2012
ANNUAL REPORT
GUARDIAN CAPITAL GROUP LIMITED
2002
19621963 1964 1965 19661967 1968 1969 1970 1971 19721973 1974 19751976 1977 197819801981198219831984 198519861987 1988 1989 1990 1991 1992 1993 1995 94 1996 199719981999 2000 20012004 2011 2005 200620072008 2009 2010 1979 2003 TABLE OF CONTENTS
3 Message from the
Chairman of the Board
4 To our Shareholders
6 Guardian Capital’s 50 Years
7 Financial Highlights
8 Review of Operations
12 Management’s Discussion
and Analysis
20 Ten Year Review
21 Management’s Statement
on Financial Reporting
22 Independent Auditors’ Report
23 Consolidated Financial
Statements
28 Notes to Consolidated
Financial Statements
49 Directors and
Principal Executives
51 Corporate Information
Guardian Capital Group Limited
Message from the Chairman of the Board
Dear Fellow Shareholders,
On behalf of your Board of Directors, I am pleased to report to you that your company
completed its 50th anniversary year with much success. This achievement did not take
place overnight, but has been the culmination of planning, patience and execution with
excellent leadership.
Of particular note, during 2012 the company returned to its shareholders $13.2 million,
consisting of dividends of $5.4 million and share repurchases of $7.8 million. Additionally,
we invested $7.4 million to build upon our profitable life insurance agency business.
In relation to the fiscal year 2012, we have declared a $0.20 per share dividend, payable
in March, a 17.6% increase from the $0.17 paid last year. The Board has also decided to
transition the Company’s dividend policy from an annual payment to a quarterly payment
schedule, beginning with the first quarterly dividend, which is anticipated to be made
payable in July, 2013.
Your Board of Directors is confident in the strength and resilience of Guardian’s business
model, and the team which continues to build upon the brand. This remarkable team,
headed by George Mavroudis, President and Chief Executive Officer, exemplifies our
company’s values of Trustworthiness, Integrity and Stability, together with care for our
business and clients. The Directors have approved Management’s updated Strategic Plan
for the company, which is based upon its vision of being the most respected independent
investment management firm in Canada.
Peter Stormonth Darling has been a dedicated member of our Board for 15 years, but has
advised us that he will not be standing for re-election to the Board at the upcoming Annual
Meeting. We wish to thank Peter for his generous counsel and contributions to Guardian.
I also thank the other members of the Board for their counsel and efforts throughout the
past year. Additionally, we wish to recognize and thank the management and associates of
each of our subsidiary companies for an outstanding year.
On behalf of the Board, we thank you for your continued support and trust, and look forward
to discussing our progress further with you at our 2013 Annual Meeting, and continuing to
work on your behalf in the year ahead.
Respectfully,
James Anas
Chairman of the Board
March 1, 2013
2012 Annual Report
3
2012 Annual Report To Our Shareholders
Dear Shareholder,
This past year marked a significant milestone for Guardian Capital, as we celebrated our
50th year in business. Associates across the company exhibit a great sense of pride knowing
they are part of a successful independent financial institution, steeped in the history of
serving the best interests of our clients, associates and shareholders. The total commitment
of our associates, and the privileges bestowed by our clients, has allowed Guardian, in its
50th year in business, to set historical highs for such key financial metrics as assets under
management, assets under administration, net revenues, operating earnings, cash flow from
operations and shareholders’ equity.
Guardian’s investment management business grew assets under management by more than
18%, or approximately $2.9 billion, to $18.8 billion at year end, compared to $15.9 billion at
the end of 2011. Worldsource Wealth Management, our financial advisory business serving
independent advisors across Canada, also experienced double digit growth, with assets under
administration ending the year at $9.9 billion, compared to $8.7 billion at the end of 2011.
The growth in assets under management and administration, in itself, is impressive.
However, it is important to highlight some of the key drivers to this success. Over the last
few years, we have had a strategic focus on improving our relations with the investment
consultant community and with key personnel at pension, endowment, foundation and
financial intermediary institutions, as well as expanding our geographical coverage. In
2012, our focus on these business development efforts led to historical highs in requests for
proposals, finalist pitches and new client wins, across both our institutional pension and
financial intermediary distribution channels. The success in new client acquisition was a
major driver to growth in assets under management for the year.
The foundation supporting our strong net new sales has been our continued success in
fostering a stable environment for our investment professionals, allowing them to pursue the
ultimate goal of adding value above our clients’ goals and benchmarks. Several of our equity
and fixed income strategies delivered relatively strong performance over the year and, more
importantly, over 3, 5 and 10-year investment horizons ending in 2012. The company’s broad
range of investment solutions, with multi-year track records available across domestic and
global equities, fixed income and balanced mandates, positions our institutional investment
management business for continued growth in the years ahead.
Guardian Capital Advisors LP, our private wealth management business, has been a steady
and growing part of the company’s investment management business. In 2012, our private
wealth business unit grew the number of clients we serve by more than 12% to over 700
families, with total assets under management of $1.4 billion. Through patient organic
growth, Guardian has built one of the largest independent private wealth management
4
Guardian Capital Group Limited firms, representing clients across Canada, and with a growing list of referring advisors who value our
partnership in serving their high net worth clients.
Worldsource Wealth Management, our financial advisory business, continues to develop improved
efficiencies and revenue growth, which have led to more than a $2 million reduction in operating losses
in 2012, and position the business to contribute to Guardian’s profitability in 2013. A large part of this
success is due to our leading position as a Managing General Agency (MGA), serving the needs of top
independent insurance advisors selling life insurance, critical illness insurance and segregated funds.
In November, 2012, we completed the acquisition of Strategic Brokerage Services, a strong regional
MGA in Western Canada, which strengthens significantly the firm’s national presence. We expect to see
continued consolidation in the MGA sector, and believe we are well positioned to play a leading role in
that consolidation.
As we have stated in recent years, we are focused on converting the scale of both our investment
management and financial advisory businesses into operating businesses that generate meaningful and
repeatable operating profits. In 2012, we began to see the potential growth in profitability from these
operating businesses, and will be increasingly supportive toward reallocating portions of our corporate
investment portfolio into investments that will aid the growth in these operating businesses.
The improved results of our operating businesses generated net earnings available to shareholders in
2012 of $0.71 per share, diluted, compared with $0.31 per share, diluted in 2011. We believe there are
other meaningful financial measures of our progress. Our operating earnings in 2012 were $20.1 million,
$3.0 million greater than in 2011 and steadily growing since the lows of 2008, and adjusted cash flow
from operations available to shareholders, which returned $0.66 per share in 2012, diluted, versus $0.60
in 2011.
In 2013, we look forward to building on the gains made over the past year, and have a strategy in place to
generate meaningful operating profits that are repeatable. The trust which clients place in our services,
and the hard work, passion and loyalty of our associates, are sincerely appreciated, as is the patience of
our shareholders, to allow us the time to build a successful independent financial institution.
Warmest regards,
George Mavroudis,
President and Chief Executive Officer
March 1, 2013
T
O
O
U
R
S
H
A
R
E
H
O
L
D
E
R
S
5
2012 Annual Report
1960s
1970s
1980s
1990s
2000s
Gdn. Management Ltd. is
renamed Guardian Capital
Group Limited.
John Christodoulou joins
Guardian’s Board
of Directors.
Norman Short, Alan Grieve
and Ralph Horner launched
Guardian in 1962, as Gdn.
Management Ltd., to serve as
the management company
for Guardian Growth
Fund Limited, which had
been formed two years earlier.
Guardian Growth Fund, with a
“Free-to-Roam” mandate,
becomes one of the
top-performing
Canadian
mutual funds
in the 1960’s.
Norman Short & Associates
Ltd. is formed, planting the
seeds for the group’s invest-
ment management business.
Later renamed Guardian
Capital Investment Counsel
Ltd. (GCIC), it is the direct
predecessor to today’s
Guardian Capital LP (GCLP).
Other senior
executives were
Hunter Thompson
and Gurston
Rosenfeld.
Hunter builds
Guardian’s outstanding col-
lection of Canadian aboriginal
art; Gurston is instrumental in
Guardian’s financing
of movies, including
“The Terry Fox Story”.
Guardian occupies offices
at 48 Yonge Street in Toronto for
most of its first quarter century.
Guardian forms pooled funds to
serve smaller pension clients, and
takes over other public mutual
fund groups, broadening its invest-
ment offering to include Canadian
and US Equity and Fixed Income
mandates.
Jim Cole joins GCIC as a senior
executive and investment
manager, holding senior posi-
tions with GCIC and the parent
company for over 25 years.
Tyndall-Guardian, a joint venture
between Guardian and Tyndall,
a UK firm, builds a mutual fund
management firm in Bermuda.
Gdn. Management Ltd.
completes its IPO, and begins
trading on the Toronto Stock
Exchange.
Vern Christensen joins Guardian,
in charge of legal and finance,
and is involved with the devel-
opment of the mutual fund
and financial advisory
businesses, continuing as
Chief Financial Officer today.
All of Guardian’s domestic mutual
fund administration brought
in-house, and Guardian Group of
Funds Limited (GGOFL) formed.
Fund offering broadened to
include World Equities, Money
Market and International Fixed
Income, among others.
Through mergers with two other
firms, Ruggles & Crysdale and
Fiscal Consultants, broader
mandates and significant AUM
added to Guardian’s investment
counseling business.
Guardian has public offerings
of specialty closed-end funds,
including Precious Metals,
Pacific Rim and specialty Fixed
Income, listed on the Toronto
Stock Exchange, using
in-house expertise and
partnerships with
international specialists.
Sale of Tyndall-Guardian to
Guardian’s joint venture partner
provides Guardian with the
start of its corporate investment
portfolio.
Norman Short retires as President
and CEO of Guardian, and is
replaced by John Christodoulou,
who had been taking on more
senior positions with Guardian.
Former closed-end funds now all
merged into current open-end funds.
Broad range of mutual funds results
in asset growth to over $2 billion.
GGOFL forms mutual fund
dealer Worldsource Financial,
sponsoring life insurance sales
force as mutual fund agents.
Alexandria Bancorp
formed as bank,
mutual fund manager,
trust and corporate administrator
in Cayman Islands. Later added
Alexandria Trust in Barbados.
GGOFL sold to Bank of Montreal
for $180 million in BMO shares,
adding to corporate portfolio of
securities. Guardian continues to
sub-advise significant assets for
the funds.
Worldsource financial advisory
business is expanded to include
a securities dealer, with the launch
of Worldsource Securities Inc.
The purchase of Trowbridge
Financial results in the forma-
tion of Worldsource Insurance
Network (WIN), a life insurance
managing general agent located
in Vancouver.
Private Wealth investment manager
formed, predecessor to Guardian
Capital Advisors, which eventually
expands to Calgary and Vancouver.
Guardian Ethical Management, a
Socially-Responsible Investment
joint venture, founded.
John Christodoulou passes
away, and George Mavroudis,
who joined Guardian several
years earlier, is appointed
President and CEO of
Guardian, and a member
of the Board of Directors.
Guardian Capital LP builds
an in-house Global investment
management division, with client
assets greater than $1 billion.
Through purchase of IDC in Eastern
Canada, and SBS in Alberta and BC,
WIN builds a national presence as
IDC Worldsource.
Guardian Capital celebrates the 50th
Anniversary of its founding, with its
total AUM at almost $19 billion and
its total AUA at almost $10 billion.
Merged Worldsource Financial with
Capital Management Group, to
form CMG-Worldsource Financial
Services, in Markham, Ontario.
AUM reaches $10 billion, and AUA
at Worldsource reaches $2 billion.
Financial Highlights
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
18,832
15,928
16,266
13,986
11,764
9,918
8,654
7,783
7,074
6,005
11.99
11.17
11.57
10.49
6.69
20,138
17,133
13,539
8,728
8,253
0.71
0.69
0.31
0.41
0.19
0.66
0.60
0.55
0.42
0.37
F
I
N
A
N
C
I
A
L
H
I
G
H
L
I
G
H
T
S
12% ▴
Increase in
productivity rates
up. Economy
slows in Q2 YoY
68M
Increase in
productivity rates
up. Economy
slows in Q2 YoY
Assets Under Management
As at December 31 ($ in millions)
Assets under management increased in 2012, largely as a result of net
new monies received from new and existing institutional clients.
Assets Under Administration
As at December 31 ($ in millions)
Assets under administration (AUA) increased significantly in 2012, as a
result of additional insurance AUA provided by the purchase of a Western
Canada MGA, plus additional mutual fund AUA provided by new advisor
teams joining the Company.
Fair Value of the Company’s Securities, per share, diluted1,2
As at December 31 (in $)
The fair value of the Company’s Securities per share increased in 2012,
reflecting the growth in the fair value of the Company’s investments,
substantially the Bank of Montreal shares.
Operating Earnings1,2
For the years ended December 31 ($ in thousands)
8
7
6
5
4
3
2
1
0
Operating Earnings improved significantly in 2012, reflecting a full year’s
contribution from a 2011 Financial Advisory purchase, plus continuing
improvements in the Company’s Investment Management business.
Increase in
productivity rates
up. Economy
slows in Q2 YoY
Net Earnings available to shareholders, per share, diluted1,2
For the years ended December 31 (in $)
Net earnings per share increased dramatically in 2012, reflecting improved
Operating Earnings and significant Gains on Securities Held For Sale.
Adjusted Cash Flow From Operations available
to shareholders, per share, diluted1,2
For the years ended December 31 (in $)
Adjusted cash flow from operations increased in 2012, reflecting improved
Operating Earnings.
(1) 2010 to 2012 numbers are in accordance with IFRS; 2009 and previous years are as reported under previous
Canadian GAAP.
(2) Numbers for 2010 and 2011 have been amended retrospectively to reflect the 2012 adoption of new IFRS
standards, as disclosed in note 3a to the 2012 Consolidated Financial Statements.
Guardian Capital Group Limited
7
2012 Annual Report
Review of Operations
Institutional Investment
Management
Institutional investment management services are
provided by Guardian Capital LP (“GCLP”), which
serves pension plan sponsors, broker dealer third-
party platforms, closed-end funds and mutual funds,
operating and endowment funds, and foundations.
GCLP’s capabilities span a range of asset classes,
geographic regions, and specialty mandates. GCLP, one
of the largest, independent investment management
firms in Canada, is the successor to our investment
management business, which was founded in 1962,
and celebrated its 50th anniversary in 2012.
Assets under management (“AUM”) in GCLP were
$17.3 billion at the end of 2012, up from $14.5 billion
at the end of 2011. The increase in assets under
management was due mainly to strong net new
monies from clients across both the institutional
and retail intermediary client base. The S&P/TSX
Composite benchmark rose 8.2% and provided
the balance of growth in AUM for 2012. Relative
to many of our peers, GCLP experienced a strong
year of growth due to strong relative performance
across several asset classes, continued stability in the
investment team and organization, and strong client
service and business development efforts.
Canadian Equity
In 2012, most of our Canadian equity strategies
experienced strong returns, which will provide
support for further growth in 2013. As indicated last
year, we experience continued investor interest in
our Canadian Growth Equity strategy, to the point of
having to decline new client appointments starting in
2013. With over $3 billion in this strategy, we felt that
it was in the best interests of our existing clients to
limit future growth in assets to the investment needs
of those clients. We have also witnessed a growing
trend among institutional investors to seek strategies
that are biased toward income generation and lower
portfolio volatility. This speaks to Guardian’s leading
expertise in managing such strategies for well over 15
years, and resulted in significant new appointments for
our Equity Income and Growth & Income strategies.
We believe this theme will continue to remain popular
with both institutions and retail investors, and should
support further growth in 2013. At times when many
institutional investors are shrinking their allocation to
Canadian equities, we are proud to have experienced
continued growth in this area, and intend to continue
providing the solutions that investors desire. Finally,
at the end of 2012, we added to our investment
bench strength with the hire of a senior analyst,
who has extensive experience focused on Canadian
companies. Guardian has one of the deepest Canadian
Equity investment teams in the industry, with nine
investment professionals who have an average of 27
years of experience overseeing a total of approximately
$10 billion in assets under management.
Global Equity
As we reported in last year’s review of operations,
the strong 5 year performance history of our Global
Dividend Equity strategy at the end of 2011 provided
us with strong cash inflow momentum into 2012,
and was a large contributor to the growth in assets
under management for the global equity team this
past year. This Global Dividend Equity strategy
surpassed $750 million under management by year
end. The team reached an important milestone in our
building of the global equity platform, reporting total
global equity AUM of over $1 billion, representing
growth of over 100% during the year. We continue to
expand the firm’s product offering, with the launch
of similar regional lower-volatility strategies for
International and Emerging Equity Markets. The
early performance results for these strategies are
encouraging, and provide the seed for further growth
in the years to come. In addition to our product
development initiatives in this area, we continued our
investment in personnel by adding to our investment
team at the end of 2012, with the hire of a Senior
Research Director/Portfolio Manager, who joined
Guardian with more than 20 years of quantitative
investing experience. This brings the total number
of investment professionals within our global equity
team to eight, which represents roughly one-third of
our investment professional staff in GCLP.
As investors gain greater confidence in the equity
markets, stronger equity markets bring the risk that
our “lower-volatility” strategies may lag the general
markets. However, we believe that the structural
needs for income by investors will support the long-
term demand for our strategies which, by design,
generate above-market dividend yield for their
investors at below-market risk.
Fixed Income
Again, in 2012, the fixed income team produced
solid, consistent investment returns across the
spectrum of strategies it manages on behalf of
clients, ranging from core bond to high yield bond
strategies. Our conservative style of management
continues to appeal to investors seeking safety in
their bond allocations. As well, the ongoing investor
appetite for higher-yielding securities supported
$17.3B
2012
Institutional
AUM
6
4
3
,
7
1
0
1
9
,
4
1
9
8
4
,
4
1
5
2
8
,
2
1
2009
2010 2011
2012
Institutional
Assets Under
Management
as at Dec. 31
($ mil)
R
E
V
I
E
W
O
F
O
P
E
R
A
T
I
O
N
S
8
Guardian Capital Group Limited
continued growth in our high yield bond strategies.
This resulted in a 25% growth in fixed income AUM
in 2012. Looking ahead, we expect bond yields to rise
eventually. This will be a challenging environment
for many strategies that have performed well over
the last 20 to 30 years. As a result, we have initiated
new strategies in 2012, including a short-duration
bond strategy focusing on high-quality corporate
issues, and a variation of this strategy incorporating
an allocation to high yield bonds. We continue
to investigate new approaches to fixed income
management for the next decade, and will introduce
additional new strategies in 2013. We intend to be
well-prepared to meet investor needs in a changing
fixed income landscape.
