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2
The power of thinking
Fiera Capital Corporation is a leading-edge firm focused on delivering
competitive and tailored multi-style investment solutions to a
diversified clientele of investors.
We are recognized for superior portfolio management, innovative
investment strategies and an ability to continually surpass
clients’ expectations.
Optimal performance. Intelligent innovation.
Table
of
contents
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84
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HigHligHts
A messAge from tHe cHAirmAn
fierA cApitAl At A glAnce
mAnAgement Discussion AnD AnAlysis
inDepenDent AuDitor’s report
mAnAgement’s report to tHe sHAreHolDers
consoliDAteD finAnciAl st Atements
notes to tHe consoliDAteD finAnciAl st Atements
boArD of Directors
corporAte informAtion
contAct us
Fiera capital corporation
Highlights
OPERATING HIGHLIGHTS
•
•
•
In line with our goal of becoming a leading North American investment management firm, Fiera Capital acquired Natcan,
Canadian Wealth Management and certain assets of UBS Global Asset Management (Canada). These transactions underline
Fiera Capital’s leading role in the industry, with the Firm now ranked as the third-largest independent investment manager
in Canada.
Fiera Properties Limited merged with Roycom to create a new, national real estate investment firm.
Subsequent to yearend, Fiera announced an agreement with GMP Capital relative to the acquisition GMP’s alternative
investment assets.
PORTFOLIO MANAGEMENT HIGHLIGHTS AS OF DEcEMbER 31, 2012
Strong outperformance of fixed income strategies in 2012 relative to their benchmarks:
• The Fixed Income - Active Management strategy surpassed its index by 118 basis points in 2012, provided a higher return than its
•
benchmark in nine of the last ten years, and has an a top-decile annualized return over ten years.
Following another year of outperformance, the Fixed Income – Tactical Management strategy continues to perform in the first
percentile annualized over a period of ten years.
• The acquisition of Natcan enabled us to expand our service offerings with the addition of innovative strategies such as currency
management and liability driven investment. This latter strategy offers customized solutions that match liabilities and generate
long-term performance. In addition, Fiera Capital produced, in collaboration with the Canadian Institute of Actuaries (CIA), the
CIA accounting discount rate curve, which can be used by plan sponsors to select discount-rate appropriate accounting.
Foreign Equities: Outstanding Results by the Team
•
Strategies for Global Equity, International Equity and U.S. Equity had another year of outperformance and annualized returns
remain in the top decile since their inception.
Canadian Equities: Constant Long-Term Results
• The Canadian Equity Value strategy outperformed its benchmark by more than 250 basis points and continues to outperform its
benchmark since its launch.
• The Canadian Equity “Core” strategy has surpassed the benchmark in eight of the last ten years.
• The Canadian Equity Growth strategy has delivered strong outperformance against its benchmark in four of the six years since its
launch.
• The Canadian Equity Selexia strategy outperformed the S&P/TSX over 600 basis points in 2012
• The Canadian Equity Small Cap “Core” strategy has generated an annualized return almost 10% higher than its benchmark over
ten years.
• The Canadian Equity Small Cap strategy outperformed its benchmark by more than 10% in 2012.
3
Highlights
Non-Traditional Strategies: Continuous Innovation and Leadership
•
•
Launch of Fiera diversified futures Fund, which takes long and short positions in over 20 different markets (bonds, indices,
commodities and currencies) using highly liquid futures contracts (futures) in order generate value for investors. This fund
complements our existing alternative strategies, including the North American Market Neutral Fund, the Long / Short Equity Fund,
the Global Macro Fund and Bond Yield Tactical Fund.
Launch of the open-ended Fiera Axium Infrastructure Fund. The first closing of the fund took place in late 2012. In addition to
diversification by type of project, the new fund is geographically diverse, offering new investment opportunities in both Canada
and the United States.
FINANcIAL HIGHLIGHTS
Assets under management
revenues
ebitDA
net earnings
earnings per share
Period ended
december 31,
2012
million $
Year ended
SePtember 30,
2011
million $
57,043
115.3
39.1
3.0
0.06
29,020
70.1
20.3
8.8
0.24
Growth
96.6%
64.4%
92.9%
-65.5%
-75.0%
4
Fiera capital corporation A message from the Chairman, Chief Executive Officer
and Chief Investment Officer
With its recent acquisitions in four Canadian provinces, Fiera has become one of the leading
independent asset managers in Canada
The year 2012 will forever be chiseled into the young history of Fiera. Almost doubling our size during the course
of the year, we have consolidated our place as the third largest publicly traded portfolio manager in Canada, with
assets under management of more than $57 billion.
It goes without saying that this past year was a gratifying one, punctuated by several acquisitions and
initiatives, one of which was the return to our original corporate name, Fiera Capital.
The acquisition of the assets of NATCAN, the investment management division of National Bank of Canada,
is without a doubt the crown achievement during fiscal 2012. The acquisition serves as an extraordinary
springboard for Fiera, giving us access to an exceptional distribution network. The transaction created a unique
ownership structure through our strategic affiliation with two major Canadian financial institutions, while leaving
control of the Firm with Fiera management.
Evolving in a Canadian market over $2.2 trillion, we continue to see significant growth potential for our
Canadian asset management business. The same goes for the U.S. market, which provides some unique growth
opportunities. We are not sitting on our laurels. Our growth strategy targets not only asset class diversification,
but geographic diversification as well.
In this context we merged our subsidiary Fiera Properties with Roycom, a national real estate investment
management firm located in Halifax, in the Maritimes. Later in the year, we also accelerated the development
of our private wealth management business with the acquisition of Canadian Wealth Management (CWM),
a subsidiary of Société Générale based in Western Canada.
As year end approached, we also announced that we would acquire certain activities from UBS Global Asset
Management, representing approximately $8 billion under management.
AN ENTREPRENEURIAL bUSINESS MODEL
Entrepreneurial values form the very essence of our success at Fiera and they are more than ever at the heart of
our business model. These values help us attract and keep the best portfolio managers, a process that is a key to
success in our industry. In addition, our leading-edge technology is an important asset that enables us to face and
surpass the competition in our industry.
Among other things, our growth relies on attracting talent, constantly improving our distribution network and
on innovation in the development of unequalled new products and solutions. To this end, an important element of
our business strategy is founded on the development of the market for alternative products.
Subsequent to the end of fiscal 2012, Fiera also announced that we had reached agreement with GMP Capital
to acquire GMP’s alternative assets management business for approximately $570 million. The North American
alternative asset management sector has benefitted from strong growth these past few years and will continue to
grow in the future.
5
A message from the Chairman, Chief Executive Officer
and Chief Investment Officer
2012 FINANcIAL AND OPERATING RESULTS
Our business strategy enabled us to deliver strong growth for our shareholders in fiscal 2012. To this end, we are
proud of the efforts of our team during the year and of our proven ability to integrate our various acquisitions. We
have now achieved the critical mass we need to create value for shareholders.
Given the change in our year end from September 30 in previous fiscal years to December 31 for fiscal 2012,
our results for fiscal 2012 include one additional quarter, resulting in fiscal 2012 being a 15-month fiscal period.
Revenues for fiscal year 2012 were $115.3 million, an increase of 64.4% compared to fiscal year 2011. This
significant increase is due primarily to higher management fees from a significant increase in assets under
management following the acquisition of Natcan and CWM, the addition of new mandates due to sales and
marketing efforts by our team, increased market values and to an additional quarter in the fiscal year. In parallel,
earnings before interest, taxes, depreciation and amortization (EBITDA) grew 92.9% to $39.1 million. The
increase reflects the realization of expected synergies from our acquisitions. Net earnings were $3.0 million, down
$5.8 million compared to the year ended September 30, 2011, due largely to non-recurring charges related to our
various acquisitions.
For the fiscal year ended December 31, 2012, total assets under management were $57 billion, a $28 billion
increase compared to September 30, 2011. The increase was due primarily to the acquisitions of Natcan and
CWM, combined with an increase in market values and the addition of new mandates.
STRONG RETURNS FOR OUR cLIENTS
Once again, our portfolios posted superb returns during the year. In fact, 92% of our mutual funds outperformed
their respective market indexes in 2012. Our fixed income strategies continue to rank amongst the best in Canada
with exceptional results that place our funds in the top decile. Global equities also delivered another year of
out-performance, also placing in the top decile. As for our Canadian equity strategies, the vast majority of our
portfolios outperformed the universe of indexes to which they are compared.
Innovation is the foundation of all of our investing strategies. To that end, we launched two new non-traditional
strategies funds during the year. In addition, the acquisition of Natcan allowed us to improve our services with the
addition of innovative strategies such as currency management and liability driven investments.
In sum, exceeding the expectations of our customers by providing exceptional returns while providing
unparalleled customer service, remain our raison d’être at Fiera. We continue to invest in technology and human
resources, so that we are constantly able to provide services of the highest quality to our clients. To that end,
our recent acquisitions have brought not only new assets but also talented new people to our teams, adding to
our capacity to provide innovative research and product solutions, and increasing our portfolio management
and client service capabilities. Moreover, our industry leading technology enables us to deliver better and more
effective client services, increases our research capacity and enables us to provide more effective compliance. All
of these factors mean we are more strongly positioned than ever to meet our clients’ investment objectives.
6
Fiera capital corporation PERSPEcTIVES
We are proud of these results and we are resolutely turned towards the future and prepared to take on the leading
role that we have set for ourselves among North American asset managers. From our strong foundations and
based on our scalable business model, we will continue to grow by focusing on organic growth as we continue
to attract the best talent in the industry, develop and deliver highly performing new products and outstanding
performance for our clients. On the acquisition front, we continue to pursue opportunities for strategic
acquisitions particularly in the United States. We are increasingly recognized as a consolidator in the asset
management industry and our pipeline of transactions is active and growing.
For 2013, everything is in place to enable us to achieve results in line with our expectations.
THANK YOU!
An exceptional year like 2012 is the result of strong team work. I conclude by thanking all our customers and
our shareholders for the confidence you showed us throughout the year, and I want to assure you that we will
continue to work hard to build value and exceed your expectations.
On behalf of the management team, I would also like to thank all our employees for their endless dedication
and commitment to Fiera’s business strategies. I am proud to be associated with people of such high caliber. In
addition, it should be emphasized that the openness and enthusiasm demonstrated by new employees who have
joined our team during the year.
Finally, our success in 2012 would not have been possible without the support of our Board of Directors. The
Board’s contribution was most appreciated in the context of the implementation and execution of Fiera’s strategies.
Fiscal 2013 is already well underway. We are working actively and with abundant confidence as we face the
challenges ahead.
Sincerely,
Jean-Guy Desjardins
Chairman, Chief Executive Officer and Chief Investment Officer
7
Fiera Capital at a glance
Fiera Capital is a recognized leader in the investment management industry in Canada, with more than $57 billion
in assets under management.
Recognized for its outstanding portfolio management and as an innovator in providing investment solutions to institutional, retail and
private wealth clients, Fiera Capital offers a wealth of expertise in Canadian and foreign equities, fixed income, asset allocation and
non-traditional investment solutions through a variety of strategies and services.
Intelligent innovation is our hallmark and sets us apart from our peers. We innovate to better manage risk. Integrated investment
solutions diversified by asset classes, as well as strong risk management are the keys to our superior returns.
We believe that superior and consistent performance can only be achieved through disciplined and rigorous risk management.
To accomplish this, we conduct independent market-leading research and employ broadly diversified investment strategies. Our
ability to innovate leads to the development of new products that enable us to better manage current and future risk within our
client’s portfolios.
DISTRIbu TION OF ASSETS by CLIENTELE , ASSET CLASS AND REg ION: DECEmbER 31, 2012
Clientele
Asset Class
institutional markets
$30.8b
54%
fixed income
strategic investment
partnerships
private Wealth
investor solutions
total
$22.9b
40%
$1.8b
$1.5b
3%
3%
$57.0 B
100%
equity
non-traditional strategies
Asset Allocation
other
total
$36.3b
$16.1b
$1.6b
$2.3b
$0.7b
64%
28%
3%
4%
1%
$57.0B
100%
Region
Quebec
ontario
West
Atlantic
other
total
$36.5b
$15.4b
$3.3b
$1.0b
$0.8b
64%
27%
6%
2%
1%
$57.0B
100%
THE POwER OF THINKING
Fiera Capital is a research-driven investment firm. We believe our clients’ investment returns derive from knowledge,
which we gain from independent market-leading research. At Fiera Capital, knowledge is capital. It is also a prerequisite
to efficient risk management.
Research is the cornerstone of our investment approach and the basis of all our management processes. Investment returns in excess
of market averages are driven by knowledge that is not already embedded in asset pricing. Consequently, we believe that independent
research creates the undiscounted knowledge that drives the excess returns our clients seek.
As unknown risks are impossible to manage, knowledge is critical to managing risk. Like research, risk management is part of Fiera
Capital’s investment culture. Our approach is to balance quantitative and qualitative risk management analyses and apply them to
our clients’ portfolios on a continuous basis. To that end, we employ a variety of non-traditional investment strategies that diversify
the sources of investment returns and minimize correlation to market movement.
8
Fiera capital corporation OUR GROwING PRESENcE
Our goal at Fiera Capital is to become a leading North American investment manager by growing our presence in Canada and the
United States. With offices in Montreal, Toronto, Calgary, Vancouver, Halifax and New York, the firm has over 255 employees and
benefits from the expertise and diversified experience of more than 100 investment professionals, dedicated to servicing our highly
diversified clientele comprised of pension funds, foundations, religious and charitable organizations, high net worth individuals,
financial institutions, mutual funds and managed asset platforms.
Our Focus is on our clients
Fiera capital institutional Markets is dedicated to providing the highest standards in client service and satisfaction. We offer
a complete range of traditional and non-traditional investment strategies through specialized and balanced mandates. Our diversified
clientele includes pension funds, endowments, foundations, religious and charitable organizations, and major municipality and
university funds.
The philosophy embraced by the Fiera Capital Institutional Markets team relies on a personalized approach, innovative investment
solutions, as well as on the highest possible standards of professionalism and integrity.
Fiera capital investor solutions applies the “Power of Thinking” to offer both alternative and traditional funds to
retail investors.
Our Alternative Funds are designed to generate returns that are not market dependent. With a focus on delivering consistent
returns with low volatility and low market correlation, these funds can enhance portfolio returns and reduce portfolio risk.
Our Mutual Funds are focused on the core asset classes needed to construct a well-balanced portfolio. Some of these funds have
been available to Canadian investors since 1985.
These funds are primarily sold by participating dealers in your province of residence, and by Fiera Sceptre Funds Inc. in
certain provinces.
Fiera capital private Wealth is an independent investment advisor offering customized investment solutions to high net worth
investors. We adopt a consultative process to determine a client’s risk tolerance and investment needs.
Once a client’s needs are determined, we create a personalized portfolio that can include stocks, bonds and a wide array of non-
traditional strategies on the income related front as well as the growth side. Our goal is to optimize, based on our client’s specific
needs, the overall portfolio risk-return ratio.
All portfolios are managed on a discretionary basis and, for additional comfort and security, accounts are held at well-known
financial institutions specializing in asset custody. Our clients have virtually every aspect of the investment process managed for
them, including account set-up, asset allocation, trading individual securities and/or pooled funds and ongoing portfolio monitoring.
Fiera capital strategic investMent partnerships offer complete portfolio management solutions to our retail customers.
In addition to working with a distribution network serving 2 million customers, the team ensures the communication of portfolio
data information, sharing of knowledge and enables a single access point to our portfolio management team—a rare privilege in our
financial universe.
Our strategies meet a broad and diverse range of needs, whether in traditional or alternative products. Indeed, mandates
include diverse strategies in Canadian equity, foreign equity, fixed-income and asset allocation products as well as non-traditional
investments.
Our philosophy within the Strategic Investment Partnerships team emphasizes rigorous services combined with a keen sense
of innovation.
9
Fiera Capital at a glance
OUR PARTNERS
Fiera axiuM inFrastructure is an independent portfolio management firm dedicated to generating attractive, long-term
investment returns through investing in core infrastructure assets. The firm combines the capabilities of a group of professionals
with extensive infrastructure development and management backgrounds, with the fund management expertise of one of Canada’s
leading independent fund managers in Fiera Capital.
Fiera Axium Infrastructure seeks to assemble a diversified portfolio of high-quality assets, generating stable and predictable cash
flows within the energy, transportation and social infrastructure sub-sectors. The firm manages a Canadian-focused infrastructure
investment vehicle, Fiera Axium Infrastructure Canada L.P.
Fiera properties is a Canadian real estate investment management company that provides direct real estate investment
opportunities to institutional investors, foundation and endowment clients, and high net worth investors. We are committed to
providing superior client-driven investment strategies that continuously generate value for our investors. Our vision is to be the most
trusted real estate investment management firm in Canada as recognized by our stakeholders.
With offices in Montreal, Toronto, Calgary, Vancouver, Halifax
and New York, the firm has over 255 employees and benefits
from the expertise of more than 100 investment professionals,
dedicated to servicing our highly diversified clientele.
10
Fiera capital corporation management Discussion & Analysis
For the three and the FiFteen Months ended deceMber 31, 2012
The following management discussion and analysis
(‘’MD&A’’) provided as of March 20, 2013 presents an
analysis of the financial condition and results of operations
of Fiera Capital Corporation, formerly known as Fiera Sceptre
Inc., (“the Company” or “Fiera Capital” or ‘’we’’ or “Firm”)
for the Three months and Year ended December 31, 2012.
The following MD&A should be read in conjunction with the
audited consolidated financial statements including the notes
thereto, as at and for the year ended December 31, 2012. The
consolidated financial statements include the accounts of Fiera
Capital and its wholly owned subsidiaries, Fiera Sceptre Funds
Inc., (“FSFI”) and Sceptre Fund Management Inc. (“SFMI”). All
intercompany transactions and balances have been eliminated
on consolidation.
Fiera Axium Infrastructure Inc. (“Fiera Axium”) is an entity
specialized in infrastructure investment and Fiera Properties
Limited (“Fiera Properties”) is an entity specialized in real
estate investments, over which the Company has joint control.
The financial results of the Company’s investments in its joint
ventures are included in the Company’s results using the
equity method.
Figures are presented in Canadian dollars and have been
prepared in accordance with Canadian generally accepted
accounting principles, as set out in Part I of the Handbook
of the Canadian Institute of Chartered Accountants (“CICA
Handbook”), and are based on management’s best information
and judgment. Certain totals, subtotals and percentage may
not reconcile due to rounding.
bASIS FOR PRESENTATION AND ADOPTION
OF IFRS
The Company prepares its consolidated financial statements
in accordance with Canadian generally accepted accounting
principles (“GAAP”) as set out in Part I of the Handbook of
the Canadian Institute of Chartered Accountants (“CICA
Handbook”). In 2010, the CICA Handbook was revised to
incorporate International Financial Reporting Standards
(“IFRS”) which require publicly accountable enterprises to
apply such standards effective for years beginning on or after
January 1, 2011. Accordingly, the Company has commenced
reporting on this basis in the interim consolidated financial
statements for the period ended December 31, 2011. In these
financial statements, the term “Canadian GAAP” refers to
Canadian GAAP before the adoption of IFRS.
The consolidated financial statements have been prepared
in compliance with IFRS applicable to the preparation of interim
financial statements, including International Accounting
Standard 34, Interim Financial Reporting (“IAS 34”) and
IFRS 1, First-time Adoption of International Financial Reporting
Standards (“IFRS 1”). Subject to certain transition elections and
exceptions disclosed in Note 25 of the interim consolidated
financial statements, the Company has consistently applied
the accounting policies used in the preparation of its opening
IFRS balance sheet as at October 1, 2010 throughout all periods
presented, as if these policies had always been in effect.
Note 25 of the interim consolidated financial statements
discloses the impact of the transition to IFRS on the Company’s
reported financial position, financial performance and cash
flows, including the nature and effect of significant changes
in accounting policies from those used in the Company’s
consolidated financial statements for the year ended
September 30, 2011 prepared under Canadian GAAP.
FORwARD-LOOKING STATEMENTS
By their very nature, forward-looking statements involve
numerous assumptions, inherent risks and uncertainties, both
general and specific, and the risk that predictions and other
forward-looking statements will not prove to be accurate. Do
not unduly rely on forward-looking statements, as a number
of important factors, many of which are beyond Fiera Capital’s
control, could cause actual events or results to differ materially
from the estimates and intentions expressed in such forward-
looking statements. These factors include, but are not limited
to: ability of Fiera Capital to maintain its clients and to attract
new clients, the investment performance of Fiera Capital, Fiera
Capital’s reliance on a major customer, Fiera Capital’s ability
to attract and retain key employees, Fiera Capital’s ability to
integrate successfully the businesses that it acquires, industry
competition, Fiera Capital’s ability to manage conflicts of
interest, adverse economic conditions in Canada or globally
including among other things, declines in the financial markets,
fluctuations in interest rates and currency values, regulatory
sanctions or reputational harm due to employee errors or
misconduct, regulatory and litigation risks, Fiera Capital’s ability
to manage risks, the failure of third parties to comply with
their obligations to Fiera Capital and its affiliates, the impact
of acts of God or other events of force majeure; legislative
and regulatory developments in Canada and elsewhere,
including changes in tax laws, the impact and consequences
of Fiera Capital’s indebtedness, potential dilution of the share
ownership that could occur and other factors described under
“Risk Factors” in this MD&A or discussed in other materials
filed by the Corporation with applicable securities regulatory
authorities from time to time.
11
cOMPANY OVERVIEw
cHANGE IN FIScAL YEAR END
Fiera Capital is an independent, full-service, multi-product
investment firm, providing investment advisory and related
services, with approximately $57 billion in assets under
management (“AUM”). Fiera Capital’s business model is
based foremost on delivering excellence in investment
management to its clients. Fiera Capital offers multi-style
investment solutions through diversified investment strategies
to institutional investors, private wealth clients and retail
investors. In addition to managing its clients’ accounts on a
segregated basis (“Managed Accounts”), Fiera Capital uses
pooled funds and sections thereof to manage specialized
asset classes and to combine the assets of smaller clients for
investment efficiencies (“Pooled Funds”). To provide retail
investors with access to its investment management services,
Fiera Capital also acts as investment manager of certain mutual
funds, a commodity pool fund and The Fiera Capital QSSP II
Investment Fund Inc. (the “Mutual Funds” and, collectively
with the Pooled Funds, the “Funds”).
Units of the Mutual Funds are distributed through Fiera
Sceptre Funds Inc. (“FSFI”), Fiera Capital’s wholly owned
subsidiary. FSFI is a member of the Mutual Fund Dealers
Association of Canada and is registered in the category of
mutual fund dealer in the Provinces of British-Columbia, Alberta,
Manitoba, Saskatchewan, Ontario, Québec and New Brunswick.
Fiera Capital is registered in the categories of exempt
market dealer and portfolio manager in all Provinces and
Territories of Canada and as an investment adviser with the
U.S. Securities and Exchange Commission. Fiera Capital is also
registered in the category of investment fund manager in the
Provinces of Ontario, Québec and Newfoundland and Labrador.
In addition, as Fiera Capital manages derivatives portfolios,
it is registered as commodity trading manager pursuant to
the Commodity Futures Act (Ontario), as an adviser under
the Commodity Futures Act (Manitoba) and, in Québec,
as derivatives portfolio manager pursuant to the Derivatives
Act (Québec).
The Company has announced earlier this year that it had
decided to change its year-end from September 30 to
December 31. The present reporting period is therefore related
to a fifteen-month period of operating results.
Consequently, the addition of a fifth quarter in the present
fiscal year contributes to the variances explanations. Also,
the additional quarter from October to December 2012 will
be analyzed in comparison with the period from October
to December 2011 which represents the first quarter of the
presented fiscal year. The contribution from the additional
three-month period will be identified and highlighted in the
present management analysis.
SIGNIFIcANT EVENTS
During the fifteen months ended December 31, 2012,
Fierar Capital entered into several strategic transactions
that individually and collectively will enable the Firm to grow
its AUM, revenues and net earnings.
NATcAN AcqUISITION
On April 2, 2012 Fiera Sceptre acquired substantially all of the
assets of Natcan Investment Management Inc. (“Natcan”) from
National Bank of Canada (the “Bank”) for $309.5 million subject
to reduction. On closing, the Bank, through Natcan, received
19,732,299 Class A subordinate voting shares of the share
capital of Fiera (the “Class A shares”) as well as a cash payment
of $85,553,219. As a result of the transaction, the retail
assets under management of the Firm grew significantly as a
proportion of total assets. The Natcan investment management
and servicing activities were fully integrated into the operations
of Fiera in the same quarter.
Coincident with the closing of the transaction, as approved
by shareholders, the legal name of the Firm was changed from
Fiera Sceptre Inc. to Fiera Capital Corporation.
12
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation FIERA PROPERTIES MERGER wITH ROYcOM
On April 4, 2012, Fiera Capital announced that its joint
venture Fiera Properties Limited had merged with Roycom
Inc. to create a new national real estate investment platform
that will be focused on providing clients with pooled fund
and segregated account management services. Roycom is an
industry leading property manager with an existing platform
and solid track record that enables Fiera Properties to execute
its growth strategy and enables Fiera Capital to offer high
quality real estate investment management opportunities
to its institutional clients.
cwM AcqUISITION
A strategic priority of the Firm has been to expand its presence
in Western Canada. To that end, on December 1, 2012 the Firm
acquired Calgary-based Canadian Wealth Management Group
Inc. from Société Général Private Banking. The acquisition
expands Fiera Capital’s presence in the wealth management
business in Western Canada and CWM, along with its highly
skilled team of professionals, provides an excellent base from
which to accelerate the Firm’s growth in the region.
