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FOR OUR CLIENTS, we foster innovation, excellence and teamwork,
and focus on providing them with the best investment strategies for
their needs and the most outstanding service.
FOR OUR SHAREHOLDERS, we leverage our leadership in the Canadian
market to accelerate our growth in the United States and establish a
client-driven global footprint.
FOR OUR CLIENTS, we recruit and retain the best talent to provide
continuity and recognized best-in-class strategies across asset classes
and investment styles.
FOR OUR SHAREHOLDERS, we focus on creating value today and for
the long term through sustained growth in assets under management
and a balanced approach to capital management.
FOR OUR CLIENTS, we aim to achieve superior returns and exceed
expectations through a rigorous and disciplined investment process and
sound governance.
FOR OUR SHAREHOLDERS, we strive to generate consistent results
through organic growth, strategic acquisitions, impeccable execution,
talent retention and the adoption of best practices.
Table of Contents
0022015 Financial Highlights
003Message to Shareholders
006Strong, Inspired Leadership
008Local Roots, Global Recognition
011Best-in-Class Investment Strategies
012Present for Our Clients
015Rigorous Risk Management
016Board of Directors
017Management’s Discussion and Analysis
065Consolidated Financial Statements
104Corporate Information
2015 Financial Highlights
We are results-driven and committed to creating long-term value for our shareholders. In
2015, we surpassed $100 billion in assets under management and continued to improve
our year-over-year financial performance across key metrics.
AUM GROWTH
$101.4B
$86.6B
$77.5B
2013
2014
2015
TOTAL AUM
INCREASE
NEW
MANDATES OF
IN 2015
IN ADDITIONAL AUM FROM CLOSING OF ACQUISITION OF
NEW YORK-BASED SAMSON CAPITAL ADVISORS LLC
INCREASE IN TOTAL
REVENUES
INCREASE IN
ADJUSTED EBITDA
INCREASE IN
NET EARNINGS
BASE MANAGEMENT FEES AND
OTHER REVENUES INCREASED BY TO
2
AS AT DECEMBER 31, 2015AS AT DECEMBER 31, 2014ASSETS UNDER MANAGEMENT (AUM)$101.4B$86.6BFOR THE 12 MONTHS ENDED DECEMBER 31, 2015FOR THE 12 MONTHS ENDED DECEMBER 31, 2014Revenues$258.4M$222.3MAdjusted EBITDA1$84.8M$78.2MNet Earnings2$27.6M$27.5MAdjusted Net Earnings$70.9M$66.7M1 Excludes non-cash compensation, acquisition and restructuring related costs 2 Attributable to the Company’s shareholders Jean-Guy Desjardins
Chairman and Chief Executive Officer
MESSAGE TO SHAREHOLDERS
These three words capture what drives us and what fuels our
growth every day. Whether for our clients or for our shareholders,
we always aim to be leaders in our field, to grow responsibly, and
to exceed expectations in the present while keeping a constant
eye on the future.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 3
FUELING OUR GROWTH
In 2015, Fiera Capital made immense progress in its growth and is becoming a leading
North American asset management firm. The strong performance of our Canadian and
U.S. divisions translated into value creation for our clients and shareholders. Total assets
under management grew 17% to surpass $100 billion by year-end. Revenues increased
by 16% to $258 million, and adjusted EBITDA grew 8% to $85 million. We continued to
return capital to shareholders with two dividend increases in 2015 and our compounded
annual growth rate in quarterly dividends declared since 2010 has grown by 20%.
Our Canadian division had a phenomenal year. Our institutional business continued to
attract a significant number of new mandates and clients, and our private wealth business
experienced exceptional growth. We remain focused on maintaining and growing our
leadership position in this market based on the reputation for excellence and innovation
we have built over the past twelve years.
In the U.S., we are more focused than ever on replicating our Canadian success. 2015
was another incredible year of growth. Our institutional business has been one of the
major growth engines of this division, bringing in significant new mandates and sub-
advisory partnerships in 2015. As our mix of U.S. revenues continues to grow, our sales
momentum is also bringing in higher margin mandates to our portfolios.
With the integration of Wilkinson O’Grady & Co., acquired in 2013, and Samson
Capital Advisors, acquired in 2015 – in addition to our planned acquisition of Apex Capital
Management announced in early 2016 – we now have a full-fledged U.S. presence, and
a growing offering of proprietary strategies for institutional, private wealth and retail
clients. Our Bel Air division had an excellent year as well, bringing in a net amount of over
$500 million in new assets.
The firm continues to widen its reach both in North America and beyond with new
mandates and distribution channels bringing our strategies to South Africa, Japan,
Australia, the U.K. and select European markets. Fiera Capital is gaining global recognition
and we are truly proud of this accomplishment.
PERFORMANCE AMID VOLATILITY
Best-in-class investment strategies are the foundation of our success in Canada and the
fuel driving our U.S. growth. Regardless of market conditions, our clients expect us to
outperform benchmarks and we always strive to exceed their expectations.
Best-in-class investment
Our Long-Short and Market Neutral strategies continued to deliver a very strong
strategies are the
foundation of our
success in Canada
performance in 2015. These products are highly attractive solutions as they provide
our clients with alternative investment strategies in a challenging and volatile market.
Furthermore, even in down markets, they deliver absolute returns to clients while
generating a high level of revenue for our firm as a result of higher performance fees,
and the fuel driving our
when compared to traditional strategies.
For fixed income strategies, 2015 was slightly more challenging in relative terms but
our long-term track record in this asset class remains one of the best in the industry.
Moreover, our Fixed Income teams continue to seize opportunities to innovate and
develop strategies that address the needs of our clients.
Results in global equities were generally flat in 2015 but returns in Canadian currency
terms were quite positive as a result of the sharp depreciation of the dollar. Within this
U.S. growth.”
4
context, the Global Equity team’s high-quality bias led to another solid year, with Global
and International Equity strategies performing particularly well in both absolute and
QUARTERLY DIVIDEND DECLARED
PER PARTICIPATING SHARE
$0.15
$0.14
$0.13
$0.12
$0.11
$0.10
Q2 Q4
2013
Q2 Q4
2014
Q2 Q4
2015
ADJUSTED NET EARNINGS PER
SHARE (BASIC)
2015
2014
2013
relative terms.
A CLEAR PATH AHEAD
Growth is our top priority. We aim to grow responsibly and for the benefit of our clients
and shareholders. To this end, Fiera Capital recently implemented a global team and
organizational structure supporting three distinct divisions and two subsidiaries serving
our broad client base across diverse geographies. Our new decentralized structure reflects
who we are today and our aspirations for the future.
Our objective is to double assets under management by the end of 2020 and be a
dominant North American firm with a major U.S. presence. We have a clear path ahead
and a strong pipeline of opportunities. We are counting on both organic growth and
strategic acquisitions to reach our objectives.
In Canada, our leadership position and proven know-how continue to drive
organic growth and we will be opportunistic with regard to acquisitions. Our recently
announced joint venture with Aquila Infrastructure Management and the creation of
Fiera Infrastructure Inc., an alternative investment platform, support our strategy to
expand our alternative strategies offering. These initiatives also enhance our ability to
offer our clients access to a broad range of asset classes.
In the U.S., we will continue to seek the right acquisitions to build our platform, adding
new talent, clients and complementary investment strategies to grow our presence. We
have a track record of successfully integrating and broadening our offering in this market
and will continue to build on these successes. Our planned acquisition of Apex, subject
to customary conditions and approvals, is expected to double our presence in the U.S.
institutional market and provide access into sub-advisory retail once completed.
With each acquisition we are not only expanding our offering but also deepening our
talent pool and nurturing the entrepreneurial spirit which permeates throughout our firm.
This is an essential element to profitable growth. Along with our expansion into the U.S.
market, Fiera Capital has been able to expand its distribution and recognition globally,
with eight global consultant approvals obtained to date.
Indeed, our teams continue to be recognized by clients, peers and the industry for their
excellent performance and leadership in their field. For this, I congratulate and thank all
Fiera Capital employees.
Already well into 2016, we are off to a strong start. We have bold ambitions and a busy
year ahead, and we have the right talent, team and structure in place to drive our success.
We sincerely thank our shareholders for their continued support as we continue to
build our leadership position and create long-term value.
Jean-Guy Desjardins
Chairman and Chief Executive Officer
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 5
Strong, Inspired Leadership
Fiera Capital’s mission is to be a leading North American asset management firm recognized
for superior portfolio management, innovative investment solutions and an ability to
surpass client expectations.
GLOBAL MANAGEMENT
01
02
03
04
05
06
GLOBAL MANAGEMENT
BUSINESS DIVISION LEADERS
Canadian Division
10 Sylvain Roy
President and Chief Operating Officer
U.S. Division
11 Benjamin S. Thompson
President and Chief Executive Officer
Bel Air Investment Advisors LLC
12 Todd M. Morgan
Chairman and Chief Executive Officer
AUM PER GEOGRAPHY (AS AT DECEMBER 31, 2015)
2015 REVENUES PER GEOGRAPHY
01 Jean-Guy Desjardins
Chairman and Chief Executive Officer
02 Sylvain Brosseau
Global President and Chief Operating Officer
03 John Valentini
Executive Vice President and
Chief Financial Officer
04 Alain St-Hilaire
Executive Vice President, Human Resources
and Corporate Communications
05 Violaine Des Roches
Senior Vice President, Legal Affairs and Compliance
06 Pierre Blanchette
Senior Vice President, Corporate Finance
07 Robert Trépanier
Senior Vice President, Information Technology
and Integration
08 David Stréliski
Senior Vice President and Chief Risk Officer
09 Peter Stock
Senior Vice President, Strategic Development
6
$101.4B100%$258.4M100%74.3% | $75.4B CANADA 25.7% | $26.0B US 70.0% | $180.2M CANADA 30.0% | $78.2M US Fiera Capital is led by a team of
seasoned professionals, who embody
our core values: client focus, respect
and integrity, performance and
accountability, teamwork, innovation
and entrepreneurship.”
BUSINESS DIVISION
LEADERS
07
08
09
10
11
12
Rapid growth in assets under management and North
American expansion led to organizational changes
in 2015 to support our continued growth. Today,
Fiera Capital is led by a global management team that
oversees three distinct divisions, each focused on serving its
geographical market and distinct client base.
FIERA CAPITAL – CANADIAN DIVISION
Fiera Capital was founded in 2003, in Montreal, Quebec,
the location of our global headquarters. Over the
last decade, we have become Canada’s third-largest
independently owned asset manager through strategic
acquisitions and sustained organic growth.
Serving institutional, private wealth and retail clients,
Fiera Capital is Canada’s leading manager of endowment
and foundation assets as well as the sixth-largest pension
investment manager. With investment professionals in
Vancouver, Calgary, Toronto, Montreal and Halifax, our
Canadian division manages approximately $75.4 billion
in assets.
FIERA CAPITAL – U.S. DIVISION
Our U.S. division operates as a single but diverse asset
management firm, based in New York and with an office in
Boston, offering proprietary strategies to U.S. institutional
and private clients. With approximately $17.5 billion in
assets under management, the U.S. division specializes in
fixed income and global equity portfolios.
Our U.S. presence has expanded through the
acquisitions of Wilkinson O’Grady & Co. Inc. in 2013
and Samson Capital Advisors LLC in 2015. Fiera Capital’s
U.S. division is a combination of our U.S. institutional
business, Wilkinson O’Grady & Co. Inc. and Samson
Capital Advisors LLC which collectively form the backbone
of our asset management platform in the American
market. In early 2016, Fiera Capital announced the
acquisition of U.S.-based Apex Capital Management, to
further strengthen its presence in the U.S. and growth
equity offering.
BEL AIR INVESTMENT ADVISORS LLC
Bel Air Investment Advisors LLC is a widely respected U.S.
wealth management firm, which distinguishes itself through
its diverse mix of proprietary and sub-advisory investment
strategies within its open architecture platform. Founded in
1997, Bel Air became part of Fiera Capital in 2013.
Bel Air provides customized management services and
investment counsel to high-net-worth individuals, families
and foundations, typically with $20 million or more in
investable assets. It currently manages approximately
$8.5 billion in assets through offices in Los Angeles and
San Francisco.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 7
Local Roots,
Global Recognition
Our expertise is widely recognized in our core North American
markets and our brand is gaining traction abroad.
In Canada, we have a strong reputation and a track record of success serving the
institutional, private wealth and retail markets for over 12 years. We continue to
enhance our leadership position by expanding our client base, and we are leveraging
this position to extend our presence beyond Canada.
We are rapidly expanding our U.S. operations and now have proven expertise in
serving institutional clients, family offices, direct private clients and the retail market.
Our U.S. division offers proprietary strategies to clients in several asset classes, and
our growing Bel Air Investment Advisors division offers customized management
services and investment counsel to high-net-worth individuals.
Our institutional sales teams have acquired new clients in the U.S. and also expanded
our distribution reach in Europe, Australia, South Africa and Asia-Pacific region.
Today, Fiera Capital and its affiliates have over 460 employees, including over
150 investment professionals, with offices in Montreal, Toronto, Calgary, Vancouver,
Halifax, New York, Boston, Los Angeles and San Francisco.
With an increasing number of global consultant approvals and several sub-advisory
partnerships, we are becoming a truly global name in the asset management space.
Jean-Guy Desjardins, Chairman and Chief Executive Officer, presented with
CFA Institute Award for Professional Excellence, the Institute’s highest distinction
Fiera Capital named 2015 Global Equity Manager of the Year by Professional
Pensions in the United Kingdom
Fiera Capital ranked as one of the largest money managers in the annual
Pensions and Investments worldwide ranking
Three Thomson Reuters’ Canadian Lipper Fund Awards for funds managed by
Fiera Capital and one Lipper Fund Award for a fund sub-advised by Fiera Capital
Fiera Capital Global Equity Fund received Fundata’s FundGrade A+ annual
rating for 2015
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8
Awards FROM LEFT TO RIGHT Carolyn N. Dolan, Executive Vice President, Head of Direct Private Client Investments – U.S. Division;
Donald M. Wilkinson III, Vice Chairman and Chief Investment Strategist, Global Equity and Tactical Asset Allocation – U.S. Division;
Jonathan E. Lewis, Chief Investment Officer – U.S. Division; Benjamin S. Thompson, President and Chief Executive Officer – U.S. Division
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 9
Nadim Rizk, Senior Vice President and Lead Portfolio Manager, Global Equities
10
Best-in-Class Investment Strategies
Fiera Capital is recognized for excellence in portfolio management, innovative and
personalized investment strategies, risk management as well as an ability to exceed
client expectations.
Our expertise covers the full spectrum of investment
strategies, diversified by asset class and investment
styles. Our extensive offering includes fixed
income, liability-driven investment solutions, Canadian
and global equity, asset allocation and alternative
investment solutions.
PROMOTING EXCELLENCE
Our structure promotes excellence within our specialized
investment teams by combining the flexible and efficient
environment of a boutique investment manager with the
scale and resources of a leading investment firm. Integrated
solutions diversified by asset class and investment style, and
supported by a disciplined risk management framework, are
key to achieving superior returns for our clients.
TRADITIONAL STRATEGIES
Rigorous fundamental research is the cornerstone of our
fixed income strategies, which aim to enhance overall
portfolio returns across virtually any interest rate or
economic environment. We offer investment strategies in
both the liability hedging and return-seeking segments of
client portfolios.
In-depth and independent research is also key to the
portfolio construction of our complete offering of Canadian
Equity strategies across styles and capitalization.
Only our best ideas, for which we have the highest
conviction, are selected for our Global Equity approach,
which seeks to identify best-of-breed companies with a
sustainable competitive advantage and led by seasoned
management teams.
We also offer fixed income and equity strategies to meet
the needs of clients who seek to emphasize environmental,
social and governance (ESG) factors within their portfolios.
ALTERNATIVE STRATEGIES
Our alternative offering includes strategies that address
both capital appreciation and income objectives – including
hedge funds, real asset investments, private lending as well
as diversified income strategies. Our strategic partnerships
with Fiera Properties and Fiera Infrastructure also contribute
to our alternative strategy offering.
With the breadth of our offering, we have a solution for
every investment need.
AUM PER ASSET CLASS (AS AT DECEMBER 31, 2015)
$101.4B
100%
60.7% | $61.5B FIXED INCOME
30.4% | $30.9B CANADIAN & GLOBAL EQUITY
8.9% | $ 9.0B ALTERNATIVE STRATEGIES & ASSET ALLOCATION
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 11
Present for Our Clients
Our team of seasoned professionals works in partnership with each client, focusing on
their evolving investment needs, exceeding their expectations and building relationships.
— Institutional Markets
We offer institutional clients a complete range of traditional and alternative investment
strategies through specialized and balanced mandates. Our diverse client base includes
pension funds, endowments, foundations, religious and charitable organizations as well
as large municipal and university funds.
— Private Wealth
We offer sophisticated and highly customized management services and investment
counselling, catering to the specific needs of private clients and high-net-worth
individuals and their families, as well as endowments and foundations.
Our team’s ability to optimize client portfolios by offering both alternative (non-
traditional) investment strategies and a proactive, tactical asset allocation process, in addition
to a complete range of traditional investment strategies, sets us apart from our peers.
— Retail Markets
We offer comprehensive portfolio management solutions to help financial advisors
achieve the goals of their clients. Our traditional funds, non-traditional funds and
structured product strategies meet a broad and diverse range of investment needs.
Our mutual fund dealer, Fiera Capital Funds Inc., provides investors with direct access to
some of Canada’s award-winning mutual funds and a dedicated client services team. We
also work closely with major Canadian financial institutions and their distribution networks.
SUBSIDIARIES OF FIERA CAPITAL CORPORATION
— Fiera Properties Limited
Through direct investment in high-quality real estate across Canada, Fiera Properties
Limited offers strategies that produce growing income and stable total returns.
Strategies are comprised of institutional-grade retail, office, industrial and multi-
residential properties. Core real estate is an attractive element of a multi-asset portfolio
based on its investment characteristics and its ability to stabilize portfolio performance
and to protect against inflation.
— Fiera Infrastructure Inc.
Fiera Infrastructure Inc. is a proprietary platform that further complements Fiera Capital’s
growing alternative investments offering and aims to generate attractive, long-term
investment returns for clients. Through investments in diversified international assets
– hydro-electric projects, regulated utilities, wind and solar projects, and transportation
infrastructure – Fiera Infrastructure seeks to generate stable and predictable cash flows.
AUM PER CLIENT TYPE
(AS AT DECEMBER 31, 2015)
$101.4B
100%
INSTITUTIONAL
49.5% | $50.2B
RETAIL
26.3% | $26.7B
PRIVATE WEALTH
24.2% | $24.5B
REVENUE1 PER CLIENT TYPE
(FY 2015)
$231.4M
100%
INSTITUTIONAL
40.3% | $93.2M
RETAIL
26.2% | $60.7M
PRIVATE WEALTH
33.5% | $77.5M
1 Base management fees
12
FROM LEFT TO RIGHT Karen Jones, Vice President, Fiera Properties; Stuart Lazier, Chief Executive Officer, Fiera Properties; Kevin Stark, Manager,
Investments, Fiera Properties
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 13
FROM LEFT TO RIGHT Gregory Zelisko, Vice President, Middle Office; David Stréliski, Senior Vice President and Chief Risk Officer;
John Valentini, Executive Vice President and Chief Financial Officer
14
Rigorous Risk Management
From our investment decisions to the way we run our business day-to-day, we are
committed to adhering to industry best practices, a rigorous framework and a sound risk
management approach to the benefit of our clients, our shareholders and our employees.
RISK MANAGEMENT
Risk management is a pillar of our investment culture.
Embedded within all of our investment processes is a rigorous
approach to risk management where we strive to achieve
optimal performance within an appropriate level of risk.
Supporting our growth and diversification is our
Enterprise Risk Management team, led by Fiera Capital’s
Chief Risk Officer. This team is responsible for assessing,
monitoring and managing all risks related to our activities,
company-wide.
PORTFOLIO ADMINISTRATION
Monitoring of a broad range of portfolio metrics is performed
by our Performance Measurement and Risk Management
group. This group operates separately from the investment
function, ensuring complete independence.
INVESTMENT PRACTICES
Our Chief Investment Officers (CIOs) in Canada
and the U.S. are responsible for monitoring investment
performance and for discussing any issues with our
numerous investment teams. They oversee aspects of risk
management, operations and governance across all of our
investment activities.
A Global CIO Committee, composed of the Chairman
and Chief Executive Officer of Fiera Capital and all divisional
CIOs, is responsible for ensuring that all processes are
consistent with the firm’s investment philosophy, and that
knowledge and best practices are shared across divisions.
Fiera Capital is also committed to ensuring, through the
CIO Office concept, that portfolio managers have autonomy
and retain full discretion over both investment and portfolio
construction decisions. By maintaining a flat structure,
we preserve the firm’s entrepreneurial spirit and drive for
excellence in portfolio management.
LEGAL AND COMPLIANCE
Our Legal and Compliance group ensures that the highest
ethical standards are consistently upheld at all levels of the
organization. This function operates independently from
our investment, client service, portfolio administration
and performance measurement groups. They monitor
compliance with legal and regulatory requirements, as well
as internal policies and procedures.
Highlights
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In compliance with the Global Investment Performance Standards1 2
CPA Canada audit 5025 reports on key control procedures performed regularly
Signatory of the United Nations supported Principles for Responsible Investments (PRI)3
Member of the Canadian Coalition for Good Governance (CCGG)
Named Best Canadian Legal Department of 2015 during the International General Counsel Awards
hosted by the International Legal Alliance Summit & Awards
1 All performance schedules are available upon request.
2 Since 2013
3 Since 2009
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 15
01
02
01 Jean-Guy Desjardins
Chairman of the Board and Chief Executive Officer,
Fiera Capital Corporation
02 Sylvain Brosseau
Global President and Chief Operating Officer,
Fiera Capital Corporation
Board of Directors
Fiera Capital Corporation’s Board of Directors is comprised of seasoned executives,
committed to ensuring that we strive for the highest standards in corporate
governance and ethical behaviour, as well as performance excellence.
03
04
05
06
03 Denis Berthiaume
Senior Executive Vice President and General Manager, Wealth
Management and Life and Health Insurance, Desjardins Group
04 Brian Davis
Co-President and Co-Chief Executive Officer, National Bank
Financial Inc.
05 Raymond Laurin
Former Chief Financial Officer and Senior Vice President Finance
and Treasury, Desjardins Group
06 Jean C. Monty
Former Chairman of the Board and Chief Executive Officer,
BCE Inc.
07
08
07 Todd M. Morgan
Chairman and Chief Executive Officer, Bel Air Investment Advisors LLC
08 David Pennycook
Vice Chairman and Executive Vice President, Institutional Markets,
Fiera Capital Corporation
09
10
09 Lise Pistono
Vice President and Chief Financial Officer, DJM Capital Inc.
10 Arthur R. A. Scace
Former Chairman, McCarthy Tétrault LLP
11
12
11 David R. Shaw
Chairman of Axsium Group Ltd., Non Executive Chairman, LHH
Knightsbridge
12 Louis Vachon
President and Chief Executive Officer, National Bank of Canada
16
Management’s Discussion
and Analysis of
Fiera Capital Corporation
For the Three and Twelve-Month Periods Ended December 31, 2015
18
Basis of Presentation
26
Highlights for the Three-month period
Ended December 31, 2015
53
Capital Management
18
28
Forward-Looking Statements
Summary of Quarterly Results
54
Significant Accounting Judgments and
Estimation Uncertainties
19
Company Overview
31
Results from Operations and
Overall Performance
54
New Accounting Policies
19
42
55
Significant Events
Summary of Quarterly Results
Non-IFRS Measures
21
45
56
Market and Economic Overview
Liquidity and Capital Resources
Risks of the Business
22
51
61
Summary of Portfolio Performance
Control and Procedures
Management’s Report to the Shareholder
24
Trend Highlights
52
Financial Instruments
62
Audit and Risk Management Committee
Annual Report
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 17
The following management’s discussion and analysis (“MD&A”) dated March 16, 2016 presents an analysis of the financial condition
and results of the consolidated operations of Fiera Capital Corporation (“the Company” or “Fiera Capital” or “Firm”) for the three
and twelve-month periods ended December 31, 2015. The following MD&A should be read in conjunction with the audited
consolidated financial statements including the notes thereto, as at and for the twelve-month period ended December 31, 2015.
The audited consolidated financial statements include the accounts of Fiera Capital Corporation and its wholly owned
subsidiaries: Fiera Capital Funds Inc. (“FCFI”) which is registered with various provincial securities commissions as a mutual fund
dealer and maintains its membership with the Mutual Fund Dealer Association (MFDA), Fiera US Holding Inc. (which owns Bel Air
Investment Advisors LLC, Bel Air Management LLC, Bel Air Securities LLC, and Fiera Capital Inc., formally Wilkinson O’Grady & Co.
Inc.), Fiera Quantum GP Inc. and 9276-5072 Québec Inc. (which collectively owns a controlling 55% interest in Fiera Quantum
Limited Partnership (“Fiera Quantum L.P.”) which owns FQ ABCP GP Inc., and FQ GenPar LLC), and 8645230 Canada Inc. (which
owns Gestion Fiera Capital S.a.r.l.). All intercompany transactions and balances have been eliminated on consolidation.
Axium Infrastructure Inc. (“Axium”) (previously Fiera Axium Infrastructure Inc.) is an entity specialized in infrastructure
investments, 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 joint venture investments are included in the Company’s results
using the equity method of accounting.
Unless otherwise stated, figures are presented in Canadian dollars. Certain totals, subtotals and percentages may not reconcile
due to rounding. Certain comparative figures have been reclassified to conform with the current period’s presentation.
BASIS OF PRESENTATION
The Company prepares its consolidated financial statements in
accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”).
The policies applied in the Company’s consolidated financial
statements are based on IFRS issued and outstanding as at
December 31, 2015.
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 of the audited
consolidated financial statements.
The following MD&A should be read in conjunction with the
Company’s 2015 annual audited consolidated financial statements,
which contain a description of the accounting policies used in the
preparation of these financial statements.
The Company presents adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA”), adjusted net
earnings and cash earnings as key non-IFRS performance measures.
These non-IFRS measures are defined on page 55.
FORWARD-LOOKING STATEMENTS
Forward-looking statements, by their very nature, involve numerous
assumptions, inherent risks and uncertainties, both general and
specific, and the risk that predictions and other forward-looking
statements will prove to be inaccurate. As a result, the Company does
not guarantee that any forward-looking statement will materialize
and readers are cautioned not to place undue reliance on these
forward-looking statements. 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: Fiera Capital’s ability to retain its
existing clients and to attract new clients, Fiera Capital’s investment
performance, Fiera Capital’s reliance on major customers, Fiera
Capital’s ability to attract and retain key employees, Fiera Capital’s
ability to successfully integrate the businesses 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 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 force majeure events;
legislative and regulatory developments in Canada and elsewhere,
including changes in tax laws, the impact and consequences of
Fiera Capital’s indebtedness, potential share ownership dilution
and other factors described under “Risk Factors” in this MD&A or
discussed in other documents filed by the Company with applicable
securities regulatory authorities from time to time. These forward-
looking statements are made as at the date of this MD&A and the
Company assumes no obligation to update or revise them to reflect
new events or circumstances, except as may be required pursuant
to securities laws.
18
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 COMPANY OVERVIEW
Fiera Capital Corporation was incorporated as Fry Investment
Management Limited in 1955 and is incorporated under the laws
of the Province of Ontario. The Company is a North American asset
management firm which offers a wide range of traditional and
alternative investment solutions, including depth and expertise in
asset allocation. The Company provides investment advisory and
related services to institutional investors, private wealth clients and
retail investors. In the US, investment advisory services are provided
by the Company’s US affiliates, which are investment advisors
registered with the US Securities and Exchange Commission. Its
head office is located at 1501 Avenue McGill College, office 800,
Montreal, Quebec, Canada. The Company is listed on the Toronto
Stock Exchange (“TSX”) under the symbol “FSZ”.
SIGNIFICANT EVENTS
Fiscal 2015 was characterized by strong organic growth especially in
the US institutional sector, while the Firm continues to diversify and
strengthen its business platform in order to build a leading North
American asset manager.
ACQUISITION OF SAMSON IN THE US
On October 30, 2015, the Firm completed its previously announced
acquisition of New York based Samson Capital Advisors LLC, a
prominent US fixed income investment management firm. With this
acquisition, the Firm’s total Assets under Management amounts to
$101.4 billion as at December 31, 2015.
The combination of Samson, Wilkinson O’Grady and the US
institutional business operations form the backbone of the Firm’s
asset management platform in the US. This wholly-owned subsidiary
serves as the foundation for the Firm’s proprietary strategies in both
the institutional and private wealth sectors.
STRUCTURED PRODUCTS
> During the first quarter of 2015, the Firm successfully closed
the initial public offering of the Investment Grade Infrastructure
Bond Fund listed on the Toronto Stock Exchange (“TSX”), which is
comprised primarily of investment grade fixed income securities
of issuers that own, operate or develop infrastructure assets in
the United States. The Fund issued 6.5 million units at a price of
$10 per unit for gross proceeds of $65 million.
> During the second quarter of 2015, the Firm successfully closed
the initial public offering of its Real Asset Income and Growth
Fund, listed on the TSX. The Fund, which has been created to
invest on an actively managed basis across the capital structure
of global real asset-related issuers, raised over $53 million in
aggregate gross proceeds.
> On June 23, 2015, the Firm filed a final prospectus for an initial
public offering of its Canadian Preferred Share Trust, listed on the
TSX. The Trust, which has been created to invest in an actively
managed portfolio comprised primarily of Canadian preferred
shares, closed subsequent to quarter-end, on July 2, 2015, and
raised over $90 million in aggregate gross proceeds.
NEW MANDATES AND SUB-ADVISORY
PARTNERSHIPS
On November 9, 2015, Fiera Capital and Nissay Asset Management,
the investment arm of global insurance company Nippon Life,
announced a sub-advisory partnership, thereby expanding Fiera
Capital’s distribution capabilities into the Japanese pension market,
and more broadly, in the Asia Pacific region. The partnership
commenced with the launch of a long-only global equity ex-Japan
strategy offshore vehicle.
The Firm was awarded a new sub-advisory mandate with a
prominent European asset manager expected to fund beginning
of 2016. This will serve as a springboard for future growth in
Europe. During the fourth quarter of 2015, the Firm also won a new
US$770 million global equity mandate with one of the world’s largest
financial services companies.
Finally, with the addition of two new favourable ratings from
leading global consultants, the Firm’s total number of consultant
approvals now stands at eight.
NORMAL COURSE ISSUER BID
On October 15, 2015, Fiera Capital announced that it received
TSX approval to commence a normal course issuer bid (“NCIB”)
for a 12-month period. Under the terms of the NCIB, the Firm may
purchase up to a maximum of 3,509,288 Class A subordinate voting
shares, representing approximately 10% of the public float of Class A
subordinate shares as at December 31, 2015. The NCIB will provide
the Firm with the flexibility to purchase shares from time to time as
it considers advisable.
INDUSTRY RECOGNITION
In 2015, Fiera Capital’s continued success and strong performance
resulted in a number of industry recognitions.
Jean-Guy Desjardins, Chairman of the Board and Chief Executive
Officer, received the Award for Professional Excellence, the highest
and most prestigious distinction bestowed by the CFA Institute.
He joins past winners Warren Buffett, John Bogle, Sir John Marks
Templeton, Peter Bernstein and only nine others to win the award
in the past 24 years.
Jean-Guy Desjardins, Chairman and Chief Executive Officer, and
Sylvain Brosseau, President and Chief Operating Officer, were named
once again among the Top 25 in the Quebec’s finance industry by
Finance et Investissement, Canada’s French-language publication for
financial professionals.
The Firm was named Global Equity Manager of the Year as part
of the 2015 Professional Pensions Investment Awards, sponsored by
Aon Hewitt, in the United Kingdom. Fiera Capital’s global equities
team stood out for its one and threeyear performance as well as
the growth of its assets under management for the year ending
June 30, 2015.
The Fiera Capital Global Equity Fund received Fundata’s
FundGrade A+ annual rating for 2015. The FundGrade A+ Rating
is an objective rating system based on risk-adjusted performance,
taking into account recognized standards of the Canadian mutual
fund industry. This is the third consecutive year the Fiera Capital
Global Equity Fund has received Fundata’s FundGrade A+ rating.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 19
DIVIDEND INCREASE
The Board of Directors declared a dividend of $0.15 per Class A
subordinate voting share and Class B special voting share of Fiera
Capital, payable on April 26, 2016, to shareholders of record at the
close of business on March 29, 2016.
This represents a 7% increase and the second dividend increase
in the last twelve months.