Balanced Funds
Balanced strategies have historically been a relatively
small component of our AUM, but have witnessed
increased momentum in 2012. Investors have started
recognizing Guardian’s ability to customize balanced
funds by selecting strategies from its wide range of
Canadian and foreign equity solutions, combined
with a solid fixed income offering. We have acquired
eight balanced fund clients in 2012, and expect the
momentum to remain strong in 2013.
Investment Client Distribution
The composition of our client base remains broadly
diversified, with approximately 50% of assets from
institutional corporate and pension accounts, and 50%
from retail intermediary clients. Retail intermediary
include sub-advisory relationships with mutual funds
and closed-end funds, and our leading position in
the separately-managed wrap account programs with
the top broker dealers in the country. The separately-
managed wrap account assets continued to deliver
excellent growth in net new assets over the 2012
calendar year, as we finished the year with more
than $3 billion in AUM in this channel. Many of our
existing broker dealer partners, in particular the big six
Canadian banks, consider us as a preferred provider of
core investment solutions on their managed account
platforms. Our independence as a wholesaler of
diversified investment solutions that deliver consistent
returns and strong investment team continuity,
coupled with our excellence in servicing the advisors
in these large broker dealer distribution channels,
positions us as a strong partner for their fast-growing
managed fee-based programs.
Building on our positive momentum in institutional
pension and endowment searches in 2011, we
experienced our highest levels of requests for
proposals and finalist opportunities in a single
calendar year in 2012. We improved on our closure
rate in finalist presentations, along with expanding
our client base beyond Canada with mandates
secured from an international sovereign wealth client
and a major US pension plan. We look to maintain
this momentum in 2013, through continued strong
relative investment returns across the spectrum
of equity and fixed income solutions, and building
on our relationships and communications with the
investment consulting community. Success in the
institutional investment market still relies heavily on
winning over that community, as they are involved
in some shape or form in greater than 80% of the
institutional searches and placements. Among them,
awareness of our capabilities is strong, and our
expanded coverage over the last couple of years from
the top tier consultant community to the regional
and smaller consultants across Canada and into the
US, will position us well going into fiscal 2013.
Growth prospects across Guardian Capital LP’s
existing investment capabilities are good. However,
we have historically demonstrated that long term
relevance as an investment management firm comes
from the ability to constantly foster new investment
products and re-invest in existing and new
investment professional teams. We have done both
over the past year. In addition to our recent hires
and the launches of new strategies for the Canadian
and global equity investment teams, we have also
attracted an experienced and talented investment
team to lead our effort in building a direct real estate
offering. In early 2013, we expect to launch a core
balanced direct real estate fund, using a combination
of Guardian Capital’s corporate funds and funds
allocated by a select group of third party clients.
Fostering a stable investment environment for
professionals to meet their value-added targets over
full cycles is of paramount importance. We shall
complement this effort with our ongoing search
to deepen our investment teams and diversify our
strategies, so as to meet our goal of building a stable
but growing pool of assets and revenues.
Private Wealth Management
Guardian Capital Advisors LP (“GCA”) provides
portfolio management services across Canada
and beyond to private wealth clients, foundations
and endowments. We are focused on assisting
private wealth clients in achieving their investment
objectives, by constructing tailored and tax-efficient
investment solutions through fully-discretionary
segregated accounts and investment funds. Our
investment process combines a proprietary global
equity screening process with the experience of
dedicated private wealth client portfolio managers.
GCA provides comprehensive portfolio management
services to meet clients’ individual investment
needs. Through the dedicated assignment of an
experienced portfolio manager, we bring the vast
intellectual resources of the firm to construct
custom-designed solutions for each client. We
work not only with the clients themselves, but also
with their legal, accounting and other advisors,
R
E
V
I
E
W
O
F
O
P
E
R
A
T
I
O
N
S
9
220%
GROWTH
in Wrap assets
since 2009
0
9
4
,
3
9
5
2
,
2
9
1
5
,
1
1
9
0
,
1
2009
2010 2011
2012
Wrap Assets
Under
Management
as at Dec. 31
($ mil)
$1.4 B
2012
Private Wealth AUM
8
1
4
,
1
1
3
3
,
1
0
3
2
,
1
0
5
0
,
1
2009
2010 2011
2012
Private Wealth
Assets Under
Management
as at Dec. 31
($ mil)
2012 Annual Report
R
E
V
I
E
W
O
F
O
P
E
R
A
T
I
O
N
S
10
$9.9B
2012 AUA
8
1
9
9
,
4
5
6
,
8
3
8
7
,
7
4
7
0
,
7
2009 2010 2011 2012
Total Assets Under
Administration
as at Dec. 31
($ mil)
to ensure that the services we provide properly
integrate with the overall financial objectives of our
clients. Through offices in Vancouver, Calgary and
Toronto, clients and their advisors have local direct
access to experienced investment professionals,
supported by a strong administrative team.
GCA’s assets under management and supervision
were $1.4 billion at the end of 2012, compared to
$1.3 billion at the end of 2011. We believe that a
focus on risk management, as well as on enhanced
returns over the long term, will provide the desired
benefits to our client base, which are protection
against short-term volatility, long-term growth and
tax-efficient cash flows. GCA continues to attract
new clients, both directly and through referrals
from financial advisors. The majority of our client
base arises from domestic clients, split roughly
equally between Eastern and Western Canada.
In 2012, we added staff to expand our portfolio
management and administrative capabilities in
order to prepare for future growth. Our business
development efforts will continue to focus on
delivering awareness in the legal, accounting,
family office and financial advisory communities.
Financial Advisory
Worldsource Wealth Management Inc.
(“Worldsource”) is an integrated financial
advisory platform, with independent financial
advisors offering mutual funds, securities and
life insurance products to Canadians from coast
to coast. Assets under administration (“AUA”)
totaled $9.9 billion at December 31, 2012,
compared to $8.7 billion at the end of 2011.
Worldsource is committed to being an independent
dealership platform for financial advisors who
sell a variety of financial products. Worldsource
promotes an open architecture, and thus provides
advisors with the independence to choose the best
available solutions for their clients. The advisors
are further supported with quality reporting and
administration, and a professional approach
to sales compliance and product suitability.
Worldsource Financial Management Inc. (“WFM”)
is a national mutual fund dealer with AUA of $6.7
billion at December 31, 2012, compared to $6.1
billion at the end of 2011. The increase in assets
was attributable to successful recruiting programs,
including the recruitment of the advisors from the
Independent Accountants’ Investment Group, and
higher client portfolio valuations due to market
appreciation for both equities and bonds. WFM’s
commission revenues continue to trend lower
in 2012, due to a general move by advisors away
from deferred sales charge (“rear-load”) funds to
lower initial commission rate “front-load” funds.
The lower commission rate funds generally have
higher continuing or “trailer” fees, so that future
periods will benefit from the build-up of these
continuing commissions. Additionally, the increase
in continuing commissions was offset by some
movement toward lower commission products
such as fixed income or balanced income strategies,
rather than the higher commissions generated from
long-term equity strategies. We believe that the
move toward greater trailer fee revenue better aligns
the advisor’s business with the client’s interests.
It also improves the advisor’s and the dealership’s
business models, by providing for recurring revenue
as opposed to the historical reliance on active sales
commission activity. Despite a significant recovery
in the equity markets since the lows of 2009, WFM
advisors and their clients remain cautious, as they
continue to allocate a disproportionate amount
of their investments into cash equivalent, fixed
income and balanced income strategies. As investor
sentiment becomes more confident, we expect to
see an increase in commission and trailer revenues,
with higher allocations toward equity products.
In 2013, WFM plans to work closely with its
independent advisors, to create an investment
solutions program where Guardian’s in-depth
investment management capabilities will be
leveraged to convert more AUA into AUM. WFM
believes that developing best practice management
programs and customized portfolio solutions
for its advisors can grow both the dealership
and the advisor’s revenues, as they improve
their productivity in servicing the needs of their
clients and in building their books of business.
Worldsource Securities Inc. (“WSI”) is Worldsource’s
investment dealer or securities brokerage. WSI
operates its branch network on the Agency
Model, under which investment advisors are
permitted a higher degree of independence than
traditionally afforded. WSI is focused on providing
the highest possible level of technological and
administrative support to its branch network.
In 2012, WSI continued to attract new financial
advisors, adding branches in Toronto, Calgary
and Moncton, and finishing the year with greater
than $1 billion in AUA. In 2013, management
expects that WSI will continue its success in
recruiting advisors and adding new branches to its
growing network of brokers across the country.
IDC Worldsource Insurance Network Inc. (“IDC
WIN”) is a Managing General Agency (“MGA”),
which is 67% owned by Worldsource and which
provides sales, marketing and administrative support
to licensed insurance advisors nationwide. IDC
WIN experienced strong growth in 2012, including
the completion, near the end of the year, of the
acquisition of Strategic Brokerage Services (“SBS”),
a strong regional MGA in Western Canada, which
gives the firm a national footprint, with offices in
Guardian Capital Group Limited
Western, Central and Eastern Canada available to
provide local service to its advisors. IDC WIN is a
leader in the MGA market in Canada, and has a
significant competitive advantage for meaningful
growth and profitability, as the industry continues
to consolidate. Segregated fund and accumulation
annuity AUA surpassed $2.2 billion as of December
31, 2012, up from $1.6 billion as of the end of 2011,
largely driven by the SBS purchase. The growth
in the IDC WIN business in the past two years
has increased its insurance commission revenue
to $10.4 million in 2012, from $2.3 million in
2010. IDC WIN will continue to build on the
strong practice management and recognition
programs it offers to its advisors, and focus on
sales growth through selective advisor recruitment
and increasing advisor productivity in 2013.
International Private Banking
Alexandria Trust Corporation (“ATC”) is a licensed
and regulated domestic trust company based in
Barbados. ATC provides fiduciary and corporate
administration services to international clients.
Alexandria Bancorp Limited (“ABL”) is a private
bank based in the Cayman Islands, which was
established in 1990. ABL is licensed and regulated by
the Cayman Islands Monetary Authority to provide
investment management, fiduciary and banking
services to international clients. ABL has substantial
investment management capabilities, both through
its own Alexandria Fund and its managed segregated
account platform. In 2012, administrative services
income improved due to higher banking transaction
activity and increased referral activity with regional
centers of influence. In 2013, ABL plans to continue
to strengthen its international referral network and
to improve its pooled investment alternatives.
R
E
V
I
E
W
O
F
O
P
E
R
A
T
I
O
N
S
7
2
2
,
2
3
3
6
,
1
3
2
7
9
1
4
2009
2010 2011
2012
Insurance Assets
Under
Administration
as at Dec. 31
($ mil)
.
4
0
1
1
.
6
9
.
1
3
.
2
2009
2010 2011
2012
Insurance
Commission
Revenue
for the years
ended Dec. 31
($ mil)1
1) Note: results for 2010 to
2012 are in accordance with
IFRS; 2009 is as reported under
previous Canadian GAAP.
11
2012 Annual Report
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
12
Management’s Discussion and Analysis
In accordance with securities regulatory
requirements, the discussion and analysis which
follows for Guardian Capital Group Limited
(“Guardian”) pertains to the year ended December
31, 2012, with comparatives for the year 2011 and, in
some cases, the year 2010. Readers are encouraged to
refer to the discussions and analyses contained in the
2011 Annual Report and the First, Second and Third
Quarter 2012 Reports. This discussion and analysis
has been prepared as of March 1, 2013.
Additional information relating to Guardian and its
business, including Guardian’s Annual Information
Form, is available on “SEDAR” at www.sedar.com.
Caution Concerning Forward-Looking
Statements
Guardian may, from time to time, make “forward-
looking statements” in annual and quarterly reports,
and in other documents prepared for shareholders
or filed with securities regulators. These statements,
characterized by such words as “goal”, “outlook”,
“intends”, “expects”, “plan”, “prospects”, “are
confident”, “believe” and “anticipate”, are intended
to reflect Guardian’s objectives, plans, expectations,
estimates, beliefs and intentions.
By their nature, forward-looking statements involve
risks and uncertainties. There is a risk that these
forward-looking statements will not be achieved.
Undue reliance should not be placed on these
statements, as a number of factors could cause actual
results to differ from Guardian’s objectives, plans,
expectations and estimates reflected in the forward-
looking statements.
Overview of Guardian’s Business
Guardian is a diversified financial services company,
which serves the wealth management needs of a range
of clients through its various business segments. The
areas in which Guardian operates are: institutional
and private client investment management; financial
advisory; and corporate activities and investments.
As at December 31, 2012, Guardian had $18.8
billion of assets under management (“AUM”) and
$9.9 billion of assets under administration (“AUA”).
In addition, Guardian has a diversified portfolio of
securities which, together with its investment in Bank
of Montreal shares, had a fair value of approximately
$380 million at the end of the year.
Material Events
Acquisition of Managing General Agency Business
Effective November 30, 2012, Guardian’s subsidiary
IDC Worldsource Insurance Network Inc. (“IDC
WIN”), a life insurance managing general agency
(“MGA”), acquired the business of Strategic
Brokerage Services Limited Partnership (“SBS”) for
a purchase price of $5.3 million. The transaction will
enhance Guardian’s presence in the Prairie Provinces
as it continues the strong growth of its MGA
business. As a result of this transaction, Guardian’s
life insurance AUA has increased to over $2.2 billion
by year end. IDCWIN ended the year with $10.4
million in insurance revenues for 2012. It is expected
that the acquisition will increase the insurance
revenues to over $13 million in 2013.
Changes in accounting policies
As disclosed in note 3a to the Consolidated Financial
Statements contained in Guardian’s 2012 Annual
Report, on a retrospective basis, during the year
Guardian “early adopted” the following International
Financial Reporting Standards (“IFRS”): IFRS 10,
Consolidated Financial Statements, IFRS 11, Joint
Arrangements, and IFRS 12, Disclosure of Interest
in Other Entities. The adoption of IFRS 10 requires
Guardian to consolidate certain mutual funds which
it is deemed to control. However, Guardian has not
consolidated these mutual funds, as they meet the
criteria to be classified as assets held for sale. As a
result, Guardian has recorded these mutual funds as
Securities held for sale on its Consolidated Balance
Sheets and has recorded the changes in the fair value
of those mutual funds in its net earnings for the current
and comparative periods. As a result of the adoption
of IFRS 11, Guardian has changed its accounting for
its investment in a joint venture, from proportionate
consolidation to the equity method, for the current
and comparative periods. The effects of those changes
in accounting policies on Guardian’s Statements of
Operations and Balance Sheets are disclosed in note 3a
to Guardian’s 2012 Consolidated Financial Statements.
Where appropriate, such effects are also described
in this discussion and analysis, and all comparative
figures have been amended accordingly.
Use of Non-IFRS Measures
Guardian’s management uses certain measures to
evaluate and assess the performance of its business.
One of the measures that Guardian uses is not in
accordance with IFRS. Non-IFRS measures do not
have standardized meanings prescribed by IFRS,
and are therefore unlikely to be strictly comparable
Guardian Capital Group Limited
to similar measures presented by other companies.
However, Guardian’s management believes that
most shareholders, creditors, other stakeholders and
investment analysts prefer to include the use of this
measure in analyzing Guardian’s results.
Guardian management measures the performance of
Guardian’s business by using “Adjusted cash flow from
operations available to shareholders”, which is disclosed
in the table under “Consolidated Financial Results”,
below. This non-IFRS measure is used by management
to indicate the amount of cash either provided by
or used in Guardian’s operating activities which
is available to shareholders, and many companies
similar to Guardian use this measure in a similar
manner. The most comparable IFRS measure is “Net
cash from operating activities”, which is disclosed on
Guardian’s Statements of Cash Flows.
The following is a reconciliation of this non-IFRS measure to the IFRS measure:
For the years ended December 31 ($ in thousands)
Net cash from operating activities, as reported
Net change in non-cash working capital items
Cash flow from operations before changes in non-cash working capital items
Less: Available to non-controlling interests
Adjusted cash flow from operations available to shareholders
2012
2011
(amended)
$
$
23,900
(1,697)
22,203
(923)
21,280
$
$
21,201
(929)
20,272
(933)
19,339
Consolidated Financial Results
The comparative financial results of Guardian on a consolidated basis are summarized in the following table:
For the years ended December 31 ($ in thousands, except per share amounts)
Net revenue
Expenses
Operating earnings
Net gains (losses)
Earnings before income taxes and gains (losses) on securities held for sale
Income tax expense
Net earnings before net gains (losses) on securities held for sale
Net gains (losses) on securities held for sale
Net earnings
Net earnings available to shareholders
Adjusted cash flow from operations available to shareholders
Diluted per share amounts
Net earnings available to shareholders
Adjusted cash flow from operations available to shareholders
As at December 31 ($ in millions, except per share amounts)
Assets under management
Assets under administration
Value of corporate holdings of securities
Value of corporate holdings of securities per share, diluted
The increase of $3 million in operating earnings in
2012 compared to 2011 is largely due to an increase
in net revenue, partially offset by an increase in
expenses. A more detailed discussion is provided
under “Revenues and Expenses” below.
The net gains of $1.3 million recorded in 2012
substantially resulted from the $1.0 million gain
on the repayment of the promissory note by the
1
.
0
2
1
.
7
1
5
.
3
1
7
.
8
2009 2010 2011 2012
Operating
Earnings
for the years ended Dec.31
($ mil)1
2012
85,030
64,892
20,138
1,337
21,475
3,275
18,200
4,559
22,759
22,556
21,280
0.71
0.66
18,832
9,918
380
11.99
$
$
$
$
$
$
$
$
$
$
2011
(amended)
% change
$
$
$
$
$
$
$
$
$
73,693
56,560
17,133
(131)
17,002
774
16,228
(5,493)
10,735
10,003
19,339
0.31
0.60
15,928
8,654
364
11.17
15 %
+
15 %
+
18 %
+
+
– %
+ 26 %
+ 323 %
12 %
+
+
– %
+ 112 %
+ 125 %
10 %
+
+ 129 %
10 %
+
+
+
+
+
18 %
15 %
4 %
7 %
issuer, plus gains of $0.2 million realized on the
repayments of partially-amortized intangible assets.