UbS AcqUISITION
In December 2012, Fiera Capital announced that it had
reached agreement with UBS Global Asset Management
(Canada) Inc. to purchase the latter’s Canadian fixed income,
Canadian equity and domestic balanced account business for
maximum cash consideration of $52 million. The transaction,
which closed on January 31, 2013 subsequent to year end,
further strengthens Fiera’s client-driven service approach
and reinforces Fiera’s leading asset management business in
Canada. The acquisition added approximately $8 billion in
AUM and was immediately accretive to earnings.
GMP AcqUISITION
On January 18, 2013, subsequent to year end, Fiera Capital
announced that it had agreed to acquire selected alternative
asset management funds of GMP Investment Management,
including flagship funds pertaining to the GMP Diversified
Alpha Fund and the Canadian ABCP Fund, representing
approximately $570 million in assets under management.
The transaction enables Fiera Capital to expand its
alternative strategies, an investment area that has been
experiencing significant momentum over the past few years in
the North American marketplace and that will continue to grow
in the future. The acquisition provides clients of the Firm with
enhanced product innovation and offerings, with customized
investment solutions that meet their objectives.
Under the terms of the Agreement, the purchase price
includes a $10.75 million cash consideration. In addition,
key members of GMP Investment Management’s team will
join a newly created Fiera Capital subsidiary in which the
management team will own a minority interest of 45%. Fiera
will also pay 25 per cent of performance fees based on the
acquired assets for a period of three years, subject to certain
minimum asset under management thresholds. It is expected
that the acquisition will be immediately accretive to earnings.
With the exception of the GMP Investment Management
transaction, which should close in the second quarter of 2013,
all transactions have been approved by regulatory authorities
and have satisfied other customary conditions.
FINANcING AcTIVITIES
In order to complete (close) all of the above initiatives, Fiera
renegotiated its long term debt, in December 2012, to increase
to $180 million, keeping relatively all the same terms and
conditions. Fiera will draw on the facility at the closing of the
various initiatives.
13
SUMMARY OF PORTFOLIO PERFORMANcE
THE FOLLOwINg CHART pRESENTS THE pERFORmANCE COmp OSITES1.
inception
Date
1 year
3 years
5 years
10 years
since
inception
Annualized
(%)
(%)
(%)
(%)
(%)
FixEd incomE invEstmEnt stRAtEgiEs
Active fixed income
tactical fixed income
long bonds
High-yield bonds
preferred shares
real return bond
money market
corporate fixed income
Jan. 01, 1997
Jan. 01, 2000
Jul. 01, 1998
sep. 01, 2003
Jan. 01, 2004
Jan. 01, 1998
Jan. 01, 2004
feb. 01, 2008
BAlAncEd invEstmEnt stRAtEgiEs
balanced core
Diversified fund
Jan. 01, 1998
Jan. 01, 2004
Equity invEstmEnt stRAtEgiEs
canadian equity Value
High income equities
canadian equity growth
canadian equity core
canadian equity small cap «core»
canadian equity small cap
us equities
international equities
global equities
Jan. 01, 2002
oct. 01, 2009
Jan. 01, 2007
Jan. 01, 1992
Jan. 01, 1989
Dec. 01, 1986
Apr. 01, 2009
Jan. 01, 2010
oct. 01, 2009
AltERnAtivE invEstmEnt stRAtEgiEs
north American market neutral
long / short equities
global macro
fiera Diversified lending
income fund
fiera infrastructure fund
Absolute bond yield
oct. 01, 2007
Aug. 01, 2010
nov. 01, 2006
Apr. 01, 2008
Jan. 01, 2010
nov. 01, 2009
Dec. 01, 2010
1. The above performances are annualized
4.78
5.44
6.05
15.36
5.75
3.02
1.29
7.32
9.11
7.54
10.06
10.33
4.96
8.55
2.16
2.24
13.38
24.09
17.80
(1.43)
5.04
3.14
9.11
7.79
6.96
7.57
7.65
8.41
12.36
9.56
8.14
10.73
1.11
6.87
6.86
5.54
5.45
11.48
1.82
4.67
8.66
8.78
11.27
10.96
12.15
(1.04)
-
1.71
7.87
8.02
3.70
-
7.20
7.80
9.28
9.60
6.21
9.26
1.67
-
2.55
3.90
1.83
-
0.94
0.54
1.05
(0.34)
-
-
-
8.67
-
5.56
-
-
-
-
6.57
7.37
8.84
-
-
8.95
-
-
7.05
-
10.21
-
-
10.37
15.37
15.63
-
-
-
-
-
-
-
-
-
-
6.94
8.21
8.09
7.86
4.12
8.96
2.45
7.20
8.43
6.47
8.84
12.91
3.98
9.85
11.70
13.25
14.82
10.96
12.93
11.13
11.46
7.81
6.51
8.02
3.51
6.54
14
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation HIGHLIGHTS FOR THE THREE AND FIFTEEN
MONTHS ENDED DEcEMbER 31, 2012
DEcEMbER 31, 2012 cOMPARED TO DEcEMbER 31, 2011
• Total AUM increased by $28.1 billion or 97.2% to
$57.0 billion as at December 31, 2012 compared to AUM
of $28.9 billion as at December 31, 2011. The increase
is primarily due to the addition of Natcan and CWM
combined with increased AUM due to new sales and
positive cash flows.
• Revenues for the three-month period ended December 31,
2012 increased by $14.9 million or 92.2% to $31.0 million
compared to $16.1 million for the same period in prior
year. The increase in revenues is mainly due to Natcan’s
acquisition as well as the inclusion of one month’s revenue
for the acquired CWM and new sales.
• Operating expenses increased by $5.8 million or 45.9% to
$18.6 million for the three-month period ended December 31,
2012, compared to $12.7 million for the same period in
2011. The increase resulted from an overall rise in SG&A
expenses of $5.7 million combined with higher external
manager expenses of $0.1 million for the three months ended
December 31, 2012 following the Natcan acquisition.
Earnings before interest, taxes, depreciation and
amortization (EBITDA, as defined on page 33 and
disclosed in table 1) (a non-IFRS measure of performance)
increased by $9.0 million or over 100% to $12.5 million for
the three-month period ended December 31, 2012, from
$3.4 million for the same period of 2011.
EBITDA per share was $0.22 for the three-month period
ended December 31, 2012, an increase of $0.13 or 136%
compared to the EBITDA per share of $0.09 for the three-
month period ended December 31, 2011.
For the quarter ended December 31, 2012, the Firm earned
$3.1 million or $0.05 (basic and fully diluted) earnings per
share. For the three-month period ended December 31,
2011, the Firm earned $0.8 million or $0.02 (basic and fully
diluted) earnings per share.
•
•
•
• The adjusted net earnings, as defined on page 33
(a non-IFRS measure of performance), for the period were
$9.3 million or $0.16 (basic and fully diluted) earnings per
share. The adjusted net earnings for the three-month period
ended December 31, 2011 were $2.8 million or $0.08 (basic
and fully diluted) earnings per share.
DEcEMbER 31, 2012 cOMPARED TO SEPTEMbER 30, 2012
• Total AUM increased by $1.8 billion or 3.3% to $57.0 billion
during the quarter ended December 31, 2012, compared
to AUM of $55.2 billion as at September 30, 2012. The
increase is attributable to new AUM, market appreciation
combined with the addition of CWM.
• Revenues for the three-month period ended December 31,
2012 increased by $4.6 million or 17.5% to $31.0 million
compared to $26.4 million for the previous quarter ended
September 30, 2012. The increase is due to higher AUM
translating into additional base revenues of $1.2 million
combined with additional performance fees from Traditional
asset class of $3.1 million and performance fees from
Alternative asset class of $0.3 million.
•
• Operating expenses increased by $1.6 million or 9.2%
to $18.6 million for the three-month period ended
December 31, 2012 compared to $17.0 million for the
quarter ended September 30, 2012. The increase resulted
from an overall rise in SG&A expenses of $2.0 million offset
by lower external manager’s expenses of $0.4 million.
Earnings before interest, taxes, depreciation and
amortization (EBITDA as defined on page 33 and
disclosed on table 1) (a non-IFRS measure of performance)
increased by $3.0 million or 32.4% to $12.5 million
for the three-month period ended December 31, 2012,
from $9.4 million for the previous quarter ended
September 30, 2012.
EBITDA per share was $0.22 for the three-month period
ended December 31, 2012, an increase of $0.05 or 32.4%
compared to the EBITDA per share of $0.17 for the three-
month period ended September 30, 2012.
For the quarter ended December 31, 2012, the Firm earned
$3.1 million or $0.05 (basic and fully diluted) representing
an increase of $0.1 million or 2.6% compared to the
quarter ended September 30, 2012, where the Firm earned
$3.0 million or $0.05 per share (basic and fully diluted).
•
•
• The adjusted net earnings, as defined on page 33
(a non-IFRS measure of performance), for the period were
$9.3 million or $0.16 (basic and fully diluted) earnings per
share. The adjusted net earnings for the three-month period
ended September 30, 2012 were $6.6 million or $0.12
(basic and fully diluted) earnings per share.
15
HIGHLIGHTS FOR THE FIFTEEN MONTHS ENDED
DEcEMbER 31, 2012 wERE:
The following section compares the fifteen-month period
ended December 31, 2012 with the twelve-month period ended
September 2012. For better comparison, the twelve-month
period ended September 2012 will be compared to the
twelve-month period ended September 2011.
• Total AUM increased by $28.0 billion or 96.6% to
$57.0 billion during the fifteen-month period ended
December 31, 2012, compared to AUM of $29.0 billion as
at September 30, 2011. The increase is mainly due to the
Natcan and CWM acquisitions. Excluding the fifth quarter
of 2012, total AUM increased by $26.2 billion or 90.3%
to $55.2 billion during the twelve-month period ended
September 30, 2012, compared to AUM of $29.0 billion as
at September 30, 2011.
• Revenues for the fifteen-month period ended December 31,
2012 increased by $45.2 million or 64.4% to $115.3 million
compared to $70.1 million for the twelve-month period
ended September 2011. The increase in revenues is mainly
due to the addition of Natcan and CWM combined
with New base revenues, higher performance fees from
Traditional asset class as well as an additional quarter.
Excluding the $31.0 million from the three additional
months in 2012, revenue increased by $14.2 million or
20.2% to $84.3 million compared to $70.1 million for
the same period in prior year. The increase in revenues
was mainly due to the addition of Natcan offset by lower
performance fees related to alternative asset class.
• Operating expenses increased by $26.4 million or 52.8%
to $76.2 million for the fifteen-month period ended
December 31, 2012, compared to $49.9 million for the
twelve-month period ended September 2011. The increase
resulted from an overall rise of $27.1 million in SG&A
expenses offset by lower external manager expenses
of $0.7 million for the fifteen-month period ended
December 31, 2012. The increase is due to the addition of
a fifth quarter in the current discussed fiscal year as well
as the addition of Natcan and CWM acquisitions. On a
twelve-month basis ended September 2012, Operating
expenses increased by $7.8 million or 15.6% to $57.7 million
for the twelve-month period ended September 30, 2012,
compared to $49.9 million for the same period in 2011.
The increase resulted from an overall rise of $8.8 million
in SG&A expenses offset by lower external manager
expenses of $1.0 million for the twelve-month period ended
September 30, 2012 due to the Natcan acquisition.
Earnings before interest, taxes, depreciation and
amortization (EBITDA as defined on page 33 and
disclosed on table 2) (a non-IFRS measure of performance)
were $39.0 million for the fifteen-month period ended
December 31, 2012, an increase of $18.8 million from
$20.3 million for the twelve-month period ended
September 2011. EBITDA for the twelve months ended
September 2012 were $26.6 million representing an
increase of $6.3 million from $20.3 million for the same
period of 2011.
For the fifteen-month period ended December 31, 2012, the
Firm’s earned $3.0 million or $0.06 per share (basic and
fully diluted). On a twelve-month basis, for the period ended
September 30, 2012, the Firm’s net loss was $0.06 million
or nil per share (basic and fully diluted). For the previous
year comparable period, the twelve-month period ended
September 30, 2011, the Firm earned $8.8 million or $0.24
per share (basic and fully diluted).
•
•
• The adjusted net earnings, as defined on page 33 (a non-
IFRS measure of performance), for the period of fifteen-
month ended December 2012 were $28.4 million or $0.59
(basic and fully diluted) earnings per share. On a twelve-
month basis, for the period ended September 30, 2012 the
adjusted net earnings were $19.1 million or $0.41 (basic
and fully diluted) earnings per share. For the comparable
previous year period, the adjusted net earnings for the
twelve-month period ended September 30, 2011 were
$16.2 million or $0.44 (basic and fully diluted) earnings
per share.
16
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation SUMMARY OF qUARTERLY RESULTS
TAbLE 1 – STATEmENTS OF INCOmE & Aum
Assets under management ($ In millions)
Assets under management
Statements of Income Data ($ In Thousands)
revenue
base management fees and other revenues
performance fees – traditional Asset class
performance fees – Alternative Asset class
expenses
selling, general and administration
external managers
operating expenses
ebitDA1
Depreciation of property and equipment
Amortization of intangible assets
capital asset write-off
interest on debt
Accretion on purchase price obligation payments
other expenses
change in fair value of derivative financial instrument
income taxes
net eArnings
per sHAre
ebitDA
basic and diluted earnings
Adjusted net earnings1
dec. 31,
2012
57,043
sept. 30,
2012
55,221
As at
Dec. 31,
2011
28,920
Quarter over
Quarter
fAV/(unf)
1,823
Variance
year over
year
fAV/(unf)
28,123
for the three months ended
dec. 31,
2012
sept. 30,
2012
Dec. 31,
2011
Quarter over
quarter
fAV/(unf)
Variance
year over
year
fAV/(unf)
27,034
3,651
324
31,009
18,267
287
18,555
12,454
259
3,664
-
1,006
619
2,171
627
1,021
3,086
0.22
0.05
0.16
25,874
519
5
26,399
16,278
713
16,991
9,408
228
3,600
-
1,076
625
520
(1,395)
1,746
3,008
0.17
0.05
0.12
15,247
799
85
16,132
12,554
166
12,719
3,413
202
884
-
-
-
906
-
591
829
0.09
0.02
0.08
1,160
3,132
318
4,610
(1,989)
425
(1,565)
3,046
(31)
(64)
-
70
6
(1,651)
(2,022)
725
77
0.05
-
0.04
11,787
2,852
239
14,877
(5,714)
(122)
(5,835)
9,042
(57)
(2,780)
-
(1,006)
(619)
(1,265)
(627)
(430)
2,257
0.13
0.03
0.08
1. EBITDA and Adjusted net earnings are non-IFRS measures. Please refer to “Non-IFRS Measures” on page 33.
17
TAbLE 2 – STATEmENT OF INCOmE & Aum (CONTINu ED)
Statements of Income Data ($ In Thousands)
revenue
base management fees and other revenue
performance fees – traditional Asset class
performance fees – Alternative Asset class
expenses
selling, general and administration
external managers
operating expenses
ebitDA1
Amortization of property and equipment
Amortization of intangible assets
capital asset write-off
interest on debt
Accretion on purchase price obligation payments
change in fair value of derivative financial instrument
other expenses
income taxes
net (loss) eArnings
per sHAre
ebitDA
basic and diluted (loss) earnings
Adjusted net earnings1
for the
15-months
ended
for the
12-months
ended
dec. 31,
2012
sept. 30,
2012
sept. 30,
2011
Variance
fAV/(unf)
sept. 2012
vs
sept. 2011
Dec. 2012
vs
sept. 2011
109,741
5,036
551
115,328
74,236
1,989
76,225
39,103
1,136
12,609
-
2,940
1,863
1,491
13,255
2,782
3,026
0.76
0.06
0.58
82,707
1,385
227
84,319
55,969
1,702
57,670
26,649
877
8,945
-
1,934
1,245
864
11,083
1,760
(60)
0.54
0.00
0.41
66,202
681
3,260
70,143
47,180
2,693
49,873
20,270
812
3,440
490
-
-
-
2,614
4,143
8,771
0.55
0.24
0.44
43,539
4,356
(2,709)
45,185
(27,056)
704
(26,352)
18,833
(324)
(9,170)
490
(2,940)
(1,863)
(1,491)
10,641
1,362
(5,745)
(0.21)
(0.18)
0.13
16,505
704
(3,033)
14,176
(8,789)
991
(7,797)
6,379
(65)
(5,506)
490
(1,934)
(1,245)
(864
(8,470)
2,383
(8,831)
(0.01)
(0.24)
(0.04)
1. EBITDA and Adjusted net earnings are non-IFRS measures. Please refer to “Non-IFRS Measures” on page 33.
18
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation TAbLE 3 – SELECTED bALANCE SHEET INFOR mATION (IN THOuSANDS OF DOLLARS )
cash, restricted cash & investments
receivables
other current assets
goodwill & intangible assets
investments in joint ventures
other long-term assets
total assets
current liabilities
Deferred income taxes
long-term debt
fair value of purchase price obligation payments
Derivative financial instrument
other long-term liabilities
equity
total liabilities and equity
(Audited)
december 31,
2012
12,845
29,888
1,216
458,980
6,879
6,966
516,774
(Audited)
september 30,
2011
1,201
16,414
716
141,219
1,333
2,687
163,570
31,293
20,264
107,521
56,503
1,491
1,963
297,739
516,774
11,258
10,079
-
-
-
1,396
140,837
163,570
19
RESULTS FROM OPERATIONS AND OVERALL PERFORMANcE
ASSETS UNDER MANAGEMENT
TAbLE 4 – ASSETS uNDER mANAgEmENT ($ IN mILLIONS )
Aum – beginning of period
net variance
natcan & cWm acquisition
Aum – end of period
3 months ended 15 months ended
12 months ended
december 31,
2012
55,221
1,252
570
57,043
December 31,
2011
29,029
(100)
-
28,920
december 31,
2012
29,020
2,025
25,998
57,043
september 30,
2012
29,020
773
25,427
55,221
september 30,
2011
30,755
1,735
-
29,020
TAbLE 5 – ASSETS uNDER mANAgEmENT by SECTOR – QuARTERLy ACTIvITy CONTINu ITy SCHEDu LE
($ IN mILLIONS )
institutional
private Wealth
retail
Aum–end of period
sept. 30,
2012
30,573
1,098
23,551
55,221
new
328
96
834
1,257
lost
(469)
(13)
(43)
(525)
market
363
26
130
520
Acquisition
-
570
-
570
dec. 31,
2012
30,794
1,777
24,473
57,043
qUARTERLY AcTIVITY
Total AUM increased by $1.8 billion or 3.3% to $57.0 billion during the quarter ended December 31, 2012, compared to AUM of
$55.2 billion as at September 30, 2012. The increase is attributable to market appreciation combined with new AUM as well as the
addition of CWM with $570 AUM as of December 1, 2012.
TAbLE 6 – ASSETS uNDER mANAgEmENT by SECTOR – FIFTEEN -mONTH ACTIvITy CONTINu ITy
SCHEDu LE ($ IN mILLIONS )
institutional
private Wealth
retail
Aum- end of period
september 30,
2012
22,117
1,356
5,547
29,020
15 months net
variance
2,370
(258)
(87)
2,025
Acquisition
6,308
678
19,012
25,998
december 31,
2012
30,794
1,777
24,472
57,043
FIFTEEN-MONTH AcTIVITY
Total AUM increased by $28.0 billion or 96.6% to $57.0 billion as at December 31, 2012 compared to AUM of $29.0 billion as
at September 30, 2011. The increase is mainly due to higher AUM following Natcan acquisition totaling $25.4 billion and CWM
acquisition totaling $0.6 billion. On a twelve-month basis, for the period ended September 2012 total AUM increased by $26.2 billion
or 90.3% to $55.2 billion as at September 30, 2012 compared to AUM of $29.0 billion as at September 30, 2011. The increase was
mainly due to higher AUM following Natcan acquisition totaling $25.4 billion.
20
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation REVENUE
Management fees are based on AUM and for each sector, revenue is earned primarily on the average closing value of AUM at the end
of each day, month or calendar quarter. The analysis of revenues that follows refers to average assets in the case of each sector.
TAbLE 7 – REvENu E: QuARTERLy ACTIvITy ($ IN THOuSANDS )
institutional
private Wealth
retail
total management fees
and other revenues
performance fees –
traditional asset class
performance fees –
Alternative asset class
total performance fees
total revenue
december 31,
2012
13,791
2,271
10,961
september 30,
2012
13,316
1,878
10,680
3 months ended
December 31,
2011
9,512
2,247
4,488
Quarter over
Quarter
475
393
292
27,034
25,874
15,247
3,651
324
3,975
31,009
519
799
5
525
26,399
85
885
16,132
1,160
3,132
318
3,450
4,610
Variance
year over
year
4,280
23
7,484
11,787
2,852
239
3,090
14,877
DEcEMbER 31, 2012 cOMPARED TO DEcEMbER 31, 2011
Revenue for the three-month period ended December 31, 2012 increased by $14.9 million or 92.2% to $31.0 million compared to
$16.1 million for the same period in prior year. The increase in revenues is due to a higher AUM base hence higher management fees
of $11.8 million combined with higher performance fees of $3.1 million.
Management fees: Increase of $11.8 million or 77.31%
The increase in AUM translated into an additional $11.8 million in revenues throughout the overall company and the impact on
revenue by sector is the following:
• Revenues for the Institutional sector increased by $4.3 million or 45.11% for the three-month period ended December 31, 2012
compared to the same quarter of 2011 due to the Natcan acquisition as well as additional AUM following sales efforts.
• Revenues for the Private Wealth remained stable for the three-month period ended December 31, 2012.
• Revenues for the Retail sector increased by $7.5 million or over 100% for the three-month period ended December 31, 2012
mainly due to the addition of Natcan.
Performance fees:
The three-month period ended December 31, 2012 recorded an increase in performance fees from Traditional asset class of
$2.9 million or over 100% combined with additional performance fess from alternative asset class of $0.2 million or over 100%.
21
DEcEMbER 31, 2012 cOMPARED TO SEPTEMbER 30, 2012
Revenue for the three-month period ended December 31, 2012 rose by $4.5 million or 17.46% at $31.0 million compared to
$26.4 million for the three-month period ended September 30, 2012.
Management fees: Increase of $1.2 million or 4.5%
The increase in management fees of $1.2 million or 4.48% is attributable to higher quarterly average AUM base and results in the
following variations by sector:
• The Institutional revenues increased by $0.5 million to $13.8 million for the three-month period ended December 31, 2012
compared to the quarter ended September 30, 2012 mainly due additional AUM due to marketing and sales efforts.
• Revenues for the Private Wealth increased by $0.4 million to $2.4 million compared to the previous quarter ended September 30,
2012 mainly due to the inclusion of one month revenue following CWM acquisition.
• Revenues for the Retail sector increased by $0.3 million at $10.7 million for the three-month period ended December 31, 2012
compared to the quarter ended September 30, 2012 due positive cash flows during the quarter ended December 31, 2012.
Performance fees:
Higher performance fees related to Traditional asset class of $3.1 million or over 100% combined with higher performance fees
related to Alternative asset class of $0.3 million or over 100% were realized in the period.
TAbLE 8 – R EvEN uE: yEAR-TO-DATE A CTIvIT y ($ IN THOuSANDS)
for the
15-months
ended
dec. 31,
2012
59,802
10,452
39,487
for the
12-months
ended
sept. 30,
2011
39,428
10,472
16,302
sept. 30,
2012
46,010
8,181
28,516
15-month vs.
prior year
12-month period
12-month vs.
prior year
12-month period
Variance $
20,374
(21)
23,185
%
51.7
(0.2)
142.2
$
6,583
(2,291)
12,214
%
16.7
(21.9)
74.9
109,741
82,707
66,202
43,539
65.8
16,505
24.9
institutional
private Wealth
retail
management fees and
other revenues
performance fees –
traditional asset class
5,036
1,385
681
4,356
639.9
704
103.5
performance fees –
Alternative asset class
total performance fees
total revenue
551
5,587
115,328
227
1,612
84,319
3,260
3,941
70,142
(2,709)
1,647
45,185
(83.1)
41.8
64.4
(3,033)
(2,329)
14,177
(93.0)
(59.1)
20.2
FIFTEEN MONTHS ENDED DEcEMbER 31, 2012 cOMPARED TO TwELVE MONTHS ENDED SEPTEMbER 30, 2011
Revenue for the fifteen-month period ended December 31, 2012 increased by $45,2 million or 64.4% to $115.3 million from
$70.1 million for the twelve-month period ended September 30, 2011 resulting from the addition of a fifth quarter in the current Fiscal
Year, Natcan and CWM acquisitions combined with higher AUM base as well as higher performance fees.
Excluding the additional fifth quarter of 2012 analyzed previously and when comparing a twelve-month period basis, revenues for
the twelve-month period ended September 30, 2012 increased by $14.2 million to $84.3 million from $70.1 million for the twelve-
month period ended September 30, 2011 resulting from the addition of Natcan offset by a decrease in performance fees.
22
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation The quarter also included a $0.5 million contractual
expense to National Bank related to recognized revenues in
December 2012 for the first quarter ended March 2012 since
the acquisition occurred April 1st 2012.
cURRENT qUARTER VS. PREVIOUS qUARTER
SG&A expenses increased by $2.0 million or 12.2% to
$18.3 million for the three-month period ended December 31,
2012 compared to $16.3 million for the quarter ended
September 30, 2012. The increase is mainly due to higher
compensation costs of $1.5 million combined with a
$0.5 million contractual expense to National Bank related to
recognize revenues for the first quarter ended March 2012 and
the acquisition occurred April 1st 2012.