SUBSEQUENT EVENT
On January 15, 2016, the Firm completed the sale of its equity
ownership stake in Axium to Axium. To continue providing clients
with exposure to this asset class, Fiera Capital is in the process of
establishing a new proprietary infrastructure platform.
On February 29, 2016, the Firm announced an agreement to
acquire, via its wholly-owned subsidiary Fiera US Holding Inc., Apex
Capital Management, a prominent U.S. growth equity manager
with approximately $9.7 billion in assets under management as at
December 31, 2015. This transaction will more than double Fiera
Capital’s presence in the U.S. institutional and sub-advisory retail
markets and increase total AUM to over $111 billion. The transaction
also creates attractive financial benefits and is expected to be
immediately accretive, adding 10% to 15% accretion to adjusted
earnings per share within the first full year post closing.
20
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 MARKET AND ECONOMIC OVERVIEW
North American fixed income markets saw some mixed results in
the fourth quarter, as the disinflationary impulse stemming from the
ongoing commodity rout came up against stronger growth prospects
in the US and accordingly, fed funds lift-off after several years at
rock-bottom levels. Against this divergent backdrop, Canadian fixed
income markets posted positive results, with bond yields declining
across the entire curve alongside the precipitous collapse in oil prices.
In contrast, and in an unusual deviation, US fixed income markets
posted negative results, with bond yields rising across the curve
alongside the increasingly entrenched US recovery and the prospect
for higher interest rates in the US.
Global equity markets regained some momentum late in the
quarter and posted positive results in the three months ending
December 31, 2015. Regionally speaking, performance was fairly
mixed. Once again, US equity markets led the charge, surging
forward on the back of resilient economic results and as investor’s
became increasingly comfortable with the potential for higher
interest rates in the US. International equity markets also posted
some respectable results, as ongoing reflationary policies from
central banks abroad revealed encouraging signs of reigniting
growth prospects in both Europe and Japan. Meanwhile, emerging
market equities experienced some heightened levels of volatility
as investor’s grappled between the prospect for higher US interest
rates and corresponding US dollar strength, which was at odds with
fresh evidence of a growth stabilization emanating from stimulative
monetary and fiscal policies from the People’s Bank of China. Finally,
the resource-levered Canadian equity market was the laggard
and posted a quarterly decline, a result of the precipitous slide in
commodity prices during the fourth quarter.
The theme of US dollar strength prevailed in the fourth quarter,
a result of ongoing economic outperformance in the US and as
investors braced for fed funds lift-off, which is in stark contrast to
other major central banks, which have been pursuing easing policies
(European Central Bank / Bank of Japan) or are firmly on hold (Bank
of China). Meanwhile, commodity markets receded across the
board during the fourth quarter, compounded by recent US dollar
strength. Oil prices led the decline amid few signs to an end to the
global supply glut, which pushed prices below the $40-mark. Gold
prices also pulled back amid persistent US dollar strength which
was bolstered by the prospect for higher interest rates in the US,
reducing the appeal for gold bullion. Finally, copper prices retreated
on the back of ongoing weakness in China, a key buyer of industrial
metals such as copper, bringing into question the potential impact
on demand for the red metal.
The US continues to enjoy a self-fulfilling expansion, however,
one that is not immune to the global headwinds at bay. On the
one hand, the consumer remains in remarkable shape, as solid
job creation, improving wages, and savings on gasoline prices
have bolstered retail sales and housing. However, trade and
manufacturing continue to suffer in the environment of a stronger
US dollar and weaker foreign demand. Fortunately, exports make up
a comparatively small (13%) portion of the US economy and any
near-term weakness should be buffered by ongoing resilience in US
domestic demand (70%). As widely expected, the Federal Reserve
delivered a quarter-point rate hike at its December 2015 meeting,
endorsing their confidence in the sustainability and durability of the
US recovery, while also emphasizing the familiar theme of gradualism
and caution in normalizing interest rates, so as not to derail the
economic progress made in the US.
After rebounding in the third quarter, the Canadian economy
hit a soft patch in the fourth quarter in the wake of the relentless
downward pressure on energy prices and some disappointing
economic results. However, while the low oil price environment
will prove challenging for Canada, the impact is expected to fade in
intensity going forward, while the economy becomes increasingly
reliant on a weaker Canadian dollar and a resurgent US economy to
foster growth. Despite recent softness, the Bank of Canada appears
comfortable to remain on hold, patiently awaiting the effects of past
interest rate cuts, a weaker Canadian dollar, and stronger US demand
to reignite the economy, enabling the muchneeded rotation towards
export-oriented growth.
Meanwhile, international economies continue to thrive on
the abundance of liquidity provided from central banks abroad. In
Europe, the economic recovery is well underway amid the trifecta
of low interest rates, a weaker euro, and cheaper gasoline prices.
Meanwhile, the environment of persistently weak inflation prompted
the European Central Bank to ease monetary policy even further
at its December 2015 meeting, providing an additional boon to
growth. Meanwhile, the Japanese economy dodged a technical
recession in the third quarter and continues to exceed expectations
on the economic front. As a result, the Bank of Japan has been
fairly reluctant to expand its quantitative easing program, but has
reiterated its willingness to act “if needed”, essentially pledging to
backstop the Japanese economy.
Finally, in China, we are seeing some tentative signs that recent
interest rate cuts and stepped-up government spending are helping
to stabilize growth. The latest round of economic results are showing
fresh evidence of finding a bottom, with both industrial output and
fixed-asset investment exceeding expectations, while retail sales
posted their strongest reading in 2015. While the manufacturing
sector remains in contractionary territory, service-oriented sectors
are faring much better, consistent with policymakers desire to
engineer a soft landing for the Chinese economy as it undergoes
the transition towards more sustainable, consumption-based growth
and away from exports and capital spending. As such, fears of a hard
landing in China have receded, in our view.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 21
SUMMARY OF PORTFOLIO PERFORMANCE
ANNUALIZED RATES OF RETURN
1 yr
Added
Value
Strategy
Return
5 yrs or Since Inception (SI)*
(SI if Inception < 5 yrs)
Quartile
Strategy
Return
Added
Value
Quartile
AUM
($Billion)
61.5
Inception
Date
Benchmark Name
Notes
3.22
2.74
3.59
3.55
-4.50
-12.35
3.84
6.33
6.25
5.01
-6.38
-3.09
-2.81
-11.28
1.75
-0.52
22.52
22.05
22.62
9.96
17.61
5.93
1.09
6.82
5.00
-0.30
-0.78
0.07
-0.25
0.26
2.59
-0.32
2.46
3.39
1.43
1.94
5.23
5.51
3.27
15.06
12.80
0.93
3.09
3.74
9.33
16.98
5.30
-1.52
n/a
n/a
3
4
2
3
4
n/a
n/a
2
2
2
2
2
2
4
2
2
2
2
2
n/a
n/a
n/a
n/a
n/a
n/a
5.03
5.20
5.07
7.48
5.31
1.28
7.97
9.04
10.61
8.50
3.54
3.00
4.40
5.50
7.70
6.31
23.22
14.93
19.62
2.81
12.11
7.29
4.25
6.14
4.55
0.23
0.39
0.27
0.18
0.07
1.54
1.23
2.08
2.82
1.69
1.24
0.70
2.10
2.12
13.43
12.05
2.85
4.14
4.57
1.90
11.20
6.37
1.44
n/a
n/a
2
1
2
2
3
n/a
n/a
1
1
2
3
3
3
3
2
2
1
1
1
n/a
n/a
n/a
n/a
n/a
n/a
4.0
30.9
5.0
101.4
1
2
3
4
01/01/1997
FTSE TMX Universe
01/01/2000
FTSE TMX Universe
01/01/1993
FTSE TMX Universe
01/07/1998
FTSE TMX Long Term
01/02/2002
High Yield Blended
01/02/2004
S&P/TSX Preferred Share
01/08/2011
FTSE TMX Provincials Long Term
01/09/1984
Balanced Core Blended
01/04/2013
Balanced Integrated Blended
01/03/1973
Balanced Blended Benchmark
01/01/2002
S&P/TSXComposite
01/01/2007
S&P/TSXComposite Capped
01/01/1992
S&P/TSXComposite
01/10/2009
S&P/TSXComposite High Dividend
01/01/1989
S&P/TSX Small Cap
01/01/1989
S&P/TSX Small Cap
01/04/2009
S&P 500 CAD
01/01/2010 MSCI EAFE Net CAD
01/10/2009 MSCI World Net CAD
01/10/2007
FTSE TMX T-Bill 91 day
01/08/2010
FTSE TMX T-Bill 91 day
01/04/2008
FTSE TMX T-Bill 91 day
01/11/2009
FTSE TMX Short Term
01/03/2010 No Benchmark
01/07/2013 No Benchmark
Strategies
Fixed Income Investment Strategies
Active Fixed Income Universe
Tactical Fixed Income Universe
Integrated Fixed Income Universe
Active Fixed Income Long-Term
High Yield Bonds
Preferred Shares Relative Value
Infrastructure Bonds
Balanced Investment Strategies
Balanced Core
Balanced Integrated
Balanced Fund
Equity Investment Strategies
Canadian Equity Value
Canadian Equity Growth
Canadian Equity Core
High Income Equity
Canadian Equity Small Cap Core
Canadian Equity Small Cap
US Equity
International Equity
Global Equity
Alternative Investment Strategies
North American Market Neutral Fund
Long / Short Equity Fund
Diversified Lending Fund
Multi-Strategy Income Fund
Infrastructure Fund
Real Estate Fund
Total
22
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015
SUMMARY OF PORTFOLIO PERFORMANCE
ANNUALIZED RATES OF RETURN
Strategies
Fixed Income Investment Strategies
Active Fixed Income Universe
Tactical Fixed Income Universe
Integrated Fixed Income Universe
Active Fixed Income Long-Term
High Yield Bonds
Preferred Shares Relative Value
Infrastructure Bonds
Balanced Investment Strategies
Balanced Core
Balanced Integrated
Balanced Fund
Equity Investment Strategies
Canadian Equity Value
Canadian Equity Growth
Canadian Equity Core
High Income Equity
Canadian Equity Small Cap Core
Canadian Equity Small Cap
US Equity
International Equity
Global Equity
Alternative Investment Strategies
North American Market Neutral Fund
Long / Short Equity Fund
Diversified Lending Fund
Multi-Strategy Income Fund
Infrastructure Fund
Real Estate Fund
Total
Strategy
Return
Quartile
Strategy
Return
Added
Value
Quartile
5 yrs or Since Inception (SI)*
(SI if Inception < 5 yrs)
AUM
($Billion)
61.5
1 yr
Added
Value
-0.30
-0.78
0.07
-0.25
0.26
2.59
-0.32
2.46
3.39
1.43
1.94
5.23
5.51
3.27
15.06
12.80
0.93
3.09
3.74
9.33
16.98
5.30
-1.52
n/a
n/a
3.22
2.74
3.59
3.55
-4.50
-12.35
3.84
6.33
6.25
5.01
-6.38
-3.09
-2.81
-11.28
1.75
-0.52
22.52
22.05
22.62
9.96
17.61
5.93
1.09
6.82
5.00
n/a
n/a
3
4
2
3
4
2
2
2
2
2
2
4
2
2
2
2
2
n/a
n/a
n/a
n/a
n/a
n/a
5.03
5.20
5.07
7.48
5.31
1.28
7.97
9.04
10.61
8.50
3.54
3.00
4.40
5.50
7.70
6.31
23.22
14.93
19.62
2.81
12.11
7.29
4.25
6.14
4.55
0.23
0.39
0.27
0.18
0.07
1.54
1.23
2.08
2.82
1.69
1.24
0.70
2.10
2.12
13.43
12.05
2.85
4.14
4.57
1.90
11.20
6.37
1.44
n/a
n/a
n/a
n/a
2
1
2
2
3
1
1
2
3
3
3
3
2
2
1
1
1
n/a
n/a
n/a
n/a
n/a
n/a
4.0
30.9
5.0
101.4
Notes :
Notes
1. The High Yield Blended Index is composed of 85% Merrill Lynch US High Yield
Cash Pay BB-B Hedged in CAD, 15% Merrill Lynch US High Yield Cash Pay C
Hedged in CAD.
1
2
3
4
2. Balanced Core Blended Benchmark is composed of 5% FTSE TMX T-Bill 91 Day
/ 35% FTSE TMX Universe / 32.5% S&P TSX Composite / 27.5% MSCI World
Ex-Canada Net.
3. Balanced Integrated Blended Benchmark is composed of 2% FTSE TMX T-Bill
91 Day / 36% FTSE TMX Universe / 35% S&P/TSX Composite / 27% MSCI
ACWI Net.
4. Balanced Blended Benchmark is composed of 5% FTSE TMX T-Bill 91 Day / 35%
FTSE TMX Universe / 32.5% S&P TSX Composite / 27.5% MSCI World NET CAD.
5. All returns, including those of the High Yield Bonds, US Equities, International
Equities, and Global Equities, are expressed in Canadian dollars.
6. All performance returns presented above are annualized.
7. All returns, except alternative strategies and Balanced Fund are presented gross
of management and custodial fees and without taxes but net of all trading
expenses.
8. Alternative Investment Strategies and Balanced Fund are presented net of
management fees, custodial fees, performance fees and withholding taxes.
9. The performance returns above assume reinvestment of all dividends.
10. Besides for the alternative strategies, the returns presented for any one line
above represent the returns of a composite of discretionary portfolios.
11. Each strategy listed above represents a single discretionary portfolio or group of
discretionary portfolios that collectively represent a unique investment strategy
or composite.
12. The since inception date represents the earliest date at which a discretionary
portfolio was in operation within the strategy.
13. The above composites and pooled funds were selected from the Firm’s major
investment strategies while the AUM represent the total amounts managed by
asset class.
14. Quartile rankings are provided by eVestment.
Inception
Date
Benchmark Name
01/01/1997
FTSE TMX Universe
01/01/2000
FTSE TMX Universe
01/01/1993
FTSE TMX Universe
01/07/1998
FTSE TMX Long Term
01/02/2002
High Yield Blended
01/02/2004
S&P/TSX Preferred Share
01/08/2011
FTSE TMX Provincials Long Term
01/09/1984
Balanced Core Blended
01/04/2013
Balanced Integrated Blended
01/03/1973
Balanced Blended Benchmark
01/01/2002
S&P/TSXComposite
01/01/2007
S&P/TSXComposite Capped
01/01/1992
S&P/TSXComposite
01/10/2009
S&P/TSXComposite High Dividend
01/01/1989
S&P/TSX Small Cap
01/01/1989
S&P/TSX Small Cap
01/04/2009
S&P 500 CAD
01/01/2010 MSCI EAFE Net CAD
01/10/2009 MSCI World Net CAD
01/10/2007
FTSE TMX T-Bill 91 day
01/08/2010
FTSE TMX T-Bill 91 day
01/04/2008
FTSE TMX T-Bill 91 day
01/11/2009
FTSE TMX Short Term
01/03/2010 No Benchmark
01/07/2013 No Benchmark
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 23
TREND HIGHLIGHTS
The following illustrates the Company’s trends regarding Assets under Management (“AUM”), quarterly and Last Twelve Months (“LTM”)
revenues, LTM Adjusted EBITDA, LTM Adjusted EBITDA Margin, LTM Adjusted Earnings per share, as well as the LTM dividend payout. The
trend analysis is presented in the “Results and Trend Analysis” section on page 43.
AUM
Retail
Private Wealth
Institutional
Total AUM
REVENUES
80.4
82.1
84.9
86.6
90.9
90.3
88.8
101.4
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
26.6
10.7
43.1
80.4
27.8
10.7
43.6
82.1
28.2
11.2
45.5
84.9
27.8
12.0
46.8
86.6
28.8
13.4
48.7
90.9
28.4
13.4
48.5
90.3
27.0
13.6
48.2
88.8
26.7
24.5
50.2
101.4
213.3
222.4
196.0
230.5
240.9
248.7
258.4
55.7
52.4
64.3
58.1
66.1
60.2
74.0
173.5
50.0
$B
120
100
80
60
40
20
0
$M
300
250
200
150
60
40
20
0
Other Revenues
Perfomance Fees
Retail
Private Wealth
Institutional
Total Revenues
LTM Revenues
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
1.7
0.5
14.1
15.5
18.2
50.0
1.9
4.0
15.0
15.9
18.9
55.7
1.4
0.3
15.2
15.9
19.6
52.4
1.2
10.6
15.5
16.7
20.3
64.3
1.8
0.1
15.8
18.3
22.1
58.1
1.3
8.6
15.4
17.9
22.9
66.1
2.5
(0.1)
15.0
18.9
23.9
60.2
173.5
196.0
213.3
222.4
230.5
240.9
248.7
1.8
10.9
14.5
22.5
24.3
74.0
258.4
24
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 LTM ADJUSTED EBITDA AND MARGIN
$M
100
90
80
70
60
50
40
30
20
10
0
36.3%
35.9%
35.8%
35.8%
35.2%
34.9%
34.6%
33.7%
32.8%
70.3
76.3
78.2
63.0
80.5
83.3
83.8
84.8
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
LTM Adjusted EBITDA
LTM Adjusted EBITDA Margin
%
50
45
40
35
30
25
20
15
10
5
0
LTM ADJUSTED NET EARNINGS PER SHARE AND LTM DIVIDENDS
$
1.40
1.20
1.00
0.80
0.60
0.40
0.20
-
0.85
0.78
0.42
0.44
0.91
0.46
0.97
0.99
1.02
1.06
0.48
0.50
0.52
0.54
1.01
0.56
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
LTM Dividends
LTM Adjusted Net Earnings per Share (EPS)
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 25
HIGHLIGHTS FOR THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2015
DECEMBER 31, 2015, COMPARED TO
DECEMBER 31, 2014
DECEMBER 31, 2015, COMPARED TO
SEPTEMBER 30, 2015
> Total AUM increased by $14.8 billion, or 17%, to $101.4 billion
as at December 31, 2015, compared to AUM of $86.6 billion as
at December 31, 2014.
> Total AUM increased by $12.6 billion, or 14%, to $101.4 billion
during the fourth quarter ended December 31, 2015, compared
to $88.8 billion as at September 30, 2015.
> Base management fees and other revenues for the fourth quarter
ended December 31, 2015, increased by $9.4 million, or 18%,
to $63.1 million compared to $53.7 million for the same period
last year.
> Base management fees and other revenues for the fourth quarter
ended December 31, 2015, increased by $2.8 million, or 5%, to
$63.1 million compared to $60.3 million for the previous quarter
ended September 30, 2015.
> Performance fees were $10.9 million for the fourth quarter ended
December 31, 2015, compared to $10.6 million for the same
period last year.
> Selling, general and administrative (“SG&A”) expenses and
external managers’ expenses increased by $8.3 million, or 20%,
to $49.9 million for the fourth quarter ended December 31, 2015,
compared to $41.6 million for the same period last year.
> Adjusted EBITDA increased by $0.9 million, or 4%, to
$25.7 million for the fourth quarter ended December 31, 2015,
compared to $24.8 million for the same period last year. Adjusted
EBITDA per share was $0.36 (basic and diluted) for the fourth
quarter of 2015, compared to $0.36 per share (basic) and $0.35
(diluted) for the same period last year.
> For the fourth quarter ended December 31, 2015, the Firm
recorded net earnings attributable to the Company’s shareholders
of $9.7 million, or $0.14 per share (basic) and $0.13 (diluted), a
decrease of $2.4 million, or 20%, compared to the fourth quarter
ended December 31, 2014, during which the Firm recorded
net earnings attributable to the Company’s shareholders of
$12.1 million, or $0.18 per share (basic and diluted).
> Adjusted net earnings attributable to the Company’s shareholders
for the fourth quarter ended December 31, 2015, amounted to
$21.1 million, or $0.30 per share (basic) and $0.29 (diluted),
compared to $23.5 million, or $0.34 per share (basic and
diluted), for the fourth quarter ended December 31, 2014.
> Performance fees were $10.9 million for the fourth quarter ended
December 31, 2015, compared to ($0.1) million for the previous
quarter ended September 30, 2015, and are generally recognized
in June and December of each year.
> SG&A expenses and external managers’ expenses increased
by $5.9 million, or 14%, to $49.9 million for the fourth quarter
ended December 31, 2015, compared to $44.0 million for the
previous quarter ended September 30, 2015.
> Adjusted EBITDA increased by $7.1 million, or 38%, to
$25.7 million for the fourth quarter ended December 31, 2015,
compared to $18.6 million for the previous quarter ended
September 30, 2015. Adjusted EBITDA per share was $0.36 (basic
and diluted) for the fourth quarter ended December 31, 2015,
compared to $0.27 per share (basic and diluted) for the previous
quarter ended September 30, 2015.
> For the fourth quarter ended December 31, 2015, the Firm
recorded net earnings attributable to the Company’s shareholders
of $9.7 million, or $0.14 per share (basic) and $0.13 (diluted),
an increase of $3.0 million, or 45%, compared to the previous
quarter ended September 30, 2015, during which the Firm
recorded net earnings attributable to the Company’s shareholders
of $6.7 million, or $0.10 per share (basic and diluted).
> Adjusted net earnings attributable to the Company’s shareholders
for the fourth quarter ended December 31, 2015, amounted to
$21.1 million, or $0.30 per share (basic) and $0.29 (diluted),
compared to $17.3 million, or $0.25 per share (basic and diluted),
for the previous quarter ended September 30, 2015.
26
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 HIGHLIGHTS FOR THE TWELVE-MONTH PERIOD
ENDED DECEMBER 31, 2015, WERE AS FOLLOWS:
> Base management fees and other revenues for the twelve-month
period ended December 31, 2015, increased by $32.0 million,
or 15%, to $238.9 million compared to $206.9 million for the
same period last year.
> Performance fees were $19.5 million for the twelve-month period
ended December 31, 2015, compared to $15.4 million for the
same period last year.
> SG&A expenses and external managers’ expenses rose by
$31.4 million, or 21%, to $182.5 million for the twelve-month
period ended December 31, 2015, compared to $151.1 million for
the twelve-month period ended December 31, 2014.
> Adjusted EBITDA rose by $6.6 million, or 8%, to $84.8 million for
the twelve-month period ended December 31, 2015, compared
to $78.2 million for the same period last year. Adjusted EBITDA
per share was $1.21 (basic) and $1.20 (diluted) for the twelve-
month period ended December 31, 2015, compared to $1.14 per
share (basic) and $1.12 (diluted) for the same period last year.
> For the twelve-month period ended December 31, 2015, the
Firm recorded net earnings attributable to the Company’s
shareholders of $27.6 million, or $0.40 per share (basic) and
$0.39 (diluted), compared to $27.5 million, or $0.40 per share
(basic and diluted) for the same period last year.
> Adjusted net earnings attributable to the Company’s shareholders
for the twelve-month period ended December 31, 2015, were
$70.9 million, or $1.01 per share (basic) and $1.00 (diluted),
compared to $66.7 million, or $0.97 per share (basic) and $0.96
(diluted), for the same period last year.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 27
SUMMARY OF QUARTERLY RESULTS
TABLE 1 – STATEMENTS OF EARNINGS AND ASSETS UNDER MANAGEMENT
Assets Under Management
(In $ millions)
Assets under Management
Statements of Earnings
(in $ thousands except per share data)
Revenues
Base management fees
Performance fees - Traditional Assets
Performance fees - Alternative Assets
Other revenues
Total revenues
Expenses
Selling, general and administrative expenses
External managers
Depreciation of property and equipment
Amortization of intangible assets
Interest on long-term debt and other financial charges
Accretion and change in fair value of purchase
price obligations
Restructuring and other integration costs
Acquisition costs
Changes in fair value of derivative
financial instruments
Impairment of non-financial assets
Other (income) expenses 3
Total expenses
Earnings before income taxes
Income taxes
Net earnings
Attributable to:
Company’s shareholders
Non-controlling interest
Net earnings
BASIC PER SHARE
Adjusted EBITDA 1
Net earnings
Adjusted net earnings 1
DILUTED PER SHARE
Adjusted EBITDA 1
Net earnings
Adjusted net earnings 1
As at
Variance
December 31,
2015
September 30,
2015
December 31,
2014
Quarter over
Quarter
FAV/(UNF) 2
Year over Year
FAV/(UNF) 2
101,431
88,759
86,612
12,672
14,819
For the Three-Month Periods Ended
Variance
December 31,
2015
September 30,
2015
December 31,
2014
Quarter over
Quarter
FAV/(UNF) 2
Year over Year
FAV/(UNF) 2
61,319
5,930
4,981
1,769
73,999
49,013
897
646
7,169
2,208
644
774
2,311
(342)
-
(974)
62,346
11,653
2,180
9,473
9,678
(205)
9,473
0.36
0.14
0.30
0.36
0.13
0.29
57,786
(181)
53
2,556
60,214
42,749
1,205
487
6,709
1,905
(1,431)
468
1,189
(89)
-
(864)
52,328
7,886
1,667
6,219
6,700
(481)
6,219
0.27
0.10
0.25
0.27
0.10
0.25
52,502
5,567
5,022
1,213
64,304
3,533
6,111
4,928
(787)
13,785
8,817
363
(41)
556
9,695
40,150
(6,264)
(8,863)
1,490
611
6,655
2,283
636
1,174
824
(8,284)
8,016
(38)
53,517
10,787
1,322
9,465
12,090
(2,625)
9,465
0.36
0.18
0.34
0.35
0.18
0.34
308
(159)
(460)
(303)
(2,075)
(306)
(1,122)
253
-
110
(10,018)
3,767
(513)
3,254
2,978
276
3,254
0.09
0.04
0.05
0.09
0.03
0.04
593
(35)
(514)
75
(8)
400
(1,487)
(7,942)
8,016
936
(8,829)
866
(858)
8
(2,412)
2,420
8
-
(0.04)
(0.04)
0.01
(0.05)
(0.05)
1. Adjusted EBITDA and Adjusted net earnings are non-IFRS measures. Please refer to “Non-IFRS Measures” on page 55.
2. FAV: Favourable - UNF: Unfavourable
3. Other expenses (income) include “Realized gain on investments”, “Share of (earnings) loss of joint ventures” and “(Gain) Loss on dilution of investments in
joint ventures”.
Certain totals, subtotals and percentages may not reconcile due to rounding.
28
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 TABLE 1 – STATEMENTS OF EARNINGS AND ASSETS UNDER MANAGEMENT (CONTINUED)
Statements of Earnings
(in $ thousands except per share data)
Revenues
Base management fees
Performance fees - Traditional Assets
Performance fees - Alternative Assets
Other revenues
Total revenues
Expenses
Selling, general and administrative expenses
External managers
Depreciation of property and equipment
Amortization of intangible assets
Interest on long-term debt and other financial charges
Accretion and change in fair value of purchase price obligations
Restructuring and other integration costs
Acquisition costs
Changes in fair value of derivative financial instruments
Impairment of non-financial assets
Other (income) expenses 3
Total expenses
Earnings before income taxes
Income taxes
Net earnings
Attributable to:
Company’s shareholders
Non-controlling interest
Net earnings
BASIC PER SHARE
Adjusted EBITDA 1
Net earnings
Adjusted net earnings 1
DILUTED PER SHARE
Adjusted EBITDA 1
Net earnings
Adjusted net earnings 1
For the Twelve-Month Periods Ended
Variance
December 31,
2015
December 31,
2014
Year over Year
FAV/(UNF) 2
231,421
6,228
13,306
7,462
258,417
177,691
4,825
2,030
27,119
8,852
484
2,361
4,748
445
-
(2,573)
225,982
32,435
6,771
25,664
27,631
(1,967)
25,664
1.21
0.40
1.01
1.20
0.39
1.00
200,612
6,434
9,003
6,309
222,358
145,967
5,107
1,733
25,700
7,977
2,642
3,127
2,079
(7,419)
8,016
(1,320)
193,609
28,749
5,158
23,591
27,492
(3,901)
23,591
1.14
0.40
0.97
1.12
0.40
0.96
30,809
(206)
4,303
1,153
36,059
(31,724)
282
(297)
(1,419)
(875)
2,158
766
(2,669)
(7,864)
8,016
1,253
(32,373)
3,686
(1,613)
2,073
139
1,934
2,073
0.07
-
0.04
0.08
(0.01)
0.04
1. Adjusted EBITDA and Adjusted net earnings are non-IFRS measures. Please refer to “Non-IFRS Measures” on page 55.
2. FAV: Favourable - UNF: Unfavourable
3. Other expenses (income) include “Realized gain on investments”, “Share of (earnings) loss of joint ventures” and “(Gain) Loss on dilution of investments in
joint ventures”.
Certain totals, subtotals and percentages may not reconcile due to rounding.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 29
TABLE 2 – SELECTED STATEMENTS OF FINANCIAL POSITION INFORMATION (IN $ THOUSANDS)
December 31, 2015
December 31, 2014
33,322
65,435
13,366
112,123
322,975
391,347
6,460
23,752
856,657
50,784
15,139
65,923
12,566
264,226
30,674
1,390
11,850
386,629
474,938
(4,910)
470,028
856,657
25,445
59,960
4,654
90,059
292,835
370,161
9,635
9,490
772,180
41,034
12,646
53,680
20,091
222,081
36,168
945
5,004
337,969
437,154
(2,943)
434,211
772,180
Cash, restricted cash, investments
Accounts receivable
Other current assets
Total current assets
Intangible assets
Goodwill
Investment in joint ventures
Other non-current assets
Total assets
Accounts payable and accrued liabilities
Other current liabilities
Total current liabilities
Deferred income taxes
Long-term debt
Purchase price obligations
Derivative financial instruments
Other non-current liabilities
Total liabilities
Equity
Attributable to Company’s shareholders
Attributable to Non-controlling interest
Total liabilities and equity
30
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 RESULTS FROM OPERATIONS AND OVERALL PERFORMANCE
ASSETS UNDER MANAGEMENT
Assets under management levels are critical to Fiera Capital’s business. The change in the Firm’s AUM is determined by i) the level of new
mandates (“New”); ii) the level of redemption (“Lost”); iii) the level of inflows and outflows from existing customers (“Net Contributions”);
iv) the increase or decrease in the market value of the assets held in the portfolio of investments (“Market”) and v) business acquisitions
(“Acquisitions”). For simplicity, the “Net variance” is the sum of the New mandates, Lost mandates and Net Contributions, the change in
Market value and the impact of foreign exchange rate changes. In this MD&A, the Firm analyzes its results based on its clientele type.
The following tables (Tables 3, 4 and 5) provide a summary of changes in the Firm’s assets under management.
TABLE 3 – ASSETS UNDER MANAGEMENT (IN $ MILLIONS) 1
AUM - beginning of period
Net variance
Acquisitions/Adjustment
AUM - end of period
For the Three-Month Periods Ended
December 31, 2015
September 30, 2015
December 31, 2014
88,759
3,424
9,248
101,431
90,291
(1,532)
-
88,759
84,875
1,737
-
86,612
Certain totals, subtotals and percentages may not reconcile due to rounding.
1. AUM include the foreign exchange impact.
TABLE 4 – ASSETS UNDER MANAGEMENT BY CLIENTELE TYPE –
QUARTERLY ACTIVITY CONTINUITY SCHEDULE ($ IN MILLIONS)
September 30,
2015
48,188
13,590
26,981
88,759
New
1,471
299
40
1,810
Net
Contributions
(638)
111
(195)
(722)
Lost
(153)
(143)
(122)
(418)
Market
1,121
210
237
1,568
Foreign
Exchange
Impact
188
998
-
1,186
Acquisition
/Adjustment
December 31,
2015
-
9,473
(225)
9,248
50,177
24,538
26,716
101,431
Institutional
Private Wealth
Retail
AUM - end of period
1. Acquisition of Samson
2. $0.2 billion to adjust the valuation of a specific mandate
Certain totals, subtotals and percentages may not reconcile due to rounding.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 31
QUARTERLY ACTIVITIES
Total AUM increased by $12.6 billion, or 14%, to $101.4 billion during the fourth quarter ended December 31, 2015, compared to $88.8 billion
as at September 30, 2015. The increase is due primarily to the acquisition of Samson, bringing $9.5 billion in AUM, combined with new
mandates of $1.8 billion and market appreciation of $1.6 billion during the quarter. These increases in AUM were partially offset by lost
mandates of $0.4 billion and negative net contribution of $0.7 billion during the quarter. Lastly, the US dollar exchange rate fluctuations
positively impacted AUM during the fourth quarter by approximately $1.2 billion.
The Institutional AUM increased by $2.0 billion or 4%, to $50.2 billion during the fourth quarter ended December 31, 2015, compared to
$48.2 billion from the previous quarter ended September 30, 2015. The increase was primarily driven by new mandates of $1.5 billion, mostly
in Global Equity, Liability Driven Investments, Balanced and Alternative strategies, combined with market appreciation of $1.1 billion during the
period. These increases were partially offset by negative net contributions of $0.6 billion from clients that remain invested with the firm but
that redeemed a portion of their investments as a result of liquidity needs or that rebalanced their allocation across asset classes, combined
with $0.2 billion in client losses which were driven primarily by clients that either ceased their own respective activities or clients with liquidity
needs. Lastly, the US dollar exchange rate fluctuations positively impacted AUM during the fourth quarter by approximately $0.2 billion.
