealth management company with offices across Canada. The Company manages approximately $1.6 billion in assets through three operating divisions:
This diversified set of operations delivers multiple sources of revenue across several asset and client groups.
Summary of year and fourth quarter ended 2011 Financial Results - Audited
The business combination of GrowthWorks and SEAMARK in January 2010 constituted a "reverse takeover" with GrowthWorks as the acquirer. The following table sets out selected consolidated financial information about Matrix for the years ended December 31, 2011 and 2010 and about GrowthWorks for the year ended December 31, 2009.
Notes:
(1) EBITDA (defined by Matrix as earnings before interest, taxes, depreciation and amortization and other non-cash items) is a measure used by many investors to compare issuers on the basis of their ability to generate cash from operations. Management believes EBITDA is a useful supplemental measure of operating performance as it provides an indication as to cash available for working capital needs, capital expenditures and dividends.
(2) Non-recurring items are described in Matrix's Management's Discussion & Analysis posted on SEDAR.
(3) Management believes "recurring EBITDA" is a useful supplemental measure of operating performance because it provides readers with greater insight into what the core or run-rate EBITDA generating capacity of the business may be by adjusting EBITDA for various non-recurring items. Without presentation of this measure, there can be a lack of transparency of the effect of non-recurring revenues or expenses on EBITDA.
(4) Management believes "recurring income (loss) before taxes" is a useful supplemental measure of operating performance because it provides readers with greater insight into what the core or run-rate income before taxes generating capacity of the business may be by adjusting income before taxes for various non-recurring items. Without presentation of this measure, there can be a lack of transparency of the effect of non-recurring revenues or expenses on income before taxes.
(5) Management believes "Free Cash Flow" (defined by Matrix as EBITDA less interest paid, commissions paid and net taxes (payable/refundable as filed)).
(6) Assets under management or "AUM" means the fair value of the net assets of the funds and accounts managed by Matrix and its subsidiaries in respect of which fees are earned.
The following table sets out selected consolidated financial information about Matrix for the three months ended December 31, 2011 compared with financial information for Matrix for the same periods in 2010.
Notes - see notes to annual table above.
Outlook
The asset management industry is affected by economic and market conditions which strongly correlate with asset inflows/outflows and asset values, both of which drive Company fee revenues. For the year ended December 31, 2011, economic and market conditions were volatile. The European banking crisis, fears of sovereign debt default, and government imposed austerity measures negatively affected economic output. With that said, most first world countries including Canada had positive economic growth in 2011. The Bank of Canada had predicted positive growth for 2012 but recently moderated its position and now forecasts a lower level of the economic growth for 2012. Canadian equity markets are weighted towards financials and resources which performed poorly compared to other market segments during 2011. As a result, the TSX lost approximately 11% of its value during the year compared to the major U.S. indices which were either flat or gained in value.
Central banks around the world continue to apply monetary stimulus to the economy. Unemployment rates remain stubbornly high in many countries and productive capacity is not fully utilized. As a result, central banks are keeping interest rates low to spur investment and economic activity. Recent statements from the U.S. Federal Reserve and Bank of Canada have led analysts to speculate that accommodative monetary policy will remain in place for the foreseeable future as long as inflationary pressure remains muted. The Bank of Canada is also concerned about Canadian housing prices. The low interest rate environment has pushed Canadian housing prices and consumer debt levels to record high levels and sparked concerns of an asset bubble. Future interest rate changes in Canada will be aimed in part at avoiding a housing market crisis. Countries that have experienced a housing market crisis, such as Ireland, Spain, and the U.S., have experienced serious negative economic consequences. On a positive note, low interest rates typically push investors to seek returns in higher risk equity investments, which generally provide positive momentum for equity markets.
While monetary policy is accommodative around the world, accommodative fiscal policy is complicated by high sovereign debt levels. Governments in Japan, many western European countries, and the U.S. have record debt levels, resulting in governments having to balance fiscal initiatives aimed at promoting growth with demands from the bond market for tighter spending controls. Austerity measures have already pushed many European countries into recession and many analysts believe most of Europe will be in recession in 2012, including countries like Germany which to date has avoided the worst of the economic malaise.
Despite the current conditions, the Company is cautiously optimistic on the economy and equity markets. Many of Canada's trading partners including the U.S. and Asia are growing and the European banking crisis to date has been contained. Corporate earnings remain impressive as does the strength of corporate balance sheets which should support higher equity market levels and, in turn, drive higher management fees. Large corporations have record cash balances which should bode well for M&A exit market activity for venture capital backed companies. High value M&A exit activity in funds managed by the Company's venture capital division increases the prospect for carried interest payments / IPA dividends. Overall, should these industry trends continue, favourable opportunities may arise for the Company's asset management business.
The asset management industry in Canada continues to experience a consolidation trend. Many small players realize they need to attain greater scale in the current environment. Firms with less than $1 billion in AUM are the most challenged to achieve sustainability and profitability. This trend presents an ongoing opportunity for Matrix as it has proven experience in mergers and acquisitions. It also has a desire to work with other organizations to create greater value through suitable strategic transactions.