YTD 15-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
SG&A expenses increased by $27.1 million or 57.3% to
$74.2 million for the fifteen-month period ended December 31,
2012 compared to $47.2 million for last year twelve-month
period ended September 2011. The increase is due to higher
expenses for compensation representing an increase of
$20.0 million combined with an increase in marketing and
servicing and information technology related expenses of
$3.9 million as well as higher rent of $1.3 million, reference
fees and other of $2.3 million offset by lower professional
fees of $0.9 million and the inclusion of a $0.5 million
contractual expense to National Bank related to recognized in
December 2012 revenues for the first quarter ended March
2012 since the acquisition occurred April 1st 2012.
The increase is mainly due to the inclusion of Natcan
related costs as well as the addition of the fifth quarter
ended December 2012 amounting to $18.3 million here
above analyzed.
Management fees: Increase of $43,5 million or 65.8%
The increase in Management fees of $43.5 million or
65.8% to $109.7 million for the fifteen-month period ended
December 31, 2012 versus the twelve-month period ended
September 30, 2011 is mainly due to the Natcan and CWM
acquisition combined with additional sales and positive cash
flows as well as the addition of a quarter. The variation in
revenues by sector was:
• The Institutional sector’s revenues increased by
$20.4 million at $59.8 million for the fifteen-month period
ended December 31, 2012 compared to the twelve-month
period ended September 30, 2011 mainly due to the
addition of Natcan and new sales.
• Revenues for the Private Wealth were stable at $10.5 million
for the fifteen-month period ended December 31, 2012
compared to $10.5 million for the twelve-month period
ended September 30, 2011. Revenues were positively
impacted by the addition of one month in revenue following
CWM acquisition offset by a shortfall in revenues.
• Revenues for the Retail sector has seen an increase
of $23.2 million for the fifteen-month period ended
December 31, 2012 compared to the twelve-month period
ended September 30, 2011. A rise in revenues following
the Natcan acquisition as well as positive cash flows mainly
explains the revenue increase.
Performance fees:
Higher performance fees of $1.6 million or over 41.79% were
realized in the period. The increase of $1.6 million is the
results of higher performance fees related to Traditional asset
classes of $4.4 million offset by lower performance fees on the
Alternative asset class of $2.7 million.
SELLING, GENERAL AND ADMINISTRATION
cURRENT qUARTER VS. PRIOR YEAR qUARTER
SG&A expenses increased by $5.7 million or 45.5% to
$18.3 million for the three-month period ended December 31,
2012 compared to $12.6 million last year’s same period. The
increase is mainly due to the inclusion of Natcan related costs.
Namely, higher compensation costs of $3.6 million and also,
higher marketing and servicing, reference fees as well as higher
information technology related expenses of $1.0 million, higher
rent of $0.2 million and higher professional fees of $0.2 million.
23
YTD 12-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
For better comparison, on a 12-month basis, SG&A expenses
increased by $8.8 million or 18.6% to $56.0 million for the
twelve-month period ended September 30, 2012 compared
to $47.2 million for last year twelve-month period ended
September 30, 2011. The increase is due to higher expenses
for compensation representing an increase of $7.0 million
combined with an increase in marketing and servicing and
information technology related expenses of $2.2 million as
well as higher rent of $0.5 million, reference fees and other of
$0.7 million offset by lower professional fees of $1.6 million.
The increase is mainly due to the inclusion of Natcan
related costs.
ExTERNAL MANAGERS
cURRENT qUARTER VS. PRIOR YEAR qUARTER
External managers’ expenses increased by $0.1 million or
73.7% to $0.3 million for the three-month period ended
December 31, 2012 from $0.3 million for the three-month
period ended September 30, 2011. The increase is mainly
due to additional expenses following the acquisition
of Natcan.
cURRENT qUARTER VS. PREVIOUS qUARTER
External managers’ expenses decreased by $0.4 million or
59.6% to $0.3 million for the three-month period ended
December 31, 2012 compared to the three-month period ended
September 30, 2012. The decrease is due to the termination
of external managers expenses related to specific funds
from Natcan.
YTD 15-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
External managers’ expenses decreased by $0.7 million or
26.1% to $2.0 million for the fifteen-month period ended
December 31, 2012 from $2.7 million for the previous twelve-
month period ended September 30, 2011. The decrease is
due to the repatriation of the management of the externally
managed assets within the Firm in line with our plan and
therefore reducing the external managers’ expenses.
YTD 12-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
On a twelve-month comparable period, external managers’
expenses decreased by $1.0 million or 36.8% to $1.7 million
for the twelve-month period ended September 30, 2012 from
$2.7 million for the previous twelve-month period ended
September 30, 2011. The decrease is due to the repatriation of
the management of the externally managed assets within the
Firm in line with our plan and therefore reducing the external
managers’ expenses.
AMORTIzATION
Depreciation of property and equipment remained stable at
$0.3 million for the three-month period ended December 31,
2012 compared to $0.2 million for the twelve-month period
of 2011 and remained stable at $0.3 million compared to the
quarter ended September 30, 2012. Depreciation of property
and equipment increased by $0.3 million or 39.9% to $1.1 million
for the fifteen-month period ended December 31, 2012
compared to $0.8 million for the twelve-month period ended
September 30, 2011 mainly due to the addition of a fifth quarter.
Amortization of intangible assets increased by $2.8 million
or over 100% at 3.7 million for the three-month period ended
December 31, 2012 following the Natcan acquisition, compared
to the quarter ended December 31, 2011 and remained stable
compared to the previous quarter ended September 30, 2012.
Amortization of intangible assets increased by $9.2 million or
over 100% to $12.6 million for the fifteen-month period ended
December 31, 2012 compared to $3.4 million for the same
period in 2011.
On a twelve-month basis, amortization of intangible assets
increased by $5.5 million or over 100% to $8.9 million for the
twelve-month period ended September 30, 2012 compared to
$3.4 million for the same period in 2011.
INTEREST
Following the Natcan acquisition, the three-month period ended
December 31, 2012 included an interest on long term debt and
other financing charges of $1.0 million and the accretion on
purchase price obligation payments of $0.6 million compared
to none in the comparable period of 2011 and remained stable
compared to the previous quarter ended September 30, 2012.
24
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation OTHER ExPENSES
cURRENT qUARTER VS. PRIOR YEAR qUARTER
Other expenses increased by $1.3 million or over 100% for the
three-month period ended December 31, 2012 to $2.2 million
compared to $0.9 million for the same period of 2011. The
increase is due higher restructuring costs and severance
payments of $1.5 million related to the Natcan and CWM
acquisitions offset by higher revenues of $0.2 million related to
the Joint venture.
cURRENT qUARTER VS. PREVIOUS qUARTER
Other expenses increased by $1.7 million or over 100% for the
three-month period ended December 31, 2012 to $2.2 million
compared to $0.5 million for the previous quarter ended
September 30, 2012. The increase is due to non-recurring
costs related to the Natcan and CWM transactions namely
restructuring costs and severance payments of $1.8 million in
comparison of the inclusion in the September 30, 2012 quarter
of a non-recurring acquisition charge as well as restructuring
costs and severance payments related to Natcan of $0.6 million.
YTD 15-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
Other expenses increased by $10.6 million or over 100% for the
fifteen-month period ended December 31, 2012 to $13.3 million
compared to $2.6 million for the same period of 2011. The
increase is mainly due to the inclusion of non-recurring costs
of $13.5 million related to the Natcan and CWM transactions
compared to a non-recurring charge of $3.4 million following
restructuring and severance costs related to the business
combination with Sceptre combined with lower revenues of
$0.8 million from the Fiera Axium Joint Venture. The additional
quarter amounting to $2.2 million contributes to the increase.
YTD 12-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
On a twelve-month comparison basis, other expenses
increased by $8.5 million or over 100% for the twelve-month
period ended September 30, 2012 to $11.1 million compared to
$2.6 million for the same period of 2011. The increase is mainly
due to the inclusion of non-recurring costs of $11.1 million
related to the Natcan transaction compared to a non-recurring
charge of $3.4 million following restructuring and severance
costs related to the business combination with Sceptre
combined with lower revenues of $0.8 million from the Fiera
Axium Joint Venture.
DERIVATIVE FINANcIAL INSTRUMENT
During the quarter ended June 30, 2012, the Company has
entered into derivative financial instruments that have not been
designated for hedge accounting which consist of exchanging
its variable rate for a fixed rate of 1.835 % ending in March
2017. These derivatives are measured at fair value at the end
of each period, and the gain or loss arising from revaluation is
recorded and reported under “Change in fair value of derivative
financial instruments” in the statement of income. The
variation in the fair value of the derivative financial instruments
was recorded in the income statement as a loss at $0.6 million
as at December 31, 2012, compared to none in the three-month
period ended December 31, 2011 and compared to a gain at
$1.4 million as at September 30, 2012.
It is the Corporation’s policy not to speculate on derivative
financial instruments; accordingly, these instruments are
normally purchased for risk management purposes and
maintained until maturity.
EbITDA1
cURRENT qUARTER VS. PRIOR YEAR qUARTER
For the three-month ended December 31, 2012 EBITDA increased
year-over-year by $9.0 million or over 100% to $12.5 million
mainly due to higher revenues of $14.9 million offset by an
increase of $5.8 million in operating expenses.
EBITDA for the current quarter ended December 31, 2012
was driven by an increase in the base management fees
compared to the same period of the previous year mainly due
to the Natcan and CWM acquisitions. These elements were
offset by an overall rise in operating expenses namely for
SG&A and external managers following the inclusion of Natcan
and CWM operations.
cURRENT qUARTER VS. PREVIOUS qUARTER
For the three-month ended December 31, 2012 EBITDA
increased by $3.0 million or 32.4% at $12.5 million compared
to the previous quarter ended September 30, 2012. The
increase results from a combination of higher revenues of
$4.6 million and higher operating expenses of $1.6 million.
1. EBITDA is a non-IFRS measure. Please refer to “Non-IFRS Measures” on page 33.
25
YTD 15-MONTH PERIOD VS. PRIOR YEAR 12-MONTH PERIOD
EBITDA for the fifteen-month ended December 31, 2012 increased by $18.8 million or 92.9% to $39.1 million compared to
$20.3 million for the twelve-month period ended September 30, 2011. Revenues for the fifteen-month period ended December 31,
2012 increased by $45.2million and was offset by $26.4 million in higher operating expenses. The addition of a fifth quarter at
$12.5 million contributes to the increase year over year.
YTD 12-MONTH PERIOD VS. PRIOR YEAR 12-MONTH PERIOD
EBITDA for the twelve-month ended September 30, 2012 increased by $6.4 million or 31.5% to $26.6 million compared to
$20.3 million for the same period ended September 30, 2011. Revenues for the twelve-month period ended September 30, 2012
increased by $14.2 million and was offset by $7.8 million in higher operating expenses.
NET EARNINGS (LOSS) AND ADjUSTED NET EARNINGS1
TAbLE 9 – NET EARNINgS AND ADjuSTED NET EARNINgS ($ THOuSANDS )
net (loss) earnings
non-cash items
non-recurring items after tax
Adjusted net earnings
Adjusted net earnings per share
12 month ended
september 30,
2011
8,771
5,060
2,345
16,176
0.44
12 month ended
september 30,
2012
(60)
11,413
7,739
19,092
0.41
Additional
3-month
3,086
4,623
1,596
9,305
0.16
15-month ended
December 31,
2012
3,026
16,037
9,334
28,397
0.58
1. Adjusted net earnings is a non-IFRS measure. Please refer to “Non-IFRS Measures” on page 33.
Certain totals, subtotals and percentage may not reconcile due to rounding
cURRENT qUARTER VS. PRIOR YEAR qUARTER
For the quarter ended December 31, 2012, the Firm earned $3.1 million or $0.05 (basic and fully diluted) earnings per share. For the
three-month period ended December 31, 2011, the Firm earned $0.8 million or $0.02 (basic and fully diluted) earnings per share.
The increase of $2.3 million in net earnings is explained by higher base management fees of $11.8 million combined with higher
performance fees impact of $3.1 million, offset by an overall increase in operating expenses of $5.8 million. Also, the addition of
intangible assets amortization of $2.8 million, acquisition and restructuring costs of $1.5 million related to the Natcan and CWM
transactions , the addition of an interest on long term debt of $1.0 million, higher income taxes of $0.4 million , the accretion on
purchase price obligation payments of $0.6 million combined with the loss in fair value of the derivative financial instrument of
$0.6 million contributed to the variation in the net earnings in the quarter ended December 31, 2012 versus last year comparable
period ended December 31, 2011.
cURRENT qUARTER VS. PREVIOUS qUARTER
Compared to the quarter ended December 31, 2012, the Firm remained stable at $3.1 million or $0.05 (basic and fully diluted). Higher
base management fees of $1.2 million combined with higher performance fees with an impact of $3.5 million, an overall increase
in operating expenses of $1.6 million. Higher acquisition and restructuring costs of $1.8 million related to the Natcan and CWM
transactions, a loss of $0.6 million recorded in the fair value of the derivative financial instrument as opposed to a gain of $1.4 million
in the previous quarter which resulted in a unfavorable variation of $2.0 million and lower income taxes of $0.7 million explains the
stable net earnings at $3.0 million.
26
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation The net earnings were negatively impacted by $4.6 million
or $0.08 per share of non-cash items and $1.6 million or $0.03
per share of non-recurring costs (net of income taxes) during
the quarter. When added back to the firm’s net earnings of
$3.1 million or $0.05 per share, the adjusted net earnings, as
defined on page 33 (a non-IFRS measure of performance),
for the three-month period ended December 31, 2012 were
$9.3 million or $0.16 (basic and fully diluted) earnings per share.
The adjusted net earnings for the three-month periods
ended December 31, 2011 and September 30, 2012 were
respectively $ 2.8 million or $ 0.08 per share and $6.6 million
or $0.12 per share.
YTD 15-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
For the fifteen-month period ended December 31, 2012,
the Firm’s net earnings was $3.0 million or $0.06 per share
(basic and fully diluted). For the twelve-month period ended
September 30, 2011, the Firm earned $8.8 million or $0.24
(basic and fully diluted). The decrease in net earnings is
explained by higher revenues of $45.2 million offset by an
overall increase in operating expenses of $26.4 million. Also,
the addition of intangible assets amortization of $9.2 million,
higher acquisition costs of $5.9 million and higher restructuring
and severances costs of $4.2 million related to the Natcan
transaction versus $3.4 million for restructuring costs following
the Sceptre transaction in last year’s comparable period, the
addition of an interest on long term debt of $2.9 million, the
accretion on purchase price obligation payments of $1.9 million
and the change in fair value of the derivative financial
instrument of $1.4 as well as lower income taxes of $1.4 million
contributed to the decrease in net earnings.
The net earnings were negatively impacted by
$16.0 million or $0.33 per share of non-cash items and
$9.3 million or $0.19 per share of non-recurring costs
(net of income taxes) during the fifteen-month period ended
December 31, 2012. When added back to the firm’s net
earnings of $3.0 million or $0.06 per share, the adjusted net
earnings, as defined on page 33 (a non-IFRS measure
of performance), for the fifteen-month period ended
December 31, 2012 were $28.4 million or $0.59 per share.
The adjusted net earnings for the twelve-month period ended
September 30, 2011 was $16.2 million or $0.44 per share.
YTD 12-MONTH PERIOD VS. PRIOR YEAR
12-MONTH PERIOD
For a better comparability, the net earnings, on a twelve-month
basis, fluctuated in the following manner:
For the twelve-month period ended September 30,
2012, the Firm’s net loss was $0.1 million or nil per share
(basic and fully diluted). For the twelve-month period ended
September 30, 2011, the Firm earned $8.8 million or $0.24
(basic and fully diluted). The decrease of $8.8 million in
net earnings is explained by an overall increase in operating
expenses of $7.8 million combined with lower performance
fees impact of $2.3 million. Also, the addition of intangible
assets amortization of $5.5 million, higher acquisition
costs of $4.3 million and the addition of restructuring costs
of $6.7 million related to the Natcan transaction versus
$3.4 million for restructuring costs following the Sceptre
transaction in last year’s comparable period, the addition of
an interest on long term debt of $1.9 million, the accretion on
purchase price obligation payments of $1.2 million and the
change in fair value of the derivative financial instrument of
$0.9 million contributed to a decrease in net earnings.
Finally, higher base management fees of $16.5 million and
lower income taxes of $2.4 million offset the above elements
contributed to the net earnings variance in the twelve-
month period ended September 30, 2012 versus last year
comparable period.
The net earnings were negatively impacted by $11.4 million
or $0.25 per share of non-cash items and $7.7 million or
$0.17 per share of non-recurring costs (net of income taxes)
during the twelve-month period ended September 30, 2012.
When added back to the firm’s net earnings of $0.1 million or
nil per share, the adjusted net earnings, as defined on page
33 (a non-IFRS measure of performance), for the twelve-
month period ended September 30, 2012 were $19.1 million or
$0.41 per share.
The adjusted net earnings for the twelve-month period ended
September 30, 2011 was $16.2 million or $0.44 per share.
27
SUMMARY OF qUARTERLY RESULTS
This quarterly information is unaudited but has been prepared on an IFRS basis. The AUM, total revenue, EBITDA, and net earnings
of the Firm, on a consolidated basis, including amounts on a per share basis for each of the Firm most recently completed eight
quarterly periods, are as follows:
TAbLE 10 – QuARTERLy RESu LTS ($ IN THOuSANDS E xCEp T Aum $ IN mILLIONS ):
Aum
total revenue
ebitDA
net (loss) earnings
per sHAre
ebitDA1
basic and diluted
net (loss) earnings
Adjusted net earnings1
Q5
Dec. 31
2012
57,043
31,009
12,454
3,086
0.22
0.05
0.16
Q4
sept. 30
2012
55,221
26,399
9,408
3,008
0.17
0.05
0.12
Q3
June 30
2012
53,915
26,257
10,424
(3,463)
Q2
mar. 31
2012
28,691
15,531
3,403
(435)
0.18
0.09
(0.06)
0.13
(0.01)
0.07
Q1
Dec. 31
2011
28,920
16,131
3,411
829
0.07
0.02
0.08
Q4
sept. 30
2011
29,020
16,072
3,993
1,246
0.11
0.03
0.08
Q3
June 30
2011
30,060
17,578
5,064
2,812
0.12
0.08
0.12
Q2
mar. 31
2011
29,452
17,936
4,310
1,897
0.11
0.05
0.12
1. EBITDA and Adjusted net earnings are non-IFRS measures. Please refer to “Non-IFRS Measures” on page 33.
Certain totals, subtotals and percentage may not reconcile due to rounding
RESULTS AND TREND ANALYSIS
AUM
AUM increased in the three-month period ended December 31,
2012 due to the acquisition of CWM in December 2012,
market appreciation as well as additional AUM resulting from
Marketing and sales efforts. The acquisition of Natcan AUM
in April 2012 contributed to the AUM increase in the June 30,
2012 ended quarter and previously, after the combination with
Sceptre on September 1, 2010, the assets under management
had remained fairly stable.
REVENUE
December 31, 2012 ending quarter revenues increased
following higher performances fees, positive cash flows and
market combined with the addition of one month in revenues
related to CWM acquisition. The previous quarter ended
September 2012 was stable vs. the quarter ended June 30,
2012 which was characterized by the acquisition of Natcan
translating into additional revenues of $10.8 million.
EbITDA
The EBITDA has fluctuated with a low of $3.4 million and a high
of $12.4 million. The current quarter ended December 2012 was
positively impacted by performance fees as well as additional
AUM base revenues following Sales efforts. The acquisition of
Natcan on April 2, 2012 has contributed to the rise in EBITDA
and the business combination with Sceptre on September
1, 2010 has contributed in the growth of the EBITDA in the
quarters following the merger. Quarters between September 30,
2011 and March 31, 2012, experienced a shortfall in the EBITDA
and were characterized by a rise in operating expenses due to
the strong investment performance of our investment teams
namely the Fixed Income and Global teams translating into
an increase in compensation expenses combined with the
continuation of strategic initiatives investments such as
the USA branch office and the Real Estate fund and related
set-up costs.
28
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation NET EARNINGS
The net earnings have fluctuated with a low of $3.5 million loss
and a high of $3.1 million earnings. The business combination
with Sceptre on September 1, 2010 explained the growth in
the net earnings and since that period, various initiatives and
non-recurring costs related to the Natcan transaction have
contributed to the decrease in net earnings in recent quarters
namely for the June 30, 2012 quarter ended. In addition, the
current quarter net earnings remained stable when compared
to the September 30, 2012 quarter.
ADjUSTED NET EARNINGS
The adjusted net earnings per share are a good performance
indicator of the business capacity to generate cash flow.
Post-Sceptre acquisition, the Firm had been performing
consistently at an adjusted net earnings of approximately
$0.12 per share per quarter. The first quarter after the Natcan
acquisition was closed with an adjusted net earnings of $0.13
per share, the following quarter ended September 30, 2012
closed with an adjusted net earnings of $0.12 per share and
the current quarter ended December 31, 2012 recorded an
adjusted net earnings of 0.16 per share mainly due to additional
performance fees recorded in the quarter.
LIqUIDITY
cASH FLOwS
The following table provides additional details regarding Fiera Capital’s cash flows.
TAbLE 11 – SummARy OF CONSOLIDATED STATEmENTS OF CASH FLOwS FOR THE pERIOD ENDED :
(IN THOuSANDS OF DOLLARS – AuDITED)
cash provided by operating activities
cash (used) provided by investing activities
cash provided (used) by financing activities
increase (decrease) in cash and cash equivalents
cash and cash equivalents, beginning of year
cash and cash equivalents, end of period
december 31,
2012
15 months
17,888
(107,631)
95,793
6,050
(34)
6,016
september 30,
2011
12 months
8,442
534
(10,187)
(1,211)
1,177
(34)
Cash provided by operating activities was $17.9 million for
the fifteen months ended December 31, 2012 compared
to $8.4 million provided for the twelve-month ended
September 30, 2011. The variation is mainly explained by the
Natcan acquisition in April 2012 and an additional quarter
computed in the December 31, 2012 results
Cash used in investing activities of $107.6 million for the
fifteen months ended December 31, 2012 results mainly from
the addition of $92.4 million payment for the recently acquired
Natcan combined with a $5.1 million subscription of capital in
Fiera Properties, the Firm’s Real Estate joint venture.
The cash provided by the financing activities of $95.8 million
for the fifteen months ended December 31, 2012 results from
an additional long term debt of $108.0 million following the
Natcan acquisition on April 2, offset by Interests and financing
charges of $2.8 million and dividend payments of $19.4 million.
Lastly, issuance of capital stock of $1.5 million contributed to the
positive cash from financing activities in the current period.
LONG TERM DEbT
Following the Natcan acquisition on April 2, 2012, the Firm has
a long term debt of $108 million. The unsecured loan bearing
interest at banker’s acceptances rate plus a variable premium
maturing on March, 2017, repayable in quarterly instalments
of $ 2.0 million starting in June 2015 up to March 2017. On
May 1st, 2012, the Company entered into an interest rate swap
agreement of a notional amount of $108 million which consist
of exchanging its variable rate for a fixed rate of 1.835 % ending
in March 2017, payable in monthly instalments.
Under the terms of the loan agreement, the Company must
satisfy certain restrictive covenants as to minimum financial
ratios. These restrictions are composed of ratio funded debt
29
to EBITDA and interest coverage ratio. EBITDA, a non IFRS
measure, means on a consolidated basis, the net earnings of
the Borrower before interest, taxes, depreciation, amortization,
non-recurring and one-time expenses related to Acquisitions
and other non-cash items and shall include various items.
bANK LOAN
The Company has an unsecured authorized revolving facility
of $10.0 million bearing interest at prime rate plus a premium
varying from 0% to 1 % or at banker acceptance rate plus a
premium rate varying from 1% to 2%, maturing in March 2017.
The covenant is the same as the long term debt.
OFF-bALANcE SHEET ARRANGEMENTS
At December 31, 2012 and September 30, 2011, Fiera Capital
did not engage in any off-balance sheet arrangements,
including guarantees, derivatives, other than the interest
swap as detailed under the long-term section above, and
variable interest entities. We do not anticipate entering into
such agreements.
LEGAL PROcEEDINGS
Fiera Capital may become involved in various claims and
litigation as a part of its business. While the Firm cannot predict
the final outcome of claims and litigation that were pending at
December 31, 2012, based on information currently available
and management’s assessment of the merits of such claims
and litigation, management believes that the resolution of these
claims and litigation will not have a material and negative effect
on our consolidated financial position or results of operations.
POST-EMPLOYMENT bENEFIT ObLIGATIONS
The Company contributes to defined contribution plans for
its employees. Contributions for the 15 month period ended
December 31, 2012 amount to $1.3 million ($0.8 million for the
12 month period ended September 30, 2011).
As part of the business combination referred in Note 4, the
Company assumed the role of sponsor of individual pension
plan (“IPP“) which had been established by the Company for
former employees. Under pension legislation, while the IPPs
are ongoing, the Company has no legal requirement to make
contributions towards any solvency deficiencies under the
IPPs. However, the Company has a legal requirement regarding
the funding of ongoing deficit. These IPPs are valued on a
triennial reporting cycle. The most recent actuarial valuation
was performed as at October 1, 2011 and the next actuarial
valuation dates is January 1, 2015.
As at October 1, 2011 two former executive employees
had an ongoing funding deficit of $1.6 million. The funding
requirement, if any, will be confirmed at the termination date of
the plan.
SHARE cAPITAL
As at December 31, 2012 the Company had 35,368,114 Class
A subordinate voting shares and 21,207,964 Class B special
voting shares for a total of 56,576,078 shares outstanding
compared to 15,367,666 Class A subordinate voting shares
and 21,207,964 Class B special voting shares for a total of
36,575,630 shares outstanding, as at September 30, 2011.