The AUM related to the Private Wealth clientele increased by $10.9 billion, or 80%, to $24.5 billion during the fourth quarter ended
December 31, 2015, compared to $13.6 billion from the previous quarter ended September 30, 2015. The increase is mainly due to the inclusion
of $9.5 billion in AUM from the acquisition of Samson, combined with the positive impact of the US dollar exchange rate fluctuations of
$1.0 billion, new mandates of $0.3 billion, namely from Wilkinson and Bel Air, and market appreciation of $0.2 billion.
The AUM related to the Retail clientele decreased by $0.3 billion, or 1%, to $26.7 billion during the fourth quarter ended December 31, 2015,
compared to $27.0 billion from the previous quarter ended September 30, 2015. The decrease is mainly due to negative net contribution and
lost mandates (mostly from one major mandate resulting from repatriation of assets) of $0.2 billion and $0.1 million, respectively. These
decreases in AUM were partially offset by market appreciation of $0.2 billion during the period. Lastly, the Firm had made an adjustment of
($0.2) billion during the fourth quarter due to funds of funds presentation requirement.
TABLE 5 – ASSETS UNDER MANAGEMENT BY CLIENTELE TYPE –
YEAR-TO-DATE ACTIVITY CONTINUITY SCHEDULE (IN $ MILLIONS)
Institutional
Private Wealth
Retail
AUM - end of period
December 31,
2014
46,774
11,998
27,840
86,612
New
2,996
865
335
4,196
Lost
(1,125)
(355)
(1,035)
(2,515)
Net
Contributions
(163)
329
172
338
Foreign
Exchange
Impact
576
2,527
-
3,103
Acquisition
/Adjustment
December 31,
2015
(475)
9,473
(225)
8,773
50,177
24,538
26,716
101,431
Market
1,594
(299)
(371)
924
1. $0.5 billion to adjust the valuation of a specific mandate to its unlevered value
2. Acquisition of Samson
3. $0.2 billion to adjust the valuation of a specific mandate
Certain totals, subtotals and percentages may not reconcile due to rounding.
32
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 Year-to-Date Activity
Total AUM increased by $14.8 billion, or 17%, to $101.4 billion during the twelve-month period ended December 31, 2015, compared to
$86.6 billion as at December 31, 2014. The increase is due primarily to the acquisition of Samson, bringing $9.5 billion in AUM, combined
with new mandates of $4.2 billion, mostly from the Institutional and Private Wealth clientele, and market appreciation of $0.9 billion,
partially offset by lost mandates of $2.5 billion. Finally, the US dollar exchange rate fluctuation positively impacted the Firm’s AUM during
the twelve-month period ended December 31, 2015, by approximately $3.1 billion.
The following graphs illustrate the breakdown of the Firm’s AUM by clientele type and by asset class as at December 31, 2014, and
December 31, 2015, respectively.
AUM BY CLIENTELE TYPE
As at December 31, 2014
As at December 31, 2015
2014
54.0%
13.9%
32.1%
INSTITUTIONAL
PRIVATE WEALTH
RETAIL
49.5%
24.2%
26.3%
AUM BY ASSET CLASS
As at December 31, 2014
As at December 31, 2015
2014
31.4%
58.3%
10.3%
EQUITIES
FIXED INCOME
ALTERNATIVE AND OTHER
30.4%
60.7%
8.9%
2015
2015
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 33
REVENUE
The Firm’s revenues consist of (i) management fees, (ii) performance fees, and (iii) other revenues. Management fees are AUM-based and,
for each clientele type, revenues are primarily earned on the AUM average closing value at the end of each day, month or calendar quarter
in accordance with contractual agreements. For certain mandates, the Firm is also entitled to performance fees. The Firm categorizes
performance fees in two groups: those associated with traditional asset classes or strategies and those associated with alternative asset
classes or strategies. Other revenues are primarily derived from brokerage and consulting fees which are not AUM driven.
The following revenue analysis refers to average assets for each clientele type.
TABLE 6 – REVENUES: QUARTERLY ACTIVITY (IN $ THOUSANDS)
Institutional
Private Wealth
Retail
Total management fees
Performance fees – Traditional asset class
Performance fees – Alternative asset class
Total performance fees
Other revenues
Total revenues
For the Three-Month Periods Ended
Variance
December 31,
2015
September 30,
2015
December 31,
2014
Quarter over
Quarter
Year over
Year
24,307
22,478
14,534
61,319
5,930
4,981
10,911
1,769
73,999
23,876
18,857
15,053
57,786
(181)
53
(128)
2,556
60,214
20,298
16,662
15,542
52,502
5,567
5,022
10,589
1,213
64,304
431
3,621
(519)
3,533
6,111
4,928
11,039
(787)
13,785
4,009
5,816
(1,008)
8,817
363
(41)
322
556
9,695
Certain totals, subtotals and percentages may not reconcile due to rounding.
Current Quarter versus Prior-Year Quarter
Revenues for the fourth quarter ended December 31, 2015, increased by $9.7 million, or 15%, to $74.0 million compared to $64.3 million for
the same period last year. The increase in revenues is due mainly to the higher AUM base driving an $8.8 million improvement in management
fees, combined with higher other revenues and higher performance fees, namely from the traditional asset class.
Management Fees
Management fees increased by $8.8 million, or 17%, to $61.3 million for the fourth quarter ended December 31, 2015, compared to
$52.5 million for the same period last year. The overall increase in revenues and the increase by clientele type are as follows:
> Revenues from the Institutional clientele improved by $4.0 million, or 20%, to $24.3 million for the fourth quarter ended December 31, 2015,
compared to $20.3 million for the same quarter last year. The improvement is primarily due to the increase in net AUM, resulting from
new mandates namely from the US, market appreciation and the positive impact of the US dollar exchange rate fluctuations, compared
to the same period last year.
> Revenues from the Private Wealth clientele increased by $5.8 million, or 35%, to $22.5 million for the fourth quarter ended
December 31, 2015, compared to $16.7 million for the same period last year. The increase is primarily due to the inclusion of two
months of revenues from Samson, higher revenue resulting from new mandates, combined with the positive impact of changes in the
US dollar exchange rates.
> Revenues from the Retail clientele decreased by $1.0 million, or 6%, to $14.5 million for the fourth quarter ended December 31, 2015,
compared to $15.5 million for the same quarter last year. The decrease is mainly due to lower base AUM as at December 31, 2015 compared
to those from the comparable period of last year.
Performance Fees
Performance fees were $10.9 million for the fourth quarter ended December 31, 2015, compared to $10.6 million for the same period last
year. The increase resulted from higher performance fees from the traditional asset class due to strong fund performance recorded during the
fourth quarter of 2015, compared to the same period last year, partially offset by lower performance fees from the alternative asset classes.
Other Revenues
Other revenues increased by $0.6 million, or 46%, to $1.8 million for the fourth quarter ended December 31, 2015, compared to $1.2 million
for the same period last year. The increase is mainly due to higher consulting and brokerage fees and other non-recurring revenues.
34
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 The following graphs illustrate the breakdown of the Firm’s revenues for the three-month periods ended December 31, 2014, and
December 31, 2015, respectively.
REVENUES
2014
Revenues Q4 2014
Revenues Q4 2015
31.6%
26.0%
24.1%
16.5%
1.9%
INSTITUTIONAL
PRIVATE WEALTH
RETAIL
PERFORMANCE FEES
OTHER REVENUES
32.8%
30.4%
19.6%
14.7%
2.4%
2015
Current Quarter versus Previous Quarter
Revenues for the fourth quarter ended December 31, 2015, increased by $13.8 million, or 23%, to $74.0 million compared to $60.2 million
for the previous quarter ended September 30, 2015. The increase in revenues is mainly attributable to higher performance fees from the
traditional and alternative asset classes, which are generally recognized in June and December of each year, combined with higher base
revenue resulting from the inclusion of two months of revenue from Samson.
Management Fees
Management fees increased by $3.5 million, or 6%, to $61.3 million for the fourth quarter ended December 31, 2015, compared to $57.8 million
for the previous quarter ended September 30, 2015. The following is the breakdown of the management fees by clientele type:
> Revenues from the Institutional clientele increased by $0.4 million, or 2%, to $24.3 million for the fourth quarter ended December 31, 2015,
compared to $23.9 million for the previous quarter ended September 30, 2015, mainly as a result of new mandates from the US Significant
mandates were funded toward the end of the current quarter of 2015, and the revenue will be recognized in the coming months.
> Revenues from the Private Wealth clientele increased by $3.6 million, or 19%, to $22.5 million for the fourth quarter ended
December 31, 2015, compared to $18.9 million for the previous quarter ended September 30, 2015. This increase in revenue is mainly
attributable to the inclusion of two months of revenue from Samson.
> Revenues from the Retail clientele decreased by $0.6 million, or 4%, to $14.5 million for the fourth quarter ended December 31, 2015,
compared to $15.1 million for the previous quarter ended September 30, 2015, mainly due to a lower AUM base.
Performance Fees
Total performance fees, which are generally recorded in June and December of each year, were $10.9 million for the fourth quarter ended
December 31, 2015, resulting from strong fund performance from the traditional and alternative asset classes, compared to ($0.1) million
due to a non-recurring credit for the previous quarter ended September 30, 2015.
Other Revenues
Other revenues decreased by $0.8 million, or 31%, to $1.8 million for the fourth quarter ended December 31, 2015, compared to $2.6 million
for the previous quarter ended September 30, 2015. The decrease in other revenues is mainly due to a one-time non-recurring revenue
recorded in the previous quarter ended September 30, 2015.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 35
TABLE 7 – REVENUES: YEAR-TO-DATE ACTIVITY (IN $ THOUSANDS)
Institutional
Private Wealth
Retail
Total management fees
Performance fees – Traditional asset class
Performance fees – Alternative asset class
Total performance fees
Other revenues
Total revenues
Certain totals, subtotals and percentages may not reconcile due to rounding.
For The Twelve-Month Periods Ended
Variance
December 31, 2015
December 31, 2014
Year over Year
93,153
77,541
60,727
231,421
6,228
13,306
19,534
7,462
258,417
76,921
63,897
59,794
200,612
6,434
9,003
15,437
6,309
222,358
16,232
13,644
933
30,809
(206)
4,303
4,097
1,153
36,059
Year-to-Date December 31, 2015, versus Year-to-Date December 31, 2014
Revenues for the twelve-month period ended December 31, 2015, increased by $36.0 million, or 16%, to $258.4 million, compared to
$222.4 million for the same period last year. The increase in revenues is mainly due to the higher AUM base, driving a $30.8 million
improvement in management fees, resulting from the acquisition of Samson, new mandates, market appreciation, and the positive impact
of the US dollar exchange rate fluctuations, combined with an increase of $4.1 million in performance fees and $1.2 million of other revenues,
mostly from consulting and brokerage fees.
Management Fees
Management fees increased by $30.8 million, or 15%, to $231.4 million for the twelve-month period ended December 31, 2015, compared
to $200.6 million for the same period last year. The overall increase in management fees and the increase by clientele type are as follows:
> Revenues from the Institutional clientele increased by $16.2 million, or 21%, to $93.1 million for the twelve-month period ended
December 31, 2015, compared to $76.9 million for the same period last year. The improvement is mainly due to additional net AUM,
mostly from new mandates in the US, combined with the positive impact of the US dollar exchange rate fluctuations, as well as market
appreciation during the period.
> Revenues from the Private Wealth clientele increased by $13.6 million, or 21%, to $77.5 million for the twelve-month period ended
December 31, 2015, compared to $63.9 million for the same period last year. This increase in revenue is mainly attributable to higher
average AUM, due to the positive impact of the US dollar exchange rate fluctuations, combined with two months of revenue from Samson
during the twelve-month period ended December 31, 2015.
> Revenues from the Retail clientele increased by $0.9 million, or 2%, to $60.7 million for the twelve-month period ended December 31, 2015,
compared to $59.8 million for the same period last year. The increase is mainly attributable to four full quarters of revenues from Propel
during the twelve-month period ended December 31, 2015 compared to four months of revenues from Propel in 2014, partially offset
by a shortfall in revenue due to lower average AUM for the twelve-month period ended December 31, 2015.
Performance Fees
Total performance fees amounted to $19.5 million for the twelve-month period ended December 31, 2015, compared to $15.4 million
for the same period last year. This improvement is due to a $4.3 million increase in alternative asset class performance fees resulting from
strong fund performance whereas the level of AUM remained fairly stable, partially offset by a $0.2 million decrease in traditional asset class
performance fees due to non-recurring credits recorded in the twelve-month period ended December 31, 2015.
Other Revenues
Other revenues increased by $1.2 million, or 18%, to $7.5 million for the twelve-month period ended December 31, 2015, compared to
$6.3 million for the same period last year. The increase in other revenues is mainly due to higher consulting and brokerage fees during the
twelve-month period ended December 31, 2015.
36
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
DEPRECIATION AND AMORTIZATION
Current Quarter versus Prior-Year Quarter
SG&A expenses rose by $8.9 million, or 22%, to $49.0 million for
the three-month period ended December 31, 2015, compared to
$40.1 million for the same period last year. The increase is mainly
due to higher compensation costs and the negative impact of the US
dollar exchange rate fluctuations on US operations, combined with
the inclusion of costs related to the Samson acquisition.
Current Quarter versus Previous Quarter
SG&A expenses increased by $6.3 million, or 15%, to $49.0 million
for the three-month period ended December 31, 2015, compared to
$42.7 million for the previous quarter ended September 30, 2015.
The increase is mainly attributable to higher compensation which is
related to higher revenue from performance fees of the traditional
and alternative asset class, combined with the inclusion of two
months of operation from the Samson acquisition.
Year-to-Date December 31, 2015, versus Year-to-Date
December 31, 2014
SG&A expenses increased by $31.7 million, or 22%, to $177.7 million
for the twelve-month period ended December 31, 2015, compared
to $146.0 million for the same period last year. The increase is
mainly due to higher fixed and variable compensation to support
the business growth, higher performance fees incentive expenses,
combined with the inclusion of costs related to the Samson
acquisition and the impact of the US dollar exchange rate changes
on the US operations.
EXTERNAL MANAGERS
Current Quarter versus Prior-Year Quarter
External managers’ expenses decreased by $0.6 million, or 40%,
to $0.9 million for the fourth quarter ended December 31, 2015,
compared to $1.5 million for the same quarter last year. The decrease
in external managers’ expenses is mainly due to lower external
managers’ expenses from Bel Air resulting from the change in
revenue presentation.
Current Quarter versus Previous Quarter
External managers’ expenses decreased by $0.3 million, or 25%,
to $0.9 million for the fourth quarter ended December 31, 2015,
compared to $1.2 million for the previous quarter ended
September 30, 2015.
Year-to-Date December 31, 2015, versus Year-to-Date
December 31, 2014
External managers’ expenses decreased by $0.3 million, or 6%, to
$4.8 million for the twelve-month period ended December 31, 2015,
compared to $5.1 million for the same period last year. The decrease
is mainly due to lower external managers’ expenses from Bel Air as
a result of the change in revenue presentation.
Current Quarter versus Prior-Year Quarter
Depreciation of property and equipment remained stable at
$0.6 million for the fourth quarter ended December 31, 2015,
compared to the corresponding quarter last year.
Amortization of intangible assets increased by $0.5 million, or
8%, to $7.2 million for the fourth quarter ended December 31, 2015,
compared to $6.7 million for the same period last year, following the
acquisition of intangible assets from Samson.
Current Quarter versus Previous Quarter
Depreciation of property and equipment increased by
$0.1 million, or 32%, to $0.6 million for the fourth quarter ended
December 31, 2015, compared to $0.5 million for the previous
quarter ended September 30, 2015.
Amortization of intangible assets increased by $0.5 million, or
7%, to $7.2 million for the fourth quarter ended December 31, 2015,
compared to $6.7 million from the previous quarter ended
September 30, 2015, mainly due to the acquisition of intangible
assets from Samson.
Year-to-Date December 31, 2015, versus Year-to-Date
December 31, 2014
Depreciation of property and equipment increased by $0.3 million,
or 17%, to $2.0 million for the twelve-month period ended
December 31, 2015, compared to $1.7 million for the same period
last year.
Amortization of intangible assets increased by $1.4 million,
or 6%, to $27.1 million for the twelve-month period ended
December 31, 2015, compared to $25.7 million for the same period
last year, following the acquisition of intangible assets from Samson.
INTEREST ON LONG-TERM DEBT AND OTHER
FINANCIAL CHARGES
Current Quarter versus Prior-Year Quarter
The interest on long-term debt and other financial charges
remained stable at $2.2 million for the fourth quarter ended
December 31, 2015, compared to $2.3 million for the same quarter
last year.
Current Quarter versus Previous Quarter
The interest on long-term debt and other financial charges increased
by $0.3 million, or 16%, to $2.2 million for the fourth quarter ended
December 31, 2015, compared to $1.9 million for the previous quarter
ended September 30, 2015, following the acquisition of Samson.
Year-to-Date December 31, 2015, versus Year-to-Date
December 31, 2014
The interest on long-term debt and other financial charges increased
by $0.9 million, or 11%, to $8.9 million for the twelve-month period
ended December 31, 2015, compared to $8.0 million for the same
period last year, mainly due to the recognition of one-time financing
costs during the twelve-month period ended December 31, 2015.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 37
CHANGES IN FAIR VALUE OF DERIVATIVE FINANCIAL
INSTRUMENTS/IMPAIRMENT OF NON-FINANCIAL
ASSETS
The Company recorded a gain of $0.3 million related to changes in
the fair value of derivative financial instruments for the fourth quarter
ended December 31, 2015, compared to a gain of $0.1 million for
the previous quarter ended September 30, 2015, and compared to a
gain of $8.3 million for the fourth quarter ended December 31, 2014,
which includes a gain of $8.4 million from the value of the option
granted to a non-controlling interest. Excluding this factor, the gain
would have been an expense of $0.1 million for the quarter ended
December 31, 2014.
During the quarters ended December 31, 2015, and
September 30, 2015, the impairment of non-financial assets was nil
compared to an impairment of non-financial assets of $8.0 million
recorded during the fourth quarter ended December 31, 2014. The
value of the option granted to non-controlling interest is based on
a formula that was agreed upon by all parties during the acquisition
of the selected alternative asset management funds of GMP. This
formula uses the present value of the sum of a multiple of the
forecasted earnings before income taxes, depreciation, amortization
(“EBITDA”) and forecasted performance fees. The actual performance
of the subsidiary will affect the value of the option. Forecasts are
monitored and updated on a monthly basis, and the value of the
option is recalculated at the end of each reporting period. During the
fourth quarter of 2014, the Company completed the annual budget
for fiscal 2015 and recalculated the option value using the most
recent EBITDA attributable to Fiera Quantum L.P. As a result, as at
December 31, 2014, the Company determined that the value of the
option was nil.
ACCRETION AND CHANGE IN FAIR VALUE OF
PURCHASE PRICE OBLIGATIONS
Current Quarter versus Prior-Year Quarter
The accretion and change in fair value of purchase price obligations
remained stable at $0.6 million for the fourth quarter ended
December 31, 2015, compared to the same quarter last year.
Current Quarter versus Previous Quarter
The accretion and change in fair value of purchase price obligations
represented a charge of $0.6 million for the fourth quarter ended
December 31, 2015, compared to a gain of $1.4 million for the third
quarter ended September 30, 2015. This is due to a write-off of
purchase price obligations of $2 million recorded in September 2015
related to the closed-end funds from Propel.
Year-to-Date December 31, 2015, versus Year-to-Date
December 31, 2014
The accretion and change in fair value of purchase price obligations
represented a charge of $0.5 million for the twelve-month period
ended December 31, 2015, compared to a charge of $2.6 million for
the same period last year. This is due to a write-off of purchase price
obligation of $2 million recorded in September 2015 related to the
closed-end funds from Propel.
ACQUISITION AND RESTRUCTURING AND OTHER
INTEGRATION COSTS
Current Quarter versus Prior-Year Quarter
Acquisition and restructuring and other integration costs increased
by $1.1 million, or 54%, to $3.1 million for the fourth quarter ended
December 31, 2015, compared to $2.0 million for the same period
last year. The increase in acquisition and restructuring costs is
mainly due to the acquisition of Samson, combined with numerous
activities in setting up the US platform during the fourth quarter
ended December 31, 2015, compared to the same period last year.
Current Quarter versus Previous Quarter
Acquisition and restructuring and other integration costs increased
by $1.4 million, or 86%, to $3.1 million for the fourth quarter ended
December 31, 2015, compared to $1.7 million for the previous
quarter ended September 30, 2015. The increase is mainly due to the
acquisition of Samson, combined with the costs related to various
new initiatives during the fourth quarter of 2015.
Year-to-Date December 31, 2015, versus Year-to-Date
December 31, 2014
Acquisition and restructuring and other integration costs increased
by $1.9 million, or 37%, to $7.1 million for the twelve-month
period ended December 31, 2015, compared to $5.2 million for
the same period last year. The increase is mainly attributable to
higher acquisitions costs resulting from the acquisition of Samson
and various initiatives during the twelve-month period ended
December 31, 2015, compared to the same period last year, partially
offset by lower restructuring and other integration costs.
38
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 ADJUSTED EBITDA
Adjusted EBITDA is calculated as the difference between total revenues and SG&A expenses (excluding non-cash compensation) and external
managers’ expenses. We believe that adjusted EBITDA is a meaningful measure as it allows for the evaluation of our operating performance
before the impact of non-operating items.
TABLE 8 - ADJUSTED EBITDA 1 (IN $ THOUSANDS EXCEPT PER SHARE DATA)
Revenues
Base management fees
Performance fees
Other revenues
Total revenues
Expenses
Selling, general and administrative
External managers
Total expenses
EBITDA
Add back: Non-cash compensation
Adjusted EBITDA
Per share basic 2
Per share diluted 2
For the Three-Month Periods Ended
For the Twelve-Month Periods Ended
December 31,
2015
September 30,
2015
December 31,
2014
December 31,
2015
December 31,
2014
61,319
10,911
1,769
73,999
49,013
897
49,910
24,089
1,668
25,757
0.36
0.36
57,786
(128)
2,556
60,214
42,749
1,205
43,954
16,260
2,348
18,608
0.27
0.27
52,502
10,589
1,213
64,304
40,150
1,490
41,640
22,664
2,156
24,820
0.36
0.35
231,421
19,534
7,462
258,417
177,691
4,825
182,516
75,901
8,880
84,781
1.21
1.20
200,612
15,437
6,309
222,358
145,967
5,107
151,074
71,284
6,940
78,224
1.14
1.12
1. Adjusted EBITDA is a non-IFRS measure. Please refer to “Non-IFRS Measures” on page 55.
2. Adjusted EBITDA include EBITDA attributable to the Company’s shareholders and non-controlling interest.
Certain totals, subtotals and percentages may not reconcile due to rounding.
Current Quarter versus Prior-Year Quarter
For the fourth quarter ended December 31, 2015, adjusted EBITDA increased by $0.9 million, or 4%, to $25.7 million, or $0.36 per share
(basic and diluted), compared to $24.8 million, or $0.36 per share (basic) and $0.35 (diluted), for the same period last year.
Adjusted EBITDA for the fourth quarter ended December 31, 2015, was driven by an increase in base management fees compared to the
same period last year, mainly due to additional base management fees, positive impact of the US dollar exchange fluctuations in the US,
market appreciation as well as the acquisition of Samson, combined with higher other revenues and performance fees from the traditional
asset class. These items were partially offset by an increase in overall operating expenses, including SG&A expenses and the inclusion of the
acquired Samson.
Current Quarter versus Previous Quarter
For the fourth quarter ended December 31, 2015, adjusted EBITDA increased by $7.1 million, or 38%, to $25.7 million, or $0.36 per share
(basic and diluted), compared to $18.6 million, or $0.27 per share (basic and diluted), from the previous quarter ended September 30, 2015.
The increase is mainly due to higher performance fees in both traditional and alternative asset classes which are generally recorded in June
and December of each year, combined with higher base management fees as a result of a higher AUM base as discussed in the AUM section.
The rise in revenue was partially offset by an increase in overall operating expenses, including SG&A expenses to support business growth
and due to the inclusion of the acquired Samson operations.
Year-to-Date December 31, 2015 versus Year-to-Date December 31, 2014
For the twelve-month period ended December 31, 2015, adjusted EBITDA increased by $6.6 million, or 8%, to $84.8 million, or $1.21 per
share (basic) and $1.20 (diluted), compared to $78.2 million, or $1.14 per share (basic) and $1.12 (diluted), for the same period last year.
The increase in adjusted EBITDA for the twelve-month period ended December 31, 2015, is mainly attributable to an increase in base
management fees resulting from higher average AUM mainly due to new mandates won, the acquisition of Samson, the market appreciation
and positive change in the US dollar exchange rates, combined with higher performance fees during the period. These items were partially
offset by an overall rise in operating expenses, including SG&A expenses, and the inclusion of the acquired Samson operations.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 39
NET EARNINGS
TABLE 9 - NET EARNINGS AND ADJUSTED NET EARNINGS 1 (IN $ THOUSANDS EXCEPT PER SHARE DATA)
Net earnings attributable to the Company’s shareholders
Depreciation of property and equipment
Amortization of intangible assets
Non-cash compensation items
Impairment of non-financial assets 2
Changes in fair value of derivative financial instruments 2
Non-cash items
Restructuring and other integration costs 2
Acquisition costs 2
Acquisition and restructuring and other integration costs
Adjusted net earnings before income taxes on above-
mentioned items 2
Income taxes on above-mentioned items 2
Adjusted net earnings attributable to the
Company’s shareholders
Per share – basic
Net earnings
Adjusted net earnings 1
Per share – diluted
Net earnings
Adjusted net earnings
For the Three-Month Periods Ended
For the Twelve-Month Periods Ended
December 31,
2015
September 30,
2015
December 31,
2014
December 31,
2015
December 31,
2014
9,678
646
7,169
1,668
-
(342)
9,140
774
2,311
3,085
21,904
823
21,081
0.14
0.30
0.13
0.29
6,700
487
6,709
2,348
-
(89)
9,455
468
1,189
1,657
17,812
470
17,342
0.10
0.25
0.10
0.25
12,090
611
6,655
2,156
8,016
(8,284)
9,154
1,174
824
1,998
23,242
(269)
23,511
0.18
0.34
0.18
0.34
27,631
2,030
27,119
8,880
-
445
38,474
2,361
4,748
7,109
73,214
2,266
70,948
0.40
1.01
0.39
1.00
27,492
1,733
25,700
6,940
8,016
(7,419)
34,970
3,127
2,079
5,206
67,668
953
66,715
0.40
0.97
0.40
0.96
1. Adjusted net earnings are a non-IFRS measure. Please refer to “Non-IFRS Measures” on page 55.
2. Income tax on changes in fair value of derivative financial instruments, acquisitions and restructuring and other integration costs is estimated by using a tax rate of 30%
Certain totals, subtotals and percentages may not reconcile due to rounding.
Current Quarter versus Prior-Year Quarter
The Firm’s net earnings attributable to the Company’s shareholders decreased by $2.4 million to $9.7 million, or $0.14 per share (basic)
and $0.13 (diluted), during the fourth quarter ended December 31, 2015, compared to $12.1 million, or $0.18 per share (basic and diluted)
for the same quarter last year. The decrease in net earnings attributable to the Company’s shareholders is mainly due to higher overall
operating expenses to support business growth and the acquisition of Samson, namely higher SG&A of $8.9 million, higher acquisition costs
of $1.5 million and higher amortization of intangible assets of $0.5 million. These increases in operating expenses were partially offset by
the increase in revenues, namely higher base management fees of $8.8 million, higher performance fees of $0.3 million and higher other
revenues of $0.6 million.
Current Quarter versus Previous Quarter
For the fourth quarter ended December 31, 2015, the Firm recorded net earnings attributable to the Company’s shareholders of $9.7 million,
or $0.14 per share (basic) and $0.13 (diluted), compared to $6.7 million, or $0.10 per share (basic and diluted), for the previous quarter ended
September 30, 2015. The increase in net earnings attributable to the Company’s shareholders is mainly due to higher revenue resulting
from higher performance fees from both traditional and alternative asset classes of $11 million, which are generally recorded in June and
December of each year, combined with higher base management fees of $3.5 million, as a result of higher average AUM and the inclusion
of two months of operation of Samson. The increase in revenues was partially offset by higher overall operating expenses, namely higher
SG&A of $6.3 million; higher acquisition costs of $1.1 million, higher accretion and the inclusion of a write-off of purchase price obligations
of $2.1 million in the previous quarter compared to nil in the fourth quarter of 2015.
40
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 Year-to-Date December 31, 2015, versus Year-to-Date December 31, 2014
For the twelve-month period ended December 31, 2015, the Firm recorded net earnings attributable to the Company’s shareholders of
$27.6 million, or $0.40 per share (basic) and $0.39 (diluted), compared to $27.5 million, or $0.40 per share (basic and diluted) for the same
period last year. The increase in net earnings attributable to the Company’s shareholders is mainly due to a $30.8 million increase in base
management fees, a $4.1 million increase in performance fees and a $1.2 million increase in other revenue, combined with a $2.2 million
decrease in accretion and change in fair value of purchase price obligations. These elements were partially offset by increases of $31.7 million,
$1.7 million, $1.9 million and $0.9 million in SG&A expenses, depreciation and amortization costs, acquisition and restructuring and other
integration costs, and interest on long-term debt, respectively. Also, the needed costs related to the set-up of the US platform will generate
benefits in the upcoming quarters.
ADJUSTED NET EARNINGS
The Firm selects adjusted net earnings as one of the key non-IFRS
performance measures as it is a good indicator of the Firm’s ability to
generate cash flows. Adjusted net earnings are calculated as the sum
of net earnings (loss) attributable to the Company’s shareholders,
non-cash items, including depreciation of property and equipment,
amortization of intangible assets, after-tax changes in fair value
of derivative financial instruments, after-tax impairment of non-
financial assets, after-tax acquisition and restructuring and other
integration costs and non-cash compensation items.
Current Quarter versus Prior-Year Quarter
During the fourth quarter ended December 31, 2015, $9.2 million of
non-cash items, net of income taxes on the changes in fair value of
derivative financial instruments ($9.1 million before taxes), or $0.13
per share (basic and diluted), as well as $2.2 million, or $0.03 per
share (basic and diluted), of acquisition and restructuring and other
integration costs, net of income taxes ($3.1 million before taxes)
had an unfavourable impact on the net earnings attributable to
the Company’s shareholders. Excluding these items, adjusted net
earnings attributable to the Company’s shareholders amounted to
$21.1 million, or $0.30 per share (basic) and $0.29 (diluted) for the
fourth quarter ended December 31, 2015.
During the fourth quarter ended December 31, 2014,
$10.0 million of non-cash items, net of income taxes on the changes
in fair value of derivative financial instruments ($9.2 million before
taxes), or $0.14 per share (basic and diluted), as well as $1.4 million, or
$0.02 per share (basic and diluted), of acquisition and restructuring
and other integration costs, net of income taxes ($2.0 million before
taxes) had an unfavourable impact on the net earnings attributable
to the Company’s shareholders. Excluding these items, adjusted net
earnings attributable to the Company’s shareholders amounted to
$23.5 million, or $0.34 per share (basic and diluted) for the fourth
quarter ended December 31, 2014.
Current Quarter versus Previous Quarter
During the previous quarter ended September 30, 2015, $9.5 million
of non-cash items, net of income taxes on the changes in fair value
of derivative financial instruments ($9.5 million before taxes), or
$0.13 per share (basic and diluted), as well as $1.2 million, or $0.02
per share (basic and diluted), of acquisition and restructuring and
other integration costs, net of income taxes ($1.7 million before
taxes) had an unfavourable impact on the net earnings attributable
to the Company’s shareholders. Excluding these items, adjusted net
earnings attributable to the Company’s shareholders amounted to
$17.3 million, or $0.25 per share (basic and diluted) for the third
quarter ended September 30, 2015, compared to adjusted net
earnings attributable to the Company’s shareholders of $21.1 million
or $0.30 per share (basic) and $0.29 (diluted) for the fourth quarter
ended December 31, 2015.
