2024 ANNUAL
REPORT
2024 was a decisive year in the evolution of Guardian Capital Group Limited.
Our cover reveals the Guardian icon forged in malleable steel, with the smouldering
fire within representing our passion for our Company, our inherent strength and
flexibility to mould and shape the future to our needs, support growth across all
our businesses and respond to the transformative forces of our industry.
CAUTION CONCERNING FORWARD-LOOKING INFORMATION
Certain information included in this Annual Report constitutes forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking information is often,
but not always, identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”,
“plan”, “continue”, or similar expressions suggesting future outcomes or events or the negative thereof. Forward-looking information in this Annual Report includes, but is not limited to,
statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or
expectations. Such forward-looking information reflects management’s beliefs and is based on information currently available. All forward-looking information in this Annual Report is qualified
by the following cautionary statements.
Although Guardian believes that the expectations reflected in such forward-looking information are reasonable, such information involves known and unknown risks and uncertainties which
may cause Guardian’s actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such
forward-looking information. Important factors that could cause actual results to differ materially include but are not limited to: general economic and market conditions, including interest
rates, business competition, changes in government regulations tax laws or tariffs, the duration and severity of pandemics, natural disasters, the military conflicts in various parts of the world
as well as those risk factors discussed or referred to in Guardian’s Management’s Discussion and Analysis and the other disclosure documents filed by Guardian with the securities regulatory
authorities in certain provinces of Canada and available at www.sedarplus.ca. The reader is cautioned to consider these factors, uncertainties and potential events carefully and not to put
undue reliance on forward-looking information, as there can be no assurance that actual results will be consistent with such forward-looking information.
The forward-looking information included in this Annual Report is presented as of the preparation date of this Annual Report and should not be relied upon as representing Guardian’s views as
of any date subsequent to the date of this Annual Report. Guardian undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information,
whether as a result of new information, future events or otherwise.
06
FINANCIAL
HIGHLIGHTS
09
CHAIRMAN’S MESSAGE
08
ENRICHING LIVES
TOGETHERTM
TABLE OF
CONTENTS
10
PRESIDENT AND CHIEF
EXECUTIVE OFFICER’S
MESSAGE
12
REVIEW OF
OPERATIONS
17
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
31
TEN YEAR REVIEW
32
MANAGEMENT’S
STATEMENT ON
FINANCIAL REPORTING
33
INDEPENDENT
AUDITOR’S REPORT
36
CONSOLIDATED
FINANCIAL
STATEMENTS
40
NOTES TO
CONSOLIDATED
FINANCIAL
STATEMENTS
71
DIRECTORS
AND PRINCIPAL
EXECUTIVES
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Annual Report 2024 | Guardian Capital Group Limited
2024 IN FOCUS
FINANCIAL
HIGHLIGHTS
NET REVENUE
INCREASE FROM
LAST YEAR
$323.4M
34%
2020
2020
2020
2021
2021
2021
$139.2M
2022
2022
2022
$194.0M
2023
2023
2023
$201.0M
2024
2024
2024
$241.2M
$323.4M
TOTAL CLIENT ASSETS
INCREASE FROM
LAST YEAR
$169.0B
188%
$46.0B
$60.7B
$53.3B
$169.0B
$58.8B
OPERATING EARNINGS
DECREASE FROM
LAST YEAR
$38.8M
35%
$35.9M
$54.9M
$44.1M
$38.8M
$59.8M
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Annual Report 2024 | Guardian Capital Group Limited
1 These terms are not standardized measures under IFRS, and therefore are unlikely to be comparable to similar measures presented by other companies. Descriptions of these non-
IFRS measures, as well as reconciliations to IFRS measures, when applicable, are provided under “Non-IFRS Measures” in the Management’s Discussion and Analysis.
EBITDA PER SHARE1 (DILUTED)
DECREASE FROM
LAST YEAR
$2.82
14%
$1.58
$2.42
$2.32
$2.82
$3.29
SECURITIES PER SHARE1 (DILUTED)
DECREASE FROM
LAST YEAR
$49.38
6%
$23.23
$28.27
$25.31
$49.38
$52.44
DECREASE FROM
LAST YEAR
$2.28
18%
ADJUSTED CASH FLOW FROM
OPERATIONS PER SHARE1 (DILUTED)
$1.30
$1.90
$1.55
$2.28
$2.79
INCREASE FROM
LAST YEAR
$53.76
9%
SHAREHOLDERS’ EQUITY
PER SHARE1 (DILUTED)
$25.69
$31.53
$29.43
$53.76
$49.39
2020
2020
2020
2020
2021
2021
2021
2021
2022
2022
2022
2022
2023
2023
2023
2023
2024
2024
2024
2024
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Annual Report 2024 | Guardian Capital Group Limited
ENRICHING LIVES
TOGETHER
In Guardian Capital Group Limited’s more than 60-year history, we have been guided by a determination to behave authentically and ethically,
and in a way that respects all of our stakeholders: our clients, associates, business partners, shareholders, and the communities in which
we live. Our people and the strength of our culture and ethics are what make us all proud to be a part of this firm, and our core values of
authenticity, integrity, stability, and trustworthiness, speak to this focus. We are driven by a vision to be the guardian of our clients’ financial
well-being, and we have a mission to protect, grow, and harvest wealth for current and future generations. We have encapsulated these
guiding principles through the establishment of Enriching Lives Together™, an initiative designed to reflect the fulfillment of these principles
for the benefit of our clients and our organization.
The Enriching Lives Together™ initiative enriches our stakeholders holistically, by supporting the creation of a safe, respectful, and enlightened
environment. Additionally, this ethos is manifested through our belief that by contributing time, resources, and community involvement, we
will have a more direct and immediate impact at different levels of society.
To expand our reach and ability to help others, we start from within. Our internal research gives us confidence that our employees have a
favourable view of Guardian when compared to other firms. With that said, we know we will always have room for improvement, and we are
working to close this gap, conceptualizing, and following through on ways to enrich the environment Guardian provides to our staff. It is from
this perspective that our holistic approach to people management at Guardian encompasses talent development, motivation, retention, and
hires across all our entities. Our associates are not merely technically proficient, they strengthen the fabric of the firm by bringing different
views, voices and values to how we conduct our business.
Looking outward, our employees raised tens of thousands of dollars in 2024 to support our communities. Together with Guardian, raised
funds were donated to support those impacted by the devastation wreaked by Hurricane Helene, on North Carolina, the home state of our
colleagues at Sterling Capital Management, and to the Food Banks Canada to raise awareness and support for their mission.
Across the country and historically, we have privately and publicly advanced an agenda that focuses on, directly and at the grassroots level,
supporting families and individuals, which, in addition to the efforts noted above, has impacted seniors, women’s shelters, children’s, and
special needs charities. There is much more work to do, but we are proud to see the effect these and other initiatives have on those who can
truly use our help.
Launched in September 2021, the Guardian Capital Indigenous Student Awards funds annual educational grants for Indigenous students by
supporting their post-secondary education within Canada. For the 2023-2024 reporting period, financial support was granted to four students
from communities located in the Northwest Territories, Ontario, and Saskatchewan, who are pursuing studies in a variety of disciplines,
including social studies, Indigenous governance, justice and consumer services.
Our industry is renowned for providing resources to advisors and financial intermediaries to further their education. Another equally vital area
that we fully support and promote is investor education. In recognizing the unique challenges women face in developing financial well-being,
in 2022, we launched Guardian Women, a thriving community of women to connect and empower each other to master and enhance their
financial literacy.
Guardian is committed to identifying concrete means of enriching lives in ways that align with our core beliefs. We believe we can create
positive outcomes both inside and outside the firm, and we will continue to align our focus with the knowledge that each of us at Guardian
has the opportunity to make a difference in the lives of the people with whom we come into contact every day.
Enriching Lives Together™ represents all of this, and, as such, is, by design, a thoughtful and constant work in progress.
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Annual Report 2024 | Guardian Capital Group Limited
Dear fellow shareholders,
Guardian Capital Group Limited ended 2024 as a strong, well-capitalized financial services company, concentrated on its operations and
delivering for our clients in our global operations. Guardian’s performance in a year of change demonstrated the benefits of focusing on its core
businesses and cautious risk appetite.
As I reported last year, in keeping with the new five-year Strategic Plan, our Management team identified a strategic acquisition and closed on
the transaction for Sterling Capital Management LLC, midway through 2024. The important task of transition continues with this and further
recent acquisitions.
Our performance and strong capital position also supported the payment of consistent and higher dividends and continued the share buy-back
program returning value directly to shareholders.
Given Guardian’s liquidity and earnings, your Board has again determined to augment the portion of the operating cash flows towards increasing
the quarterly dividend as we did last year. Accordingly, the Board has declared a quarterly dividend of $0.39 per share, an increase of 5%,
payable on April 11, 2025 to shareholders on record on April 18, 2025.
Looking ahead, we believe that Guardian has a team and leaders with integrity and enormous capabilities who are committed to building on the
Company’s future successes. President and Chief Executive Officer, George Mavroudis leads our seasoned leadership team that reflects integrity
and high standards of professional excellence achieving consistent results across our financial services businesses in multiple jurisdictions. We
appreciate and thank our associates for their dedication and commitment while continuing to keep our customers as a foundational principle.
We believe that your Board brings a robust skill set and expertise, which we will continue to employ focused on Guardian’s strategic growth
opportunities. I acknowledge each of our board members for their continued wise counsel, insight, and sound business acumen in support
of our management team and Guardian. The Board and its committees meet regularly, encouraging robust and diverse discourse and remain
unswerving in ensuring our oversight and governance practices while dedicated to constantly reviewing and broadening our perspectives.
In all things, we remain resolute in our efforts to provide outstanding value to our shareholders. Once again, the Board extends its acknowledgment
to our clients and stakeholders for the opportunity to serve them, and to our shareholders for their ongoing confidence.
On behalf of the board of directors,
MESSAGE FROM THE
CHAIRMAN
James Anas | Chairman of the Board
February 27, 2025
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Annual Report 2024 | Guardian Capital Group Limited
MESSAGE FROM THE
PRESIDENT & CEO
Dear Shareholders,
In 2024, we achieved significant growth in some key top-line metrics, more than tripling our client assets to a record $169 billion, alongside
a 45% increase in management fee revenue compared to the previous year. This success is largely due to our acquisition of Sterling Capital
Management (“Sterling”) which we closed mid-year, advancing us towards our five-year strategic plan outlined in last year’s shareholder letter.
Our plan focuses on diversifying investment strategies, client segments, and geographical reach, aiming to double our Operating Earnings and
Earnings Before Interest Tax Depreciation & Amortization (“EBITDA”) from our asset management business operations by the end of fiscal 2028.
This would imply a target of approximately $80 million in Operating Earnings and more than $100 million in EBITDA, before any contributions
from our balance sheet investment income.
Our plan to double Operating Earnings and EBITDA is expected to follow a “J” curve trajectory, with initial higher investments and expenditures
that drag these key metrics in the initial years of the five-year plan but finally looking to unlock targeted earnings in the latter years. In 2024, our
increased expenditures include technology costs, organic growth investments, integration costs of Sterling, and our continuing multi-year plan for
key executive successions all have the effect of a drag on profitability. Details on how much these specific areas of investment have dampened
our overall profitability and how these investments will either recede or deliver improved revenues for future periods are shared below.
Before we comment on some of the investments being made across the Group or celebrate top-line achievements, we are most preoccupied with
the many threats to maintaining our relevance to clients. Remaining relevant with strategies that clients seek and performing to their expectations
is likely the greatest risk to our business plans. The phrase, “comparison is the thief of joy,” highlights the expectations of those who trust us
with their financial assets. Client accounts across most mandates have largely experienced increased levels of asset value as we deliver healthy
absolute or risk-adjusted investment returns. With higher levels of clients’ assets this, in turn, drives higher management fees we earn. However,
investment portfolio performance is often compared against peers and benchmarks, and the latter in particular leaves us with less joy than what
the headline returns have delivered. The most recent cycle of concentrated euphoria for the top tech/artificial intelligence-driven publicly listed
companies (i.e., the so-called Magnificent Seven: Facebook, Apple, Amazon, Microsoft, Google, Nvidia and Tesla) has made comparisons in the
investment management industry most difficult.
We remain committed to active equity strategies that invest with a high conviction, benchmark-aware but somewhat agnostic to the construction
of our portfolios, as we focus on delivering results that align with our long-term investment success and client expectations. We are prepared to
navigate challenges with our equity strategies, confident in our financial strength but mindful of our clients’ patience. In 2024, we faced higher
levels of net outflows from certain equity strategies we manage, particularly from our UK-based global concentrated equity strategy, which
experienced notable underperformance relative to core benchmarks. Despite this, we are encouraged that many clients continue to understand
and support our investment process and expertise. Retaining client investments during this period of underperformance is crucial to our future
success. While some of our US and Global fundamental active equity strategies face challenging comparisons, we take pride in our quantitative,
AI-driven equity strategies and extensive fixed-income offerings, which have performed significantly better than most peers and benchmarks.
Both strategy sets have seen positive client inflows and offer a robust growth pipeline as we head into 2025. This underscores the advantages
of maintaining a diversified portfolio of client assets and strategies.
Renovating your home
There is a sense that the various initiatives we have undertaken to improve our fortunes in the future mirror in many ways the commitment made
by a homeowner to upgrade the value and quality of their home with substantial renovations while living through that process. For many of us
who have experienced such a project, you will be able to relate to the anxiety experienced when the cash outlays are constant and frequent,
and yet the immediate return is only total chaos as you live amongst torn down walls, dust everywhere, and a creeping feeling of regret as
you contemplate whether you made the right decision to renovate. The process is one you wouldn’t want to repeat too often; however, upon
completion of the project, when the final product aligns with your initial vision, there is immense satisfaction and appreciation for the value you
have created. Guardian has embarked on renovating our home and this effort is not without costs or a strong resolve to deal with the challenges
posed by any renewal one undertakes.
Since late 2023, we have been upgrading the behind-the-wall technology infrastructure that includes our front-, middle-, and back-office
systems, with an anticipated total project implementation cost of $20 million. In 2024, the financial results included more than $7 million
of incremental technology spend and increased our budget to $10 million for fiscal year 2025. We expect to complete this major technology
project by year-end, normalizing expenditure by 2026 and, although the new run-rate will be more than those of our older systems, we expect a
meaningful reduction in technology spend from the 2024 levels.
We also continue to add to our asset management capabilities. One of the larger financial commitments over the past couple of years has been
our effort to stand up a private smart infrastructure strategy, launched in early 2022, focusing on opportunities where proven technologies can
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Annual Report 2024 | Guardian Capital Group Limited
enhance existing infrastructure assets. Aside from funding approximately $3.6 million to date in operating losses, we have also provided seed
capital and bridge financing, totalling over approximately US$95 million for the first asset acquired by the strategy in the traffic management
space. After more than two years, and countless meetings with prospective investors, we anticipate reaching an inflection point in 2025, as we
begin to offset some of the in-place expenditures with new client revenues and ultimately eliminate operating losses, or even better, contribute to
overall profitability by 2026. In the meantime, the traffic management platform the fund acquired is performing as expected and has successfully
been awarded a number of recent tenders across the global network of clients it serves. Given growing investor interest in this segment and
operating one of the leading platforms of intelligent traffic management companies, our first investment in this strategy leaves us hopeful of
delivering to our clients, invested alongside us, on our stated double digit internal rate of return expectations over time.
Investing in our portfolio management capabilities has also been matched by investing in improving our distribution capabilities in Canadian
retail. Our retail investment vehicles include an updated lineup of mutual funds and an expanding suite of active Exchange-Traded Funds (ETFs).
This initiative is aimed at expanding our target client segments and enhancing retail distribution capabilities, ultimately increasing firm revenue.
Although asset growth has been slower than anticipated, we see promising incremental new sales success. In 2024, our Canadian retail mutual
funds, ETFs, and Separately Managed Wrap accounts experienced significant net sales growth of approximately $500 million. Total Canadian
retail assets under management, including sub-advisory mandates, reached an all-time high of more than $13.5 billion. More importantly, the
number of advisors utilizing our direct investment vehicles of mutual funds and ETFs in 2024 has more than doubled to over one thousand actively
engaged financial advisors. The financial success of this broad endeavour to build a more committed presence along the retail segment of asset
management has yet to realize the meaningful contributions expected as we initiated this strategic move. However, the opportunity for revenue
growth to now significantly exceed any further expenditure is much greater as a large amount of the base investment has already been funded and
any growth in net sales and related new revenues will make a larger contribution towards reducing operating losses in this business going forward.
The strategic plan for the next five years always contemplated acquisitions as a complement to all the work we have in building out our growth
through organic investments. Given our solid financial footing and agility, a major strategic addition was achieved with the acquisition of
Sterling in 2024, presenting exciting growth opportunities albeit with some near-term financial noise. This acquisition required a non-recurring
investment of more than $14 million in transaction and integration costs in fiscal 2024, overwhelming the run rate of profitability we expect from
this acquisition. There are likely some more one-time integration costs to be incurred in 2025 but at much lower amount than in 2024. We are
excited to own a larger platform in the US and although it has only been a few months since we closed this transaction, we are already seeing
the potential of operating at a larger scale in the competitive and large financial asset base that the biggest market in the world has to offer.
As we pursue these varied goals, managing business continuity risk effectively is crucial during this transition. We have been strategically building
the depth of our human talent and leadership capabilities to ensure a smooth transition to the next generation of key successors. Although this
has the effect of increasing our employee compensation costs, we see it as essential for executing a seamless long-term succession. We expect
compensation ratios, relative to revenues, to stabilize and eventually decline over the next few years as we transition to future leaders and reduce
leadership redundancies.
Our experience has taught us that building new skills, whether they are operations, distribution or portfolio management, these new capabilities
often take longer than expected, but maintaining a long-term perspective can yield significant rewards. It is never enjoyable or comfortable in the
middle of a renovation, but the key is to remain committed to the vision as it has historically delivered great value creation to our shareholders.
Looking forward, we continue to maintain financial strength and flexibility, with the year-end fair market value of securities totalling over $1.2
billion, much of which is available in daily liquid marketable securities. We have also continued returning capital to shareholders, buying back
583,000 shares or more than 2% of all outstanding shares in 2024 for $24.9 million while increasing the quarterly dividend by 9%, paying
$35.6 million in total dividends for fiscal year 2024.
Our journey towards building resilience and relevance is supported by the unwavering guidance of our Board of Directors. I thank them for their
wise counsel and leadership, which have been instrumental in helping us achieve our objectives.
Of the many plans we desire to execute none are possible without the trust of our clients and the ability to attract and retain a dedicated team
of associates who are committed to driving forward our success. We are always appreciative of the faith clients have bestowed on us to manage
their assets and I am deeply grateful to all our associates at Guardian who continue to work with tireless dedication and perseverance to meet
the needs of our clients.
Lastly, to our shareholders, we are grateful for your alignment with our long-term vision and thank you for your steadfast support and commitment
to our mission.
We look forward to the opportunities and challenges ahead, confident in our strategy and committed to delivering sustainable growth and value.
Together, we will navigate the path forward, building on our successes and addressing any hurdles with resilience and determination.
Sincerely,
George Mavroudis | President and Chief Executive Officer
February 27, 2025
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Annual Report 2024 | Guardian Capital Group Limited
REVIEW OF
OPERATIONS
Institutional Investment Management
2024 was a transformational year for Guardian, with our acquisition of Sterling Capital Management, LLC (“Sterling”) significantly increasing
our presence in the United States and materially increasing the assets we manage or advise on behalf of our clients, which include asset under
management (“AUM”) and assets under advisement (“AUA”) (together “Total Client Assets” or “Client Assets”). The Review of Operations below
discusses the Investment Management Segment by the client channels that we distribute through as well as Guardian’s key investment strategies.
Guardian’s investment management services are provided by Guardian Capital LP (“GCLP”), GuardCap Asset Management Limited (“GuardCap”),
Sterling, Alta Capital Management, LLC (“Alta”), Agincourt Capital Management, LLC (“Agincourt”), Galibier Capital Management Ltd. (“Galibier”),
Guardian Partners Inc. (“GPI”), which was combined with Guardian Capital Advisors LP (“GCA”) on December 31, 2024 to operate as one
business, Guardian Capital Real Estate Inc. (“GCREI”), Guardian Smart Infrastructure Management Inc. (“GSIM”), , Rae & Lipskie Investment
Counsel Inc. (“RaeLipskie”), Alexandria Bancorp Limited (“ABL”) and Modern Advisor Canada Inc. (“Modern Advisor”). Guardian serves pension
plan sponsors, broker-dealer third-party platforms, insurance company segregated funds, exchange-traded funds, mutual funds, endowment
funds, foundations, retail intermediaries and high- and ultra-high-net-worth clients. Its capabilities span a range of asset classes, geographic
regions and specialty mandates. These entities are the successors to Guardian’s original investment management business, which was founded
in 1962.
Guardian’s investment management solutions are distributed through the Institutional Channel, the Retail Intermediary Channel and the Private
Wealth and Other Channel. As at December 31, 2024, Guardian’s Total Client Assets were $169.0 billion, increased from $58.8 billion at the
end of 2024. Of the total increase, approximately $109 billion was associated with the businesses of Sterling and Galibier, which were acquired
during the year.
Distribution Channels
i. Institutional Channel
Guardian has continued its efforts to broaden asset management reach through expanded distribution to most parts of the developed world
and in several developing markets. The acquisition of Sterling in mid-2024 significantly increased Guardian’s distribution capabilities in the
United States and increased the breadth of our product offerings. While competition for opportunities in institutional markets remains high, we
nonetheless believe that the growth of our proprietary distribution capabilities and capacity is validated by our continued success in attracting a
variety of institutional investor types to our marquee strategies from multiple points of origin.
The Client Assets managed for institutional clients was $105.2 billion at the end of 2024 with $98.0 billion of it being for those clients outside
of Canada, compared to $31.3 billion at the end of the prior year with $23.4 billion of it for those clients outside of Canada.
Within the United States, institutional distribution represents the largest segment by AUM. As at December 31, 2024, institutional Client Assets
in the US were approximately $89.4 billion, reflecting the contribution of Sterling’s institutional business. In comparison, as at December 31,
2023, institutional Client Assets in the US were approximately $11.8 billion. The majority of institutional Client Assets in the US are in fixed-
income mandates. Agincourt and Sterling have both seen significant support from their core institutional client base, who have been adding
assets to existing mandates, as well as demonstrating success with new clients. Agincourt’s long-term relationships with investment consultants
and Outsourced Chief Investment Officer (“OCIO”) clients continue to serve as the principal source of growth opportunities for it. Sterling’s focused
approach on key market segments and long-standing relationships as well as investment consultants, is also yielding strong results. Sterling
manages money for some of the largest pension and institutional clients in the United States, and their inclusion in the Guardian business has
dramatically accelerated our strategy of an elevated profile for Guardian and a drive for more business opportunities in the largest market of
financial assets in the world.