On October 6, 2011, the board of directors adopted an
Employee Share Purchase Plan (ESPP) for the purposes of
attracting and retaining eligible employees, therefore allowing
them to participate in the growth and development of the
Company. The maximum number of issuable Shares under this
plan is 1.5 million Class A subordinate voting shares. The Board
may determine the subscription date and the number of shares
each eligible employee can subscribe to. The subscription price
is determined by the volume-weighted, average trading price
(VWAP) of Company shares on the TSX for the five trading
days immediately preceding the date of the subscription Date.
30
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation SHARE-bASED cOMPENSATION
A summary of the changes that occurred during the 15 months ended December 31, 2012 and the 12 months ended September 30,
2011 in the Company share based plans is presented below:
TAbLE 12 – OpTIONS
outstanding – beginning of year
granted
exercised
expired
forfeited
outstanding – end of year
options exercisable – end of year
INTERNAL cONTROL OVER
FINANcIAL REPORTING
During the fifth quarter ended December 31, 2012, no change
to internal control over financial reporting of Fiera Capital
has occurred that has materially affected, or is reasonably
likely to have materially affected, such internal control over
financial reporting.
Management of the Company has evaluated the
effectiveness of its disclosure controls and procedures and
internal controls over financial reporting (as defined under
National Instrument 52-109) as of December 31, 2012, under
the supervision of the Chief Executive Officer and the Senior
Vice President, Finance. Based on that evaluation, the Chief
Executive Officer and the Senior Vice President, Finance has
concluded that the design and operation of those disclosure
controls and procedures and internal controls over financial
reporting were adequate and effective as of December 31, 2012.
FINANcIAL INSTRUMENTS
The Company, through its financial assets and financial
liabilities, has exposure to the following risks from its use of
financial instruments: credit risk, interest rate risk, currency
risk and liquidity risk. The following analysis provides a
measurement risk as at December 31, 2012.
The Company’s business is the management of investment
assets. The key performance driver of the Company’s ongoing
december 31, 2012
september 30, 2011
number of
class A shares
1,630,072
986,939
(181,401)
-
(145,217)
2,290,393
707,172
Weighted-
average
exercise price
$
5.93
8.22
4.16
-
8.13
6.92
5.88
number of
class A shares
1,135,878
709,028
(139,573)
(7,200)
(68,061)
1,630,072
320,875
Weighted-
average
exercise price
$
4.25
8.39
5.54
6.15
4.10
5.93
4.75
results is the level of assets under management. The level of assets
under management is directly tied to investment returns and the
Company’s ability to retain existing assets and attract new assets.
The Company’s consolidated balance sheet includes a
portfolio of investments. The value of these investments is
subject to a number of risk factors. While a number of these
risks also affect the value of client assets under management,
the following discussion related only to the Company’s own
portfolio of investments.
The Company’s exposure to potential loss from its financial
instrument investments is due primarily to market risk,
including interest rate and equity market fluctuation risks,
credit risk and liquidity risk.
MARKET RISK
Market risk is the risk of loss arising from adverse changes
in market rates and prices, such as interest rates, equity
market fluctuations and other relevant market rate or price
changes. Market risk is directly influenced by the volatility
and liquidity in the markets in which the related underlying
assets are traded. Below is a discussion of the Company’s
primary market risk exposures and how these exposures are
currently managed.
EqUITY MARKET FLUcTUATION RISK
Fluctuations in the value of equity securities affect the level and
timing or recognition of gains and losses on equity and mutual
fund and pooled fund securities in the Company’s portfolio and
31
causes changes in realized and unrealized gains and losses.
General economic conditions, political conditions and many other
factors can also adversely affect the stock and bond markets and,
consequently, the value of the equity, mutual fund, pooled fund
and fixed income available-for-sale financial assets held.
The Company manages its investment portfolio with a
medium risk mandate. Its particular expertise is investment
management and, as part of its daily operations, it has
resources to assess and manage the risks of a portfolio. The
Company’s portfolio of equity and equity-related securities
as at December 31, 2012, comprises mutual fund and pooled
fund investments under its management with a fair value of
$6.5 million. Mutual fund and pooled investments comprise a
well-diversified portfolio of Canadian investments. Mutual fund
and polled fund units have no specific maturities.
A 10% change in the Company’s equity and equity-related
holdings in other comprehensive income as at December 31,
2012 has an impact of increasing or decreasing other
comprehensive income by $0.7 million.
cREDIT RISK
Credit risk is the risk that one party to a financial instrument
fails to discharge an obligation and causes financial loss to
another party.
The credit risk on cash, restricted cash and temporary
investments is limited because the counterparties are
chartered banks with high-credit ratings assigned by national
credit-rating agencies.
INTEREST RATE RISK
The Company’s interest rate risk arises from long-term debt
and the bank loan. Long-term debt issued at variable rates
exposes the Company to cash flow interest rate risk which is
partially offset by cash held at variable rates.
The Company manages its cash flow interest rate risk
by using floating-to-fixed interest rate swaps. Such interest
rate swaps have the economic effect of converting debt from
floating rates to fixed rates. The Company obtained the long-
term debt at a floating rate and swaps it into fixed rates that
are lower than those available if the Company borrowed at
fixed rates directly. Under the interest rate swap, the Company
agrees with the counter party to exchange, at specified
intervals, the difference between the fixed contract rate and
floating-rate interest amounts calculated by reference to the
agreed notional amounts.
cURRENcY RISK
The Company realizes less than 1% of its revenue principally
in US dollars and is thus not significantly exposed to foreign
exchange fluctuations. The Company does not actively
manage this risk. Refer to note 6. Financial Instruments of the
Consolidated Financial Statements for additional information.
LIqUIDITY RISK
The Company’s objective is to have sufficient liquidity to
meet its liabilities when due. The Company monitors its cash
balance and cash flows generated from operations to meet
its requirements. Refer to note 6. Financial Instruments of the
Consolidated Financial Statements for additional information.
DETERMINATION OF FAIR VALUE OF DERIVATIVE
FINANcIAL INSTRUMENTS
The fair value of the financial instruments represents the
amount of the consideration that would be agreed upon in
an arm’s length transaction between knowledgeable, willing
parties who are under no compulsion to act. The following
methods and assumptions were used to measure fair value.
The fair value of long-term debt approximates their carrying
amount value giving that it is subject to terms and conditions,
including variable interest rates, similar to those available to
the Company for instruments with comparable terms.
Derivative financial instruments consist primarily of swap
contracts. The Company determines the fair value of its
derivative financial instruments using the purchase or selling
price, as appropriate, in the most advantageous active market
to which the Company has immediate access. When there is no
active market for derivative financial instruments, the Company
determines the fair value by applying valuation techniques,
using available information on market transaction involving
other instruments that are substantially the same, discounted
cash flows analysis or other techniques, where appropriate. The
Company ensures, to the extent practicable, that its valuation
technique incorporates all factors that market participants would
consider in setting a price and that it is consistent with accepted
economic methods for pricing financial instruments. The
carrying amounts of derivative financial instruments classified
as cash flow hedge as at December 31, 2012 was $1.5 million.
32
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation cAPITAL MANAGEMENT
The Company’s capital comprises share capital, retained earnings
and long-term debt, including the current portion, less cash and
cash equivalents. The Company manages its capital to ensure
there are adequate capital resources while maximizing the return
to shareholders through the optimization of the debt and equity
balance and to maintain compliance with regulatory requirements
and certain restrictive covenants required by the lender of the debt.
In order to maintain its capital structure, the Company may
issue new shares or proceed to the issuance or repayment of debt
and acquire or sell assets to improve its financial performance
and flexibility.
In order to be in compliance with Canadian securities
administration regulations the Company is required to maintain
a minimum working capital of $275,000 as defined in Regulation
31-103, respecting Registration Requirements and Exemptions.
As at December 31, 2012, all debt covenant requirement and
exemptions have been respected.
SIGNIFIcANT AccOUNTING POLIcIES
INTERNATIONAL FINANcIAL REPORTING
STANDARDS (IFRS)
Our consolidated financial statements represent our results
and financial position under IFRS and have been prepared
in accordance with IAS 34, Interim Financial Reporting,
and with IFRS 1, First-time Adoption of IFRS, as issued by
the International Accounting Standards Board (IASB) and
in accordance with our accounting policies. Previously, our
consolidated annual and interim financial statements were
prepared in accordance with Canadian GAAP. The adoption of
IFRS has not had a material impact on our overall performance,
strategic decisions or underlying trends of our operations.
IMPAcT OF TRANSITION TO IFRS
IFRS 1, First-time adoption of international financial reporting
standards sets forth guidance for the initial adoption of IFRS.
Our analysis of IFRS and comparison to our accounting policies
under Canadian GAAP determined that we were generally
aligned with IFRS in many areas, but also identified a number
of key differences. Refer to our audited consolidated financial
statements and our MD&A for the year ended September 30,
2011, for explanations of these differences and adjustments.
IFRS 1 provides both mandatory exceptions and optional
exemptions. In general, we have chosen to apply certain
optional exemptions to reduce the complexity involved in
converting to IFRS. Refer to note 13 of our interim consolidated
financial statements for the three months ended December 31,
2011 for more details on the significant IFRS 1 exemptions
we have taken and reconciliations between our 2011 results
previously prepared under Canadian GAAP and to those
under IFRS. The reconciliations include the total equity as at
October 1, 2010, December 31, 2010, and September 30, 2011,
and net earnings (loss) and comprehensive income (loss), for
the three months ended December 31, 2010, and year ended
September 30, 2011. Our IFRS accounting policies are provided
in note 2 to our consolidated financial statements.
NON-IFRS MEASURES
EBITDA is calculated as the sum of net earnings, plus interest
on debt and other interest expense, income taxes, amortization
and impairment loss of property and equipment and intangible
assets, retention bonus and certain acquisition costs.
Adjusted net earnings is calculated as the sum of net
earnings, non-cash items, namely depreciation, amortization
and impairment loss of property and equipment and intangible
assets and non-recurring expenses, namely, special bonuses
and certain acquisition and restructuring costs.
We have included Non-IFRS measures to provide investors
with supplemental measures of our operating and financial
performance. We believe Non-IFRS measures are important
supplemental metrics of operating and financial performance
because they eliminate items that have less bearing on our
operating and financial performance and thus highlight trends
in our core business that may not otherwise be apparent when
relying solely on IFRS measures. We also believe that securities
analysts, investors and other interested parties frequently use
Non-IFRS measures in the evaluation of issuers, many of which
present Non-IFRS measures when reporting their results. Our
management also uses Non-IFRS measures in order to facilitate
operating and financial performance comparisons from period
to period, to prepare annual budgets, and to assess our ability to
meet our future debt service, capital expenditure and working
capital requirements. Non-IFRS measures are not presentations
made in accordance with IFRS. For example, certain or all of the
Non-IFRS measures do not reflect: (a) our cash expenditures,
or future requirements for capital expenditures or contractual
commitments; (b) changes in, or cash requirements for, our
working capital needs; (c) the significant interest expense,
or the cash requirements necessary to service interest or
principal payments on our debt; and (d) income tax payments
that represent a reduction in cash available to us. Although
we consider the items excluded in the calculation of Non-IFRS
33
measures to be non-recurring and less relevant to evaluate our
performance, some of these items may continue to take place
and accordingly may reduce the cash available to us. We believe
that the presentation of the Non-IFRS measures described
above is appropriate. However, these Non-IFRS measures have
important limitations as analytical tools, and you should not
consider them in isolation, or as substitutes for analysis of our
results as reported under IFRS. Because of these limitations,
we primarily rely on our results as reported in accordance with
IFRS and use the Non-IFRS measures only as a supplement. In
addition, because other companies may calculate Non-IFRS
measures differently than we do, they may not be comparable
to similarly-titled measures reported by other companies.
RISKS OF THE bUSINESS
Fiera Capital’s business is subject to a number of risks factors,
including but not limited to the following:
cLIENTS ARE NOT cOMMITTED TO LONG-TERM
RELATIONSHIP
The agreements pursuant to which Fiera Capital manages its
clients’ assets, in accordance with industry practice, may be
terminated upon short notice. Clients that are invested in units
of the Funds may have their units redeemed upon short notice
as well. Consequently, there is no assurance that Fiera Capital
will be able to achieve or maintain any particular level of AUM,
which may have a material negative impact on Fiera Capital’s
ability to attract and retain clients and on its Management
Fees, its potential Performance Fees and its overall profitability.
The loss of any major clients or of a significant number of
existing clients could have a material adverse effect upon Fiera
Capital’s results of operations and financial condition.
POOR INVESTMENT PERFORMANcE cOULD LEAD TO THE
LOSS OF ExISTING cLIENTS, AN INAbILITY TO ATTRAcT
NEw cLIENTS, LOwER AUM AND A DEcLINE IN REVENUES
Poor investment performance, whether relative to Fiera
Capital’s competitors or otherwise, could result in the
withdrawal of funds by existing clients in favour of better
performing products and would have an adverse impact
upon Fiera Capital’s ability to attract funds from new and
existing clients, any of which could have an adverse impact
on Fiera Capital’s AUM, Management Fees, profitability
and growth prospects. In addition, Fiera Capital’s ability to
earn Performance Fees is directly related to its investment
performance and therefore poor investment performance may
cause Fiera Capital to earn less or no Performance Fees. Fiera
Capital cannot guarantee that it will be able to achieve positive
relative returns, retain existing clients or attract new clients.
RELIANcE ON A MAjOR cUSTOMER
As part of the Natcan Transaction, Fiera Capital entered into
an Assets Under Management Agreement with Natcan and
National Bank. Following the Natcan Transaction, National Bank
became the largest client of Fiera Capital with $21,2 billion of
AUM as of December 31, 2012, representing approximately
37% of Fiera Capital’s $57 billion in AUM. Termination of the
agreement or failure to renew the term of this agreement could
result in a significant reduction of Fiera Capital’s AUM which
could have a material adverse effect on its business, prospect
financial condition and results of operations.
LOSS OF KEY EMPLOYEES DUE TO cOMPETITIVE
PRESSURES cOULD LEAD TO A LOSS OF cLIENTS AND A
DEcLINE IN REVENUES
Fiera Capital’s business is dependent on the highly-skilled and
often highly-specialized individuals it employs. The contributions
of these individuals to Fiera Capital’s Investment Management,
Risk Management and Client Service teams is important
to attracting and retaining clients. Fiera Capital devotes
considerable resources to recruiting, training and compensating
these individuals. However, given the growth in total AUM in
the investment management industry, the number of new firms
entering the industry and the reliance on performance results to
sell financial products, demand has increased for high-quality
investment and client service professionals. Compensation
packages for these professionals have a tendency to increase at
a rate well in excess of inflation and above the rates observed
in other industries. Fiera Capital expects that these costs will
continue to represent a significant portion of its expenses.
Fiera Capital has taken, and will continue to take, steps
to encourage its key employees to remain with Fiera Capital.
These steps include providing a stock option plan, a short-term
incentive plan and the Employee Share Purchase Plan, as well as
a working environment that fosters employee satisfaction. We
are confident that these measures, aimed at being an employer
of choice, will be efficient at retaining these individuals, even if
we face increasing competition for experienced professionals
in the industry, and that Fiera Capital will be able to recruit high
quality new employees with the desired qualifications in a timely
manner, when required.
34
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation INTEGRATION OF THE AcqUIRED bUSINESSES
The success of the expected benefits from any acquisition
completed or that may be completed by Fiera Capital will
depend, in part, on the ability of management of Fiera Capital
to realize the anticipated benefits and cost savings from
integration of the businesses of Fiera Capital and those
acquired. The integration of the businesses may result in
significant challenges, and management of Fiera Capital
may be unable to accomplish the integration smoothly or
successfully or without spending significant amounts of
money. It is possible that the integration process could result
in the loss of key employees, the disruption of their respective
ongoing businesses or inconsistencies in standards, controls,
procedures and policies that adversely affect the ability of
management of Fiera Capital to maintain relationships with
customers, suppliers, employees or to achieve the anticipated
benefits of any acquisition.
The integration of Fiera Capital and any acquired business
requires the dedication of substantial management effort,
time and resources which may divert management’s focus
and resources from other strategic opportunities and from
operational matters during this process. There can be no
assurance that management of Fiera Capital will be able to
integrate the operations of each acquired business successfully
or achieve any of the synergies or other benefits that were
anticipated as a result of an acquisition. Any inability of
management to successfully integrate the operations of Fiera
Capital and those contemplated by an acquisition, including,
information technology and financial reporting systems,
could have a material adverse effect on the business, financial
condition and results of operations of Fiera Capital.
cOMPETITIVE PRESSURES cOULD REDUcE REVENUES
The investment management industry is competitive. Certain
of Fiera Capital’s competitors have, and potential future
competitors could have, substantially greater technical,
financial, marketing, distribution and other resources than
Fiera Capital. There can be no assurance that Fiera Capital will
be able to achieve or maintain any particular level of AUM or
revenues in this competitive environment. Competition could
have a material adverse effect on Fiera Capital’s profitability
and there can be no assurance that Fiera Capital will be able
to compete effectively. In addition, Fiera Capital’s ability to
maintain its Management Fee and Performance Fee structure
is dependent on its ability to provide clients with products and
services that are competitive. There can be no assurance that
Fiera Capital will not come under competitive pressures to
lower the fees it charges or that it will be able to retain its fee
structure or, with such fee structure, retain clients in the future.
A significant reduction in Fiera Capital’s Management Fees or
Performance Fees could have an adverse effect on revenues.
cONFLIcTS OF INTEREST AND REPUTATIONAL RISK
The failure by Fiera Capital to appropriately manage and address
conflicts of interest could damage Fiera Capital’s reputation
and materially adversely affect its business, financial condition
or profitability. Certain of the Funds and Managed Accounts
have overlapping investment objectives and potential conflicts
may arise with respect to a decision regarding how to allocate
investment opportunities among them. It is possible that actual,
potential or perceived conflicts could give rise to investor
dissatisfaction or litigation or regulatory enforcement actions.
Claims in connection with conflicts of interest could have a
material adverse effect on Fiera Capital’s reputation which could
materially adversely affect Fiera Capital’s business in a number
of ways, including as a result of any related client losses.
Reputational risk is the potential that adverse publicity,
whether true or not, may cause a decline in Fiera Capital’s
earnings or client base due to its impact on Fiera Capital’s
corporate image. Reputational risk is inherent in virtually
all of Fiera Capital’s business transactions, even when the
transaction is fully compliant with legal and regulatory
requirements. Reputational risk cannot be managed in isolation,
as it often arises as a result of operational, regulatory and
other risks inherent in Fiera Capital’s business. For this reason,
Fiera Capital’s framework for reputation risk management is
integrated into all other areas of risk management and is a
key part of the code of ethics and conduct which all of Fiera
Capital’s employees are required to observe.
cHANGE(S) IN THE INVESTMENT MANAGEMENT
INDUSTRY cOULD RESULT IN A DEcLINE IN REVENUES
Fiera Capital’s ability to generate revenues has been
significantly influenced by the growth experienced in the
investment management industry and by Fiera Capital’s
relative performance within the investment management
industry. The historical growth of the investment management
industry may not continue and adverse economic conditions
and other factors, including any significant decline in the
financial markets, could affect the popularity of Fiera Capital’s
services or result in clients withdrawing from the markets or
decreasing their level and/or rate of investment. A decline in
35
the growth of the investment management industry or other
changes to the industry that discourage investors from using
Fiera Capital’s services could affect Fiera Capital’s ability to
attract clients and result in a decline in revenues.
EMPLOYEE ERRORS OR MIScONDUcT cOULD RESULT
IN REGULATORY SANcTIONS OR REPUTATIONAL
HARM, wHIcH cOULD MATERIALLY ADVERSELY AFFEcT
FIERA cAPITAL’S bUSINESS, FINANcIAL cONDITION
OR PROFITAbILITY
There have been a number of highly-publicized cases involving
fraud or other misconduct by employees in the financial
services industry in recent years and, notwithstanding the
extensive measures Fiera Capital takes to deter and prevent
such activity (including by instituting its code of ethics and
conduct), Fiera Capital runs the risk that employee misconduct
could occur. Misconduct by employees could include binding
Fiera Capital to transactions that exceed authorized limits or
present unacceptable risks, or concealing from Fiera Capital
unauthorized or unsuccessful activities, which, in either
case, may result in unknown and unmanaged risks or losses.
Employee misconduct could also involve the improper use
of confidential information, which could result in regulatory
sanctions and serious reputational harm. Fiera Capital is also
susceptible to loss as a result of employee error. It is not always
possible to deter employee misconduct or prevent employee
error and the precautions Fiera Capital takes to prevent and
detect these activities may not be effective in all cases, which
could materially adversely affect Fiera Capital’s business,
financial condition or profitability.
REGULATORY AND LITIGATION RISK
Fiera Capital’s ability to carry on business is dependent
upon Fiera Capital’s compliance with, and continued
registration under, securities legislation in the jurisdictions
where it carries on business. Any change in the securities
regulatory framework or failure to comply with any of these
laws, rules or regulations could have an adverse effect on
Fiera Capital’s business. There is also the potential that the
laws or regulations governing Fiera Capital’s operations or
particular investment products or services could be amended
or interpreted in a manner that is adverse to Fiera Capital.
The rapidly changing securities regulatory environment and
the rise of investment management industry standards for
operational efficiencies, as well as competitive pressures
towards the implementation of innovative products and
services may require additional human resources. The
36
implementation of additional reporting obligations and other
procedures for investment Funds may require additional
expenditures. Failure to comply with these regulations could
result in fines, temporary or permanent prohibitions on Fiera
Capital’s activities or the activities of some of Fiera Capital’s
personnel or reputational harm, which could materially
adversely affect Fiera Capital’s business, financial condition
or profitability.
Regardless of Fiera Capital’s effectiveness in monitoring and
administering established compliance policies and procedures,
Fiera Capital, and any of its directors, officers, employees and
agents, may be subject to liability or fines that may limit its
ability to conduct business. Fiera Capital maintains various
types of insurance to cover certain potential risks and regularly
evaluates the adequacy of this coverage. In recent years, the
cost of obtaining insurance has increased while the number
of insurance providers has decreased. As a result of the
introduction of the secondary market civil liability regime, the
ability to obtain insurance on reasonable economic terms may
be even more difficult in the future.
Litigation risk is inherent in the investment management
industry in which Fiera Capital operates. Litigation risk cannot
be eliminated, even if there is no legal cause of action. The legal
risks facing Fiera Capital, its directors, officers, employees and
agents in this respect include potential liability for violations
of securities laws, breach of fiduciary duty and misuse
of investors’ Funds. In addition, with the existence of the
secondary market civil liability regime in certain jurisdictions,
dissatisfied shareholders may more easily make claims against
Fiera Capital, its directors and its officers.
INDEbTEDNESS
The Amended and Restated Credit Agreement contains
various covenants that limit the ability of Fiera Capital to
engage in specified types of transactions and imposes
significant operating restrictions, which may prevent Fiera
Capital from pursuing certain business opportunities and
taking certain actions that may be in its interest.
THESE cOVENANTS LIMIT THEIR AbILITY TO, AMONG
OTHER THINGS:
•
incur, create, assume, or suffer to exist additional debt for
Borrowed Money (as defined therein);
create, assume, or otherwise become or maintain in respect
of, or permit to be outstanding certain guarantees;
• pay dividends on, redeem or repurchase Fiera Capital’s
•
capital stock;
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation • make investments and loans;
•
create, incur, assume or suffer to exist certain liens; engage
in certain mergers, acquisitions, asset sales or sale-
leaseback transactions,
• dispose of assets;
•
•
effect any change in the nature of its business activities;
amend or modify in any way Fiera Capital’s constitutive
documents, charters, by-laws or jurisdiction of
incorporation;
amend any material provision of the Material Contracts
(as described therein); and
consolidate, merge or sell all or substantially all of
the assets.
•
•
These restrictions may prevent us from taking actions
that we believe would profit our business, and may make it
difficult for Fiera Capital to successfully execute its business
strategy or effectively compete with companies that are not
similarly restricted.
In addition, the Amended and Restated Credit Agreement
requires Fiera Capital to meet certain financial ratios and tests,
and provides that the occurrence of a change of control will
cause an event of default.
Although at present, given Fiera Capital’s strong balance
sheet, these covenants do not restrict Fiera Capital’s ability
to conduct its business as presently conducted, there are
no assurances that in the future, Fiera Capital will not be
limited in its ability to respond to changes in its business or
competitive activities or be restricted in its ability to engage
in mergers, acquisitions or dispositions of assets. Furthermore,
a failure to comply with these covenants, including a failure
to meet the financial tests or ratios, would likely result in an
event of default under the Credit Agreement as amended
and restated.
Furthermore, a portion of Fiera Capital’s indebtedness,
including the borrowings under the Amended and Restated
Credit Agreement, is at variable rates of interest and exposes
Fiera Capital to interest rate risk. If interest rates increase,
Fiera Capital’s debt service obligations on the variable rate
indebtedness would increase even though the amount
borrowed would remain the same, and the net income and
cash flows would decrease.
FAILURE TO MANAGE RISKS IN PORTFOLIO MODELS
cOULD MATERIALLY ADVERSELY AFFEcT FIERA cAPITAL’S
bUSINESS, FINANcIAL cONDITION OR PROFITAbILITY
Fiera Capital monitors, evaluates and manages the principal
risks associated with the conduct of its business. These
risks include external market risks to which all investors are
subject, as well as internal risks resulting from the nature of
Fiera Capital’s business. Certain of Fiera Capital’s methods of
managing risk are based upon the use of observed historical
market behaviour. As a result, these methods may not predict
future risk exposures, which may be significantly greater than
the historical measures indicated.