Year-to-Date December 31, 2015, versus Year-to-Date
December 31, 2014
For the twelve-month period ended December 31, 2015,
$38.3 million of non-cash items, net of income taxes on the changes
in fair value of derivative financial instruments and impairment of
non-financial assets ($38.5 million before taxes), or $0.54 per
share (basic and diluted), as well as $5.0 million, or $0.07 per
share (basic and diluted), of acquisition and restructuring and other
integration costs, net of income taxes ($7.1 million before taxes)
had an unfavourable impact on the net earnings attributable to
the Company’s shareholders. Excluding these items, adjusted net
earnings attributable to the Company’s shareholders amounted
to $70.9 million, or $1.01 per share (basic) and $1.00 (diluted) for
the twelve-month period ended December 31, 2015, compared to
$66.7 million or $0.97 per share (basic) and $0.96 (diluted) for the
same period last year.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 41
SUMMARY OF QUARTERLY RESULTS
The Firm’s AUM, total revenues, adjusted EBITDA and net earnings, on a consolidated basis and including per share amounts, for each of the
Firm’s most recently completed eight quarterly periods and the last twelve months are as follows:
TABLE 10 – QUARTERLY RESULTS (IN $ THOUSANDS EXCEPT AUM IN $ MILLIONS AND PER SHARE DATA)
AUM
Total revenues
Adjusted EBITDA 1
Adjusted EBITDA margin
Net earnings attributable to
Company’s shareholders
PER SHARE – BASIC
Adjusted EBITDA 1
Net earnings attributable
to the Company’s shareholders
Adjusted net earnings attributable
to the Company’s shareholders1
PER SHARE – DILUTED
Adjusted EBITDA 1
Net earnings attributable to the
Company’s shareholders
Adjusted net earnings attributable
to the Company’s shareholders 1
PER SHARE – DILUTED
(Including non-cash compensation and
options granted) 2
Adjusted EBITDA 1
Net earnings attributable
to the Company’s shareholders
Adjusted net earnings attributable
to the Company’s shareholders 1
Last
Twelve
Months 3
Q4
Dec. 31
2015
92,852
101,431
258,417
84,781
32.8%
73,999
25,757
34.8%
Q3
Sep. 30
2015
88,759
60,214
18,608
30.9%
Q2
Jun. 30
2015
90,291
66,143
23,050
34.8%
Q1
Mar. 31
2015
90,927
58,061
17,366
29.9%
Q4
Dec. 31
2014
86,612
64,304
24,820
38.6%
Q3
Sep. 30
2014
84,875
52,371
18,085
34.5%
Q2
Jun. 30
2014
82,131
55,720
20,191
36.2%
Q1
Mar. 31
2014
80,412
49,963
15,127
30.3%
27,631
9,678
6,700
7,541
3,712
12,090
5,053
7,671
2,678
1.21
0.40
1.01
1.20
0.39
1.00
1.11
0.36
0.93
0.36
0.14
0.30
0.36
0.13
0.29
0.33
0.12
0.27
0.27
0.10
0.25
0.27
0.10
0.25
0.25
0.09
0.23
0.33
0.11
0.26
0.33
0.11
0.26
0.30
0.10
0.24
0.25
0.05
0.21
0.25
0.05
0.21
0.23
0.05
0.19
0.36
0.18
0.34
0.35
0.18
0.34
0.33
0.16
0.31
0.26
0.07
0.21
0.26
0.07
0.21
0.24
0.07
0.20
0.30
0.11
0.23
0.29
0.11
0.23
0.28
0.10
0.22
0.22
0.04
0.18
0.22
0.04
0.18
0.20
0.04
0.17
1. Adjusted EBITDA and Adjusted net earnings are non-IFRS measures. Please refer to “Non-IFRS Measures” on page 55.
2. This analysis assumes that all outstanding stock-based awards will vest and will be settled with shares of the Company (including 3,040,225 share options;
2,542,711 PSUs and 686,244 RSUs as at December 31, 2015.
3. Last Twelve Months (“LTM’’) represents the sum of the last four quarters, except for AUM, which are an average of the last four quarters.
Certain totals, subtotals and percentages may not reconcile due to rounding.
42
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015
RESULTS AND TREND ANALYSIS
The following shows the evolution of the Company since its creation through successful organic growth and various business acquisitions.
Acquisition
of Senecal
Investment Counsel
(October 2005)
Introduction of
1st Alternative
Strategy
Merger with Sceptre
Investment Counsel
(September 2010)
Acquisition of
Canadian Wealth
Management Group
Inc. (November 2012)
$0.6B
Acquisition of Propel
Capital Corporation
(September 2014)
$0.2B
Creation
of Foreign
Equity Team
Opening of
First US Office
(September 2011)
Acquisition Of Assets
From Ubs Global Asset
Mgmt. (Canada) Inc.
(January 2013)
$6B
Acquisition of
Samson Capital
Advisors LLC
(October 2015)
$9.5B
2003
2005
2006
2008
2009
2010
2011
2012
2013
2014
2015
Creation of
Fiera Capital through
Acquisition of Elantis,
Desjardins Group’s
Investment Subsidiary
(September 2003)
Acquisition of
YMG Capital
(February 2006)
Creation of
Fiera Properties
(December 2011)
Acquisition of Assets
From GMP Captial Inc.
And Creation of Fiera
Quantum (May 2013)
$0.6B
Acquisitions of Bel Air
Investment Advisors
and Wilkinson O’Grady
(October 2013)
$8.5B
Creation of
Fiera Axium
Infrastructure
(December 2008)
Listing on Toronto
Stock Exchange
(September 2010)
Acquisition
of Natcan
(April 2012)
$25B
AUM
The current quarter showed an increase in AUM compared to the
previous quarter, mainly due to the acquisition of Samson and new
mandates won during the quarter, namely in the US institutional
sector, combined with market appreciation and the positive impact
of the US dollar exchange rates, partially offset by lost mandates and
negative net contribution during the period.
The previous quarter ended September 30, 2015, showed a
decrease in AUM compared to the quarter ended June 30, 2015,
mainly due to market depreciation and lost mandates, despite an
increase in net inflows during the period, and favourable US dollar
exchange rates impact. The quarter ended June 30, 2015, showed a
decrease in AUM compared to the quarter ended March 31, 2015,
mainly due to market depreciation combined with lost mandates,
partially offset by new mandates won during the quarter. The quarter
ended March 31, 2015, showed an increase in AUM compared
to the quarter ended December 31, 2014, mainly due to market
appreciation and to the favourable impact of the US dollar exchange
rates. The quarter ended December 31, 2014, showed an increase
in AUM mainly due to new mandates obtained in the institutional
clientele, notably in the US, combined with market appreciation and
the positive impact of the US dollar exchange rates. The quarter
ended September 30, 2014, showed a significant increase in AUM
compared to the quarter ended June 30, 2014, mainly due to
important mandates won in the institutional clientele namely in
the US, combined with market appreciation and additional assets
obtained following the acquisition of Propel. The increase in AUM in
the second quarter of 2014 compared to the first quarter of 2014,
is mainly attributable to market appreciation and new mandates,
partially offset by lost mandates and net negative contributions.
Finally, the increase in AUM in the first quarter of 2014, compared to
the fourth quarter of 2013, is mainly attributable to new mandates
and market appreciation from one quarter to the next.
REVENUES
Since the acquisition of Bel Air and Wilkinson O’Grady in late 2013,
the Firm’s revenue stream is balanced between the institutional,
retail and private wealth clientele and has been constantly
progressing. Also, revenue from the US Institutional segment is
positively increasing, fueled by new mandates.
The current quarter showed an increase in revenues mainly
due to higher performance fees recorded at the end of the year,
combined with the inclusion of two months of revenue from the
Samson acquisition. It is worth noting that performance fees are
generally recorded in June and December of each year.
The previous quarter ended September 30, 2015, showed an
increase in base management fees compared to the quarter ended
June 30, 2015, mainly as a result of new mandates from the US
funded toward the end of the second quarter of 2015, for which
revenues are recognized during the third quarter of 2015, while
performance fees were lower due to the fact that they are generally
recorded in June and December of each year.
The quarter ended June 30, 2015, showed an increase in
performance fees from the alternative asset class, which are
generally recorded in June and December of each year. The quarter
ended March 31, 2015, showed an increase in base management
fees compared to the fourth quarter of 2014 as a result of a higher
AUM base. The previous quarter ended December 31, 2014, showed
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 43
ADJUSTED EBITDA MARGIN
Adjusted EBITDA margin relates adjusted EBITDA to revenues. It is
an important measure of overall operating performance because it
measures Company profitability from operations.
Adjusted EBITDA margin has fluctuated from a low of 29.9%
to a high of 38.6% during the most recent eight quarters. The
quarter ended March 31, 2014, had an adjusted EBITDA margin
of 30.3%, which is lower than the previous quarter, mainly due
to lower performance fees that are generally recorded in June and
December of each year. The following quarter ended June 30, 2014,
had an adjusted EBITDA margin of 36.2% mainly due to higher base
management fees, higher performance fees in the alternative asset
class, combined with lower SG&A expenses, particularly related to
variable compensation, compared to those from the quarter ended
March 31, 2014. The third quarter ended September 30, 2014, had
an adjusted EBITDA margin of 34.5%, a lower level compared to
the previous quarter, mainly due to lower performance fees in the
alternative asset class, which are generally recorded in June and
December of each year. The quarter ended December 31, 2014, had
an adjusted EBITDA margin of 38.6%, a higher level compared to
the previous quarter, mainly attributable to higher performance fees
which are generally recorded in December of each year, combined
with higher base management fees as a result of higher base AUM.
The quarter ended March 31, 2015, showed an adjusted EBITDA
margin of 29.9% mainly due to lower performance fees compared
to the fourth quarter ended December 31, 2014. The previous quarter
ended June 30, 2015, showed an adjusted EBITDA margin of 34.8%
mainly due to higher performance fees from the alternative asset
class compared to the first quarter of 2015. The following quarter
ended September 30, 2015, showed an adjusted EBITDA margin
of 30.9% mainly due to lower performance fees compared to the
previous quarter ended June 30, 2015.
The current quarter ended December 31, 2015, showed an
adjusted EBITDA margin of 34.8%, which is higher than the previous
quarter, mainly due to higher performance fees and higher base
management fees. Also, the upfront set-up costs of the US platform
initiative and other costs associated with building scale will generate
benefits in the upcoming quarters.
On a twelve-month basis, the current LTM adjusted EBITDA
margin was at 32.8%, which compares to the LTM adjusted EBITDA
margin of 33.7% and 34.6% reported as at September 30, 2015,
and June 30, 2015, respectively. The LTM adjusted EBITDA margin
neutralizes the impact of the timing of performance fees which are
generally recorded in the second and the fourth quarter of each year,
as well as the rise in SG&A expenses in recent quarters resulting
from various acquisitions and provides a better measure of the Firm’s
overall performance.
a significant increase in revenues mainly due to the inclusion of
performance fees from both traditional and alternative asset classes.
Also, revenue from base management fees in the fourth quarter
of 2014 were higher than those in the third quarter of 2014. This
was mainly attributable to a higher AUM base resulting from new
mandates won during the period.
The third quarter ended September 30, 2014, showed an
increase in base management fees compared to the quarter ended
June 30, 2014. Also, performance fees were lower in the third
quarter of 2014 compared to the second quarter of 2014. The
increase in revenues in the second quarter of 2014, compared to
the first quarter of 2014 is mainly attributable to the increase in base
management and performance fees in the alternative asset class.
Finally, the quarter ended March 31, 2014, was characterized by an
increase in base management fees and other revenue resulting from
a full quarter of Bel Air and Wilkinson O’Grady operations and net
additional AUM, combined with market appreciation.
ADJUSTED EBITDA
Adjusted EBITDA has been on an increasing trend over the last eight
quarters. Adjusted EBITDA increased in the current quarter ended
December 31, 2015, compared to the previous quarter mainly due to
higher performance fees and base management fees, partially offset
by higher overall operating expenses. Adjusted EBITDA decreased in
the third quarter of 2015 compared to the second quarter of 2015,
mainly due to lower performance fees in the alternative asset class,
which are generally recorded in June and December of each year.
Adjusted EBITDA increased in the second quarter of 2015,
compared to the first quarter of 2015, mainly due to higher
performance fees from the alternative asset class, which are generally
recorded in June and December of each year, partially offset by
higher SG&A expenses namely related to variable compensation.
Adjusted EBITDA decreased in the first quarter of 2015, compared
to the fourth quarter of 2014, mainly due to lower performance
fees which are generally recorded in June and December of each
year, despite the fact that base management fees were higher and
SG&A stayed at the same level compared to those from the fourth
quarter of 2014. Adjusted EBITDA increased in the fourth quarter of
2014, compared to those in the third quarter of 2014, mainly due to
higher performance fees which are generally recorded in December
of each year, combined with higher base management fee revenues,
partially offset by higher SG&A expenses. Adjusted EBITDA decreased
in the third quarter of 2014, compared to the second quarter of 2014,
mainly due to lower performance fees in the alternative asset class,
which are generally recorded in June and December of each year.
Adjusted EBITDA increased in the second quarter of 2014,
compared to the first quarter of 2014, mainly due to higher base
management and performance fees, combined with lower SG&A
expenses, particularly relating to variable compensation. Finally,
the first quarter ended March 31, 2014, showed a decrease in
adjusted EBITDA compared to the previous quarter, mainly due to
lower performance fees and higher SG&A expenses. The increase in
SG&A is mainly due to the inclusion of a full quarter of Bel Air and
Wilkinson O’Grady operations, combined with higher performance-
based investment manager compensation.
44
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 NET EARNINGS ATTRIBUTABLE TO THE
COMPANY’S SHAREHOLDERS
Net earnings attributable to the Company’s shareholders have
fluctuated from a low of $2.7 million to a high of $12.1 million over
the last eight quarters. Net earnings attributable to the Company’s
shareholders were impacted by various initiatives resulting in higher
SG&A expenses, acquisitions and restructuring and other integration
costs. Also, performance fees generally recorded in the second quarter
and the fourth quarter of each year contributed to the fluctuation of
the net earnings attributable to the Company’s shareholders.
The current quarter’s net earnings attributable to the Company’s
shareholders were higher than those of the previous quarter ended
September 30, 2015, mainly due to higher performance fees from
the traditional and alternative asset class, combined with higher base
management revenues.
ADJUSTED NET EARNINGS PER SHARE ATTRIBUTABLE
TO THE COMPANY’S SHAREHOLDERS
Adjusted net earnings attributable to the Company’s shareholders
per share are a good performance indicator of the Company’s ability
to generate cash flows. Adjusted net earnings attributable to the
Company’s shareholders have fluctuated from a low of $0.18 per
share (basic and diluted) to a high of $0.34 per share (basic and
diluted) over the last eight quarters.
The quarter ended March 31, 2013, closed with adjusted net
earnings attributable to the Company’s shareholders of $0.18 per
share (basic and diluted), mainly due to lower performance fees
in the traditional and alternative asset classes recorded in the
fourth quarter of 2013. The second quarter ended June 30, 2014,
LIQUIDITY AND CAPITAL RESOURCES
showed adjusted net earnings attributable to the Company’s
shareholders of $0.23 per share (basic and diluted), mainly due to
higher performance fees from the alternative asset class recorded
in the second quarter of 2014. The following quarter ended
September 30, 2014, closed with adjusted net earnings attributable
to the Company’s shareholders of $0.21 per share (basic and
diluted), as a result of higher base management fees, partially
offset by lower performance fees compared to the previous quarter.
The fourth quarter of 2014 showed a high level of adjusted net
earnings attributable to the Company’s shareholders of $0.34 per
share (basic and diluted), mainly due to higher performance fees
recorded during the quarter.
For the first quarter of 2015, the Firm recorded net earnings
attributable to the Company’s shareholders of $0.21 per share
(basic and diluted), a level lower than that of the fourth quarter
of 2014, mainly due to lower performance fees, partially offset by
higher base management fees recorded during the quarter. For
the following quarter ended September 30, 2015, adjusted net
earnings attributable to the Company’s shareholders were $0.25
per share (basic and diluted), representing a slight decrease from
the previous quarter resulting mainly from lower performance fees
from the alternative asset class, compared to $0.26 per share (basic
and diluted) recorded for the second quarter ended June 30, 2015.
Finally, the current quarter ended December 31, 2015, closed with
adjusted net earnings attributable to the Company’s shareholders
of $0.30 per share (basic) and $0.29 (diluted), mainly due to higher
performance fees from both traditional and alternative asset class,
combined with higher base management fees as a results of higher
average AUM and the inclusion of Samson.
CASH FLOWS
The ability to consistently generate free cash flows from operations in excess of dividend payments, share repurchases, capital expenditures,
and ongoing operating expenses remains one of the Company’s fundamental financial goals. The Firm’s principal uses of cash, other than
for operating expenses, include (but are not limited to) dividend payments, debt repayments, capital expenditures, business acquisitions
and stock buy-backs.
The following table provides additional cash flows information for Fiera Capital.
TABLE 11 – SUMMARY OF CONSOLIDATED STATEMENTS OF CASH FLOWS (IN $ THOUSANDS)
Cash generated by operating activities
Cash used in investing activities
Cash used in financing activities
Net increase (decrease) in cash
Effect of exchange rate changes on cash denominated in foreign currencies
Cash, beginning of period
Cash, end of period
For The Twelve-Month Periods Ended
December 31, 2015
December 31, 2014
66,856
(34,600)
(25,852)
6,404
2,441
16,880
25,725
63,735
(20,712)
(48,987)
(5,964)
1,070
21,774
16,880
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 45
YEAR-TO-DATE ACTIVITIES
Cash generated by operating activities amounted to $66.8 million for the twelve-month period ended December 31, 2015. This amount
resulted from $80.4 million of cash generated from net earnings adjusted for depreciation and amortization, non-cash compensation,
accretion of purchase price obligations, interest on long-term debt and other financial charges, income tax expenses, as well as changes in
fair value of derivative financial instruments, which was offset by $12.6 million of cash used for income tax paid and $1 million of negative
change in non-cash operating working capital.
Cash used in investing activities was $34.6 million for the twelve-month period ended December 31, 2015, resulting from $24.0 million
of cash used related to the Samson acquisition, combined with $9.4 million cash used for the purchase of property and equipment and
$1.7 million and $1.9 million of cash used for the purchase of intangible assets and deferred charges, respectively. These uses of cash were
partially offset by $3.4 million of cash generated from the sale of the short- term investments.
Cash used in financing activities was $25.9 million for the twelve-month period ended December 31, 2015, resulting from a $37.9 million
dividend payment, $3.5 million of cash used for the settlement of share-based compensation, $8.7 million for long-term debt interest
payments and financing charges, and $3.1 million of cash used to purchase shares for cancellation. These uses of cash in financing activities
were partially offset by $23.0 million of additional net long-term debt, and by $4.2 million from the issuance of share capital during the period.
Finally, the positive impact of exchange rate changes on cash denominated in foreign currencies was $2.4 million during the twelve-
month period ended December 31, 2015.
YEAR-TO-DATE DECEMBER 31, 2015 VERSUS YEAR-TO-DATE DECEMBER 31, 2014
Cash generated in operating activities amounted to $66.8 million for the twelve-month period ended December 31, 2015, compared to
$63.7 million for the same period last year. The variation of $3.1 million is mainly attributable to an increase of $6.5 million in adjusted
EBITDA as described in the “Adjusted EBITDA” section, combined with a decrease of $3.4 million in income tax paid and income tax expenses,
partially offset by a negative change in non-cash operating working capital of $5.2 million, and a negative change in shares of earnings and
gain on dilution of investment in joint ventures of $1.3 million in the twelve-month period ended December 31, 2015, compared to the
same period last year.
Cash used in investing activities amounted to $34.6 million for the twelve-month period ended December 31, 2015, compared to
$20.7 million of cash used for the same period last year. The variation in cash used in investing activities is mainly attributable to higher cash
used for the Samson acquisition in 2015 compared to the Propel acquisition in 2014 ($24.0 million and $9.9 million respectively in business
combinations), combined with higher cash used for the purchase of property and equipment in 2015 compared to 2014 ($9.4 million and
$1.3 million respectively). These increases in cash used in investing activities in 2015 compared to those in 2014 were partially offset by a
one-time payment of $9.5 million for purchase price obligations during the twelve-month period ended December 31, 2014, compared to
nil in the same period of 2015.
Cash used in financing activities was $25.9 million for the twelve-month period ended December 31, 2015, compared to $49.0 million
of cash used in financing activities for the same period last year. The year-over-year variation is mainly attributable to higher net long-term
debt of $36 million (additional long-term debt of $23 million in 2015, compared to $13.3 million of long-term debt repayment in 2014),
partially offset by higher cash used for the settlement of share- based compensation of $3.5 million, higher dividends paid of $6.5 million,
higher financing charges of $1.1 million, and higher cash used to purchase shares for cancellation of $3.1 million.
Finally, the positive impact of exchange rate changes on cash denominated in foreign currencies was $2.4 million during the twelve-month
period ended December 31, 2015, compared to $1.1 million for the same period last year.
CASH EARNINGS1
The Company defines cash earnings as net earnings attributable to the Company’s shareholders, adjusted for depreciation and amortization,
changes in fair value of derivative financial instruments and non-cash compensation items. Cash earnings are an indicator of our ability to
pay out dividends, to continue operations, and to invest in new businesses. We believe that cash earnings are an important measure used
to assess our core operating performance.
46
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 The following table provides details of the Firm’s cash earnings and cash earnings per share for the twelve-month periods ended
December 31, 2015 and 2014, respectively.
TABLE 12 – CASH EARNINGS AND CASH EARNINGS PER SHARE (IN $ THOUSANDS)
Net earnings attributable to the Company’s shareholders
Adjusted for the following items:
Depreciation of property and equipment
Amortization of intangible assets
Non-cash compensation
Impairment of non-financial assets
Changes in fair value of derivative financial instruments
Cash earnings attributable to the Company’s shareholders
Cash earnings per share (basic)
Cash earnings per share (diluted)
For The Twelve-Month Periods Ended
December 31, 2015
December 31, 2014
27,631
2,030
27,119
8,880
-
445
66,105
0.94
0.93
27,492
1,733
25,700
6,940
8,016
(7,419)
62,462
0.91
0.90
1. Cash earnings and cash earnings per share are non-IFRS measures. Please refer to “Non-IFRS Measures” on page 55.
Certain totals, subtotals and percentages may not reconcile due to rounding.
For the twelve-month period ended December 31, 2015, $29.1 million of depreciation of property and equipment, and amortization of
intangible assets, as well as $9.3 million of non-cash compensation, impairment of non-financial assets and change in fair value of derivative
financial instruments had an unfavourable impact on the net earnings attributable to the Company, compared to $27.4 million and $7.5 million
for the same period last year, respectively. When added back to the Firm’s net earnings attributable to the Company’s shareholders of
$27.6 million, or $0.40 per share (basic) and $0.39 (diluted), cash earnings attributable to the Company’s shareholders amounted to
$66.1 million, or $0.94 per share (basic) and $0.93 (diluted) for the twelve-month period ended December 31, 2015, compared to $62.5 million
or $0.91 per share (basic) and $0.90 (diluted) for the same period last year.
LONG-TERM DEBT
TABLE 13 – REVOLVING FACILITY (IN $ THOUSANDS)
Term facility
Revolving facility
Deferred financing charges
December 31, 2015
December 31, 2014
-
265,270
(1,044)
264,226
177,756
45,244
(919)
222,081
REVOLVING FACILITY
On June 26, 2015, the Company amended the terms of its credit agreement to include, amongst others, the following changes:
> Conversion of the previous facility consisting of a $75 million senior unsecured revolving facility maturing in April 2017 and a $175 million
term facility maturing in April 2017 into a $300 million senior unsecured revolving facility, that can be drawn in Canadian or US dollar
equivalent at the discretion of the Company, and repayable in full in March 2020.
> Revised financial covenants applicable for the different test periods including in periods after certain acquisitions.
> Inclusion of Fiera US Holding Inc., a wholly-own subsidiary, as a borrower.
The Company evaluated the amendments and concluded that the revised terms were substantial and constituted an extinguishment of
the previous facility. As a result, unamortized deferred financing charges of $0.7 million relating to the previous facility were written off in
the consolidated financial statements on the date of the amendment.
The Company plans to use the additional amounts available under the amended revolving facility to finance future acquisitions and for
general corporate purposes, if needed.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 47
As at December 31, 2015, the total amount of long-term debt was comprised of $128.3 million and US$99.0 million ($137 million)
($129.5 million and US$80.6 million ($93.5 million) was outstanding as at December 31, 2014).
Under the terms of the loan agreement, the Company must satisfy certain restrictive covenants including minimum financial ratios.
These restrictions include maintaining a maximum ratio of funded debt to EBITDA and a minimal interest coverage ratio. EBITDA, a non
IFRS measure, is defined in the revolving facility 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.
As at December 31, 2015, all debt covenant requirements were met.
On May 1, 2012, the Company entered into an interest rate swap agreement for a notional amount of $108 million, to exchange its
monthly variable interest rate payments for fixed interest payments at the rate of 1.835% until March 2017. The amendments to the credit
facility had no impact on the interest rate swap agreements.
CONTRACTUAL OBLIGATIONS AND CONTINGENT LIABILITIES
Contractual Obligations
The Company has the following contractual obligations as at December 31, 2015:
TABLE 14 – CONTRACTUAL OBLIGATIONS ($ IN THOUSANDS)
Long-Term Debt
Purchase Price Obligations
Operating Leases
Total Obligations
Carrying
Amount
265,270
42,235
n/a
n/a
Total
265,270
48,697
77,876
391,843
2016
-
11,845
11,934
23,779
2017
-
10,426
10,416
20,842
2018
Thereafter
-
10,426
7,943
18,369
265,270
16,000
47,583
328,853
Contingent Liabilities
In the normal course of business, the Company is party to business and employee-related claims. The potential outcomes related to existing
matters faced by the Company are not determinable at this time. The Company intends to defend these actions, and management believes
that the resolution of these matters will not have a material adverse effect on the Company’s financial condition.
OFF-BALANCE SHEET ARRANGEMENTS
At December 31, 2015, Fiera Capital was not party to any off-balance sheet arrangements, including guarantees, derivatives, except
for the above-mentioned floating-to-fixed interest rate swap agreement, and variable-interest entities. We do not expect to enter into
such agreements.
SHARE CAPITAL
As at December 31, 2015, the Company had 51,536,848 Class A subordinate voting shares and 19,847,577 Class B special voting shares for
a total of 71,384,425 outstanding shares compared to 48,715,873 Class A subordinate voting shares and 20,039,750 Class B special voting
shares for a total of 68,755,623 outstanding shares as at December 31, 2014.
48
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 SHARE-BASED PAYMENTS
Stock Option Plan
The following table presents transactions that occurred during the twelve-month periods ended December 31, 2015, and 2014, under the
terms of the Company’s stock option plan:
TABLE 15 – OPTIONS TRANSACTIONS
Outstanding – beginning of period
Granted
Exercised
Forfeited
Expired
Outstanding – end of period
Options exercisable – end of period
December 31, 2015
December 31, 2014
Number of
Class A Share Options
Weighted-Average
Exercise Price ($)
Number of
Class A Share Options
Weighted-Average
Exercise Price ($)
3,346,037
255,000
(356,173)
(204,639)
-
3,040,225
1,225,485
9.32
11.64
6.82
12.74
-
9.58
7.04
2,942,522
692,427
(249,236)
(32,176)
(7,500)
3,346,037
1,230,298
8.12
13.43
6.77
8.10
5.59
9.32
6.55
Deferred Share Unit Plan (“DSU”)
In 2007, the Board adopted a deferred share unit plan (the “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 of 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, 2015, management had recorded a liability for an amount of approximately $0.162 million for the 14,295 units
($0.174 million for 13,681 units as at December 31, 2014), outstanding under the DSU Plan.
Restricted Share Unit Plan (“RSU”)
On December 11, 2012, the Board adopted a RSU Plan for the purposes of providing certain employees with the opportunity to acquire
Class A 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 Company. The maximum number of issuable Class A Shares under all plans is
10% of the issued and outstanding shares of the Company calculated on a non-diluted basis. The vesting date is the third anniversary of the
award date. The Board may determine the number of shares each eligible employee can receive. RSU expense is recorded at fair value and
is amortized over the vesting period on a straight-line basis.
The following table presents transactions that occurred during the twelve-month periods ended December 31, 2015 and 2014 in the Company’s
RSU plans.
TABLE 16 – RSU TRANSACTIONS
Outstanding – beginning of period
Granted
Reinvestments in lieu of dividends
Vested 1
Forfeited
Outstanding – end of period
1. 1,760 Restricted share units representing the last dividend were paid in cash.
Number of RSUs Outstanding
2015
540,508
273,964
30,872
(140,630)
(18,470)
686,244
2014
367,548
166,559
15,573
-
(9,172)
540,508
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 49
As at December 31, 2015, management had recorded a liability for an amount of $2.9 million for the 686,244 units ($2.2 million for
540,508 units as at December 31, 2014), outstanding under the RSU Plan. An expense of $2.2 million and $1.6 million was recorded during
the years ended December 31, 2015 and 2014, respectively for these grants.
Restricted Share Plan (“RSP”)
On October 30, 2015, in relation with the acquisition of Samson, the Board adopted a Restricted Share Plan for the purposes of retaining
certain employees and providing them with the opportunity to participate in the growth and development of the Company. The maximum
number of issuable Class A Shares under the plan is 224,699 of the issued and outstanding shares of the Company. The Board may determine
the number of restricted shares each eligible employee can receive. The Restricted Shares vest over a three-year period with one third vesting
each year. Accelerated vesting occurs in certain circumstances, including death or disability. The Restricted Shares are entitled to dividends,
and have voting rights. The plan administrator will reinvest the proceeds of the dividends received into additional shares of the Company.
On October 30, 2015, the Company issued 224,699 Restricted Shares. In conjunction with the Restricted Share issuance, the Company
issued 224,699 Class A Shares which are held by the plan administrator. During the year, the plan administrator purchased an additional
2,346 Class A Shares with the proceeds of the dividends received.
The share-based payment expense is measured based on the fair value of the Restricted Shares on the grant date and is recognised over
the vesting period on a straight-line basis. An expense of $0.227 million was recorded during the year ended December 31, 2015 for this grant.
Performance Share Unit Plan (“PSU”)
PSU plan applicable to business units
The following table presents transactions that occurred during the twelve-month periods ended December 31, 2015 and 2014 in the Company’s
PSU plans applicable to BU.
TABLE 17 – PSU TRANSACTIONS
Outstanding – beginning of period
Granted
Settled
Forfeited
Outstanding – end of period
2015
1,735,705
1,101,589
(234,583)
(60,000)
2,542,711
2014
1,345,321
415,384
-
(25,000)
1,735,705
During the year ended December 31, 2015, the Company granted 1,092,273 PSUs which will vest in equal tranches in either the next 4 or
5 years and 9,316 PSUs which are cliff vesting on December 31, 2018. The formula to determine the value of the PSUs upon vesting is based
on a multiple of the revenues applicable to the business unit while the performance condition is based on a revenue growth objective. The
PSUs granted are anticipated to be equity-settled.
The weighted-average grant date fair value of the PSUs awarded is $14.24 per share. The fair value of the PSUs granted was determined at
inception using a discounted cash flow model which values the underlying PSUs using different long-term projections such as the expected
revenue growth rate, client retention rate and discount rate. The Company determined that it is currently probable that only the first two
years of the awards granted during the period will vest. During the year ended December 31, 2015, 234,583 PSUs vested and were settled.
The Company settled the vested PSUs by paying $3.5 million in cash in lieu of issuing Class A Shares. The Company treated the transaction
as a repurchase of an equity interest and recorded a deduction in the amount of $3.5 million in contributed surplus. The settling of these
PSUs in cash was due to unique circumstances. The Company still has the intention to settle the remaining tranches by issuing shares.
An expense of $4.4 million and $4.0 million was recorded during the years ended December 31, 2015 and 2014, respectively for the
PSU plan applicable to BU. For the year ended December 31, 2015, the expense is attributable to equity-settled grants and cash-settled
grants for an amount of $4.4 million and ($0.029 million), respectively ($3.96 million and $0.043 million, respectively for the year ended
December 31, 2014).
PSU plan
An expense of $0.9 million and nil was recorded during the years ended December 31, 2015 and 2014, respectively for this PSU plan. For the
year ended December 31, 2015, the expense is attributable to equity-settled grants and to cash-settled grants for an amount of $0.2 million
and $0.7 million, respectively (nil for the year ended December 31, 2014).
50
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 Post-Employment Benefit Obligations
The Company contributes to defined contribution plans for its employees. Contributions for the year ended December 31, 2015, amount to
$2.4 million ($2.26 million for the year ended December 31, 2014).
Subsequent to a business combination realized in September 2010, the Company assumed the role of sponsor of an 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 January 1, 2013, and the next actuarial valuation date is January 1, 2016.