Within Canada and the rest of the world, institutional Client Assets stood at $15.8 billion as at December 31, 2024, reflecting a healthy balance
between Canadian and Global Equities, and Canadian Fixed Income. During the year in review, new business activity was focused on areas of
competitive strength, for example with liability driven investing mandates in Fixed-Income and pockets of demand for Global Equities. In addition,
we have built momentum with third-party investors as part of our fundraising for GSIM, with committed capital totaling $149 million at year end,
including Guardian’s seed investment. Otherwise, it has been a priority to stay close to Guardian’s existing institutional clients, many of whom
are, themselves, going through organizational change which can bring about shifts in investment priorities. The pressure on our institutional
business in Canada is unrelenting – whether caused by larger clients taking investment mandates in-house to reduce expenses or using public
market assets as a source of funds to build private markets allocations. These trends have persisted for many years and oblige us to ensure we
continue to provide best-in-class investment solutions and client service.
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Annual Report 2024 | Guardian Capital Group Limited
Guardian also has institutional clients outside of Canada and the United States, primarily related to GuardCap in London, UK. GuardCap’s
distribution reach has expanded over its ten-year existence, and now covers most developed markets around the world, and selected markets in
Asia and Latin America.
Growth in GuardCap has been notable in the period since the late 2010’s but stalled somewhat in 2024. The base of clients investing in
GuardCap’s solutions remains a model for how we would like to see Guardian’s other institutional businesses develop over time. GuardCap
is doing business in multiple channels with clients in the Americas, in the UK and throughout the Continental Europe, and in both Asia and
Australia.
It is well documented that equity markets, particularly in the US, have witnessed historically narrow leadership in each of the past two years,
with the so-called “Magnificent Seven” names featuring as part of this phenomenon and responsible for much of the benchmark performance.
While our marquee strategies have continued to deliver attractive positive absolute returns, matching forecasts and meeting set expectations
in the process, they have nonetheless lagged relative to equity index benchmarks in recent times. A number of our investors, particularly in the
institutional channel, have proven less tolerant of near-term relative underperformance than might have been expected. A combination of near-
term relative underperformance and the market trends described above contributed to some net outflows during the year.
ii. Retail Intermediary Channel
During 2024, Guardian’s retail intermediary segment in the US was also dramatically enhanced through the acquisition of Sterling, which
added a fully developed mutual fund and Exchange-traded Funds (“ETF”) platform, a material separately managed account (“SMA”) and unified-
managed accounts (“UMA”) business and strategically important distribution relationships to Guardian’s business. At the end of 2023, the retail
intermediary distribution channel, which consisted of Alta’s business, the Guardian suite of mutual funds governed by US securities laws (the
“40 Act Funds”), and SMAs of other Guardian strategies offered in the US had Client Assets of $6.5 billion. By the end of 2024, the assets in
the US retail intermediary distribution channel had grown to $39.3 billion, reflecting those legacy mandates as well as the addition of Sterling’s
Client Assets in the retail intermediary channel. With broad distribution that includes some of the largest US broker dealers, independent dealers
and registered investment advisory firms, Guardian’s strategic plan in the retail intermediary channel has been materially enhanced through the
acquisition of Sterling.
In Canada, Guardian’s retail distribution channel has evolved meaningfully over the years. After the sale of Guardian Group of Funds in the early
2000’s, the buildup of retail business centred on relationships with retail intermediaries, primarily with the large banks and independent broker
dealers. Success was a function of growing mutual fund sub-advisory relationships and in the SMA space. Over the years, Guardian has also
built a range of proprietary mutual funds and multi-asset funds-of-funds. In recent years, this has extended to the launch of ETFs as they have
rapidly become a ‘vehicle of choice’ for retail advisers. Today, our retail client base is well balanced across channels, and now includes both
direct distribution of ETFs, mutual funds and SMA through the retail advice channels, as well as strong sub-advisory relationships. We maintain
a leading position in the SMA market and UMA wrap programs with the top broker-dealers in the country, including all big six bank-owned
broker-dealers and the largest independent dealers. At December 31 2024, Canadian retail Total Client Assets grew to $13.5 billion from $11.4
billion at December 31, 2023.
iii. Private Wealth and Other Channel
Guardian’s third distribution channel includes the private client, OCIO, international private bank and digital-advisory businesses. Guardian’s
Total Client Assets in this channel were $11.0 billion at the end of 2024, an increase of $1.4 billion since the end of 2023.
Guardian Partners Inc. (the business which was combined with Guardian Capital Advisors on December 31, 2024), RaeLipskie, Modern Advisor
and ABL provide wealth management and OCIO services to high- and ultra-high-net-worth families, foundations, endowments, charities, select
pension plans and other retail investors.
As the trusted advisor to our clients, Guardian manages discretionary portfolios consistent with their investment goals and objectives. The risk-
based approach, combined with Guardian’s institutional research in domestic and global investments, allows us to build well-structured and
globally diversified client portfolios. Financial planning along with collaborative work with clients’ financial, legal, accounting, insurance and other
advisors, ensures a holistic and integrated approach to wealth management. The OCIO practice focuses on working with ultra-high-net-worth
clients, the board and management of foundations, endowments and select pension plans who value the investment advice, governance oversight
and comprehensive reporting and expertise. One of the key differentiators of Guardian in the OCIO space is that we begin with independent advice
and research that aligns them with the objectives of the client.
In 2024, Guardian’s Private Wealth businesses continued to invest in marketing and brand awareness through increased focus on publication
and distribution of thought leadership, digital marketing and brand awareness with a community focus. Events such as Guardian Women were
augmented with webinars, local office and industry focused events as well as charitable participation.
Guardian’s Investment Strategies
i. Canadian Equity
Canadian markets turned in their best performance in three years, with the S&P/TSX Composite Index up 21.6% as moderating inflationary
pressures and the resulting relatively proactive approach to easing monetary policy by the Bank of Canada served as support for the domestic
economy and proved constructive to stocks. That strong overall gain, however, masked the significant divergences across segments of the market
that have come to characterize the last few years, with those more growth-focused areas outperforming while the more value-oriented stocks
lagged — and this factored into the Canadian equity benchmark again trailing its neighbour to the south by a wide margin.
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Annual Report 2024 | Guardian Capital Group Limited
Guardian’s various Canadian Equity strategies turned in generally solid performance, however, the more growth-oriented mandates fared relatively
better versus the broad market benchmark. The Canadian Focused Equity and core Canadian Equity strategies outperformed the broad Canadian
market by wide margins while the income/value-biased strategies lagged.
Acquired in September of 2024, Galibier is a Toronto-based investment manager. Galibier offers its three pooled fund products, Canadian
Equities, Global Equities and the Canada/Global Opportunities Fund, primarily to institutional investors. All three funds are concentrated with
around 20-30 names and are absolute return focused.
Galibier employs a rigorous investment philosophy and process called “The Galibier Way”. “The Galibier Way” has two components: first defining
an investable universe of companies which possess five criteria namely a durable competitive advantage, a high-performing management team
with strong ESG adherence, high free cash flow/economic earnings, industry leading balance sheets and are in sectors which offer the potential
for secular growth; and second, proactively determining the intrinsic value of the companies within the investable universe using Galibier’s
rigorous valuation methodology. While the Galibier strategies have underperformed in the more momentum-driven markets of recent years, we
remain confident that our approach will yield positive results for investors.
While growth momentum remains positive into the New Year with the tailwinds of moderating inflation and lower interest rates becoming more
prevalent, the year ahead looks to be another challenging one, as Canadian investors face significant uncertainty with respect to US fiscal policy
that could carry significant implications for the domestic outlook. But with that said, higher-quality companies are expected to overcome these
headwinds and continue to provide attractive valuations which should benefit active managers with quality-focused investment strategies such
as Guardian.
ii. US Equity
Guardian’s Salt Lake City-based subsidiary, Alta, manages US equity strategies in the US Large Cap Growth and US All Cap Growth categories.
These strategies follow a high-conviction approach, investing in quality growth companies exhibiting a high degree of free cash flow and
sustainable revenue growth. This approach complements Guardian’s company-wide array of high-conviction strategies, both in concept and
investment philosophy.
Sterling actively markets nine active equity strategies covering the spectrum of growth, core, value, large, mid, small, fundamental and systematic.
Sterling has 20 portfolio managers and analysts supporting these strategies from offices in Charlotte, Philadelphia and Virginia Beach. Broadly
speaking, the approaches employed across Sterling center around the cornerstones of high quality, attractive valuation, low turnover, and
concentration driven by deep fundamental analysis. Importantly, all of the strategies at the firm have maintained unwavering consistency of
investment process over their long-term track records.
While it was not a simple matter of smooth sailing on calm seas throughout the last 12 months, the record books will show that 2024 was
another strong year for US markets with the S&P 500 Composite Index up 25.0% to once again outpace its peers. The historically narrow
leadership in the market that once again saw a small number of companies account for the vast majority of gains, however, served as a
challenging backdrop for generating relative performance gains.
The outlook for further consumer-driven growth in the US, moderating inflation and modestly lower interest rates remains constructive for
stocks; however, the rising policy uncertainty under the new Administration in the White House could keep volatility elevated and benefit those
investments strategies that place an added emphasis on quality in their security selection, which should be supportive for many of our strategies
across the group.
iii. Global Equity
Guardian has two global equity strategy teams: the Toronto-based i3 InvestmentsTM Team follows a quantitative approach; and the London
UK-based team follows a fundamental approach, with a focus on quality growth companies combined with a high-conviction mindset. These
strategies serve as strong complements to each other and provide a broader set of choices for investors.
The i3 InvestmentsTM Team’s Global Quality Growth strategy materially outperformed its benchmark as the pro-growth market environment served
as a tailwind for the mandate. The Global Dividend Growth strategy, which accounts for the majority of the team’s AUM, trailed the broad global
equity benchmark, however, it did handily outperform its dividend-focused benchmark and its main competitors.
The i3 InvestmentsTM Team continues to research and develop artificial intelligence for use in portfolio construction, with the output from using
these methods now making up a sizeable component of their models. These continued enhancements in a fast-evolving field have contributed to
significant improvements in returns and are expected to further support the growth of this team in the future.
GuardCap, Guardian’s London, UK-based subsidiary, manages the Fundamental Global Equities strategies.
The historically narrow market leadership of stock markets over the last few years has proven difficult for the Fundamental Global Equities
strategy, which materially underperformed its benchmark for the fourth straight year in 2024 after a period of exceptional outperformance,
where five years out of the previous six were well ahead of benchmark. These market dynamics have plagued competing high-conviction global
fundamental Managers in a sign that the investing style has fallen out of favour — the Managers believe that the fundamentals of portfolio
holdings continue to deliver the desired double-digit growth which should translate into better performance.
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Annual Report 2024 | Guardian Capital Group Limited
iv. Canadian Fixed Income
Guardian’s Canadian Fixed-Income mandates cover a broad range of profiles, addressing various combinations of parameters such as duration,
types of issuers, currencies and risk profiles. In addition, many portfolios are highly customized to meet specific client needs.
It was another highly volatile year for bond markets as investors balanced the impact of the further easing of monetary policy worldwide (including
175 basis points worth of cuts by the Bank of Canada) against the upward pressure on longer-term yields due to rising inflation expectations
and a renewed focus on fiscal sustainability. The FTSE Canada Universe Bond Index finished the year up a decent 4.2% with shorter duration
and corporate credit outperforming.
Guardian’s core Canadian Bond strategy, which was generally biased toward higher-quality credits, outperformed the domestic bond index and
the corporates-heavy Short Duration Bond mandate beat its shorter-term benchmark, while the credit selection resulted in the Investment Grade
Corporate Bond strategy outpacing both the broad market and its own mid-term benchmark by a wide margin.
Looking forward, the prospects for bond markets appear constructive. Notwithstanding the likelihood that heightened near-term headline risk
associated with politics and the still high degree of uncertainty around the near-term path for monetary policy keeps rate volatility somewhat
elevated in the coming months, the ultimate path of least resistance for domestic market yields is likely to be lower as the continued central bank
easing cycle exerts downward pressure on rates — the impact is likely to be felt more at the front-end of the yield curve where rates are far more
sensitive to monetary policy.
v. US Fixed Income
Guardian’s US Fixed Income strategies are managed by Agincourt, the firm’s Richmond, Virginia-based subsidiary and Sterling, based in
Charlotte, North Carolina. Both teams approach US fixed income investment management similarly to the Canadian team in many ways, as they
invest conservatively in high-quality debt instruments, with an overall duration typically shorter than the benchmark and with an overweight to
credits at the shorter end.
The US Fixed Income teams’ absolute returns in 2024 were modest as the continued resilience of the US economy and potential for adoption of
expansionary fiscal policies posed upside risk to inflation and raised concerns about fiscal sustainability that offset the impact of 100 basis points
worth of policy rate cuts by the Federal Reserve. The yield curve steepened with front-end rates decreasing, but longer rates increasing. The
continued bias, across strategies, toward high-quality credit, particularly in the structured products sector, and a shift in yield curve positioning
that benefitted from a steeper curve resulted in positive relative performance versus broad market benchmarks and peers.
An outlook for modest but positive growth and still moderating inflation against a backdrop of persistent risks to the outlook would appear to be
constructive for fixed income. Guardian believes it is well positioned to increase the size of its business due to the persistent top-tier performance
of Agincourt and Sterling’s strategies combined with the support of Guardian’s expanding distribution capabilities in the United States.
vi. Multi-Asset and Engineered Solutions
Multi-asset class strategies have been a relatively small component of Guardian’s business, but have experienced consistent growth in recent
years. Investors are increasingly recognizing our ability to customize balanced funds and add value by making tactical asset mix decisions using
strategies from Guardian’s growing range of equity and fixed income offerings. The overall performance in these mandates has been positive in
both absolute terms as well as relative to their blended benchmarks amid a challenging market environment in recent years.
Guardian also offers several strategies aimed at generating specific outcomes. These are currently all equity-based and combine a set of
carefully selected stock options specifically focusing on generating cash flow or downside protection. These mandates fared well in the extremely
challenging market conditions experienced that followed their inception in 2019, however, have underperformed in the more recent years as the
option overlays detracted from performance against the decline in volatility and continued strong performance in global stock markets. That said,
the approach to managing risk and generating income (both increasingly important for investors approaching their post-retirement decumulation
phase) has proven to be attractive to investors.
vii. Real Estate
Since 2013, Guardian has been providing clients the ability to invest in real estate through its Guardian Capital Real Estate Fund LP. Guardian’s
highly qualified professional real estate team invests the fund’s assets in a broad range of smaller functional properties located across Canada,
with the intention of providing high and sustainable income for clients, and with the expectation that well-purchased properties may also provide
capital gains to investors. Currently, the team manages gross real estate assets valued at approximately $500 million for the fund. Real estate is an
important asset class for our clients, and the team has established a successful track record of efficiently deploying clients’ capital and generating
consistent returns.
The year 2024 saw bond rates level off for the first half of the year at 5% before starting to decline mid-year, dropping by +/- 175 bps to 3.25% by
the end of 2024. Due to a lag period in the real estate market (time to adjust and market sentiment that the lower rates will remain for an extended
period of time), the effect of these rate drops on property valuations will not be felt until Q1 2025. Therefore, the year 2024 still presented some
valuation headwinds. Amid the continued challenges, the fund once again performed extremely well due to stable income growth in the fund,
including a substantial income growth in two industrial assets in Toronto. All of this led to an increase in the overall total portfolio appraised values
of 3% or $14M year over year.
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Annual Report 2024 | Guardian Capital Group Limited
viii. Smart Infrastructure
GSIM, the manager of Guardian Smart Infrastructure Fund LP, is focused on investing and scaling proven, commercial technologies and digital
business models to optimize efficiency and financial outcomes. It targets large infrastructure opportunities of scale like transit systems, electricity
grids, renewable and energy storage solutions, traffic management systems, airports and other large infrastructure assets. Following GSIM’s successful
acquisition of its seed investment via its Guardian Smart Infrastructure Partners LP fund in 2023, the first group of third-party institutional investors
were admitted into the fund during 2024. We are starting to see increased momentum with in-bound inquiries from third-party investors and expect
rolling commitment closings over the next year to on-board additional third-party LP commitments that have been secured.
Technology Investments
Over the past years, Guardian has been investing in a strategic, multi-year technology enhancement project. Significant efforts and resources were
invested in these enhancements. In 2024, Guardian completed its initial phase of this project. The second, and the largest, phase of this project
is scheduled for 2025. Although this project has added significant costs to our operations in the near term, it will better prepare our business for
future growth. We expect the enhancements to increase our operating efficiencies and provide us with an enriched technology platform to support
continued organic growth and integration of acquired businesses in the future.
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Annual Report 2024 | Guardian Capital Group Limited
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
In accordance with securities regulatory requirements, the management’s discussion and analysis which follows for Guardian Capital Group
Limited, its subsidiaries and other controlled entities (together, “Guardian”) pertains to the year ended December 31, 2024, with comparatives
for the year ended December 31, 2023. Readers are encouraged to refer to Guardian’s Consolidated Financial Statements contained in the 2024
Annual Report. This discussion and analysis has been prepared as of February 27, 2025.
Additional information relating to Guardian and its business, including Guardian’s Annual Information Form, is available on “SEDAR” at
www.sedarplus.ca.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain information included in this Management’s Discussion and Analysis (“MD&A”) constitutes forward-looking information within the meaning
of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of forward-looking terminology
such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or
similar expressions suggesting future outcomes or events or the negative thereof. Forward-looking information in this MD&A includes, but is not
limited to, statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated
future events, results, circumstances, performance or expectations. Such forward-looking information reflects management’s beliefs and is based
on information currently available. All forward-looking information in this MD&A is qualified by the following cautionary statements.
Although Guardian believes that the expectations reflected in such forward-looking information are reasonable, such information involves known
and unknown risks and uncertainties which may cause Guardian’s actual performance and results in future periods to differ materially from any
estimates or projections of future performance or results expressed or implied by such forward-looking information. Important factors that could
cause actual results to differ materially include but are not limited to: general economic and market conditions, including interest rates, business
competition, changes in government regulations, tax laws or tariffs, the duration and severity of pandemics, natural disasters, military conflicts in
various parts of the world, as well as those risk factors discussed or referred to in the risk factors section and the other disclosure documents filed
by Guardian with the securities regulatory authorities in certain provinces of Canada and available at www.sedarplus.ca. The reader is cautioned
to consider these factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information, as there can
be no assurance that actual results will be consistent with such forward-looking information.
The forward-looking information in this MD&A is provided as of the preparation date of this MD&A and should not be relied upon as representing
Guardian’s views as of any date subsequent to the date of this MD&A. Guardian undertakes no obligation, except as required by applicable law,
to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
OVERVIEW OF GUARDIAN’S BUSINESS
Guardian is a financial services company which provides investment management services to institutional, retail and private high and ultra-
high-net worth clients through its subsidiaries. At the end of the current year, Guardian had $169.0 billion of assets under management
(“AUM”) and assets under advisement (“AUA”) (together the “Total Client Assets” or “Client Assets”). Guardian is headquartered in Canada and
operates in Canada, the United Kingdom, the United States and the Caribbean. The Investment Management business is operated through
the Toronto, Ontario-based Guardian Capital LP (“GCLP”), Guardian Smart Infrastructure Management Inc. (“GSIM”), Guardian Capital Real
Estate Inc. (“GCREInc”), the recently acquired Galibier Capital Management Ltd. and Guardian Partners Inc. (“GPI”), which was combined
with Guardian Capital Advisors LP on December 31, 2024, the Waterloo, Ontario-based Rae & Lipskie Investment Counsel Inc. (“RaeLipskie”),
Vancouver, British Columbia-based Modern Advisor Canada Inc. (“Modern Advisor”), the London, UK-based GuardCap Asset Management
Limited (“GuardCap”), the Salt Lake City, Utah-based Alta Capital Management, LLC (“Alta”), the Richmond, Virginia-based Agincourt Capital
Management LLC (“Agincourt”), the recently acquired Charlotte, North Carolina-based Sterling Capital Management LLC (“Sterling”) and the
Caribbean-based Alexandria Bancorp Limited (“ABL”). Guardian also manages its proprietary investment portfolio which had a fair market value
of $1.2 billion as at December 31, 2024.
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Annual Report 2024 | Guardian Capital Group Limited
NON-IFRS MEASURES
Guardian uses certain measures to evaluate and assess the performance of its business, some of which are not defined within IFRS Accounting
Standards (“IFRS”). These measures are EBITDA, EBITDA attributable to shareholders, EBITDA attributable to shareholders per share, Adjusted
cash flow from operations, Adjusted cash flow from operations attributable to shareholders, Adjusted cash flow from operations attributable to
shareholder per share. Other Non-IFRS measures are equity per share, securities, net and securities, net per share. Non-IFRS measures do not have
standardized meanings prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. However,
Guardian believes that most shareholders, creditors, other stakeholders and investment analysts prefer to include the use of these measures in
analyzing Guardian’s results. In the Non-IFRS Measures section of this Management Discussion and Analysis a description of how these measures
are defined by Guardian is provided, with reconciliations to their most comparable IFRS measures.
2024 HIGHLIGHTS
Acquisition of Sterling Capital Management LLC
As previously announced, Guardian completed its acquisition of a 100% equity interest in Sterling, a Charlotte, North Carolina-based investment
management company, from Truist Financial Corporation (“Truist”) on July 2, 2024. On closing, Guardian paid US$68.9 million, based on a
US$70 million base-purchase price, net of various estimated adjustments. These estimated adjustments were finally determined to be US$9.5
million and were paid at the end of October 2024. A series of earn-out incentives of up to US$45 million could also be paid over a 5-year period
from closing, depending on the amount of revenue earned from Truist by Sterling.
This strategic acquisition of Sterling significantly enhances Guardian’s overall scale as a global asset manager, accelerates its expansion plans
in the US market and enhances its platform for future growth in the US market. Sterling currently manages and advises on approximately $108
billion (US$75 billion) of client assets. Since closing, management continues to focus on integrating Sterling with the existing US businesses,
reviewing Sterling’s operations and evaluating its strategic priorities for the near-term.