The Company, through its operating units, will also continue to seek to attract additional AUM through competing for new investment management mandates and through positioning and re-positioning its investment fund offerings to meet the current needs of investors. Strategic assessment and planning to strengthen the Company's mandates and offerings will continue to be a focus. In particular, the Company sees further demand and strength in innovative new growth, resource-oriented and income investment products that can provide value-added features for investors and utilize its best portfolio management resources to attract additional assets for management. The Company also expects to realize additional operating efficiencies over the coming quarters as it continues to integrate its diversified asset management platform.
Matrix's fourth quarter and year end 2011 financial statements and MD&A are available on the SEDAR website at .
Dividend Reinvestment Plan
Matrix also announced today that the Board has approved the adoption of a DRIP. The DRIP allows eligible shareholders of Matrix to reinvest their cash dividends into additional Common shares issued by Matrix from treasury or, at the discretion of Matrix, acquired through the facilities of the Toronto Stock Exchange ("TSX"). Common Shares issued from treasury may, at the discretion of Matrix, be purchased at an up to 5% discount from prevailing market prices. Matrix will announce further details of the DRIP, including how shareholders can enroll in the DRIP, in advance of the record date for the next quarterly dividend, being April 26, 2012. The DRIP is subject to the approval of the TSX.
About Matrix ()
Matrix (TSX: MTA) is a diversified asset and wealth management company with approximately $1.6 billion in assets under management and offices across Canada. The Company's mission is to provide a diverse array of investment choices and the best possible investment management service to Canadian investors and institutions. The Company delivers its services through three main operating subsidiaries serving institutional, high net worth, and retail investors.
Forward-Looking Statements
Certain statements in this press release are forward-looking statements, including statements regarding the operations, business, financial condition, expected financial results and profitability, expense reductions, dividends, dividend policies and the adoption of a dividend reinvestment plan, performance, targeted acquisitions, prospects, opportunities, new products, priorities, goals, strategies, accounting policies and estimates and outlook of Matrix for the current fiscal year and subsequent periods. Forward-looking statements are predictive in nature and are not based upon historical fact. Forward-looking statements are based upon beliefs and assumptions, including with respect to levels of Matrix's AUM and expenses and related assumptions as to levels of portfolio returns and managed fund sales and redemptions, beliefs and assumptions concerning prevailing and future economic and market conditions and the impact of such conditions and other factors on Matrix's AUM, the continuation of portfolio and fund management and advisory engagements, the extent and effectiveness of cost-saving measures and the impact of such measures and other factors on earnings, tax rates and laws, performance of managed venture capital investments relative to performance fee return thresholds, and the absence of extraordinary or one-time expenses not currently known to management. While management considers these beliefs and assumptions to be reasonable based on information currently available to it, these statements are subject to numerous risks and uncertainties and no assurance can be given that such beliefs and assumptions will prove to be correct. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements due to many factors including, but not limited to, risks associated with institutional, mutual fund and venture capital fund management sectors generally, market, economic, political and other risks affecting portfolio performance, interest and foreign exchange rates, managed fund sales and redemptions, demand for financial products offered by Matrix and the impact of a lack of demand on Matrix's AUM, revenues and earnings, changes to regulatory requirements, accounting and reporting policies (including the adoption of IFRS) and tax laws, Matrix's ability to effectively respond to competition and technological change and recruit and retain key management personnel, uninsured losses, risks associated with completing proposed financings and targeted acquisitions, introducing new products, accessing needed capital resources from internal and external sources and Matrix's ability to successfully integrate acquired operations and implement cost savings measures and growth strategies. Many of these risks are beyond the control of Matrix.
Readers are cautioned to consider these and other risks, uncertainties and potential events carefully and not place undue reliance on forward-looking statements. Other than as specifically required by law, Matrix undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or other factors.
Non-IFRS Measures
"EBITDA", "recurring EBITDA", "Free Cash Flow" and "recurring income (loss) before taxes" are not measures recognized under International Financial Reporting Standards ("IFRS"). However, management of Matrix believes that most shareholders, creditors, other stakeholders and investment analysts prefer to have these measures included as reported measures of operating performance, a proxy for cash flow, and to facilitate valuation analysis. These non-IFRS measures do not have any standard meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Readers are cautioned that these non-IFRS measures are not alternatives to measures determined in accordance with IFRS and should not, on their own, be construed as indicators of performance, cash flows or profitability or measures of liquidity. These non-IFRS measures should be read in conjunction with the financial statements of Matrix posted on SEDAR. For additional information regarding Matrix's use of non-IFRS measures, including reconciliations of these measures to the nearest IFRS measures, please refer to the "Non-IFRS Financial Measures" and "Non-Recurring Items, EBITDA & Free Cash Flow" sections of its MD&A available on the SEDAR website at .
Contacts:
Matrix Asset Management Inc.
David Levi
President & CEO
(604) 895-7274 and (416) 934-7700
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Datum: 29.03.2012 - 06:51 Uhr
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