RELATED PARTY TRANSACTIONS
The Company entered into the following significant transactions with its shareholders and their related companies:
TABLE 18 – RELATED PARTY TRANSACTIONS (IN $ THOUSANDS)
Base management, performance and other revenues
Selling, general & administrative expenses
Reference fees
Other
Interest on long-term debt
Changes in fair value of derivative financial instruments
Acquisition costs
Shares issued as settlement of the purchase price obligations
For the Twelve-Month Periods Ended
December 31, 2015
December 31, 2014
52,326
49,290
1,592
2,320
7,782
445
120
8,500
1,583
1,775
7,864
301
-
8,500
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. Fees are at prevailing market prices and are settled on normal trade terms. The
amounts due under the Company’s revolving facility, presented as long-term debt are due to syndicate of lenders which includes two related
parties of the Company. During the second quarter of 2015, the Company paid $1.0 million to the syndicate of lenders for different transaction-
related fees in relation to the amendment of the revolving facility. The derivative financial instruments liability is due to a related company.
The Company has carried out the following transaction with joint ventures: other revenue of $0.4 million for the year ended December 31,
2015 ($1.2 million for the year ended December 31, 2014).
CONTROL AND PROCEDURES
The Chairman of the Board & Chief Executive Officer (“CEO”) and
the Executive Vice President & Chief Financial Officer (“CFO”),
together with Management, are responsible for establishing and
maintaining adequate disclosure controls and procedures (“DC&P”)
and internal controls over financial reporting (“ICFR”), as defined in
National Instrument 52-109.
Fiera Capital Corporation’s (“Corporation”) internal control
framework is based on the criteria published in the Internal Control-
Integrated Framework (COSO framework 2013) report issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with IFRS.
The CEO and CFO, supported by Management, evaluated the
design of the Corporation’s DC&P and ICFR as at December 31, 2015,
and have concluded that they were effective. Furthermore, no
significant changes to the internal controls over financial reporting
occurred during the quarter ended December 31, 2015, except as
described below:
On October 30, 2015, the Corporation acquired 100% of
the issued and outstanding shares of Samson Capital Advisors
LLC (“Samson”). Management is in the process of completing its
review of the design and operating effectiveness of ICFR for this
acquisition. At December 31, 2015, risks were however mitigated
as management was fully apprised of any material events affecting
these acquisitions. In addition, all the assets and liabilities acquired
were valued and recorded in the consolidated financial statements
as part of the purchase price allocation process and Samson results
of operations were also included in the Corporation’s consolidated
results. Samson constitutes 1.3% of revenue, (1.6%) of the net
earnings of the year, 5.7% of the total assets, 3% of the current
assets, 6% of the non-current assets, 1% of the current liabilities
and none of the non-current liabilities of the consolidated financial
statements for the year ended December 31, 2015. In the coming
fiscal year, management will complete its review of the design of
ICFR for Samson, and assess its effectiveness.
Following the above mentioned acquisition, Management
had to adjust the consolidation process to incorporate the new
US subsidiary.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 51
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 of risks as at
December 31, 2015.
The Company’s business is the management of investment
assets. The key performance driver of the Company’s results is
the level of assets under management. The level of assets under
management is directly tied to the Company’s investment returns
and ability to retain existing assets and attract new assets.
The Company’s audited consolidated statements of financial
position include 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’s assets under management,
the following discussion relates 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, equity
market fluctuation risks, credit risk, interest rate risk, currency 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 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 as at December 31, 2015 and 2014, is comprised
of mutual fund and pool fund investments under its management
with a fair value of $4.7 million as at December 31, 2015 and
$7.1 million as at December 31, 2014. Mutual fund and pooled
fund investments are comprised of a well-diversified portfolio of
investments in equities and bonds. Mutual fund and pool fund units
have no specific maturities.
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 Company’s principal financial assets which are subject
to credit risk are cash, restricted cash, investments and accounts
receivable. The carrying amounts of financial assets on the
consolidated statements of financial position represent the
Company’s maximum credit exposure at the consolidated
statements of financial position dates.
The credit risk on cash, restricted cash and investments is limited
because the counterparties are chartered and commercial banks with
high-credit ratings assigned by national credit-rating agencies.
The Company’s credit risk is attributable primarily to its trade
receivables. The amounts disclosed in the consolidated statements
of financial position 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
and financial condition of the counterparties. In order to reduce
its risk, management has adopted credit policies that include
regular review of client balances. With the exception of National
Bank of Canada and related companies which represent 21% as at
December 31, 2015 (20% as at December 31, 2014), no customer
represents more than 10% of the Company’s accounts receivable as
at December 31, 2015 and 2014.
INTEREST RATE RISK
The Company is exposed to interest rate risk through its cash and
long-term debt. The interest rates on the long-term debt are variable
and expose the Company to cash flow interest rate risk.
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 a portion of it into fixed rates that were 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
Currency risk is the risk that the fair value or future cash flows of
a financial instrument will fluctuate because of changes in foreign
exchange rates. The Company’s exposure relates to cash, accounts
receivable, accounts payable and accrued liabilities and long-
term debt denominated in US dollars and the operations of its US
businesses which are predominantly in US dollars. The Company
manages a portion of its exposure to foreign currency by matching
asset and liability positions. More specifically, the Company matches
the long-term debt in foreign currency with long-term assets in the
same currency.
A 10% change in the fair value of the Company’s equity and
equity-related holdings as at December 31, 2015, and 2014 has an
impact of increasing or decreasing other comprehensive income by
$0.47 million and $0.71 million respectively.
Based on the balances outstanding (excluding long-term debt)
as at December 31, 2015, a 5% increase/decrease of the US dollar
against the Canadian dollar would result in an increase/decrease in
total comprehensive income of $0.9 million (2014 - $1.1 million).
52
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 The above calculation does not include the US dollar long-term debt,
which is hedged by a long-term asset in the same currency. This long-
term asset is not included in the consolidated statement of financial
position given that it is an intercompany balance.
LIQUIDITY RISK
The Company’s objective is to have sufficient liquidity to meet
its liabilities when they become 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 long-term debt
to finance its activities and to respect its obligations as they
become due.
DETERMINATION OF FAIR VALUE OF
FINANCIAL INSTRUMENTS
The fair value represents 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.
The fair value of cash, restricted cash, accounts receivable,
accounts payable and accrued liabilities, dividend payable, 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
$3.8 million as at December 31, 2015 and $6.5 million as at
December 31, 2014, while the fair value is $4.7 million as at
December 31, 2015 and $7.1 million as at December 31, 2014. The
unrealized gain of $0.8 million (net of income taxes of $0.12 million)
as at December 31, 2015 and $0.6 million (net of income taxes
of $0.083 million) as at December 31, 2014, are reflected in
accumulated other comprehensive income.
The fair value of long-term debt approximates its carrying
amount, 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.
The Company measured the fair value of the subscription receipts
receivable of $1.8 million and subscription receipts obligation of the
same amount using level 2 inputs in the fair value hierarchy. The
Company determined the fair value by using observable market
inputs such as the discount rate.
The fair value of the option granted to non-controlling interest
is based on a formula that was agreed upon by all parties during the
acquisition of the selected alternative asset management funds of
GMP. The fair value of the option is determined using the present
value of the sum of a multiple of the forecasted earnings before
income taxes, depreciation, amortization (“EBITDA”) and forecasted
performance fees. The actual performance of the subsidiary
directly impacts the value of the option. Forecasts are monitored
and updated on a monthly basis, and the value of the option is
recalculated at the end of each reporting period. During 2014, the
Company completed the annual budget of the subsidiary for fiscal
year 2015 and recalculated the option value using the most recent
forecasted EBITDA attributable to Fiera Quantum L.P. As a result,
the Company determined that the value of the option was nil as
at December 31, 2014. The fair value remained unchanged as at
December 31, 2015.
In addition, the Company has the option to purchase the
45% interest owned by the key member of the GMP Investment
Management team at any time following December 31, 2015. This
option can be settled in cash or by the issuance of Class A Shares at
the option of Fiera Capital. The formula to determine the purchase
price of the remaining 45% is the same that is used to calculate
the value of the option granted to non-controlling interest, which
considers the sum of a multiple of the forecasted EBITDA and
forecasted performance fees.
Derivative financial instruments consist only of interest rate swap
contracts, The Company determines the fair value of its interest rate
swap contracts by applying valuation techniques, using observable
market inputs such as interest rate yield curves as well as 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 it is consistent with accepted economic methods for pricing
financial instruments.
Changes in fair value of derivative financial instruments presented
in the consolidated statement of earnings include changes in the
fair value of the interest rate swap contracts described above of
$0.4 million and $0.3 million for the years ended December 31, 2015
and 2014, respectively and the changes in the fair value of the
option granted to non-controlling interest of nil and ($7.7) million
for the years ended December 31, 2015 and 2014, respectively
for a total of $0.4 million and ($7.4) million for the years ended
December 31, 2015 and 2014, respectively. Refer to Note 6, Financial
Instruments, of the audited consolidated financial statements for
additional information.
CAPITAL MANAGEMENT
The Company’s capital comprises share capital, (deficit) retained
earnings and long-term debt, less cash. 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.
During the years ended at December 31, 2015 and 2014, all
regulatory requirements and exemptions were met.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 53
SIGNIFICANT ACCOUNTING JUDGMENTS
AND ESTIMATION UNCERTAINTIES
This MD&A is prepared with reference to the audited consolidated
financial statements for the three and twelve-month periods ended
December 31, 2015. A summary of the Company’s significant
accounting judgements and estimation uncertainties are presented
in Note 3 to the Company’s audited consolidated financial
statements for the year ended December 31, 2015. Some of the
Company’s accounting policies, as required under IFRS, require
the Management to make subjective, complex judgements and
estimates to matters that are inherent to uncertainties.
NEW ACCOUNTING POLICIES
ADOPTION OF NEW IFRS
The following revised standards are effective for annual periods
beginning on January 1, 2015 and their adoption has not had any
impact on the amounts reported or disclosures made in these
financial statements but may affect the accounting for future
transactions, arrangements, or disclosures in the Company’s 2015
annual financial statements.
Annual Improvements to IFRS (2010-2012) and
(2011-2013) Cycles
In December 2013, the IASB published annual improvements on the
2010-2012 and the 2011-2013 cycles which included narrow-scope
amendments to a total of nine standards. Modifications of standards
that may be relevant to the Company include amendments made
to clarify items including the definition of vesting conditions in
IFRS 2 – Share-Based payment, disclosure on the aggregation of
operating segments in IFRS 8 – Operating segments, measurement
of short-term receivables and payables under IFRS 13 – Fair value
measurement, definition of related party in IAS 24 – Related party
disclosures, and other amendments. Most of the amendments were
effective for annual periods beginning on or after July 1, 2014.
IFRS ISSUED BUT NOT YET ADOPTED
The Company has not applied the following new and revised IFRS
that have been issued but are not yet effective:
IFRS 9 – Financial Instruments
In July 2014, the IASB finalized IFRS 9, bringing together the
financial asset and financial liability classification and measurement,
impairment of financial assets and hedge accounting phases of the
IASB project. IFRS 9 provides a single model for financial asset
classification and measurement that is based on contractual
cash flow characteristics and on the business model for holding
financial assets. IFRS 9 also introduces a new impairment model
for financial assets not measured at fair value through profit or
loss. This version adds a new expected loss impairment model and
limited amendments to classification and measurement of financial
assets and liabilities. IFRS 9 replaces IAS 39 – Financial Instruments:
Recognition and Measurement and is mandatorily effective for
annual periods beginning on or after January 1, 2018, and is to be
applied retrospectively. Early adoption permitted. The Company
is still evaluating the impact of this standard on its consolidated
financial statements.
IFRS 15 – Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15 – Revenue from Contracts
with Customers. The new standard provides a comprehensive
framework for recognition, measurement and disclosure of revenue
from contracts with customers, excluding contracts within the
scope of the standards on leases, insurance contracts and financial
instruments. In July 2015, the IASB affirmed its proposal to defer
the effective date by one year. Application of IFRS 15 is currently
mandatory for annual periods beginning on or after January 1, 2018,
and is to be applied retrospectively. Early adoption is permitted.
The Company is still evaluating the impact of this standard on its
consolidated financial statements.
IFRS 16 – Leases
In January 2016, the IASB issued IFRS 16 – Leases. It supersedes the
IASB’s current lease standard, IAS 17, which required lessees and
lessors to classify their leases as either finance leases or operating
leases and to account for those two types of leases differently.
IFRS 16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases. It introduces a single lessee
accounting model and requires a lessee to recognize assets and
liabilities for all leases with a term of more than twelve months
and for which the underlying asset is not of low value. This new
standard will come into effect for annual periods beginning on or
after January 1, 2019. Earlier application is permitted. The Company
is still evaluating the impact of this standard on its consolidated
financial statements.
Amendments to IFRS 11 – Joint Arrangements
In May 2014, the IASB issued an amendment to this standard
requiring business combination accounting to be applied to
acquisitions of interests in a joint operation that constitute a
business. The amendment is effective for annual periods beginning
on or after January 1, 2016, and is not expected to have a significant
impact on the consolidated financial statements.
Amendments to IAS 38 – Intangible Assets and IAS 16 –
Property, Plant and Equipment
In May 2014, the IASB issued amendments to these standards to
introduce a rebuttable presumption that the use of revenue-based
amortization methods for intangible assets is inappropriate. The
amendment is effective for annual periods beginning on or after
January 1, 2016 with early adoption permitted and is not expected to
have a significant impact on the consolidated financial statements.
54
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 Amendments to IFRS 10 – Consolidated Financial
Statements and IAS 28 – Investments in Associates and
Joint Ventures
In September 2014, the IASB issued amendments to these standards
to clarify the treatment of the sale or contribution of assets from
an investor to its associate or joint venture. The extent of gains
and losses arising on the sale or contribution of assets depends
on whether the assets sold or contributed constitute a business.
In August 2015, the IASB published an exposure draft proposing
an indefinite deferral of the effective date for these amendments.
Application of the amendments to IFRS 10 and IAS 28 are currently
mandatory for annual periods beginning on or after January 1, 2016
and is to be applied prospectively. Early adoption is permitted and
is not expected to have a significant impact on the consolidated
financial statements.
Annual Improvements to IFRS (2012-2014) Cycle
In September 2014, the IASB published annual improvements on
the 2012-2014 cycle which included narrow-scope amendments to
a total of four standards. Modifications of standards that may be
relevant to the Company include amendments made to provide: (1)
specific guidance for cases when an entity reclassifies an asset from
held-for-sale to held-for-distribution and vice versa in IFRS 5 – Non-
current assets held-for-sale, (2) additional guidance on whether a
servicing contract is continuing involvement in a transferred asset
and clarification on offsetting disclosures in condensed interim
financial statements in IFRS 7 – Financial Instruments: Disclosures,
(3) clarification that the high quality bonds used in estimating the
discount rate for post-employment benefits should be denominated
in the same currency as the benefits paid under IAS 9 – Employee
Benefits, (4) clarification of the term “elsewhere in the interim report”
in IAS 34 – Interim Financial Reporting. Most of the amendments are
effective for annual periods beginning on or after July 1, 2016. Early
adoption is permitted. The Company is still evaluating the impact of
these standards on its consolidated financial statements.
Amendments to IAS 1 – Presentation of Financial Statements
In December 2014, the IASB published amendments to this standard
to clarify materiality, aggregation and disaggregation of items
presented on the statement of financial position, statement of
earnings, and statement of comprehensive income as well as the
order of notes to the financial statements. The amendments apply
prospectively for annual periods beginning on or after January 1, 2016
with early adoption permitted. The Company is still evaluating the
impact of this standard on its consolidated financial statements.
NON-IFRS MEASURES
Adjusted EBITDA is calculated as the difference between total
revenues and SG&A expenses (excluding non-cash compensation)
and external managers’ expenses.
Adjusted net earnings are calculated as the sum of net earnings
(loss) attributable to the Company’s shareholders, non-cash items,
including depreciation of property and equipment, amortization of
intangible assets, after-tax changes in fair value of derivative financial
instruments, after-tax impairment of non-financial assets, after-tax
acquisition and restructuring and other integration costs and non-
cash compensation items.
Cash earnings are calculated as the sum of net earnings (loss)
attributable to the Company’s shareholders, non-cash items,
including depreciation of property and equipment, amortization
of intangible assets, changes in fair value of derivative financial
instruments, impairment of non-financial assets and non-cash
compensation items.
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 one relies 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.
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 recognized measures
under IFRS. For example, some 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 from the calculation of non-IFRS
measures to be non-recurring and less relevant to evaluate our
performance, some of these items may be recurring and, accordingly,
may reduce available cash. 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 the reader should not consider them in isolation, or as
substitutes in the analysis of our results as reported under IFRS.
Because of these limitations, we rely primarily on our results as
reported in accordance with IFRS and use non-IFRS measures
only as a supplement. In addition, because other companies may
calculate non-IFRS measures differently than we do, these measures
may not be comparable to similarly titled measures reported by
other companies.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 55
RISKS OF THE BUSINESS
Fiera Capital’s business is subject to a number of risk factors,
including but not limited to the following:
Clients are not committed to a 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 who 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 revenue
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 $23.6 billion of AUM as
of December 31, 2015, representing approximately 23% of Fiera
Capital’s $101.4 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 as a result of competitive pressures
could lead to a loss of clients and a decline in revenue
Fiera Capital’s business is dependent on the highly skilled and
often highly specialized individuals it employs. The contribution of
these individuals to Fiera Capital’s Investment Management, Risk
Management and Client Service teams plays an important role in
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 the Company. 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 to ensure we are an employer of choice,
will be effective in 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.
Integration of 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 expected
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 or employees or to achieve the expected
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
expected 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 revenue
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
56
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 particular level of AUM or revenue 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
a 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
because of its impact on Fiera Capital’s corporate image. Reputational
risk is inherent in virtually all 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 that
all Fiera Capital’s employees are required to observe.
Change(s) in the investment management industry could
result in a decline in revenue
Fiera Capital’s ability to generate revenue 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 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 to implement innovative products and services, may require
additional human resources. The 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 civil liability regime for secondary
market disclosure, the ability to obtain insurance on reasonable
economic terms may be even more difficult in the future.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 57
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 civil liability regime for secondary market disclosure
in certain jurisdictions, dissatisfied shareholders may more easily
make claims against Fiera Capital, its directors and its officers.
Certain of Fiera Capital’s US subsidiaries, namely Bel Air Advisors
(and its subsidiary, Bel Air Management) and Fiera Capital Inc.
(formerly, Wilkinson O’Grady), are registered investment advisers
with the SEC. Fiera Capital’s other US subsidiary, Bel Air Securities,
is a registered US broker-dealer. Many aspects of these entities’
asset management and/or broker-dealer activities are subject to
US federal and state laws and regulations primarily intended to
benefit the investor or client. These laws and regulations generally
grant supervisory agencies and bodies broad administrative powers,
including the power to limit or restrict Bel Air, Bel Air Management
or Fiera Capital Inc. from carrying on their asset management or
broker-dealer activities (including, but not limited to, by suspending
individual employees, revoking registrations or imposing other
censures and significant fines) in the event that they, their employees
or their affiliates fail to comply with such laws and regulations.
The regulatory environment in which Bel Air, Bel Air Management
and Fiera Capital Inc. operate in the United States is in a period of
transition. In the United States, there has been active debate over
the appropriate extent of regulation and oversight of investment
advisers and broker-dealers. New or revised legislation or regulations
imposed by the SEC or other US governmental regulatory authorities
or self-regulatory organizations, or changes in the interpretation
or enforcement of existing laws and rules by these governmental
authorities and self-regulatory organizations, may impose additional
costs or other adverse effects on Bel Air, Bel Air Management, Fiera
Capital Inc., Fiera Capital or any of its affiliates.
Indebtedness
The Third Amended and Restated Credit Agreement contains
various covenants that limit the ability of Fiera Capital and certain
of its subsidiaries (collectively, the “Borrower Parties”) to engage in
specified types of transactions and imposes significant operating
restrictions, which may prevent the Borrower Parties from pursuing
certain business opportunities and taking certain actions that may
be in their interest.
These covenants limit Fiera Capital’s 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 remain obligated in
respect of, or permit to be outstanding guarantees;
> pay dividends on, redeem or repurchase Fiera Capital’s
capital stock;
> make investments and loans;
> make acquisitions;
> incur capital expenditures;
> 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 their business activities;
> amend or modify in any way the Borrower Parties’ constitutive
documents, charters, by-laws or jurisdiction of incorporation;
> amend any material provision of the Material Contracts (as
described therein); and
> consolidate, merge, wind-up, liquidate or sell all or substantially
all of their respective assets.
These restrictions may prevent the Corporation from taking actions
that it believes would profit its 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 Third 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 of Fiera Capital
will cause an event of default.
Although at present 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,
could result in an event of default under the Third Amended and
Restated Credit Agreement.
Furthermore, a portion of Fiera Capital’s indebtedness, including
the borrowings under the Third 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.
58
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 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 causes
management expense ratios or the Funds to become uncompetitive,
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 reside on or is
transmitted through them. An externally caused information security
incident, such as a hacker attack, a virus or a 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.
The administrative services provided by Fiera Capital depend on
software supplied by third parties. Failure of a key supplier, the loss
of suppliers’ products or problems or errors related to such products
would most 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, and breach
of client contracts, reputational harm or legal liability, which in turn
could materially adversely affect Fiera Capital’s business, financial
condition or profitability.
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.
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 Funds’ 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.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 59
Potential dilution
Fiera Capital is authorized to issue an unlimited number of Class A
Subordinate Voting Shares, Class B Special Voting Shares and
Preferred Shares and may decide to issue additional Shares or
Preferred Shares in order to finance investment projects or raise
liquidity, which could dilute the share ownership.
Further, under the Investor Rights Agreement, National Bank
benefits from the National Bank Anti-Dilution Rights and Fiera L.P.
benefits from the Fiera L.P. Anti-Dilution Rights, which are described
in the Company’s Annual Information Form (“AIF”) under the sections
“Description of Material Contracts – Investor Rights Agreement” and
“Sceptre Investor Agreement”, respectively. However, as of the
March 12, 2015 closing of the Secondary Offering, National Bank
no longer benefits from the National Bank Anti-Dilution Rights as it
reduced its position in Fiera Capital to an ownership percentage less
than one-third of the issued and outstanding Shares.
As a result of an issuance pursuant to the Fiera L.P. Anti-Dilution
Rights described under the section “Description of Material Contracts
– Sceptre Investor Agreement” of the Company’s AIF, the share
ownership of the Corporation would be diluted.
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 its 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 ultimately be 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 its business, financial condition or profitability. There can
be no assurance that Fiera Capital will be able to obtain insurance
coverage on favourable economic terms.
Major shareholders
Jean-Guy Desjardins indirectly owns approximately 35.9% of the
outstanding voting interest of Fiera L.P., a controlling shareholder
of Fiera Capital holding 28.15% of the outstanding voting shares of
Fiera Capital. DFH, an indirect wholly-owned subsidiary of FCD, owns
36.2% of the outstanding voting interest of Fiera L.P. As a result, Mr.
Desjardins is in a position to exercise significant control over matters
of Fiera Capital requiring shareholder approval, including the election
of directors and the determination of significant corporate actions.
Although DFH’s minority interest in Fiera L.P. does not constitute a
controlling interest in Fiera Capital, DFH is entitled to appoint two of
the eight directors of Fiera Capital that the holders of Class B Special
Voting Shares are entitled to appoint.
As of the date hereof, National Bank holds approximately 22.7%
of the outstanding voting shares of Fiera Capital, by way of its wholly-
owned subsidiary Natcan. Pursuant to the Investor Rights Agreement,
National Bank is entitled to appoint two of the four directors of Fiera
Capital that the holders of Class A Subordinate Voting Shares are
entitled to appoint.
60
MANAGEMENT’S DISCUSSION AND ANALYSISFor the Three and Twelve-month Periods Ended December 31, 2015 MANAGEMENT’S REPORT TO THE SHAREHOLDER
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 International Financial Reporting Standards 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 and Risk Management Committee meets periodically with
management and with auditors to discuss the Corporation’s financial reporting and internal control. The Audit
and Risk Management 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 and Risk Management Committee.
In addition, the Corporation’s independent auditors, Deloitte LLP, 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
Global President and
Chief Operating Officer
Jean-Guy Desjardins
Chairman of the Board and
Chief Executive Officer
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 61
ANNUAL REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE
TO OUR SHAREHOLDERS
Fiera Capital Corporation (“Fiera Capital” or “Fiera” or the “Company”) is committed to providing high-quality,
reliable and relevant financial reporting. Accordingly, Fiera Capital ensures it maintains appropriate accounting
practices, effective internal controls and strong risk management practices.
Fiera Capital’s Audit and Risk Management Committee (“Committee”) actively assists the Board of Directors
(“Board”) in fulfilling its oversight responsibilities in the following areas:
i) the integrity of Fiera’s interim and annual consolidated financial statements as well as and related information
including their respective Management’s Discussion and Analysis and the Annual Information Form (“AIF”);
ii) the adequacy of the design and the effectiveness of the application of Fiera’s system of disclosure controls
and procedures, as well as of its system of internal controls with respect to Fiera’s financial reporting, asset
protection and fraud detection;
iii) the evaluation of Fiera’s external auditor including its qualifications, independence and appointment;
iv) the appropriateness of Fiera’s risk management program and practices;
v) Fiera’s compliance with legal and regulatory requirements, as well as with its ethical standards; and
vi) any assignments or functions as delegated to it by the Board.
The Committee examines the information resulting from this governance process every quarter.
In connection with fulfilling its duties, the Committee met five times in 2015. Senior members of Fiera Capital’s
management team attended these meetings. The agenda of the meetings included systematic private sessions,
respectively with Fiera Capital’s Chief Financial Officer, Chief Compliance Officer and Chief Risk Officer. In these
private sessions, the Committee and the aforementioned senior management members had candid discussions
regarding Fiera Capital’s financial disclosures, financial and non-financial risk management, as well as legal,
accounting, auditing and internal control matters. Such meetings support direct communication between the
Committee and the senior management maintaining their independence.
AUDIT AND RISK MANAGEMENT COMMITTEE CHARTER
The Committee is governed by the Audit and Risk Management Committee Charter (the “Charter”). The Charter
is contained in the Company’s AIF, which is available on Fiera Capital’s website (www.fieracapital.com). The
Charter is examined at least annually to review the Committee’s responsibilities and ensure its compliance with
the most current regulatory requirements.
The Charter was last amended on November 9, 2015. Three amendments were approved by the Board.
Two included additional oversight responsibilities, the first being over Fiera Capital’s cybersecurity program
and practices regarding emerging risks such as cyberattacks and the second over Fiera’s implementation of an
integrated enterprise risk management program. The third amendment concerns the delegation to management
of its oversight responsibility for the integrity of the annual and semi-annual financial statements of Fiera Capital’s
mutual funds, pooled funds and closed-end funds, in line with common industry practice.
In accordance with sound corporate governance practices, the Committee annually reviews its efficiency and
effectiveness in executing its mandate as set out in its Charter. In 2015, the self-assessment of the Committee was
effected through a formal questionnaire distributed and reviewed by the Governance sub-committee of the Board.
The Committee reports to Fiera’s Board on a quarterly basis and, when necessary, makes recommendations.
62
INDEPENDENT AUDITOR
Fiera Capital’s independent auditor, Deloitte LLP (“Deloitte”), reports directly to the Committee, which has sole
authority over its appointment or discharge if required, its oversight, its compensation, and its annual evaluation.
The Committee supervises the work of Deloitte and examines its audit proposal, its mandate, its annual audit
strategy, its interim and annual reports, its communications to management, and associated management’s
comments and action plans. At each meeting, the Committee holds discussions with Deloitte within an in-camera
private session. The audit results, the internal control over financial reporting review as well as the overall quality
of financial reporting are reviewed and discussed with Deloitte.
In addition, the Committee contributes to ensuring the independence of the Auditor by approving all audit
and non-audit services to be conducted by Deloitte in accordance with Fiera’s Pre-Approval of the External Audit
and Non-Audit Services Policy.
The Chair of the Committee meets with Deloitte on a regular basis to foster open dialogue.
In 2015, the Committee reviewed and discussed with management its assessment of the independent auditor.
The Committee concluded to recommend the reappointment of Deloitte as independent auditor of Fiera Capital.
AUDIT AND RISK MANAGEMENT COMMITTEE ACTIVITIES FOR FISCAL YEAR 2015
In 2015, in addition to its statutory responsibilities, the following activities were conducted by the Committee:
> Monitored the internal control over the financial reporting program based on the criteria of the 2013 COSO
framework for ensuring the requirements of NI 52-109 are met;
> Oversaw the launch of an information technology control framework based on the requirements of COBIT 5
for certification purposes;
> Oversaw the launch of the following corporate programs:
- an integrated Enterprise Risk Management program to support the mitigation of key risks having a material
impact on Fiera’s performance;
- a cyberattack prevention and detection program;
- a whistleblower program ensuring mechanisms for anonymous submission of potential ethics and
compliance issues regarding accounting, internal accounting controls or auditing matters; and
- an internal control program over financial reporting of public mutual and closed-end funds for
certification purposes.
> Reviewed the corporate insurance coverage program;
> Reviewed and monitored the inspection reports issued by the Autorité des marchés financiers;
> Reviewed Fiera Capital’s Code of Conduct, which is available on Fiera’s website (www.fieracapital.com);
> Approved a Protocol with Deloitte for sharing the Canadian Public Accountability Board (CPAB) inspection
findings related to Fiera’s file, when applicable;
> Held in-camera discussions with the Chief Operating Officer and the Chairman of the Human Resources
sub-committee of the Board;
> Reviewed and approved the Committee’s 2015 annual work plan and priorities; and
> Attended a training session on new accounting standards and key accounting issues relating to
Fiera Capital’s environment.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 63
AUDIT AND RISK MANAGEMENT COMMITTEE MEMBERSHIP
The Committee’s membership comprises three directors of which two are independent (Mr. Raymond Laurin and
Mr. Jean C. Monty) and the third (Mrs. Lise Pistono) appointed under the section 3.3(2) exemption in NI 52-110
as disclosed in the Company’s AIF.
EDUCATION AND EXPERIENCE OF AUDIT AND RISK MANAGEMENT COMMITTEE MEMBERS
The following is a brief description of the qualifications, education and experience of each current member of
the Committee that are relevant to the execution of their responsibilities as members of the Committee.
Mr. Laurin, FCPA, FCA, Adm.A, ASC, is a Corporate Director. During his 32-year career with Desjardins Group,
he served namely as Senior Vice President, Finance and Treasury, and Chief Financial Officer. In addition, he was
functional manager of the Desjardins Group Audit and Inspection Commission, the Fonds de sécurité Desjardins
and the Desjardins Group Pension Plan. Mr. Laurin is a Fellow of the Ordre des comptables agréés du Québec.
Mr. Monty is a Corporate Director. Mr. Monty had a 28-year career with BCE Inc., where he was Chairman of
the Board and Chief Executive Officer from 1997 to 2002. He was previously President and Chief Executive Officer
of Nortel Networks Corporation from 1993 to 1997. Mr. Monty is a member of the Order of Canada. He currently
sits on the board of several international companies.
Mrs. Pistono, CPA, CA, is Vice President and Chief Financial Officer of DJM Capital Inc. Previously, she was with
KPMG supporting public companies in their financial disclosure requirements, and served as a senior finance officer
for a Bell Canada subsidiary as well as a private office furniture and supplies company. Mrs. Pistono also has over
20 years of teaching experience at l’École des hautes études commerciales (HEC Montréal) in Applied Economics,
Quantitative Methods and Accounting.
The members of the Audit and Risk Management Committee
Raymond Laurin, Chair
Jean C. Monty
Lise Pistono
March 16, 2016
Montréal
64
Consolidated Financial Statements
of Fiera Capital Corporation
December 31, 2015 and 2014
66
Independent Auditor’s Report
69
73
Consolidated Statements of
Financial Position
Notes to the Consolidated
Financial Statements
67
70
Consolidated Statements of Earnings
Consolidated Statements of Changes
in Equity
68
Consolidated Statements of
Comprehensive Income
72
Consolidated Statements of Cash Flows
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 65
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Fiera Capital Corporation
We have audited the accompanying consolidated financial statements of Fiera Capital Corporation, which
comprise the consolidated statements of financial position as at December 31, 2015 and December 31, 2014,
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 years then ended 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 position
of Fiera Capital Corporation as at December 31, 2015 and December 31, 2014, and its financial performance and
its cash flows for the years then ended in accordance with International Financial Reporting Standards.