In 2011, the net loss of $0.1 million was composed
of realized losses on both directly-held securities and
consolidated mutual funds, partially offset by a gain
of $0.7 million on a debt restructuring by the issuer.
The higher income tax expense in 2012 is the result
of legislative changes which increased the provincial
1) Note: results for 2010 to
2012 are in accordance with
IFRS; 2009 is as reported under
previous Canadian GAAP.
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
13
2012 Annual Report
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
2
3
8
,
8
1
6
6
2
,
6
1
8
2
9
,
5
1
6
8
9
,
3
1
2009
2010 2011
2012
Total Assets Under
Management
as at Dec. 31
($ mil)
4
.
2
4
2
.
7
3
3
.
3
3
2
.
0
3
2009
2010 2011
2012
Management Fee
Income, net
for the years
ended Dec. 31
($ mil)1
1) Note: results for 2010 to
2012 are in accordance with
IFRS; 2009 is as reported under
previous Canadian GAAP.
14
tax rates applicable to future periods, plus the income
taxes on the increased operating earnings.
The net earnings before net gains (losses) on securities
held for sale, which are comparable to the net earnings
reported in previous years, were approximately $18.2
million in 2012, $2.0 million higher than in 2011. With
the exception of the effect of the additional deferred
taxes referred to above, Guardian’s management
believes that this is a more directly comparable
measure of the historical representation of Guardian’s
operating results than net earnings, which include the
effect of the changes in the fair values of the mutual
funds classified as held for sale.
The net gains (losses) on securities held for sale represent
the net changes in the fair value and the net realized
gains (losses) on those securities during each year. These
securities held for sale are the result of the changes in
the accounting policies and adoption of new accounting
standards, as previously described under “Changes in
accounting policies” above. Net gains on these securities
in 2012, compared to significant net losses in 2011,
contributed to the increase in net earnings for the year to
$22.8 million, from $10.7 million in 2011.
Adjusted cash flow from operations for the year
amounted to $21.3 million, compared to $19.3
million in 2011. The differences between earnings
per share and cash flow per share arise primarily due
to the impact of future income taxes, amortization
expenses and stock-based compensation, as well as
the exclusion of gains or losses on securities from the
calculation of cash flow from operations.
Revenues and Expenses
Investment Management Revenues
The largest source of revenue at Guardian is management fees received from clients, which vary as
a result of changes in the amounts of assets managed, and variations in the rates of management fees charged.
The following is a summary of the assets under management:
Years ended December 31 ($ in millions)
Assets under management, beginning of year
Net additions (reductions) from clients during year
Market appreciation (depreciation)
Assets under management, end of year
Composed of:
Institutional
Private client
International
Total
Guardian’s total AUM was $18.8 billion at December
31, compared to $15.9 billion in the prior year, an
18% increase. The increase in AUM was largely due
to successful marketing efforts which resulted in new
monies from new and existing institutional clients.
Management fees, net of referral fees paid, for the
year 2012 were $42.4 million, 14% higher than the
$37.2 million for 2011. Institutional management fees
increased 17% to $33.0 million in 2012 from $28.3
million in 2011, as a result of increases in AUM and
the continuing conversion to higher-margin AUM. A
performance fee of $1.4 million was included in the
2012 fees, whereas a performance fee of $0.4 million
was earned in 2011. Private client management
fees, net of referral fees paid, increased 10% during
the year to $6.9 million from $6.3 million in 2011,
reflecting the continuing increase in the actual and
average AUM in this area. Management fees earned
from international clients during the year, at $2.5
million, were substantially unchanged from the $2.6
million a year earlier.
2012
15,928
1,855
1,049
18,832
17,346
1,418
68
18,832
$
$
$
$
2011
16,266
(57)
(281)
15,928
14,489
1,331
108
15,928
$
$
$
$
Financial Advisory Commission Revenues
Total AUA at Guardian at the end of 2012 amounted to
$9.9 billion, 15% higher than the $8.7 billion at the end
of 2011. The increase in AUA was largely due to the
addition of segregated fund AUA from the acquisition
of the SBS managing general agency in November,
plus successes in recruiting other new advisors into the
financial advisory subsidiaries.
Net sales commission revenue earned from the financial
advisory business is generated from the sale of mutual
funds, other securities and insurance, as well as from
continuing fees related to AUA and in force life insurance
policies, net of commissions paid to advisors. This revenue
amounted to $18.9 million in 2012, 36% higher than the
$13.8 million in 2011. This increase is largely due to the
inclusion of the full year’s results of IDC Financial, which
was acquired in July of 2011, and successful recruitment
efforts in the mutual fund and securities dealers.
Guardian Capital Group Limited
Administrative Services Income
Administrative services income in 2012 was composed
of $5.4 million of registered plan and other fees earned
in the financial advisory area, and $1.8 million of trust,
corporate administration and other fees earned mainly
in the international area, for a total of $7.2 million,
compared with $5.4 million in 2011. The increase
resulted from planned rate increases in the financial
advisory area, and fees from additional client activities
in the international area. These fees are not directly
impacted by fluctuations in the financial markets.
Dividend and Interest Income
The following is a summary of Guardian’s dividend and interest income:
For the years ended December 31 ($ in thousands)
Dividend income
Interest income
Total dividend and interest income
2012
$
$
15,292
1,315
16,607
2011
(amended)
$
$
15,879
1,412
17,291
% change
–
–
–
4 %
7 %
4 %
Dividend income decreased by 4% in the year compared
to the year 2011, due to the non-consolidation of certain
mutual funds in 2012, which had been consolidated in
the prior year. Interest income decreased from 2011, as a
result of the investment in promissory notes being fully
repaid by the issuer in the third quarter of 2012.
Expenses
Guardian’s operating expenses, excluding commissions,
referral fees, amortization and interest, were $60.1
million in 2012, compared with $52.1 million in 2011,
an increase of 15%. Included in the expenses for 2012
were approximately $2.9 million of additional expenses
due to the inclusion of the full year of expenses
relating to the IDC Financial business acquired in
2011, compared to only six months included in 2011.
Excluding this variance, the increase in these expenses
in 2012 would have been 10%.
The increase in amortization in 2012, from $3.0
million to $3.5 million, was largely a result of the full
year’s amortization of the intangible assets acquired
as part of the IDC business compared to only six
months in 2011. Interest expense reduced to $1.3
million in 2012, compared to $1.4 million in 2011,
a reduction of 7%, as a result of lower interest rates
renegotiated during the year.
The net income tax expense recorded in 2012 was
$3.3 million, compared with $0.8 million in 2011.
The increase was due in part to the recording of
$1.1 million of deferred income taxes during the year,
resulting from an increase in the provincial income
tax rate enacted during the year, and the income tax
expense on the increase in the operating earnings in
Guardian’s subsidiaries.
Liquidity and Capital Resources
The strength of Guardian’s balance sheet has enabled
Guardian to attract Associates, provide clients
with a high comfort level, make appropriate use of
borrowings, and develop its businesses. It has also
allowed Guardian to maintain the appropriate levels
of working capital in each of its areas of operations.
The strong cash flow enables Guardian to meet all of
its financial commitments, to finance the expansion
of its businesses and to purchase the capital assets
necessary for the development of those businesses.
During the year, Guardian made payments totalling
$7.4 million, which were due on the purchases of
MGA businesses in 2011 and 2012. Additionally,
under its Issuer Bid, Guardian purchased and
cancelled 0.8 million of its Class A shares, for a total
cost of $7.8 million. As well, Guardian’s dividend
payment amounted to $5.4 million in 2012.
In 2012, Guardian renegotiated its borrowings with its
major bank lender, to increase the amounts available
for general corporate purposes to $50 million, and
the amount available to the EPSP Trust to $20
million, both of which may be availed under bankers’
acceptances at attractive rates. With the operating line
of credit of $11 million also available, the total amounts
available under Guardian’s credit arrangements were
increased to $81 million from $66 million. The total
amounts borrowed under these arrangements at the
end of the year amounted to $52.2 million, compared
with $45.5 million at the end of 2011.
We are confident that the strength of Guardian’s
balance sheet will continue to provide benefits in
the future. Guardian’s holdings of securities as at
December 31, 2012 had a fair value of $380 million,
or $11.99 per share, diluted, compared with $364.2
million, or $11.17 per share, diluted, as at December
31, 2011. The increase in the fair value of the
securities holdings was primarily due to the increase
in the market value of the shares of the Bank of
Montreal during the year.
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
15
2012 Annual Report
The following is a summary of Guardian’s securities holdings:
Securities Holdings
As at December 31 ($ in thousands, except per share amounts)
Securities at fair value:
Short-term securities
Bonds
Mutual funds
Bank of Montreal common shares
Other equity securities
Total securities at fair value
Promissory notes at amortized cost
Total securities holdings
Securities held for sale
Total securities
Total securities per share, diluted
2012
2011
(amended)
$
2,187
2,007
8,729
301,626
39,389
353,938
–
353,938
26,018
$ 379,956
11.99
$
$
$
$
3,166
–
13,355
276,925
22,530
315,976
2,366
318,342
45,840
364,182
11.17
Contractual Obligations
Guardian has contractual commitments for the payment of certain obligations over a period of time. A
summary of those commitments, including a summary of the periods during which they are payable, is shown
in the following table:
As at December 31, 2012 ($ in thousands)
Bank loans and borrowings
Client deposits
Accounts payable and other
Payable to clients
Operating lease obligations
Total contractual obligations
Total
52,235
3,884
21,821
36,820
16,645
131,405
$
$
Payments due by period
One to
three years
Within
one year
$
$
52,235
3,884
21,821
36,820
1,897
116,657
$
$
–
–
–
–
2,890
2,890
Three to
five years
After
five years
$
$
–
–
–
–
2,298
2,298
$
–
–
–
–
9,060
$ 9,060
Guardian’s contractual commitments are supported
by its strong financial position, including its
securities holdings, referred to above under the
heading “Liquidity and Capital Resources”. The
Payable to Clients, in Guardian’s securities dealer
subsidiary, is offset by the Receivable from Clients
and Broker, and the Client Deposits, in the offshore
banking subsidiary, are supported by the Interest-
Bearing Deposits with Banks.
Selected Annual Information
Years ended December 31 ($ in thousands, except per share amounts)
Net revenue
Net earnings available to shareholders
Per share
Net earnings
Basic
Diluted
Dividends paid
2012
2011
(amended)
2010
(amended)
$
$
$
$
85,030
22,556
0.72
0.71
0.17
73,693
10,003
$ 64,928
23,015
0.31
0.31
0.16
$
0.70
0.69
0.15
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
16
Guardian Capital Group Limited
As at December 31
Total assets
2012
2011
(amended)
2010
(amended)
$
510,752
$ 469,508
$ 467,250
The fluctuations in Total Assets over the past two years substantially reflect the changes in the value of the
corporate holdings of securities, and the additional assets received on the purchases of MGAs in 2011 and 2012.
Summary of Quarterly Results
The following table summarizes Guardian’s financial results for the past eight quarters.
Quarters ended
($ in thousands)
Dec.31,
2012
Sep 30,
2012
Jun 30,
2012
(amended)
Mar 31,
2012
(amended)
Dec.31,
2011
(amended)
Sep 30,
2011
(amended)
Jun 30,
2011
(amended)
Mar 31,
2011
(amended)
Net revenue
Operating earnings
Net gains (losses)
Net earnings before net gains
(losses) on securities held
for sale
Net gains (losses) on securities
$ 23,799 $ 20,858 $ 20,251 $ 20,122 $ 19,824 $ 18,871 $ 17,431 $ 17,567
4,148
784
4,344
(2,013)
4,860
(548)
4,840
(16)
4,647
2,045
3,317
(478)
5,791
(144)
5,324
1,576
4,938
6,045
2,838
4,379
6,658
2,136
2,802
4,632
held for sale
1,084
2,849
(2,961)
3,587
2,236
(8,410)
(576)
1,257
Net earnings (loss) available
to shareholders
Shareholders’ equity
(in $)
Per average Class A and
Common Share
Net earnings before net gains
(losses) on securities held
for sale:
- Basic
- Diluted
Net earnings (loss):
- Basic
- Diluted
Shareholders’ equity
- Basic
- Diluted
5,915
353,756
8,750
336,362
(114)
323,690
8,005
340,096
7,745
322,618
(5,876)
331,718
2,280
344,374
5,854
351,998
$
$
$
0.16 $
0.15
0.19 $ 0.09 $
0.19
0.09
0.14 $
0.14
0.17 $ 0.08 $ 0.09 $ 0.14
0.14
0.17
0.09
0.08
0.19 $ 0.28 $
0.19
0.27
(0.00) $
(0.00)
0.25 $
0.25
0.24 $
0.24
(0.18) $ 0.07 $ 0.18
0.18
0.07
(0.18)
11.44 $ 10.78 $ 10.29 $
11.16
10.06
10.54
10.72 $
10.48
10.12 $ 10.40 $ 10.67 $ 10.85
10.63
9.90
10.45
10.18
Management fees earned in the investment
management segment are generally not subject to
seasonal fluctuations. There is a degree of seasonality in
the financial advisory segment, with some concentration
of commission revenue in the first quarter of each year,
relating to the traditional “RSP season”. However, the
increase in net revenue in the second half of 2011 and
in 2012 came in part from the additional net revenue
earned from the IDC WIN subsidiary, as a result of
aquisitions of MGAs completed in July, 2011 and
November, 2012. Additionally, increases in management
fees have occurred, including the earning of a
performance fee of $1.4 million in December, 2012.
The net earnings available to shareholders for the
quarter ended June 30, 2012 were reduced because of
the net losses on securities held for sale, and the increase
in deferred income taxes resulting from increased
Ontario income taxes substantively enacted in June,
2012. This increase in taxes amounted to $1.1 million
($0.03 per share, diluted). The quarterly fluctuations
in shareholders’ equity shown above have been largely
caused by changes in the value of Guardian’s investment
in the Bank of Montreal common shares, less this
provision for future income taxes.
Since gains and losses are recorded on disposal of
available for sale securities or other assets when
realized, and on changes in the value of held for
trading securities, and such amounts can vary from
quarter to quarter, the amounts included in “Net
gains (losses)” each quarter can fluctuate, as shown
in the quarterly results shown above. The significant
net gains recorded in the third quarter of 2012 and
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
17
2012 Annual Report
the fourth quarter of 2011 were largely responsible
for the increases in “Net earnings before net gains
(losses) on securities held for sale” in those quarters.
The net gains recorded in the third quarter of 2012
include a one-time gain of $1.0 million on the
repayment to Guardian of the full face value of the
investment in promissory notes.
The “Net gains (losses) on securities held for sale” reflect
changes in the fair value of investments in mutual funds
which are categorized as held for sale, and are directly
related to movements in the financial markets.
Risk Factors
Guardian applies many of the same risk management
principles to its business as a whole, as it does to the
management of risks on behalf of its clients. One
of the principles is that risk can pose challenges,
as well as provide opportunities, depending upon
the effectiveness of the way in which it is managed.
Readers are encouraged to refer to note 21 to the
Consolidated Financial Statements, contained in
Guardian’s 2012 Annual Report, for additional
information on financial risk management.
Market Risk
Market fluctuations can have a significant effect on the
value of both clients’ portfolios and our earnings, since
management fees are generally based on market values.
Additionally, market fluctuations have a significant
impact on the amounts being invested by the clients
of our financial advisory businesses, increasing or
reducing our commission revenues. We manage the
risk of market fluctuations by having a diversified
client base with different investment needs, and by
having a variety of products and services, which may be
attractive in different market environments and which
have different correlations to equity and other financial
markets and to each other. Guardian’s holdings of
securities are managed independently of clients’ assets,
except for those of our assets that are invested in
Guardian’s investment funds.
Portfolio Value and Concentration Risk
Guardian’s corporate holdings of securities are
subject to price fluctuation risk. Guardian manages
this risk through professional third-party portfolio
managers or in-house expertise, each of whom takes
a disciplined approach to investment management.
All securities are held by well-known independent
custodians chosen by Guardian. With the exception
of the investment of $301.6 (2011 - $276.9) million
in the Bank of Montreal shares, which is a significant
portion of Guardian’s securities holdings, the
holdings are diversified, from both an asset class and
a geographical perspective. Guardian has accepted
the concentration risk associated with its holding of
Bank of Montreal shares, as the bank is a diversified
company, with a history of steady dividend payments.
Foreign Currency Risk
Guardian’s investments in its foreign subsidiaries
are subject to the risk of foreign currency exchange
rate fluctuations. The effects of changes in foreign
currency exchange rates on the values of these
investments are not included in Net Earnings, but
are recorded as changes in the “Foreign Currency
Translation Adjustment” in Guardian’s Statements
of Comprehensive Income, and the cumulative effect
is included in Accumulated Other Comprehensive
Income in the Shareholders’ Equity section of the
Consolidated Balance Sheets. This foreign currency
exposure is not actively managed, due to the long-term
nature of these investments, but is closely monitored by
the Company.
Credit Risk
Guardian’s credit risk is generally considered to be
low. Because of the nature of Guardian’s business,
receivables are mainly from large institutions, which
are considered to pose a relatively low credit risk, or
from individuals, which are secured by marketable
securities. On an ongoing basis, Guardian reviews
the financial strength of all of its counterparties, and
reduces its exposure where appropriate.
Interest Rate Risk
Guardian manages interest rate risk in its international
banking operations, through matching the interest
rates and maturity dates of client deposit liabilities with
the assets, interest-bearing deposits with banks.
Liquidity Risk
Guardian manages liquidity risk through the
monitoring and managing of cash flows from various
segments of the business, and by establishing
sufficient cash borrowing facilities with major
Canadian banks, which currently total $81 million
through three credit facilities. The maturities of
Guardian’s contractual commitments are outlined
under “Contractual Commitments” in this discussion
and analysis. The combination of the cash flows
from operations and the borrowing facilities provides
sufficient cash resources to manage its liquidity risk.
Regulatory Change Risk
Changes to government regulations, including
those related to income taxes, can have an effect on
Guardian’s business. Examples are the changes in
future income tax rates, which have had significant
effects on Guardian’s income tax expense, and net
earnings, in 2006, 2007, 2009 and 2012. Because
there had been a downward trend in income tax
rates prior to 2012, the effects on earnings in earlier
years had been positive, but they were negative in
2012, and further negative effects could result if tax
rates increase again in the future. Another area in
which regulation affects Guardian’s business is in
the regulatory requirements of the government and
self-regulatory agencies under which our regulated
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
18
Guardian Capital Group Limited
subsidiaries operate. Through a combination of
in-house expertise and external advisors, when
appropriate, these subsidiaries are able to react to
changes in these regulatory requirements.