The following is a summary analysis of Sterling’s Total Client Assets:
As at December 31, ($ in millions)
2024
Distribution channel
Institutional
$
75,509
Retail and intermediary
31,804
Private wealth
745
$
108,058
Asset class
Equities
$
14,420
US fixed income
71,804
Multi-asset solutions
21,833
$
108,058
From the period of acquisition on July 2, 2024 to December 31, 2024 ($ in thousands)
Net Revenue
$
74,183
Operating expenses
65,072
Transitional expenses
10,214
Amortization arising from acquisition
2,428
Total expenses
77,714
Operating loss
(3,531)
EBITDA
$
973
The following is a summary of Sterling’s operating results from the period of acquisition on July 2, 2024 to December 31, 2024:
During the initial period of Sterling ownership, certain expenses were incurred that are expected to be one-time or short-term in nature related to
the transaction and certain initial business integration efforts. These include such expenses as transaction success fees, legal and tax advisory
fees, retention incentives for key employees, and technology and other business integration related costs (all together “Transitional” expenses).
Approximately $10.2 million (US $7.4 million) in Transitional expenses were incurred by Sterling during the period and another $4.2 million
were incurred within the Corporate Activities and Investments Segment. In addition, the accounting for the acquisition of Sterling resulted in new
amortization expenses, which are not part of operating expenses of Sterling. The acquisition accounting related amortization expenses included
in Sterling’s results are $2.4 million (US $1.8 million). Dampened by these expenses, Sterling recorded an Operating loss of $3.5 million (US
$2.6 million) and EBITDA of $0.9 million (US $0.7 million) during the period from acquisition on July 2, 2024 to December 31, 2024.
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Annual Report 2024 | Guardian Capital Group Limited
As at December ($ in millions)
2024
2023
% Inc (Dec)
Distribution channel
Institutional
$
105,221
$
31,295
236.2%
Retail and intermediary
52,781
17,948
194.1%
Private wealth
10,977
9,531
15.2%
$
168,979
$
58,774
187.5%
Asset class
Canadian equities
$
5,718
$
4,661
22.7%
Global equities
20,909
21,781
-4.0%
US equities
19,333
4,298
349.8%
Canadian fixed income
5,222
6,664
-21.6%
US fixed income
85,732
11,839
624.1%
Multi-asset solutions
32,065
9,531
236.4%
$
168,979
$
58,774
187.5%
As Sterling continues to be integrated within Guardian’s organization, it is expected that all U.S. based subsidiaries and operations will be
managed as a consolidated business segment in the future.
Acquisition of Galibier Capital Management LTD
Also as previously announced, Guardian completed the transaction to acquire 100% of Galibier Capital Management Ltd. (“Galibier”), an
independent, Toronto-based investment management firm on September 3, 2024. Guardian paid $3.6 million on closing and is subject to
further earn-outs of up to $7.5 million based on certain metrics related to Total Client Assets on the one-year anniversary date from closing and
again on the 5th anniversary date. The acquisition will enhance Guardian’s Canadian equity investment capabilities and has added $1.1 billion
in Total Client Assets on closing.
TOTAL CLIENT ASSETS
The following is a summary of Total Client Assets managed and advised by Guardian:
For the years ended December 31 ($ in millions)
2024
2023
% Inc (Dec)
Beginning of year
$
58,774
$
53,302
10.3%
Acquisitions
105,231
–
–
Net additions from (withdrawals by) clients
(10,629)
(500)
2025.8%
Net market appreciation
15,603
5,972
168.4%
End of year
$
168,979
$
58,774
187.5%
The following is an analysis of the change in Guardian’s Total Client Assets:
Guardian is reporting Total Client Assets of $169.0 billion as at December 31, 2024, compared to $58.7 billion at the end of the prior year. The
increase in Total Client Assets since December 31, 2023, can primarily be attributed to the acquisitions of Sterling and Galibier, which added
$105.2 billion on closing, and the impact of positive market performance, partially offset by the net outflows of Client Assets. Included in the
impact of market performance are the effects of changes in foreign currency exchange rates against the Canadian dollar. The outflows during
the current year were due largely to continued industry wide headwinds of internalization of investment management functions and allocation
of assets to alternative asset classes by institutional clients. This coincided with recent relative underperformance by certain of our investment
strategies, contributing to the net outflows. Improved relative performance will be an important factor in weathering these headwinds.
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Annual Report 2024 | Guardian Capital Group Limited
For the years ended December 31, ($ in thousands, except per share amounts)
2024
2023
% Inc (Dec)
Net revenue
$
323,403
$
241,182
34.1%
Expenses
284,579
181,333
56.9%
Operating earnings
38,824
59,849
-35.1%
Net gains
77,444
57,787
34.0%
Net earnings before income taxes
116,268
117,636
-1.2%
Income tax expense
14,670
15,474
-5.2%
Net earnings from continuing operations
101,598
102,162
-0.6%
Net earnings from discontinued operations
–
554,933
-100.0%
Net earnings
$
101,598
$
657,095
-84.5%
EBITDA
$
70,874
$
85,424
-17.0%
Adjusted cash flow from operations
57,536
72,763
-20.9%
Attributable to shareholders:
Net earnings from continuing operations
$
100,099
$
100,250
-0.2%
Net earnings
100,099
562,929
-82.2%
EBITDA
68,248
82,247
-17.0%
Adjusted cash flow from operations
54,884
69,581
-21.1%
Per share amounts (diluted):
Net earnings from continuing operations
$
4.10
$
3.99
2.8%
Net earnings
4.10
22.12
-81.5%
EBITDA
2.82
3.29
-14.3%
Adjusted cash flow from operations
2.28
2.79
-18.3%
CONSOLIDATED FINANCIAL RESULTS
In the following discussion and analysis, all referenced terms and line items are those associated with the continuing operations, unless
specifically indicated otherwise.
The comparative financial results of Guardian on a consolidated basis are summarized in the following table:
As at December 31 ($ in millions, except per share amounts)
2024
2023
% Inc (Dec)
Shareholders' equity
$
1,318
$
1,241
6.2%
Securities, net
1,211
1,318
-7.2%
Per share amounts (diluted):
Shareholders' equity
$
53.76
$
49.39
8.8%
Securities, net
49.38
52.44
-5.8%
Guardian’s consolidated Operating earnings and EBITDA for the year ended December 31, 2024 were $38.8 million and $70.9 million, respectively,
compared to $59.8 million and $85.4 million, respectively, in the prior year. As stated above, dampening the current year results were $14.4
million in Transitional expenses associated with the acquisitions of Sterling and Galibier. Current year results were further dampened by the continued
investments in the technology enhancement project, marketing and branding initiatives to support the Retail Asset Management initiative in both
Canada and the US, lower interest income resulting from lower average balances in the short-term securities portfolio, and higher interest expenses
due to higher interest rates on our loan facilities. Funding the acquisition of Sterling and Galibier with short-term securities resulted in interest income
being replaced by earnings from these operating businesses. In the near term, we will experience a reduction in Operating earnings and EBITDA
due to the Transitional expenses. However, once the businesses sheds itself of these Transitional expenses and are fully integrated into Guardian’s
operations, we expect the annual earnings contributions to be substantially accretive to any interest income foregone.
Consolidated Net revenues grew to $323.4 million, a 34.1% increase from $241.2 million in 2023. Net management and advisory fees
increased $85.0 million as compared with last year, with Sterling and Galibier contributing $75.4 million to the increase, while interest income
in the Corporate Activities and Investment Segment decreased by $4.7 million. The latter resulted from lower average balance of interest earning
short-term securities held during the year. Guardian used portions of the short-term securities portfolio to fund payment of tax liabilities arising
from the net gains on the sale of Worldsource in 2023, share buybacks, seed capital for new investment strategies, and the acquisitions of
Sterling and Galibier.
Total expenses in 2024 were $284.6 million, a 56.9% or $103.3 million increase from $181.3 million in 2023. The addition of operating
expenses from Sterling and Galibier increased expenses by $69.1 million, and the Transitional expenses related to the acquisition of Sterling and
Galibier added an additional $14.4 million to consolidated operating expenses. The remaining increase is largely related to our continued multi-
year strategic investments into our technology platform, our Retail Asset Management initiatives in both Canada and the U.S and additional staff
to support all these initiatives. Guardian anticipates investments in technology platform to increase further in the near term, before returning to
normalized levels in the latter half of 2026.
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Annual Report 2024 | Guardian Capital Group Limited
Consolidated Net gains in 2024 were $77.4 million, compared to Net gains of $57.8 million in 2023. The Net gains were largely due to the
increases in fair values of securities driven by the positive performance in the global equities markets in 2024.
Consolidated Net earnings from continuing operations were $101.6 million as compared with $102.2 million in the previous year. The decrease
in net earnings from continuing operations is largely due to the above-mentioned impacts to Operating earnings, partially offset by Net gains.
The discussion on Guardian’s operating results by Segments of continuing operations are provided below. The discussion should be read in
conjunction with Note 20 (a) Business Segments of the Consolidated Financial Statements contained in Guardian’s 2024 Annual Report.
INVESTMENT MANAGEMENT SEGMENT
Selected financial information for the Investment Management Segment is as follows:
For the years ended December 31, ($ in thousands)
2024
2023 % Inc (Dec)
Bank of Montreal common shares
$
18,420
$
19,111
-3.6%
Other securities and securities sold short
64,087
34,804
84.1%
Securities and securities sold short
82,507
53,915
53.0%
Intangible assets
(471)
2,137
-122.0%
Lease and other liabilities
(1,115)
565
-297.3%
Foreign exchange
(3,477)
1,170
-397.2%
$
77,444
$
57,787
34.0%
For the years ended December 31, ($ in thousands)
2024
2023
% Inc (Dec)
Net revenues
$
281,180
$
194,945
44.2%
Expenses
251,802
156,620
60.8%
Operating earnings
29,378
38,325
-23.3%
EBITDA
48,211
52,303
-7.8%
An analysis of the composition of Guardian’s Net gains is as follows:
Investment Management Segment’s Operating earnings and EBITDA in the current year were $29.4 million and $48.2 million, respectively,
compared to $38.3 million and $52.3 million, respectively in the prior year. Included in the current year’s results were Sterling’s and Galibier’s
Operating loss of $3.9 million for the period from the dates of acquisition to December 31 of this year. The combined Operating loss in these entities
was driven by $10.2 million in Transitional expenses associated with their acquisitions.
The Investment Management Segment’s Net revenues in the current year increased by $86.2 million, to $281.2 million, compared to the prior year,
with $75.4 million being contributed by Sterling and Galibier since their acquisitions. We are also pleased to report that GSIM’s Smart Infrastructure
Fund successfully onboarded initial third party investors in the fourth quarter of 2024 and earned its initial revenues therefrom. While third party
commitments to the fund have been modest so far, GSIM is currently in the late stages of onboarding additional mid-sized institutional clients into
the fund, which are expected to be completed in the first half of 2025. The fundraising has taken longer than originally anticipated facing many of
the challenges often experienced with first fund launches, however progress to date has been increasingly positive, as investors continue to show
growing interest in the investment strategy. Our efforts to organically build out a new investment capability with GSIM is yet another example of the
need and ability to remain patient and capable to digest short-term operating losses in order to build future successes. The remaining increase in net
revenue, compared with the same period in the prior year, is driven by increases in Total Client Assets resulting from positive global financial market
performance, partially offset by net outflows over the same period.
Total expenses in the Segment increased $95.2 million, to $251.8 million as compared with the prior year. The increase was due largely to the
addition of operating expenses of Sterling and Galibier of $69.1 million, the Transitional expenses associated with these two acquisitions of $10.2
million, the continuing multi-year strategic investments into enhancing our technology platform, to support our Retail Asset Management initiatives
in both the US and Canada, and the higher compensation expenses reflecting higher management and advisory fees earned during 2024. The
investments into the technology platform enhancements are expected to continue, and slightly increase, in fiscal year 2025 before returning to more
normal levels.
22
Annual Report 2024 | Guardian Capital Group Limited
The Operating earnings and EBITDA in the Corporate Activities and Investments Segment were $9.4 million and $22.7 million, respectively, in
the current year, compared to $21.5 million and $33.1 million, respectively, in the prior year. Included in the current year were $4.2 million in
Transitional expenses associated with the acquisitions of Sterling and Galibier.
The Net revenues in the Corporate Activities and Investments Segment decreased by $2.8 million as compared with the prior year, due largely to
the decrease in interest income earned on short-term securities, partially offset by increase in dividend income. Since the third quarter of 2023,
the investment balance in short-term securities has steadily declined as payment of tax liabilities arising from the net gains realized on the sale of
the Worldsource business in 2023, share buybacks completed during the current year, the seeding of various investment strategies to support the
operating businesses and the acquisitions of Sterling and Galibier were largely funded from the short-term investments, significantly reducing the
interest earning base.
Expenses in the current year were $9.3 million higher than in the prior year, mainly driven by the Transitional expenses incurred, higher interest
expense due to higher interest rates being incurred on the borrowings and the cost of additional hires to support the various on-going initiatives.
LIQUIDITY AND CAPITAL RESOURCES
The strength of Guardian’s balance sheet has enabled Guardian to provide clients with a high level of comfort, maintain the appropriate levels of
working capital in each of its areas of operation, make the necessary capital expenditures to develop and support its businesses, attract strong
associates and make appropriate use of borrowings, including financing the expansion of its businesses.
The hallmark of Guardian’s balance sheet is the significant liquid marketable securities portfolio, as presented below:
For the years ended December 31, ($ in thousands)
2024
2023
% Inc (Dec)
Net revenues
$
44,662
$
47,452
-5.9%
Expenses
35,216
25,928
35.8%
Operating earnings
9,446
21,524
-56.1%
EBITDA
22,663
33,121
-31.6%
CORPORATE ACTIVITIES AND INVESTMENTS SEGMENT
Selected financial information for the Corporate Activities and Investments Segment is as follows:
Guardian’s Securities, net as at December 31, 2024 had a fair value of $1,211 million, or $49.38 per share, diluted, compared with $1,318
million, or $52.44 per share, diluted, as at December 31, 2023. Securities decreased during the year as Guardian used a portion of the holdings
of short-term securities to fund the payments of the tax liabilities arising from net gains realized on the sale of Worldsource in 2023, the closing
payments on the acquisitions of Sterling and Galibier, and the share buybacks completed during the year.
Guardian’s Shareholders’ equity as at December 31, 2024 amounted to $1,318 million, or $53.76 per share compared to $1,241 million, or
$49.39 per share as at December 31, 2023. The increase in shareholders’ equity is largely attributed to net earnings for the year and the net
change in foreign currency translation of foreign subsidiaries recorded in other comprehensive income, offset by dividends and share buybacks
returned to shareholders.
In addition to its sizable marketable securities portfolio, Guardian has, under various borrowing arrangements, total borrowing capacity of $175
million. The total bank borrowing amounted to $144 million at the end of the current year, as compared with $136 million at December 31, 2023.
Guardian generated Adjusted cash flow from operations of $57.5 million during the current year, compared to $72.8 million in 2023.
A reconciliation to its closest IFRS measure is provided in Non-IFRS Measures section of this Management’s Discussion and Analysis.
As at December 31 ($ in millions)
2024
2023
% Inc (Dec)
Securities, carried at fair value
Proprietary investment strategies
Short-term and fixed-income securities
$
88,296
$
79,272
11.4%
Canadian equities
7,936
5,871
35.2%
Global equities
325,464
274,700
18.5%
Global equities sold short
(11,678)
–
-100.0%
Private investments and real estate
161,602
157,157
2.8%
571,620
517,000
10.6%
Bank of Montreal common shares
310,594
292,175
6.3%
Short-term securities
287,491
470,289
-38.9%
Fixed-income securities
–
4,053
-100.0%
Other equities
40,943
34,013
20.4%
Securities, net
$ 1,210,648
$ 1,317,530
-8.1%
Securities, net per share, diluted
$
49.38
$
52.44
-5.8%
23
Annual Report 2024 | Guardian Capital Group Limited
As at December 31, 2024 ($ in thousands)
Payments due by period
Total
Within
one year
2 to 3 years
4 to 5 years
After five
years
Bank loans and borrowings
$
144,126
$
144,126
$
–
$
–
$
–
Third party investor liabilities
127,290
127,290
–
–
–
Client deposits
74,185
74,185
–
–
–
Accounts and income taxes payable
155,655
155,655
–
–
–
Acquisition liabilties and due to non-controlling
interests
38,099
11,016
12,961
14,122
–
Investment commitments
5,329
5,329
–
–
–
Scheduled lease payments, undiscounted
45,737
5,925
11,400
10,558
17,854
Total contractual obligations
$
590,421
$
523,526
$
24,361
$
24,680
$
17,854
Guardian uses its Adjusted cash flow from operations primarily to fund its working capital, quarterly dividends, debt repayments where possible,
and capital expenditures. At current levels of cash flow and anticipated dividend payout rates, Guardian generates sufficient cash flow to meet
its operating obligations, necessary ordinary course capital expenditures, and regular dividend payments.
In 2024, by utilizing its strong balance sheet and cash flows, Guardian returned $35.6 million (2023 - $31.6) in dividends and $24.9 million
(2023 - $42.7 million) in share buybacks to the shareholders. The level of share buybacks can fluctuate from year to year based on the
availability of shares in the market.
On December 13, 2024, Guardian received approval from the Toronto Stock Exchange (“TSX”) for the renewal of its Normal Course Issuer Bid
(“NCIB”), pursuant to which it intends to purchase, during the period from December 19, 2024 to December 18, 2025, up to 136,918 of its
outstanding Common Shares, entitled to one vote per share, and up to 1,507,908 of Non-Voting Class A Shares. Shares may also be purchased
by the trustee (the “Trustee”) for Guardian’s employee profit sharing plan, which purchases will count against the maximum number of shares
which may be purchased by Guardian. In each case, these shares will be purchased at market prices, on the TSX, other designated exchanges
and/or alternative Canadian trading systems. As at December 31, 2024, Guardian acquired 69,792 Non-Voting Class A Shares at an average
purchase price of $40.61 per share and no Common Shares under the current NCIB. All shares purchased by Guardian (but not those purchased
by the Trustee) will be cancelled.
Shareholders may obtain a copy of Guardian’s notice of intention regarding the renewal of its NCIB, without charge, by contacting the Senior Vice-
President, Chief Compliance Officer and Secretary of Guardian at 199 Bay Street, Suite 2700, Commerce Court West, Toronto, Ontario, M5L 1E8.
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:
Guardian’s contractual obligations are supported by its strong financial position, including its securities and its borrowing capacity, referred to
above under “Liquidity and Capital Resources”. Client deposits, in the offshore banking subsidiary, are largely supported by interest-bearing
deposits with banks. The third-party investor liabilities are offset by securities backing third party investor liabilities. Acquisition liabilities
and due to non-controlling interests includes the present value of estimated earn-out liabilities related to the acquisition of Sterling and
Galibier, and obligations due to minority shareholders who may choose to put their non-controlling interest to Guardian. Guardian also has a
commitment to invest $5.3 million in third-party private equity funds and GSIP. Guardian will decide on the appropriate strategy for funding
these obligations and commitments when called upon by the funds.
Years ended December 31, ($ in thousands, except per share amounts)
2024
2023
2022
Net revenue
$
323,403
$
241,182
$
200,996
Net earnings (loss)
101,598
657,095
(37,317)
Net earnings (loss) attributable to shareholders
100,099
562,929
(43,078)
Per share
Net earnings (loss) attributable to shareholders:
Basic
4.30
23.67
(1.76)
Diluted
4.10
22.12
(1.76)
Dividends paid
1.45
1.26
0.90
As at December 31, ($ in thousands)
Total assets
$ 1,952,386
$ 1,733,000
$ 1,364,772
SELECTED ANNUAL INFORMATION
24
Annual Report 2024 | Guardian Capital Group Limited
Guardian’s Net revenue and Operating earnings are most influenced by the level of Total Client Assets as the majority of the revenues are earned
from servicing those assets. Partially offsetting this volatility in Net revenue is the income from Securities, which is more correlated to the size of
the portfolio. However, the volatility in the global financial markets can cause fluctuations in the fair values of Securities, which can result in Net
gains or losses being recorded in those periods.
Summarized below are other factors that contributed to the fluctuations in Net revenues, Operating earnings, Net gains (losses) and Net earnings
(loss) attributable to shareholders.
The Net revenue for each of the quarters above generally trended with the levels of Total Client Assets. However, in the second quarter of 2023,
Net revenue increased significantly due to the increased interest income earned on the proceeds of disposition of Worldsource businesses.
The Net earnings from discontinued operations includes earnings from the Worldsource businesses until the date of the sale and the Net gain
realized on the disposition.
The quarterly fluctuations in shareholders’ equity shown above are caused largely by Guardian’s Net earnings (loss), attributable to shareholders,
less dividends paid and shares repurchased and the impact of the net change in foreign currency translation of foreign subsidiaries recorded in
other comprehensive income . The impact of foreign currency translation of subsidiaries on shareholder’s equity has become more pronounced
following the acquisition of Sterling in the third quarter of 2024. The most significant factor of the increase in the first quarter of 2023 was the
sale of the Worldsource businesses, which resulted in a large net gain being realized in that period.
2024
2023
As at ($ in millions)
Dec 31
Sept 30
Jun 30
Mar 31
Dec 31
Sept 30
Jun 30
Mar 31
Total client assets
$168,979
$ 165,061
$ 58,628
$ 61,316
$ 58,774
$ 56,215
$ 56,527
$ 56,326
For the three months ended ($ in thousands)
Net revenue
$ 98,614
$ 98,128
$ 64,164
$ 62,497
$ 62,245
$ 62,611
$ 61,833
$ 54,493
Operating earnings
7,385
4,790
14,333
12,318
13,097
18,474
17,038
11,240
Net gains (losses)
64,476
39,392
(39,161)
12,737
60,747
(17,358)
(3,736)
18,134
Net earnings (loss) from continuing operations
63,231
39,658
(22,730)
21,441
68,048
(2,270)
11,532
24,852
Net earnings from discontinued operations
--
–
–
–
–
–
–
554,933
Net earnings (loss)
63,231
39,658
(22,730)
21,441
68,048
(2,270)
11,532
579,785
Net earnings (loss) from continuing operations
attributable to shareholders
62,849
39,222
(23,137)
21,167
67,087
(2,506)
11,145
24,524
Net earnings (loss) attributable to shareholders
62,849
39,222
(23,137)
21,167
67,087
(2,506)
11,145
487,203
Per share (in $)
Net earnings (loss) from continuing operations
attributable to shareholders
Basic
$
2.72
$
1.69
$
(0.99)
$
0.90
$
2.85
$
(0.11)
$
0.47
$
1.04
Diluted
2.58
1.60
(0.99)
0.86
2.68
(0.11)
0.45
1.00
Net earnings (loss) attributable to shareholders
Basic
$
2.72
$
1.69
$
(0.99)
$
0.90
$
2.85
$
(0.11)
$
0.47
$
20.27
Diluted
2.58
1.60
(0.99)
0.86
2.68
(0.11)
0.45
18.79
Dividends paid on Class A and Common shares
$
0.37
$
0.37
$
0.37
$
0.34
$
0.34
$
0.34
$
0.34
$
0.24
As at
Shareholders' equity ($ in millions)
$
1,318
$
1,245
$
1,223
$
1,255
$
1,241
$
1,201
$
1,213
$
1,242
Per share (in $)
Basic
$
56.54
$
53.73
$
52.59
$
53.69
$
52.87
$
50.90
$
51.11
$
52.42
Diluted
53.76
50.38
49.34
50.30
49.39
47.54
47.63
48.73
Total Class A and Common shares outstanding
(shares in thousands)
24,647
24,867
24,959
25,136
25,230
25,408
25,609
26,113
SUMMARY OF QUARTERLY RESULTS
The following table summarizes Guardian’s financial results for the past eight quarters.