March 16, 2016
Montreal, Quebec
___________________
1. CPA auditor, CA, public accountancy permit No. A116635
66
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of Canadian dollars, except per share data)
For the years ended December 31,
Revenues
Base management fees
Performance fees
Other revenues
Expenses
Selling, general and administrative expenses (Note 18)
External managers
Depreciation of property and equipment (Note 9)
Amortization of intangible assets (Note 10)
Impairment of non-financial assets (Note 10)
Acquisition costs
Restructuring and other integration costs (Note 4)
Earnings before realized gain on investments, interest on long-term debt and other financial charges, accretion and
change in fair value of purchase price obligations, (gain) loss on dilution of investments in joint ventures, changes
in fair value of derivative financial instruments and share of earnings of joint ventures
Realized gain on investments
Interest on long-term debt and other financial charges
Accretion and change in fair value of purchase price obligations
(Gain) loss on dilution of investments in joint ventures
Changes in fair value of derivative financial instruments (Note 6)
Share of earnings of joint ventures (Note 5)
Earnings before income taxes
Income taxes (Note 12)
Net earnings
Net earnings attributable to :
Company’s shareholders
Non-controlling interest
Earnings per share (Note 15)
Basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements.
2015
$
231,421
19,534
7,462
258,417
177,691
4,825
2,030
27,119
-
4,748
2,361
218,774
39,643
(522)
8,852
484
(83)
445
(1,968)
32,435
6,771
25,664
27,631
(1,967)
25,664
0.40
0.39
2014
$
200,612
15,437
6,309
222,358
145,967
5,107
1,733
25,700
8,016
2,079
3,127
191,729
30,629
(80)
7,977
2,642
23
(7,419)
(1,263)
28,749
5,158
23,591
27,492
(3,901)
23,591
0.40
0.40
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 67
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of Canadian dollars)
For the years ended December 31,
Net earnings
Other comprehensive income:
Items that may be reclassified subsequently to earnings:
Unrealized gain on available-for-sale financial assets (net of income taxes of $105 in 2015 and $83 in 2014)
Reclassification of gain on disposal of investments (net of income tax recovery of $68 in 2015)
Share of other comprehensive income of joint ventures
Unrealized exchange differences on translating financial statements of foreign operations
Other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Company’s shareholders
Non-controlling-interest
The accompanying notes are an integral part of these consolidated financial statements.
2015
$
2014
$
25,664
23,591
640
(414)
155
18,382
18,763
44,427
46,394
(1,967)
44,427
352
-
111
7,472
7,935
31,526
35,427
(3,901)
31,526
68
CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31,
(In thousands of Canadian dollars)
Assets
Current assets
Cash
Restricted cash
Investments (Note 7)
Assets held-for-sale (Note 5)
Accounts receivable (Note 8)
Prepaid expenses and other assets
Subscription receipts receivable
Non-current assets
Deferred charges
Long-term receivable
Deferred income taxes (Note 12)
Subscription receipts receivable
Investment in joint ventures (Note 5)
Property and equipment (Note 9)
Intangible assets (Note 10)
Goodwill (Note 10)
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 11)
Dividend payable
Restructuring provisions (Note 4)
Amount due to related companies
Purchase price obligations
Client deposits
Deferred revenues
Subscription receipts obligation
Non-current liabilities
Deferred lease obligations
Lease inducements
Deferred income taxes (Note 12)
Long-term restructuring provisions (Note 4)
Other non-current liabilities
Cash settled share-based liabilities
Long-term debt (Note 13)
Purchase price obligations
Derivative financial instruments (Note 6 & 13)
Subscription receipts obligation
Equity
Share capital, restricted and hold back shares, contributed surplus, (deficit) retained earnings, and accumulated
other comprehensive income
Non-controlling interest
Initial value of option granted to non-controlling interest
Total non-controlling interest
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board
2015
$
25,725
2,890
4,707
5,496
65,435
6,115
1,755
112,123
3,284
433
1,079
-
6,460
18,956
322,975
391,347
856,657
50,784
334
75
1,259
11,561
155
-
1,755
65,923
1,311
5,284
12,566
936
2,512
1,807
264,226
30,674
1,390
-
386,629
474,938
2,388
(7,298)
(4,910)
470,028
856,657
2014
$
16,880
579
7,986
-
59,960
2,908
1,746
90,059
1,831
449
483
1,607
9,635
5,120
292,835
370,161
772,180
41,034
311
904
931
8,500
155
99
1,746
53,680
519
636
20,091
979
-
1,263
222,081
36,168
945
1,607
337,969
437,154
4,355
(7,298)
(2,943)
434,211
772,180
Jean-Guy Desjardins
Director
Sylvain Brosseau
Director
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 69
Restricted and Hold
back shares
Contributed
surplus
(Deficit) Retained
earnings
Accumulated
other
comprehensive
income
Related to
Non-Controlling
Interest
$
8,781
-
-
-
-
-
-
-
(3,104)
-
5,677
-
-
-
-
-
-
3,566
-
(2,622)
-
-
(2,959)
-
3,662
$
4,533
-
-
-
5,255
(557)
-
-
-
-
9,231
-
-
-
5,994
(3,450)
(719)
-
-
-
-
-
-
-
11,056
$
(20,356)
27,492
27,492
(31,629)
(24,493)
27,631
27,631
(789)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(37,877)
(35,528)
$
-
1,916
7,935
7,935
9,851
18,763
18,763
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
416,083
27,492
7,935
35,427
5,255
1,688
8,500
1,830
-
(31,629)
437,154
27,631
18,763
46,394
5,994
(3,450)
2,427
15,564
(3,109)
8,500
3,341
-
-
(37,877)
474,938
$
958
(3,901)
(3,901)
(2,943)
(1,967)
(1,967)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Equity
$
417,041
23,591
7,935
31,526
5,255
1,688
8,500
1,830
-
(31,629)
434,211
25,664
18,763
44,427
5,994
(3,450)
2,427
15,564
(3,109)
8,500
3,341
-
-
(37,877)
470,028
28,614
(4,910)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31,
(In thousands of Canadian dollars)
Balance, December 31, 2013
Net earnings
Other comprehensive income
Comprehensive income
Share-based compensation expense (Note 18)
Stock options exercised (Note 14)
Shares issued as settlement of purchase price obligations (Note 14)
Issuance of shares (Note 14)
Conversion of hold back shares (Note 14)
Dividends
Balance, December 31, 2014
Net earnings
Other comprehensive income
Comprehensive income
Share-based compensation expense (Note 18)
Performance share units settled
Stock options exercised (Note 14)
Shares issued as part of a business combination (Note 4)
Shares purchased for cancellation (Note 14)
Issuance of restricted shares (Note 14)
Shares issued as settlement of purchase price obligations (Note 14)
Issuance of shares (Note 14)
Conversion of hold back shares (Note 14)
Dividends
Balance, December 31, 2015
The accompanying notes are an integral part of these consolidated financial statements.
Share Capital
$
421,209
-
-
-
-
2,245
8,500
1,830
3,104
-
436,888
-
-
-
-
-
3,146
11,998
(2,320)
2,622
8,500
3,341
2,959
-
467,134
70
CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31,
(In thousands of Canadian dollars)
Balance, December 31, 2013
Net earnings
Other comprehensive income
Comprehensive income
Dividends
Balance, December 31, 2014
Net earnings
Other comprehensive income
Comprehensive income
Share-based compensation expense (Note 18)
Stock options exercised (Note 14)
Shares issued as settlement of purchase price obligations (Note 14)
Issuance of shares (Note 14)
Conversion of hold back shares (Note 14)
Share-based compensation expense (Note 18)
Performance share units settled
Stock options exercised (Note 14)
Shares issued as part of a business combination (Note 4)
Shares purchased for cancellation (Note 14)
Issuance of restricted shares (Note 14)
Shares issued as settlement of purchase price obligations (Note 14)
Issuance of shares (Note 14)
Conversion of hold back shares (Note 14)
Dividends
Balance, December 31, 2015
The accompanying notes are an integral part of these consolidated financial statements.
421,209
2,245
8,500
1,830
3,104
436,888
$
-
-
-
-
-
-
-
-
-
-
3,146
11,998
(2,320)
2,622
8,500
3,341
2,959
-
$
8,781
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,104)
5,677
3,566
(2,622)
(2,959)
$
4,533
5,255
(557)
9,231
5,994
(3,450)
(719)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
467,134
3,662
11,056
Share Capital
Restricted and Hold
back shares
Contributed
surplus
(Deficit) Retained
earnings
Accumulated
other
comprehensive
income
$
(20,356)
27,492
-
27,492
-
-
-
-
-
(31,629)
(24,493)
27,631
-
27,631
-
-
-
-
(789)
-
-
-
-
(37,877)
(35,528)
$
1,916
-
7,935
7,935
-
-
-
-
-
-
9,851
-
18,763
18,763
-
-
-
-
-
-
-
-
-
-
28,614
Total
$
416,083
27,492
7,935
35,427
5,255
1,688
8,500
1,830
-
(31,629)
437,154
27,631
18,763
46,394
5,994
(3,450)
2,427
15,564
(3,109)
-
8,500
3,341
-
(37,877)
474,938
Related to
Non-Controlling
Interest
$
958
(3,901)
-
(3,901)
-
-
-
-
-
-
(2,943)
(1,967)
-
(1,967)
-
-
-
-
-
-
-
-
-
-
(4,910)
Total
Equity
$
417,041
23,591
7,935
31,526
5,255
1,688
8,500
1,830
-
(31,629)
434,211
25,664
18,763
44,427
5,994
(3,450)
2,427
15,564
(3,109)
-
8,500
3,341
-
(37,877)
470,028
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 71
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
For the years ended December 31,
Operating activities
Net earnings
Adjustments for:
Depreciation of property and equipment
Amortization of intangible assets
Impairment of non-financial assets
Amortization of deferred charges
Accretion and change in fair value of purchase price obligations
Lease inducements
Deferred lease obligations
Share-based compensation
Cash settled share-based compensation
Restructuring provisions
Interest on long-term debt and other financial charges
Changes in fair value of derivative financial instruments
Income tax expense
Income tax paid
Share of earnings of joint ventures
(Gain) loss on dilution of investments in joint ventures
Realized gain on investments
Other non-current liabilities
Changes in non-cash operating working capital items (Note 19)
Net cash generated from operating activities
Investing activities
Business combinations (less cash acquired of $1,144 in 2015 ($107 in 2014)) (Note 4)
Payment of purchase price obligations
Investments, net
Investment in joint ventures
Purchase of property and equipment
Purchase of intangible assets
Repayment from a related shareholder
Long-term receivable
Deferred charges
Restricted cash and client deposits
Net cash used in investing activities
Financing activities
Settlement of share-based compensation
Dividends
Issuance of share capital less issuance cost of $19 in 2015 (nil in 2014)
Shares purchased for cancellation
Long-term debt, net
Interest paid on long-term debt
Financing charges
Net cash used in financing activities
Net increase (decrease) in cash
Effect of exchange rate changes on cash denominated in foreign currencies
Cash – beginning of year
Cash – end of year
The accompanying notes are an integral part of these consolidated financial statements.
72
2015
$
25,664
2,030
27,119
-
507
484
(216)
764
5,994
2,886
(872)
8,852
445
6,771
(12,563)
(1,968)
(83)
(522)
2,490
(926)
66,856
(23,975)
-
3,385
(96)
(9,409)
(1,655)
-
(218)
(1,874)
(758)
(34,600)
(3,450)
(37,854)
4,238
(3,109)
23,030
(7,539)
(1,168)
(25,852)
6,404
2,441
16,880
25,725
2014
$
23,591
1,733
25,700
8,016
373
2,642
(121)
(15)
5,255
1,683
574
7,977
(7,419)
5,158
(14,346)
(1,263)
23
(80)
-
4,254
63,735
(9,914)
(9,484)
2,904
-
(1,295)
(2,343)
1,211
(449)
(1,500)
158
(20,712)
-
(31,318)
3,518
-
(13,300)
(7,864)
(23)
(48,987)
(5,964)
1,070
21,774
16,880
CONSOLIDATED FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements
December 31, 2015 and 2014
74
90
Note 1 – Description of business
Note 9 – Property and equipment
100
Note 17 – Post-employment
benefit obligations
74
Note 2 – Basis of presentation and
adoption of new IFRS
91
100
Note 10 – Goodwill and intangible assets
Note 18 – Expenses by nature
74
92
101
Note 3 – Significant accounting policies,
judgments and estimation uncertainty
Note 11 – Accounts payable and
accrued liabilities
Note 19 – Additional information relating
to consolidated statements of cash flows
82
93
Note 4 – Business combinations
Note 12 – Income taxes
101
Note 20 – Commitments and contingent
liabilities
84
94
101
Note 5 – Investment in joint ventures
Note 13 – Long-term debt
Note 21 – Capital management
84
Note 6 – Financial instruments
95
102
Note 14 – Share capital and accumulated
other comprehensive income
Note 22 – Related party transactions
89
97
102
Note 7 – Investments
Note 15 – Earnings per share
Note 23 – Segment reporting
89
97
103
Note 8 – Accounts receivable
Note 16 – Share-based payments
Note 24 – Subsequent event
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 73
1. DESCRIPTION OF BUSINESS
Fiera Capital Corporation (“Fiera Capital” 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 North American asset management firm which offers
a wide range of traditional and alternative investment solutions,
including depth and expertise in asset allocation. The Company
provides investment advisory and related services to institutional
investors, private wealth clients and retail investors. In the U.S.,
investment advisory services are provided by the Company’s U.S.
affiliates, which are investment advisors registered with the U.S.
Securities and Exchange Commission. Its head office is located at
1501 Avenue McGill College, office 800, Montreal, Quebec, Canada.
The Company is listed on the Toronto Stock Exchange (“TSX”) under
the symbol “FSZ”.
The Board of Directors (the “Board”) approved the consolidated
financial statements for the years ended December 31, 2015 and
2014, on March 16, 2016.
2. BASIS OF PRESENTATION AND ADOPTION OF NEW IFRS
STATEMENT OF COMPLIANCE
The Company prepares its consolidated financial statements in
accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”).
The policies applied in these consolidated financial statements
are based on IFRS issued and outstanding as at December 31, 2015.
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.
REVISED IFRS, INTERPRETATIONS
AND AMENDMENTS
ANNUAL IMPROVEMENTS TO IFRS (2010-2012) AND
(2011-2013) CYCLES
In December 2013, the IASB published annual improvements on the
2010-2012 and the 2011-2013 cycles which included narrow-scope
amendments to a total of nine standards. Modifications of standards
that may be relevant to the Company include amendments made
to clarify items including the definition of vesting conditions in
IFRS 2 – Share-Based payment, disclosure on the aggregation of
operating segments in IFRS 8 – Operating segments, measurement
of short-term receivables and payables under IFRS 13 – Fair value
measurement, definition of related party in IAS 24 – Related party
disclosures, and other amendments. Most of the amendments were
effective for annual periods beginning on or after July 1, 2014. The
adoption of these standards had no impact on the amounts reported
or disclosures made in these consolidated financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATION UNCERTAINTY
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF MEASUREMENT
The consolidated financial statements have been prepared under the
historical cost convention, except for financial assets and 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, as well as its share of interests in joint
ventures. All intercompany transactions, balances and unrealized
gains and losses from intercompany transactions with and amongst
the subsidiaries are eliminated on consolidation.
The consolidated financial statements include the accounts of Fiera
Capital Corporation and its wholly owned subsidiaries, Fiera Capital
Funds Inc. (“FCFI”) which is registered with various provincial securities
commissions as a mutual fund dealer and maintains membership in
the Mutual Fund Dealer Association, Fiera US Holding Inc. (which
owns Bel Air Investment Advisors LLC, Bel Air Management LLC, Bel
Air Securities LLC, and Fiera Capital Inc., formerly Wilkinson O’Grady
& Co. Inc.), Propel Capital Corporation, Fiera Quantum GP Inc. and
9276-5072 Quebec Inc. (which collectively owns a controlling 55%
interest in Fiera Quantum Limited Partnership (“Fiera Quantum L.P.”)
which owns FQ ABCP GP Inc., and FQ GenPar LLC), and 8645230
Canada Inc. (which owns Gestion Fiera Capital S.a.r.l.).
Subsidiaries are those entities which the Company controls. The
Company controls 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.
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.
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) Accounting policies of subsidiaries have been changed when
necessary to ensure consistency with the policies adopted by the
Company.
INVESTMENTS IN JOINT VENTURES
A joint venture is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the net assets of the
joint arrangement. Joint control is the contractually agreed sharing
of control of an arrangement, which exists only when decisions about
the relevant activities require unanimous consent of the parties
sharing control. The Company owns interests in the following joint
ventures: Axium Infrastructure Inc. (“Axium”), formerly Fiera Axium
Infrastructure Inc., an entity in Montreal, Quebec that specializes
in infrastructure investment and Fiera Properties Limited (“Fiera
Properties”), an entity in Halifax, Nova Scotia that specializes 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 of
accounting.
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.
The accounting policies of the joint ventures have been changed
when 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 of assets, 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 COMBINATIONS
Acquisitions of businesses are accounted for using the acquisition
method. The consideration transferred in a business combination is
measured at fair value at the date of acquisition. Acquisition-related
costs are recognized in the consolidated statement of earnings.
At the acquisition date the identifiable assets acquired and the
liabilities assumed are recognized at their fair value, except deferred
tax assets or liabilities, which are recognized and measured in
accordance with IAS 12 – Income Taxes. Subsequent changes in fair
values are adjusted against the 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 intangibles assets, property and equipment and contingent
consideration. Contingent consideration that is classified as a
liability is measured at each subsequent reporting date 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 recognized
immediately in the consolidated statement of earnings as a bargain
purchase gain.
FOREIGN CURRENCY TRANSLATION
The Company has prepared and presented these 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 rates in
effect at the date of initial recognition.
The assets and liabilities of foreign operations, including goodwill
and fair value adjustments arising on acquisition are translated in
Canadian dollars at exchange rates at the reporting date. The revenue
and expenses of foreign operations are translated at exchange rates
at the date of transactions.
Translation gains or losses related to foreign operations are
recognized in other comprehensive income and are reclassified in
earnings on disposal or partial disposal of the investment in the
related foreign operations.
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 (“AUM”) while 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 AUM 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.
DEFERRED REVENUES
Payments received in advance for services from external parties
are recorded upon receipt as deferred revenues. These revenues are
recognized in the period in which the related services are rendered.
FINANCIAL INSTRUMENTS
Financial assets and 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
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 75
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:
CLASSIFICATION
Cash and restricted cash
Loans and receivables
Investments
Other securities and obligations
Fair value through profit or loss
Mutual fund and pooled fund
investment
Accounts receivable
Long-term receivable
Available-for-sale
Loans and receivables
Loans and receivables
Subscription receipts receivable
Loans and receivables
Accounts payable and accrued
liabilities
Dividend payable
Financial liabilities at amortized cost
Financial liabilities at amortized cost
Amount due to related companies
Financial liabilities at amortized cost
Client deposits
Financial liabilities at amortized cost
Value of option granted to non-
controlling interest
Fair value through profit or loss
Cash settled share-based liabilities
Fair value through profit or loss
Long-term debt
Financial liabilities at amortized cost
Purchase price obligations
Financial liabilities at amortized cost
Derivative financial instruments
Fair value through profit or loss
Subscription receipts obligation
Financial liabilities at amortized cost
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 certain securities and obligations, classified under investments
in the consolidated statements of financial position 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 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 statement of financial position 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 consist of cash, restricted cash,
accounts receivable, long-term receivable, and subscription receipts
receivable. With the exception of the long-term receivable, these
assets 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, if applicable, a discount to reduce the loans and
receivables to fair value. Subsequently, loans and receivables are
76
measured at amortized cost using the effective interest method,
less a provision for impairment, if necessary.
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.
Available-for-sale investments are assessed for indicators of
impairment at the end of each reporting period. The investments
are considered to be impaired when there is objective evidence that,
as a result of one or more events that have occurred, the estimated
future cash flows of the investment have been affected, such as a
prolonged decline in the fair value of the investment below cost.
Financial liabilities at amortized cost
Financial liabilities at amortized cost include accounts payable
and accrued liabilities, dividend payable, amount due to related
companies, client deposits, long-term debt, purchase price
obligations and subscription receipts obligation. Accounts payable
and accrued liabilities, dividend payable, amount due to related
companies and client deposits are initially recognized at the amount
required to be paid less, if applicable, a discount to reduce the
payables to fair value. Subsequently, they are measured at amortized
cost using the effective interest method. Long-term debt, purchase
price obligations and subscription receipts obligation are recognized
initially at fair value, net of any transaction costs incurred, and
subsequently at amortized cost using the effective interest method.
RESTRICTED CASH
Restricted cash consists of client deposits received following the
settlement of a class action in favour of certain clients for whom
the Company acted as agent and cash held in a segregated account,
in connection with lease arrangements.
INVESTMENTS
Investments in other securities and obligations are carried on the
consolidated statements of financial position at fair value using bid
prices at the end of the reporting period. Investments in mutual fund
and pooled 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, if any. Cost
includes expenditures that are directly attributable to the acquisition
of the asset. Subsequent costs are included in the asset’s carrying
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 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.
The major categories of property and equipment are depreciated
over their estimated useful lives using the straight-line method over
the following periods:
The amount initially recognized for internally-generated
intangible assets is the sum of the expenditures incurred from the
date when the intangible asset first meets the recognition criteria
listed above. Where no internally-generated intangible asset can
be recognized, development expenditures are charged to the
consolidated statement of earnings in the period in which they are
incurred.
Amortization of the finite-life intangible assets is based on
their estimated useful lives using the straight-line method over the
following periods:
Office furniture and equipment
Computer equipment
5 years
3 years
Asset management contracts
10 years
Leasehold improvements
Shorter of lease term or useful life
Customer relationships
Other
5 to 20 years
2 to 8 years
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 from disposal with the carrying amount of
the asset and are recognized in the consolidated statement 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. These mutual
funds have an indefinite life. 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 comprised of trade name, software and non-
compete agreements. 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.
Development costs for internally-generated intangible assets are
capitalized when all of the following conditions are met:
> technical feasibility can be demonstrated;
> management has the intention to complete the intangible asset
and use or sell it;
> management can demonstrate the ability to use or sell the
intangible asset;
> it is probable that the intangible asset will generate future
economic benefits;
> the Company can demonstrate the availability of adequate
technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
> costs attributable to the asset can be measured reliably.
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.
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 amounts 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.
Value-in-use is determined by discounting estimated future cash
flows, using a pre-tax discount rate that reflects current assessments
of the market, of the time value of money and of the risks specific to
the CGU. Fair value less costs to sell is determined using an EBITDA
(earnings before interest, taxes, depreciation and amortization)
multiple of comparable companies operating in similar industries
for each CGU. An impairment loss is recognized for the amount by
which the asset’s carrying amount exceeds its recoverable amount.
Impairment losses are recognized in the consolidated statement
of earnings.
Impairment losses recognized are allocated first to reduce the
carrying amount of any goodwill allocated to the CGU, and then
to reduce the carrying amounts of the other assets in the CGU on
a pro rata basis. An impairment loss in respect of goodwill is not
reversed. Previously impaired non-financial assets are reassessed at
each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there have
been changes to the estimates used to determine the recoverable
amount, and that these changes will be supported in the future.
An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would
have been determined, net of amortization, if no impairment loss
had been recognized.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 77
For goodwill impairment testing purposes, the CGU, which
represents the lowest level within the Company at which
management monitors goodwill, is Fiera Quantum L.P. and the
remainder of the business.
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 lease inducements 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.
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 are comprised of current and deferred tax. Income
taxes are recognized in the consolidated statement of earnings,
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 statement of financial
position 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.
78
EMPLOYEE BENEFITS
Post-employment benefit obligations
Certain 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 are earned by the employees.
Bonus plans
The Company recognizes a provision and an expense for bonuses
at the time the Company becomes contractually obliged to make
a payment or when there is a past practice that has created a
constructive obligation.
Share-based compensation
The Company grants stock options to certain employees which are
approved by the Board. The Board may determine the vesting term
of the option including when any option will become exercisable
and if 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 the grant date using the
Black-Scholes-option-pricing model and recognized as share-based
compensation over the vesting period with an equal and offsetting
amount recorded to contributed surplus. 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 common 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. In 2010, the Board discontinued
the DSU plan; however, all existing rights and privileges were kept
intact. All eligible directors are now compensated in cash. The liability
related to this plan is recognized in accounts payable and accrued
liabilities. The liability is derecognized when the DSUs are settled.
Restricted share unit plan
The Restricted Share Unit Plan (“RSU Plan”) was established for the
purpose of providing certain employees with the opportunity to
acquire Class A subordinate voting 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 Company. If a RSU participant’s employment
with the Company terminates for any reason other than upon
death or disability, then all unvested RSUs will automatically be
forfeited and cancelled. The maximum number of issuable shares
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) under all plans is 10% of the issued and outstanding shares of the
Company calculated on a non-diluted basis. The vesting date is the
third anniversary of the award date. The Board may determine the
number of shares each eligible employee can receive. The restricted
share unit (“RSU”) expense is recorded at fair value and is amortized
over the vesting period on a straight-line basis.
Performance share unit plan
PSU plan applicable to business units
On September 3, 2013, the Company adopted a PSU plan applicable
to business units (“PSU plan applicable to BU”) for the purposes of
attracting persons to become employees of the Company or to retain
key employees and officers by allowing them to participate in the
growth and development of the Company and the unit in which they
directly contribute. Under the terms of the PSU plan applicable to
BU, the Company is allowed to grant PSUs at a value determined
by reference to the value of a specific business unit rather than by
reference to the price of the Class A Shares of the Company.
At the time of grant of any PSUs, the Company determines (i) the
award value, (ii) the number of PSUs which are being granted, (iii)
the value of each PSU granted, (iv) the formula used to determine
the value of the applicable business unit, (v) the vesting terms and
conditions of the PSUs, and (vi) the applicable vesting date(s). The
method of settlement with respect to the vested PSUs shall be
determined upon each particular granting of PSU. Such methods
may include all or a portion of the value of the vested PSUs payable
in Class A Shares or in cash. The choice of the method of settlement
may be at the option of either the Company or the participant.
The PSU compensation expense is recognized on a straight-
line basis over the vesting period only when it is probable that
the performance targets will be met. The attainment of the
performance conditions and the estimated vesting of the PSUs are
reassessed at the end of each reporting period. When a participant
commences rendering services before the grant date of an award,
the Company recognizes a compensation expense from the service
commencement date until the grant date based on the estimated
grant date fair value of the PSUs.
PSU Plan
On May 23, 2013, the Company adopted a PSU plan (“PSU plan”)
for the purposes of retaining key employees and officers by allowing
them to participate in the growth and development of the Company.
Under the terms of the PSU plan, the Company is allowed to grant
PSUs based on the price of the Class A Shares of the Company on
the date of the award.
PSUs awarded to participants vest on the third anniversary of
the date of the grant or as determined by the Board of Directors
at the time of the grant, provided that the PSU participants have
satisfied the performance conditions determined at the time of the
grant. These performance conditions are expressed as performance
criteria objectives and may be set at different aggregate levels:
from individual to corporate level. PSU participants have the right
to receive up to 50% of the vested PSUs in cash. A PSU participant’s
account will be credited with dividend equivalents in the form of
additional PSUs as of each dividend payment date, if any, in respect
of which dividends are paid on Class A Shares.
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 becoming due
more than twelve months after the end of the reporting period are
discounted to their present value.
RESTRUCTURING PROVISIONS
Provisions, representing termination benefits, 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.
ACQUISITION COSTS
Acquisition costs include expenses, fees, commissions and other
costs associated with the collection of information, negotiation of
contracts, risk assessments related to business combinations that
have closed or that are being contemplated. These expenses are
mostly composed of lawyers, advisors and specialists’ fees.
EARNINGS PER SHARE
Basic earnings per share (“EPS”) is calculated by dividing the net
earnings for the year attributable to equity owners of the Company
by the weighted average number of shares and hold back shares
outstanding during the year.
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, with only the bonus
element of the issue reflected in diluted EPS. The bonus element is
the difference between the number of ordinary shares that would be
issued at the exercise price and the number of ordinary shares that
would have been issued at the average market price. The Company’s
potentially dilutive shares comprise stock options and performance
share units granted to employees.
SHARE CAPITAL
Class A subordinated voting shares (“Class A Shares”) and Class B
special voting shares (“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-based payment reserve
recorded at fair value at grant date.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 79
SIGNIFICANT ACCOUNTING JUDGMENTS
AND ESTIMATION UNCERTAINTIES
The application of the Company’s accounting policies requires
management to use estimates and judgments that can have
a significant effect on the revenues, expenses, comprehensive
income, assets and liabilities recognized and disclosures made in
the consolidated financial statements. Estimates and judgments are
significant when:
> the outcome is highly uncertain at the time the estimates and
judgments are made; and
> if different estimates or judgments could reasonably have been
used that would have had a material impact on the consolidated
financial statements.
Management’s best estimates regarding the future are based
on the facts and circumstances available at the time estimates are
made. Management uses historical experience, general economic
conditions and trends, as well as assumptions regarding probable
future outcomes as the basis for determining estimates. Estimates
and their underlying assumptions are reviewed periodically and the
effects of any changes are recognized immediately. Actual results
will differ from the estimates used, and such differences could be
material. Management’s annual budget and long-term plan which
covers a five-year period are key information for many significant
estimates necessary to prepare these consolidated financial
statements. Management prepares a budget on an annual basis and
periodically updates its long-term plan. Cash flows and profitability
included in the budget and long-term plan are based on existing and
future assets under management, general market conditions and
current and future cost structures. The budget and long-term plan are
subject to approval at various levels, including senior management.
The Board approves the annual budget.
The following discusses the most significant accounting
judgments and estimates that the Company has made in the
preparation of the consolidated financial statements:
CASH GENERATING UNIT
The Company determined that it had one CGU for the purpose of
assessing the carrying value of the allocated goodwill and indefinite-
life intangible assets, until the acquisition by the Company of the
asset management funds of GMP Investment Management from
GMP Capital Inc. (“GMP”) which also constitutes a CGU since their
acquisition on May 1, 2013.
SHARE-BASED PAYMENTS
The Company measures the cost of cash and equity-settled
transactions with employees by reference to the fair value of the
related instruments at the date at which they are granted. Estimating
fair value for share-based payments requires determining the most
appropriate valuation model for a grant, which is dependent on
the terms and conditions of the grant. This also requires making
assumptions and determining the most appropriate inputs to
the valuation model including the assessment of some of the
80
performance criteria along with the expected number of units that
are going to vest.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Goodwill is tested annually for impairment. The recoverable amount
of the CGU is determined based on value-in-use calculation. This
calculation requires the use of estimates including those with respect
to 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 amounts of indefinite-life intangible assets and finite-
life intangible assets are based on the present value of the expected
future cash flows, which involves making estimates about the future
cash flows including projected client attrition rates when applicable,
as well as discount rates and gross profit margin percentage.
BUSINESS COMBINATIONS
The purchase price allocation process resulting from a business
combination requires management to estimate the fair value of
assets acquired including intangible assets, property and equipment
along with liabilities assumed and the purchase price obligation
due over time. The Company uses valuation techniques, which
are generally based on a forecast of the total expected future
net discounted cash flows. These valuations are linked closely
to the assumptions made by management regarding the future
performance of the related assets and the discount rate applied.
INCOME TAXES
The calculation of income tax expense requires significant judgment
in interpreting tax rules and regulations, which are frequently subject
to change. Furthermore, there are transactions and calculations for
which the ultimate tax determination is uncertain. 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.
IFRS NOT YET ADOPTED
The Company has not applied the following new and revised IFRS
that have been issued but are not yet effective:
IFRS 9 – FINANCIAL INSTRUMENTS
In July 2014, the IASB finalized IFRS 9, bringing together the
financial asset and financial liability classification and measurement,
impairment of financial assets and hedge accounting phases of the
IASB project. IFRS 9 provides a single model for financial asset
classification and measurement that is based on contractual
cash flow characteristics and on the business model for holding
financial assets. IFRS 9 also introduces a new impairment model
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) for financial assets not measured at fair value through profit or
loss. This version adds a new expected loss impairment model and
limited amendments to classification and measurement of financial
assets and liabilities. IFRS 9 replaces IAS 39 – Financial Instruments:
Recognition and Measurement and is mandatorily effective for
annual periods beginning on or after January 1, 2018, and is to be
applied retrospectively. Early adoption permitted. The Company
is still evaluating the impact of this standard on its consolidated
financial statements.
IFRS 15 – REVENUE FROM CONTRACTS
WITH CUSTOMERS
In May 2014, the IASB issued IFRS 15 – Revenue from Contracts
with Customers. The new standard provides a comprehensive
framework for recognition, measurement and disclosure of revenue
from contracts with customers, excluding contracts within the
scope of the standards on leases, insurance contracts and financial
instruments. In July 2015, the IASB affirmed its proposal to defer
the effective date by one year. Application of IFRS 15 is mandatory
for annual periods beginning on or after January 1, 2018 and is to be
applied retrospectively. Early adoption is permitted. The Company
is still evaluating the impact of this standard on its consolidated
financial statements.