Performance Risk
Product performance presents another risk. It is a
relative, as well as an absolute measure, because the
risk is that we will not perform as well as the market,
our peers, or in line with our clients’ expectations. We
manage this risk by having a disciplined approach to
investment management, and by ensuring that our
compliance capabilities are strong. With respect to
clients’ expectations, we also ensure that we are fully
aware of all of those expectations, and that we properly
communicate with our clients to develop, report on and
comply with client mandates on a continuous basis.
Financial Advisory Risk
Because of the number of agents who publicly
represent each of the Worldsource operating
entities, there are risks associated in their dealings
with their clients. These risks are mitigated by the
strong compliance and product review capabilities
of the Worldsource organization, significant
management oversight and insurance coverage
carried by both Worldsource and the agents.
Competition Risk
Another risk is competition. Our ability to compete
is enhanced by the high quality of our management
team, the substantial depth in personnel and
resources and a strong balance sheet, which
provide us with the flexibility to make the changes
necessary to be competitive. In addition, we manage
competition risk by tailoring our product and service
offerings to market conditions and client needs.
Internal Control Over Financial
Reporting and Disclosure Controls
Management is responsible for establishing and
maintaining adequate internal controls over
financial reporting, to provide reasonable assurance
regarding the reliability of financial reporting and
the preparation of financial statements for external
purposes in accordance with IFRS. There have
been no changes in Guardian’s internal control
over financial reporting during the quarter ended
December 31, 2012 that have materially affected, or
are reasonably likely to materially affect, Guardian’s
internal control over financial reporting.
Management of Guardian has evaluated the
effectiveness of its disclosure controls and procedures
and internal controls over financial reporting (as
defined under National Instrument 52-109) as of
December 31, 2012, under the supervision of the
Chief Executive Officer and the Senior Vice-President,
Finance, who is the Chief Financial Officer. Based
on that evaluation, the Chief Executive Officer and
the Chief Financial Officer have concluded that the
design and operation of those disclosure controls
and procedures and internal controls over financial
reporting were effective.
Outlook
Over the past year, equity markets continued to
oscillate with no clear directional trend, caught in
a tug-of-war between, on the one hand, European
fears, perceived weakness in China and concern
about a slowing U.S. recovery, and, on the other
hand, inexpensive markets, in both historical
terms and relative to interest rates, and favourable
monetary ease on a global basis. We believe that,
despite these global macro and geopolitical concerns,
the overall trend for the equity markets will be
toward the upside, as investors continue to accept
greater equity risk allocation in their portfolios.
Guardian’s assets under management increased over
the past year by almost three billion dollars, ending
the year with approximately $18.8 billion, due in
part to the positive Canadian and global equity
markets and our relative value add across several of
our equity and fixed income strategies. Even more
significantly, in the past year we witnessed strong
growth from very large net new client inflows from
both institutional and retail intermediary distribution
channels. The pipeline of new business opportunities
in the year ahead remains promising, as we look to
continue the success of attracting new assets across
various mandates managed by Guardian.
Guardian’s financial advisory business, through
its subsidiary Worldsource Wealth Management,
reduced operating losses over the prior year by
greater than $2 million, due to strong commission
growth from new life insurance sales at its Managing
General Agency, and better revenue and expense
management in its Mutual Fund and Securities
dealerships. We expect to continue our efforts
toward improving operating earnings from our
financial advisory business, with the delivery of
strong life insurance net sales, and the recruitment
of additional independent advisors across our
Worldsource platform. The improvements in the day
to day operations of our financial advisory business,
coupled with greater equity risk appetite from the
retail investor, are expected to result in the financial
advisory business turning an operating profit in 2013.
We will continue to focus our efforts on creating
more meaningful and repeatable operating profits
from both our investment management and financial
advisory businesses. A successful improvement in
operating profits will be instrumental in the company’s
efforts to deliver consistent growth in dividends and
shareholders’ equity.
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
19
2012 Annual Report
M
A
N
A
G
E
M
E
N
T
’
S
D
I
S
C
U
S
S
I
O
N
A
N
D
A
N
A
L
Y
S
I
S
20
Ten Year Review
Notes 1, 7, 8
($ in millions)
2012
2011
2010
(amended) (amended)
2009
2008
2007
2006
2005
2004
2003
Assets under management
Assets under administration
18,832
9,918
15,928
8,654
16,266
7,783
13,986
7,074
11,764
6,005
16,885
6,303
17,305
5,677
18,444
4,837
16,085
3,708
13,444
2,731
($ in thousands)
Net revenue
Operating expenses2
Operating earnings
Net gains (losses)
Net gains (losses) on securities
held for sale
Net earnings available
to shareholders
Shareholders’s equity5
Securities holdings (at fair value)
(In dollars)
Per average common and
Class A share
Net earnings available
to shareholders for the year
Basic
Diluted
Per common and
Class A share
Dividends paid
Shareholders’ equity5
Basic
Diluted
Share prices
Common high
low
high
low
Class A
(In thousands)
Year end common and Class A
shares outstanding
Basic
Diluted
85,030
64,892
20,138
1,337
73,693
56,560
17,133
(131)
64,928
51,389
13,539
2,982
61,147
52,419
8,728
1,217
66,918
58,665
8,253
(4,484)
69,607
51,617
17,990
4,215
66,247
48,159
18,088
4,134
58,908
44,162
14,746
1,597
49,585
38,930
10,655
1,236
38,323
32,971
5,352
(120)
4,559
(5,493)
6,443
–
–
–
–
–
–
–
22,5566
353,756
379,956
10,003
322,618
364,182
23,015
331,856
383,604
14,2743
317,784
362,512
7,2994 26,4923
204,051 334,696
380,433
241,549
22,9593
12,821
212,016 192,240
407,117
443,108
10,559
196,273
364,318
6,653
192,332
335,205
0.726
0.716
0.31
0.31
0.70
0.69
0.413
0.413
0.194
0.194
0.693
0.683
0.603
0.583
0.33
0.32
0.27
0.26
0.17
0.17
0.17
0.16
0.150
0.150
0.150
0.135
0.120
0.105
0.0875
0.075
11.44
11.16
11.65
9.41
10.55
9.00
10.12
9.90
12.75
9.49
11.63
8.70
10.16
10.01
9.75
7.90
9.00
7.35
9.37
9.19
9.97
4.65
8.25
3.00
5.69
5.65
11.10
4.26
11.02
3.02
8.79
8.67
15.50
10.65
13.50
10.33
5.48
5.36
14.00
11.25
13.13
10.12
5.04
4.87
13.00
9.63
12.13
9.00
4.98
4.89
11.01
7.37
12.00
6.75
4.86
4.78
8.00
5.70
7.25
5.15
30,917
31,696
31,890
32,604
32,652
33,162
33,932
34,563
35,874
36,104
38,095
38,605
38,669
39,576
38,149
39,492
39,552
40,538
39,568
40,284
NOTES:
1 Comparative figures reflect the May, 2006 2-for-1 stock split.
2 Excluding commissions paid, referral fees and income taxes.
3 Net earnings available to shareholders reflect a reduction in future income taxes, resulting from the reduced income tax rates enacted during the year,
as follows: 2009 - $2.0 million, $0.06 per share diluted; 2007 - $6.6 million, $0.16 per share diluted; 2006 - $3.3 million, $0.08 per share diluted.
4 Net earnings available to shareholders in 2008 reflect a $1.3 million ($0.03 per share) reduction in future income taxes, resulting from the reversal of future income
taxes relating to Guardian’s foreign subsidiaries, as well as the recording of restructuring costs of $2.3 million ($0.06 per share).
5 Shareholders’ equity in 2007 and subsequent years reflects the recording of the corporate holdings of securities at fair value, in accordance with required new
accounting policies adopted effective January 1, 2007.
6 Net earnings available to shareholders in 2012 reflect a $1.1 million ($0.03 per share) increase in future income taxes, resulting from increased income tax rates
enacted during the year.
7 Results in 2010 to 2012 are in accordance with IFRS; 2009 and previous years are as reported under previous Canadian GAAP.
8 Comparative figures in 2011 and 2010 have been amended to reflect the 2012 adoption of new IFRS standards, as disclosed in note 3a to the Consolidated
Financial Statements contained in Guardian’s 2012 Annual Report. 2009 and previous years are as reported under previous Canadian GAAP.
Guardian Capital Group Limited
Management’s Statement on Financial Reporting
The following financial statements, which consolidate the financial results of Guardian Capital Group Limited,
its subsidiaries and other controlled entities, and the Company’s interest in a joint venture, and all other
information in this annual report, are the responsibility of management.
The financial statements have been prepared in accordance with International Financial Reporting
Standards. Financial information presented elsewhere in this annual report is consistent with that in the
financial statements.
In management’s opinion, the financial statements have been properly prepared within reasonable limits of
materiality and within the framework of the accounting policies summarized on pages 28 to 32. Management
maintains a system of internal controls over the financial reporting process designed to provide reasonable
assurance that relevant and reliable financial information is produced. Management also administers a
program of ethical business conduct compliance.
KPMG LLP, the Company’s independent auditors, have audited the accompanying financial statements. Their
report follows. The Audit Committee of the Board of Directors, composed of independent directors, meets
regularly with management and KPMG LLP to review their activities and to discuss the external audit process,
internal controls, accounting policies and financial reporting matters. KPMG LLP has unrestricted access to
the Company, the Audit Committee and the Board of Directors.
The Audit Committee has reviewed the financial statements and Management’s Discussion and Analysis
and recommended their approval to the Board of Directors. Based on this recommendation, the financial
statements and Management’s Discussion and Analysis have been approved by the Board of Directors.
George Mavroudis,
President and Chief Executive Officer
C. Verner Christensen,
Senior Vice-President, Finance
March 1, 2013
M
A
N
A
G
E
M
E
N
T
’
S
S
T
A
T
E
M
E
N
T
O
N
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
I
N
G
21
2012 Annual Report
Independent Auditors’ Report
To the Shareholders of Guardian Capital Group Limited
We have audited the accompanying consolidated financial statements of Guardian Capital Group Limited, which
comprise the consolidated balance sheets as at December 31, 2012, December 31, 2011 and January 1, 2011,
the consolidated statements of operations, comprehensive income, equity and cash flow for the years ended
December 31, 2012 and December 31, 2011, and notes, comprising 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.
Auditors’ 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 our 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, we consider internal control relevant to the Company’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 Company’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 consolidated
financial position of Guardian Capital Group Limited as at December 31, 2012, December 31, 2011 and
January 1, 2011, and its consolidated financial performance and its consolidated cash flow for the years ended
December 31, 2012 and December 31, 2011 in accordance with International Financial Reporting Standards.
Chartered Accountants, Toronto, Canada
Licensed Public Accountants
March 1, 2013
I
N
D
E
P
E
N
D
E
N
T
A
U
D
I
T
O
R
S
’
R
E
P
O
R
T
22
Guardian Capital Group Limited
Consolidated Balance Sheets
As at ($ in thousands)
December 31, 2012
December 31, 2011
(note 3a)
January 1, 2011
(note 3a)
Assets
Current Assets
Cash
Interest-bearing deposits with banks
Accounts receivables and other
Loans receivable
Receivables from clients and broker
Prepaid expenses
Securities (note 4)
Securities holdings
Securities held for sale
Other Assets
Deferred tax assets (note 11c)
Intangible assets (note 5)
Equipment (note 6)
Goodwill (note 7)
Investment in associate (note 23d)
Other
Total Assets
Liabilities
Current liabilities
Bank loans and borrowings (note 8)
Client deposits
Accounts payable and other
Income taxes payable
Payable to clients
Due on securities sold short
Other liabilities
Deferred tax liabilities (note 11c)
Total Liabilities
Equity
Shareholders’ Equity
Capital stock (note 12)
Treasury stock (note 13a)
Contributed surplus
Retained earnings
Accumulated other comprehensive income
Non-Controlling Interests
Total Equity
Total Liabilities and Equity
See accompanying notes to consolidated financial statements.
$
$
$
$
26,993
3,884
23,547
–
36,820
1,419
92,663
353,938
26,018
379,956
3,835
19,594
2,464
11,111
333
796
38,133
510,752
52,235
3,884
21,821
818
36,820
–
115,578
37,424
153,002
22,113
(17,750)
8,636
231,040
109,717
353,756
3,994
357,750
510,752
$
$
$
$
5,514
8,033
19,141
6,410
32,044
1,128
72,270
318,342
45,840
364,182
3,480
15,297
2,068
11,111
333
767
33,056
469,508
45,467
7,432
24,390
773
32,044
–
110,106
32,394
142,500
22,717
(16,063)
7,491
221,053
87,420
322,618
4,390
327,008
469,508
$
$
$
$
4,492
12,356
15,448
6,462
27,676
1,133
67,567
334,243
49,361
383,604
3,105
5,521
1,869
5,249
335
–
16,079
467,250
46,500
11,984
15,487
127
27,676
664
102,438
31,920
134,358
22,934
(11,443)
6,549
216,157
97,659
331,856
1,036
332,892
467,250
On behalf of the Board:
Barry J. Myers,
Director
George Mavroudis,
Director
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
23
2012 Annual Report
Consolidated Statements of Operations
For the years ended December 31
($ in thousands, except per share amounts)
Revenue
Gross commission revenue
Commissions paid to advisors
Management fee income, net (note 14)
Administrative services income
Dividend and interest income (note 15)
Net revenue
Expenses
Employee compensation and benefits (note 16)
Amortization
Interest
Other expenses
Operating earnings
Net gains (losses) (note 17)
Earnings before income taxes and net gains (losses) on securities held for sale
Income tax expense (note 11a)
Net earnings before net gains (losses) on securities held for sale
Net gains (losses) on securities held for sale (note 17)
Net earnings
Net earnings before net gains (losses) on securities held for sale, available to:
Shareholders
Non-controlling interest
Net earnings before net gains (losses) on securities held for sale
Net earnings before net gains (losses) on securities held for sale,
available to shareholders per Class A and Common share (note 18):
Basic
Diluted
Net earnings available to:
Shareholders
Non-controlling interest
Net earnings
Net earnings available to shareholders per Class A and Common share (note 18):
Basic
Diluted
See accompanying notes to consolidated financial statements.
2012
71,926
(53,071)
18,855
42,397
7,171
16,607
85,030
41,912
3,478
1,283
18,219
64,892
20,138
1,337
21,475
3,275
18,200
4,559
22,759
17,997
203
18,200
0.57
0.57
22,556
203
22,759
0.72
0.71
$
$
$
$
$
$
$
$
2011
(note 3a)
$ 67,906
(54,086)
13,820
37,212
5,370
17,291
73,693
35,771
3,039
1,432
16,318
56,560
17,133
(131)
17,002
774
16,228
(5,493)
10,735
15,496
732
16,228
0.48
0.48
10,003
732
10,735
0.31
0.31
$
$
$
$
$
$
$
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
24
Guardian Capital Group Limited
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
For the years ended December 31 ($ in thousands)
Net earnings
Other comprehensive income
Available for sale securities:
Net change in fair value
Income tax provision (recovery)
Transfer to net earnings of unrealized losses (gains) upon disposal
Reversal of income taxes
Changes in foreign currency translation adjustment on foreign subsidiary
Other comprehensive income (loss)
Comprehensive income
Comprehensive income (loss) available to:
Shareholders
Non-controlling interests
Comprehensive income
See accompanying notes to consolidated financial statements.
2012
2011
(note 3a)
$
22,759
$
10,735
28,475
4,148
24,327
(546)
134
(412)
23,915
(1,618)
22,297
45,056
44,853
203
45,056
$
$
$
(11,831)
(1,129)
(10,702)
40
9
49
(10,653)
414
(10,239)
496
(236)
732
496
$
$
$
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
25
2012 Annual Report
Consolidated Statements of Equity
For the years ended December 31
($ in thousands)
Total equity, beginning of year
Shareholders’ equity, beginning of year
Capital stock
Balance, beginning of year
Acquired and cancelled
Capital stock, end of year
Treasury stock
Balance, beginning of year
Acquired
Treasury stock, end of year
Contributed surplus
Balance, beginning of year
Stock-based compensation expense
Contributed surplus, end of year
Retained earnings
Balance, beginning of year
Net earnings available to shareholders
Dividends declared and paid
Excess of purchase price over issue price of
Company’s capital stock acquired (note 12c)
Excess of fair value over carrying value of interest in
subsidiary transferred to non-controlling interests (note 24b)
Retained earnings, end of year
Accumulated other comprehensive income
Balance, beginning of year
Unrealized gains on available for sale securities, net of income taxes
Balance, beginning of year
Net change during year
Balance, end of year
Foreign currency translation adjustment on a self-sustaining foreign subsidiary
Balance, beginning of year
Net change during year
Balance, end of year
Accumulated other comprehensive income, end of year
Shareholders’ equity, end of year
Non-controlling interests
Balance, beginning of year
Net earnings available to non-controlling interests
Net subscriptions to mutual fund subsidiaries
De-consolidation of mutual fund subsidiaries
Increase in non-controlling interests due to an acquisition of a subsidiary
Non-controlling interests, end of year
Total equity, end of year
$
See accompanying notes to consolidated financial statements.
2012
2011
(note 3a)
$
327,008
$
332,892
322,618
331,856
22,717
(604)
22,113
(16,063)
(1,687)
(17,750)
7,491
1,145
8,636
221,053
22,556
(5,392)
(7,177)
–
231,040
87,420
91,157
23,915
115,072
(3,737)
(1,618)
(5,355)
109,717
353,756
4,390
203
108
(707)
–
3,994
357,750
22,934
(217)
22,717
(11,443)
(4,620)
(16,063)
6,549
942
7,491
216,157
10,003
(5,202)
(2,595)
2,690
221,053
97,659
101,810
(10,653)
91,157
(4,151)
414
(3,737)
87,420
322,618
1,036
732
9,243
(10,196)
3,575
4,390
327,008
$
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
26
Guardian Capital Group Limited
Consolidated Statements of Cash Flow
For the years ended December 31 ($ in thousands)
Operating activities
Net earnings
Adjustments for:
Income taxes (paid)
Income tax expense
Net (gains) losses
Amortization of intangible assets
Amortization of equipment
Stock-based compensation
Net change in non-cash working capital items (note 20)
Net cash from operating activities
Investing activities
Acquisition of securities
Proceeds from sale of securities
Acquisition of securities held for sale
Proceeds from sale of securities held for sale
Acquisition of intangible assets
Proceeds from disposition of intangible assets
Acquisition of equipment
Acquisition of subsidiaries (note 24)
Net cash from (used in) investing activities
Financing activities
Dividends
Acquisition of capital stock
Acquisition of treasury stock
Proceeds of bank loans and borrowings
Net subscriptions from non-controlling interests in mutual fund subsidiaries
Disposition of mutual fund subsidiary
Net cash (used in) financing activities
Foreign exchange
Net effect of foreign exchange rate on changes on cash balances
Net change in net cash
Net cash, beginning of year
Net cash, end of year
Net cash represented by:
Cash
Bank indebtedness
See accompanying notes to consolidated financial statements.