The increase in Net revenue since 2022 reflects the growth of the business, both organically and through acquisitions, with 2024 including
$75.4 million from the acquisition of Sterling and Galibier. The decrease in Net earnings in 2024 compared to 2023 is largely due the recognition
of $554.9 million in Net gains realized on the sale of the Worldsource businesses in 2023. For the same reason, 2023 Net earnings increased
as compared with 2022.
25
Annual Report 2024 | Guardian Capital Group Limited
RISK FACTORS
Guardian applies many of the same risk management principles to its business as a whole, as it applies to the management of client assets.
One of these principles is that risk can pose challenges, as well as provide opportunities, depending upon the effectiveness of the way in which
it is managed. The following sections discuss the most significant risks and Guardian’s management processes to mitigate them. Readers are
encouraged to refer to Note 22 of the Consolidated Financial Statements, contained in Guardian’s 2024 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 the largest portion of our revenues
are generated from Client Assets. The market fluctuations can be driven by political, economic or other changes in various regions of the world.
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 securities holdings 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 securities, net are subject to the risk of price fluctuations. The potential impact of market fluctuations on the value of Guardian’s
securities is quantified in Note 22 of the Consolidated Financial Statements. Guardian manages this risk through professional in-house investment
management expertise, which takes a disciplined approach to investment management. All securities are held by independent custodians chosen
by Guardian. As at December 31, 2024, Guardian holds $311 million of BMO shares (2023 – $292 million) and $115 million investment in
Guardian Smart Infrastructure Fund A-LP (“GSIP”), GSIM’s smart infrastructure fund, which together represents 35% of Guardian’s securities
(2023 – 31%). Guardian has accepted this concentration risk, as the bank is a diversified company with a history of steady and growing dividend
payments and the investment in GSIP is strategically important in developing our alternative investment capabilities. Guardian has been reducing
its concentrated exposure in BMO over several years, having sold more than half its holdings since the second quarter of 2013. The remainder
of Guardian’s security portfolio is more diversified, from both an asset class and a geographical perspective.
The concentration risks by type as a percentage of total securities is summarized in the following table:
FOREIGN CURRENCY RISK
Guardian’s revenues, expenses and operating results from foreign operations may fluctuate with changes in foreign currency exchange rates
compared to the Canadian dollar. The most significant foreign currency exposure is the US dollar, as the proportion of Guardian’s business
operating in the US market has grown substantially since the acquisition of Sterling. In addition, majority of the non-Canadian dollar denominated
portfolios managed or advised by Guardian are denominated in US dollars. Guardian estimates that for every 1% change in the value of the
Canadian dollar against the US dollar would result in approximately $2.1 million (2023 - $1.4 million) change in Net revenues.
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 (loss), but are recorded in the “Net change
in foreign currency translation on foreign subsidiaries” in Guardian’s Consolidated Statements of Operations and Comprehensive Income, and the
cumulative effect is included in Accumulated Other Comprehensive Income in the Shareholders’ Equity section of the Consolidated Balance Sheets.
From time to time, Guardian may record certain foreign exchange gains (losses) in Net earnings on non-domestic currency cash balances held in
various operations. These balances are monitored by local management and are largely limited to amounts necessary for its operating working
capital needs. Readers are encouraged to refer to Note 22 in the Consolidated Financial Statements for further discussion and sensitivity analyses.
CREDIT RISK
Guardian’s credit risk is generally considered to be low. Due to the nature of Guardian’s business, its receivables are mainly from large institutions,
which are considered to pose a relatively low credit risk, or from high-net-worth individuals where the fees are collected directly from the portfolios
Guardian manages. Guardian periodically reviews the financial strength of all its counterparty banks it deals with within the international private
As at December 31 (as a percentage of securities)
2024
2023
% Inc (Dec)
Bank of Montreal common shares
25%
22%
14%
Intelligent traffic systems company
10%
9%
11%
35%
31%
13%
Canadian equity securities and real estate
5%
4%
25%
Emerging market equities
6%
5%
20%
Developed market equities
23%
18%
-15%
Short-term and Fixed income securities
31%
42%
-26%
100%
100%
0%
26
Annual Report 2024 | Guardian Capital Group Limited
bank business, and if the circumstances warrant it, Guardian takes appropriate action to reduce its exposure to certain counterparties. The credit
risk associated with Guardian’s investment in short-term and fixed-income securities is managed by the monitoring of the activities of the portfolio
managers who, through diversification and credit reviews of the investments, directly manages the credit risk.
INTEREST RATE RISK
Guardian’s most significant exposure to interest rate risk is through its bank loans and borrowings and investments in interest bearing securities.
The interest rates on the borrowings are short-term, and Guardian’s interest expense and net earnings will fluctuate with the changes in short-
term rates. Guardian manages interest rate risk in its international banking operations, through matching the interest rates of client deposit
liabilities with the assets, which consist of interest-bearing deposits with banks or other similar interest-earning instruments. The interest rate risk
associated with Guardian’s investment in short-term and fixed-income securities is managed by monitoring the activities of the portfolio manager,
who manages this risk by positioning the portfolio for various interest rate environments.
LIQUIDITY RISK
Guardian manages liquidity risk through the monitoring and managing of cash flows from operations, by establishing sufficient borrowing facilities
with major Canadian banks, which currently has $30.9 million of the $175.0 million available to be drawn upon through three credit facilities,
and by leveraging the support of its significant securities portfolio. The maturities of Guardian’s contractual commitments are outlined under
“Contractual Commitments” in this MD&A. Management believes the combination of the cash flows from operations, the securities holdings and
the borrowing facilities provides sufficient resources to manage Guardian’s liquidity risk.
REGULATORY AND LEGAL RISK
Guardian and its subsidiaries operate in various geographical regions, subject to various laws and regulations applicable in those regions,
including those applicable to its cross-border businesses. Guardian and its subsidiaries, may, from time to time, be subject to changes in
these laws and regulations, claims or complaints from investment clients and sanctions from governing bodies. These risks are mitigated by
maintaining relevant in-house competence in laws and regulations, compliance and product review oversight, adequate insurance coverage and,
where appropriate, utilizing assistance from external advisors.
The recent disruptions to long-standing trade relations amongst the jurisdictions in which Guardian operate have raised the potential for negative
impact to Guardian’s business. Although the recent tariff announcements have not directly impacted Guardian, the downstream impact of
negative economic and financial market performances resulting from the current and future announcements could have an unfavourable impact
on Guardian’s business, over time. Guardian’s Total Client Assets, from which Guardian earns the majority of its revenues, are diversified by
investment strategies and the geographical domicile of the clients providing some level of mitigation against such disruptions. In addition,
Guardian’s resilient balance sheet affords us the ability to ride out the potential volatility and any resulting depressed earnings.
PERFORMANCE RISK
Product performance risk is the risk that we will not perform as well as the market, our peers, or in line with our clients’ expectations. The nature
of this risk is both relative and absolute. 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 seek to ensure that we are aware of those expectations, and
that we properly communicate with our clients to develop, report on and comply with client mandates on a continuous basis.
KEY PERSONNEL RISK
The success of Guardian is highly dependent on key personnel, including its senior management and investment professionals. The loss of any of
these individuals, or an inability to retain these individuals and attract the best of the brightest talent, could have a negative impact on Guardian. To
mitigate this risk, Guardian monitors the industry to competitively compensate these individuals, invests into the business to create an environment
where both Guardian and these individuals can succeed, and evaluates, on an ongoing basis, the succession plans in place for these key individuals.
Guardian’s financial strength provides resources necessary to competitively compensate these individuals and to allow us to invest in the business.
COMPETITION RISK
Guardian operates in a highly competitive environment, with competition based on a variety of factors including investment performance, the
type and quality of products offered, business reputation and financial strength. Loss of client assets in the Investment Management Segment
will result in losses of revenue and earnings to Guardian. Guardian attempts to mitigate this risk by developing and maintaining strong client
relationships, a competitive product line with competitive relative performance of its products, the recruitment and retention of high-quality
professionals and a high-quality management team. Our ability to compete is also enhanced by our large capital base, which provides Guardian
with the financial strength to invest in the development or acquisition of businesses. It also provides existing and future clients with comfort which
allows Guardian to better compete in winning and retaining these clients.
27
Annual Report 2024 | Guardian Capital Group Limited
INFORMATION TECHNOLOGY AND CYBERSECURITY RISK
Guardian uses information technology and the internet to streamline business operations and to improve client and advisor experience. However,
the use of information technology can also introduce operational risk related to its use by employees, which may result in errors and lead to
financial loss to Guardian. In addition, through the use of mobile devices, and the use of internet, such as emails and other online capabilities,
Guardian is exposed to information security and other technology disruptions risks that could potentially have an adverse impact on its business.
Guardian actively monitors this risk and continues to develop controls to protect against such threats that are becoming more sophisticated and
pervasive. The cyber security risk has increased with the elevated levels of remote working by Guardian’s employees. Guardian has heightened
its monitoring of the internal network traffic and the monitoring of developments in latest known cyber threats.
CLIMATE CHANGE RISK
Guardian and its subsidiaries have mostly indirect exposure to climate risk; climate change may have an impact on financial market performance,
which may, in turn, have an impact on level of income earned by Guardian; with the heightened awareness of climate change, asset managers
may find retaining or attracting clients more challenging if they are viewed as not having a credible approach to climate change; and increasing
regulatory requirements create onerous compliance obligations and increased costs which could impact business operations. Guardian has
established a Responsible Investing Oversight Committee comprised of senior executives across its asset management subsidiaries, which is
responsible for assessing and managing business risks related to the environment, social issues and corporate governance. Guardian also has
a dedicated responsible investing team which is responsible for incorporating industry best practices in its asset management approach and
aligning those activities across all of Guardian’s asset management businesses.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates, judgements and
assumptions which affect the reported amounts of assets, liabilities, contingencies, revenues and expenses. These estimates and judgements
are listed in Note 2(c) to Guardian’s 2024 Consolidated Financial Statements. The most significant accounting estimates and judgements are
related to the identification and valuation of intangible assets and contingent consideration as part of a business combination, the impairment
assessment of goodwill, the determination of fair value of financial assets and liabilities classified as level 3 within the fair value hierarchy and
the determination of level and nature of control Guardian has over its investments.
Judgement is required in identifying and valuing material intangible assets acquired and in the valuation of any deferred or contingent consideration
in a business combination. Guardian used an income approach – the multi-period excess earnings method to determine estimated fair values of
the intangible assets and a multi-scenario Monte Carlo technique to determine the estimated fair value of the contingent consideration. These
valuation approaches were developed by management based on expected revenues, expenses and Total Client Assets, utilizing knowledge from
recent transactions and research reports by independent research analysts.
The impairment assessment of goodwill includes a comparison of the carrying value and the recoverable amount of each business unit to verify
that the recoverable amount of the business unit is greater than its carrying value. In the current period recoverable amounts were estimated
using the fair value less cost to sell method for each of the business units. Guardian used valuation approaches to determine estimated fair values
in the current period, based on a multiple of AUM and AUA. These multiples are developed by management based on recent transactions and
research reports by independent research analysts and are the most significant internally generated unobservable input used in these valuations.
These valuations approaches are also sensitive to the levels of AUM and AUA.
A financial instrument is classified as level 3 when the fair value of the instrument is determined using valuation techniques based on significant
inputs which are not observable in the market. The valuation techniques and inputs used to determine the fair value of Guardian’s securities
classified as level 3 are described in Note 4(c) to Guardian’s 2024 Consolidated Financial Statements. The valuation techniques and inputs used
to determine the fair value of Guardian’s acquisition liabilities and due to non-controlling interests classified as level 3 are described in Note 9(a)
to Guardian’s 2024 Consolidated Financial Statements.
Judgement is required in determining whether Guardian controls or does not control an investment which can impact how Guardian accounts
for an investment. Guardian exercised significant judgement in determining whether it controlled the investment it made in Q-Free through GSIP,
which is considered an investment company. Although GSIP, which is substantially owned and controlled by Guardian, owns 70% of Q-Free,
which normally would be indicative of control, it was determined that the third-party investor in Q-Free held certain rights that resulted in joint
control. The investment in Q-Free is accounted for at fair value through the profit and loss, since Guardian’s interest in Q-Free is jointly controlled
and held through an investment company.
NON-IFRS MEASURES
EBITDA, EBITDA attributable to shareholders, and EBITDA per share
Guardian defines EBITDA as net earnings before interest, income tax, amortization, stock-based compensation expenses, any net gains or losses,
and net earnings from discontinued operations. EBITDA attributable to shareholders is defined as EBITDA less amounts attributable to non-
controlling interests. EBITDA per share is calculated on EBITDA attributable to shareholders using the same average shares outstanding that are
used in calculating Net earnings attributable to shareholders per share.
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Annual Report 2024 | Guardian Capital Group Limited
For the years ended December 31 ($ in thousands)
2024
2023
Net cash from operating activities, as reported
$
93,261
$
81,419
Add (deduct):
Net cash from operating activities, discontinued operations
–
(10,087)
Net change in non-cash working capital items
(35,725)
(8,282)
Net change in non-cash working capital items, discontinued operations
–
9,713
Adjusted cash flow from operations
57,536
72,763
Less attributable to non-controlling interests, continuing operations
(2,652)
(3,182)
Adjusted cash flow from operations attributable to shareholders
$
54,884
$
69,581
Adjusted Cash Flow From Operations, Adjusted Cash Flow From Operations Attributable to Shareholders and Adjusted Cash
Flow From Operations per share
Guardian defines Adjusted cash flow from operations as net cash from operating activities, net of changes in non-cash working capital items
and cash flows of discontinued operations. Adjusted cash flow from operations attributable to shareholders is defined as Adjusted cash flow
from operations less non-controlling interests. Adjusted cash flow from operations per share is calculated on Adjusted cash flow from operations
attributable to shareholders, divided using the same average shares outstanding that are used in calculating Net earnings attributable to
shareholders per share. These measures are used by management to measure the amount of cash either provided by or used in Guardian’s
operating activities available to shareholders, without the distortions caused by fluctuations in its working capital. The most comparable IFRS
measure is “Net cash from operating activities”, which is disclosed in Guardian’s Consolidated Statement of Cash Flows. Adjusted cash flow from
operations per share is calculated using the same average shares outstanding as are used in calculating Net earnings attributable to shareholders
per share.
The following is a reconciliation of the IFRS measure to this non-IFRS measure:
Shareholders’ Equity per share
Shareholders’ equity per share, diluted, is used by management to indicate the retained value per share available to shareholders which is created
by Guardian’s operations. The most comparable IFRS measure is “Shareholders’ equity”, which is disclosed in Guardian’s Consolidated Balance
Sheet. Shareholders’ equity per share is calculated by dividing Shareholders’ equity by the number of dilutive shares outstanding as at period end.
Securities, net and Securities, net per share
Securities, net and Securities, net per share is used by management to indicate the value available to shareholders created by Guardian’s
investment in securities, without the netting of debt or deferred income taxes associated with the unrealized gains. The most comparable IFRS
measures are “Securities” & “Securities sold short”, which are disclosed in Guardian’s Consolidated Balance Sheet. Securities, net is defined as
the net sum of Securities and Securities sold short, as disclosed on the Balance Sheet. Securities, net per share is calculated by dividing the net
sum of Securities and Securities sold short by the number and dilutive shares outstanding as at period end.
Guardian believes these are important measures, as they allow management to assess the operating profitability of our business and to compare
it with other investment management companies, without the distortion caused by the impact of non-core business items, different financing
methods, levels of income taxes and the level of capital expenditures.
The most comparable IFRS measure are “Net earnings” and “Net earnings from discontinued operations”, which are disclosed in Guardian’s
Consolidated Statements of Operations.
The following is a reconciliation of the IFRS measure to this non-IFRS measure:
For the years ended December 31 ($ in thousands)
2024
2023
Net earnings
$
101,598
$
657,095
Add (deduct):
Net earnings from discontinued operations
–
(554,933)
Income tax expense
14,670
15,474
Net gains
(77,444)
(57,787)
Stock-based compensation
4,058
3,587
Interest expense
10,362
8,296
Amortization
17,630
13,692
EBITDA
70,874
85,424
Less attributable to non-controlling interests in continuing operations
(2,626)
(3,177)
EBITDA attributable to shareholders
$
68,248
$
82,247
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Annual Report 2024 | Guardian Capital Group Limited
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROL
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, 2024 that have materially
affected, or are reasonably likely to materially affect, Guardian’s internal control over financial reporting.
Management is currently continuing the process of evaluating the disclosure controls and procedures and internal controls over financial reporting
of recently acquired Sterling Capital Management LLC (“Sterling”) for the purpose of integrating it into Guardian. It is anticipated that Sterling
will be integrated into Guardian’s disclosure controls and procedures and internal controls over financial reporting by the second quarter of
2025. For the period from acquisition date to December 31, 2024, Sterling’s Net revenue was $74.2 million and Net loss was $2.0 million.
As at December 31, 2024, Sterling’s Current assets were $70.7 million, Non-current assets were $136.1 million, Current liabilities were
$54.7 million and Non-current liabilities were $17.7 million. Additional information on Sterling is provided in 2024 Highlights section of this
Management Discussion and Analysis.
Aside from the above, 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, 2024, under the supervision of the Chief Executive
Officer and 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
While there is arguably more uncertainty over the outlook than seen in recent years, it would seem that, at least from a fundamental economic
perspective, there is little reason to expect that the coming year will be much different than what has played out over the last few years. The
financial health of consumers and their ability to spend beyond the necessities of life remains the most important foundational aspect of the
economic cycle and the data continue to indicate that this foundation remains solid. Household net worth (the value of assets less liabilities) is at
all-time highs thanks to the firmness in financial and housing markets that have recorded gains which has outpaced debt growth in the last two
years in the face of higher rates. And while the US has registered the biggest improvements, spanning the entire wealth spectrum rather than just
the rich getting richer, it is also the case that wealth across the aggregated Eurozone, Canada and Japan is at all-time highs.
The presence of a decent (and growing) nest egg for households, especially those less-wealthy ones, (in stark contrast to the pre-pandemic
cycle where the need to rebuild savings following the housing market crash constrained spending), combined with firm labour markets that
see unemployment rates remain near all-time, or generational, lows worldwide provides a clear reason for the persistent resiliency in consumer
spending in recent years.
As well, sustained economic growth, lower rates, and increasing government incentives and supports, including a slate of notable initiatives
stateside, appear to be encouraging businesses to commit to enhancing capital spending plans that have been broadly restrained in recent years,
with the tech sector seeing added flows.
Of course, the rise in geopolitical uncertainty and the attendant increase in headline risks that may come represents a material risk that could
mean the path forward is not without some bumps. The regime change in the US and the accompanying heightened unpredictability of the
returning Administration’s approach to economic policy, especially regarding international relations and trade, has cast a pall over the outlook for
not just the US but the entire world — potentially restraining spending by both businesses and households. The prospective introduction of new
tariffs, whether they are sweeping levies on all goods imported into the US, more targeted taxes on goods produced in those countries viewed by
the incoming President as the “greatest offenders” or a bit of both, along with the prospect of retaliatory tariffs would have a significant impact
on global growth given that the export of goods and services across borders accounts for roughly one-third of global output.
Taking everything together, it remains the case that the coming year may not be all that different than what has played out from an economic
perspective over the last few years provided that the new approach to economic policy does not cause a big enough shock to the system. The
baseline outlook appears to point to continued positive global growth underpinned by the still healthy US consumer while moderating inflationary
pressures could allow central banks to continue on the path toward more “neutral” stances that, in turn, will give some support to the more
rate-sensitive goods-producing activities. Such a backdrop would again be constructive for further gains across financial markets even faced with
greater volatility.
The base case outlook for modest, but positive, growth and still moderating inflation against a backdrop of persistent risks to the outlook would
appear to be constructive for fixed-income. Notwithstanding the prospect of elevated political risks and the still high degree of uncertainty around
the near-term path for monetary policy keeping rate volatility somewhat elevated in the coming months, the ultimate path of least resistance
for market yields still appears to be lower as central bank easing cycle puts downward pressure on rates. The impact, however, is likely to be
felt more at the front end of the yield curve where rates are far more sensitive to monetary policy, driving a further steepening of the yield curve.
As short-term rates decline, the resulting increased reinvestment risk makes assets with shorter maturities, that have outperformed the broader
market in recent years, relatively less attractive. History shows that a backdrop of notably rising rates is the only one in which short-term bonds
and cash outperform, while flat-to-down rates tend to see better performance further out the curve.
Sustained consumer-driven economic momentum and an ongoing moderation in inflationary pressures, that would permit central banks to
continue with policy easing cycles, also bode well for positive performance among equities. History shows moderate growth and modestly
declining short-term rates have coincided with stocks’ best overall performance.
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Annual Report 2024 | Guardian Capital Group Limited
The risks to the outlook and the concentration of gains in recent years that have seen an extremely narrow subset of sectors and stocks account
for the bulk of market gains, however, represent clear challenges to this track record. For starters, the select group of outperformers that have
been the driving force behind the 50% global stock market gains (and 70% of gains stateside) since the start of 2023, creates risks to overall
market indexes should these leaders experience a loss of momentum or fall out of favour. Just as they pulled markets higher, they can drag them
down even if the rest of the market holds up. As for the uncertainties over the outlook, the potential for elevated headline risks and volatility
could encourage more caution among investors that can translate into higher risk premia and, therefore, lower valuations when broad market
metrics are on the “expensive” side of history. Importantly, the combination of a historically high share of stocks that have lagged the overall index
performance and widening earnings improvement suggests that most stocks are not all that richly priced.
As with all participants in financial markets, Guardian’s results are significantly affected by the level and performance of stock and bond
markets. While we currently hold significant cash reserves, most of our investment portfolio is exposed to more volatile assets. Our investment
management businesses are also exposed to risk markets, and thus our Total Client Assets can fluctuate based on market conditions. The
acquisition of Sterling Capital, in 2024 has further added to our market exposure, however, since the majority of Sterling’s Client Assets are
fixed-income-related, it can be assumed that such volatility would be less than being primarily equity-oriented. The Sterling transaction showed
the value of holding a strong balance sheet. We maintain that possessing a strong balance sheet is a vital part of our plan to grow our business,
allowing us to react quickly to unanticipated events and giving us the luxury of making long-term plans that are not necessarily reliant on the
cooperation of events outside our control.