IFRS 16 – LEASES
In January 2016, the IASB issued IFRS 16 – Leases. It supersedes the
IASB’s current lease standard, IAS 17, which required lessees and
lessors to classify their leases as either finance leases or operating
leases and to account for those two types of leases differently.
IFRS 16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases. It introduces a single lessee
accounting model and requires a lessee to recognize assets and
liabilities for all leases with a term of more than twelve months
and for which the underlying asset is not of low value. This new
standard will come into effect for annual periods beginning on or
after January 1, 2019. Earlier application is permitted. The Company
is still evaluating the impact of this standard on its consolidated
financial statements.
AMENDMENTS TO IFRS 11 – JOINT ARRANGEMENTS
In May 2014, the IASB issued an amendment to this standard
requiring business combination accounting to be applied to
acquisitions of interests in a joint operation that constitute a
business. The amendment is effective for annual periods beginning
on or after January 1, 2016 and is not expected to have a significant
impact on the consolidated financial statements.
AMENDMENTS TO IAS 38 – INTANGIBLE ASSETS AND
IAS 16 – PROPERTY, PLANT AND EQUIPMENT
In May 2014, the IASB issued amendments to these standards to
introduce a rebuttable presumption that the use of revenue-based
amortization methods for intangible assets is inappropriate. The
amendment is effective for annual periods beginning on or after
January 1, 2016 with early adoption permitted and is not expected
to have a significant impact on the consolidated financial statements.
AMENDMENTS TO IFRS 10 – CONSOLIDATED
FINANCIAL STATEMENTS AND IAS 28 – INVESTMENTS
IN ASSOCIATES AND JOINT VENTURES
In September 2014, the IASB issued amendments to these standards
to clarify the treatment of the sale or contribution of assets from
an investor to its associate or joint venture. The extent of gains
and losses arising on the sale or contribution of assets depends
on whether the assets sold or contributed constitute a business.
In August 2015, the IASB published an exposure draft proposing
an indefinite deferral of the effective date for these amendments.
Application of the amendments to IFRS 10 and IAS 28 are currently
mandatory for annual periods beginning on or after January 1, 2016
and is to be applied prospectively. Early adoption is permitted and
is not expected to have a significant impact on the consolidated
financial statements.
ANNUAL IMPROVEMENTS TO IFRS
(2012-2014) CYCLE
In September 2014, the IASB published annual improvements on
the 2012-2014 cycle which included narrow-scope amendments to
a total of four standards. Modifications of standards that may be
relevant to the Company include amendments made to provide:
(1) specific guidance for cases when an entity reclassifies an asset
from held-for-sale to held-for-distribution and vice versa in IFRS 5 –
Non-current assets held-for-sale, (2) additional guidance on whether
a servicing contract is continuing involvement in a transferred asset
and clarification on offsetting disclosures in condensed interim
financial statements in IFRS 7 – Financial Instruments: Disclosures,
(3) clarification that the high quality bonds used in estimating the
discount rate for post-employment benefits should be denominated
in the same currency as the benefits paid under IAS 9 – Employee
Benefits, (4) clarification of the term “elsewhere in the interim report”
in IAS 34 – Interim Financial Reporting. Most of the amendments are
effective for annual periods beginning on or after July 1, 2016. Early
adoption is permitted. The Company is still evaluating the impact of
these standards on its consolidated financial statements.
AMENDMENTS TO IAS 1 – PRESENTATION OF
FINANCIAL STATEMENTS
In December 2014, the IASB published amendments to this standard
to clarify materiality, aggregation and disaggregation of items
presented on the statement of financial position, statement of
earnings, and statement of comprehensive income as well as the
order of notes to the financial statements. The amendments apply
prospectively for annual periods beginning on or after January 1, 2016
with early adoption permitted. The Company is still evaluating the
impact of this standard on its consolidated financial statements.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 81
4. BUSINESS COMBINATIONS
2015
SAMSON
On October 30, 2015, the Company completed the acquisition of all
the outstanding shares of Samson Capital Advisors LLC (“Samson”),
a prominent New York-based investment management firm which
specializes in global fixed income and currency investment. The
acquisition will enable the Company to create a full-fledged global
asset manager in the United States, adding strong leadership and
investment talent in order to further expand the Company’s presence
in the market.
Under the terms of the agreement, the total purchase price for
Samson includes US$19,200 (CA$25,119) paid in cash to the sellers,
US$9,150 worth of Class A Shares, representing 1,028,086 Class A
Shares, that were issued upon closing, which was accounted for at a
fair value of US$9,170 (CA$11,998) and US$3,150 worth of hold back
shares, representing approximately 353,928 Class A Shares, that will
be issued eighteen months after the closing, which was accounted
for at a fair value of US$2,725 (CA$3,566). In addition, the purchase
price includes an amount of up to US$4,175 which was accounted for
at a fair value of US$3,008 (CA$3,935) payable over three years if
certain targets are achieved, as well as US$1,025 (CA$1,342) which
represented the Company’s best estimate of the working capital
adjustment. Other compensation mechanisms were agreed upon
at the time the agreements were signed including retention bonuses,
PSUs, and restricted shares. The transaction was accounted for as a
business combination using the acquisition method and the assets
and liabilities were recorded at their estimated fair value at the
acquisition date as follows:
Cash
Restricted cash
Other current assets
Non-current assets
Property and equipment
Intangible assets
Goodwill ($5,699 deductible for tax purposes)
Deferred income taxes
Accounts payable and accrued liabilities
Deferred revenues
Purchase consideration
Cash consideration
Share capital
Hold back shares
Fair value of purchase price obligation
$
1,144
509
4,486
15
100
38,122
4,791
379
(460)
(3,126)
45,960
$
25,119
11,998
3,566
5,277
45,960
which have been accounted for separately from goodwill. These
intangible assets were non-compete agreement valued at $471,
customer relationships valued at $36,168 and tradename valued at
$1,433. The fair value of the purchase price obligation was calculated
using the estimated discounted cash flows. The Company incurred
acquisition-related costs of $3,363 mainly composed of legal and
compliance fees and due diligence costs. These costs were included
under the caption acquisition costs in the consolidated statement of
earnings. The Company financed the cash portion of the acquisition
price with the revolving facility described in Note 13. The Company
expects to finalize the accounting for this acquisition by the end of
the first quarter of 2016.
PRO FORMA IMPACT
The impact of the acquisition for the year ended December 31, 2015
on the Company’s base management fees, performance fees and net
earnings was as follows:
Base management fees
Performance fees
Net loss
$
3,239
-
(210)
If the business combination would have occurred on
January 1, 2015, the Company’s consolidated base management
fees, performance fees and net earnings for the year ended
December 31, 2015 would have been as follows:
Base management fees
Performance fees
Net earnings
$
246,674
19,534
29,197
The Company considers the pro forma figures to be an approximate
measurement of the financial performance of the combined business
over a twelve-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, amortization of tangible and intangible
assets, and the elimination of the acquisition costs, as well as related
tax effects.
2014
PROPEL CAPITAL CORPORATION
On September 2, 2014, the Company acquired all of the outstanding
shares of Propel Capital Corporation (“Propel”), a prominent Toronto–
based investment firm which develops, manages and distributes
investment solutions to Canadians with a focus on closed-end funds.
The acquisition enhanced the Company’s expertise, offering and
distribution capabilities in the Canadian retail investor space.
The goodwill is attributable to synergies expected as a result of
the consolidation of the Company’s U.S. operations. Management of
Fiera Capital has identified intangible assets acquired from Samson
Under the terms of the agreement, the purchase price for Propel
included $9,021 paid in cash to the sellers plus $1,000 paid to an
escrow account which will be released in February 2016 provided
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) there are no claims pursuant to the indemnification provisions
of the share purchase agreement. In addition, the purchase price
included an amount of $2,000 payable in February 2016 if a certain
level of revenues generated from closed-end funds managed by
the Company is reached. The transaction was accounted for as a
business combination using the acquisition method and the assets
and liabilities were recorded at their estimated fair value at the
acquisition date as follows:
Cash
Other current assets
Intangible assets
Goodwill
Accounts payable and accrued liabilities
Deferred income tax liability
Purchase consideration
Cash consideration
Fair value of purchase price obligation
$
107
1,073
5,050
7,954
(931)
(1,346)
11,907
$
10,021
1,886
11,907
The goodwill was attributable to the well-established network and
trained work force of Propel and was not deductible for tax purposes.
Management of Fiera Capital Corporation had identified intangible
assets acquired from Propel which had been accounted for separately
from goodwill. These intangible assets were customer relationships
valued at $5,050. The fair value of the purchase price obligation was
calculated using the estimated discounted cash flows. The Company
incurred acquisition-related costs of $623 mainly composed of legal
fees and due diligence costs. These costs were included under the
caption acquisition costs in the consolidated statement of earnings.
The Company financed the acquisition of Propel with cash on hand.
During the year ended December 31, 2015, the Company
reviewed its estimate with regards to the performance conditions
required to make the contingent payment of $2,000. As a result of
this review and mostly due to the challenging conditions currently
present within the closed-end fund market, the Company concluded
that the required performance conditions would not be met by
December 31, 2015, and that no payment would be made. As
such, the purchase price obligation was revalued and the recovery
was recorded in the consolidated statement of earnings under
the caption: accretion and change in fair value of purchase price
obligations. The contingent payment had a carrying value of $1,970
before the revaluation to nil.
If the business combination would have occurred on
January 1, 2014, the Company’s consolidated base management
fees, performance fees and net earnings for the year ended
December 31, 2014 would have been as follows:
Base management fees
Performance fees
Net earnings
$
204,366
15,437
23,707
The Company considers the pro forma figures to be an
approximate measurement of the financial performance of the
combined business over a twelve-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, amortization of tangible and intangible
assets, and the elimination of the acquisition costs, as well as related
tax effects.
RESTRUCTURING AND OTHER INTEGRATION COSTS
During the year ended December 31, 2015, the Company recorded
a restructuring provision of $1,267 ($1,210 for the year ended
December 31, 2014) and integration costs related to the companies
acquired of $1,094 for the year ended December 31, 2015 ($1,917
for the year ended December 31, 2014), for an aggregate amount
of $2,361 ($3,127 for the year ended December 31, 2014). The
restructuring charges are mostly composed of severance costs due
to corporate reorganizations following business combinations or as
a result of the normal evolution of the business. The integration
costs are mostly composed of professional fees, relocation and
lease related costs and other expenses incurred as a result of the
integration of businesses recently acquired.
The change in the restructuring provisions during the years ended
December 31 is as follows:
Balance, December 31, 2013
Addition during the year
Paid during the year
Balance, December 31, 2014
Addition during the year
Paid during the year
Balance, December 31, 2015
Severance
$
1,309
1,210
(636)
1,883
1,267
(2,139)
1,011
December 31, 2015
December 31, 2014
$
75
936
1,011
$
904
979
1,883
PRO FORMA IMPACT
The impact of the acquisition for the year ended December 31, 2014
on the Company’s base management fees, performance fees and net
earnings was as follows:
Current portion
Non-current portion
Total
Base management fees
Performance fees
Net earnings
The restructuring provision of $936 ($979 in 2014) is classified
as a non-current liability as the Company does not expect to settle
the provision within the next twelve months.
$
1,481
-
269
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 83
Statements of earnings
Revenues
Expenses
Depreciation and amortization
Interest income
Interest expense
Income taxes
Net earnings
For the years ended,
December 31,
2015
December 31,
2014
$
$
8,232
6,332
343
55
96
913
1,900
18,525
14,931
451
48
147
647
3,594
The reconciliation of the summarized financial information to
the carrying amount of the interests in the joint ventures recognized
in the consolidated financial statements as at December 31 is
as follows:
Net assets of the joint venture
Contributed surplus not attributable to the
Company
Ownership of the Company
Goodwill
Carrying amount of
investment in joint ventures
2015
$
13,429
(93)
13,336
5,860
600
2014
$
23,130
(195)
22,935
9,049
586
6,460
9,635
5.
INVESTMENT IN JOINT VENTURES
The Company has investments in two joint ventures (Axium and
Fiera Properties) and the variation of its interests during the years
ended December 31 are as follows:
Balance, December 31,
Share of earnings
Gain (loss) on dilution
Share of other comprehensive income
Business combination
Subscription to capital
Foreign exchange difference
Assets held-for-sale
Balance, December 31,
2015
$
9,635
1,968
83
155
15
96
4
(5,496)
6,460
2014
$
8,284
1,263
(23)
111
-
-
-
-
9,635
During the years ended December 31, 2015 and 2014, the
Company’s ownership in Axium changed slightly but remained stable
at approximately 35%. A gain on dilution of $83 (loss of $23 in
2014) was recorded to reflect these minor changes. The Company’s
ownership in Fiera Properties remained stable at approximately 44%.
On December 21, 2015, the Company entered into a definitive
agreement with Axium pursuant to which Axium will purchase for
cancellation the Company’s 35% equity ownership in Axium. As a
result, the Company discontinued equity accounting for Axium and
reclassified the investment as assets held-for-sale.
The summarized financial information of Fiera Properties is
presented below. The summarized financial information represents
amounts shown in the joint venture’s financial statements prepared
in accordance with IFRS. The comparative period includes the results
of Axium.
Statements of financial position
Current assets (including cash – 2015:
$423 and 2014: $687)
Non-current assets
Current liabilities
Non-current liabilities
Net assets
December 31,
2015
December 31,
2014
$
$
5,167
13,644
(5,382)
-
13,429
3,698
28,108
(8,618)
(58)
23,130
6. FINANCIAL INSTRUMENTS
The Company, through its financial assets and liabilities, has exposure
to the following risks from its use of financial instruments: equity
market fluctuation risk, credit risk, interest rate risk, currency risk and
liquidity risk. The following analysis provides a measurement risk as
at December 31, 2015 and 2014.
The Company’s consolidated statements of financial position
include 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’s AUM, the following discussion relates
only to the Company’s own portfolio of investments.
The Company’s business is the management of investment assets.
The key performance driver of the Company’s ongoing results is the
level of AUM. The level of AUM is directly tied to investment returns and
the Company’s ability to retain existing assets and attract new assets.
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 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 pooled 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 as at December 31, 2015 and 2014, is
comprised of mutual fund and pooled fund investments under its
management with a fair value of $4,707 as at December 31, 2015
and $7,128 as at December 31, 2014. Mutual fund and pooled
fund investments are comprised of a well-diversified portfolio of
investments in equities and bonds. Mutual fund and pooled 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, 2015, and 2014 has an
impact of increasing or decreasing other comprehensive income by
$471 and $713 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 Company’s principal financial assets which are subject
to credit risk are cash, restricted cash, investments and accounts
receivable. The carrying amounts of financial assets on the
consolidated statements of financial position represent the
Company’s maximum credit exposure at the consolidated
statements of financial position dates.
The credit risk on cash, restricted cash and investments is limited
because the counterparties are chartered and commercial banks with
high-credit ratings assigned by national credit-rating agencies.
The Company’s credit risk is attributable primarily to its trade
receivables. The amounts disclosed in the consolidated statements
of financial position 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
and financial condition of the counterparties. In order to reduce
its risk, management has adopted credit policies that include
regular review of client balances. With the exception of National
Bank of Canada and related companies which represent 21% as at
December 31, 2015 (20% as at December 31, 2014), no customer
represents more than 10% of the Company’s accounts receivable as
at December 31, 2015 and 2014.
INTEREST RATE RISK
The Company is exposed to interest rate risk through its cash and
long-term debt. The interest rates on the long-term debt are variable
and expose the Company to cash flow interest rate risk.
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 a portion of it into fixed rates that were 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
Currency risk is the risk that the fair value or future cash flows of
a financial instrument will fluctuate because of changes in foreign
exchange rates. The Company’s exposure relates to cash, accounts
receivable, accounts payable and accrued liabilities and long-
term debt denominated in US dollars and the operations of its US
businesses which are predominantly in US dollars. The Company
manages a portion of its exposure to foreign currency by matching
asset and liability positions. More specifically, the Company matches
the long-term debt in foreign currency with long-term assets in the
same currency.
The consolidated statements of financial position as at
December 31, 2015 and 2014, include the following amounts
expressed in Canadian dollars with respect to financial assets and
liabilities for which cash flows are denominated in US dollars:
Cash
Restricted cash
Investments
Accounts receivable
Accounts payable and accrued liabilities
Purchase price obligations
Long-term debt
2015
$
16,918
1,530
946
16,602
(13,009)
(5,704)
2014
$
15,797
579
1,084
12,643
(7,543)
-
(137,012)
(93,501)
Based on the balances outstanding (excluding long-term debt)
as at December 31, 2015, a 5% increase/decrease of the US dollar
against the Canadian dollar would result in an increase/decrease in
total comprehensive income of $864 (2014 - $1,128). The above
calculation does not include the US dollar long-term debt, which is
hedged by a long-term asset in the same currency. This long-term
asset is not included in the consolidated statement of financial
position given that it is an intercompany balance.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 85
LIQUIDITY RISK
The Company’s objective is to have sufficient liquidity to meet its liabilities when they become 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 long-term debt to
finance its activities and to respect its obligations as they become due.
The Company has the following financial liabilities as at December 31, 2015:
Carrying
Amount
$
50,784
334
1,259
265,270
42,235
359,882
Total
$
50,784
334
1,259
265,270
48,697
366,344
Contractual cash flow commitments
2016
$
50,784
334
1,259
-
11,845
64,222
2017
2018
Other
$
-
-
-
-
$
-
-
-
-
10,426
10,426
10,426
10,426
$
-
-
-
265,270
16,000
281,270
Accounts payable and accrued liabilities
Dividend payable
Amount due to related companies
Long-term debt
Purchase price obligations
FAIR VALUE
DETERMINATION OF FAIR VALUE OF
FINANCIAL INSTRUMENTS
The fair value represents 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.
The fair value of cash, restricted cash, accounts receivable,
accounts payable and accrued liabilities, dividend payable, 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 pooled fund investments is
$3,808 as at December 31, 2015 and $6,492 as at December 31, 2014,
while the fair value is $4,707 as at December 31, 2015 and $7,128 as at
December 31, 2014. The unrealized gain of $779 (net of income taxes
of $120) as at December 31, 2015 and $553 (net of income taxes of
$83) as at December 31, 2014, are reflected in accumulated other
comprehensive income.
The fair value of long-term debt approximates its carrying
amount, 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.
The Company measured the fair value of the subscription receipts
receivable of $1,755 and subscription receipts obligation of the same
amount using level 2 inputs in the fair value hierarchy. The Company
determined the fair value by using observable market inputs such as
the discount rate.
The fair value of the option granted to non-controlling interest
is based on a formula that was agreed upon by all parties during the
acquisition of the selected alternative asset management funds of
GMP. The fair value of the option is determined using the present
value of the sum of a multiple of the forecasted earnings before
income taxes, depreciation, amortization (“EBITDA”) and forecasted
performance fees, using level 3 inputs. The actual performance of
the subsidiary directly impacts the value of the option. Forecasts are
monitored and updated on a monthly basis, and the value of the
option is recalculated at the end of each reporting period. During
2014, the Company completed the annual budget of the subsidiary
for fiscal year 2015 and recalculated the option value using the most
recent forecasted EBITDA attributable to Fiera Quantum L.P. As a
result, the Company determined that the value of the option was
nil as at December 31, 2014. The fair value remained unchanged as
at December 31, 2015.
In addition, the Company has the option to purchase the
45% interest owned by the key member of the GMP Investment
Management team at any time following December 31, 2015. This
option can be settled in cash or by the issuance of Class A Shares at
the option of Fiera Capital. The formula to determine the purchase
price of the remaining 45% is the same that is used to calculate
the value of the option granted to non-controlling interest, which
considers the sum of a multiple of the forecasted EBITDA and
forecasted performance fees.
Derivative financial instruments consist only of interest rate swap
contracts. The Company determines the fair value of its interest rate
swap contracts by applying valuation techniques, using observable
market inputs such as interest rate yield curves as well as 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 it is consistent with accepted economic methods for pricing
financial instruments.
Changes in fair value of derivative financial instruments
presented in the consolidated statement of earnings include changes
in the fair value of the interest rate swap contracts described above
of $445 and $301 for the years ended December 31, 2015 and
2014, respectively and the changes in the fair value of the option
granted to non-controlling interest of nil and ($7,720) for the
years ended December 31, 2015 and 2014, respectively for a total
of $445 and ($7,419) for the years ended December 31, 2015 and
2014, respectively.
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) FINANCIAL INSTRUMENTS BY CATEGORY:
AS AT DECEMBER 31, 2015
Loans and
receivables
Available-
for-sale
FVTPL1
Financial
liabilities at
amortized
cost
Assets
Cash
Restricted cash
Investments
Accounts receivable
Long-term receivable
Subscription receipts receivable
Total
Liabilities
Accounts payable and accrued liabilities
Dividend payable
Amount due to related companies
Client deposits
Subscription receipts obligation
Cash settled share-based liabilities
Long-term debt
Purchase price obligations
Derivative financial instruments
Total
$
25,725
2,890
-
65,435
433
1,755
96,238
-
-
-
-
-
-
-
-
-
-
$
-
-
4,707
-
-
-
4,707
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
1,807
-
-
1,390
3,197
Total
$
25,725
2,890
4,707
65,435
433
1,755
100,945
$
-
-
-
-
-
-
-
50,784
50,784
334
1,259
155
1,755
-
264,226
42,235
-
334
1,259
155
1,755
1,807
264,226
42,235
1,390
360,748
363,945
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.
AS AT DECEMBER 31, 2014
Assets
Cash
Restricted cash
Investments
Accounts receivable
Long-term receivable
Subscription receipts receivable
Total
Liabilities
Accounts payable and accrued liabilities
Dividend payable
Amount due to related companies
Client deposits
Subscription receipts obligation
Cash settled share-based liabilities
Long-term debt
Purchase price obligations
Derivative financial instruments
Total
Loans and
receivables
Available-
for-sale
FVTPL1
Financial
liabilities at
amortized
cost
$
16,880
579
-
59,960
449
3,353
81,221
-
-
-
-
-
-
-
-
-
-
$
-
-
$
-
-
7,128
858
-
-
-
-
-
-
7,128
858
$
-
-
-
-
-
-
-
Total
$
16,880
579
7,986
59,960
449
3,353
89,207
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,263
-
-
945
2,208
41,034
41,034
311
931
155
3,353
-
222,081
44,668
-
311
931
155
3,353
1,263
222,081
44,668
945
312,533
314,741
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.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 87
FAIR VALUE HIERARCHY
The following table classifies financial assets and liabilities that are recognized on the consolidated statements of financial position 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).
There was no transfer between levels during these years.
The following table presents the financial instruments recorded at fair value in the consolidated statements of financial position, classified
using the fair value hierarchy described above:
DECEMBER 31, 2015
Financial assets
Mutual fund and pooled fund investments under the Company’s management
Total financial assets
Financial liabilities
Cash settled share-based liabilities
Derivative financial instruments – interest rate swap agreement
Total financial liabilities
DECEMBER 31, 2014
Financial assets
Mutual fund and pooled fund investments under the Company’s management
Other securities and investments
Total financial assets
Financial liabilities
Cash settled share-based liabilities
Derivative financial instruments – interest rate swap agreement
Total financial liabilities
Level 1
Level 2
Level 3
$
-
-
1,807
-
1,807
$
4,707
4,707
-
1,390
1,390
$
-
-
-
-
-
Level 1
Level 2
Level 3
$
-
858
858
1,263
-
1,263
$
7,128
-
7,128
-
945
945
$
-
-
-
-
-
-
Total
$
4,707
4,707
1,807
1,390
3,197
Total
$
7,128
858
7,986
1,263
945
2,208
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 7.
INVESTMENTS
Mutual fund and pooled fund investments under the Company’s management
Other securities and investments
8. ACCOUNTS RECEIVABLE
Trade accounts
Trade accounts – related companies of shareholders
Trade accounts – Joint ventures
Other
The aging of accounts receivable were as follows:
Trade
Current
Aged between 61 – 119 days
Aged greater than 120 days
Total trade
Related companies and joint ventures
Current
Aged between 61 – 119 days
Aged greater than 120 days
Total related companies and joint ventures
Other
As at December 31, 2015, there was a provision for doubtful accounts of $37 (2014 - $68).
December 31, 2015
December 31, 2014
$
4,707
-
4,707
$
7,128
858
7,986
December 31, 2015
December 31, 2014
$
50,288
14,314
409
424
65,435
$
45,935
13,241
438
346
59,960
December 31, 2015
December 31, 2014
$
49,241
520
527
50,288
14,584
109
30
14,723
424
65,435
$
43,378
1,446
1,111
45,935
13,438
165
76
13,679
346
59,960
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 89
9. PROPERTY AND EQUIPMENT
For the year ended December 31, 2014
Opening net book value
Additions
Foreign exchange difference
Depreciation
Closing net book value
Balance, December 31, 2014
Cost
Accumulated depreciation
Foreign exchange difference
Net book value
For the year ended December 31, 2015
Opening net book value
Additions
Business combination
Transfer to intangible assets
Reclassification
Write-off
Foreign exchange difference
Depreciation
Closing net book value
Balance, December 31, 2015
Cost
Accumulated depreciation
Foreign exchange difference
Net book value
Office furniture
& equipment
Computer
equipment
Leasehold
improvements
$
1,264
359
15
(402)
1,236
3,920
(2,701)
17
1,236
1,236
3,091
52
-
(113)
(31)
161
(506)
3,890
6,209
(2,497)
178
3,890
$
1,003
295
26
(560)
764
2,757
(2,026)
33
764
764
1,026
9
(135)
113
(53)
80
(488)
1,316
2,763
(1,560)
113
1,316
$
3,055
805
31
(771)
3,120
5,202
(2,121)
39
3,120
3,120
11,168
39
-
-
-
375
(952)
13,750
16,289
(2,953)
414
13,750
Total
$
5,322
1,459
72
(1,733)
5,120
11,879
(6,848)
89
5,120
5,120
15,285
100
(135)
-
(84)
616
(1,946)
18,956
25,261
(7,010)
705
18,956
During the year ended December 31, 2015, computer equipment with a cost of $238 and accumulated amortization of $103 were transferred
to other intangible assets and office furniture and equipment with a cost of $159 and accumulated amortization of $46 were transferred
to computer equipment.
In addition, during the year ended December 31, 2015, the Company derecognized office furniture and equipment which had an accounting
cost of $695 (nil for December 31, 2014) and accumulated amortization of $664 (nil for December 31, 2014), computer equipment which
had an accounting cost of $950 (nil for December 31, 2014) and accumulated amortization of $897 (nil for December 31, 2014) and
leasehold improvements which had an accounting cost of $120 (nil for December 31, 2014) and accumulated amortization of $120 (nil for
December 31, 2014). The excess of the cost over the accumulated amortization of $84 was recognized in the statement of consolidated
earnings under the caption: depreciation of property and equipment.
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 10. GOODWILL AND INTANGIBLE ASSETS
For the year ended December 31, 2014
Opening net book value
Additions
Additions – internally developed
Business combinations
Impairment charge
Foreign exchange difference
Amortization for the year
Closing net book value
Balance, December 31, 2014
Cost
Accumulated amortization and impairment
Foreign exchange difference
Net book value
For the year ended December 31, 2015
Opening net book value
Additions
Additions – internally developed
Transfer from property and equipment
Business combination
Foreign exchange difference
Amortization for the year
Closing net book value
Balance, December 31, 2015
Cost
Accumulated amortization and impairment
Foreign exchange difference
Net book value
Indefinite life
Finite-life
Asset
management
contracts
Asset
management
contracts
Customer
relationships
$
$
$
Goodwill
$
357,773
8,191
69,960
224,494
-
-
7,331
(1,918)
6,975
-
370,161
363,713
(1,918)
8,366
370,161
-
-
-
-
184
-
8,375
8,154
-
221
8,375
-
-
-
-
-
(8,480)
61,480
84,800
(23,320)
-
61,480
-
-
5,050
(6,098)
6,487
(14,795)
215,138
245,798
(38,498)
7,838
215,138
370,161
8,375
61,480
215,138
-
-
-
4,791
16,395
-
391,347
368,504
(1,918)
24,761
391,347
-
-
-
-
425
-
8,800
8,154
-
646
8,800
-
-
-
-
-
(8,480)
53,000
84,800
(31,800)
-
53,000
-
-
-
36,168
16,201
(16,752)
250,755
281,966
(55,250)
24,039
250,755
Other
$
7,506
1,799
611
-
-
351
(2,425)
7,842
13,297
(5,894)
439
7,842
7,842
408
1,250
135
1,954
718
(1,887)
10,420
14,396
(5,133)
1,157
10,420
Total
$
310,151
1,799
611
5,050
(6,098)
7,022
(25,700)
292,835
352,049
(67,712)
8,498
292,835
292,835
408
1,250
135
38,122
17,344
(27,119)
322,975
389,316
(92,183)
25,842
322,975
During the year ended December 31, 2015, other intangible assets with a cost of $238 (nil for December 31, 2014) and accumulated
amortization of $103 (nil for December 31, 2014) were transferred from property and equipment. In addition, during the year ended
December 31, 2015, the Company derecognized other intangible assets which had an accounting cost of $2,751 ($805 for December 31, 2014)
and accumulated amortization of $2,751 ($805 for December 31, 2014).
IMPAIRMENT TESTS OF GOODWILL
During the fourth quarters of 2015 and 2014, in the context of its
annual impairment testing, the Company completed its impairment
analysis and assessed the recoverability of its assets. The Company
identified two CGUs (Fiera Quantum L.P. and the remainder of the
business) as at December 31, 2014 and 2015, but Fiera Quantum
L.P. had no amount of goodwill recorded as at December 31, 2015.
FIERA QUANTUM L.P.
2014
The recoverable amount of the assets within the Fiera Quantum
L.P. CGU was determined based on the value-in-use approach using
a discounted cash flow model. The significant key assumptions
included forecasted cash flows based on updated financial plans
prepared by management covering a five-year period.
The discounted cash flow models were established using a
discount rate of 17%. The forecasted cash flows also incorporated
forecasted AUM decline in 2015 and stable AUM in future years. Cash
flows for the years beyond Fiera Quantum L.P.’s long-term plan were
extrapolated using a terminal growth rate of 1%.
As a result of the impairment analysis, the Company determined
that the carrying amounts of the assets of Fiera Quantum L.P.
exceeded their recoverable amounts and accordingly, the Company
recorded a goodwill impairment charge of $1,918 and an intangible
assets impairment charge of $6,098 for a total impairment charge
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 91
IMPAIRMENT TESTS OF INDEFINITE-LIFE
INTANGIBLE ASSETS
In assessing indefinite-life intangible assets for impairment as at
December 31, 2015 and 2014, the Company compared the aggregate
recoverable amount of the assets to their respective carrying
amounts. For 2015, the 2013 calculation of the recoverable amount
for indefinite life intangible assets was used in the impairment test
as of December 31, 2015 for the same reasons as discussed above.
Key assumptions included the following:
Weighted average growth rate
Discount rate
1. Assumptions carried forward from 2013.
20151
%
2.5%
11%
20141
%
2.5%
11%
The recoverable amount has been determined based on
value-in-use 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 of 2.5%. The discount rate is applied to the pre-tax cash flow
projections 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.
As a result of the impairment analysis, the Company determined
that the recoverable amount of its CGUs exceeded their carrying
amounts and as a result, there was no impairment identified.
of $8,016. The charge is mostly attributable to lower AUM in Fiera
Quantum L.P. coupled with expenses that are not decreasing at
the same pace as revenues. The impairment charge did not affect
Fiera Quantum L.P.’s operations, its liquidity, or its cash flows from
operating activities.
REMAINDER OF THE BUSINESS
The 2013 calculation of the recoverable amount of this CGU,
which represents the most recent detailed calculation made in a
preceding year, was used in the impairment test of that unit as of
December 31, 2015 and 2014, given that all of the following criteria
were met:
a) the assets and liabilities making up the unit have not changed
significantly since the most recent recoverable amount calculation;
b) the most recent recoverable amount calculation resulted in an
amount that exceeded the carrying amount of the unit by a
substantial margin; and
c) based on an analysis of events that have occurred and
circumstances that have changed since the most recent
recoverable amount calculation, the likelihood that a current
recoverable amount determination would be less than the
current carrying amount of the unit is remote.