2012
2011
(note 3a)
$
22,759
$
10,735
(2,558)
3,275
(5,896)
2,826
652
1,145
22,203
1,697
23,900
(86,378)
80,211
(2,640)
25,247
(2,825)
1,040
(956)
(7,388)
6,311
(5,392)
(7,781)
(1,687)
500
108
(707)
(14,959)
(41)
15,211
3,010
18,221
26,993
(8,772)
18,221
$
$
$
(842)
774
5,624
2,448
591
942
20,272
929
21,201
(130,953)
123,736
(5,749)
3,740
(1,986)
-
(297)
(4,271)
(15,780)
(5,202)
(2,812)
(4,620)
1,487
9,243
–
(1,904)
57
3,574
(564)
3,010
5,514
(2,504)
3,010
$
$
$
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
27
2012 Annual Report
Notes to Consolidated Financial Statements
1. Reporting Entity
These consolidated financial statements include the accounts of Guardian Capital Group Limited and its subsidiaries (the “Company”). The Company
is incorporated under the laws of the Province of Ontario, and its principal business office is located at Suite 3100, 199 Bay Street, Toronto, Ontario.
The Company provides investment management and financial advisory services to a wide range of clients in Canada and abroad, and maintains and
manages a proprietary investment portfolio.
2. Significant Accounting Policies
(a) Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), which comprises
standards and interpretations approved by either the International Accounting Standards Board (“IASB”), the IFRS Interpretations Committee or their
predecessors.
These financial statements were authorized for issuance by the Board of Directors of the Company on March 1, 2013.
(b) Basis of presentation
These consolidated financial statements have been prepared on a going concern basis and the historical cost basis, except for certain financial instru-
ments that have been measured at fair value.
These financial statements are presented in Canadian dollars, which is the Company’s functional currency. In these notes, all dollar amounts and num-
bers of shares are stated in thousands. Per share amounts and option exercise prices are stated in dollars and cents.
(c) Estimates and judgments
The preparation of these consolidated financial statements necessitates the use of judgments, estimates and assumptions, which affect the reported
amounts of assets, liabilities, revenue and expenses. Actual results may differ from these estimates. Management believes that the significant areas
where judgment is necessarily applied are those which relate to the:
(i) Determination of when control of another entity exists;
(ii) Valuation of certain securities that do not have quoted market prices;
(iii) Assessment of goodwill and available for sale securities for impairments;
(iv) Assessment of provisions; and
(v) Measurement of share-based payments.
(d) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of
the other entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to
align them with the policies adopted by the Company.
The Company considers several factors in determining whether it has power over another entity which it will be able to use to obtain benefits.
When voting rights are relevant in determining power over an entity, the Company considers its: existing voting rights; potential voting rights that are
currently exercisable and have no substantive barriers to exercise; agreements with other vote holders; rights from other contractual arrangements; eco-
nomic interests; or a combination of the foregoing. Offsetting these factors, the Company considers matters which prevent it from the exercise of power.
When voting rights are not relevant in determining power over an entity the Company considers: evidence of its practical ability to direct the activities of
the entity for the Company’s benefit; indications of a special relationship between it and the entity; and whether it has a significant exposure to variability
of returns. In evaluating these three factors, the Company gives greater weight to evidence of its ability to direct the activities of the entity.
The Company from time to time has seed capital investments in a number of funds where it controls those funds. These funds are consolidated unless
they meet the criteria set out in the accounting policy in respect of non-current assets held for sale to be categorized as being held for sale, in which case
they are classified and accounted for in accordance with that policy.
(ii) Transactions eliminated on consolidation
All inter-company transactions, balances, income and expenses between the consolidated entities are eliminated on consolidation. Non-controlling inter-
ests in the equity of subsidiaries are shown as a component of the equity section of the consolidated balance sheet.
28
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
(e) Joint ventures
Joint ventures are those entities over which the Company has joint control, established by contractual agreement and requiring unanimous consent for
strategic financial and operating decisions. Joint ventures are accounted for using the equity method. The investments are carried in the balance sheet at
cost as adjusted by post-acquisition changes in the Company’s share of the net assets of the joint venture.
(f) Foreign currency translation
Amounts denominated in foreign currencies included in these consolidated financial statements are translated into Canadian dollars as follows:
(i) Foreign currency denominated monetary items and non-monetary items measured at fair value are translated at the reporting date exchange rates,
and purchases and sales of securities and revenues and expenses are translated at the rates of exchange prevailing on the respective dates of such trans-
actions. Foreign exchange gains and losses, if any, resulting from the foregoing, are included in the statements of operations.
(ii) The accounts of certain subsidiaries of the Company are maintained in foreign currencies. Assets and liabilities have been translated into Canadian
dollars at exchange rates prevailing at the reporting date and revenues and expenses at average monthly rates. Adjustments resulting from the exchange
gains and losses on the translation of balance sheets of the Company’s foreign operations are recorded as a foreign currency translation adjustment
in the statements of comprehensive income, and the cumulative balance is included in accumulated other comprehensive income in the shareholders’
equity section of the consolidated balance sheets.
(g) Financial instruments
The Company’s financial assets may be classified as held-for-trading (“Held for Trading”), available for sale (“Available for Sale”) or loans and receiv-
ables (“Loans & Receivables”). Financial liabilities are classified as either Held for Trading or other financial liabilities (“Other Financial Liabilities”).
(i) Measurement of financial instruments
All of the Company’s financial instruments are initially measured at fair value. Subsequent to initial recognition, financial instruments classified as Held
for Trading or Available for Sale are measured:
a. at fair value using quoted market prices in an active market;
b. where there is no active market, but the fair value can be reliably measured, the fair value is determined using valuation techniques; or
c. otherwise, they are measured at cost.
(ii) Changes in fair value
During each reporting period, changes in the fair value of financial assets classified as Available for Sale are reflected in other comprehensive income,
and changes in fair value of financial assets classified as Held for Trading are reflected in net earnings. All other financial instruments, which include
Loans & Receivables and Other Financial Liabilities, are measured at amortized cost using the effective interest rate method.
(iii) Classification of the Company’s financial instruments
The Company’s financial instruments are classified as follows:
a. Interest-bearing deposits with banks, accounts receivable and other, loans receivable, receivables from clients and broker and securities at amor-
tized cost are classified as Loans & Receivables.
b. Substantially all of the securities holdings are classified as Available for Sale.
c. Cash, equity and debt securities held by mutual funds which are consolidated, due on securities sold short by consolidated mutual funds, securi-
ties meeting the criteria of non-current assets held for sale, and derivative contracts, if any, held directly by the Company, are classified as Held
for Trading.
d. Bank loans and borrowings, client deposits, accounts payable and other, and payable to clients are classified as Other Financial Liabilities.
(iv) Fair value hierarchy
Financial assets and liabilities measured at fair value are classed using a fair value hierarchy which reflects the significance of the inputs used in making
the fair value measurements. The fair value hierarchy is as follows:
a. Level 1 – Quoted market prices: financial instruments with quoted prices for identical instruments in active markets.
b. Level 2 – Valuation technique using observable inputs: financial instruments with quoted prices or similar instruments in active markets or
quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs
are observable.
c. Level 3 – Valuation technique with significant unobservable inputs: financial instruments valued using valuation techniques where one or more
significant inputs are unobservable.
(v) Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the
recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
(h) Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale or deemed sale transaction, rather than
through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its pres-
ent condition. The Company must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from
the date of the classification, except for circumstances beyond management’s control. Non-current are classified as held for sale and measured at the
lower of their carrying value and fair value less costs to sell.
(i) Impairment of securities and other financial assets
For securities and other financial assets other than those classified as Held for Trading, an assessment is made each period by management as to
whether there is any objective evidence of impairment. Factors considered in determining whether an objective evidence of impairment exists include
the length of time and the extent of unrealized loss, the financial condition and near-term prospects of the issuer and the Company’s ability and intent to
hold the investment for a period of time sufficient to allow for any anticipated recovery. If it is determined that the security is impaired, the carrying value
of the security is written down to its fair value, and any cumulative loss amount recognized in other comprehensive income is reclassified to net income.
29
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
For securities and other financial assets carried at amortized cost, if, in subsequent periods, the amount of the loss decreases and the decrease can be
objectively related to an event occurring after the impairment was recognized, the loss is reversed in the statement of operations. The reversal is limited
to what the amortized amount of the security or financial asset would have been if no impairment loss had been recognized in a prior period.
(j) Intangible assets
Intangible assets represent new business costs (costs pertaining to new advisors and branches joining the Company’s mutual fund dealer and securi-
ties dealer subsidiaries, and account transfer costs), computer software and the Company’s rights to future revenues (substantially in the Company’s
life insurance managing general agency subsidiary). Intangible assets are carried at cost less accumulated amortization and accumulated impairment
losses. They are amortized on a straight-line basis over their estimated useful lives, as outlined below:
(i) New business costs – Where there is a commitment by advisors to stay with the Company for a specified number of years, they are amortized over
that number of years, which is generally three to five years;
(ii) Computer software – The initial cost of the main computer processing system used by the mutual fund dealer subsidiary is amortized over ten
years, with subsequent improvements to this system being amortized over five years, and other computer software being amortized over three to five
years; and
(iii) Rights to future revenues – These are amortized over fifteen years.
Amortization methods and useful lives of the intangible assets are reviewed annually and adjusted, if appropriate. Intangible assets are derecognized
upon disposal or when they are fully amortized and no longer in use.
(k) Equipment
Equipment is carried at cost less accumulated amortization, and accumulated impairment losses, and is amortized over its expected useful life, as
outlined below:
(i) Computer hardware – The majority of computer hardware is amortized on a straight-line basis over three years;
(ii) Furniture and equipment – The majority of furniture and equipment is amortized on a diminishing balance basis at a rate of 20% per annum, and
works of art included within furniture and equipment are not amortized; and
(iii) Leasehold improvements – Leasehold improvements are amortized on a straight-line basis over the remaining terms of the leases.
Amortization rates and the useful life of equipment is reviewed annually and adjusted, if appropriate. Equipment is derecognized upon disposal or when
it no longer has any residual value.
(l) Goodwill
Goodwill represents the excess of the cost of acquisition of a consolidated entity over the fair value of the net identifiable tangible and intangible
assets of the subsidiary at the date of acquisition. Goodwill is not amortized, but is carried at cost less accumulated impairment losses. Goodwill is
allocated to the appropriate cash-generating units for the purpose of impairment testing.
(m) Impairment of non-financial assets
The Company reviews non-financial assets, including intangible assets, equipment and goodwill, annually for impairment. If the net carrying amount of an
asset which is considered impaired exceeds the estimated recoverable amount, the excess is charged to the statement of operations as an impairment loss.
Management also assesses annually whether there is any indication that an impairment loss recognized in a prior period may no longer exist or may
have decreased. If such indication exists, the estimated recoverable amount is compared to the carrying amount and, if the recoverable amount exceeds
the carrying amount, the prior impairment loss is reversed, to bring the carrying amount to a maximum of the carrying amount that would have been
determined (net of amortization) had no impairment loss been recognized in a prior period.
(n) Bank loans and borrowings
(i) Bank indebtedness
Bank indebtedness is a financial liability owed on lines of credit to banks. Bank indebtedness may also consist of bank indebtedness net of cash in
bank, when the Company has a legal right of offset and intends to settle on a net basis or realize the asset and settle the liability simultaneously.
(ii) Bank loan and bankers’ acceptances payable
Bank loan and bankers’ acceptances are financial liabilities and are initially recorded at fair value and subsequently at amortized cost, which approxi-
mates fair value.
(o) Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event and it is probable that an outflow
of economic benefits will be required to settle the obligation. The amount recognized as a provision is the best estimate of the obligation at the reporting
date. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assess-
ments of the time value of money and, where appropriate, the risks specific to the liability. Future events that may affect the amount required to settle an
obligation are reflected in the amount of a provision where there is sufficient objective evidence that they will occur. Where some or all of the expenditure
is expected to be reimbursed by insurance or some other party, and it is virtually certain, the reimbursement is recognized as a separate asset on the bal-
ance sheet, and the net amount is recorded in the statements of operations. Provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate. If it is no longer probable that an outflow of economic benefits will be required to settle the obligation, the provision is reversed.
(p) Treasury stock
The Company provides stock-based entitlements to certain senior employees through an Employee Profit Sharing Plan Trust (the “EPSP Trust”). The
EPSP Trust purchases shares of the Company, which are allocated to senior employees and are financed by a bank loan facility with a major chartered
bank, which is secured by the shares held by the EPSP Trust and guaranteed by the Company. The Company consolidates the EPSP Trust in these finan-
cial statements, and accounts for the shares owned by the EPSP Trust as treasury stock.
30
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited (q) Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
The various types of revenues and the associated accounting policies adopted by the Company are as follows:
(i) Gross commission revenue earned and commissions paid to advisors are recorded on a trade date basis.
(ii) Management fees – The Company provides investment management and investment advisory services to clients, in consideration for manage-
ment fees, which are generally calculated based on the fair value of the assets managed, in accordance with the agreements with the clients. The fees are
earned over the time during which the assets are managed or advised on by the Company. Certain clients also pay performance fees, if the performance
of such clients’ assets under management exceeds that of certain performance benchmarks by an agreed level over a stated time period. Such fees
are recorded when the services have been provided, the amount of the fees can be reliably measured, and it is probable that the fees will be received.
Management fees are presented net of referral fees paid to third party agents.
(iii) Administrative services income – The Company earns income from certain clients and advisors, associated with the maintenance of accounts with
the Company, and the provision of general corporate, trust or other services. Such income is recognized, on an accrual basis, as the services continue to
be performed on an ongoing basis, all as based on agreements with the clients or advisors. When the Company holds assets or liabilities on a fiduciary
basis in providing these services, those assets and liabilities and the income and expenses associated with them are excluded from these consolidated
financial statements.
(iv) Dividend and interest income is recorded as follows:
a. Dividends are recognized when the Company’s right to receive payment is established.
b. Interest is recorded as earned over the period of time during which the interest-paying investment is held, on an effective yield basis.
(r) Employee compensation and benefits
Wages, salaries, profit sharing, bonuses, payroll taxes and levies and paid annual leaves are accrued in the year in which the associated services are ren-
dered by employees and when a reliable estimate of the obligation can be made.
(s) Stock-based compensation
Stock-based compensation is accounted for under the fair value method, under which compensation cost is measured at the fair value of equity instru-
ments granted and is expensed over the vesting period of the equity instruments. Fair value is determined on the grant date using appropriate valuation
models, taking into account the terms and conditions upon which the equity instruments were granted.
Vesting conditions are not taken into account in the initial estimate of the fair value at the grant date. They are taken into account by adjusting the num-
ber of equity instruments included in the measurement of the transaction, so that the amount recognized for services received as consideration for the
equity instruments granted is based on the estimated number of equity instruments that eventually vest.
Where a grant has been modified, as a minimum the expense of the original grant continues to be recognized as if it had not been modified. Where the
effect of the modification is to increase the fair value of a grant or increase the number of equity instruments, the incremental fair value of the grant or
incremental fair value of the additional equity instruments is recognized in addition to the value of the original grant, measured at the date of the modifi-
cation, over the modified vesting period.
(t) Interest expense
Interest expense comprises interest payable on borrowings recognized using the effective interest rate method.
(u) Pensions
The Company operates a defined contribution pension plan and a group registered retirement savings plan. Payments to the plans are charged as
expenses as they are incurred. The Company has no legal or constructive obligation to pay further contributions if the plans do not hold sufficient assets
to pay all employees the benefits relating to employee service in the current and prior periods.
(v) Net gains or losses
Gains or losses include any gains or losses related to changes in the fair value of Held for Trading securities, or on disposal of Available for Sale securi-
ties or other assets, and adjustments to record any impairment in value, recognized on a trade date basis.
(w) Income tax
Income tax on net earnings for the year comprises current tax and deferred tax. Income tax is recognized in the statements of operations, except to the
extent that it relates to items recognized in other comprehensive income or directly in equity, in which case it is also recognized in other comprehensive
income or directly in equity.
Current tax is the tax expected to be payable on the taxable net earnings for the year, calculated using tax rates enacted or substantively enacted by the
reporting date, and any adjustment to tax payable in respect of previous years. Current tax assets and liabilities are offset when the Company intends to
settle on a net basis and the legal right of offset exists.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the balance sheet and the amount attributed to
such assets and liabilities for tax purposes. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized. Deferred
tax is calculated using the tax rates expected to apply in the periods in which assets will be realized or the liabilities settled. Deferred tax assets and liabilities are
offset when they arise in the same tax reporting entities, relate to income taxes levied by the same taxation authority and a legal right to set off exists.
(x) Earnings per share
The calculation of basic earnings per share is based on the weighted average of Class A and common shares outstanding during the year and on earnings
available to the holders of the Class A and common shares. Diluted earnings per share are calculated by adjusting for the effect of outstanding dilutive
instruments, such as stock options or stock-based entitlements, using the treasury stock method.
31
NOTES TO FINANCIAL STATEMENTS2012 Annual Report (y) Related parties
For the purposes of these financial statements, a party is considered related to the Company if such party or the Company has the ability to, directly or
indirectly, control or exercise significant influence over the other entity’s financial and operating decisions, or if the Company and such party are subject to
common significant influence. Related parties may be individuals or other entities. All material transactions with related parties are recorded at fair value.