Other risk management methods depend upon evaluation
of information regarding markets, clients or other matters that
is publicly available or otherwise accessible by Fiera Capital.
This information may not in all cases be accurate, complete,
up-to-date or properly evaluated. Management of operational,
legal and regulatory risk requires, among other things, policies
and procedures to record properly and verify a large number of
transactions and events and these policies and procedures may
not be fully effective. A failure by Fiera Capital to manage risks
in its portfolio models could materially adversely affect Fiera
Capital’s business, financial condition or profitability.
RAPID GROwTH IN FIERA cAPITAL’S AUM cOULD
ADVERSELY AFFEcT FIERA cAPITAL’S INVESTMENT
PERFORMANcE OR ITS AbILITY TO cONTINUE TO GROw
An important component of investment performance is the
availability of appropriate investment opportunities for new
client assets. If Fiera Capital is not able to identify sufficient
investment opportunities for new client assets in a timely
manner, its investment performance could be adversely
affected or Fiera Capital may elect to limit its growth and
reduce the rate at which it receives new client assets. If Fiera
Capital’s AUM increases rapidly, it may not be able to exploit
the investment opportunities that have historically been
available to it or find sufficient investment opportunities for
producing the absolute returns it targets.
37
The administrative services provided by Fiera Capital
depend on software supplied by third-party suppliers. Failure
of a key supplier, the loss of these suppliers’ products, or
problems or errors related to such products would likely have
a material adverse effect on the ability of Fiera Capital to
provide these administrative services. Changes to the pricing
arrangement with such third-party suppliers because of
upgrades or other circumstances could also have an adverse
effect upon the profitability of Fiera Capital.
DEPENDENcY ON INFORMATION SYSTEMS AND
TELEcOMMUNIcATIONS
Fiera Capital is dependent on the availability of its personnel,
its office facilities and the proper functioning of its computer
and telecommunications systems. A disaster such as water
damage, an explosion or a prolonged loss of electrical power
could materially interrupt Fiera Capital’s business operations
and cause material financial loss, loss of human capital,
regulatory actions, breach of client contracts, reputational harm
or legal liability, which in turn could materially adversely affect
Fiera Capital’s business, financial condition or profitability.
ObTAINING SUFFIcIENT INSURANcE cOVERAGE ON
FAVOURAbLE EcONOMIc TERMS MAY NOT bE POSSIbLE
Fiera Capital holds various types of insurance, including errors
and omissions insurance, general commercial liability insurance
and a financial institution bond. The adequacy of insurance
coverage is evaluated on an ongoing basis, including the cost
relative to the benefits. However, there can be no assurance
that claims will not exceed the limits of available insurance
coverage or that any claim or claims will be ultimately satisfied
by an insurer. A judgment against Fiera Capital in excess of
available insurance or in respect of which insurance is not
available could have a material adverse effect on the business,
financial condition or profitability. There can be no assurance
that Fiera Capital will be able to obtain insurance coverage on
favourable economic terms in the future.
VALUATION
Valuation of the Funds is subject to uncertainty. While
the Funds are audited by independent auditors, within the
meaning of the Code of Ethics of the Ordre des comptables
professionnels agréés du Québec, in order to assess whether
the Fund’s financial statements are fairly stated in accordance
with Canadian GAAP or IFRS valuation of certain of the Funds’
securities and other investments may involve uncertainties
and judgment determinations and, if such valuations should
prove to be incorrect, the net asset value of a Fund could be
misstated. Independent pricing information may not always be
available regarding certain of the Funds’ securities and other
investments. Additionally, the Funds may hold investments
which by their very nature may be extremely difficult to value
accurately, particularly the venture investments held by Fiera
Capital in private portfolio companies. Fiera Capital may incur
substantial costs in rectifying pricing errors caused by the
misstatement of investment values.
POSSIbLE REqUIREMENT TO AbSORb OPERATING
ExPENSES ON bEHALF OF MUTUAL FUNDS
If the assets under management in the Funds decline to the
point that charging the full fund operating expenses to the
Funds results in management expense ratios or the Funds
becoming uncompetitive, then Fiera Capital may choose to
absorb some of these expenses. This will result in an increase
in expenses for Fiera Capital and a decrease in profitability.
FAILURE TO IMPLEMENT EFFEcTIVE INFORMATION
SEcURITY POLIcIES, PROcEDURES AND cAPAbILITIES
cOULD DISRUPT OPERATIONS AND cAUSE FINANcIAL
LOSSES THAT cOULD MATERIALLY ADVERSELY AFFEcT
FIERA cAPITAL’S bUSINESS, FINANcIAL cONDITION
OR PROFITAbILITY
Fiera Capital is dependent on the effectiveness of its information
security policies, procedures and capabilities to protect its
computer and telecommunications systems and the data that
resides on or is transmitted through them. An externally caused
information security incident, such as a hacker attack or a
virus or worm, or an internally-caused issue, such as failure to
control access to sensitive systems, could materially interrupt
Fiera Capital’s business operations or cause disclosure or
modification of sensitive or confidential information and could
result in material financial loss, regulatory actions, breach of
client contracts, reputational harm or legal liability, which, in
turn, could materially adversely affect Fiera Capital’s business,
financial condition or profitability.
38
Management Discussion & AnalysisFor the three and the FiFteen months ended december 31, 2012Fiera capital corporation Independent Auditor’s Report
TO THE SHAREHOLDERS OF FIERA cAPITAL cORPORATION
We have audited the accompanying consolidated financial statements of Fiera Capital Corporation Inc., which comprise the
consolidated balance sheets as at December 31, 2012, September 30, 2011 and October 1, 2010, and the consolidated statements
of earnings, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated
statements of cash flows for the 15-month period ended December 31, 2012 and the year ended September 30, 2011, and a summary
of significant accounting policies and other explanatory information.
MANAGEMENT’S RESPONSIbILITY FOR THE cONSOLIDATED FINANcIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
AUDITOR’S RESPONSIbILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our
audit opinion.
OPINION
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial positions of Fiera Capital
Corporation Inc. as at December 31, 2012, September 30, 2011 and October 1, 2010, and its financial performance and its cash flows
for the 15-month period ended December 31, 2012 and the year ended September 30, 2011 in accordance with International Financial
Reporting Standards.
Montreal (Canada), March 20, 2013
1. CPA auditor, CA, public accountancy permit No. A103322
39
management’s Report to the Shareholders
Management of Fiera Capital Corporation is responsible for the integrity and objectivity of the consolidated
financial statements and all other information contained in the Annual Report. The consolidated financial
statements were prepared in accordance with Canadian generally accepted accounting principles and based on
management’s information and judgment.
In fulfilling its responsibilities, management has developed internal control systems as well as policies and
procedures designed to provide reasonable assurance that the Corporation’s assets are safeguarded, that
transactions are executed in accordance with appropriate authorization, and that accounting records may be
relied upon to accurately reflect the Corporation’s business transactions.
Operating under the Board of Directors, the Audit Committee is composed of independent directors who
meet periodically with management and with auditors to discuss the Corporation’s financial reporting and
internal control. The Audit Committee reviews the financial information prepared by management and the
results of the audit by the auditors prior to recommending the consolidated financial statements to the Board of
Directors for approval. The independent auditors have unrestricted access to the Audit Committee. In addition,
the Corporation’s independent auditors, Deloitte s.e.n.c.r.l., are responsible for auditing the consolidated financial
statements and for providing an opinion thereon. Their report is provided herein.
Management recognizes its responsibility to conduct the Corporation’s affairs in the best interests of
its shareholders.
Sylvain Brosseau
President and
Chief Operating Officer
Jean-Guy Desjardins
Chairman of the Board,
Chief Executive Officer and
Chief Investment Officer
40
Fiera capital corporation Consolidated Statements of Earnings
(in thousand of canadian dollars, except per share data)
periods ended:
REvEnuE
base management fees
performance fees
other revenue
ExpEnsEs
Note 19
selling, general and administrative expenses
external managers
Depreciation of property and equipment
Amortization of intangible assets
Write-off of property and equipment
reversal of unamortized lease inducement
loss on disposal of assets
interest on long-term debt and other financing charges
Accretion on purchase price obligation
changes in fair value of derivative financial instrument
december 31,
2012
september 30,
2011
15 months
$
12 months
$
109,261
5,587
480
115,328
74,236
1,989
1,136
12,609
-
-
6
2,940
1,864
1,491
96,271
65,630
3,941
572
70,143
47,180
2,693
812
3,440
633
(143)
8
-
-
-
54,623
earnings before share of earnings of joint venture, acquisition costs and
restructuring provisions and other costs and income taxes
19,057
15,520
share of earnings of joint venture
Acquisition costs
restructuring provisions and other costs
earnings before income taxes
Note 4
income taxes
net earnings for the period
Note 13
earnings per share
Note 16
basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements.
(201)
5,937
7,513
5,808
2,782
3,026
0.06
0.06
(744)
-
3,350
12,914
4,143
8,771
0.24
0.24
41
Consolidated Statements of Comprehensive Income
(in thousands of canadian dollars)
periods ended:
nEt EARnings FoR thE pERiod
other comprehensive income:
items that may be reclassified subsequently to earnings:
unrealized gain (loss) on available-for-sale financial assets (net of income taxes)
reclassification adjustment included in net earnings
share of other comprehensive income of joint ventures
other comprehensive income for the period
comprehensive income for the period
The accompanying notes are an integral part of these consolidated financial statements.
december 31,
2012
15 months
$
september 30,
2011
12 months
$
3,026
8,771
(60)
-
108
48
3,074
5
(8)
12
9
8,780
42
Fiera capital corporation
Consolidated balance Sheets
(in thousands of canadian dollars)
AssEts
current assets
cash
funds held for clients
investments
Note 7
Accounts receivable
Advance to a joint venture
prepaid expenses
Note 8
non-current assets
Deferred charges
Deferred income taxes
investment in joint ventures
property and equipment
intangible assets
goodwill
Note 10
Note 10
Note 13
Note 5
Note 9
Note 11
liABilitiEs
current liabilities
bank overdraft
bank loan
Accounts payable and accrued liabilities
restructuring provision
Amount due to related companies
client deposits
prepaid management fees
Note 4
Note 12
non-current liabilities
Note 13
Deferred lease obligation
lease inducements
Deferred income taxes
long term restructuring provisions
long term debt
purchase price obligations
Derivative financial instrument
other long-term liabilities
Note 14
Note 4
Note 4
Note 14 and 6
Equity
share capital
Note 15
contributed surplus
(Deficit) retained earnings
Accumulated other comprehensive income
Note 15
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board
As at:
december 31,
2012
$
september 30,
2011
$
october 1,
2010
$
6,016
297
6,532
29,888
342
874
43,949
402
1,364
6,879
5,200
180,230
278,750
516,774
-
9,800
16,501
1,764
2,003
297
928
31,293
599
1,052
20,264
312
107,521
56,503
1,491
-
219,035
307,759
2,668
(12,753)
65
297,739
516,774
-
218
983
16,414
-
716
18,331
224
50
1,333
2,413
50,749
90,470
163,570
34
-
8,867
1,982
149
218
8
11,258
320
706
10,079
137
-
-
-
233
22,733
135,587
1,703
3,530
17
140,837
163,570
1,177
1,798
4,514
15,942
-
481
23,912
199
53
56
2,598
53,408
89,905
170,131
-
-
11,227
2,916
108
1,798
-
16,049
302
945
10,073
1,451
-
-
-
-
28,820
134,496
1,088
5,719
8
141,311
170,131
Jean-Guy Desjardins, Director
Sylvain Brosseau, Director
43
Consolidated Statements of Changes in Equity
(in thousands of canadian dollars, except per share data)
periods ended:
shARE cApitAl
balance, beginning of period
stock options exercised
shares issued as part of business combination
shares issued for cash as part of the employee share purchase plan
Note 4
Balance, end of period
contRiButEd suRplus
balance, beginning of period
share-based compensation expense
stock options exercised
Balance, end of period
(dEFicit) REtAinEd EARnings
balance, beginning of period
net earnings
gain on dilution
Dividends
Note 5
Balance, end of period
AccumulAtEd othER compREhEnsivE incomE
balance, beginning of period
other comprehensive income
Balance, end of period
Dividend per share
The accompanying notes are an integral part of these consolidated financial statements.
december 31,
2012
15 months
$
september 30,
2011
12 months
$
135,587
967
170,487
718
307,759
1,703
1,176
(211)
2,668
3,530
3,026
112
(19,421)
(12,753)
17
48
65
0.40
134,496
1,091
-
-
135,587
1,088
933
(318)
1,703
5,719
8,771
-
(10,960)
3,530
8
9
17
0.30
44
Fiera capital corporation Consolidated Statements of Cash Flows
(in thousands of canadian dollars)
periods ended:
december 31,
2012
15 months
$
september 30,
2011
12 months
$
cash flows generated by (used in)
opERAting ActivitiEs
net earnings
Adjustments for:
Depreciation of property and equipment
Amortization of intangible assets
Amortization of deferred charges
Amortization of financing charges
Write-off of property and equipment
reversal of unamortized lease inducements
Accretion of purchase price obligation payments
lease inducements
Deferred lease obligations
share-based compensation
interest expenses
change in fair value of derivative financial instrument
income tax expense
income taxes paid
income taxes received
share of (earnings) loss from joint ventures
prepaid management fee
other
changes in non-cash operating working capital items
Note 20
net cash generated from operating activities
invEsting ActivitiEs
Note 4
business combinations (less cash acquired of $310 in 2012)
investments
Advance to a joint venture
investments in a joint venture
Dividend paid by a joint venture
purchase of property and equipment
purchase of intangible assets
lease inducements
Deferred charges
Note 5
Note 5
net cash (used) generated in investing activities
FinAncing ActivitiEs
Note 14
bank loan
Dividend paid
issuance of share capital
long-term debt
interest paid on long-term debt
financing charges
repayment of amount due to shareholder
net cash (used) generated in financing activities
net (decrease) increase in cash and cash equivalents
cash and cash equivalents – beginning of period
cash and cash equivalents – end of period
3,026
1,136
12,609
260
83
-
-
1,864
(185)
274
1,176
2,838
1,491
2,782
(4,551)
-
(201)
888
(109)
(5,493)
17,888
(92,393)
(5,500)
(342)
(5,125)
-
(2,393)
(2,336)
531
(73)
(107,631)
9,800
(19,421)
1,474
108,000
(2,838)
(562)
(660)
95,793
6,050
(34)
6,016
8,771
812
3,440
99
-
633
(143)
-
(157)
18
933
-
-
4,143
(5,387)
2,052
(744)
-
8
(6,036)
8,442
(361)
3,520
-
(875)
354
(1,260)
(781)
61
(124)
534
-
(10,960)
773
-
-
-
-
(10,187)
(1,211)
1,177
(34)
Cash and cash equivalent include bank overdraft
The accompanying notes are an integral part of these consolidated financial statements.
45
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46
Fiera capital corporation Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
Note 1
DEScRIPTION OF bUSINESS
Note 2
bASIS OF PRESENTATION AND
ADOPTION OF IFRS
Fiera Capital Corporation (“Fiera Capital Corporation” or the
“Company”) was incorporated as Fry Investment Management
Limited in 1955 and is incorporated under the laws of the
Province of Ontario. The Company is a full-service, multi-
product investment firm, providing investment advisory and
related services to institutional investors, private wealth clients
and retail investors. Its head office is located at 1501 Avenue
McGill College, office 800, Montreal, Quebec, Canada.
The Company changed its registered company name to
Fiera Capital Corporation as approved by the shareholders at
Fiera Capital Corporation annual and special meeting held on
March 29, 2012.
Fiera Capital Corporation is registered in the categories of
exempt market dealer and portfolio manager in all Provinces
and Territories of Canada and as an investment adviser with
the US Securities and Exchange Commission. Fiera Capital
Corporation is also registered in the category of investment
fund manager in the provinces of Ontario and Quebec. In
addition, as Fiera Capital Corporation manages derivatives
portfolios, it is registered as a commodity trading manager
pursuant to the Commodity Futures Act (Ontario), as an adviser
under the Commodity Futures Act (Manitoba) and, in Quebec,
as derivatives portfolio manager pursuant to the Derivatives
Act (Quebec).
The Corporation changed its financial year-end from
September 30 to December 31. This change was made in order
to allow for a better alignment of the Corporation’s operations
processes. The amounts presented in the financial statements
is not entirely comparable.
The Company prepares its consolidated financial statements
in accordance with Canadian generally accepted accounting
principles (“GAAP”) as set out in Part I of the Handbook of
the Canadian Institute of Chartered Accountants (“CICA
Handbook”). In 2010, the CICA Handbook was revised to
incorporate International Financial Reporting Standards
(“IFRS”) which require publicly accountable enterprises to
apply such standards effective for years beginning on or after
January 1, 2011. Accordingly, the Company has commenced
reporting on this basis in the consolidated financial statements
for the period ended December 31, 2012. In these financial
statements, the term “Canadian GAAP” refers to Canadian
GAAP before the adoption of IFRS. These consolidated
financial statements have been prepared in compliance with
IFRS and IFRS1. First-time Adoption of International Financial
Reporting Standards (‘‘IFRS 1’’). Subject to certain transition
elections and exceptions disclosed in Note 25, the Company
has consistently applied the accounting policies used in the
preparation of its opening IFRS balance sheet as at October
1, 2010, throughout all periods presented, as if these policies
had always been in effect. Note 25 discloses the impact of
the transition to IFRS on the Company’s reported balance
sheet, financial performance and cash flows, including the
nature and effect of significant changes in accounting policies
from those used in the Company’s consolidated financial
statements for year ended September 30, 2011, prepared under
Canadian GAAP.
The policies applied in these consolidated financial
statements are based on IFRS issued and outstanding as
of December 31, 2012. The date the Board of Directors
approves the financial statements and authorize for issue on
March 20, 2013.
The preparation of financial statements in conformity with
IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the
process of applying the Company’s accounting policies. The
areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 3.
47
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
Note 3
SIGNIFIcANT AccOUNTING
POLIcIES, jUDGMENTS AND
ESTIMATION UNcERTAINTY
The significant accounting policies used in the preparation of
these consolidated financial statements are described below.
bASIS OF MEASUREMENT
The consolidated financial statements have been prepared
under the historical cost convention, except for financial assets
and financial liabilities held at fair value through profit or loss
and available-for-sale investments which have been measured
at fair value as discussed under “Financial Instruments”.
cONSOLIDATION
The financial statements of the Company include the accounts
of the Company and its subsidiaries. All intercompany
transactions, balances and unrealized gains and losses from
intercompany transactions are eliminated on consolidation.
The consolidated financial statements include the accounts
of Fiera Capital Corporation and its wholly owned subsidiaries,
Fiera Sceptre Funds Inc. (“FSFI”) which is registered with
various provincial securities commissions as a mutual fund
dealer and maintains membership in the Mutual Fund Dealer
Association, and Sceptre Fund Management Inc. (“SFMI”).
Subsidiaries are those entities which the Company controls
by having the power to govern the financial and operating
policies. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered
when assessing whether the Company controls another entity.
Subsidiaries are fully consolidated from the date on which
control is obtained by the Company and are deconsolidated
from the date that control ceases.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies
adopted by the Company.
INVESTMENTS IN jOINT VENTURES
A joint venture is a contractual arrangement whereby the
Company and other parties undertake an economic activity
that is subject to joint control (i.e. when the strategic financial
and operating policy decisions relating to the activities of the
joint venture require the unanimous consent of the parties
sharing control).
The Company owns interests in the following joint ventures:
Fiera Axium Infrastructure Inc. (“Fiera Axium”) is an entity
specialized in infrastructure investment and Fiera Properties
Limited (“Fiera Properties”) is an entity specialized in real
estate investments, over which the Company has joint control.
The financial results of the Company’s investments in its joint
ventures are included in the Company’s results using the
equity method.
Subsequent to the acquisition date, the Company’s share of
earnings of the joint venture is recognized in the consolidated
statement of earnings. The cumulative post-acquisition
movements are adjusted against the carrying amount of the
investment. When the Company’s share of losses in the joint
venture equals or exceeds its interest in the joint venture,
including any other unsecured receivables, the Company
does not recognize further losses unless it has incurred a
legal or constructive obligation or made payment on behalf
of joint venture.
The accounting policies of the joint ventures have been
changed where necessary to ensure consistency with the
policies adopted by the Company.
The Company assesses at each year-end whether there is
any objective evidence that its interests in the joint ventures
are impaired. If impaired, the carrying value of the Company’s
investment in the joint venture is written down to its estimated
recoverable amount (being the higher of fair value less costs
to sell and value in use) and charged to the consolidated
statement of earnings. In accordance with IAS 36, impairment
losses are reversed in subsequent years if the recoverable
amount of the investment subsequently increases and the
increase can be related objectively to an event occurring after
the impairment was recognized.
bUSINESS cOMbINATION
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value. Acquisition-related costs
are recognised in the statement of earnings.
At the acquisition date, the identifiable assets acquired
and the liabilities assumed are recognised at their fair value,
except deferred tax assets or liabilities which are recognised
and measured in accordance with IAS 12. Subsequent
changes in fair values are adjusted against cost of acquisition
if they qualify as measurement period adjustments. The
measurement period is the period between the date of the
acquisition and the date where all significant information
necessary to determine the fair values is available and cannot
exceed 12 months. All other subsequent changes are recognized
in the consolidated statement of earnings. The determination
of fair value involves making estimates relating to acquired
48
Fiera capital corporation intangibles assets, property and equipment and contingent
consideration. Contingent consideration that is classified as
liability is measured at each subsequent reporting dates with
the corresponding gain or loss being recognized in earnings.
Goodwill is measured as the excess of the consideration
transferred over the net amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment,
the net of identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the excess
is recognised immediately in profit or loss as a bargain
purchase gain.
FOREIGN cURRENcY TRANSLATION
The Company has prepared and presented the
consolidated financial statements in Canadian dollars, its
functional currency.
Foreign currency transactions are translated using the
exchange rates prevailing at the dates of the transactions.
Generally, foreign exchange gains and losses from the
settlement of foreign currency transactions and from the
translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in
the consolidated statement of earnings. Non-monetary assets
and liabilities denominated in foreign currencies are reported
in Canadian dollars based on the exchange rate in effect at the
date of initial recognition.
cLASSIFIcATION
cash and cash equivalents, and funds held for clients
investments
short-term notes
mutual fund and pool fund investment
Accounts receivable
Advance to a joint venture
bank overdraft
bank loan
Accounts payable and accrued liabilities
Amount due to related companies
client deposits
long-term debt
purchase price obligations
Derivative financial instruments
REVENUE REcOGNITION
Revenue from management fees is recognized as the related
services are rendered and when the fees are determinable.
Management fees are invoiced quarterly based on daily average
assets under management and others are calculated and invoiced
monthly or quarterly in arrears based on calendar quarter-end or
month-end asset values under management or on an average of
opening and closing assets under management for the quarter.
Performance fees are recorded only at the performance
measurement dates contained in the individual account
agreements and are dependent upon performance of the
account exceeding agreed-upon benchmarks over the
relevant period.
FINANcIAL INSTRUMENTS
Financial assets and financial liabilities are recognized when the
Company becomes a party to the contractual provisions of the
instrument. Financial assets are derecognized when the rights
to receive cash flows from the assets have expired or have been
transferred and the Company has transferred substantially all
risks and rewards of ownership. Regular purchases and sales of
financial assets are accounted for at the trade date.
At initial recognition, the Company classifies its financial
instruments in the following categories depending on the purpose
for which the instruments were acquired:
loans and receivables
fair value through profit or loss
Available for sale
loans and receivables
loans and receivables
financial liabilities at amortized cost
financial liabilities at amortized cost
financial liabilities at amortized cost
financial liabilities at amortized cost
financial liabilities at amortized cost
financial liabilities at amortized cost
financial liabilities at amortized cost
fair value through profit or loss
49
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
FINANcIAL ASSETS AT FAIR VALUE THROUGH PROFIT
OR LOSS
A financial asset is classified in this category if acquired
principally for the purpose of selling or repurchasing in the
short term. The instruments held by the Company that are
classified in this category are short-term notes, classified under
investments in the consolidated balance sheet and derivative
financial instruments.
Financial instruments in this category are measured initially
and subsequently at fair value. Transaction costs are expensed
as incurred in the consolidated statement of earnings. Gains
and losses arising from changes in fair value are presented in
the consolidated statement of earnings in finance earnings or
expense in the period in which they arise. Financial assets at
fair value through profit or loss are classified as current except
for the portion expected to be realized or paid beyond twelve
months of the consolidated balance sheet date, which is
classified as non-current.
LOANS AND REcEIVAbLES
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. The Company’s loans and receivables comprise
cash and cash equivalents, funds held for clients, accounts
receivable and loans to related companies, and are included
in current assets due to their short-term nature. Loans and
receivables are initially recognized at the amount expected
to be received, less, when material, a discount to reduce the
loans and receivables to fair value. Subsequently, loans and
receivables are measured at amortized cost using the effective
interest method, less a provision for impairment.
AVAILAbLE FOR SALE
Available-for-sale investments are recognized initially at fair
value plus transaction costs and are subsequently carried at
fair value. Gains or losses arising from changes in fair value are
recognized in other comprehensive income (loss). Available-
for-sale investments are classified as non-current unless the
investment matures within twelve months or management
expects to dispose of it within twelve months.