Our US-based operations will be a major focus for Guardian’s management team in 2025, we are spending significant time and energy integrating
Sterling within the Guardian ecosystem, streamlining our US businesses, integrating systems and processes, and sharpening our strategic plan
in light of the addition of this substantial new platform. There is a great deal of focus that integration costs and large technology projects need
to be completed on time and on budget. Successful execution across our various functions is critical to moving our business forward as delays
or constant deferral to later periods injects frustration and often higher costs for longer. Improved profitability will also be heavily dependent on
improving distribution outcomes both in the US and Canada. We have increased our footprint of distribution professionals in the US across both
retail and institutional client segments and believe the larger more coordinated focus to drive improved sales results can have meaningful impact
to our financial success. The steadily improving Canadian retail net sales in 2024 is expected to carry over into 2025 and will be looking to build
on this momentum. We have the optionality to augment improved sales activity and relationships with the creation of new products that can be
sold through our expanded operating platforms giving us a very efficient way to expand Guardian and its profitability. We have a growing number
of initiatives that can fit into this strategy and a large amount of capital to seed them. As always, shareholders can expect the company to focus
on surfacing improvements and growth through multiple organic initiatives currently in process and willing, on occasion, to complement organic
growth through acquisitions that present attractive characteristics at discipline valuations. In the near term we expect our focus to predominantly
center around successful execution of the many organic opportunities we have within our current stable of businesses.
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Annual Report 2024 | Guardian Capital Group Limited
TEN YEAR
REVIEW
As at December 31, ($ in millions)
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Total client assets
$168,979 $ 58,774 $ 53,303 $ 60,679 $ 45,984 $ 31,147 $ 26,962 $ 27,250 $ 27,280 $ 24,278
Shareholders’ equity
1,318
1,241
768
839
700
683
599
634
580
504
Securities, net
1,211
1,318
660
752
633
682
627
652
620
540
For the year ended
December 31, ($ in thousands)
Net revenue
$323,403 $241,182 $200,996 $194,001 $139,219 $120,077 $114,014 $ 98,600 $ 95,171 $ 90,352
Expenses
284,579
181,333
156,873
139,062
103,287
86,858
80,555
64,979
61,459
57,457
Operating earnings
38,824
59,849
44,123
54,939
35,932
33,219
33,459
33,621
33,712
32,895
Net gains (losses)
77,444
57,787
(104,216)
139,687
(2,890)
95,578
(56,867)
64,396
93,511
(20,158)
Net earnings (loss) from continuing operations
attributable to shareholders
100,099
100,250
(61,503)
166,147
29,988
102,374
(34,494)
77,471
103,401
3,189
Net earnings (loss) attributable to shareholders
100,099
562,929
(43,078)
184,239
42,358
112,747
(25,723)
87,145
110,860
10,046
For the year ended December 31,
Per share, Common and Class A (in dollars)
Net earnings (loss) from continuing
operations attributable to shareholders
Basic
$
4.30 $
4.22 $
(2.52) $
6.63 $
1.18 $
3.97 $
(1.28) $
2.79 $
3.63 $
0.11
Diluted
4.10
3.99
(2.52)
6.19
1.12
3.75
(1.28)
2.64
3.45
0.12
Net earnings (loss) attributable to shareholders
Basic
4.30
23.67
(1.76)
7.35
1.67
4.77
(0.63)
3.49
4.16
0.57
Diluted
4.10
22.12
(1.76)
6.87
1.57
4.50
(0.63)
3.30
3.95
0.56
Dividends paid
1.45
1.26
0.90
0.70
0.63
0.58
0.48
0.39
0.33
0.29
As at December 31,
Shareholders’ equity
Basic
56.54
52.87
31.84
33.89
27.43
26.73
22.85
23.20
20.75
17.37
Diluted
53.76
49.39
29.43
31.53
25.69
25.01
21.57
21.88
19.62
16.55
Share prices:
Common high
52.13
46.17
40.80
42.50
28.80
28.00
27.00
29.50
25.98
24.61
low
39.48
38.00
24.62
26.00
16.00
22.38
20.40
23.41
16.20
16.55
Class A high
52.01
46.28
41.00
37.00
28.10
27.98
27.05
29.00
25.10
19.25
low
39.00
37.96
24.51
25.53
16.05
21.68
20.05
23.45
15.58
15.50
As at December 31,
Common and Class A shares outstanding,
less treasury stock (thousands of shares)
Basic
23,310
23,471
24,115
24,741
25,506
25,542
26,232
27,345
27,963
29,029
Diluted
24,515
25,123
26,093
26,595
27,234
27,302
27,782
29,001
29,576
30,472
32
Annual Report 2024 | Guardian Capital Group Limited
MANAGEMENT’S STATEMENT ON
FINANCIAL REPORTING
The following consolidated financial statements, which consolidate the financial results of Guardian Capital Group Limited, its subsidiaries and
other controlled entities, and all other information in this annual report, are the responsibility of management.
The consolidated 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 consolidated financial statements.
In management’s opinion, the consolidated financial statements have been properly prepared within reasonable limits of materiality and within
the framework of the accounting policies summarized in Note 2 Material Accounting Policy Information. 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 auditor, has audited the accompanying consolidated 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 consolidated financial statements and Management’s Discussion and Analysis and recommended their
approval to the Board of Directors. Based on this recommendation, the consolidated financial statements and Management’s Discussion and
Analysis have been approved by the Board of Directors.
George Mavroudis
President and Chief Executive Officer
Donald Yi
Chief Financial Officer
February 27, 2025
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Annual Report 2024 | Guardian Capital Group Limited
INDEPENDENT
AUDITOR’S REPORT
To the Shareholders of Guardian Capital Group Limited
OPINION
We have audited the consolidated financial statements of Guardian Capital Group Limited (the Entity), which comprise:
—
the consolidated balance sheets as at December 31, 2024 and December 31, 2023
—
the consolidated statements of operations and comprehensive income for the years then ended
—
the consolidated statements of equity for the years then ended
—
the consolidated statements of cash flow for the years then ended
—
and notes to the consolidated financial statements, including a summary of material accounting policy information
(Hereinafter referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at
December 31, 2024 and December 31, 2023, its consolidated financial performance and its consolidated cash flows for the years then ended
in accordance with IFRS Accounting Standards.
BASIS FOR OPINION
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are
further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our auditor’s report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year
ended December 31, 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our auditor’s report.
Evaluation of the fair value of a certain security that does not have a quoted market price
Description of the matter
We draw attention to notes 2(c), 2(k) and 4(c) to the financial statements.
As of December 31, 2024, the Entity has recorded $1,222,326 thousand of investment in securities, of which $156,155 thousand are valued
using valuation techniques where one or more significant inputs are unobservable. Of such investments, the Entity, through its consolidated
smart infrastructure partnerships, holds an investment in an intelligent traffic systems company (the “investee”) with a fair value of $115,307
thousand. The fair value is determined using a discounted cash flow (“DCF”) model. The significant internally generated unobservable inputs
used in the valuation are the forecasts of the future performance of the investee, the discount rate of 18.6% and an estimated exit price based
on a multiple of 12 times future earnings before interest taxes and depreciation (“EBITDA”).
Why the matter is a key audit matter
We identified the evaluation of the fair value of the securities investment in an intelligent traffic systems company as a key audit matter. This
matter represented an area of significant risk of material misstatement given the size of the investment and the high degree of estimation
uncertainty in the determination of the significant internally generated unobservable inputs used in the valuation. Further, significant auditor
judgement and specialized skills and knowledge were required to evaluate the results of our audit procedures in respect of the significant
internally generated unobservable inputs due to the sensitivity of the valuation to changes to the inputs.
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Annual Report 2024 | Guardian Capital Group Limited
How the matter was addressed in the audit
The following were the primary procedures we performed to address this key audit matter:
We compared the forecasts of the future performance of the investee to historic cash flows. We took into account adjustments made by the Entity
for new initiatives in the investee’s long-term strategic plan and we compared growth rates used by the Entity in the forecasts to comparable
external industry data.
We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rate and exit multiple used in
the DCF model. The discount rate and exit multiple were evaluated by comparing these inputs to published external data of comparable entities.
Evaluation of acquisition-date fair values of certain intangible assets related to the Sterling Capital Management LLC
acquisition
Description of the matter
We draw attention to notes 2(c), 2(e) and 25(a)(i) of the financial statements. On July 2, 2024, the Entity acquired a 100% interest in Sterling
Capital Management LLC (“Sterling”) from Truist Financial Corporation. The Entity’s identified acquired intangible assets relate to existing
investment management contracts that Sterling has with clients for $67,645 thousand. The fair value of the intangible assets was determined
using an income approach - the multi-period excess earnings method (“MPEEM”). The valuation method was based on the discounted cash flows
expected to be derived from the ownership of the intangibles. The significant assumptions used to determine the fair value of the intangibles
include projected revenue growth, client attrition and the discount rate.
Why the matter is a key audit matter
We identified the evaluation of acquisition-date fair values of certain intangible assets related to the Sterling acquisition as a key audit matter.
Significant auditor judgment was required due to the high degree of estimation uncertainty in determining the fair values of these intangibles. In
addition, specialized skills and knowledge were required to evaluate our audit procedures related to the significant assumptions.
How the matter was addressed in the audit
The following were the primary procedures we performed to address this key audit matter.
We involved valuation professionals with specialized skills and knowledge who assisted in:
—
Independently developing a discount rate based on publicly available market data for comparable entities and comparing the discount
rate to the internal rate of return and weighted-average return on assets. The discount rate was then adjusted for each intangible asset
as relevant.
—
Independently developing the client attrition using historical data and management’s expectations.
—
We evaluated the appropriateness of projected revenue growth by comparing estimated revenue growth rates to external market data.
OTHER INFORMATION
Management is responsible for the other information. Other information comprises:
—
the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.
—
the information, other than the financial statements and the auditor’s report thereon, included in a document entitled “2024 Annual Report”.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain
alert for indications that the other information appears to be materially misstated.
We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at
the date of this auditor’s report.
If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information,
we are required to report that fact in the auditor’s report.
We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards,
and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
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Annual Report 2024 | Guardian Capital Group Limited
In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the
Entity or to cease operations, or has no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit.
We also:
—
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
—
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
—
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control.
—
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by management.
—
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity
to cease to continue as a going concern.
—
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
—
Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
—
Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
—
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the
direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for
our audit opinion.
—
Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Chartered Professional Accountants, Licensed Public Accountants
The engagement partner on the audit resulting in this auditor’s report is James Loewen.
Toronto, Canada
March 6, 2025
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Annual Report 2024 | Guardian Capital Group Limited
CONSOLIDATED BALANCE SHEETS
As at December 31 ($ in thousands of Canadian dollars)
2024
2023
Assets
Current assets
Cash
$
137,477
$
72,414
Interest-bearing deposits with banks
85,100
66,912
Accounts receivable and other assets
87,922
55,001
Income tax receivable
1,507
8,350
Securities backing third party investor liabilities (note 3)
127,290
59,578
439,296
262,255
Securities (note 4)
1,222,326
1,317,530
Other assets
Deferred tax assets (note 12b)
4,189
4,015
Intangible assets (note 5)
161,928
85,390
Equipment (note 6)
36,823
22,184
Goodwill (note 7)
87,824
41,626
290,764
153,215
Total assets
$ 1,952,386
$ 1,733,000
Liabilities
Current liabilities
Bank loans and borrowings (note 8)
$
144,126
$
136,014
Securities sold short (note 4)
11,678
–
Third party investor liabilities (note 3)
127,290
59,578
Client deposits
74,185
50,071
Accounts payable and accrued liabilities
155,162
91,496
Acquisition liabilities and due to non-controlling interests (note 9)
11,016
1,710
Lease obligations (note 11)
2,142
1,484
Income taxes payable
493
73,747
526,092
414,100
Acquisition liabilities and due to non-controlling interests (note 9)
27,083
13,047
Lease obligations (note 11)
32,005
19,441
Deferred tax liabilities (note 12b)
50,227
43,486
Total liabilities
635,407
490,074
Equity
Shareholders’ equity
Capital stock (notes 13a and 13b)
16,408
16,826
Treasury stock (note 14a)
(31,373)
(32,037)
Contributed surplus
30,859
27,956
Retained earnings
1,253,764
1,214,763
Accumulated other comprehensive income
48,362
13,358
1,318,020
1,240,866
Other equity interests
(1,041)
2,060
Total equity
1,316,979
1,242,926
Total liabilities and equity
$ 1,952,386
$ 1,733,000
The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board:
Barry J. Myers
Director
George Mavroudis
President and Chief Executive Officer
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Annual Report 2024 | Guardian Capital Group Limited
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
For the years ended December 31 ($ in thousands of Canadian dollars, except per share amounts)
2024
2023
Revenue
Management and advisory fees, gross
$
281,738
$
195,887
Fees paid to referring agents
(14,201)
(13,359)
Net management and advisory fees
267,537
182,528
Administrative services income
10,354
10,350
Dividend and interest income (note 15)
45,512
48,304
Net revenue
323,403
241,182
Expenses
Employee compensation and benefits (note 16)
178,668
115,029
Amortization
17,630
13,692
Interest
10,362
8,296
Other operating expenses (note 17)
77,919
44,316
284,579
181,333
Operating earnings
38,824
59,849
Net gains (note 18)
77,444
57,787
Earnings before income taxes
116,268
117,636
Income tax expense (notes 12a)
14,670
15,474
Net earnings from continuing operations
101,598
102,162
Net earnings from discontinued operations (note 26)
–
554,933
Net earnings
101,598
657,095
Other comprehensive income (loss)
Net change in foreign currency translation on foreign subsidiaries
35,838
(10,915)
Comprehensive income
$
137,436
$
646,180
Net earnings from continuing operations attributable to:
Shareholders
$
100,099
$
100,250
Non-controlling interests
1,499
1,912
Net earnings from continuing operations
$
101,598
$
102,162
Per share (note 19):
Basic
$
4.30
$
4.22
Diluted
4.10
3.99
Net earnings attributable to:
Shareholders
$
100,099
$
562,929
Non-controlling interests
1,499
94,166
Net earnings
$
101,598
$
657,095
Per share (note 19):
Basic
$
4.30
$
23.67
Diluted
4.10
22.12
Comprehensive income attributable to:
Shareholders
$
135,103
$
552,160
Non-controlling interests
2,333
94,020
Comprehensive income
$
137,436
$
646,180
The accompanying notes are an integral part of these consolidated financial statements.
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Annual Report 2024 | Guardian Capital Group Limited
CONSOLIDATED STATEMENTS OF EQUITY
For the years ended December 31 ($ in thousands of Canadian dollars)
2024
2023
Total equity, beginning of year
$ 1,242,926
$
782,859
Shareholders’ equity, beginning of year
1,240,866
767,864
Capital stock, beginning of year
16,826
17,559
Acquired and cancelled (note 13c)
(418)
(733)
Capital stock, end of period
16,408
16,826
Treasury stock, beginning of year
(32,037)
(35,569)
Acquired (note 14a)
(4,985)
(3,140)
Disposed of (note 14a)
5,649
6,672
Treasury stock, end of year
(31,373)
(32,037)
Contributed surplus, beginning of year
27,956
28,460
Stock-based compensation expense from continuing operations
4,058
3,587
Stock-based compensation expense from discontinued operations
--
898
Redemptions of equity-based entitlements
(1,155)
(4,989)
Contributed surplus, end of year
30,859
27,956
Retained earnings, beginning of year
1,214,763
733,287
Net earnings
100,099
562,929
Dividends declared and paid (note 13d)
(35,563)
(31,622)
Capital stock acquired and cancelled (note 13c)
(25,022)
(41,959)
Transactions with non-controlling interests (note 9a)
(513)
(7,872)
Retained earnings, end of period
1,253,764
1,214,763
Accumulated other comprehensive income, beginning of year
13,358
24,127
Other comprehensive income (loss)
35,004
(10,769)
Accumulated other comprehensive income, end of year
48,362
13,358
Shareholders’ equity, end of year
1,318,020
1,240,866
Other equity interests, beginning of year
2,060
14,995
Non-controlling interests, beginning of year
15,107
52,569
Net earnings
1,499
94,166
Other comprehensive income (loss)
834
(146)
Dividends declared and paid
(1,914)
(10,267)
Disposition of subsidiary (note 26)
--
(103,830)
Transactions with non-controlling interests (note 9a)
(283)
(17,385)
Non-controlling interests, end of period
15,243
15,107
Obligations to non-controlling interests, beginning of year
(13,047)
(37,574)
Payments (note 9a)
796
25,257
Other changes
(4,033)
(730)
Obligations to non-controlling interests, end of year
(16,284)
(13,047)
Other equity interests, end of year
(1,041)
2,060
Total equity, end of year
$ 1,316,979
$ 1,242,926
The accompanying notes are an integral part of these consolidated financial statements.
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Annual Report 2024 | Guardian Capital Group Limited
For the years ended December 31 ($ in thousands of Canadian dollars)
2024
2023
Operating activities
Net earnings
$
101,598
$
657,095
Adjustments for:
Income taxes paid
(10,834)
(15,523)
Income tax refunded
7,589
5,058
Income tax expense
14,670
83,721
Net gains
(77,444)
(677,299)
Amortization of intangible assets
12,746
11,840
Amortization of equipment
4,884
3,589
Stock-based compensation
4,058
4,485
Other non-cash operating expenses
269
171
57,536
73,137
Net change in non-cash working capital items (note 21)
35,725
8,282
Net cash from operating activities
93,261
81,419
Investing activities
Net (acquisition) disposition of securities
211,311
(617,626)
Net disposition (acquisition) of securities backing third party investor liabilities
(54,961)
14,910
Acquisition of intangible assets
(3,099)
(1,215)
Acquisition of equipment
(438)
(928)
Disposition of intangible assets
–
2,608
Acquisition of subsidiaries (note 25)
(101,059)
–
Discontinued operations (note 26)
–
726,580
Income tax paid on discontinued operations
(73,600)
–
Net cash from (used in) investing activities
(21,846)
124,329
Financing activities
Dividends paid to shareholders
(35,563)
(31,622)
Dividends paid to non-controlling interests
(1,914)
(10,267)
Disposal of subsidiary, non-controlling interests (note 26)
–
(103,830)
Cash provided from discontinued operations
–
33,138
Acquisition and cancellation of capital stock
(24,942)
(42,692)
Acquisition of treasury stock
(4,985)
(3,140)
Disposition of treasury stock
4,494
1,683
Net (repayment of) proceeds from short-term bank borrowings
(12,209)
12,601
Principal payments on lease obligations
(2,000)
(986)
Net funds from (to) third party investors in consolidated mutual funds
54,961
(14,910)
Transactions with non-controlling interests (note 9a)
(796)
(25,257)
Net cash used in financing activities
(22,954)
(185,282)
Foreign exchange
Net effect of foreign exchange rate changes on cash balances
3,152
3,036
Net change in net cash
51,613
23,502
Net cash, beginning of year
50,030
26,528
Net cash, end of year
$
101,643
$
50,030
Net cash represented by:
Cash
$
137,477
$
72,414
Bank indebtedness
(35,834)
(22,384)
$
101,643
$
50,030
CONSOLIDATED STATEMENTS OF CASH FLOW
The accompanying notes are an integral part of these consolidated financial statements.
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Annual Report 2024 | Guardian Capital Group Limited
NOTES TO CONSOLIDATED
FINANCIAL
STATEMENTS
1. REPORTING ENTITY
2. MATERIAL ACCOUNTING POLICY INFORMATION
Guardian Capital Group Limited (“Guardian”) is a publicly traded company with its common and class A shares listed on the Toronto Stock
Exchange. Guardian is incorporated under the laws of the Province of Ontario, and its principal business office is located at Suite 2700, 199 Bay
Street, Toronto, Ontario. Guardian, through its subsidiaries, provides investment services to a wide range of clients in Canada and abroad, and
maintains and manages a proprietary investment portfolio.
(A) BASIS OF PREPARATION
These consolidated financial statements include the accounts of Guardian, its subsidiaries, and its interest in joint ventures (together, the
“Company”) and have been prepared under IFRS Accounting Standards (“IFRS”). These consolidated financial statements have been prepared
on a going concern basis and the historical cost basis, except for certain financial instruments that have been measured at fair value and non-
current assets of discontinued operations, which are carried at the lower of cost and fair value less cost to sell.
These consolidated financial statements were authorized for issuance by the Board of Directors of Guardian on February 27, 2025.
(B) BASIS OF PRESENTATION
These consolidated financial statements are presented in Canadian dollars, which is Guardian’s functional currency. In these notes, all dollar
amounts and numbers 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
material areas where estimates and judgments are applied are those which relate to the:
i. Determination of whether a non-controlling interest in a subsidiary represents an equity interest;
ii. Determination of the subsequent accounting for certain transactions with non-controlling interests;
iii. Valuation of certain assets and liabilities that do not have quoted market prices;
iv. Assessment of goodwill and intangible assets for impairments;
v. Determination of when control of another entity exists;
vi. Assessment of provisions;
vii. Initial measurement of lease obligations and right of use (“ROU”) assets;
viii. Whether an acquisition is of a business or group of assets; and
ix. The identification and valuation of assets acquired and liabilities assumed in a business combination.
December 31, 2024 and December 31, 2023
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Annual Report 2024 | Guardian Capital Group Limited
(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.
a.
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; economic interests; or a combination of the foregoing. Offsetting these factors, the Company considers
matters which prevent it from the exercise of power.
b.
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, for its benefit.
ii. Non-controlling interests of a subsidiary
To the extent that they represent a residual interest in the Company’s assets, non-controlling interests (“NCI”) in subsidiaries are shown as
a component of the equity section of the consolidated balance sheet. NCIs in a subsidiary which do not represent a residual interest in the
Company’s net assets are shown as a component of the Company’s liabilities.
iii. Changes in the ownership of a subsidiary
Transactions which result in a change in the Company’s ownership interest in a subsidiary but do not result in a loss of control of that subsidiary
are recorded in equity in their entirety. The non-controlling interests are adjusted to reflect the changes in their relative interest in the carrying
value of the subsidiary and any difference between the consideration paid or received is recorded in retained earnings. For future transactions,
which are at the option of the non-controlling interests, the estimated future consideration is shown as a liability and as an obligation to non-
controlling interests within equity and any changes in the balances are reflected within equity.
iv. Transactions eliminated on consolidation
All inter-company transactions, balances, income and expenses between the consolidated entities are eliminated on consolidation.
(E) BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for the acquisition of a business by the Company whereby the purchase consideration
is allocated to the identifiable assets and liabilities on the basis of fair value at the date of acquisition.