In assessing goodwill for impairment as at December 31, 2015
and 2014, the Company compared the aggregate recoverable
amount of the CGU to the carrying amounts. The recoverable
amounts have been determined based on the value-in-use using
five-year cash flow forecasts approved by management that made
maximum use of observable market inputs. For the periods beyond
the five-year budget, the terminal value was determined using the
expected long-term growth rate. Key assumptions included the
following:
Weighted average growth rate
Discount rate
1. Assumptions carried forward from 2013.
20151
%
5.5%
11%
20141
%
5.5%
11%
Reasonable changes in key assumptions would not cause the
recoverable amount of goodwill to fall below the carrying value.
11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade accounts payable and accrued liabilities
Wages and vacation payable
Bonuses and commissions payable
Sales taxes payable
92
December 31, 2015
December 31, 2014
$
18,835
429
30,641
879
50,784
$
11,989
552
27,235
1,258
41,034
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 12. INCOME TAXES
Income tax expense details for the years ended December 31, are as follows:
Current income taxes
Deferred income taxes (recovery)
2015
$
15,077
(8,306)
6,771
2014
$
10,818
(5,660)
5,158
For the years ended December 31, 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
Combined federal and provincial statutory tax rates
Income tax expense based on combined statutory income tax rate
Share-based compensation
Non-deductible acquisition costs
Income tax allocated to non-controlling interest
Difference between Canadian and foreign statutory rates
Prior years’ tax adjustments
Other non-deductible (non-taxable) amounts
2015
$
32,435
26.7%
8,660
956
755
539
(3,407)
(835)
103
6,771
2014
$
28,749
26.7%
7,676
154
357
1,022
(1,314)
(1,380)
(1,357)
5,158
The movement in deferred income tax assets and liabilities during the years, without taking into consideration the offsetting of balances
within the same tax jurisdiction, is as follows:
Balance, December 31, 2013
Charged to earnings
Business combinations
Charged to other comprehensive income
Foreign exchange difference
Balance, December 31, 2014
Charged to earnings
Other
Business combinations
Charged to other comprehensive income
Foreign exchange difference
Balance, December 31, 2015
Lease
inducements &
Deferred lease
obligations
Restructuring
provisions
Carry forward
losses
$
398
(45)
-
-
-
353
(48)
-
-
-
-
$
349
(89)
-
-
-
260
(10)
-
-
-
-
305
250
$
381
451
-
-
1
833
3,106
276
-
-
158
4,373
Other
$
1,630
1,624
-
(83)
57
3,228
3,194
-
-
(37)
493
6,878
Total
$
2,758
1,941
-
(83)
58
4,674
6,242
276
-
(37)
651
11,806
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 93
Balance, December 31, 2013
Charged to earnings
Business combinations
Charged to other comprehensive income
Foreign exchange difference
Balance, December 31, 2014
Charged to earnings
Other
Business combinations
Charged to other comprehensive income
Foreign exchange difference
Balance, December 31, 2015
Financial statement presentation as at December 31:
Non-current deferred income tax assets
Non-current deferred income tax liabilities
Total
13. LONG-TERM DEBT
Term facility
Revolving facility
Deferred financing charges
Total (from
above)
Intangible assets
Property &
equipment
$
2,758
1,941
-
(83)
58
4,674
6,242
276
-
(37)
651
11,806
$
(25,822)
3,339
(1,346)
-
(612)
(24,441)
1,723
-
379
-
(1,502)
(23,841)
$
(223)
380
-
-
2
159
341
-
-
-
48
548
2015
$
1,079
(12,566)
(11,487)
Total
$
(23,287)
5,660
(1,346)
(83)
(552)
(19,608)
8,306
276
379
(37)
(803)
(11,487)
2014
$
483
(20,091)
(19,608)
December 31, 2015
December 31, 2014
$
-
265,270
(1,044)
264,226
$
177,756
45,244
(919)
222,081
REVOLVING FACILITY
On June 26, 2015, the Company amended the terms of its credit
agreement to include, amongst others, the following changes:
> Conversion of the previous facility consisting of a CA$75,000
senior unsecured revolving facility maturing in April 2017
and a CA$175,000 term facility maturing in April 2017 into a
CA$300,000 senior unsecured revolving facility that can be
drawn in Canadian or U.S. dollar equivalent at the discretion of
the Company, and is repayable in full in March 2020.
> Revised financial covenants applicable for the different test
periods including in periods after certain acquisitions.
> Inclusion of Fiera US Holding Inc., a wholly-owned subsidiary,
as a borrower.
consolidated financial statements on the date of the amendment.
The Company plans to use the additional amounts available
under the amended revolving facility to finance future acquisitions
and for general corporate purposes, if needed.
As at December 31, 2015, the total amount of long-term debt
was comprised of CA$128,258 and US$98,997 (CA$137,012)
(CA$129,500 and US$80,597 (CA$93,500) was outstanding as at
December 31, 2014).
Under the terms of the loan agreement, the Company must
satisfy certain restrictive covenants including minimum financial
ratios. These restrictions include maintaining a maximum ratio
of funded debt to EBITDA and a minimal interest coverage ratio.
EBITDA, a non IFRS measure, is defined in the revolving facility 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. As at
December 31, 2015, all debt covenant requirements were met.
The Company evaluated the amendments and concluded that the
revised terms were substantial and constituted an extinguishment
of the previous facility. As a result, unamortized deferred financing
charges of $718 relating to the previous facility were written off in the
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).
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 14. SHARE CAPITAL AND ACCUMULATED OTHER COMPREHENSIVE INCOME
AUTHORIZED
The Company is authorized to issue an unlimited number of Class A
Shares and an unlimited number of Class B Shares. The Class B
Shares may only be issued to Fiera Capital L.P., the holder of the
Class B Shares.
Except as described below, the Class A Shares and the Class B
Shares have the same rights, are equal in all respects and are treated
as if they were shares of one class only. The Class A Shares and Class B
Shares rank equally with respect to the payment of dividends, return
of capital and distribution of assets in the event of the liquidation,
dissolution or winding up of the Company.
The holders of outstanding Class A Shares and Class B Shares are
entitled to receive dividends out of assets legally available at such
times and in such amounts and form as the Board may from time to
time determine without preference or distinction between Class A
Shares and Class B Shares.
Class A Shares and Class B Shares each carry one vote per share
for all matters other than the election of directors. With respect to
the election of directors, holders of Class A Shares are entitled to
elect one-third of the members of the Board while holders of Class B
Shares are entitled to elect two-thirds of the members of the Board
of the Company.
The Class A Shares are not convertible into any other class of
shares. Class B Shares are convertible into Class A Shares on a one-
for-one basis, at the option of the holder as long as Fiera Capital
L.P. is controlled by current shareholders or holds at least 20% of
the total number of issued and outstanding Class A Shares and
Class B Shares.
The shares have no par value.
PREFERRED SHARES
On April 17, 2014, Directors of the Company approved the filings of articles of amendment to create a new class of shares to be designated
as preferred shares (“Preferred Shares”). This amendment was approved by the Company’s shareholders at the annual shareholders’ meeting.
The Preferred Shares would be issuable in series and would rank, both in regards to dividends and return on capital, in priority to the holders
of the Class A Shares, the holders of the Class B Shares and over any other shares ranking junior to the holders of the Preferred Shares. Other
conditions could also be applicable to the holders of the Preferred Shares.
The following table provides details of the issued and outstanding shares:
Balance, December 31, 2013
Issuance of shares
Conversion of hold back shares
Stock options exercised
Shares issued as settlement of purchase price obligations
Transfer from Class B Shares to Class A Shares
Class A
voting shares
Class B
voting shares
Number
$
Number
$
Number
Total
$
46,639,057
388,113
20,798,008
33,096
67,437,065
421,209
149,469
277,578
249,236
642,275
758,258
1,830
3,104
2,245
8,500
1,207
-
-
-
-
-
-
-
-
(758,258)
(1,207)
149,469
277,578
249,236
642,275
-
1,830
3,104
2,245
8,500
-
Balance, December 31, 2014
48,715,873
404,999
20,039,750
31,889
68,755,623
436,888
Shares issued as part of a business combination (Note 4)
1,028,086
11,998
Issuance of restricted shares
Conversion of hold back shares
Issuance of shares
Stock options exercised
Shares issued as settlement of purchase price obligations
Shares purchased for cancellation
Transfer from Class B Shares to Class A Shares
224,699
277,578
288,339
356,173
729,157
(275,230)
192,173
2,622
2,959
3,341
3,146
8,500
(2,320)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,028,086
11,998
224,699
277,578
288,339
356,173
729,157
2,622
2,959
3,341
3,146
8,500
(275,230)
(2,320)
306
(192,173)
(306)
-
-
Balance, December 31, 2015
51,536,848
435,551
19,847,577
31,583
71,384,425
467,134
2015
Shares issued as part of a business combination
As part of the acquisition of Samson, the Company issued 1,028,086 Class A Shares worth US$9,150. The shares issued were recorded at the
closing price at the acquisition date of CA$11,998. The Company also committed to issue approximately 353,928 Class A Shares eighteen
months following the closing of the acquisition. The commitment was considered an equity component and was recorded at a discounted
value of CA$3,566 under the caption: Restricted and Hold back shares.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 95
Issuance of restricted shares
In addition, the Company issued 224,699 restricted shares (the
“Restricted Shares”) to former employees of Samson. These
shares will vest over a period of up to three years and the grant is
accounted for as a share-based payment (Note 16). The Restricted
Shares of CA$2,622 are included as an increase in share capital with
a corresponding decrease under the caption: Restricted and Hold
back shares.
accordance with applicable regulations of the TSX. Under its normal
course issuer bid, the Company may purchase for cancellation
up to but no more than 3,509,288 Class A Shares, representing
approximately 10% of the public float of Class A Shares as at
September 30, 2015. During the year, the Company purchased and
cancelled 275,230 Class A Shares at a cost of $3,109. The excess
paid of $789 over the recorded capital stock value of the shares
repurchased for cancellation was charged to retained earnings.
Conversion of hold back shares
As part of the acquisition of Bel Air Investment Advisors LLC as
well as its affiliate Bel Air Securities LLC (collectively “Bel Air”), the
Company committed to issue in three tranches over a 32-month
period following closing, 832,755 Class A Shares worth US$9,760.
This commitment was considered an equity component and was
recorded at a discounted value of US$8,419 (CA$8,781) under the
caption: Restricted and Hold back shares. During the second quarter
of 2015, the second tranche amounting to 277,578 of the hold back
shares were issued and effectively converted into Class A Shares and
a value of CA$2,959 was transferred from the caption Restricted and
Hold back shares to share capital.
Issuance of shares
On the same day as the conversion of the second tranche of the
hold back shares into share capital in connection with a related
agreement, the Company issued 149,469 Class A Shares to National
Bank of Canada (“National Bank”) for cash proceeds of $1,830 less
issuance-related costs of $19. These shares were issued upon the
exercise by National Bank of its anti-dilution rights, as defined in
the Investor Rights Agreement.
In connection with the agreement described above, the Company
also issued subscription receipts to National Bank providing for the
issuance of 149,469 Class A Shares, at a pre-determined price of
$12.24, to be exchanged into shares concurrently with the third
conversion of hold back shares into share capital. The proceeds
of these subscription receipts have been transferred to an escrow
account but the release from the escrow is conditional on the
issuance of the hold back shares. As such, the amounts have been
recorded as an asset and a liability for an amount of $1,755 which is
presented as a current asset/liability.
The Company issued 138,870 Class A Shares from treasury at a
cost of $1,530 for Restricted Share Units that vested during the year.
Shares issued as settlement of purchase price obligations
On October 15, 2015, in connection with the asset purchase
agreement of Natcan Investment Management Inc., the Company
issued 729,157 Class A Shares for $8,500 as settlement of purchase
price obligations.
Shares purchased for cancellation
On October 15, 2015, the Company announced its intention to make
a normal course issuer bid for its shares through the facilities of the
TSX from October 19, 2015 to no later than October 18, 2016 in
Transfers
During the year ended December 31, 2015, 192,173 Class B Shares
were converted into 192,173 Class A Shares (758,258 Class B Shares
were converted into 758,258 Class A Shares for the year ended
December 31, 2014) on a one-for-one basis.
2014
Conversion of hold back shares
As part of the acquisition of Bel Air, the Company committed to
issue in three tranches over a 32-month period following closing,
832,755 Class A Shares worth US$9,760. This commitment was
considered an equity component and was recorded at a discounted
value of US$8,419 ($8,781) under the caption: Restricted and Hold
back shares. During the second quarter of 2014, the first tranche
amounting to 277,578 of the hold back shares were issued and
effectively converted into Class A Shares and a value of $3,104 was
transferred from the caption: Restricted and Hold back shares to
share capital.
Issuance of shares
On the same day as the conversion of the first tranche of the
hold back shares into share capital in connection with a related
agreement, the Company issued 149,469 Class A Shares to National
Bank for $1,830. The amount of $1,830 was received on July 2, 2014.
These shares were issued upon the exercise by National Bank of its
anti-dilution rights, as defined in the Investor Rights Agreement.
In connection with the agreement described above, the Company
also issued two subscription receipts to National Bank, each providing
for the issuance of 149,469 Class A Shares, at a pre-determined
price of $12.24, to be exchanged into shares concurrently with the
second and third conversion of hold back shares into share capital.
The proceeds of these subscription receipts have been transferred
to an escrow account but the release from the escrow is conditional
on the issuance of the hold back shares. As such, the amounts have
been recorded as an asset and a liability for an amount of $3,353 of
which $1,746 is presented as a current asset/liability.
Shares issued as settlement of purchase price obligations
On November 3, 2014, in connection with the asset purchase
agreement of Natcan Investment Management Inc., the Company
issued 642,275 Class A Shares for $8,500 as settlement of purchase
price obligations.
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) Dividends
During the year ended December 31, 2015, the Company declared $37,605 of dividends ($0.54 per share) on Class A and Class B Shares
($31,229 for the year ended December 31, 2014 ($0.46 per share)) and $272 on hold back shares ($400 for the year ended December 31, 2014).
The components of accumulated other comprehensive income as at December 31 include:
Unrealized gain on available-for-sale financial assets
Share of other comprehensive income of joint ventures
Unrealized exchange differences on translating financial statements of foreign operations
15. EARNINGS PER SHARE
December 31, 2015
December 31, 2014
$
779
509
27,326
28,614
$
553
354
8,944
9,851
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 attributable to shareholders
Weighted average shares outstanding – basic
Effect of dilutive share-based awards
Weighted average shares outstanding – diluted
Basic earnings per share
Diluted earnings per share
For the years ended December 31,
2015
$
27,631
69,956,100
808,523
70,764,623
0.40
0.39
2014
$
27,492
68,578,274
987,478
69,565,752
0.40
0.40
For the year ended December 31, 2015, the calculation of hypothetical conversions does not include 1,220,427 options (1,140,427 in 2014)
with an anti-dilutive effect.
16. SHARE-BASED PAYMENTS
A) STOCK OPTION PLAN
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 years ended December 31, 2015, and 2014, in the Company’s stock option plan is
presented below:
Outstanding – beginning of year
Granted
Exercised
Forfeited
Expired
Outstanding – end of year
Options exercisable – end of year
December 31, 2015
December 31, 2014
Number of
Class A Share options
Weighted-average
exercise price
Number of
Class A Share options
Weighted-average
exercise price
3,346,037
255,000
(356,173)
(204,639)
-
3,040,225
1,225,485
$
9.32
11.64
6.82
12.74
-
9.58
7.04
2,942,522
692,427
(249,236)
(32,176)
(7,500)
3,346,037
1,230,298
$
8.12
13.43
6.77
8.10
5.59
9.32
6.55
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 97
The following table presents the weighted average assumptions used during the years ended December 31, 2015 and 2014, 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 of the share price (%)
Weighted-average fair values ($)
Share-based compensation expense ($)
December 31, 2015
December 31, 2014
3.80 to 5.17
1.09 to 1.37
7.5
2.93 to 3.67
1.72 to 2.09
7.5
41.1 to 42.5
43.2 to 43.8
2.80
1,132
4.31
1,292
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:
Range of exercise price
Number of Class A
Share options
Options outstanding
Weighted-average
remaining contractual
life in years
3.67
5.41 to 8.50
8.51 to 13.89
359,006
1,460,792
1,220,427
4
6
9
Options exercisable
Weighted-average
exercise price
Number of Class A
Share options
Weighted-average
exercise price
$
3.67
8.09
13.10
359,006
846,479
20,000
$
3.67
8.31
13.89
B) DEFERRED SHARE UNIT PLAN
In 2007, the Board adopted a deferred share unit plan (the “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 of 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, 2015, management had recorded a liability for an amount of approximately $162 for the 14,295 units ($174 for
13,681 units as at December 31, 2014), outstanding under the DSU Plan.
C) RESTRICTED SHARE UNIT PLAN
On December 11, 2012, the Board adopted a RSU Plan for the purposes of providing certain employees with the opportunity to acquire
Class A 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 Company. The maximum number of issuable Class A Shares under all plans is
10% of the issued and outstanding shares of the Company calculated on a non-diluted basis. The vesting date is the third anniversary of the
award date. The Board may determine the number of shares each eligible employee can receive. RSU expense is recorded at fair value and
is amortized over the vesting period on a straight-line basis.
The following table presents transactions that occurred during the years ended December 31, 2015 and 2014 in the Company’s RSU plans.
Outstanding – beginning of year
Granted
Reinvestments in lieu of dividends
Vested1
Forfeited
Outstanding – end of year
1. 1,760 Restricted share units representing the last dividend were paid in cash.
98
Number of RSUs outstanding
2015
540,508
273,964
30,872
(140,630)
(18,470)
686,244
2014
367,548
166,559
15,573
-
(9,172)
540,508
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) As at December 31, 2015, management had recorded a liability for an amount of $2,905 for the 686,244 units ($2,231 for 540,508 units
as at December 31, 2014), outstanding under the RSU Plan. An expense of $2,204 and $1,640 was recorded during the years ended
December 31, 2015 and 2014, respectively for these grants.
D) RESTRICTED SHARE PLAN
On October 30, 2015, in relation with the acquisition of Samson, the Board adopted a Restricted Share Plan for the purposes of retaining
certain employees and providing them with the opportunity to participate in the growth and development of the Company. The maximum
number of issuable Class A Shares under the plan is 224,699 of the issued and outstanding shares of the Company. The Board may determine
the number of restricted shares each eligible employee can receive. The Restricted Shares vest over a three-year period with one third vesting
each year. Accelerated vesting occurs in certain circumstances, including death or disability. The Restricted Shares are entitled to dividends
and have voting rights. The plan administrator will reinvest the proceeds of the dividends received into additional shares of the Company.
On October 30, 2015, the Company issued 224,699 Restricted Shares. In conjunction with the Restricted Share issuance, the Company
issued 224,699 Class A Shares which are held by the plan administrator. During the year, the plan administrator purchased an additional
2,346 Class A Shares with the proceeds of the dividends received.
The share-based payment expense is measured based on the fair value of the Restricted Shares on the grant date and is recognized
over the vesting period on a straight-line basis. An expense of $227 was recorded during the year ended December 31, 2015 for this grant.
E) PERFORMANCE SHARE UNIT PLAN
PSU PLAN APPLICABLE TO BUSINESS UNITS
The following table presents the transactions that occurred during the years ended December 31 in the Company’s PSU plan applicable to BU:
Outstanding – beginning of year
Granted
Settled
Forfeited
Outstanding – end of year
2015
1,735,705
1,101,589
(234,583)
(60,000)
2,542,711
2014
1,345,321
415,384
-
(25,000)
1,735,705
During the year ended December 31, 2015, the Company granted 1,092,273 PSUs which will vest in equal tranches in either the next 4 or
5 years and 9,316 PSUs which are cliff vesting on December 31, 2018. The formula to determine the value of the PSUs upon vesting is based
on a multiple of the revenues applicable to the business unit while the performance condition is based on a revenue growth objective. The
PSUs granted are anticipated to be equity-settled.
The weighted-average grant date fair value of the PSUs awarded is $14.24 per share. The fair value of the PSUs granted was determined at
inception using a discounted cash flow model which values the underlying PSUs using different long-term projections such as the expected
revenue growth rate, client retention rate and discount rate. The Company determined that it is currently probable that only the first two
years of the awards granted during the period will vest. During the year ended December 31, 2015, 234,583 PSUs vested and were settled.
The Company settled the vested PSUs by paying $3,450 in cash in lieu of issuing Class A Shares. The Company treated the transaction as a
repurchase of an equity interest and recorded a deduction in the amount of $3,450 in contributed surplus. The settling of these PSUs in cash
was due to unique circumstances. The Company still has the intention to settle the remaining tranches by issuing shares.
An expense of $4,393 and $4,006 was recorded during the years ended December 31, 2015 and 2014, respectively for the PSU plan
applicable to BU. For the year ended December 31, 2015, the expense is attributable to equity-settled grants and cash-settled grants for an
amount of $4,422 and ($29), respectively ($3,963 and $43, respectively for the year ended December 31, 2014).
PSU PLAN
An expense of $924 and nil was recorded during the years ended December 31, 2015 and 2014, respectively for this PSU plan. For the year
ended December 31, 2015, the expense is attributable to equity-settled grants and to cash-settled grants for an amount of $213 and $711,
respectively (nil for the year ended December 31, 2014).
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 99
17. POST-EMPLOYMENT BENEFIT OBLIGATIONS
The Company contributes to defined contribution plans for its employees. Contributions for the year ended December 31, 2015 amount to
$2,409 ($2,260 for the year ended December 31, 2014).
Subsequent to a business combination realized in September 2010, the Company assumed the role of sponsor of an 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 January 1, 2013, and the next actuarial valuation date is January 1, 2016.
18. EXPENSES BY NATURE
The details of selling, general and administration expense are as follows:
Wages and employee benefits
Travelling and marketing
Reference fees
Rent
Technical Services
Professional fees
Insurance, permits and taxes
Other
The details of wages and employee benefits are as follows:
Salaries and wages
Pension costs
State plans
Share-based compensation
Cash settled share-based compensation
Other
For the years ended December 31,
2015
$
132,034
8,369
5,978
6,537
9,907
6,321
2,645
5,900
2014
$
108,289
6,316
5,839
5,071
6,867
4,804
2,588
6,193
177,691
145,967
For the years ended December 31,
2015
$
110,630
2,409
2,814
5,994
2,886
7,301
2014
$
91,446
2,260
2,490
5,255
1,683
5,155
132,034
108,289
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
9,403
2,577
11,800
1,257
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 19. ADDITIONAL INFORMATION RELATING TO CONSOLIDATED STATEMENTS OF CASH FLOWS
Changes in non-cash operating working capital items
Accounts receivable
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Amount due to related companies
Deferred revenues
For the years ended December 31,
2015
$
1,990
(2,484)
2,565
328
(3,325)
(926)
2014
$
(2,409)
1,045
6,039
(25)
(396)
4,254
The following are non-cash items: subscription receipts receivable of $1,755, subscription receipts obligation of $1,755, shares issued as
settlement for purchase price obligations of $8,500 (2014 – $8,500), conversion of hold back shares of $2,959 (2014 - $3,104), issuance of
Restricted Shares of $2,622, issuance of shares and hold back shares as part of a business combination of $11,998 and $3,566,respectively,
issuance of shares relating to the vesting of RSUs of $1,530, conversion of amounts outstanding under the previous facility into the amended
revolving facility of CA$129,500 and US$73,159, additions to property and equipment included in lease inducements of $4,844, additions
to property and equipment included in accounts payable and accrued liabilities of $1,194 and additions to intangible assets included in
accounts payable and accrued liabilities of $70.
The changes in non-cash working capital for accounts payable and accrued liabilities exclude the difference between income taxes
paid of $12,563 (2014 – $14,346) and income tax expense of $15,077 (2014 – $10,818) for a net impact of $2,514 for the year ended
December 31, 2015 (2014 – $(3,528)).
20. COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS
The Company leases office space and equipment under non-cancellable operating leases expiring at different dates until 2026. Future lease
payments total $77,876 and include the following payments for each of the next five years as at December 31, 2015, and thereafter:
2016
2017
2018
2019
2020
Thereafter
$
11,934
10,416
7,943
7,198
6,601
33,784
CONTINGENT LIABILITIES
In the normal course of business, the Company is party to business and employee-related claims. The potential outcomes related to existing
matters faced by the Company are not determinable at this time. The Company intends to defend these actions, and management believes
that the resolution of these matters will not have a material adverse effect on the Company’s financial condition.
21. CAPITAL MANAGEMENT
The Company’s capital comprises share capital, (deficit) retained earnings and long-term debt, less cash. 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.
During the years ended December 31, 2015 and 2014, all regulatory requirements and exemptions were met.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 101
22. RELATED PARTY TRANSACTIONS
The Company has carried out the following transactions with shareholders and their related companies, during the years ended December 31.
Base management, performance and other revenues
Selling, general & administrative expenses
Reference fees
Other
Interest on long-term debt
Changes in fair value of derivative financial instruments
Acquisition costs
Shares issued as settlement of the purchase price obligations
2015
$
52,326
1,592
2,320
7,782
445
120
8,500
2014
$
49,290
1,583
1,775
7,864
301
-
8,500
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. Fees are at prevailing market prices and are settled on normal trade terms. The
amounts due under the Company’s revolving facility presented as long-term debt are amounts due to a syndicate of lenders which includes
two related parties of the Company. During the second quarter of 2015, the Company paid $1,034 to the syndicate of lenders for different
transaction-related fees in relation to the amendment of the revolving facility. The amounts are recorded as deferred financing costs. The
derivative financial instruments liability is due to a related company.
The Company has carried out the following transaction with joint ventures: other revenue of $400 for the year ended December 31, 2015
($1,202 for the year ended December 31, 2014).
23. SEGMENT REPORTING
The chief operating decision-maker of the Company has determined that the Company’s reportable segment is investment management
services in Canada and the United States of America.
GEOGRAPHICAL INFORMATION
Canada
United States of America
Canada
United States of America
Revenues
Non-current assets
For the year ended
December 31, 2015
As at December 31,
2015
$
180,178
78,239
$
492,841
250,614
Revenues
Non-current assets
For the year ended
December 31, 2014
As at December 31,
2014
$
166,544
55,814
$
515,443
166,195
Revenues are attributed to countries on the basis of the customer’s location. Non-current assets exclude deferred income taxes.
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2015 and 2014(in thousands of Canadian dollars, unless noted otherwise – except share and per share information) 24. SUBSEQUENT EVENT
PENDING ACQUISITION
On February 29, 2016, the Company announced that it had reached
a definitive agreement to acquire all of the outstanding shares of
Apex Capital Management (“Apex”), a prominent growth equity
manager based in Dayton, Ohio. The acquisition is in line with
the Company’s North American growth strategy, and provides a
meaningful complementary presence in the institutional and sub-
advisory retail markets, small/mid cap, small cap and other growth
strategies.
Under the terms of the agreement, the purchase price for Apex
includes US$88,000 payable in cash to the sellers and US$57,000
worth of Fiera Capital Class A Shares that will be held in escrow and
issued over 7 years starting on the first anniversary of the closing
date. The Class A Shares will not have voting rights until their release
from escrow. The purchase price is subject to post-closing price
adjustments.
The Company will finance the cash portion of the acquisition with
a new US$125,000 term loan which will mature three years from the
date of closing. The Company plans to use the additional amounts
available under the new loan to refinance existing borrowings under
the revolving facility.
The transaction is expected to close in April 2016, and is subject
to customary conditions, including regulatory approvals and approval
of the TSX.
DISPOSAL OF JOINT VENTURE
On January 15, 2016 the Company completed the sale of the
Company’s 35% equity ownership in Axium for cash proceeds of
$20,000. As a result, the Company wrote off the assets held-for-sale
of $5,496, reclassified $509 of accumulated other comprehensive
income to net earnings and recorded a gain on disposal of $15,013.
SHARES PURCHASED FOR CANCELLATION
During the month of January 2016, the Company purchased and
cancelled 154,500 Class A Shares at a cost of $1,306. The excess
paid of $353 over the recorded capital stock value of the shares
repurchased for cancellation was charged to retained earnings.
DIVIDENDS DECLARED
On March 16, 2016, the Board declared a quarterly dividend of $0.15
per share to shareholders of record as at March 29, 2016 and payable
on April 26, 2016.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 103
— CORPORATE INFORMATION
Executive Officers
Sylvain Brosseau
Violaine Des Roches
Jean-Guy Desjardins
Sylvain Roy
Alain St-Hilaire
Benjamin S. Thompson
John Valentini
Head Office
1501 McGill College Avenue, Suite 800
Montreal, Quebec, Canada H3A 3M8
T 514 954-3300
T 1 800 361-3499 (toll free)
F 514 954-5098
info@fieracapital.com
www.fieracapital.com
Transfer Agent and Registrar
Computershare Investor Services Inc.
100 University Avenue, 9th Floor
Toronto, Ontario, Canada M5J 2Y1
T 1 800 564-6253 (toll free Canada and United States)
T 514 982-7555 (international direct dial)
www.computershare.com
Auditor
Deloitte LLP
Stock Exchange Listing
Stock markets: Class-A subordinate voting shares are listed on the TSX under the symbol FSZ
Annual and Special Meeting
Centre Mont-Royal
2200 Mansfield Street
Montreal, Quebec, Canada H3A 3R8
Friday, May 27, 2016, 9:30 a.m.
104
FIERA CAPITAL CORPORATION
Montreal
1501 McGill College Avenue
Suite 800
Montreal, Quebec
H3A 3M8
T 514 954-3300
T 1 800 361-3499 (toll free)
Vancouver
1040 West Georgia Street
Suite 520
Vancouver, British Columbia
V6E 4H1
T 604 688-7234
T 1 877 737-4433 (toll free)
Toronto
1 Adelaide Street East
Suite 600
Toronto, Ontario
M5C 2V9
T 416 364-3711
T 1 800 994-9002 (toll free)
Calgary
607 8th Avenue SW
Suite 300
Calgary, Alberta
T2P 0A7
T 403 699-9000
Halifax
5657 Spring Garden Road, Box 117
Suite 505
Halifax, Nova Scotia
B3J 3R4
T 902 421-1066
FIERA CAPITAL INC.*
BEL AIR INVESTMENT ADVISORS*
New York
375 Park Avenue
8th Floor
New York, New York
10152
T 212 300-1600
Boston
60 State Street
22nd Floor
Boston, Massachusetts
02109
T 857 264-4900
Los Angeles
1999 Avenue of the Stars
Suite 3200
Los Angeles, California
90067
T 310 229-1500
T 1 877 229-1500 (toll free)
San Francisco
555 Mission Street
Suite 3325
San Francisco, California
94105
T 415 229-4940
fieracapital.com
info@fieracapital.com
*Legal Notice to U.S. Persons: Fiera Capital does not provide investment advisory services, or offer investment funds, in the United States or to U.S. persons.
Investment advisory services for U.S. persons are provided by Fiera Capital’s U.S. affiliates, Bel Air Investment Advisors LLC (“Bel Air”) and Fiera Capital Inc. (“FCI”
and together with Bel Air, the “U.S. Advisers”). Any investment advisory services of Fiera Capital provided to U.S. persons are (or were) provided by either FCI or
Bel Air d/b/a Fiera Asset Management USA, in each case pursuant to a “participating affiliate” arrangement with Fiera Capital as that term is used in relief granted
by the staff of the U.S. Securities and Exchange Commission (the “SEC”). The U.S. Advisers are SEC-registered investment advisers. Unless otherwise indicated, all
dollar figures are expressed in Canadian dollars.
The information and opinions herein are provided for informational purposes only and are subject to change. The information provided herein does not constitute
investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. Performance figures
pertaining to composites are aggregations of the performance of one or more client portfolios or pooled funds that represent similar investment strategies. Further
information on the investment strategy of composites can be found at www.fieracapital.com. All performance data is time weighted and assumes reinvestment
of all distributions or dividends and does not take into account other charges or income taxes payable that would have reduced returns. Valuations and returns
are computed and stated in Canadian dollars, unless otherwise noted. Past performance is no guarantee of future results and other calculation methods may
produce different results. Individual account or fund performance will vary. Unless otherwise noted, index returns are presented as total returns, which reflect
both price performance and income from dividend payments, if any, but do not reflect fees, brokerage commissions or other expenses of investing. The index
comparisons in this presentation are provided for informational purposes only and should not be used as the basis for making an investment decision. Furthermore,
the performance of the composite and the index may not be comparable. There may be significant differences between a composite and the indices referenced,
including, but not limited to, risk profile, liquidity, volatility and asset composition.
FIERA CAPITAL CORPORATION 2015 ANNUAL REPORT | 105
Our numbers reflect a commitment
Fiera Capital is deeply committed to being a good corporate citizen and recognizes the importance
of protecting the environment for the well-being of all. The pages of this annual report were printed on
recycled paper and manufactured using biogas energy.
12
mature trees
2,032 kg
of CO2
10 GJ
energy
530 kg
of waste
43,096 litres
of water
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