Dividends on available-for-sale equity instruments are
recognized in the consolidated statement of earnings when the
Company’s right to receive payment is established. When an
available-for-sale investment is sold or impaired, the accumulated
gains or losses are moved from accumulated other comprehensive
income to the consolidated statement of earnings.
FINANcIAL LIAbILITIES AT AMORTIzED cOST
Financial liabilities at amortized cost include bank overdraft,
bank loan, accounts payable and accrued liabilities, amount
due to related companies, client deposits, long-term debt and
fair value of purchase price obligations. Accounts payable
and accrued liabilities and amount due to related companies
and client deposits are initially recognized at the amount
required to be paid, less, when material, a discount to reduce
the payables to fair value. Subsequently, they are measured at
amortized cost using the effective interest method. Long-term
debt and fair value of purchase price obligations are recognized
initially at fair value, net of any transaction costs incurred,
and subsequently at amortized cost using the effective
interest method.
cASH AND cASH EqUIVALENTS
Cash and cash equivalents may comprise cash and the short-
term treasury bills with maturities of three months or less from
the date of acquisition and bank overdraft.
FUNDS HELD FOR cLIENTS AND cLIENT DEPOSITS
The funds held for clients consist of client deposits received
during the year following the settlement of a class action in
favour of certain clients for whom the Company acted as agent.
The source and use of funds related to these deposits are not
considered as operating activities.
INVESTMENTS
Investments in short-term notes are carried on the
consolidated balance sheets at fair value using bid prices.
Investments in mutual fund and pool fund units are carried at the
net asset value reported by the fund manager.
PROPERTY AND EqUIPMENT
Property and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses. Cost
includes expenditures that are directly attributable to the
acquisition of the asset. Subsequent costs are included in the
asset’s carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Company
and the cost can be measured reliably. The carrying amount
of a replaced asset is derecognized when replaced. Repairs and
maintenance costs are charged to the consolidated statement
of earnings during the period in which they are incurred.
50
Fiera capital corporation The major categories of property and equipment are
depreciated on a straight-line basis as follows:
office furniture and equipment
computer equipment
leasehold improvements
5 years
3 years
lease term
Residual values, methods of amortization and useful lives of
the assets are reviewed annually and adjusted if appropriate.
Gains and losses on disposals of property and equipment are
determined by comparing the proceeds with the carrying
amount of the asset, part of earnings.
INTANGIbLE ASSETS
Intangible assets with an indefinite life such as the
management contracts with mutual funds are accounted
for at cost. The Company expects both the renewal of these
contracts and the cash flows generated by these assets
to continue indefinitely. Accordingly, the Company does
not amortize these intangible assets, but reviews them for
impairment, annually or more frequently if events or changes
in circumstances indicate that the assets might be impaired.
The finite life intangible assets are accounted for at cost.
Other intangible assets are notably comprised of trade name,
software and a non compete agreement. The expected useful
lives of finite life customer relationships are analyzed each
year and determined based on the analysis of the historical
and projected attrition rates of clients and other factors that
may influence the expected future economic benefit that the
Company will generate from the customer relationships.
Amortization of the finite life assets is based on their
estimated useful lives using the straight-line method over
the following periods:
Assets management contract
customer relationships
other
10 years
20 years
2 years to 8 years
IMPAIRMENT OF NON-FINANcIAL ASSETS
Property and equipment and finite-life intangible assets
are tested for impairment when events or changes in
circumstances indicate that the carrying amount may not
be recoverable. Indefinite-life intangible assets are tested at
least annually for impairment. For the purpose of measuring
recoverable amounts, assets are grouped at the lowest level
for which there are separately identifiable cash inflows (cash-
generating units or CGU). The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use (being
the present value of the expected future cash flows of the
relevant asset or CGU). An impairment loss is recognized for
the amount by which the asset’s carrying amount exceeds its
recoverable amount.
The Company evaluates impairment losses for
potential reversals when events or circumstances warrant
such consideration.
GOODwILL
Goodwill represents the excess of the consideration transferred
in a business combination over the fair value of the Company’s
share of the net identifiable assets acquired at the date of
acquisition. Goodwill is tested at least annually for impairment
and carried at cost less accumulated impairment losses.
Impairment losses on goodwill are not reversed. Gains and
losses on the disposal of an entity include the carrying amount
of goodwill relating to the entity sold.
For goodwill impairment testing purposes, the CGU which
represents the lowest level within the Company at which
management monitors goodwill is the operating segment
(note 24).
LEASES
Leases in which substantially all of the risks and rewards
of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net
of any incentives received from the lessor) are charged to the
consolidated statement of earnings on a straight-line basis over
the term of the lease.
DEFERRED cHARGES
Deferred charges consist of insurance, rent and other long term
prepaid expenses and are amortized on a straight-line basis
over the term of the contract or lease.
51
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
DEFERRED LEASE ObLIGATIONS
The Company leases office space with a predetermined fixed
escalation of the minimum rent. The Company recognizes the
related rent expense on a straight-line basis and consequently,
records the difference between the recognized rental expense
and the amounts payable under the lease as deferred
lease obligations.
LEASE INDUcEMENTS
Lease inducements consist of allocations received from lessors
for leasehold improvements and are amortized over the
lease term.
INcOME TAxES
Income taxes comprise current and deferred tax. Income taxes
are recognized in the consolidated statement of income except
to the extent that they relate to items recognized directly in
equity, in which case the income taxes are also recognized
directly in equity.
Current income taxes are the expected tax payable on
the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and
any adjustment to tax payable in respect of previous years.
In general, deferred income taxes are recognized in respect
of temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the
consolidated financial statements. Deferred income taxes are
determined on a non-discounted basis using tax rates and
laws that have been enacted or substantively enacted at the
consolidated balance sheet date and are expected to apply
when the deferred tax asset or liability is settled. Deferred tax
assets are recognized to the extent that it is probable that the
assets can be recovered.
Deferred income taxes are provided on temporary differences
arising on investments in subsidiaries and joint ventures except
in the cases of subsidiaries where the timing of the reversal of
the temporary difference is controlled by the Company and it
is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred income tax assets and liabilities are presented as
non-current.
EMPLOYEE bENEFITS
POST-EMPLOYMENT bENEFIT ObLIGATIONS
Employees of the Company have entitlements under the
Company’s pension plans which are defined contribution
pension plans. The cost of defined contribution pension plans
is charged to expense as the contributions become payable.
bONUS PLANS
The Company recognizes a provision and an expense for
bonuses, based on several plans and payable on various dates
during the year when it is contractually obliged or where there
is a past practice that has created a constructive obligation.
SHARE-bASED cOMPENSATION
The Company grants stock options to certain employees.
The Board may determine when any option will become
exercisable and may determine that the option will be
exercisable in instalments or pursuant to a vesting schedule.
Share-based compensation expense is recorded using
the fair value method. Under this method, the compensation
expense for each tranche is measured at fair value at grant date
using the Black-Scholes option pricing model and recognized
over the vesting period. When stock options are exercised, any
consideration paid by employees is credited to share capital
and the recorded fair value of the options is removed from
contributed surplus and credited to share capital.
DEFERRED SHARE UNIT PLAN
The expense associated with granting deferred share units
(“DSU”) was recognized when the deferred shares were
issued. Changes in the fair value of previously issued DSU
that arise due to changes in the price of the Company’s
shares are recognized on an ongoing basis in the consolidated
statement of earnings. The number of DSU granted to
directors was determined by dividing the dollar value of the
portion of directors’ fees to be paid in DSU by the closing price
of the Company’s shares on the TSX for the business day
immediately preceding the date of the grant. DSU were granted
on the third business day following the publication by the
Company of its earnings results for each quarter. At September,
2010, the Board cancelled the DSU plan; however, all existing
rights and privilege were kept intact. All eligible directors are
now compensated in cash.
RESTRIcTED SHARE UNIT PLAN
The Restricted Share Unit Plan (”RSU”) was established
for the purposes to provide certain specified persons with
the opportunity to acquire class A subordinate shares of
the Company in order to induce such persons to become
employees of the Company or one of its affiliates and to permit
them to participate in the growth and development of the
52
Fiera capital corporation Company. The maximum number of issuable shares under
this plan is 10% of the issued and outstanding shares of the
Company calculated on a non-diluted basis. The subscription
date is the third anniversary of the award date. The Board
may determine the number of shares each eligible employee
can prescribe to. RSU expense is recorded at fair value over
a 3 years on a straight-line basis.
TERMINATION bENEFITS
The Company recognizes termination benefits when it
is demonstrably committed to either terminating the
employment of current employees according to a detailed
formal plan without possibility of withdrawal, or providing
benefits as a result of an offer made to encourage voluntary
termination. Benefits falling due more than twelve months
after the end of the reporting period are discounted to their
present value.
RESTRUcTURING PROVISIONS
Provisions are measured at management’s best estimate of the
expenditures required to settle the obligation at the end of the
reporting period, and are discounted to present value where
the effect is material.
EARNINGS PER SHARE
Basic earnings per share (“EPS”) is calculated by dividing
the net earnings for the period attributable to equity owners
of the Company by the weighted average number of shares
outstanding during the period.
Diluted EPS is calculated by adjusting the weighted average
number of shares outstanding for dilutive instruments. The
number of shares included with respect to options and similar
instruments is computed using the treasury stock method.
The Company’s potentially dilutive shares comprise stock
options granted to employees.
SHARE cAPITAL
Class A shares and class B shares are classified as equity.
Incremental costs directly attributable to the issuance of shares
are recognized as a deduction from equity.
DIVIDENDS
Dividends on shares are recognized in the Company’s
consolidated financial statements in the period in which the
dividends are approved by the Company’s Board of Directors.
cONTRIbUTED SURPLUS
Contributed surplus is defined as the share base payment
reserve recorded at fair value.
SIGNIFIcANT AccOUNTING jUDGMENTS AND
ESTIMATION UNcERTAINTIES
The preparation of financial statements requires management
to use judgment in applying its accounting policies and
estimates and assumptions about the future. Estimates and
other judgments are continuously evaluated and are based
on management’s experience and other factors, including
expectations about future events that are believed to be
reasonable under the circumstances. The following discusses
the most significant accounting judgments and estimates
that the Company has made in the preparation of the
financial statements:
cASH GENERATING UNIT
The Company has one cash-generating unit (“CGU”) for
the purpose of assessing the carrying value of the allocated
goodwill and indefinite-life intangible.
IMPAIRMENT OF GOODwILL AND INDEFINITE-LIFE
INTANGIbLE
The Company tests annually whether goodwill has suffered any
impairment. The recoverable amount of CGU is determined
based on value-in-use calculation. This calculation requires
the use of estimates. These estimates include the assumed
growth rates for future cash flows, the numbers of years used
in the cash flow model, the discount rate and others estimates.
The recoverable amount if indefinite-life-intangibles is based
on the present value of the expected future cash flow which
involves making estimates about the future cash flows as well
as discount rates and marging percentage.
IMPAIRMENT OF FINITE-LIFE INTANGIbLE ASSETS AND
PROPERTY AND EqUIPMENT
Finite-life intangible assets and property and equipment
are tested for recoverability whenever events or changes in
circumstances indicate that their carrying amount may not
be recoverable.
The expected useful lives of the finite-life customer
relationships are analyzed each year and determined based
on the analysis of the historical and projected attrition rates
of clients and other factors that may influence the expected
future economic benefit that the Company will generate from
the customer relationships.
53
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
bUSINESS cOMbINATIONS
The purchase price allocation process resulting from a
Business combination requires from management to estimate
the fair value of assets relating to acquired intangible assets,
property and equipment and the liabilities assumed such
as the purchase price obligation due over time and related
discount rates.
RESTRUcTURING PROVISIONS
Provisions are recognized when the Company has a present
legal or constructive obligation as a result of a business
acquisition. The amount recognized as a provision is the best
estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into
account the risks and uncertainties surrounding the obligation.
Provisions are discounted using a current pre-tax rate when
the impact of the time value of money is material. The increase
in the provision due to the passage of time is recognized
as finance cost.
INcOME TAxES
The calculation of income tax expense requires significant
judgment in interpreting tax rules and regulations, which
are changing constantly. There are many transactions and
calculations for which the ultimate tax determination is
uncertain. The Company recognizes liabilities for anticipated
tax audit issues based on estimates of whether additional taxes
will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such
differences will impact the current and deferred income tax
assets and liabilities in the period in which such determination
is made.
Deferred tax assets and liabilities require judgment
in determining the amounts to be recognized. Significant
judgment is required when assessing the timing of the reversal
of the temporary differences to which future tax rates are
applied. The amount of deferred tax assets, which is limited to
the amount that is probable to be realized, is estimated with
consideration given to the timing, sources and level of future
taxable profit.
AccOUNTING STANDARDS ISSUED bUT NOT
YET APPLIED
Unless otherwise noted, the following revised standards
and amendments, which are relevant but have not yet been
adopted by the Company, are effective for annual periods
beginning on or after January 1, 2013, except for IFRS 9, which
is effective for annual periods beginning on or after January 1,
2015, with earlier application permitted. The Company is
currently evaluating the impact of these standards on its
consolidated financial statement but no significant impact
is expected.
IFRS 7 (REVISED) – FINANcIAL INSTRUMENTS:
DIScLOSURES AND IAS32 FINANcIAL INSTRUMENTS:
PRESENTATION
On December 16, 2011 the International Accounting Standard
Board (‘’IASB’’) issued common disclosure requirements that
are intended to help investors and other users to better asses
the effects or potential effect of offsetting arrangements on a
company’s balance sheet. The new requirements are set out
in Disclosures-Offsetting Financial Assets and Financial Liabilities
(Amendments to IFRS 7). The IFRS 7 amendments are effective
for annual reporting periods beginning on after January 1, 2013.
IFRS 9 – FINANcIAL INSTRUMENTS
IFRS 9 Financial instruments was issued in November 2009 and
addresses classification and measurement of financial assets.
It replaces the multiple category and measurement models
in IAS 39 Financial Instruments Recognition and measurement
for debt instruments with a new mixed measurement
model having only two categories: amortized cost and fair
value through profit or loss. IFRS 9 also replaces the models
for measuring equity instruments. Such instruments are
either recognized at fair value through profit or loss or at
fair value through other comprehensive income. Where
equity instruments are measured at fair value through other
comprehensive income, dividends are recognized in profit or
loss to the extent that they do not clearly represent a return
of investment; however, other gains and losses (including
impairments) associated with such instruments remain in
accumulated comprehensive income indefinitely.
Requirements for financial liabilities were added to IFRS 9
in October 2010 and they largely carried forward existing
requirements in IAS 39, Financial Instruments – Recognition and
Measurement, except that fair value changes due to credit risk
for liabilities designated at fair value through profit and loss are
generally recorded in other comprehensive income.
54
Fiera capital corporation Note 4
bUSINESS cOMbINATIONS
NATcAN INVESTMENTS MANAGEMENT INc.
On April 2, 2012 Fiera Capital Corporation and National
Bank of Canada (“National Bank” or the “Bank”) announced
the closing of the transaction under which Fiera Capital
Corporation acquired substantially all of the assets of Natcan
Investment Management Inc. (“Natcan”) from the Bank at the
following condition:
The Bank, through Natcan, received 19,732,299 Class A
subordinate voting shares of Fiera Capital Corporation with
an assigned value of $170,487 (the “Class A shares”) a cash
payment of $85,553 and future instalment amounting of
$74,500 payable over the time after the closing unless certain
minimum assets under management thresholds are not
satisfied by National Bank or its affiliates.
At the transaction date, the share purchase consideration
was accounted for using a value of $8.64 per share.
The 19,732,299 Class A Shares (the “Consideration
Shares”) over which the Bank exercises control and direction
represent approximately 56.11% of the issued and outstanding
Class A Shares and 35% of the total number of Class A
Shares and Class B special voting shares in the capital of Fiera
Capital Corporation issued and outstanding at the time of
the transaction. The Bank also received an option to acquire
additional Class A Shares of Fiera Capital Corporation at a
market price determined on the day of exercise, equal to 2.5%
of total shares outstanding at the end of September in each
of 2013 and 2014. If the options are fully exercised, the Bank
will own 40% of the outstanding shares of Fiera. The Bank will
also be entitled to protect its ownership in Fiera pursuant to
anti-dilution rights.
IFRS 10 – cONSOLIDATED FINANcIAL STATEMENTS
In May 2011, the IASB issued IFRS 10, Consolidated Financial
Statements; IFRS 10 requires an entity to consolidate an
investee when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to
affect those returns through its power over the investee. Under
existing IFRS, consolidation is required when an entity has
the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. IFRS 10 will
replace SIC-12, Consolidation-Special Purpose Entities, and part
of IAS 27, Consolidated and Separate Financial Statements.
IFRS 11 – jOINT ARRANGEMENTS
IFRS 11, Joint Arrangements requires a venturer to classify
its interest in a joint arrangement as a joint venture or joint
operation. Joint ventures will be accounted for using the
equity method of accounting, whereas for a joint operation,
the venturer will recognize its share of the assets, liabilities,
revenue and expenses of the joint operation. Under existing
IFRS, entities have the choice to proportionately consolidate
or equity account for interests in joint ventures. IFRS 11
supersedes IAS 31, Interests in Joint Ventures, and SIC-13, Jointly
Controlled Entities – Non-monetary Contributions by Venturer.
IFRS 12 – DIScLOSURE OF INTERESTS IN OTHER ENTITIES
IFRS 12, Disclosure of Interests in Other Entities establishes
disclosure requirements for interests in other entities,
such as subsidiaries, joint arrangements, associates, and
unconsolidated structured entities. The standard carries
forward existing disclosures and also introduces significant
additional disclosures that address the nature of, and risks
associated with, an entity’s interests in other entities.
IFRS 13 – FAIR VALUE MEASUREMENT
IFRS 13, Fair Value Measurement is a comprehensive standard
for fair value measurement and disclosure for use across all
IFRS standards. The new standard clarifies that fair value is the
price that would be received to sell an asset, or paid to transfer
a liability in an orderly transaction between market participants,
at the measurement date. Under existing IFRS, guidance
on measuring and disclosing fair value is dispersed among
the specific standards requiring fair value measurements
and does not always reflect a clear measurement basis or
consistent disclosures.
55
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
The transaction was accounted for as a business combination using the acquisition method, accordingly the assets and liabilities
are recorded at their estimated fair values at the acquisition date as follows.
current assets
property and equipment
Deferred charges
intangible assets
goodwill
Accounts payable and accrued liabilities
Deferred income taxes
purchase consideration
cash consideration
purchase price obligation
share capital issued
$
332
193
365
132,302
186,518
(332)
(10,698)
308,680
$
85,553
52,640
170,487
308,680
Goodwill is attributable to the significant synergies
expected as result of the acquisition of Natcan. A small portion
of the goodwill will be tax deductible.
Management of Fiera Capital Corporation has identified
certain intangible assets acquired from Natcan, which have
been accounted for separately from goodwill. These intangibles
include asset management contracts with National Bank of
Canada and its affiliates (which have a seven-year life and a
three-year renewal period) valued at $84,800 and customer
relationships valued at $47,500.
cANADIAN wEALTH MANAGEMENT GROUP INc.
On November 30, 2012, Fiera Capital Corporation acquired
100 % of the shares of Canadian Wealth Management
Group Inc. (“CWM”) from Société Générale Private Banking,
a Calgary-based subsidiary of Société Générale Private Banking.
The amount of the transaction is $ 7,150 in cash payment at
closing and a contingent payment of $ 2,000 in December
2013 if a certain level of assets under management is achieved.
On December 31, 2012, the Company proceeded to the
winding-up of CWM and its subsidiary in the Company.
The purchase price allocation shown below is preliminary
and based on management’s best estimates. The final purchase
price allocation is expected to be completed as soon as
management has gathered all significant information available
in order to finalize this allocation.
56
Fiera capital corporation As at the acquisition date, the estimated fair value of the identifiable assets acquired and liabilities is as follows:
cash
other current assets
property and equipment
intangible assets
goodwill
Accounts payable and accrued liabilities
Amount due to shareholder
Deferred income taxes
purchase consideration
cash consideration
purchase price obligation
$
310
1,219
1,337
7,452
1,762
(1,318)
(660)
(952)
9,150
$
7,150
2,000
9,150
ScEPTRE INVESTMENT cOUNSEL INc
On September 1, 2010, Fiera Capital Inc. (‘’Fiera Capital’’) completed the plan of arrangement (the “Arrangement”) pursuant to which
the business of Sceptre Investment Counsel Limited (“Sceptre”) and Fiera Capital Inc. were combined to create a leading-edge and
publicly traded independent investment manager under the name Fiera Sceptre Inc. (“Fiera Sceptre“). During the twelve-month period
ended September 30, 2011, the Company finalized the purchase price allocation and had adjusted the goodwill for an amount of 565$.
The impact of the acquisitions during the 15 month period on the management fee, performance fee and the net earnings
is as follows:
management fee
performance fee
net loss
$
32,273
2,545
(3,173)
If the business combinations occurred on October 1, 2011, the Company’s consolidated management fee, performance fee and
net earnings would have been as follows:
management fee
performance fee
net earnings
$
137,135
5,587
23,018
The Company considers the pro forma figures to be an approximate measurement of the financial performance of the
combined business over a 15 month period and that they provide a baseline against which to compare the financial performance
of future periods.
The above pro forma net earnings includes selling, general and administrative expense, external managers expense amortization
of tangible and intangible assets, interest on long term debt, accretion on purchase price obligation and change in fair value of
derivative financial instrument and the elimination of the acquisition costs, restructuring provision as well as related tax effects.
57
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
RESTRUcTURING PROVISION AND OTHER cOSTS
With respect to the current and past business combinations, the Company recorded restructuring provisions related to leases
for premises which the Company vacated and costs related to the termination of certain employees in view to integrate the
different businesses.
During the 15 months ended December 31, 2012 restructuring provision accounting to $4,336 and integration costs of the
business combinations and special bonuses totalling $3,177 were recorded for an aggregate amount of $7,513 ($3,350 for
the 12 months ended September 30, 2011) of restructuring provisions and other costs.
The change in the restructuring provisions during the periods is as follows:
balance, october 1, 2010
Addition (reversal) during the period
paid during the period
balance, september 30, 2011
Addition during the period
paid during the period
balance, December 31, 2012
severance
$
2,189
313
(1,972)
530
4,336
(2,790)
2,076
lease
for premises
$
1,384
(89)
(383)
912
-
(912)
-
total
$
3,573
224
(2,355)
1,442
4,336
(3,702)
2,076
Note 5
INVESTMENT IN jOINT VENTURES
The Company has investments in two joint ventures (Fiera Axium and Fiera Properties) and the variation of its interests during
the 15 months period is as follows:
opening balance
Dividend
subscription to capital
share of earnings
gain on dilution
share of other comprehensive income
closing balance
december 31,
2012
15 months
$
1,333
-
5,125
201
112
108
6,879
september 30,
2011
12 months
$
56
(354)
875
744
-
12
1,333
During the month of February 2012, the Company increased its share of ownership in Fiera Axium from 35% to 36% resulting
from a share buyback by the joint venture. However, in October 2012 and November 2012, a shareholder of the joint venture
exercised his options resulting in a decrease of the ownership to 35% resulting in a gain on dilution of $112.
During the month of December 2011, the Company subscribed to 50% of the shares with voting rights in a new joint venture, Fiera
Properties, for an amount of 1 dollar. In April 2012, Fiera Properties acquired Roycom Inc.; a company specialized in real estate investments.
The commitment of Fiera Capital for this acquisition is $5,125 in the form of a share subscription of Fiera Properties. After the transaction,
the ownership of Fiera Capital Corporation represents 46% of the shares with voting rights.
58
Fiera capital corporation The Company share of earnings in the joint ventures and their aggregated assets and liabilities are as follows:
balance sheet
current asset
long term asset
current liabilities
long term liabilities
statement of earnings
revenue
expense
net earnings
december 31,
2012
$
september 30,
2011
$
october 1,
2010
$
1,662
8,664
2,356
1,673
1,837
812
1,287
30
1,018
477
1,389
34
december 31,
2012
15 months
$
september 30,
2011
12 months
$
4,758
4,557
201
2,755
2,011
744
Note 6
FINANcIAL INSTRUMENTS
The Company, through its financial assets and financial
liabilities, has exposure to the following risks from its use of
financial instruments: credit risk, interest rate risk, currency
risk and liquidity risk. The following analysis provides a
measurement risk as at December 31, 2012, September 30,
2011 and October 1, 2010.
The Company’s business is the management of investment
assets. The key performance driver of the Company’s ongoing
results is the level of assets under management. The level of
assets under management is directly tied to investment returns
and the Company’s ability to retain existing assets and attract
new assets.
The Company’s consolidated balance sheet includes a
portfolio of investments. The value of these investments is
subject to a number of risk factors. While a number of these
risks also affect the value of client assets under management,
the following discussion relates only to the Company’s own
portfolio of investments.
The Company’s exposure to potential losses from its
financial instrument investments is due primarily to market
risk, including equity market fluctuation risks, credit risk,
interest rate and liquidity risk.
MARKET RISK
Market risk is the risk of loss arising from adverse changes in
market rates and prices, such as interest rates, equity market
fluctuations and other relevant market rate or price changes.
Market risk is directly influenced by the volatility and liquidity
in the markets in which the related underlying assets are traded.
Below is a discussion of the Company’s primary market risk
exposures and how these exposures are currently managed.
EqUITY MARKET FLUcTUATION RISK
Fluctuations in the value of equity securities affect the level and
timing of recognition of gains and losses on equity and mutual
fund and pool fund securities in the Company’s portfolio and
causes changes in realized and unrealized gains and losses.
General economic conditions, political conditions and many
other factors can also adversely affect the stock and bond
markets and, consequently, the value of the equity, mutual
fund and fixed income available-for-sale financial assets held.