Provisional fair values allocated at a reporting date are finalized as soon as the relevant information is available, within a period not to exceed
12 months from the acquisition date, with retroactive restatement of the impact of adjustments to those provisional fair values effective as at
the acquisition date.
The Company elects on a transaction-by-transaction basis whether to measure any non-controlling interests if present at fair value, or at the
proportionate share of the recognized amount of the identifiable net assets of the acquired subsidiary, at the acquisition date.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred and equity interests issued by the Company.
Consideration also includes the fair value of any deferred or contingent consideration. Subsequent to acquisition deferred and contingent
consideration are measured at fair values with the resulting change in values recorded in net earnings.
The Company evaluates the put arrangements provided to non-controlling interests as part of a transaction to determine whether they represent
consideration or are a future transaction between shareholders. In this assessment, the Company considers whether or not the non-controlling
interest continues to represent a residual interest in acquired business as a result of the put.
Acquisition-related costs are expensed as incurred.
The Company evaluates amounts paid in the business combination to sellers who remain employed with the Company following the acquisition
to determine whether such amounts should be considered part of the business combination or a separate transaction. In this assessment, the
Company considers factors such as whether the employee is required to remain employed to receive the payment and the duration of that
employment, the linkage of the payment to the valuation of the acquired company, the overall compensation provide to the employee, and
whether the employee received an incremental payment over the sellers upon becoming an employee. Amounts paid to employees who were not
sellers are considered separate from the business combination.
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Annual Report 2024 | Guardian Capital Group Limited
(F) DISCONTINUED OPERATIONS
A subsidiary representing a separate major line of business for which the Company has a committed sale plan involving the loss of control is classified
as a discontinued operation. Upon initial classification as a discontinued operation and until disposition, the non-current assets of the subsidiary
are recorded at the lower of cost or fair value less cost to sell, amortization ceases and all assets and liabilities of the subsidiary are presented on
the consolidated balance sheet separately from the other assets and liabilities of the Company. In addition, the components of the subsidiary’s net
earnings must be presented separately in the statement of operations and comprehensive income in the current and all prior periods.
(G) FOREIGN CURRENCY
Amounts denominated in foreign currencies included in these consolidated financial statements are accounted as follows:
i. Foreign currency balances and transactions.
Financial assets and liabilities denominated in foreign currency are converted into the functional currency using the period end rate. Revenues
and expenses are converted into the functional currency at the average monthly rates of exchange. Foreign exchange gains and losses, if any,
resulting from the foregoing, are included in net gains in the statements of operations.
ii. Translation of subsidiaries.
The Company translates to its functional currency, Canadian dollars, the balances and results of its subsidiaries whose functional currency is
different from the Company’s. The assets and liabilities are translated into Canadian dollars at exchange rates prevailing at the reporting date
and revenues and expenses at average monthly rates. Adjustments resulting from the translation of balance sheets and net earnings are recorded
as a foreign currency translation adjustment in other comprehensive income, and the cumulative balance is included in accumulated other
comprehensive income in the shareholders’ equity section of the consolidated balance sheet.
(H) FINANCIAL INSTRUMENTS – FINANCIAL ASSETS
i. Recognition and initial measurement
The Company recognizes a financial asset when the Company becomes party to the contractual provisions of the instrument. All financial assets
are measured at fair value upon recognition.
ii. Classification and subsequent measurement
The classification of the Company’s financial assets is based on the business model for managing the assets and their contractual characteristics.
Financial assets are classified and subsequently measured as follows:
a.
Amortized cost. Financial assets are measured at amortized cost when they are held in order collect contractual cash flows and whose
terms give rise to cash flows that are solely payments of principal and interest. The Company’s financial assets classified as amortized
cost includes interest bearing deposits with banks, accounts receivable, loans receivable, and receivables from clients and brokers.
b.
Fair value through other comprehensive income (“FVOCI”). Financial assets measured at FVOCI when they are held in order collect
contractual cash flows and for periodic sales and whose terms give rise to cash flows that are solely payments of principal and interest.
FVOCI may also include certain equity instruments, if the Company has irrevocably designated them as FVOCI on initial recognition.
The Company has no assets in this category.
c.
Fair value through profit or loss (“FVTPL”). All other financial assets and assets which have been designated FVTPL are included in
this classification. The Company may designate assets which are amortized cost or FVOCI as FVTPL in order to provide more relevant
information by significantly reducing a mismatch from measuring assets or liabilities on different basis. This designation which is made
on initial recognition is irrevocable. The Company may designate investments in jointly controlled entities as FVTPL if they are held
through an investment entity. The Company’s financial assets classified as FVTPL includes securities backing third party liabilities and
substantially all of its securities portfolio.
iii. Derecognition
The Company derecognizes a financial asset when the contractual rights of the instrument expire or the Company substantially transfers all risks
and rewards of ownership to a third party.
iv. Impairment
The Company provides for credit losses on financial assets classified as amortized cost. If there has been a significant increase in credit risk since
initial recognition, the Company provides for credit losses which are expected over the next 12 months. If there has been a significant increase
in credit risk, the Company provides for the expected lifetime credit losses.
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Annual Report 2024 | Guardian Capital Group Limited
(I) FINANCIAL INSTRUMENTS – FINANCIAL LIABILITIES
i. Recognition and initial measurement
The Company recognizes a financial liability when the Company becomes party to the contractual provisions of the instrument. All financial
liabilities are measured at fair value upon recognition.
ii. Classification and subsequent measurement
The Company’s financial liabilities are classified and subsequently measured as follows:
a.
Amortized cost. Generally all financial liabilities are included in this classification. The Company’s financial liabilities included in this
classification are bank loans, client deposits, accounts payable, accrued liabilities, income taxes payable, and lease liabilities.
b.
Fair value through profit or loss (“FVTPL”). Financial liabilities included in this classification are derivative liabilities, contingent
consideration recognized in a business combination and liabilities which have been designated FVTPL. The Company may designate
liabilities which are amortized cost as FVTPL in order to provide more relevant information by significantly reducing a mismatch from
measuring assets or liabilities on different basis. This designation which is made on initial recognition is irrevocable. The Company’s
financial liabilities included in this classification are securities backing third party liabilities, and certain acquisition related liabilities.
c.
Fair value through equity. A financial liability is included in this classification when it is an obligation to non-controlling interests
pertaining to the future purchase of their holdings in a subsidiary and they are considered to have continuing access to the returns
associated with that subsidiary.
iii. Derecognition
The Company derecognizes a financial liability when the contractual obligation is discharged, cancelled or expires.
(J) OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Financial assets and financial liabilities are offset and the net amount reported in the balance sheets only 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.
(K) FAIR VALUE HIERARCHY
Financial instruments and other assets that are measured at fair value are categorized 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:
i. Level 1
Quoted market prices: financial instruments with quoted prices for identical instruments in active markets.
ii. Level 2
Valuation technique using observable inputs: financial instruments with quoted prices of 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.
iii. Level 3
Valuation technique with significant unobservable inputs: financial instruments valued using valuation techniques where one or more significant
inputs are unobservable.
(L) INTANGIBLE ASSETS AND CONTRACT COSTS
Intangible assets include both intangible assets and contract costs. Intangible assets include advisor recruitment and management contracts
and computer software. Management contracts pertain to costs associated with acquired investment management contracts in the Company’s
investment management segment.
Contract costs represent the incremental costs, such as certain sales commissions paid to staff and success fees paid to third party introducers,
incurred in successfully obtaining new business with customers, primarily in the Company’s investment management segment.
Intangible assets and contract costs are carried at cost less accumulated amortization and accumulated impairment losses. They are amortized
over their estimated useful lives, as outlined below:
i. Advisor recruitment and management contracts
They are amortized on a straight-line basis over a number of years, ranging from three to fifteen years;
ii. Computer software
The initial cost of the main computer processing systems are amortized on a straight-line basis 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
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Annual Report 2024 | Guardian Capital Group Limited
iii. Contract costs
They are amortized over periods ranging from seven to 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.
(M) 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 to five 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.
(N) LEASES
Upon the commencement of a lease, a right of use (“ROU”) asset and lease liability are recognized. The amount of ROU asset and lease liability
recognized will be equal to the present value of the contractual lease payments, with adjustment for certain amounts. The discount rate used
in calculating the present value of the contractual lease payments will be the rate implicit in the lease or if that is not available then Company’s
incremental borrowing rate. Frequently the implicit rate is not available, so the Company’s estimates its incremental borrowing rate considering
various factors such as current interest rates and duration of the lease, among others.
Subsequent to initial recognition, a ROU asset is amortized on a straight-line basis over its useful life, which is generally the term of the lease. A
lease liability is subsequently measured at amortized cost, accruing interest at the discount rate used upon initial recognition. Lease payments
are accounted as repayments of the lease liability.
(O) GOODWILL
Goodwill represents the excess of the cost of acquisition of an acquired business over the fair value of the net identifiable tangible and intangible
assets of the acquired business 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.
(P) IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company annually tests its indefinite-life, non-financial assets, which includes goodwill, for impairment, except for recently acquired assets.
The Company does not test recently acquired indefinite-life assets for impairment during the first year unless there are indications that the asset
may be impaired. If the net carrying amount of an asset exceeds its estimated recoverable amount, the asset is considered impaired and the
excess amount is charged to net earnings.
The Company reviews its finite-life, non-financial assets, including intangible assets and equipment, whether there are any indications an asset
may be impaired. If such indication exists, its carrying amount is compared to the estimated recoverable amount and any excess of the carrying
amount over recoverable amount is charged to net gains as an impairment loss.
Recoverable amount is considered to be the higher of the estimated fair value of asset, less the estimated cost to sell and the net present value
of future cash flow expected from the use of the asset.
(Q) 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 assessments 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 balance sheets, 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.
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Annual Report 2024 | Guardian Capital Group Limited
(R) TREASURY STOCK
The Company accounts for its shares purchased and held by its subsidiary, the Guardian Capital Group Limited Employee Profit Sharing Plan
Trust (the “EPSP Trust”), as treasury stock.
(S) REVENUE FROM CUSTOMERS
Revenue from customers is recognized as the Company performs its service obligations to the customers. The major types revenue earned from
customers and the associated accounting policies adopted by the Company are as follows:
i. Investment management fees
These include fee based revenues the Company earns for providing investment management and advisory services to clients. The revenues are
generally calculated based on the fair value of the assets to which the Company provides services, in accordance with the agreements with
the clients. The revenues are earned and recognized over the time during which the Company provides services to the clients. Certain clients
also pay performance fees, if the performance of such clients’ assets exceeds that of certain performance benchmarks by an agreed level over a
stated time period. Such revenues are recognized when the services have been provided, the amount of the revenues can be reliably measured,
and it is highly probable that the fees will be received, which is usually at the end of the performance period. Fees paid to referring agents, an
expense, are fees paid to third parties that place their clients funds into investment products which are managed by the Company, are generally
calculated based on the fair value of the assets placed and are recognized in a manner consistent with the related revenue. As these expenses
are highly correlated with the management fees the Company presents the expense as a deduction from the gross management fees on the face
of the Statement of Operations.
ii. Administrative services income
The Company earns income from certain clients, 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 over the period the service is performed, based on agreements
with the clients or advisors.
(T) DIVIDEND AND INTEREST INCOME
Dividend and interest income is recorded as follows:
i. Dividends are recognized when the Company’s right to receive payment is established.
ii. Interest is recorded as earned over the period of time during which the interest-paying investment is held, on an effective interest rate method.
(U) 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 rendered by employees and when a reliable estimate of the obligation can be made. Should they qualify, certain bonuses may be accounted
for in accordance with the policy on contract costs, (see note 2(L) Intangible assets).
(V) STOCK-BASED COMPENSATION
Stock-based compensation is accounted for under the fair value method, under which the compensation cost is measured at the fair value of the
equity instruments issued (“Stock-based entitlement”) and is expensed over the vesting period of the Stock-based entitlement.
Fair value of a Stock-based entitlement is determined on the issuance date and is the product of the fair value of the equity instrument and the
number of those instruments that are ultimately expected to vest.
Where a Stock-based entitlement has been modified, the incremental change in fair value of the Stock-based entitlement is expensed over the
remaining vesting period.
(W) INTEREST EXPENSE
Interest expense comprises interest payable on borrowings recognized using the effective interest rate method.
(X) PENSIONS
The Company operates a defined contribution pension plan, payments to the plan are charged as expenses as they are incurred. The Company
has no legal or constructive obligation to pay further contributions if the plan does not hold sufficient assets to pay all employees benefits relating
to employee service in the current and prior periods.
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Annual Report 2024 | Guardian Capital Group Limited
(Y) NET GAINS OR LOSSES
Net gains and losses, which are recognized on a trade date basis, include all changes in fair value of financial instruments classified as FVTPL
which are due to changes in market prices, changes in the value of currency denominated monetary items due to changes in exchange rates, and
on the disposal or impairment of other assets.
(Z) INCOME TAX
Income tax on earnings for the year comprises current tax and deferred tax. Income tax is recognized in net earnings, 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. Income taxes generally result from operating activities and taxes paid are shown in the statement of cash flow as an
operating activity, unless the taxes can be specifically identified with significant investing or financing activities.
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 sheets 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.
(AA) 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.
(AB) 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.
(AC) FIDUCIARY ASSETS AND LIABILITIES
Certain of the Company’s subsidiaries hold assets or liabilities on a fiduciary basis on behalf of clients. In providing these services, those assets
and liabilities and the income and expenses associated with them are excluded from these consolidated financial statements.
(AD) FUTURE CHANGES IN ACCOUNTING POLICIES - IFRS 18 PRESENTATION AND DISCLOSURES IN FINANCIAL
STATEMENTS
The International Accounting Standards Board issued on April 9, 2024 IFRS 18 Presentation and Disclosures in Financial Statements (IFRS 18)
which replaces IAS 1 Presentation of Financial Statements effective for annual periods beginning on or after January 1, 2027. The objective of
IFRS 18 is to provide investors with more relevant information and transparency on a company’s financial results and greater comparability and
consistency of financial presentation between companies. IFRS 18 will not change the reported net earnings but it may result in significant changes
to the structure and organization of the Statement of Operations and Comprehensive Income. The nature and extent of the changes to the Company’s
Statement of Operations and Comprehensive Income will depend on the result of Management’s assessment and classification of the Company’s
main business activities using the principles as contained in IFRS 18. In addition, IFRS 18 will make management-defined performance measures
of its operating results, such as EBITDA, part of the audited financial statements by requiring its inclusion in the notes to the financial statements.
The Company is currently evaluating the recently released standard and its potential impact on the Financial Statements.
3. SECURITIES BACKING THIRD PARTY INVESTOR LIABILITIES AND THIRD PARTY
INVESTOR LIABILITIES
Securities backing third party investor liabilities represent third party investors’ proportionate interest in the assets of the consolidated
investment funds. The use of these assets is strictly limited to the investment in securities that are in accordance with the investment policies
of each investment fund and available to fund future investor redemptions. These securities are classified as FVTPL.
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Annual Report 2024 | Guardian Capital Group Limited
4. SECURITIES AND SECURITIES SOLD SHORT
(A) CLASSIFICATION
An analysis of the securities and securities sold short, which may include units of investment funds, by the type of security is as follows:
As at December 31
2024
2023
Fair value through profit or loss:
Short-term securities
$
334,091
$
516,177
Fixed-income securities
41,696
37,437
Bank of Montreal common shares
310,594
292,175
Public equity securities
333,495
280,575
Private equity investments and real estate (i)
202,450
191,169
$ 1,222,326
$ 1,317,530
Equity securities sold short
(11,678)
–
$ 1,210,648
$ 1,317,530
i. The outstanding capital commitments for future investments are as follows:
As at December 31
2024
2023
Investment commitments
$
5,329
$
23,626
(B) FAIR VALUE HIERARCHY
The securities and securities sold short that are classified as FVTPL have been categorized based upon a fair value hierarchy as follows:
As at December 31
2024
2023
Securities
Level 1
$
660,990
$
625,393
Level 2
405,181
545,699
Level 3
156,155
146,438
$ 1,222,326
$ 1,317,530
Securities sold short
Level 1
(11,678)
–
$ 1,210,648
$ 1,317,530
Level 2 securities include short term securities and investments into certain investment funds. Short-term securities are valued using observable
market prices and include accrued interest. The investments in funds are valued using the net asset value of each fund. During 2024, certain
equity securities were reclassed from Level 1 to Level 2 due to low trading volumes as at year-end (2023 – none). During 2024 and 2023 there
were no transfers between Level 3 and Level 1 or Level 2.
Third party investor liabilities represent third party investors’ proportionate ownership interests in the consolidated funds. The liabilities are
payable on redemption of the units of the funds by the third party investors and will be settled with the proceeds from the disposition of
securities backing third party investor liabilities.
The value of the liabilities is equal to and varies with the value of the securities backing third party investor liabilities. These liabilities have
been designated as FVTPL.
The Company continually evaluates whether it controls these funds. On the date when a fund is no longer deemed to be controlled, the
Securities backing third party investor liabilities and Third party investor liabilities related to the fund are derecognized in the financial
statements. Details on the funds the Company consolidates and changes therein during the years are disclosed in note 24(d).
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Annual Report 2024 | Guardian Capital Group Limited
(C) ANALYSIS OF LEVEL 3 SECURITIES
i. The change in the value of Level 3 securities is as follows:
For the years ended December 31
2024
2023
Securities categorized as Level 3, beginning of year
$
146,438
$
33,463
Change in fair value, unrealized
29,374
(3,745)
Purchases
18,194
123,241
Return of capital and redemptions
(37,965)
(1,090)
Foreign exchange translation
114
(5,431)
Securities categorized as Level 3, end of year
$
156,155
$
146,438
ii. Level 3 securities are comprised of the following:
As at December 31
2024
2023
Intelligent traffic systems company (a)
$
115,307
$
112,512
Private equity funds (b)
37,110
30,108
Other investments (c)
3,738
3,818
$
156,155
$
146,438
Internally generated input
Change in fair value due to a
+10% change in the input
Change in fair value due to a
-10% change in the input
Discount Rate
$ (10,771)
$ 12,228
EBITDA
12,957
(12,788)
Exit multiple
9,311
(9,311)
a.
During 2023, the Company through its consolidated smart infrastructure partnerships (note 24(d)) acquired joint control of a leading
supplier of tolling, traffic management and cooperative intelligent transport systems solutions. As at December 31, 2023 the investment
was valued at cost which was the equivalent of fair value as the investment was last publicly traded in mid-December 2023 before it
was taken private. As at December 31, 2024, the Company’s investment in the intelligent traffic systems company was valued using
a discounted cash flow model. The most significant internally generated unobservable inputs used in this valuation are the forecasts of
future performance of the investee, discount rate of 18.6% and estimated exit price based on a multiple of 12 times future EBITDA.
These estimates are supported by multiple analysis of the investee’s peer group and review of precedent transactions. An analysis of
the sensitivity of the fair value of the investment to changes in the significant internally generated unobservable inputs as at December
31, 2024 is as follows:
b.
The Company’s investment in two private equity funds are valued on the most recent fair value as obtained from each fund’s manager.
The Company ensures that it has a basis for reliance on the reported fair values by meeting with the managers at least once per year
to gain an understanding of each manager’s valuation process and by comparing previously reported fair values to each fund’s audited
financial statements.
c.
The Company’s other investments which are comprised of an investment in an investment management company and a health services
company. The investment management company is valued using an EBITDA multiple of 7.00 (2023 – 7.00) and the projected future
earnings. The EBITDA multiple and the projected earnings are the most significant internally generated unobservable inputs used in
this valuation. The projected earnings are estimated using the investee’s current assets under management and historical financial
ratios, adjusted where required. The health services company is valued using an EBITDA and revenue multiples of 8.11 and 0.995
respectively (2023 – 8.75 and 1.564) and recent financial information. The multiples used are the most significant internally generated
unobservable inputs used in this valuation. The multiples used were derived from published research reports of similar businesses by
independent analysts.
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Annual Report 2024 | Guardian Capital Group Limited
5. INTANGIBLE ASSETS
A summary of the composition of and changes in the intangible assets is as follows:
For the years
ended December 31
2024
2023
Contract
costs
Management
contracts
Computer
software
Total
Contract
costs
Management
contracts
Computer
software
Total
Cost
Balance, beginning of year
$19,733
$ 105,135
$ 9,345
$ 134,213
$ 18,522
$
108,750
$
9,915
$ 137,187
Acquisitions (note 25)
-
77,951
-
77,951
–
–
–
–
Additions
1,989
-
1,110
3,099
1,215
–
–
1,215
Disposals
-
-
(834)
(834)
–
(1,157)
(568)
(1,725)
Foreign exchange translation
502
11,690
10
12,202
(4)
(2,458)
(2)
(2,464)
Balance, end of year
22,224
194,776
9,631
226,631
19,733
105,135
9,345
134,213
Accumulated amortization
Balance, beginning of year
7,275
36,672
4,876
48,823
4,962
31,482
3,857
40,301
Amortization
2,003
9,808
935
12,746
2,319
7,058
1,022
10,399
Disposals
-
-
(419)
(419)
-
(1,016)
–
(1,016)
Foreign exchange translation
280
3,264
9
3,553
(6)
(852)
(3)
(861)
Balance, end of year
9,558
49,744
5,401
64,703
7,275
36,672
4,876
48,823
Carrying value, end of year
$12,666
$ 145,032
$ 4,230
$ 161,928
$ 12,458
$
68,463
$
4,469
$
85,390
6. EQUIPMENT
A summary of the composition of and changes in the equipment is as follows:
For the years
ended December 31
2024
2023
Office
equipment
Leasehold
improve-
ments
Right
of use
asset
Total
Office
equipment
Leasehold
improve-
ments
Right
of use
asset
Total
Cost
Balance, beginning of year
$
9,945
$
2,270
$23,199
$ 35,414
$
9,113
$
2,102
$
26,497
$37,712
Acquisitions (note 25)
1,080
1,056
14,432
16,568
–
–
–
–
Additions
355
83
798
1,236
872
338
1,212
2,422
Disposals
-
-
(340)
(340)
(22)
(168)
(4,477)
(4,667)
Foreign exchange translation
689
490
1,108
2,287
(18)
(2)
(33)
(53)
Balance, end of year
12,069
3,899
39,197
55,165
9,945
2,270
23,199
35,414
Accumulated amortization
Balance, beginning of year
7,418
1,677
4,135
13,230
6,755
1,652
4,003
12,410
Amortization
974
325
3,585
4,884
713
119
2,460
3,292
Disposals
-
-
(110)
(110)
(22)
(92)
(2,312)
(2,426)
Foreign exchange translation
21
75
242
338
(28)
(2)
(16)
(46)
Balance, end of year
8,413
2,077
7,852
18,342
7,418
1,677
4,135
13,230
Carrying value, end of year
$
3,656
$
1,822
$31,345
$ 36,823
$
2,527
$
593
$
19,064
$22,184
7. GOODWILL
A summary of the changes in the goodwill is as follows:
For the years ended December 31
2024
2023
Balance, beginning of year
$
41,626
$
42,519
Acquisition (note 25)
41,379
–
Foreign exchange translation
4,819
(893)
Balance, end of year
$
87,824
$
41,626
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Annual Report 2024 | Guardian Capital Group Limited
Goodwill acquired in business acquisitions are allocated to the cash generating units (“CGUs”) that are expected to benefit from those business
acquisitions. An analysis of the Company’s goodwill by relevant CGUs are as follows:
Goodwill is not amortized, but is subject to annual impairment testing, except for goodwill that was acquired in the current year. The impairment
tests are conducted as at September 30 of each year and they compare each CGU’s recoverable amount against its carrying value. In addition,
the Company may test for impairment more frequently if there are indications of impairment. Goodwill acquired in the current year is reviewed
for any indications of impairment and if such conditions are present then the goodwill is tested for impairment.