3. Changes In Accounting Policies
A number of new standards, and amendments to existing standards, have been issued by IASB, which are effective for the Company’s consolidated
financial statements either in the current year or in certain future periods. The following is a description of these new standards and amendments, with
indications of how they may affect the Company’s consolidated financial statements.
(a) Current changes in accounting policies
In May, 2011, the IASB issued IFRS 10, Consolidated Financial Statements (“IFRS 10”), IFRS 11, Joint Arrangements (“IFRS 11”) and IFRS 12, Disclosure
of Interest in Other Entities (“IFRS 12”), all of which were required to come into effect for the Company’s financial year beginning on January 1, 2013, but
with early adoption allowed. Upon early adoption of any of these standards, contemporaneous adoption of the others was required.
IFRS 10
(i)
IFRS 10 replaced the current consolidation standards in IAS 27, Consolidated and Separate Financial Statements and SIC 12, Consolidation – Special
Purpose Entities, and introduces a single, principle-based, control model where control is deemed to exist when an investor has: power over an investee;
exposure to variable returns from the investee; and the ability to use its power to affect its returns from the investee. The Company has opted to early
adopt this standard in the current year.
In conjunction with the adoption of IFRS 10, the Company has also amended its policy on non-current assets held for sale, to incorporate the provisions
of IFRS 5, Non-Current Assets Held for Sale and Discontinued Operations. Under the amended policy, the Company does not consolidate entities which
it controls, or is deemed to control, provided they meet certain criteria set out in the policy, allowing them to be classified as “held for sale”, in which
case they are classified and accounted for in accordance with that policy. The most significant of these criteria are the following: i) the carrying value of
the entity is expected to be recovered through a sale transaction, rather than through continuing use: ii) the sale is highly probable and the asset is avail-
able for immediate sale in its present condition; iii) management is committed to the sale; and iv) the sale is expected to be completed within one year
of the date of classification, except for certain conditions beyond management’s control.
In applying the new consolidation policy retrospectively, the Company determined that it controls certain mutual funds, which it manages and in which
it invests, which were not previously consolidated. However, the Company has a committed plan in place to reduce its ownership level sufficiently to not
be deemed to have control of the mutual funds. Accordingly, the Company has retrospectively reclassified the investment in these mutual funds from
“available for sale” securities to “held for sale” securities. The accumulated changes in the fair value of these investments, which had previously been
recognized in Accumulated Other Comprehensive Income, have therefore been transferred to Retained Earnings. The effects of these changes have been
reflected, as appropriate, in these financial statements, and the resulting balance sheet as at January 1, 2011 has been provided.
The following table summarizes the effects of adoption of IFRS 10 and the new policies on the Company’s consolidated financial statements:
As at
December 31,
2012
December 31,
2011
January 1,
2011
Increase (decrease) in previously reported amounts and effect in current period:
Consolidated balance sheets
Retained earnings
Accumulated other comprehensive income
Shareholders’ equity
For the periods ended December 31
Increase (decrease) to previously reported amounts and effect in current period:
Consolidated statements of operations
Net gains (losses)
Net earnings before net gains (losses) on securities held for sale
Net gains (losses) on securities held for sale
Net earnings (loss) available to shareholders
Net earnings available to shareholders per class A and Common shares:
Basic
Diluted
Consolidated statements of comprehensive income
Other comprehensive income
Comprehensive income (loss)
Comprehensive income available to shareholders
$
$
17,055
(17,055)
–
$
$
$
$
$
24,324
(24,324)
–
2012
(11,828)
(11,828)
4,559
(7,269)
(0.23)
(0.23)
7,269
Nil
Nil
$
$
$
$
$
30,778
(30,778)
–
2011
(960)
(960)
(5,494)
(6,454)
(0.20)
(0.19)
6,454
Nil
Nil
32
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
IFRS 11
(ii)
IFRS 11 replaces IAS 31, Interests in Joint Ventures (“IAS 31”), and the Company early adopted this standard during the year. IFRS 11 eliminates propor-
tionate consolidation as one of the alternatives for accounting for Joint ventures. As a result, during the year, the Company changed its accounting for
its investment in a joint venture from proportionate consolidation to the equity method, on a retrospective basis.
The following table summarizes the effects of IFRS 11 on the Company’s consolidated financial statements:
As at
December 31
2012
December 31
2011
January 1
2011
Increase (decrease) to previously reported amounts and effect in current period:
Consolidated balance sheets
Investment in associate
Assets, excluding investment in associate
Current and total liabilities
Shareholders’ equity
For the periods ended December 31
Increase (decrease) to previously reported amounts and effect in current period:
Consolidated statements of operations
Net revenue
Expenses
Net earnings (loss)
Net earnings (loss) available to shareholders
$
$
333
(871)
(538)
Nil
$
$
$
$
$
333
(948)
(615)
Nil
2012
(244)
(244)
Nil
Nil
$
$
$
$
$
335
(1,087)
(752)
Nil
2011
(468)
(468)
Nil
Nil
(iii) IFRS 12
IFRS 12 combines in a single standard the disclosure requirements for interests in subsidiaries, associates and joint arrangements, as well as uncon-
solidated structured entities, and the Company early adopted this standard in the current year. The Company has incorporated the requirements of
IFRS 12 in its annual disclosures in these financial statements.
(b) Future changes in accounting policies
(i) Fair value measurement
IFRS 13, Fair Value Measurement (“IFRS 13”) was issued by IASB in May 2011, and establishes a framework for measuring fair value and sets out related
disclosure requirements when fair value measurement is required or permitted under other standards. IFRS 13 will be effective for annual periods
beginning on or after January 1, 2013. The Company is currently evaluating the impact of IFRS 13 on the fair value measurements in its consolidated
financial statements.
(ii) Financial instruments
The initial installments of IFRS 9, Financial Instruments (“IFRS 9”) were issued by IASB in November, 2009 and October, 2010. These installments
represent the first phase in IASB’s planned phased replacement of IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”) with an
improved standard for financial instruments that is principle-based and less complex.
The main changes to the requirements of IAS 39 that may have an effect on the Company’s consolidated financial statements are as follows:
•
•
•
All financial assets that are currently within the scope of IAS 39 will be classified as either amortized cost or fair value. The Available for Sale and
Loans & Receivables categories will no longer exist.
The above classification will be based on an entity’s business model for managing the financial assets and the contractual cash flow character-
istics of the financial assets. Reclassifications between amortized cost and fair value will be prohibited, unless there is a change in the entity’s
business model.
Changes in the fair value of financial assets classified at fair value are recorded in net earnings, except that an entity may choose to designate
certain equity securities at fair value to be recorded in other comprehensive income. If this option is chosen, all subsequent changes in those
securities must be recorded in other comprehensive income, and no transfer to net earnings of gains or losses on disposal will be permitted.
The next phases in IASB’s project is expected to address the impairment of financial assets measured at amortized cost, and hedge accounting.
IFRS 9 is expected to be effective for annual periods beginning on or after January 1, 2015, with early adoption permitted. The Company is currently
evaluating the impact of IFRS 9 on its consolidated financial statements, particularly with regard to the recording of its securities.
33
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
4. Securities
An analysis of the Company’s securities is as follows:
As at December 31
Securities holdings
Available for sale securities
Short-term securities (a)
Bonds
Mutual funds
Bank of Montreal common shares
Other equity securities
Held for trading securities
Equity securities (b)
Total securities holdings at fair value
Securities at amortized cost (c)
Total securities holdings
Securities held for sale (d)
Total securities
2012
2011
(note 3a)
$
2,187
2,007
8,729
301,626
38,389
352,938
1,000
353,938
–
353,938
26,018
$
3,166
–
13,355
276,925
16,980
310,426
5,550
315,976
2,366
318,342
45,840
$
379,956
$
364,182
(a) Short-term securities shown above include securities of non-controlled mutual funds that hold short-term securities, as well as directly held short-term secu-
rities that are continually reinvested by the Company and therefore are included in securities holdings.
(b) Held for trading equity securities consist of securities held by consolidated mutual funds which meet the criteria for this classification. Changes in fair value
are included in net gains.
(c) The securities at amortized cost were comprised of promissory notes, which resulted from the restructuring of existing debt securities in 2011, and the rec-
ognition of a gain of $731 in that year. During the current year, the issuer of the promissory notes exercised its option and repaid the full face value of the notes,
resulting in the recognition of an additional gain of $963.
(d) Securities held for sale are the Company’s interest in mutual funds which the Company controls but does not consolidate, as it intends to dispose of
control through either sale or dilution within 12 months. These securities are carried at fair value, with subsequent changes in fair value recognized in the
consolidated statements of operations.
(e) The Company’s securities have been categorized based upon a fair value hierarchy, as follows:
As at December 31
Level 1
Level 2
Level 3
Total securities at fair value
Securities at amortized cost
Total securities
An analysis of the movement in Level 3 securities is as follows:
For the years ended December 31
Level 3 securities, beginning of year
Additions
Increase (decrease) in estimated fair value, recognized in other comprehensive income
Level 3 securities, end of year
During 2012 and 2011, there have been no transfers between Levels 1 and 3 securities.
$
2012
375,865
–
4,091
379,956
–
$
2011
(note 3a)
358,439
–
3,377
361,816
2,366
$
379,956
$
364,182
$
2012
3,377
30
684
2011
(note 3a)
$
3,952
107
(682)
$
4,091
$
3,377
34
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
5. Intangible Assets
For the years ended December 31
2012
2011
New
business
costs
Computer
software
Rights to
future
revenue
New
business
costs
Computer
software
Rights to
future
revenue
Total
Cost:
Balance, beginning of year
Purchases
Arising on acquisition of subsidiaries (note 24)
Reclassifications (a)
Disposals
Foreign exchange translation adjustments
Balance, end of year
Accumulated amortization:
Balance, beginning of year
Amortization expense
Reclassifications (a)
Disposals
Foreign exchange translation adjustments
Balance, end of year
$ 7,533
531
–
–
–
–
8,064
$ 2,865
487
–
–
–
(1)
3,351
$ 13,978
1,807
5,150
–
(935)
–
20,000
$ 24,376
2,825
5,150
–
(935)
(1)
31,415
$ 7,798
964
–
(1,229)
–
–
7,533
$ 2,095
768
–
–
–
2
2,865
4,904
1,419
–
–
–
6,323
1,479
421
–
–
(1)
1,899
2,696
986
–
(83)
–
3,599
9,079
2,826
–
(83)
(1)
11,821
4,119
1,417
(632)
–
–
4,904
1,198
279
–
–
2
1,479
$ 2,257
254
10,238
1,229
–
–
13,978
1,312
752
632
–
–
2,696
Total
$ 12,150
1,986
10,238
–
–
2
24,376
6,629
2,448
–
–
2
9,079
Carrying value, end of year
$
1,741
$
1,452
$ 16,401
$ 19,594
$ 2,629
$ 1,386
$ 11,282
$ 15,297
(a) In conjunction with the 2011 acquisition of the Managing General Agency subsidiary as described in note 24b, the Company reassessed certain new
business costs held by its existing subsidiary. As a result of this reassessment, it was determined that these costs qualify as rights to future revenues,
and their cost and accumulated amortization were therefore reclassified accordingly, as of the date of the acquisition. As a result of this reclassifica-
tion, amortization expense in the year 2012 was reduced by $186 (2011 - $131).
6. Equipment
For the years ended December 31
Cost:
Balance, beginning of year
Purchases
Arising on acquisition of subsidiaries (note 24)
Foreign exchange translation adjustments
Balance, end of year
Accumulated amortization:
Balance, beginning of year
Amortization expense
Foreign exchange translation adjustments
Balance, end of year
2012
2011
Office
equipment
Leasehold
improvements
Total
Office
equipment
Leasehold
improvements
$ 4,968
795
102
(18)
5,847
$ 1,668
161
–
(2)
1,827
3,353
409
(8)
3,754
1,215
243
(2)
1,456
$ 6,636
956
102
(20)
7,674
4,568
652
(10)
5,210
$ 4,563
197
191
17
4,968
2,947
399
7
3,353
$
1,274
100
292
2
1,668
1,021
192
2
1,215
Total
$
5,837
297
483
19
6,636
3,968
591
9
4,568
Carrying value, end of year
$ 2,093
$
371
$ 2,464
$
1,615
$
453
$ 2,068
7. Goodwill
For the years ended December 31
Balance, beginning of year
Arising on acquisition
Balance, end of year
2012
11,111
–
11,111
$
$
2011
5,249
5,862
11,111
$
$
35
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
Goodwill acquired in a business acquisition is allocated to the cash generating units (“CGUs”) that are expected to benefit from that business acquisi-
tion. The carrying amount of goodwill has been allocated to the relevant CGUs as follows:
As at December 31
Financial advisory:
Mutual fund distributor
Managing general agency
Total goodwill
2012
4,227
6,884
11,111
$
$
2011
4,227
6,884
11,111
$
$
Goodwill is not amortized, but is subject to annual impairment testing, as described below.
Impairment tests were performed upon the goodwill associated with each CGU in 2012 and 2011, in each year based upon each of the CGU’s estimated fair
value, less estimated costs to sell. Management used a multi-factor model to determine fair value, with the principal assumptions being values assigned as
multiples of key business analytics pertaining to each CGU. Management considers that the key business analytics are client assets under administration
in both CGUs and annual net service fees and net first year commissions in the Life Insurance Managing General Agent CGU. It is management’s opinion
that estimating fair value based on these analytics is in accordance with established industry practice, and that the multiples used are consistent with mar-
ket transactions. Based on the results of this testing, there were no indications that the goodwill was impaired in 2012 or 2011.
The most sensitive assumptions used in the above testing were:
As at December 31
Mutual fund distributor:
Multiple of assets under administration
Managing general agency:
Multiple of annual net service fee revenue
2012
2011
1.25%
6
1.25%
6
The following table shows for each CGU the amount by which the fair value less the estimated costs to sell referred to above exceeds its carrying value.
As at December 31
Mutual fund distributor
Managing general agency
2012
2011
$
69,849
10,688
$
62,294
7,905
The following table shows the percentage that the most sensitive assumption in each test would be required to change individually in order for the
estimated fair value less costs to sell to be equal to the carrying amount of the CGU.
As at December 31
Mutual fund distributor:
Multiple of assets under administration
Managing general agency:
Multiple of annual net service fee revenue
8. Bank Loans and Borrowings
As at December 31
Bank indebtedness (a)
Bank loan (b)
Bankers’ acceptances payable (b)
Total bank loans and borrowings
2012
2011
(90)%
(50)%
(87)%
(44)%
2012
8,772
14,963
28,500
52,235
$
$
2011
2,504
14,963
28,000
45,467
$
$
(a) Bank indebtedness
Bank indebtedness consists of overdraft borrowing under a line of credit from a major Canadian chartered bank, which is available to a maximum of $11,000
(2011 - $11,000), due on demand, secured by a General Security Agreement and securities valued at $48,648 (2011 - $44,644), and bearing interest at the bank
prime rate plus 0.25%.
(b) Bank loan and bankers’ acceptances payable
Under written loan agreements, the Company has $70,000 (2011 - $55,000) in lending facilities from a major Canadian chartered bank. Borrowings under these
facilities may be in the form of either demand loans bearing a rate of bank prime plus 0.25% (2011 – 0.25%) or bankers’ acceptances for periods ranging from
30 to 270 days, at rates negotiated in the bankers’ acceptance market plus 0.50% (2011 – 0.75%). These facilities are secured by the deposit of treasury stock
held by the EPSP Trust valued at $22,113 at December 31, 2012 (2011 - $18,766), and other securities valued at $77,536 at December 31, 2012 (2011 - $8,207).
36
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
9. Provisions
From time to time in connection with its operations, the Company is named as a defendant in actions for damages and costs allegedly sustained by
the plaintiffs. While it is often not possible to estimate the outcome of the various proceedings at any time, the Company has made provisions, where
possible, for the estimated outcome of such proceedings. As at December 31, 2012 and 2011, there were no material provisions recorded. Should any
additional loss result from the resolution of such claims, such loss will be accounted for as a charge to income in the year in which it is identified.
10. Operating Leases
The Company has non-cancellable operating leases for premises and equipment with initial terms in excess of one year and which expire on various
dates after year end. Future minimum payments required under these non-cancellable operating leases are as follows:
As at December 31
Payable within one year
Payable after one year and within five years
Payable after five years
Total lease obligations
2012
1,897
5,688
9,060
16,645
$
$
2011
1,347
1,404
–
2,751
$
$
During the year ended December 31, 2012, the Company recognized $1,597 (2011 - $1,242) of base rental costs in respect of these non-cancellable leases.
11. Income Taxes
(a) The components of the income tax expense are as follows:
For the years ended December 31
Current tax expense
Tax on profits for the current year
Adjustments in respect of prior periods
Deferred tax expense
Origination and reversal of temporary differences
Adjustments in respect of prior periods
Change in future periods’ income tax rates
Income tax expense
2012
2,599
15
2,614
(454)
28
1,087
661
3,275
$
$
2011
1,656
139
1,795
(1,058)
37
–
(1,021)
774
$
$
(b) The income tax expense in the consolidated statements of operations is less than the combined Federal and Provincial statutory income tax rates of
26.50% (2011 – 28.25%) of the current year for the following reasons:
For the years ended December 31
Tax at the combined Federal and Provincial statutory income tax rate for the current year
Increase (decrease) in the expense due to:
Tax exempt income from securities
Lower average tax rate applicable to foreign subsidiaries
Adjustments to deferred tax assets and liabilities for changes in temporary differences
Non-taxable portion of capital losses (gains)
Non-deductible expenses
Change in future periods’ income tax rates
Other
Income tax expense
2012
2011
$
5,691
$
4,803
(3,699)
(250)
(2)
(83)
387
1,087
144
3,275
$
(4,293)
(135)
(259)
5
423
–
230
774
$
The combined statutory income tax rate is the aggregate of the Federal income tax rate of 15.00% (2011 – 16.50%) and the Provincial income tax rate
of 11.50% (2011 – 11.75%). During 2012, the province of Ontario enacted legislation which reversed previously enacted rate reductions and set the
income tax rate applicable to future periods at 11.50%.