The Company manages its investment portfolio with a
medium risk mandate. Its particular expertise is investment
management and, as part of its daily operations, it has
resources to assess and manage the risks of a portfolio. The
Company’s portfolio of equity and equity-related securities
59
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
as at December 31, 2012, September 30, 2011 and October 1,
2010, comprises mutual fund and pool fund investments under
its management with a fair value of $6,532 as at December 31,
2012, $983 as at September 30, 2011 and $1,014 as at October
1, 2010. Mutual fund investments comprise a well-diversified
portfolio of Canadian investments. Mutual fund and pool fund
units have no specific maturities.
A 10% change in the fair value of the Company’s equity and
equity-related holdings as at December 31, 2012, September
30, 2011 and October 1, 2010 has an impact of increasing or
decreasing other comprehensive income by $653, $98 and
$101 respectively.
cREDIT RISK
Credit risk is the risk that one party to a financial instrument
fails to discharge an obligation and causes financial loss to
another party.
The credit risk on cash and cash equivalents, funds held for
clients and investments is limited because the counterparties
are chartered banks with high-credit ratings assigned by
national credit-rating agencies.
The Company’s principal financial assets which are
subject to credit risk are cash, funds held for clients
investments and accounts receivable. The carrying amounts
of financial assets on the consolidated balance sheets
represent the Company’s maximum credit exposure at
the consolidated balance sheet dates.
The Company’s credit risk is attributable primarily to its
trade receivables. The amounts disclosed in the consolidated
balance sheets are net of allowance for doubtful accounts,
estimated by the Company’s management based on previous
experience and its assessment of the current economic
environment. In order to reduce its risk, management has
us dollars
cash
Accounts receivable
adopted credit policies that include regular review of credit
limits. With the exception of National Bank and related
companies which represent 21% as at December 31, 2012,
no customer represents 10% of the Company’s revenues and
accounts receivable as at December 31, 2012, September 30,
2011 and October 1, 2010.
INTEREST RATE RISK
The Company’s interest rate risk arises from long-term debt
and the bank loan. Long-term debt and the bank loan issued at
variable rates expose the Company to cash flow interest rate
risk which is partially offset by cash held at variable rates.
The Company manages its cash flow interest rate risk
by using floating-to-fixed interest rate swaps. Such interest
rate swaps have the economic effect of converting debt from
floating rates to fixed rates. The Company obtained its long-
term debt at a floating rate and swapped it into fixed rates that
are lower than those available if the Company borrowed at
fixed rates directly. Under the interest rate swap, the Company
agrees with the counterparty to exchange, at specified
intervals, the difference between the fixed contract rate and
floating-rate interest amounts calculated by reference to the
agreed notional amounts.
cURRENcY RISK
The Company realizes less than 1% of its revenue principally
in US dollars and is thus not significantly exposed to foreign
exchange fluctuations. The Company does not actively manage
this risk.
The consolidated balance sheets include the following
amounts expressed in Canadian dollars with respect to
financial assets and financial liabilities for which cash flows are
denominated in the following currencies:
2012
$
160
75
2011
$
36
2
2010
$
93
2
60
Fiera capital corporation LIqUIDITY RISK
The Company’s objective is to have sufficient liquidity to meet its liabilities when due. The Company monitors its cash balance and
cash flows generated from operations to meet its requirements.
The Company generates enough cash from its operating activities and has sufficient available financing through its bank loan
to finance its activities and to respect its obligations as they become due.
The Company has the following financial liabilities as at December 31, 2012:
bank loan
Accounts payable and accrued liabilities
restructuring provisions
Amount due to related companies
long term debt
purchase price obligation
carrying
Amount
$
9,800
16,501
2,076
2,003
108,000
56,503
194,883
total
$
9,800
16,501
2,076
2,003
108,000
76,500
214,880
2013
$
9,800
16,501
1,764
2,003
-
10,500
40,568
contractual cash flow commitment
2014
$
-
-
312
-
-
8,500
8,812
2015
$
-
-
-
-
6,075
8,500
14,575
other
$
-
-
-
-
101,925
49,000
150,925
FAIR VALUE
Determination of fair value of financial instruments
The fair value of the financial instruments represents the
amount of the consideration that would be agreed upon in
an arm’s length transaction between knowledgeable, willing
parties who are under no compulsion to act.
The fair value of cash, funds held for clients, accounts
receivable, bank loan, accounts payable and accrued liabilities,
amount due to related companies and client deposits is
approximately equal to their carrying values due to their short-
term maturities.
The cost of mutual fund investments and pool funds is
$6,580 as at December 31, 2012, $973 as at September 30,
2011 and $1,022 as at October 1, 2010, while the fair value is
$6,532 as at December 31, 2012, $985 as at September 30,
2011 and $1,014 as at October 1, 2010. The unrealized gain
(loss) of ($48) as at December 31, 2012, $12 as at September
30, 2011 and $8 as at October 1, 2010 are reflected in other
comprehensive income.
The fair value of long-term debt approximates their carrying
amount, value given that it is subject to terms and conditions,
including variable interest rates, similar to those available to
the Company for instruments with comparable terms.
Derivative financial instruments consist primarily of
interest rate swap contracts. The Company determines the
fair value of its derivative financial instruments using the bid
or ask price, as appropriate, in the most advantageous active
market to which the Company has immediate access. When
there is no active market for a derivative financial instrument,
the Company determines the fair value by applying valuation
techniques, using available information on market transactions
involving other instruments that are substantially the same,
discounted cash flows analysis or other techniques, where
appropriate. The Company ensures, to the extent practicable,
that its valuation technique incorporates all factors that
market participants would consider in setting a price and that
is consistent with accepted economic methods for pricing
financial instruments.
61
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
The carrying amount of derivative financial instruments is as follows:
Derivative financial instruments classified
as fair value through profit or loss
interest rate swap agreement
liabilities
december 31,
2012
september 30,
2011
october 1,
2010
1,491
-
-
FAIR VALUE HIERARcHY
Financial instruments recorded at fair value on the consolidated balance sheets are classified using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements.
Financial instruments by category:
DECEmbER 31, 2012
Assets
cash
funds held for clients
investments
Accounts receivable
Advance to a joint venture
total
liabilities
bank loan
Accounts payable and accrued liabilities
Amount due to related companies
client deposits
long-term debt
purchase price obligations
Derivative financial instrument
total
loans and
receivables
$
Available
for sale
$
fVtpl1
$
6,016
297
-
29,888
342
36,543
-
-
-
-
-
-
-
-
-
-
6,532
-
-
6,532
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,491
1,491
financial
liabilities at
amortized
cost
$
-
-
-
-
-
-
9,800
16,501
2,003
297
107,521
56,503
-
196,404
total
$
6,016
297
6,532
29,888
342
43,075
9,800
16,501
2,003
297
107,521
56,503
1,491
197,900
1 Assets (Liabilities) at fair value through profit or loss. This category includes assets and financial instruments designated as financial liabilities at fair value
through profit or loss.
62
Fiera capital corporation
SEpTEmbER 30, 2011
Assets
funds held for clients
investments
Accounts receivable
total
liabilities
bank overdraft
Accounts payable and accrued liabilities
Amount due to related companies
client deposits
total
OCTObER 1, 2010
Assets
cash
funds held for clients
investments
Accounts receivable
total
liabilities
Accounts payable and accrued liabilities
Amount due to related companies
client deposits
total
loans and
receivables
$
Available
for sale
$
fVtpl
$
218
-
16,414
16,632
-
-
-
-
-
-
983
-
983
-
-
-
-
-
loans and
receivables
$
Available
for sale
$
1,177
1,798
-
15,942
18,917
-
-
-
-
-
-
1,014
-
1,014
-
-
-
-
-
-
-
-
-
-
-
-
-
fVtpl1
$
-
-
3,500
-
3,500
-
-
-
-
financial
liabilities at
amortized
cost
$
-
-
-
-
34
8,867
149
218
9,268
financial
liabilities at
amortized
cost
$
-
-
-
-
-
11,227
108
1,798
13,133
total
$
218
983
16,414
17,615
34
8,867
149
218
9,268
total
$
1,177
1,798
4,514
15,942
23,431
11,227
108
1,798
13,133
1. Assets (Liabilities) at fair value through profit or loss. This category includes assets and financial instruments designated as financial liabilities at fair value
through profit or loss.
63
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
The following table classifies financial assets and financial liabilities that are recognized on the consolidated balance sheets at fair
value in a hierarchy that is based on the significance of the inputs used in making the measurements. The levels in the hierarchy are:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 – Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices); and
• Level 3 – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The Company does not hold any financial instruments classified in Level 3. There was no transfer between levels during
these periods.
The following table presents the financial instruments recorded at fair value in the consolidated balance sheets, classified using
the fair value hierarchy described above:
Financial assets
mutual fund and pool fund investments under company’s management
total financial assets
Financial liabilities
Derivative financial instrument designated as fair value
through profit or loss
total financial liabilities
Financial assets
mutual fund and pool fund investments under company’s management
total financial assets
Financial assets
mutual fund and pool fund investments under company’s management
total financial assets
level 1
$
821
821
-
-
level 1
$
783
783
level 1
$
742
742
December 31, 2012
total
$
level 2
$
5,711
5,711
1,491
1,491
6,532
6,532
1,491
1,491
september 30, 2011
total
$
level 2
$
200
200
level 2
$
272
272
983
983
october 1, 2010
total
$
1,014
1,014
64
Fiera capital corporation
Note 7
INVESTMENTS
short-term notes
mutual fund and pool fund investments under company’s management
Note 8
AccOUNTS REcEIVAbLE
trade accounts and others
trade accounts – related companies of shareholders
trade accounts – Joint ventures
The aging of accounts receivable were as follows:
trade
current
Aged between 61 – 119 days
Aged greater than 120 days
total trade
related companies (current)
others
There is no doubtful account provision.
december 31,
2012
$
-
6,532
6,532
september 30,
2011
$
-
983
983
december 31,
2012
$
19,776
9,635
477
29,888
september 30,
2011
$
14,875
1,536
3
16,414
october 1,
2010
$
3,500
1,014
4,514
october 1,
2010
$
14,146
1,497
299
15,942
december 31,
2012
$
september 30,
2011
$
october 1,
2010
$
18,720
149
120
18,989
10,112
787
29,888
13,325
261
129
13,715
1,539
1,160
16,414
12,097
436
118
12,651
1,796
1,495
15,942
65
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
Note 9
PROPERTY AND EqUIPMENT
At october 1, 2010
cost
Accumulated depreciation
net book value
year ended september 30, 2011
opening net book value
Additions
Disposals
Depreciation for the year
closing net book value
At september 30, 20111
cost
Accumulated depreciation
net book value
period ended december 31, 2012
opening net book value
Additions
business acquisition
Depreciation for the year
closing net book value
At december 31, 20121
cost
Accumulated depreciation
net book value
office furniture
and equipment
$
computer
equipment
$
leasehold
improvements
$
2,076
(1,580)
496
496
434
(115)
(263)
552
2,245
(1,693)
552
552
695
502
(320)
1,429
3,368
(1,939)
1,429
2,995
(2,320)
675
675
327
-
(301)
701
3,054
(2,353)
701
701
300
314
(428)
887
1,870
(983)
887
2,101
(674)
1,427
1,427
499
(518)
(248)
1,160
1,645
(485)
1,160
1,160
1,398
714
(388)
2,884
3,736
(852)
2,884
total
$
7,172
(4,574)
2,598
2,598
1,260
(633)
(812)
2,413
6,944
(4,531)
2,413
2,413
2,393
1,530
(1,136)
5,200
8,974
(3,774)
5,200
1. During the 15 month ended December 31, 2012 and the 12 months ended September 30, 2011, the Company disposed of office furniture and equipment
which had an accounting cost of $74 ($266 for September 2011), and accumulated amortization of $74 ($151 for September 2011). Also, the Company
disposed of computer equipment which had an accounting cost of $1,798 ($268 for September 2011) and an accumulated amortization of $1,798
($268 for September 2011). Finally, the Company disposed of leasehold improvements which had an accounting cost of $21 ($955 for September 2011)
and accumulated amortization of $21 ($437 for September 2011).
66
Fiera capital corporation
Note 10
GOODwILL AND INTANGIbLE ASSETS
At october 1, 2010
cost
Accumulated amortization
net book value
year ended september 30, 2011 1
opening net book value
Additions
business acquisition
Amortization for the year
closing net book value
At september 30, 2011
cost
Accumulated amortization
net book value
period ended december 31, 20121
opening net book value
Additions
business acquisition
Amortization for the period
closing net book value
At december 31, 2012
cost
Accumulated amortization
net book value
goodwill
$
89,905
-
89,905
89,905
-
565
-
90,470
90,470
-
90,470
90,470
-
188,280
-
278,750
278,750
-
278,750
indefinite
life
finite life
Asset
management
contracts
Asset
management
contracts
customer
relationship
$
$
$
other
$
4,330
(980)
3,350
3,350
781
-
(1,174)
2,957
5,021
(2,064)
2,957
2,957
2,336
49
(1,579)
3,763
total
$
55,780
(2,372)
53,408
53,408
781
-
(3,440)
50,749
56,471
(5,722)
50,749
50,749
2,336
139,754
(12,609)
180,230
-
-
-
-
-
-
-
-
-
-
-
-
84,800
(6,360)
78,440
45,280
(1,392)
43,888
43,888
-
-
(2,266)
41,622
45,280
(3,658)
41,622
41,622
-
54,905
(4,670)
91,857
84,800
(6,360)
78,440
100,185
(8,328)
91,857
6,711
(2,948)
3,763
197,866
(17,636)
180,230
6,170
-
6,170
6,170
-
-
-
6,170
6,170
-
6,170
6,170
-
-
-
6,170
6,170
-
6,170
1. During the 15 months ended December 31, 2012, and the 12 months ended September 30, 2011, the Company disposed of software which had an accounting
cost of $695 ($90 for September 2011) and accumulated amortization of $695 ($ 90 for September 2011).
67
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
IMPAIRMENT TESTS OF GOODwILL
In assessing goodwill for impairment as at December 31, 2012, September 30, 2011 and October 1, 2010, the Company compared
the aggregate recoverable amount of the assets included in the CGU to their carrying amounts. Recoverable amount has been
determined based on the value in use of the CGU (entity as a whole) using five-year cash flow forecasts approved by management
that made maximum use of observable market inputs. For the periods beyond the 5 years budget, the terminal value was determined
using the expected long term growth rate. Key assumptions included the following:
budgeted gross margin
Weighted average growth rate
Discount rate
2012
%
40.0
5.1
11.0
2011
%
44.0
11.7
15.5
2010
%
38.0
12.0
15.5
Reasonable changes in key assumptions would not cause the recoverable amount of goodwill to fall below the carrying value.
IMPAIRMENT TESTS OF INDEFINITE-LIFE INTANGIbLE ASSETS
In assessing indefinite-life intangible assets for impairment as at December 31, 2012, September 30, 2011 and October 1, 2010,
the Company compared the aggregate recoverable amount of the assets to their respective carrying amounts. Recoverable amount
has been determined based on the value using indefinite-life cash flow forecasts approved by management that made maximum use
of observable markets inputs and outputs. For the periods beyond the budget period, the terminal value was determined using the
expected long term growth rate. Key assumptions included the following:
budgeted gross margin
Weighted average growth rate
Discount rate
2012
%
40.0
2.5
11.0
2011
%
30.0
-
15.0
2010
%
28.0
-
15.0
The budgeted margin is based on past experience and represents the margin achieved in the period preceding the budgeted
period. The discount rate is applied to the five year pre tax cash flow protections and is derived from the weighted average
cost of capital.
Reasonable changes in key assumptions would not cause the recoverable amount of indefinite life intangible assets to fall below
the carrying value.
Note 11
bANK LOAN
The Company has an unsecured authorized revolving facility of $10,000 bearing interest at prime rate plus a premium varying from
0% to 1 % or at banker acceptance rate plus a premium rate varying from 1% to 2%, maturing in March 2017. The covenant is the
same as the long term debt.
68
Fiera capital corporation Note 12
AccOUNTS PAYAbLE AND AccRUED LIAbILITIES
trade accounts payable and accrued liabilities
Wages, vacation and severance payable
bonuses and commissions payable
taxes
Note 13
INcOME TAxES
Income tax expense details as follows:
current income taxes
Deferred income taxes (recovery)
december 31,
2012
$
6,124
447
9,033
897
16,501
september 30,
2011
$
2,744
436
5,110
577
8,867
october 1,
2010
$
3,754
2,745
4,662
66
11,227
december 31,
2012
15 months
$
5,561
(2,779)
2,782
september 30,
2011
12 months
$
4,134
9
4,143
The Company’s income tax expense differs from the amounts that would have been obtained using the combined federal and
provincial statutory tax rates as follows:
earnings before income taxes
income tax expense based on combined statutory income tax rate
share-based compensation
non-deductible acquisition costs
other non-deductible amounts
Adjustment of deferred income tax assets and liabilities
due to changes to substantively enacted income tax rate
The weighted average applicable tax rate was 27.3% (2011: 29.5%).
december 31,
2012
15 months
$
5,808
1,586
314
586
100
september 30,
2011
12 months
$
12,914
3,816
268
-
(99)
196
2,782
158
4,143
69
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
The movement in deferred income tax assets and liabilities during the periods, without taking into consideration the offsetting
of balances within the same tax jurisdiction, is as follows:
property
and
equipment
$
lease
and
inducements
$
restructuring
provisions
$
carry forward
loss
$
550
(550)
-
-
-
-
333
(62)
271
169
-
440
816
(512)
304
(194)
-
110
-
-
-
-
1,173
1,173
intangible
assets
$
property and
equipment
$
(11,874)
(1,252)
(10,622)
2,460
(12,660)
(20,822)
-
(75)
(75)
(138)
(163)
(376)
other
$
164
(71)
93
482
-
575
other
$
(9)
9
-
-
-
-
total
$
1,863
(1,195)
668
457
1,173
2,298
total
$
(11,883)
1,186
(10,697)
2,322
(12,823)
(21,198)
Asset
october 1, 2010
charged to earnings
september 30, 2011
charged to earnings
Business combinations
december 31, 2012
liabilities
october 1, 2010
charged to earnings
september 30, 2011
charged to earnings
Business combinations
december 31, 2012
The tax benefits derived from certain non capital loss resulting from a business combination have not been recorded from an
amount approximately of $220.
Note 14
LONG TERM DEbT
unsecured loan bearing interest at prime rate plus a premium varying from 0% to 1% or
at banker’s acceptances rate plus a premium varying from 1.00 % to 2.00 % (1.75 % as
at December 31, 2012) maturing on march 31, 2017, repayable in quarterly instalments
of $2,025 starting in June 2015 up to march 2017
Deferred financing charges
2012
$
2011
$
108,000
(479)
107,521
-
-
-
70
Fiera capital corporation
On May 1, 2012, the Company entered into an interest rate swap agreement of a notional amount of $108,000 which consists
of exchanging its variable rate for a fixed rate of 1.835 % ending in March 2017, payable in monthly instalments (see Note 6).
Under the terms of the loan agreement, the Company must satisfy certain restrictive covenants as to minimum financial ratios.
These restrictions are composed of ratio funded debt to EBITDA and interest coverage ratio as described below.
EBITDA, a non IFRS measure is defined in the loan agreement on a consolidated basis, as earnings of the Borrower before interest,
taxes, depreciation, amortization, non-recurring and one-time expenses related to acquisitions and other non-cash items and shall
include various items.
As at December 31, 2012, all debt covenant requirement and exemptions have been respected.
The principal repayments required over the next five years are as follows:
2015
2016
2017
$
6,075
8,100
93,825
108,000
Note 15
SHARE cAPITAL AND AccUMULATED OTHER cOMPREHENSIVE INcOME
Authorized, an unlimited number of:
Class A shares, subordinate voting and participating
Class B shares, special voting, participating
The shares have no par value
At october 1, 2010
transfer from class b special voting
shares to class A subordinate
voting shares
class A subordinate
voting shares
$
100,510
number
15,078,721
class b special
voting shares
$
33,986
number
21,357,336
number
36,436,057
total
$
134,496
149,372
238
(149,372)
(238)
-
-
stock options exercised
As at september 30, 2011
139,573
15,367,666
1,091
101,839
-
21,207,964
-
33,748
139,573
36,575,630
1,091
135,587
stock options exercised
181,401
967
shares issued as part of business
combination (note 4)
19,732,299
170,487
-
-
-
181,401
967
-
19,732,299
170,487
shares issued for cash1
As at december 31, 2012
86,748
35,368,114
718
274,011
-
21,207,964
-
33,748
86,748
56,576,078
718
307,759
1. During the month of June 2012, as part of the Employee Share Purchase Plan, the Company issued 86,748 Class A subordinate voting shares for an amount
of $718 in cash.
71
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
Components of accumulated other comprehensive income include:
At october 1, 2010
unrealized gain on available-for-sale financial assets
share of other comprehensive income of joint venture
At september 30, 2011
unrealized gain on available-for-sale financial assets
share of other comprehensive income of joint venture
At December 31, 2012
Note 16
EARNINGS PER SHARE
Available for sales
financial assets
$
8
(3)
12
17
(60)
108
65
Earnings per share as well as the reconciliation of the number of shares used to calculate basic and diluted earnings per share are
as follows:
net earnings for the periods
Weighted average shares outstanding – basic
effect of dilutive stock options
Weighted average shares outstanding – diluted
Basic and diluted earnings per share
december 31,
2012
15 months
$
3,026
september 30,
2011
12 months
$
8,771
48,562,458
387,944
48,950,402
36,531,305
441,516
36,972,821
0,06
0,24
For the 15 months ended December 31, 2012 and the 12 months ended September 30, 2011, the calculation of hypothetical
conversions does not include 1,566,750 options (709,028 in 2011) with an anti-dilutive effect.
72
Fiera capital corporation
Note 17
SHARE-bASED PAYMENT
a) Under the stock option Plan, the exercise price of each stock option is equal to the volume weighted average trading price of the
Company’s shares on the TSX for the five trading days immediately preceding the date the stock option is granted and each stock
option’s maximum term is ten years. The Board may determine when any option will become exercisable and may determine
that the option will be exercisable in instalments or pursuant to a vesting schedule.
A summary of the changes that occurred during the 15 months ended December 31, 2012 and the 12 months ended
September 30, 2011 in the Company stock option plans is presented below:
outstanding – beginning of period
granted
exercised
expired
forfeited
outstanding – end of period
december 31, 2012
september 30, 2011
number of class
A shares
$
1,630,072
986,939
(181,401)
-
(145,217)
2,290,393
Weighted-
average exercise
price
$
5.93
8.22
4.16
-
8.13
6.92
number of class
A shares
$
1,135,878
709,028
(139,573)
(7,200)
(68,061)
1,630,072
Weighted-
average exercise
price
$
4.25
8.39
5.54
6.15
4.10
5.93
options exercisable – end of period
707,172
5.88
320,875
4.75
The following table presents the weighted average assumptions used during the 15 months ended December 31, 2012 and
12 months ended September 30, 2011 to determine the share-based compensation expense using the Black-Scholes option
pricing model:
Dividend yield (%)
risk-free interest rate (%)
expected life (years)
expected volatility for the share price (%)
Weighted-average fair values ($)
share-based compensation expense ($)
december 31,
2012
3.79 to 4.23
1.58 to 1.91
7.5
46 to 47
2.69
1,176
september 30,
2011
3.76 to 3.85
2.25
5
50
2.75 to 2.83
933
73
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
The expected volatility is based on the historical volatility of the Company’s share price. The risk-free interest used is equal to the
yield available on government of Canada bonds at the date of grant with a term equal to the expected life of options.
The following table summarizes the stock options outstanding:
options outstanding
options exercisable
Weighted-average
remaining
contractual life
in (years)
7
2
9
number of
options
613,810
109,833
1,566,750
Weighted-
average
exercise price
$
3.67
5.72
8.28
number
of options
313,728
109,833
283,611
Weighted-
average
exercise price
$
3.67
5.72
8.39
range of exercise price
$
3.67
5.41 to 6.37
7.56 to 8.50
See Note 19 for the total expense recognized in the consolidated statement of earnings for share options granted to directors and
employees.
b) Deferred share unit plan
In 2007, the Board of Directors of the Company adopted
a deferred share unit plan (DSU Plan) for the purposes
of strengthening the alignment of interests between the
directors and the shareholders by linking a portion of
annual director compensation to the future value of the
shares, in lieu of cash compensation. Under the DSU Plan,
each director received, on the date in each quarter which
is three business days following the publication by the
Company its earnings results for the previous quarter, that
number of DSU having a value equal to up to 100% of such
director’s base retainer for the current quarter, provided
that a minimum of 50% of the base retainer must be in the
form of DSU. The number of DSU granted to a director was
determined by dividing the dollar value of the portion of the
director’s fees to be paid in DSUs by the closing price of the
Class A shares of the TSX for the business day immediately
preceding the date of the grant. At such time as a director
ceased to be a director, the Company would make a cash
payment to the director equal to the closing price of the
Class A shares on the date of departure, multiplied by
the number of DSU held by the director on that date. As
at September 1, 2010, the Board cancelled the DSU plan;
however, all existing rights and privileges were kept intact.
All directors are now compensated in cash.