The Company as per its policy did not test the goodwill of $43,448 that was acquired during the current year for impairment. However, the
Company reviewed it for any indications of impairment and concluded that there were no such indications.
In 2024 and 2023, the Company calculates the recoverable amounts based upon the estimated fair values, less costs to sell (“FVLCS”). In
estimating the FVLCS, the Company used a single or multi-factor model to determine fair values, with the key assumptions being values assigned
as multiples of key business analytics pertaining to each CGU. These multiples are developed by the Company based on recent transactions and
research reports by independent research analysts. The Company considers that the key business analytics as client assets under management
(“AUM”) and client assets under administration (“AUA”). In addition, the Company corroborates its asset based multiples with revenue and
profitability measures. It is the Company’s opinion that estimating fair values based on these analytics is in accordance with established industry
practice, and that the multiples used are consistent with market transactions. These recoverable amounts, which are estimates, are considered
Level 3 under the fair value hierarchy.
The most significant internally generated unobservable input used in the testing are as follows:
For the years ended December 31
2024
2023
Private wealth management firm
$
6,432
$
$6,432
Outsourced chief investment officer
4,702
4,702
USA-based equities manager
21,125
19,368
USA-based fixed-income manager
11,246
10,311
USA-based fixed-income & equities manager
43,448
–
UK-based equities manager
871
813
$
87,824
$
$41,626
As at September 30
2024
2023
Amount by which the recoverable amounts exceeds the carrying value:
Private wealth management firm
$
3,891
$
907
Outsourced chief investment officer
NA
3,005
USA-based equities manager
NA
14,913
Based on the results of the testing, there was no impairment of goodwill in 2024 or 2023.
Summarized below for each CGU is the amount by which its recoverable amount exceeds its carrying value and the required percentage change
in the key assumptions which would cause the recoverable amount to equal the carrying value. If a change in a key assumption which would
cause the recoverable amount to equal the carrying value for a CGU was beyond a reasonable amount, 25%, then the excess carrying value and
percentage change is noted below as NA.
As at September 30
Multiple of
2024
2023
Private wealth management firm
AUM
1.33%
1.33%
Outsourced chief investment officer
AUA
0.20%
0.20%
AUM
1.00%
1.00%
USA-based equities manager
AUM
1.85%
2.00%
USA-based fixed-income manager
AUM
0.35%
0.35%
UK-based equities manager
AUM
1.45%
2.00%
Required percentage change in the key assumptions which would cause the recoverable amount to equal the
carrying value:
2024
2023
Multiple of
Private wealth management firm
AUM
22%
6%
Outsourced chief investment officer
AUA
NA
25%
AUM
NA
25%
USA-based equities manager
AUM
NA
19%
51
Annual Report 2024 | Guardian Capital Group Limited
8. BANK LOANS AND BORROWINGS
Bank borrowings, and details of the borrowing facilities, are as follows:
i. The Company maintains two short-term revolving credit facilities for general corporate purposes with a total borrowing capacity of $130,000
(2023 - $130,000). Borrowings under these facilities can be drawn in various short-term forms in both Canadian and US dollars. Bank
indebtedness bears interest at the bank’s prime rate plus 0.4% and short-term borrowings bear interest at term CORRA plus 1.4% for Canadian
dollar borrowings and term SOFR plus 1.4% for US dollar borrowings. For the calculation of interest on the bank indebtedness the Company
may offset a portion of the bank indebtedness with certain cash balances. Such cash balances were $35,570 as at December 31, 2024
(2023 - $18,239). The terms of these facilities require that the Company maintain certain financial ratios and the Company is in compliance
with these requirements. The facilities were amended during the current year to reflect the replacement of certain interest rate benchmarks.
ii. The Company maintains a short-term revolving credit facility for borrowings by the Company’s employee profit sharing plan, which has a
total borrowing capacity of $45,000 (2023 - $45,000). Borrowings under this facility are secured by a deposit of all treasury stock held by
the EPSP Trust as detailed in Note 14. Borrowings under this facility can be drawn in various short-term forms in Canadian dollars. Bank
indebtedness bears interest the bank’s prime rate plus 0.4% and short-term borrowings bear interest at term CORRA plus 1.4%. The facility
was amended during the current year to reflect the replacement of certain interest rate benchmarks.
As at December 31
2024
2023
General corporate borrowings (i):
Bank indebtedness
Canadian dollar
$
35,834
$
22,215
Short-term
Canadian dollar
–
–
US dollar
73,492
80,830
Employee profit sharing plan borrowings (ii):
Bank indebtedness
Canadian dollar
–
169
Short-term
Canadian dollar
34,800
32,800
$
144,126
$
136,014
9. ACQUISITION LIABILITIES AND DUE TO NON-CONTROLLING INTERESTS
(A) CLASSIFICATION OF OTHER LIABILITIES AND DUE TO NON-CONTROLLING INTERESTS
An analysis of these obligations is as follows:
As at December 31
2024
2023
Current
Acquisition-related (i)
$
1,183
$
1,710
Due to non-controlling interests (ii)
9,833
–
11,016
1,710
Non-current
Acquisition-related (i)
20,632
–
Due to non-controlling interests (ii)
6,451
13,047
27,083
13,047
$
38,099
$
14,757
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Annual Report 2024 | Guardian Capital Group Limited
a.
This represents the present value of a promissory note payable related to the acquisition of Rae & Lipskie Investment Counsel Inc.
(“RaeLipskie”). The amount payable, which may range in value between nil and $1,800, is dependent on the assets under management
of RaeLipskie on certain future dates between September 1, 2024 and September 1, 2026. The note was repaid on September 1,
2024.
b.
The Sterling earn-out payments are the present value of three expected earn-out payments related to the acquisition of Sterling Capital
Management LLC (“Sterling”). The total combined payments may range between nil and $64,751, (USD nil and USD $45,000). The
earn-outs become due on dates between July 2, 2027 and July 2, 2029. Each earn-out is dependent on the cumulative revenues
earned by Sterling from certain clients between July 2, 2024 and the earn-out date, net of any previously paid earn-out. The Company
estimated each expected earn-out using a Monte Carlo technique that used actual revenues to estimate the probability weighted client
revenues over each of the three earn-out periods. The expected payments were discounted using a rate of 17.0%. The most sensitive
internally generated input used in the valuation of these payments was the discount rate and a change in the rate of +/- 10% would
change the value of the liabilities by between +$855 and -$801.
c.
The Galibier earn-out payments are the present value of two expected earn-out payments related to the acquisition of Galibier Capital
Management LLC (“Galibier”). The total combined payments may range between nil and $7,500. The earn-outs become due on
September 3, 2025 and September 3, 2029. The first payment is dependent on Galibier’s retaining a certain level of assets under
management (“AUM”) and the second payment is dependent on the expected future revenues and the first payment. The Company
estimated the expected payments using the combination of a Monte Carlo technique that used actual observed AUM’s, current observed
fee margins and the Company’s future growth assumptions. The expected payments were discounted using a rate of 11.9%. The most
sensitive internally generated input used in the valuation of these payments was the discount rate and a change in the rate of +/- 10%
would change the value of the liabilities by between +$197 and -$186.
ii. Due to non-controlling interests
The Company has granted to certain non-controlling interests the right to sell to the Company their interests in those subsidiaries at prices which
approximate fair value at the date of exercise. The Company also holds the right to purchase those interests on the same term and conditions.
These options are exercisable over various future periods. These liabilities relate to future transactions with non-controlling interests, acting in
their capacity as owners. Therefore, all subsequent changes in these obligation are reflected in the Consolidated Statements of Equity. An analysis
of these obligations, which are classified in the fair value hierarchy as level 3, is as follows:
i. Acquisition-related
The acquisition related liabilities are deferred amounts and earn-out payments on acquisitions completed by the Company. The acquisition-
related amounts, which are classified in the fair value hierarchy as level 3, are comprised of the following:
As at December 31
2024
2023
Promissory note payable (a)
$
–
$
1,710
Sterling earn-out payments (b)
16,949
–
Galibier earn-out payments (c)
4,866
–
$
21,815
$
1,710
Subsidiary to be acquired
Option period
2024
2023
Agincourt Capital Management LLC
October 1, 2025 to October 1, 2040
$
9,530
$
7,276
Rae & Lipskie Investment Counsel Inc.
September 1, 2027 to September 1, 2032
6,451
5,771
Modern Advisor Canada Inc.
March 31, 2025 to March 31, 2034
303
–
$
16,284
$
13,047
Each of the above, except the Modern Advisor Canada Inc. (“Modern Advisor”) obligation, are the present value of the estimated payment
required on the earliest date that payment may be required. The discount rate used to determine amounts not currently exercisable ranges
between 9.0% and 14.6% (2023 – 9.0% to 14.6%). The most sensitive assumption used estimating the future payments is the projected
revenues of the subsidiary in the year preceding the exercise date and this assumption largely relies on the most recent data plus growth that is
consistent with the Company’s current plans. The obligations for Agincourt are payable in USD. The Modern Advisor obligation was based on
actual recent transactions with the non-controlling interests.
During the periods the Company agreed with certain non-controlling interests of its subsidiaries to acquire their interests and increase the
Company’s ownership interest in those subsidiaries. In 2024, the Company purchased an additional 21% interest in Modern Advisor from
the non-controlling interests. This transaction increased the Company’s ownership interest in Modern Advisor to 92%. In 2023, the Company
purchased an additional 30% interest in Alta Capital Management LLC from the non-controlling interests. This transaction increased the
Company’s ownership interest in Alta Capital to 100%.
53
Annual Report 2024 | Guardian Capital Group Limited
(B) CHANGES IN LEVEL 3 LIABILITIES
An analysis of the changes in the acquisition related liabilities and due to non-controlling interests that are categorized as level 3 is as follows:
For the years ended December 31
2024
2023
Fair value through profit or loss:
Balance, beginning of the year
$
1,710
$
4,293
Payments
(1,800)
(2,713)
Arising on acquisition
20,143
–
Recognized in net earnings
919
127
Foreign exchange translation
843
3
Balance, end of year
$
21,815
$
1,710
Fair value through equity:
Balance, beginning of the year
$
13,047
$
37,574
Payments
(796)
(25,257)
Arising on acquisition
--
–
Change in fair value
3,343
730
Foreign exchange translation
690
–
Balance, end of year
$
16,284
$
13,047
10. PROVISIONS
From time to time, the Company is named as a party to claims, proceedings and investigations, including legal, regulatory and taxes, in the
ordinary course of its business. While it is often not possible to estimate the outcome of the various proceedings at any time, the Company makes
provisions, where possible, for the estimated outcome of such proceedings. Should any loss resulting from the resolution of any claims differ
from these estimates, the difference will be accounted for as a charge to income in that year. As at December 31, 2024 and 2023, there were
no material provisions recorded.
For the years ended December 31
2024
2023
Consideration paid to non-controlling interests
$
796
$
25,257
Less: Non-controlling interest carrying value in subsidiary
(283)
(17,385)
Excess consideration charged to retained earnings
$
513
$
7,872
A summary of these transactions are as follows:
11. LEASE OBLIGATIONS
Leases, and recognized lease obligations on the Consolidated Balance Sheets are presented on a discounted basis. An analysis of the lease
obligations on a non-discounted basis is as follows:
As at December 31
2024
2023
Payable within one year
$
5,925
$
2,943
Payable after one year and within five years
21,958
10,382
Payable after five years
17,854
16,393
Total undiscounted lease obligations
$
45,737
$
29,718
In 2024, the Company recognized interest expense of $1,702 (2023 - $1,261) and paid a total cash amount of $3,723 (2023 – $2,146) in
respect of lease obligations.
The amount of the Company’s lease obligations, which arise substantially from leased office space, will increase, along with the right of use
assets, when the Company enters into a new lease, renews an existing lease or when it is reasonably certain it may exercise an option to extend
a current lease. Information on the right to use assets is disclosed in note 6 Equipment.
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Annual Report 2024 | Guardian Capital Group Limited
(A) INCOME TAX EXPENSE
The components of the income tax expense are as follows:
The income tax expense in the consolidated statements of operations is less than the tax computed using combined Canadian Federal and
Provincial statutory income tax rates of 26.5% (2023 – 26.5%) in the current year for the following reasons:
12. INCOME TAXES
For the years ended December 31
2024
2023
Current tax expense
Tax on profits for the current year
$
10,697
$
13,466
Adjustments in respect of prior periods
98
(1,182)
10,795
12,284
Deferred tax expense
Origination and reversal of temporary differences
4,276
3,420
Adjustments in respect of prior periods
(401)
–
Adjustments due to changes in substantively enacted tax rates
-
(230)
3,875
3,190
Income tax expense
$
14,670
$
15,474
For the years ended December 31
2024
2023
Tax at the combined Federal and Provincial statutory income tax rate for the current year
$
30,811
$
31,174
Increase (decrease) in the expense due to:
Tax exempt income from securities
(5,160)
(3,394)
Rate differential on earnings of foreign subsidiaries
(4,457)
(7,887)
Non taxable portion of (gains) or losses
(9,447)
(5,256)
Adjustments due to changes in substantively enacted tax rates
–
(230)
Non-deductible expenses
892
277
Benefits of losses not recognized
266
82
Other
1,765
708
Income tax expense (recovery)
$
14,670
$
15,474
The combined statutory income tax rate is the aggregate of the Federal income tax rate of 15.0% (2023 – 15.0%) and the Provincial income
tax rate of 11.5% (2023 – 11.5%).
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Annual Report 2024 | Guardian Capital Group Limited
(B) DEFERRED TAX ASSETS AND LIABILITIES
An analysis of the deferred tax assets and liabilities and changes therein by the assets or liabilities that have temporary differences between their
carrying and tax amounts is as follows:
(C) OTHER TEMPORARY DIFFERENCES
The aggregate amount of temporary differences between costs for accounting purposes and costs for income tax purposes arising from the
earnings accumulated in certain subsidiaries is $442,960 (2023 - $372,823) and deferred tax has not been provided on these differences,
as the Company controls the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the
foreseeable future. In addition, the Company has approximately $6,729 (2023 - $6,177) of non-capital loss carry forwards, which have not
been recognized and expire between 2034 to 2044.
Other assets in the above table are the tax effects of recognized temporary differences from certain of the Company’s intangibles, equipment
and goodwill. Other liabilities in the above table are the tax effects of recognized temporary differences from certain of the Company’s accrued
liabilities and lease obligations.
For the year ended December 31, 2024
Bank of
Montreal
shares
Other
securities
Loss carry
forwards
Other
assets
Other
liabilities
Total
Deferred tax assets:
Balance, beginning of year
$
–
$
(3,976)
$
1,031
$
(27)
$
6,987
$
4,015
Recognized in net earnings and offset of taxes
–
(1,297)
32
1,124
123
(18)
Foreign exchange translation
–
(316)
–
(1)
509
192
Balance, end of year
–
(5,589)
1,063
1,096
7,619
4,189
Deferred tax liabilities:
Balance, beginning of year
$
37,995
$
3,303
$
(183)
$
6,067
$
(3,696)
$
43,486
Recognized in net earnings and offset of taxes
2,189
5,703
(3,913)
6,880
(7,002)
3,857
Acquisition (note 25)
–
–
–
2,731
–
2,731
Foreign exchange translation
–
4
(15)
11
153
153
Balance, end of year
40,184
9,010
(4,111)
15,689
(10,545)
50,227
For the year ended December 31, 2023
Bank of
Montreal
shares
Other
securities
Loss carry
forwards
Other
assets
Other
liabilities
Total
Deferred tax assets:
Balance, beginning of year
$
–
$
–
$
792
$
–
$
2
$
794
Recognized in net earnings and offset of taxes
–
(3,859)
239
(26)
6,787
3,141
Foreign exchange translation
–
(117)
–
(1)
198
80
Balance, end of year
–
(3,976)
1,031
(27)
6,987
4,015
Deferred tax liabilities:
Balance, beginning of year
$
35,435
$
5,929
$
(13)
$
5,662
$
(9,819)
$
37,194
Recognized in net earnings and offset of taxes
2,560
(2,627)
(170)
407
6,161
6,331
Foreign exchange translation
–
1
–
(2)
(38)
(39)
Balance, end of year
37,995
3,303
(183)
6,067
(3,696)
43,486
13. CAPITAL STOCK
(A) AUTHORIZED
i. Unlimited preferred shares, without par value, may be issued in an unlimited number of series, the designation, rights, privileges, conditions
and 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.
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Annual Report 2024 | Guardian Capital Group Limited
For the years ended December 31
2024
2023
Shares
Amount
Shares
Amount
Class A shares
Outstanding, beginning of year
22,492
$
16,165
23,498
$
16,895
Acquired and cancelled
(583)
(418)
(1,017)
(733)
Converted from common
-
-
11
3
Outstanding, end of year
21,909
15,747
22,492
16,165
Common shares
Outstanding, beginning of year
2,738
661
2,749
664
Converted to Class A
-
-
(11)
(3)
Outstanding, end of year
2,738
661
2,738
661
Total outstanding, end of year
24,647
$
16,408
25,230
$
16,826
(C) ISSUER BID
A summary of the Company’s activity under its ongoing Normal Course Issuer Bid (NCIB) is as follows:
For the years ended December 31
2024
2023
Purchased and cancelled
Class A
583
1,017
Consideration paid and capital transaction taxes provided
$
25,440
$
42,692
Less average issue price, charged to share capital
(418)
(733)
Excess consideration charged to retained earnings
$
25,022
$
41,959
For the years ended December 31
2024
2023
Dividends declared and paid, per share
$
1.45
$
1.26
Under the current NCIB, which commenced on December 19, 2024 and expires on December 18, 2025, the Company may purchase up to
137 common shares and 1,508 Class A shares. The Company had purchased and cancelled 70 Class A shares under the current NCIB in the
period up to December 31, 2024.
(D) DIVIDENDS ON COMMON AND CLASS A SHARES
The Company also declared dividends of $0.37 and $0.39 per share payable on January 18, 2025 and April 18, 2025, respectively, on the
common and Class A shares outstanding.
14. TREASURY STOCK
The Company provides Stock-based entitlements to certain senior employees of the Company through an Employee Profit-Sharing Plan Trust
(EPSP Trust). The EPSP Trust purchases shares of the Company related to these Stock-based entitlements, which are in the form of either equity-
based entitlements or option-like entitlements, and the shares are accounted for as treasury stock. The purchases are financed by a bank loan
facility with a major chartered bank, which is secured by the shares held by the EPSP Trust and a guarantee issued by the Company.
(A) CHANGES IN TREASURY STOCK
A summary of the changes in the treasury stock is as follows:
For the years ended December 31
2024
2023
Shares
Amount
Shares
Amount
Balance, beginning of year
1,758
$
32,037
2,131
$
35,569
Acquired
101
4,985
78
3,140
Disposed
(522)
(5,649)
(451)
(6,672)
Balance, end of year
1,337
$
31,373
1,758
$
32,037
(B) ISSUED AND OUTSTANDING
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Annual Report 2024 | Guardian Capital Group Limited
During the year, the Company disposed of 522 (2023 – 451) of the class A shares for amounts equal to their costs.
As at December 31, 2024, the treasury stock was comprised of 30 common shares (2023 – 30) and 1,307 class A shares (2023 – 1,728
shares).
(B) EQUITY-BASED ENTITLEMENTS
Equity-based entitlements allow the employees to acquire shares of the Company from the EPSP Trust at zero cost, subject to predetermined
vesting arrangements and other conditions.
A summary of the changes in the number of shares under equity-based entitlements is as follows:
For the years ended December 31
2024
2023
Entitlements, beginning of year
1,221
1,423
Provided
102
78
Exercised
(103)
(279)
Forfeited
-
(1)
Balance, end of year
1,220
1,221
Equity-based entitlements provided during the year ended December 31, 2024 had a fair value of $5,005 (2023 – $3,140). As at December
31, 2024 the vested number of equity based entitlements were 920 (2023 – 925).
(C) OPTION-LIKE ENTITLEMENTS
The option-like entitlements allow the employees to purchase shares of the Company from the EPSP Trust at prices equal to the amount of the
borrowings per share pertaining to those shares, subject to predetermined vesting arrangements and other conditions. 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 option-like entitlements is as follows:
For the years ended December 31
2024
2023
Number of
Shares
Weighted
average
exercise price
per share
Number of
Shares
Weighted
average
exercise price
per share
Balance, beginning of year
536
$
10.35
708
$
10.20
Exercised
(419)
10.72
(172)
9.71
Balance, end of year
117
$
9.03
536
$
10.35
As at December 31
2024
2023
Number of
Shares
Weighted
average
exercise price
per share
Number of
Shares
Weighted
average
exercise price
per share
$7.51 – $10.00
117
$
9.03
312
$
9.46
$10.01 – $12.50
–
–
224
11.59
117
$
9.03
536
$
10.35
No option-like entitlements were granted during 2024 or 2023, and all option-like entitlements outstanding are vested. As at December 31,
2024, there were option-like entitlements outstanding for 117 class A shares (2023 – 536).