37
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
(c) Deferred tax assets and liabilities are recognized as follows:
For the year ended December 31
2012
Deferred tax assets
Balance at beginning of year
Recognized in operating earnings
Balance at end of year
Deferred tax liabilities
Balance at beginning of year
Recognized in operating earnings
Recognized in other comprehensive income
Balance at end of year
Capital
losses
carryforwards
Non-capital
loss
carryforwards
Equipment
and
intangibles
Other
temporary
differences
Total
$
$
$
$
–
–
–
$ 2,559
409
$ 2,968
$
$
597
(106)
491
$
$
324
52
376
$ 3,480
355
3,835
$
(156)
(71)
–
(227)
$
$
–
(13)
–
(13)
$ 2,199
(69)
–
$ 2,130
$
(903)
(121)
–
$ (1,024)
$ 32,394
1,016
4,014
$ 37,424
Securities
$
$
–
–
–
$ 31,254
1,290
4,014
$ 36,558
For the year ended December 31
2011
Deferred tax assets
Balance at beginning of year
Recognized in operating earnings
Balance at end of year
Deferred tax liabilities
Balance at beginning of year
Recognized in operating earnings
Recognized in other comprehensive income
Arising on business combinations
Balance at end of year
Capital
losses
carryforwards
Non-capital
loss
carryforwards
Equipment
and
intangibles
Other
temporary
differences
Total
$
$
$
$
–
–
–
$
1,770
789
$ 2,559
$
$
1,115
(518)
597
(47)
(109)
–
–
(156)
$
$
–
–
–
–
–
$
206
(265)
–
2,258
$ 2,199
$
$
$
$
220
104
324
$
3,105
375
$ 3,480
(722)
(181)
–
–
(903)
$ 31,920
(646)
(1,138)
2,258
$ 32,394
Securities
$
$
–
–
–
$ 32,483
(91)
(1,138)
–
$ 31,254
(d) The aggregate amount of temporary differences between costs for accounting purposes and costs for income tax purposes because of earnings accumu-
lated in certain subsidiaries is $84,370 (2011 - $74,112), which amount may be subject to income tax if such subsidiaries are disposed of or the earnings are
otherwise distributed. Deferred tax has not been provided on these temporary differences, as the Company does not intend to dispose of such subsidiaries
or distribute such earnings.
Unlimited preferred shares, without par value, may be issued in an unlimited number of series, the designation, rights, privileges, conditions and
12. Capital Stock
(a) Authorized
i)
other provisions of which are to be determined by the Board of Directors.
ii) Unlimited Class A non-voting shares without par value, convertible into common shares on a one-for-one basis, under certain terms and conditions,
the highlights of which are as follows: if any person other than an insider of the Company acquires ownership, control or direction over in excess of 50%
of the common shares, or makes an offer to all common shareholders to buy common shares, the Class A shares may be converted into common shares,
unless holders of over 50% of the outstanding common shares do not accept the offer, or an equivalent offer is made to the holders of Class A shares.
iii) Unlimited common shares, without par value, convertible on a one-for-one basis into Class A non-voting shares.
(b) Issued and Outstanding
For the years ended December 31
i) Class A shares
Outstanding, beginning of year
Acquired and cancelled
Converted from Common
Outstanding, end of year
38
2012
2011
Shares
Amount
Shares
Amount
28,872
(800)
–
28,072
$ 21,517
(604)
–
20,913
28,815
(288)
345
28,872
$ 21,650
(217)
84
21,517
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
ii) Common shares
Outstanding, beginning of year
Converted from Common
Outstanding, end of year
Total outstanding, end of year
4,971
–
4,971
1,200
–
1,200
5,316
(345)
4,971
1,284
(84)
1,200
33,043
$ 22,113
33,843
$ 22,717
(c) Issuer Bid
Under its Normal Course Issuer Bid, the Company purchased 800 (2011 – 288) of its class A shares for $7,781 (2011 – $2,812) of which $7,177 (2011 -
$2,595), the excess of the purchase price over the average issue price, was charged directly to retained earnings.
(d) Stock Option Plan
The Company maintains a Stock Option Plan for designated officers, directors and employees. Each stock option entitles the holder to purchase one
class A share, subject to certain predetermined vesting arrangements and other conditions. A summary of the changes in the Company’s outstanding
stock options is as follows:
For the years ended December 31
Outstanding, beginning of year
Expired
Outstanding, end of year
The following table summarizes information about options outstanding.
Range of purchase prices
As at December 31, 2011
2012
2011
Weighted
average
exercise
price
$ 10.50
10.50
–
$
Number of
options
36
–
36
Weighted
average
exercise
price
$
10.50
–
10.50
Number of
options
36
(36)
–
Number
of options
outstanding
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price
Number
of options
vested
Weighted
average
exercise
price
36
0.10
$
10.50
36
$
10.50
(e) Dividends
During the year 2012, dividends of $0.17 per share (2011 - $0.16 per share) were declared and paid on the common and class A shares outstanding.
Subsequent to year end, a dividend of $0.20 per share was declared, payable in 2013 on the outstanding common and class A shares.
13. Treasury Stock
The Company purchases and holds shares in its capital stock through the EPSP Trust, which are accounted for as treasury stock. These shares are
deposited as collateral against a bank loan, which is used to finance the purchase of the shares.
(a) A summary of the changes in the Company’s treasury stock is as follows:
For the years ended December 31
Balance, beginning of year
Acquired
Balance, end of year
2012
2011
Shares
Amount
Shares
Amount
1,954
172
2,126
$ 16,063
1,687
$ 17,750
1,479
475
1,954
$ 11,443
4,620
$ 16,063
As at December 31, 2012, the treasury stock was composed of 63 common shares (2011 – 63) and 2,063 class A shares (2011 – 1,891 shares).
(b) EPSP Trust – Stock-based entitlements
The stock-based entitlements provided by the Company to certain employees through the EPSP Trust are in the form of either an option-like entitle-
ment or an equity-based entitlement, as described below.
i) Option-like entitlements
The option-like entitlements allow the employees to purchase shares from the EPSP Trust at prices equal to the amount of the bank loan per share
pertaining to those shares, subject to predetermined vesting arrangements and other conditions. Due to the nature of these entitlements and the con-
ditions attached to them, the contractual life of the entitlement is indeterminable.
39
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
A summary of the changes in the option-like entitlements is as follows:
For the years ended December 31
2012
2011
Option-like entitlements, beginning of year
Entitlements provided
Option-like entitlements, end of year
Weighted
average
exercise
price
$
$
8.76
9.78
8.86
Number of
shares
954
448
1,402
Weighted
average
exercise
price
$
$
8.32
9.71
8.76
Number of
shares
1,402
150
1,552
As at December 31, 2012, there were outstanding option-like entitlements for 63 common shares (2011 – 63) and 1,489 class A shares (2011 – 1,339).
Option-like entitlements provided during the year had a fair value of $420 (2011 - $1,697). Because these entitlements have option-like characteristics, they
are accounted for as options and valued using the Black-Scholes option pricing model. The value of the entitlements provided is recorded as compensa-
tion cost over the vesting period of the entitlements, and is credited to contributed surplus. On exercise of an entitlement, treasury stock is reduced for the
value of the entitlement exercised. The following are the key assumptions used in the valuation of the entitlements granted during the year:
For the years ended December 31
Average purchase price per share
Vesting period in years
Average expected term to exercise in years
Risk-free interest rate
Expected price volatility
Expected dividends per share, per annum
The following table summarizes information about option-like entitlements outstanding.
As at December 31, 2012
$2.51 - $5.00
$5.01 - $7.50
$7.51 - $10.00
$10.01 - $12.50
As at December 31, 2011
$2.51 - $5.00
$5.01 - $7.50
$7.51 - $10.00
$10.01 - $12.50
2012
9.78
5.00
10.00
2.45%
23.17%
0.17
$
$
$
$
Number of
shares
Weighted
average
exercise
Number of
price shares vested
20
355
913
264
1,552
20
355
763
264
1,402
$
$
$
$
2.62
6.15
9.33
11.36
8.86
2.62
6.15
9.24
11.36
8.76
20
339
363
246
968
20
334
253
226
833
2011
9.71
5.00
10.00
3.41%
26.09%
0.16
Weighted
average
exercise
price
$
$
$
$
2.62
6.18
8.92
11.31
8.43
2.62
6.19
8.71
11.25
8.24
Equity-based entitlements
ii)
Equity-based entitlements allow the employees to purchase shares from the EPSP Trust at zero cost, subject to predetermined vesting arrangements and other
conditions. When such purchases by employees occur, the Company pays to the EPSP Trust the amount of the bank loan attributable to the shares purchased.
Due to the nature of these entitlements and the conditions attached to them, the contractual life of the entitlement is indeterminable.
A summary of the changes in the number of shares under equity-based entitlements is as follows:
For the years ended December 31
Equity-based entitlements, beginning of year
Entitlements provided
Equity-based entitlements, end of year
2012
552
22
574
2011
525
27
552
Equity-based entitlements are valued at the fair market value of the shares purchased by the EPSP Trust on the date of the provision of the entitlement.
This value is recorded by the Company as compensation cost over the vesting period, and is credited to contributed surplus. On exercise of an entitle-
ment, treasury stock and contributed surplus are reduced for the value of the entitlement exercised.
Equity-based entitlements provided during the year ended December 31, 2012 had a fair value of $220 (2011 - $266).
40
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
14. Management Fee Income, Net
Management fee income is presented net of referral fees which are paid to referring agents, amounting to $2,078 for the year ended December 31, 2012 (2011 - $1,695).
15. Dividend and Interest Income
Dividend and interest income is composed of the following:
For the years ended December 31
Dividend income
Interest income
Total dividend and interest income
16. Employee Compensation and Benefits
Employee compensation and benefits are composed of the following:
For the years ended December 31
Salaries and other compensation, payroll taxes and benefits
Contributions to defined contribution pensions plans
Stock-based compensation
17. Net Gains (Losses)
Net gains (losses) are composed of the following:
For the years ended December 31
Held for trading securities (a)
Available for sale securities
Securities at amortized cost (b)
Net gains (losses) on securities
Gains on disposition of intangible assets
Net gains (losses)
Net gains (losses) on securities held for sale (c)
2012
15,292
1,315
16,607
2012
40,257
510
1,145
41,912
2012
(163)
348
963
1,148
189
1,337
4,559
$
$
$
$
$
$
$
2011
15,879
1,412
17,291
2011
34,429
400
942
35,771
2011
(305)
(557)
731
(131)
–
(131)
(5,493)
$
$
$
$
$
$
$
(a) Net losses on held for trading securities include net gains or losses on securities both owned and sold short by consolidated mutual funds.
(b) During the year, the issuer of the promissory notes recorded at amortized cost exercised its option and repaid the full face value of the notes, which resulted
in the recognition of a gain.
(c) Net gains (losses) on securities held for sale are the net changes in the fair value of the Company’s investment in mutual funds which the Company
controls but does not consolidate, as it intends to dispose of control through either sale or dilution.
18. Net earnings per share
The calculations of net earnings per share are based on the following number of shares and net earnings.
For the years ended December 31
Weighted average number of class A and common shares outstanding
Basic
Effect of outstanding entitlements and options from stock based compensation plans
Diluted
Net earnings available to shareholders of class A and common shares
Basic
Effect of outstanding entitlements and options from stock based compensation plans
Diluted
2012
2011
31,496
713
32,209
32,278
204
32,482
$
$
22,556
317
22,873
$
$
10,003
30
10,033
41
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
The effects of 1,388 (2011 – 1,584) entitlements and options from the Company’s stock based compensation arrangements were excluded from the calcu-
lation of the diluted number of shares, as those entitlements and options were anti-dilutive.
19. Business Segments
The Company operates in the following three main business segments: a) the investment management segment, which involves the earning of man-
agement fees relating to investment management services provided to clients; b) the financial advisory segment which relates to the earning of sales
commissions and administrative services revenue from assets under administration; and c) the corporate activities and investments segment, which
relates substantially to the investment of the Company’s securities holdings, as well as corporate management and development activities. The alloca-
tion of costs to individual business segments is undertaken to provide management information on the cost of providing services and a tool to manage
and control expenditures. The Company’s business segments do not have any material intra-segment revenues. The following table discloses certain
information about these segments:
For the years end December 31
2012
2011
2012
2011
2012
2011
2012
2011
Investment
Management
Financial
Advisory
Corporate
Activities and
Investments
Consolidated
$
– $
–
–
42,397
1,789
154
44,340
– $ 71,926 $ 67,906 $
–
–
37,212
1,369
357
38,938
(54,086)
13,820
–
4,001
482
18,303
(53,071)
18,855
–
5,382
507
24,744
– $
–
–
–
–
15,946
15,946
– $ 71,926 $ 67,906
(54,086)
–
13,820
–
37,212
–
5,370
–
17,291
16,452
73,693
16,452
(53,071)
18,855
42,397
7,171
16,607
85,030
22,975
104
281
10,570
33,930
10,410
–
18,659
112
207
9,914
28,892
10,046
–
12,184
2,945
74
10,429
25,632
(888)
189
9,821
2,610
69
8,821
21,321
(3,018)
–
6,753
429
928
(2,780)
5,330
10,616
1,148
7,291
317
1,156
(2,417)
6,347
10,105
(131)
41,912
3,478
1,283
18,219
64,892
20,138
1,337
35,771
3,039
1,432
16,318
56,560
17,133
(131)
10,410
2,416
7,994
–
$ 7,994
10,046
2,398
7,648
–
$ 7,648
(699)
7
(706)
–
(3,018)
(476)
(2,542)
–
(706) $ (2,542)
11,764
852
10,912
4,559
$ 15,471
9,974
(1,148)
11,122
(5,493)
$ 5,629
17,002
21,475
774
3,275
16,228
18,200
4,559
(5,493)
$ 22,759 $ 10,735
$
$ 7,994
–
$ 7,648
–
$ 7,994 $ 7,648
$ (1,032) $ (2,635) $ 15,594 $ 4,990 $ 22,556 $ 10,003
732
$ 5,629 $ 22,759 $ 10,735
326
(123)
93
(706) $ (2,542) $ 15,471
203
639
$
$
– $
8
–
– $ 7,688 $ 11,806 $
47
–
582
5,862
287
–
287 $
772
–
418 $ 7,975 $ 12,224
780
151
5,862
–
1,067
–
$ 43,538 $ 29,896 $ 85,652 $ 76,319 $ 381,562 $ 363,293 $ 510,752 $ 469,508
142,500
25,987
77,196
74,527
39,579
49,819
28,394
153,002
Revenue
Gross commission revenue
Commissions paid to advisors
Management fee income, net
Adminstrative services income
Dividend and interest income
Net revenue
Expenses
Employee compensation and benefits
Amortization
Interest
Other expenses
Operating earnings
Net gains (losses)
Earnings before income taxes and net gains (losses)
on securities held for sale
Income tax expense (recovery)
Net gains (losses) on securities held for sale
Net earnings
Net earnings available to:
Shareholders
Non-controlling interests
Capital expenditures on segment assets:
Intangible assets
Equipment
Goodwill
As at December 31
Segment assets and liabilities:
Assets
Liabilities
42
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
The following table discloses certain information about the Company’s activities, segmented geographically
For the years end December 31
Net revenue
As at December 31
Segment non-current assets
Intangible assets
Equipment
Goodwill
Canada
2012
2011
Rest of the World
2011
2012
Consolidated
2012
2011
$ 79,827
$ 68,480
$ 5,203
$
5,213
$ 85,030
$ 73,693
$ 19,593
1,995
11,111
$ 15,269
1,567
11,111
$
1
469
–
$
28
501
–
$ 19,594
2,464
11,111
$ 15,297
2,068
11,111
20. Net Change in Non-Cash Working Capital Items
For the years ended December 31
Decrease (increase) in non-cash working capital assets
Interest-bearing deposits with banks
Accounts receivable and other
Loan receivable
Receivables from clients and broker
Prepaid expenses
Increase (decrease) in non-cash working capital liabilities
Client deposits
Accounts payable and other
Payable to clients
Net change
2012
2011
$
$
4,027
(4,422)
6,349
(4,776)
(281)
(3,523)
(453)
4,776
1,697
$
$
4,121
(3,670)
205
(4,367)
9
(4,357)
4,621
4,367
929
21. Financial Risks Management
The Company’s goal in managing financial risk is to evaluate the risks being taken against the benefits that are targeted to be achieved and, where
those risks are deemed acceptable, to mitigate those risks, where practicable. A discussion on the Company’s risk management practices is included
under the heading “Risk Factors” in the Management’s Discussion and Analysis, on pages 18 and 19 of the Company’s 2012 Annual Report. The follow-
ing are the more significant risks associated with financial instruments to which the Company is subject:
(a) Concentration Risk
The Company is exposed to concentration risk associated with the $301,626 (2011 - $276,925) investment in the Bank of Montreal shares, which is a
significant portion of the Company’s securities holdings. The Company monitors the investment in the Bank of Montreal shares on a continuous basis.
A change in the price of the Bank of Montreal shares by 10% would result in an unrealized gain or loss of $30,163 (2011 - $27,693) being recorded in
other comprehensive income.
(b) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk
comprises three types of risk: price risk, currency risk, and interest rate risk.
(i) Price Risk
The Company is exposed to price risk with its securities. Unrealized changes in the values of its securities are recognized in net earnings (for held for
trading securities and securities held for sale) and in other comprehensive income (for available for sale securities). This risk is managed through the
use of professional in-house portfolio management expertise, which takes a disciplined approach to investment management. The securities holdings,
excluding the Bank of Montreal shares, are also diversified by asset class and, as shown in the chart below, by geographical region. The chart also indi-
cates the gain or loss which would be recognized in net earnings and other comprehensive income as a result of a 10% change in the market prices:
43
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
As at December 31, 2012
Canada
United States
Rest of the World
As at December 31, 2011
Canada
United States
Rest of the World
Fair value of held for
trading securities and
securities held for sale
Unrealized gain
or loss recognized
in net earnings
from 10% market
change in region
Fair value of available for
sale securities, excluding
Bank of Montreal
shares, short-term
securities and bonds
Unrealized gain or
loss recognized in
other comprehensive
income from
10% market
change in region
$
$
$
$
5,905
4,458
16,655
27,018
18,653
6,347
26,390
51,390
±$
±$
±$
±$
590
446
1,666
2,702
1,865
635
2,639
5,139
$
$
$
$
4,838
3,579
38,701
47,118
7,480
2,916
19,939
30,335
±$
±$
±$
±$
484
358
3,870
4,712
748
292
1,994
3,034
(ii) Currency Risk
The Company’s main exposure to currency risk is on its investments in its foreign subsidiaries, amounting to $82,096 as at December 31, 2012 (2011 -
$73,832). Changes in the values of these investments caused by changes in the US dollar exchange rate are reflected in other comprehensive income in
the period in which the change occurs.