As at December 31, 2012, management had provided
an amount of approximately $238 for the 31,933 units
($192 for 30,325 units as at September 30, 2011 and $237
for 29,318 units as at October 1, 2010) outstanding under
the DSU Plan.
c) Employee Share Purchase plan
On October 6, 2011, the Board of Directors adopted an
Employee Share Purchase Plan (“ESPP“) for the purposes
of attracting and retaining eligible employees, therefore
allowing them to participate in the growth and development
of the Company. The maximum number of issuable Shares
under this plan is 1.5 million shares of Class A subordinate
voting shares. The Board may determine the subscription
date and the number of shares each eligible employee
can subscribe to. The subscription price is determined by
the volume-weighted average trading price (“VWAP“)
of Company shares on the TSX for the five trading days
immediately preceding the date of the subscription (“Date“).
d) Restricted Share Unit Plan
On December 11, 2012, the Board of directors adopted a
Restricted Share Unit Plan (“RSU“) for the purposes to
provide certain specified persons with the opportunity to
acquire class A subordinate voting shares of the Company
in order to induce these to become employees of the
Company or one of its affiliates and to permit them to
participate in the growth and development of the Company.
The maximum number of issuable class A shares under
this plan is 10% of the issued and outstanding shares
of the Company calculated on a non-diluted basis. The
subscription date is the third anniversary of the award
date. The Board may determine the number of shares each
eligible employee can prescribe to. RSU expense is recorded
at fair value using a 3 years straight-line basis.
74
Fiera capital corporation Note 18
POST-EMPLOYMENT bENEFIT ObLIGATIONS
The Company contributes to defined contribution plans for its employees. Contributions for the 15 month period ended December 31,
2012 amount to $1,252 ($819 for the 12 month period ended September 20, 2011).
As part of the business combination referred in Note 4, the Company assumed the role of sponsor of individual pension plan
(“IPP“) which had been established by the Company for former employees. Under pension legislation, while the IPPs are ongoing,
the Company has no legal requirement to make contributions towards any solvency deficiencies. These IPPs are valued on a triennial
reporting cycle. The most recent actuarial valuation was performed as at October 1, 2011 and the next actuarial valuation dates is
January 1, 2015.
As at October 1, 2011 two IPPs former executive employees had an ongoing funding deficit of $1,577. The funding requirement, if
any, will be confirmed at the termination date of the plans.
Note 19
ExPENSES bY NATURE
Selling general and administration expense details as follows:
Wages and employee benefits
traveling and marketing
reference fees
rent
technical services
professional fees
others
Wages and employee benefit details as follows:
salaries and wages
pension costs
share-based compensation
other
december 31,
2012
15 months
$
53,976
4,046
3,343
3,151
3,103
2,472
4,145
74,236
september 30,
2011
12 months
$
33,981
2,324
2,011
1,899
1,338
3,400
2,227
47,180
december 31,
2012
15 months
$
48,937
1,252
1,176
2,611
53,976
september 30,
2011
12 months
$
30,865
819
933
1,364
33,981
Key management includes the Company’s directors and key officers. Compensation awarded to key management is as follows:
Salaries and other short-term benefits
Share-based payments
4,638
427
4,658
404
75
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
Note 20
ADDITIONAL INFORMATION RELATING TO cONSOLIDATED STATEMENTS OF cASH FLOwS
changes in non-cash operating working capital items
Accounts receivable
prepaid expenses
Accounts payable and accrued liabilities
Amount due to related companies
restructuring provisions
prepaid management fees
Note 21
cOMMITMENTS
december 31,
2012
15 months
$
september 30,
2011
12 months
$
(12,678)
265
4,972
1,854
94
-
(5,493)
(1,258)
(239)
(16,570)
41
1,982
8
(6,036)
The Company leases office space and equipment under non-cancellable operating leases expiring at different dates until 2021. Future
lease payments total $32,750 and include the following payments for each of the next five years and thereafter:
2013
2014
2015
2016
2017 and thereafter
Note 22
cAPITAL MANAGEMENT
$
6,449
6,011
5,544
4,132
10,614
The Company’s capital comprises share capital, retained earnings and long-term debt, including the current portion, less cash and
cash equivalents. The Company manages its capital to ensure there are adequate capital resources while maximizing the return to
shareholders through the optimization of the debt and equity balance and to maintain compliance with regulatory requirements and
certain restrictive covenants required by the lender of the debt.
In order to maintain its capital structure, the Company may issue new shares or proceed to the issuance or repayment of debt and
acquire or sell assets to improve its financial performance and flexibility.
In order to be in compliance with Canadian securities administration regulations the Company is required to maintain a minimum
working capital of $275,000 as defined in Regulation 31-103, respecting Registration Requirements and Exemptions.
76
Fiera capital corporation
Note 23
RELATED PARTY TRANSAcTIONS
The Company has carried out the following transactions with shareholders and their related companies.
management fee
performance fee
selling, general & administrative expense
salaries and employee benefits
reference fee
other
interest on long-term debt
Accretion on purchase price obligation
changes in fair value of Derivative financial instrument
integration cost
2012
$
30,653
2,238
1,015
971
482
2,863
1,864
1,491
1,031
2011
$
7,741
-
581
-
49
-
-
-
-
These transactions were made in the normal course of business and are measured at the exchange amount, which is the amount
of consideration established and agreed to by the related parties. Bank loan, long term debt and derivative financial instruments are
amounts due to shareholders and their related companies as at December 31, 2012.
The Company has carried out the following transactions with joint venture: other revenue of $151 as at December 31, 2012
($248 as at September 30, 2011), reimbursement of salaries of $30 as at December 31, 2012 ($34 as at September 30, 2012) and
reimbursement of other expense of $92 as at December 31, 2012 ($62 as at September 30, 2011).
Note 24
SEGMENT REPORTING
The Company operates in one operating segment which is management services in Canada; therefore, no additional segmental
information is presented.
The chief operating decision-maker of the Company has determined that the Company’s reportable segment is investment
management services in Canada and almost all non-current assets are located in Canada.
77
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
Note 25
TRANSITION TO IFRS
The effect of the Company’s transition to IFRS, described in Note 2, is summarized in this note as a reconciliation of balance sheet,
equity and total comprehensive income as previously reported under Canadian GAAP to IFRS, adjustments to the consolidated
statement of cash flows and additional IFRS information for the year ended September 30, 2011.
In preparing these consolidated financial statements in accordance with IFRS 1, the Company has applied mandatory transition
exceptions and the following exemptions from full retrospective application of IFRS:
business combination
estimates
share-based payments
As described in explanatory notes
(aa)
(bb)
(cc)
(aa) Business combination
In accordance with IFRS transitional provisions, the Company elected to apply IFRS relating to business combinations
prospectively from October 1, 2010. As such, business combinations entered into before that date, have been carried forward
without adjustments.
(bb) Estimates
In accordance with IFRS 1, an entity’s estimates under IFRS at the date of transition to IFRS must be consistent with estimates
made for the same date under previous GAAP, unless there is objective evidence that those estimates were in error. Our IFRS
estimates as of October 1, 2010, are consistent with our Canadian GAAP estimates for the same date.
(cc) Share-based Payments
IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2, Share-based Payment, to equity instruments that were
granted on or before November 7, 2002, or equity instruments that were granted subsequent to November 7, 2002, and vested
before the later of the date of transition to IFRS and January 1, 2005. We have elected not to apply IFRS 2 to grants that vested
prior to October 1, 2010.
REcONcILIATION OF IFRS AND cANADIAN GAAP
The following reconciliations provide a quantification of the effect of the transition to IFRS and provide details of the impact of the
transition on equity and total comprehensive income:
a) Reconciliation of equity as previously reported under Canadian GAAP to IFRS.
As reported under canadian gAAp
total reversal of impairment losses on intangibles net of taxes
As reported under ifrs
note
(c)
september 30,
2011
$
137,610
3,227
140,837
october 1,
2010
$
137,897
3,414
141,311
78
Fiera capital corporation RECONCILIATION OF CONSOLIDATED bALANCE SHEETS AS pREvIOuSLy REp ORTED uNDER gAAp TO IFRS.
Assets
current assets
cash
funds held for clients
investments
Accounts receivable
prepaid expenses
Deferred income taxes
non-current assets
long-term investment
investments in joint ventures
property and equipment
intangible assets
goodwill
Deferred charges
Deferred income taxes
liabilities
current liabilities
Accounts payable and accrued liabilities
restructuring provisions
Amount due to related companies
client deposits
Deferred income
prepaid management fees
Due to shareholders of the joint venture
non-current liabilities
Deferred lease obligations
lease inducements
Deferred income taxes
long term restructuring provisions
other long-term liabilities
Equity
share capital
contributed surplus
retained earnings
Accumulated other comprehensive income
note
(a)
(a)
(a)
(a) (e)
(a)
(a)
(a)
(c)
(e)
(a)
(d)
(a)
(a)
(a)
(a)
(c)
(d)
(d)
(c)
october 1, 2010
canadian
gAAp
$
Joint venture
adjustments
$
ifrs
adjustments
and
reclassification
$
2,118
1,798
4,514
15,897
496
56
24,879
369
-
2,706
48,795
89,905
199
-
166,853
14,507
-
108
1,798
58
307
573
17,351
302
978
8,874
-
1,451
28,956
134,496
1,088
2,305
8
137,897
166,853
(941)
-
-
45
(15)
(3)
(914)
(369)
56
(108)
-
-
-
-
(1,335)
(364)
-
-
-
(58)
(307)
(573)
(1,302)
-
(33)
-
-
-
(1,335)
-
-
-
-
-
(1,335)
-
-
-
-
-
(53)
(53)
-
-
-
4,613
-
-
53
4,613
(2,916)
2,916
-
-
-
-
-
-
-
-
1,199
1,451
(1,451)
1,199
-
-
3,414
-
3,414
4,613
ifrs
$
1,177
1,798
4,514
15,942
481
23,912
-
56
2,598
53,408
89,905
199
53
170,131
11,227
2,916
108
1,798
-
-
-
16,049
302
945
10,073
1,451
-
28,820
134,496
1,088
5,719
8
141,311
170,131
79
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
RECONCILIATION OF CONSOLIDATED bALANCE SHEETS AS pREvIOuSLy REp ORTED uNDER gAAp TO IFRS.
note
(a)
(a)
(a)
(a) (e)
(a)
(a)
(a)
(a) (c)
(e)
(a)
(a) (d)
(d)
(a)
(a)
(a)
(a)
(c)
(d)
(d)
(c)
september 30, 2011
canadian
gAAp
$
Joint venture
adjustments
$
ifrs
adjustments
and
reclassification
$
1,715
218
983
16,468
735
64
20,183
714
-
2,507
46,383
90,470
224
-
160,481
-
11,527
-
195
218
18
551
12,509
320
736
8,936
-
370
22,871
135,587
1,703
303
17
137,610
160,481
(1,715)
-
-
(54)
(19)
(14)
(1,802)
(714)
1,333
(94)
(4)
-
-
-
(1,281)
34
(678)
-
(46)
-
(18)
(543)
(1,251)
-
(30)
-
-
-
(1,281)
-
-
-
-
-
(1,281)
-
-
-
-
-
(50)
(50)
-
-
-
4,370
-
-
50
4,370
-
(1,982)
1,982
-
-
-
-
-
-
-
1,143
137
(137)
1,143
-
-
3,227
-
3,227
4,370
ifrs
$
-
218
983
16,414
716
-
18,331
-
1,333
2,413
50,749
90,470
224
50
163,570
34
8,867
1,982
149
218
-
8
11,258
320
706
10,079
137
233
22,733
135,587
1,703
3,530
17
140,837
163,570
Assets
current assets
cash
funds held for clients
investments
Accounts receivable
prepaid expenses
Deferred income taxes
non-current assets
long-term investment
investments in joint ventures
property and equipment
intangible assets
goodwill
Deferred charges
Deferred income taxes
liabilities
current liabilities
bank overdraft
Accounts payable and accrued liabilities
restructuring provisions
Amount due to related companies
client deposits
Deferred income
prepaid management fees
non-current liabilities
Deferred lease obligations
lease inducements
Deferred income taxes
long term restructuring provisions
other long-term liabilities
Equity
share capital
contributed surplus
retained earnings
Accumulated other comprehensive income
80
Fiera capital corporation
b) Reconciliation of total comprehensive income as previously reported under Canadian GAAP to IFRS:
Comprehensive income as reported under Canadian GAAP
Change in net earnings
Comprehensive income as reported under IFRS
note
(c)
for the 12 months ended
september 30, 2011
$
8,967
(187)
8,780
RECONCILIATION OF CONSOLIDATED STATE mENT OF EARNIN gS AS pREvIOuSLy RE pORTED uNDER
CANADIAN gAAp TO IFRS
note
(a)
(a)
(a)
(a)
(a) (c)
(a)
(a) (c)
september 30, 2011
canadian
gAAp
$
Joint venture
adjustments
$
other effects
of transition
to ifrs
$
68,165
3,941
656
72,762
48,771
2,693
830
3,199
633
(143)
8
3,350
-
13,421
4,463
8,958
9
8,967
(2,535)
-
(84)
(2,619)
(1,591)
-
(18)
(2)
-
-
-
-
(744)
(264)
(264)
-
-
-
-
-
-
-
-
-
-
243
-
-
-
-
-
(243)
(56)
(187)
-
-
Revenue
base management fees
performance fees
interest and other revenues
Expenses
selling, general and administrative expenses
external manager
Depreciation of property and equipment
Amortization of intangible assets
Write-off of property and equipment
reversal of unamortized lease inducement
loss on disposal of investment
other operating expenses
share of earnings of joint ventures
earnings before income taxes
income taxes
net earnings for the year
other comprehensive income
comprehensive income
earnings per share
basic
Diluted
ifrs
$
65,630
3,941
572
70,143
47,180
2,693
812
3,440
633
(143)
8
3,350
(744)
12,914
4,143
8,771
9
8,780
0.25
0.24
81
Notes to the Consolidated Financial Statements
deceMber 31, 2012 and septeMber 30, 2011
Explanatory notes of differences and adjustments
(a) Consolidation of joint venture
Under Canadian GAAP, investments in joint ventures were
accounted for using the proportionate consolidation method.
IFRS currently permits the proportionate consolidation
method and the equity method. However, IFRS 11, Joint
arrangements which will supersede IAS 31, Interests in Joint
Venture from January 1, 2013, will allow only the equity
method to account for interests in joint ventures. In this
regard, the Company has elected to use the equity method
to account for its interests in the joint ventures, Fiera Axium
Infrastructure and Fiera Properties.
The deconsolidation of the Canadian GAAP balance
sheets, results and cash flows is presented in the
reconciliations included in this note as joint venture
adjustments.
The Company’s share of assets and liabilities, and share
of earnings of the equity accounted in joint ventures are
summarized in Note 5.
(b) In accordance with IFRS transitional provisions, the
Company elected to classify cash as loans and receivables
under IAS 39, Financial Instruments – Recognition and
Measurement. Under Canadian GAAP, cash and cash
equivalents were classified as held for trading.
(c) Under Canadian GAAP, the Company had recognized
impairment losses of $3,300 ($2,395 net of income tax
of $905) and $1,556 ($1,130 net of income tax of $426)
in 2006 and 2008 respectively in relation to intangible
assets acquired from YMG (which were deemed to have
an indefinite useful life at the time the impairment had
been taken). Intangible assets with indefinite useful lives
were tested for impairment on a standalone basis under
Canadian GAAP by comparing carrying amount of the
intangible asset to their fair value.
Under IFRS, assets that do not generate independent
cash inflows must be assessed for recoverability at the
cash generating unit level (CGU). The CGU is the lowest
group of assets that generate independent cash inflows.
On transition, the Company has determined its cash
generating unit as the entity as a whole and has assessed
the recoverable amount to exceed the carrying value of the
cash generating unit retrospectively. As a consequence,
the Company increased the customer relationship account
by an amount of $4,613 (net of amortization of $243) as
at October 1, 2010 and recorded a deferred income tax
liabilities of $1,199 for a net increase in retained earnings
of $3,344 as at October 1, 2010.
As a result, the Company recorded a charge of
amortization of $243 with a decrease of deferred income
tax charge of $56 for the twelve month period ended
September 30, 2011 and a net decrease of the net earnings
of $187.
(d) Provisions
Under IAS 1 Presentation of financial statements, provisions
shall be presented separately on the balance sheets.
(e) Deferred taxes
Under IAS 12, Income taxes, deferred tax balances shall not
be classified as current, irrespective of the classification
of assets or liabilities to which deferred income taxes are
related or expected timing of the reversal of temporary
differences. Under Canadian GAAP, deferred taxes related to
current assets or current liabilities were classified as current.
Therefore, current deferred taxes recognized under Canadian
GAAP were reclassified as non-current under IFRS.
ADjUSTMENTS TO cONSOLIDATED STATEMENT OF
cASH FLOwS
The transition from Canadian GAAP to IFRS had no significant
impact on cash flows generated by the Company except that,
under IFRS, cash flows relating to interest paid and dividends
are classified as financing in a consistent manner each
period. Under Canadian GAAP, cash flows relating to interest
payments were classified as operating.
82
Fiera capital corporation Note 26
SUbSEqUENT EVENTS
On January 18, 2013 the Company announced that it reached
an agreement with GMP Capital Inc. (GMP), to acquire
selected alternative asset management funds of GMP
Investment Management including flagship funds pertaining
to the GMP Diversified Alpha Fund and the Canadian ABCP
Fund, both representing in aggregate $570M in AUM.
Under the terms of the agreement, key members of GMP
Investment Management’s team will join a newly created
Fiera Capital subsidiary in which management will own a
45% interest. The purchase price includes a $10,750 cash
consideration payable at closing plus an amount payable at
the end of each of the next three years equal to 25 per cent of
the performance fees generated based on the acquired assets,
subject to certain minimum AUM thresholds. The transaction
is expected to close during the quarter ended June 30, 2013.
On the last business day of the 36 months following
the closing of the purchase of the GMP assets by Fiera
Capital subsidiary, the key members of the GMP investment
management’s team have the option to sell all and not
less than all of their interest in Fiera Capital subsidiary.
The consideration shall be paid in cash or by Fiera Capital
Corporation Class A shares.
In December 2012, Fiera Capital announced that it had
reached an agreement with UBS Global Asset Management
(Canada) Inc. (UBS) to purchase the latter’s Canadian Fixed
Income, Canadian Equity and Domestic Balance account
business for maximum cash consideration of $52M. At closing,
which occurred on January 30, 2013, an amount of $40,200
was paid to UBS and an amount of $11,800 was placed in
escrow. The escrow amount will be paid in 6 months after
closing and is subject to certain adjustments.
On March 20, 2013 the Board of directors declared a
quarterly dividend $0.09 per share to shareholders of record
as of April 2, 2013 and payable on April 30, 2013.
83
board of directors
JEAn-guy dEsJARdins
JEAn c. monty
Jean-Guy Desjardins is Chief Executive Officer and Chief
Investment Officer of Fiera Capital, and serves as the Chairman
of its board of directors. Prior to founding Fiera Capital,
Mr. Desjardins co-founded TAL Global Asset Management
in 1972 and was its principal shareholder until the business
was purchased by a financial institution in 2001. Through his
leadership, the firm had grown to over $60 B in AUM.
Jean C. Monty is a Corporate Director. In April 2002,
Mr. Monty retired as Chairman of the Board and Chief
Executive Officer of Bell Canada Enterprises (BCE Inc.),
following a distinguished 28-year career. Prior to joining
BCE Inc., Mr. Monty was Vice-Chairman and Chief
Executive Officer of Nortel. He sits on a number of boards of
international companies.
sylvAin BRossEAu
chRistiAnE BERgEvin
Sylvain Brosseau, President and Chief Operating Officer
of Fiera Capital, has over 21 years of experience in the
investment management industry. Prior to joining Fiera Capital,
Mr. Brosseau served as Executive Vice President, Institutional
Markets at TAL Global Asset Management Inc., and Executive
Vice President at TAL International, where he oversaw
worldwide distribution and operations.
Christiane Bergevin works as Executive Vice President,
Strategic Partnerships, Office of the President, at Desjardins
Group. Prior to joining Desjardins Group, she was Senior Vice
President and General Manager, Corporate Projects, at SNC-
Lavalin Group Inc,. and President at SNC-Lavalin Capital Inc.
between 2001 and 2008. Ms. Bergevin is also a member of the
board of directors of Talisman Energy Inc.
nEil niskER
dEnis BERthiAumE
Neil Nisker has over 40 years of experience in the financial
services industry. He joined Fiera Holdings in 2006 as
President, Private Wealth which title he held until the
combination of its business with Sceptre in September 2010.
From 2000 to 2006, Mr. Nisker was President of the Private
Wealth Management division of YMG Capital Management
Inc. and from 1997 to 1999, Mr. Nisker was Chairman of Nisker
Associates, Inc., a registered investment counselling firm,
which was later purchased by YMG Capital Management Inc.
Denis Berthiaume is Senior Vice President and General
Manager, Wealth Management and Life and Health Insurance
at Desjardins Group. Prior to that, he held roles as Senior
Vice President, Retail Markets at Standard Life, Senior Vice
President, Individual Insurance of Desjardins Financial Security,
and President of SFL Management.
84
Fiera capital corporation dAvid R. shAW
dAvid pEnnycook
David R. Shaw is the founder and CEO of Knightsbridge Human
Capital Management Inc., a national human resource firm.
Previously, he was President and CEO of Pepsi Cola Canada
Beverages. He is the former Chairman of the North York
General Hospital Foundation and sits on several boards.
W. Ross WAlkER
Ross Walker is the former Chairman and Chief Executive of
KPMG Canada, a position he held from 1989 to 1993. From
1993 to 1996, Mr. Walker served as International Executive
Partner of KPMG International. He was the Chairman of
Sceptre from May 2003 to September 2010.
ARthuR R.A. scAcE
Arthur Scace is the former national Chairman of McCarthy
Tétrault LLP and former managing partner of the Toronto office.
He serves on the board of directors of a number of Canadian
corporations. He was also the former Chairman of Scotia Bank
from March 2004 to March 2009.
David Pennycook leads the Institutional Markets team and
is also a member of the firm’s management committee. Mr.
Pennycook has 32 years of industry experience and has been
with the firm and a predecessor since 1991. Prior experiences
include marketing and servicing roles at major Canadian
investment management firms and insurance companies. He is
also the Co-Chairman on the Canadian Investment/Corporate
Committee of the International Foundation.
louis vAchon
Louis Vachon has been President and Chief Executive Officer
of National Bank since June 2007 and is responsible for the
strategies, orientations and development of National Bank
Financial Group. Prior experience includes senior management
positions at BT Bank of Canada, Natcan and National Bank
Financial. He has served on the Board of Directors of the
Canadian Council of Chief Executives since June 2009. In
2001, he was one of Canada’s Top 40 under 40T™ and
business publication Finance et Investissement’s 2012 Financial
Personality of the Year.
luc pAiEmEnt
Luc Paiement is Co-President and Co-Chief Executive Officer of
National Bank Financial and Executive Vice-President – Wealth
Management. He is responsible for all wealth management
activities at National Bank and its subsidiaries. During his 30-
year career at National Bank Financial, Mr. Paiement has held
key positions in brokerage, institutional equities and corporate
finance. He was one of Canada’s Top 40 under 40™ in 1999.
85
Corporate information
ExEcUTIVE OFFIcERS
TRANSFER AGENT & REGISTRAR
Pierre Blanchette
Sylvain Brosseau
Violaine Des Roches
Jean-Guy Desjardins
Merri L. Jones
Neil Nisker
David Pennycook
Alain St-Hilaire
Robert Trépanier
Alexandre Viau
HEAD OFFIcE
1501 McGill College Avenue
Suite 800
Montréal, Québec
Canada H3A 3M8
Phone: 514-954-3300
Toll Free: 1-800-361-3499
Fax: 514-954-5098
Email: info@fieracapital.com
Website: www.fieracapital.com
Computershare Investor Services Inc.
100 University Avenue, 9th Floor
Toronto, Ontario
Canada M5J 2Y1
Toll Free: 1-800-564-6253 (Canada and United States)
Phone: 514-982-7555 (international direct dial)
Website: www.computershare.com
AUDITORS
Deloitte s.e.n.c.r.l.
STOcK ExcHANGE LISTING
Class A Subordinate Voting Shares (“FSZ”)
Toronto Stock Exchange
ANNUAL AND SPEcIAL MEETING
Centre Mont-Royal
2200 Mansfield Street
Montréal, Québec
Canada H3A 3R8
Thursday, May 23, 2013, 9:30 a.m.
86
Fiera capital corporation
Contact us
MONTREAL
VANcOUVER
Fiera Capital Corporation
1040 West Georgia Street, Suite 520
Vancouver, British Columbia
Canada V6E 4H1
Phone: 604-688-7234
Toll Free: 1-877-737-4433
Fax: 604-684-6315
info@fieracapital.com
NEw YORK
Fiera Asset Management
410 Park Avenue, Suite 510
New York NY 10022
USA
Phone: 646 449-9058
Fax: 646 476-3458
info@fierausa.com
Fiera Capital Corporation
1501 McGill College Avenue, Suite 800
Montréal, Québec
Canada H3A 3M8
Phone: 514-954-3300
Toll Free: 1-800-361-3499
Fax: 514-954-5098
info@fieracapital.com
TORONTO
Fiera Capital Corporation
1 Adelaide Street East, Suite 600
Toronto, Ontario
Canada M5C 2V9
Phone: 416-364-3711
Toll Free: 1-800-994-9002
Fax: 416-955-4877
info@fieracapital.com
MUTUAL FUNDS
Phone: 416-360-4826
Toll Free: 1-800-265-1888
Fax: 416-367-5938
Fax (Toll Free): 1-877-367-5938
info@fieracapital.com
cALGARY
Fiera Capital Corporation
607 8th Avenue SW, Suite 300
Calgary, Alberta
Canada T2P 0A7
Phone: 403 699-9000
Fax: 403 699-9092
info@fieracapital.com
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