(iii) Interest Rate Risk
The Company is exposed to interest rate risk through its bank loans and borrowings of $52,235 (2011 - $45,467). The interest rates on these borrowings
are short-term and, if short-term rates increase, the Company’s interest expense would increase and net earnings would decrease. If interest rates had
been 2% higher throughout 2012, with all other variables held constant, the Company’s interest expense would have increased by approximately $1,020
(2011 - $969). The Company is also exposed to interest rate risk in its international banking operation, through the assets interest-bearing deposits
with banks of $3,884 (2011 - $8,033), and the client deposits liability of $3,884 (2011 – $7,432). This risk is low, as it is managed through the matching
of interest rates and maturities on these balances.
(c) Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The
Company’s total credit risk exposure, without consideration of any collateral or other credit enhancements, is as outlined below:
As at December 31
Cash
Interest-bearing deposits with banks
Accounts receivable and other
Loan receivable
Receivable from clients and broker
Securities at amortized cost – promissory notes
Short-term securities
Bonds
Loan guarantee
2012
26,993
3,884
23,547
–
36,820
–
2,187
2,007
482
95,920
$
$
2011
5,514
8,033
19,141
6,410
32,044
2,366
3,166
–
482
77,156
$
$
The Company considers its credit risk to be low. The interest-bearing deposits with banks and the majority of the accounts receivable are due from
major institutions. The Company reviews the credit worthiness of any banks with which it places deposits, and does not deal with a bank if it is not
satisfied with the bank’s financial strength. The credit exposure on receivables from clients and loan receivable is offset with securities, which are held
in the client margin accounts of the securities dealer subsidiary, and by the offshore bank subsidiary, respectively. There are controls on the amounts
that these clients may borrow, depending upon the securities that are pledged. The short-term securities and bonds are short-duration investment
quality securities. Offsetting the credit exposure on the loan guarantee are marketable securities pledged by the borrower, the market values of which
the Company actively monitors on a continuous basis.
(d) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities, which are substantially
all due within one year. The Company manages this financial risk by maintaining a portfolio of securities, and by arranging for significant borrowing
facilities with major Canadian banks, at attractive rates.
44
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
22. Capital Management
The Company considers the following to be its capital: capital stock, contributed surplus, retained earnings, accumulated other comprehensive income
and bankers’ acceptances payable. The Company’s objectives in managing its capital are to:
(a) maintain a strong capital base to provide investor, creditor, regulator and client confidence; and
(b) provide returns to shareholders by the payment of dividends, the repurchase of the Company’s shares, and the enhancement of long-term value.
The allocation of capital to, and the return from, the Company’s businesses are monitored by senior management. Certain of the Company’s operating
subsidiaries are subject to various types of capital requirements imposed by the regulatory authorities to which they report. During the year, and at
year end, the subsidiaries complied with those requirements. As at December 31, 2012, the Company’s regulated businesses had total regulatory capi-
tal amounting to $92,461 (2011 - $64,823). These amounts are, in all cases, in excess of the regulatory requirements, and are adjusted by the Company
as necessary from time to time. The Company’s borrowing facility, through which bankers’ acceptances are issued, is subject to certain terms and con-
ditions. During the year, and at year end, the Company complied with those terms and conditions.
23. Related Parties
(a) Parent company
Minic Investments Limited (“Minic”) is a corporation of which A. Michael Christodoulou, a director and officer of the Company, is currently President.
Minic is owned by The Christodoulou 2004 Family Trust, a discretionary trust of which the children of the late John Christodoulou are possible ben-
eficiaries. As at December 31, 2012, Minic beneficially owned 48.2% (2011 – 48.2%) of the Company’s outstanding common shares. In 2012 and 2011,
there were no transactions between Minic and the Company.
(b) Key management personnel
Key management personnel are persons having authority and responsibility for planning, directing and controlling the activities of the Company, either
directly or indirectly. The Company has determined that its key management personnel include the Board of Directors of the Company and certain
senior executives of the Company. The following summarizes transactions with key management personnel:
For the years ended December 31
Short-term employment benefits
Post-employment benefits
Stock-based compensation
$
2012
2,929
14
501
3,444
$
2011
2,969
10
280
3,259
The Company provides investment management services to key management personnel at reduced fee rates, which are available to all employees of
the Company. The following is a summary of the fees paid for these services.
For the years ended December 31
Investment management services
(c) The Company’s significant subsidiaries are as follows:
As at December 31
Guardian Capital LP
Guardian Capital Advisors LP
Guardian Capital Enterprises Ltd.
Worldsource Wealth Management Inc.
Worldsource Financial Management Inc.
Worldsource Securities Inc.
IDC Worldsource Insurance Network Inc.(i)
Guardian Capital International Ltd.
Alexandria Bancorp Ltd.
Alexandria Global Investment Management Ltd.
Alexandria Trust Corporation
Guardian Capital Group Limited Employee Profit Sharing Plan (ii)
Guardian Canadian Value Equity Fund (iii)
Guardian Global Dividend Growth Fund (iii)
Guardian Growth & Income Fund
The Alexandria Fund Ltd.(iv)
2012
$
32
$
2011
41
Country of organization
2012
2011
Voting ownership interest
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Bermuda
Cayman Islands
Cayman Islands
Barbados
Canada
Canada
Canada
Canada
Cayman Islands
100%
100%
100%
100%
100%
100%
67%
100%
100%
100%
100%
0%
n/a
7%
100%
40%
100%
100%
100%
100%
100%
100%
67%
100%
100%
100%
100%
0%
87%
40%
n/a
40%
45
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
(i) The principal place of business for IDC Worldsource Insurance Network Inc. (“IDC WIN”), the Company’s primary managing general agency subsidiary, is
located at Suite 700, 625 Cochrane Drive, Markham, Ontario. The non-controlling interests have a 33% ownership and voting interests in IDC WIN.
The accumulated non-controlling interest in the Company’s accounts related to IDC WIN is as follows:
For the years ended December 31
Non-controlling interest, beginning of year
Arising on acquisition
Net earnings available to non-controlling interests
Non-controlling interest, end of year
The following is summarized financial information about IDC WIN before consolidation adjustments:
As at December 31
Cash
Other current assets
Intangible assets
Other non-current assets
Current liabilities
For the year ended December 31, 2012 and the six months ended December 31, 2011
Revenue
Net earnings
Comprehensive income
$
$
$
$
$
$
2012
3,668
–
326
3,994
2012
482
1,689
8,548
906
11,625
6,244
2012
11,567
1,905
1,905
$
$
$
$
$
$
2011
–
3,575
93
3,668
2011
184
1,474
2,299
1,192
5,149
1,672
2011
5,237
584
584
(ii) The Company does not hold any ownership interest in Guardian Capital Group Limited Employee Profit Sharing Plan (the “EPSP Trust”). However, the
EPSP Trust is consolidated because the Company has power over the activities of the EPSP Trust, which are conducted on behalf of the Company, and the
Company remains exposed to the risks of the EPSP Trust, which are described in note 8, Bank Loans and Borrowings, and note 13, Treasury Stock.
(iii) The Company disposed of its interest in Guardian Canadian Value Equity Fund during the year. The Company ceased to consolidate Guardian Global
Dividend Growth Fund effective December 31, 2011, as new business commitments sufficiently diluted the Company’s interest. The Company did not recognize a
gain or loss as a consequence of losing control of either of these subsidiaries.
(iv) The Company does not control The Alexandria Fund Ltd., as the Company intends to dispose of control of the fund either through a sale or dilution transac-
tion, which meets the criteria as established under its policy for Non-current assets held for sale. As at December 31, 2012, the Company’s holdings in the fund,
through investments in certain of its sub-funds, were valued at $26,018 (2011 – $45,580) and the fund’s total net asset value was $68,455 (2011 – $106,313).
(d) The Company’s significant joint venture is as follows:
As at December 31
Guardian Ethical Management Inc.
Country of organization
Canada
2012
Voting ownership interest
2011
50%
50%
Guardian Ethical Management Inc. (“GEM”) is an investment fund manager specializing in socially responsible investing mandates, which comple-
ments the Company’s existing investment management businesses. Management of GEM is shared equally with the other partner in the joint venture.
The Company accounts for its investment in GEM using the equity method. The following is summarized financial information about GEM:
As at December 31
Cash
Other current assets
Current liabilities
For the years ended December 31
Net revenue
Net earnings
Comprehensive income
46
2012
1,167
574
1,741
1,077
2012
2,140
–
–
2011
1,693
739
2,432
1,769
2011
2,793
–
–
$
$
$
$
$
$
$
$
$
$
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
(e) Interest in unconsolidated structured entities
The Company sponsors and manages a number of collective investment vehicles for the purpose of efficiently investing monies on behalf of the
Company’s clients, who are the primary investors in these vehicles. These collective investment vehicles, which are separate legal entities, are financed
by investments made by clients and, to a limited extent, the Company. The Company is paid for the investment management services it provides to the
vehicles either directly from the vehicles or from the investors. The following tables summarize the size of the unconsolidated collective investment
vehicles managed by the Company, and the Company’s interests in and transactions with those collective investment vehicles:
As at December 31
Net assets of unconsolidated collective investment vehicles
Company’s interests in unconsolidated investment vehicles
Securities holdings
Securities held for sale
2012
2011
$ 1,156,885
$ 979,829
$
$
8,331
26,019
34,350
$
$
12,991
45,840
58,831
For the years ended December 31
2012
2011
Net revenues earned directly from unconsolidated collective investment vehicles
$
986
$
1,187
The Company’s maximum exposure to loss from its interest in these collective investment vehicles is limited to the amount of its investment.
24. Acquisitions
(a) Strategic Brokerage Services LP (“SBS”)
On November 30, 2012, the Company acquired the operating net assets of the life insurance Managing General Agency (an “MGA”) business of SBS
through its MGA subsidiary, IDC Worldsource Insurance Network Inc. (“IDC WIN”). The acquisition of SBS augments IDC WIN’s existing business by
providing greater scale and strengthening its presence in Western Canada. The cash consideration paid by the Company for the acquisition is $5,261,
$3,157 on closing and the balance due over a period of one year after closing.
The accounting for the consideration paid for the acquisition is as follows:
Fair value of consideration paid:
Cash on closing
Cash to be paid over a period of one year after closing
Total consideration paid
Fair value of identifiable net assets acquired:
Intangible assets, rights to future revenue
Equipment
Other
Net value of net assets acquired
Goodwill
$
$
3,157
2,104
5,261
5,150
102
9
5,261
Nil
Subsequent to its acquisition, SBS has contributed net revenue of $302 and net earnings of $87 to the Company’s 2012 results. If the acquisition had
occurred on January 1, 2012, management estimates that SBS would have earned net revenue of $2,800 and net earnings of $330 and, as a result,
the Company’s reported net revenue and net earnings for the year ended December 31, 2012 would have been approximately $87,830 and $23,089,
respectively. In determining these amounts, management has assumed that the fair value adjustments determined above, which arose on the date of
acquisition, would have been the same if the acquisition had occurred on January 1, 2012. Management has also assumed the amortization of intan-
gible assets of $340 and a provision for income taxes of $130 for the year 2012.
(b) IDC Financial Inc. (“IDC”)
On July 1, 2011, the Company acquired a 67% interest in IDC, a life insurance MGA, through an amalgamation of IDC with the Company’s existing
MGA subsidiary, Worldsource Insurance Network Inc. (“WIN”), to form IDC WIN, and a subsequent share purchase. The consideration paid by the
Company to the vendors consisted of a 33% of the ownership of WIN and $8,558, $4,271 on closing and the balance due over a period of one year after
closing. The acquisition of IDC increased the operating leverage of, and created a national presence for, the Company’s MGA business.
Goodwill, which is not expected to be deductible for income tax purposes, represents expectations that IDC WIN will be able to maximize the value of
the contracts with major insurance carriers, and that synergies will be able to be achieved, to maximize the profitability of the combined entity.
47
NOTES TO FINANCIAL STATEMENTS2012 Annual Report
The accounting for the consideration paid for the acquisition was as follows:
Fair value of consideration:
Cash on closing
Cash paid over a period of one year after closing
Ownership interest of WIN
Total consideration paid
Fair value of identifiable net assets acquired:
Intangible assets, rights to future revenue
Accounts receivable and other
Equipment
Accounts payable and other liabilities
Bank loans and borrowings
Deferred tax liability
Less: fair value of identifiable net assets retained by non-controlling interests
Net value of net assets acquired
Goodwill
$
$
4,271
4,287
3,308
11,866
10,238
1,671
483
(1,140)
(33)
(2,258)
8,961
(2,957)
6,004
5,862
The non-controlling interests in IDC WIN are measured at their proportionate share of the fair value of the net identifiable assets of the acquired busi-
ness. In addition, the carrying value of the 33% interest in WIN which was transferred to the vendors was credited to non-controlling interests. As a
result, non-controlling interests in the Company’s subsidiaries changed as follows:
Ownership interest in fair value of IDC
Ownership interest in carrying value of WIN transferred to non-controlling interests
Increase in non-controlling interests due to the acquisition of IDC
As a result of this transaction, the Company’s retained earnings were increased as follows:
Fair value of ownership interest in WIN transferred to non-controlling interests
Less: Carrying value of ownership interests transferred
Excess of fair value over carrying value, credited to retained earnings
$
$
$
$
2,957
618
3,575
3,308
(618)
2,690
Subsequent to its acquisition, IDC contributed net revenue of $3,383 and net earnings of $280 to the Company’s 2011 results. If the acquisition had
occurred on January 1, 2011, management estimates that IDC would have earned net revenue of $6,366 and net earnings of $446 and, as a result,
the Company’s reported net revenue and net earnings for the year ended December 31, 2011 would have been approximately $76,676 and $10,901
respectively. In determining these amounts, management has assumed that the fair value adjustments determined above, which arose on the date of
acquisition, would have been the same if the acquisition had occurred on January 1, 2011. Management has also assumed the amortization of intan-
gible assets of $720 and a provision for income taxes of $235 for the year 2011.
48
NOTES TO FINANCIAL STATEMENTSGuardian Capital Group Limited
Directors
Principal Executives
Guardian Capital
Group Limited
George Mavroudis
President and
Chief Executive Officer
C. Verner Christensen
Senior Vice-President,
Finance and Secretary
A. Michael Christodoulou
Senior Vice-President,
Strategic Planning
and Development
Matthew D. Turner
Senior Vice-President
and Chief Compliance
Officer
Leslie Lee
Vice-President,
Human Resources
Donald Yi
Risk Management Officer
Ernest B. Dunphy
Controller
Board of
Directors
James S. Anas •*
A. Michael Christodoulou
Harold W. Hillier •
George Mavroudis
Barry J. Myers •
Michel Sales •
Peter Stormonth Darling •
Committees
Governance
Barry J. Myers •
A. Michael Christodoulou
Michel Sales •*
Compensation
James S. Anas •
Harold W. Hillier •*
Michel Sales •
Audit
James S. Anas •
Harold W. Hillier •
Barry J. Myers •*
* Chairman
• Unrelated Directors
Portfolio Managers:
Denis Larose
Chief Investment Officer
Gary M. Chapman
Managing Director
Kevin R. Hall
Managing Director
Robert K. Hammill
Managing Director
Peter A. Hargrove
Managing Director
Srikanth G. Iyer
Managing Director
Stephen D. Kearns
Managing Director
D. Edward Macklin
Managing Director
John G. Priestman
Managing Director
Michele J. Robitaille
Managing Director
Michael P. Weir
Managing Director
Guardian
Capital LP
George Marvoudis
Chief Executive Officer
C. Verner Christensen
Senior Vice-President
and Secretary
Robert G. Broley
Senior Vice-President,
Investment Services
Brian P. Holland
Senior Vice-President,
Client Service
Hugh M. MacFarlane
Senior Vice-President,
Investment Services
Spyro Carayannis
Vice-President,
Investment Services
Greg Chai
Vice-President,
Client Service
Joyce Hum
Vice-President,
Consultant Relations
Patrick Milot-Daignault
Vice-President,
Investment Services
Patrick E. Poulin
Vice-President,
Investment Services
Rocco Vessio
Vice-President,
Investment Services
Chris Winchell
Vice-President,
Investment Services
Darryl M. Workman
Vice-President,
Operations and
Administration
Matthew D. Turner
Chief Compliance Officer
Ernest B. Dunphy
Controller
49
2012 Annual Report Alexandria
Bancorp Limited
Robert F. Madden
General Manager
Alexandria Trust
Corporation
Robert F. Madden
Director
Worldsource
Wealth
Management Inc.
Paul Brown
Managing Director
John T. Hunt
Managing Director
Andy Mitchell
Managing Director
Linda Kenny
Chief Financial Officer
Paige Wadden
Head of Compliance
Areef Samji
Controller
Guardian Capital
Advisors LP
J.J. Woolverton
Chairman
A. Michael Christodoulou
Managing Director
C. Verner Christensen
Vice-President
and Secretary
Simon Bowers
Vice-President,
Private Client Trading
Steven W. Thode
Vice-President,
Private Client Services
Darryl M. Workman
Vice-President,
Operations and
Administration
Matthew D. Turner
Chief Compliance Officer
Ernest B. Dunphy
Controller
Private Client
Portfolio Managers:
Michael E. Barkley
Senior Vice-President
George E. Crowder
Senior Vice-President
Douglas G. Farley
Senior Vice-President
Michael G. Frisby
Senior Vice-President
J. Matthew Baker
Vice-President
Thierry Di Nallo
Vice-President
Christie F. Rose
Vice-President
50
Guardian Capital Group Limited
Corporate Offices
Commerce Court West
Suite 3100, P.O. Box 201
Toronto, Ontario M5L 1E8
Telephone: (416) 364-8341
Fax: (416) 364-2067
Website: www.guardiancapital.com
Investor Relations
George Mavroudis
email: info@guardiancapital.com
Auditors
KPMG LLP
Bankers
Canadian Imperial Bank of Commerce
Bank of Montreal
Toronto Stock Exchange Listing
Symbol
Shares
Common GCG
Class A GCG.A
Annual Meeting
May 23, 2013
11:00 a.m.
King Gallery,
The Suites at One King West
1 King Street West
Toronto, Ontario
Custodian and Fund Administrator
RBC Investor Services Trust
Registrar and Transfer Agent
Computershare Investor Services Inc.