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 compensation 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 table summarizes information about option-like entitlements outstanding:
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Annual Report 2024 | Guardian Capital Group Limited
15. DIVIDEND AND INTEREST INCOME
Dividend and interest income is comprised of the following:
For the years ended December 31
2024
2023
Dividends on Bank of Montreal shares
$
13,648
$
12,934
Other securities
9,238
8,617
Dividend income
22,886
21,551
Interest income
22,626
26,753
Dividend and interest income
$
45,512
$
48,304
16. EMPLOYEE COMPENSATION AND BENEFITS
Employee compensation and benefits are comprised of the following:
For the years ended December 31
2024
2023
Salaries and other compensation, payroll taxes and benefits
$
172,509
$
109,971
Contributions to defined contribution pension plans
2,101
1,471
Stock-based compensation
4,058
3,587
Employee compensation and benefits
$
178,668
$
115,029
Other operating expenses are comprised of the following:
For the years ended December 31
2024
2023
Information and technology services
$
39,809
$
18,652
Professional and outsourced services
20,992
12,557
Marketing and travel
7,706
5,428
Registration, facilities and other operating expenses
9,412
7,679
Other operating expenses
$
77,919
$
44,316
17. OTHER OPERATING EXPENSES
18. NET GAINS
Net gains are comprised of net gains (losses) arising on the following items:
i. Net gains on securities and securities sold short are a result of changes in the fair value of securities, securities backing third party investor
liabilities, securities sold short and third party investor liabilities.
ii. Foreign exchange gains (losses) arise from monetary assets and liabilities denominated in currencies which are different from the functional
currencies of the Company or its individual subsidiaries.
For the years ended December 31
2024
2023
Bank of Montreal common shares
$
18,420
$
19,111
Other securities and securities sold short
64,087
34,804
Securities and securities sold short (i)
82,507
53,915
Disposal of intangible assets
(471)
2,137
Lease and other liabilities
(1,115)
565
Foreign exchange (ii)
(3,477)
1,170
Net gains
$
77,444
$
57,787
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Annual Report 2024 | Guardian Capital Group Limited
19. NET EARNINGS PER SHARE
The calculations of net earnings per share and net earnings from continuing operations per share are based on the following:
The calculation of weighted average number of shares outstanding includes both Common and Class A shares less share held by the EPSP Trust
as Treasury Stock.
The weighted average effects of 151 (2023 – 141) equity-based and option-like entitlements from the Company’s stock-based compensation
arrangements were excluded from the above calculation as those entitlements were anti-dilutive.
For the years ended December 31
2024
2023
Weighted average number of share outstanding
Basic
23,266
23,782
Equity-based and option-like entitlements
1,527
1,742
Diluted
24,793
25,524
Net earnings from continuing operations attributable to shareholders
Basic
$
100,099
$
100,250
Effect of equity-based and option like entitlements
1,672
1,621
Diluted
$
101,771
$
101,871
Net earnings attributable to shareholders
Basic
$
100,099
$
562,929
Effect of equity-based and option-like entitlements
1,672
1,621
Diluted
$
101,771
$
564,550
20. BUSINESS SEGMENTS
Following the sale of the Worldsource Subsidiaries (note 26) the Company reorganized its operations into two segments: a) Investment
Management, which primarily involves earning management fees relating to investment management services provided to clients; and b)
Corporate Activities and Investments, which relates substantially to the investment of the Company’s securities holdings, as well as corporate
management and development activities. The segmented operating results below includes certain centralized costs which are allocated from
Corporate Activities and Investments segment to operating segments to better reflect the costs associated with each of the segments.
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Annual Report 2024 | Guardian Capital Group Limited
Investment
Management
Discontinued
Operations
Corporate Activities
and Investments
Inter-segment
transactions
Consolidated
For the years ended December 31
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Management and advisory fees
$
283,802 $197,865 $
– $
– $
– $
– $ (2,064) $ (1,978) $281,738 $ 195,887
Fees paid to referring agents
(14,201)
(13,359)
–
–
–
–
–
–
(14,201)
(13,359)
Net management and advisory fees
269,601
184,506
–
–
–
–
(2,064)
(1,978)
267,537
182,528
Administrative services income
9,478
8,797
–
–
2,088
1,553
(1,212)
–
10,354
10,350
Dividend and interest income
2,101
1,642
–
–
42,574
45,899
837
763
45,512
48,304
Net revenue
281,180
194,945
–
–
44,662
47,452
(2,439)
(1,215)
323,403
241,182
Expenses
Employee compensation and benefits
163,726
104,848
–
–
14,942
10,181
–
–
178,668
115,029
Amortization
15,618
11,604
–
–
2,012
2,088
–
–
17,630
13,692
Interest
889
508
–
–
9,473
7,918
–
(130)
10,362
8,296
Other expenses
71,569
39,660
–
–
8,789
5,741
(2,439)
(1,085)
77,919
44,316
251,802
156,620
–
–
35,216
25,928
(2,439)
(1,215)
284,579
181,333
Operating earnings
29,378
38,325
–
–
9,446
21,524
–
–
38,824
59,849
Net gains (losses)
2,781
(996)
–
–
74,663
58,783
–
–
77,444
57,787
Net earnings before income taxes
32,159
37,329
–
–
84,109
80,307
–
–
116,268
117,636
Income tax expense
10,938
11,464
–
–
3,732
4,010
–
–
14,670
15,474
Net earnings from continuing
operations
21,221
25,865
–
–
80,377
76,297
–
–
101,598
102,162
Net earnings from discontinued
operations
-
–
–
554,933
–
–
–
–
--
554,933
Net earnings
$
21,221 $ 25,865 $
– $554,933 $ 80,377 $
76,297 $
– $
– $101,598 $ 657,095
Net earnings attributable to:
Shareholders
$
19,722 $ 23,953 $
$462,679 $ 80,377 $
76,297 $
– $
– $100,099 $ 562,929
Non-controlling interests
1,499
1,912
92,254
–
–
–
1,499
94,166
$
21,221 $ 25,865 $
– $554,933 $ 80,377 $
76,297 $
– $
– $ 101,598 $ 657,095
Additions to segment assets
Intangible assets
$
79,984 $
1,215 $
– $
– $
1,066 $
– $
– $
– $ 81,050 $
1,215
Equipment
17,420
1,662
–
–
384
760
–
–
17,804
2,422
Goodwill
41,379
–
–
–
–
–
–
–
41,379
–
As at December 31
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Segment assets and liabilities:
Assets
$
601,624 $326,225 $
– $
– $1,333,726 $1,427,831 $ 17,036 $(21,056) $1,952,386 $1,733,000
Liabilities
263,936
168,452
–
–
354,435
342,678
17,036
(21,056)
635,407
490,074
(B) GEOGRAPHIC SEGMENTS
The Company also operates in various geographic regions. The following table discloses certain information about the Company’s activities
by geography:
Canada
United Kingdom
United States and other
Consolidated
For the year ended December 31
2024
2023
2024
2023
2024
2023
2024
2023
Net revenue from external parties
$
148,216 $
148,037 $
58,031 $
55,756 $
117,156 $
37,389 $
323,403 $
241,182
As at December 31
2024
2023
2024
2023
2024
2023
2024
2023
Segment non-current assets
Intangible assets
$
32,814 $
23,417 $
2,196 $
2,365 $
126,918 $
59,608 $
161,928 $
85,390
Equipment
17,637
18,748
270
602
18,916
2,834
36,823
22,184
Goodwill
11,134
11,134
871
813
75,819
29,679
87,824
41,626
(A) BUSINESS SEGMENTS
The following table discloses certain information about these segments:
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Annual Report 2024 | Guardian Capital Group Limited
21. NET CHANGE IN NON-CASH WORKING CAPITAL ITEMS
22. FINANCIAL RISK MANAGEMENT
For the years ended December 31
2024
2023
Decrease (increase) in non-cash working capital assets
Interest-bearing deposits with banks
$
(9,891)
$
(1,490)
Accounts receivable and other assets
(1,311)
(3,298)
Receivables from clients and broker
–
28,524
Increase (decrease) in non-cash working capital liabilities
Client deposits
17,162
(7,061)
Accounts payable and other
29,765
16,620
Payable to clients
–
(25,013)
Net change in non-cash working capital items
$
35,725
$
8,282
As at December 31
2024
2023
Bank of Montreal common shares
$
310,594
$
292,175
Intelligent traffic systems company
115,307
112,512
$
425,901
$
404,687
Net change in non-cash working capital items is comprised of the following:
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 of the Company’s 2024 Annual Report. The following
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 certain investments as follows:
The investment in the Bank of Montreal shares represents 25% (2023 – 22%) of the Company’s securities. 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
gain or loss of $31,059 (2023 - $29,218) being recorded in net gains (losses).
The investment in the Intelligent traffic systems company (note 4(c)) represents 9% (2023 – 9%) of the Company’s securities. The Company’s
interest in this investment is held through an investment in the Company’s smart infrastructure partnerships (note 24d). The Company through
the partnership jointly controls this investment and manages its risk through representation on investment’s board and active monitoring of its
operations. A change in the estimated fair value of the investment by 10% would result in gain or loss of $11,531 (2023 - $11,251) being
recorded in net gains (losses).
(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
Price risk, the risk of a gain or loss resulting from movements in the price of securities, arises when the Company invests in securities or sells
securities short.
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Annual Report 2024 | Guardian Capital Group Limited
As at December 31
2024
2023
Assets
Cash
$
14,280
$
–
Short-term securities
13,723
16,551
Liabilities
Bank loans and borrowings
73,492
80,830
$ (45,489)
$ (64,279)
The Company’s currency risk is primarily related to the US dollar borrowings. This risk is mitigated by the US dollar cash flows which are
generated by certain of the Company’s subsidiaries, which have been used to reduce these borrowings. In addition, the Company will recognize
an offsetting amount on translation of the investment in this foreign subsidiary and recognize a gain/loss in other comprehensive income. A
change in the CAD-USD exchange rate by +/-10% would result in a foreign exchange loss or gain of +/- $4,549 (2023 – $6,428) recognized
in net earnings.
From time to time, a foreign subsidiary may hold an unhedged position in Canadian dollars, which can result in foreign exchange gains or
losses in that subsidiary. Upon translation of their results on consolidation, the Company will recognize an equal and offsetting foreign currency
translation adjustment in Other comprehensive income. This is not considered to be a currency risk as there is no economic risk to the Company.
iii. Interest Rate Risk
Interest rate risk, the risk of increased income and expense or gain or loss resulting from changes in interest rates, arises when the Company is
party to an interest-bearing financial instrument. The Company’s significant exposure to interest rate risk is as follows:
This risk is managed through the use of professional in-house portfolio management expertise, which takes a disciplined approach to investment
management. The Company’s securities holdings and short positions, excluding the Bank of Montreal shares, are also diversified by asset class
and by geographical region. The net price risk from third party investors liabilities and Securities banking third party liabilities is minimal and is
discussed in detail in note 3.
ii. Currency Risk
Currency risk, the risk of a gain or loss resulting from the movements in currency exchange rates, arises when the Company or one of its
subsidiaries is a party to financial instruments which are denominated in a currency which is different from its functional currency. The Company’s
most significant exposure to currency risk is as follows:
As at December 31, 2024
Securities and securities sold
short classified as fair value
through the profit and loss
Gain or loss recognized from
10% market change in region
Canada
$
56,108
±$
5,611
Emerging markets
78,920
7,892
Developed markets
273,932
27,393
$
408,960
±$
40,896
As at December 31, 2023
Canada
$
52,316
±$
5,232
Emerging markets
68,400
6,840
Developed markets
238,513
23,851
$
359,299
±$
35,923
The Company’s most significant exposure to price risk, excluding the investments disclosed in the preceding concentration risk note and fixed-
income and short-term securities is as follows:
As at December 31
2024
2023
Interest rate sensitive assets:
Interest-bearing deposits with banks
$
85,100
$
66,912
Short-term securities
334,091
516,177
Fixed-income securities
41,696
37,437
$
460,887
$
620,526
Interest rate sensitive liabilities:
Bank loans and borrowings
$
144,126
$
136,014
Client deposits
74,185
50,071
$
218,311
$
186,085
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Annual Report 2024 | Guardian Capital Group Limited
23. CAPITAL MANAGEMENT
The Company considers the following to be its capital: shareholders’ equity and bank loans and borrowings. The Company’s objectives in
managing its capital are to:
i. Maintain a strong capital base to provide investor, creditor, regulator and client confidence; and
ii. 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, 2024, the Company’s regulated businesses had
total regulatory capital amounting to $329,826 (2023 – $297,750). 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 general corporate borrowing facility is subject to certain terms and conditions. During the years, and at year ends, the Company
complied with those terms and conditions.
The cash and 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 accounts receivable and other are generally amounts due to from customers and the credit risk is low due to the nature
of the Company’s customers.
The credit risk associated with the Company’s investment in short-term and fixed-income securities are managed first by the Company who
selects appropriate investment risk parameters and then by the use of professional in-house portfolio management expertise that manages the
securities in accordance with the investment policy. The short-term securities are investments in investment-quality securities with very short
duration and low credit risk.
(D) LIQUIDITY RISK
Liquidity risk, the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities, arises when the
Company has insufficient resources to meet its obligations as they come due. The Company is exposed to liquidity risk because it has significant
obligations which are due within one year. The Company manages this financial risk by managing its cash flows from operations, maintaining a
portfolio of liquid securities, and by arranging significant borrowing facilities with major Canadian banks which are secured by collateral.
As at December 31
2024
2023
Cash
$
137,477
$
72,414
Interest-bearing deposits with banks
85,100
66,912
Accounts receivable and other assets
87,922
55,001
Short-term securities
334,091
516,177
Fixed-income securities
41,696
37,437
$
686,286
$
747,941
The interest rates on these borrowings are short-term and, if short-term rates increase, the Company’s interest expense will increase and net
earnings will decrease. If interest rates had been different by ± 1% throughout the year, with all other variables held constant, the Company’s
interest expense would have been changed by approximately ± $1,160 (2023 – ± $1,148).
The Company’s short-term and fixed-income securities are managed by its investment management subsidiaries. The interest rate risk associated
with these securities are managed first by the Company who selects appropriate investment duration and then by the use of professional in-house
portfolio management expertise that manages the securities in accordance with the investment policy. If interest rates had been different by ±
1% throughout the year, with all other variables held constant, the Company’s interest income would have been changed by approximately ±
$4,695 (2023 - ± $4,846).
The interest rate risk on interest-bearing deposits with banks and the client deposits, both of which arise in the international banking operation,
is considered to be low, as the Company manages by matching interest and maturities on the assets and liabilities.
(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:
64
Annual Report 2024 | Guardian Capital Group Limited
As at December 31
2024
2023
Short-term employment benefits
$
7,075
$
18,752
Post-employment benefits
35
35
Stock-based compensation
2,606
2,255
$
9,716
$
21,042
For the years ended December 31
2024
2023
Investment management services
$
69
$
50
Voting ownership interest
As at December 31
Country of organization
2024
2023
Guardian Capital LP
Canada
100%
100%
Guardian Partners Inc.
Canada
100%
100%
Guardian Capital Advisors LP
Canada
NA
100%
Guardian Capital Enterprises Limited
Canada
100%
100%
Guardian Capital Real Estate Inc.
Canada
100%
100%
Guardian Smart Infrastructure Management Inc.
Canada
100%
100%
Rae & Lipskie Investment Counsel Inc. (i)
Canada
60%
60%
Modern Advisor Canada Inc.
Canada
92%
71%
4135431 Canada Inc.
Canada
100%
100%
Galibier Capital Management Ltd.
Canada
100%
0%
GuardCap Asset Management Limited
United Kingdom
100%
100%
Guardian Capital, LLC
United States
100%
100%
Alta Capital Management, LLC (ii)
United States
100%
100%
Agincourt Capital Management, LLC (iii)
United States
70%
70%
Sterling Capital Management LLC
United States
100%
0%
Guardian Capital Holdings International Ltd.
Cayman Islands
100%
100%
Alexandria Bancorp Limited
Cayman Islands
100%
100%
Alexandria Global Investment Management Ltd.
Cayman Islands
100%
100%
Alexandria Trust Corporation
Barbados
100%
100%
Guardian Capital Group Limited Employee Profit Sharing Plan (iv)
Canada
0%
0%
Certain of the short-term employment benefits in 2023 include amounts related to the Company’s discontinued operations.
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:
(C) OPERATING SUBSIDIARIES
The Company’s significant operating subsidiaries during the periods and ownership interest at year ends are as follows:
24. RELATED PARTIES
(A) MAJOR SHAREHOLDER
Minic Investments Limited (“Minic”) beneficially owned 49.7% (2023 – 49.7%) of the Company’s outstanding common shares as at December
31, 2024. A. Michael Christodoulou, a director and officer of the Company, is currently President and significant shareholder of Minic. In 2024
and 2023, 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:
65
Annual Report 2024 | Guardian Capital Group Limited
ii. The principal place of business for Alta Capital Management, LLC (“Alta”), the Company’s US equity investment manager subsidiary, is
located at Suite 260, South Wasatch Boulevard, Salt Lake City, Utah. During 2023 the Company acquired the portion of Alta it did not
already own and as a result at December 31, 2023 and subsequently non-controlling interests had no equity and voting ownership interest
in Alta.
The accumulated non-controlling interests in the Company’s accounts related to Alta are as follows:
For the years ended December 31
2024
2023
Balance, beginning of year
$
–
$
17,582
Net earnings
–
298
Other comprehensive income
–
(31)
Distributions
–
(1,328)
Acquisition of NCI
–
(16,521)
Balance, end of year
$
–
$
–
Summarized financial information about the operations of Alta before inter-company eliminations in which the non-controlling interests had an
interest are as follows:
For the years ended December 31
Revenue
$
–
$
13,708
Net earnings
–
1,521
Comprehensive income
–
1,253
iii. The principal place of business for Agincourt Capital Management, LLC (“Agincourt”), the Company’s US fixed-income investment manager
subsidiary, is located at Suite 800, 200 South 10th Street, Richmond, Virginia. The non-controlling interests have a 30% equity and voting
ownership interest in Agincourt (2023 – 30%).
Summarized financial information about assets, liabilities and operations of Rae & Lipskie before inter-company eliminations in which the non-
controlling interests have an interest are as follows:
As at December 31
2024
2023
Current assets
$
3,721
$
3,056
Intangible assets
7,796
8,424
Other non-current assets
6,865
6,981
$
18,382
$
18,461
Current liabilities
$
1,826
$
1,201
Non current liabilities
8,769
8,258
$
10,595
$
9,459
For the years ended December 31
Revenue
$
7,601
$
7,474
Net earnings
856
645
Comprehensive income
856
645
For the years ended December 31
2024
2023
Balance, beginning of year
$
5,190
$
5,007
Net earnings
545
423
Dividends
(560)
(240)
Balance, end of year
$
5,175
$
5,190
i. The principal place of business for Rae & Lipskie Investment Counsel Inc. (“Rae & Lipskie”) the Company’s wealth management subsidiary, is
located at 20 Erb Street W, Waterloo, Ontario. The non-controlling interests have a 40% (2023 – 40%) equity and voting ownership interest
in Rae & Lipskie.
The accumulated non-controlling interests in the Company’s accounts related to Rae & Lipskie are as follows:
66
Annual Report 2024 | Guardian Capital Group Limited
As at December 31
2024
2023
Current assets
$
8,488
$
6,582
Other non-current assets
907
1,095
Intangible assets
16,848
16,887
Goodwill
11,247
10,312
$
37,490
$
34,876
Current liabilities
$
2,714
$
1,944
Non-current liabilities
746
933
$
3,460
$
2,877
For the years ended December 31
Revenue
$
15,184
$
13,461
Net earnings
2,620
2,600
Comprehensive income
2,233
1,445
Summarized financial information about assets, liabilities, and operations of Agincourt before inter-company eliminations in which the non-
controlling interests have an interest are as follows:
iv. The Company does not hold any ownership interest in 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 14, Treasury Stock.
(D) INTERESTS IN INVESTMENT FUNDS
The Company sponsors and manages a number of investment funds, including both mutual funds and exchange traded funds. The purpose of
each fund is to efficiently invest monies on behalf of the Company’s clients, and they are intended to be the primary investors in and owners of
the fund. The Company provides investment management services and in certain circumstances administration services to these funds. These
funds, which are separate legal entities, are to be financed by investments made by clients and, to a limited extent, the Company. However, there
are periods when the Company may control a fund, due to the management of and the size of its economic interest in the fund, and as a result
the Company will consolidate that fund.
i. Consolidated investment funds
The Company consolidates an investment fund when it controls the fund. This is frequently during the initial launch period of a fund when
the Company provides the initial seed capital. In addition, control of the fund may change during other periods, for example due to ongoing
investments into or out of a fund. Subsequent to control being lost, the Company may continue to maintain an investment in the fund. Investment
funds sponsored by the Company which were consolidated at any time during 2024 or 2023, and the Company’s ownership interest at the end
of each of those years are as follows:
For the years ended December 31
Country of organization
Voting ownership interest
2024
2023
Guardian Directed Equity Path Fund (a)
Canada
NA
33%
Guardian i3 US Quality Growth ETF (a)
Canada
NA
48%
GuardPath Modern Tontine 2042 Trust
Canada
83%
81%
Guardcap UCITS Funds PLC, Emerging Markets Equity Fund
Ireland
91%
90%
Alta Quality Growth Fund
United States
55%
49%
Guardian Dividend Growth Fund
United States
68%
99%
Guardian Smart Infrastructure Partners – A LP
United States
82%
99%
Guardian Smart Infrastructure Partners Juniper Aggregator LP
United States
67%
97%
The Alexandria Directed Equity Path Fund (a)
Cayman Islands
NA
100%
For the years ended December 31
2024
2023
Balance, beginning of year
$
9,339
$
9,643
Net earnings
1,112
983
Other comprehensive income
(725)
172
Distributions
(1,354)
(1,459)
Balance, end of year
$
8,372
$
9,339
The accumulated non-controlling interests in the Company’s accounts related to Agincourt are as follows:
67
Annual Report 2024 | Guardian Capital Group Limited
As at December 31
2024
2023
Net assets of unconsolidated investment funds
$18,285,400
$ 9,757,102
Company’s interests in unconsolidated investment funds
262,430
211,441
For the years ended December 31
Net revenue for investment management and administration services
earned directly from unconsolidated investment funds
$
70,520
$
44,385
The Company’s maximum exposure to loss from its interest in these investment funds is limited to the amount of its investment.
In addition to the Net revenue shown above, certain investors pay fees for investment management services directly to the Company, rather than
through the fund. These fees have not been included in the above amounts.
The Company revised its previously reported estimates for the fair value of the earn-out payments, intangibles and goodwill. The revised estimates
resulted in the fair value of the earn-out payments decreasing by $9,607, the intangibles decreasing by $20,251 and goodwill increasing by
$10,645. These adjustments were made retrospectively to the acquisition date.
The Company incurred and expensed to December 31, 2024 approximately $8,969 of costs to execute this transaction and these costs were
included in other operating expenses in the Consolidated Statements of Operations.
ii. Unconsolidated investment funds
A summary of the unconsolidated investment funds that are managed by the Company, and the Company’s interest in and transactions with
those funds, are summarized in the following tables:
25. ACQUISITIONS
(A) ACQUISITIONS
i. Sterling Capital Management LLC
On July 2, 2024, the Company acquired a 100% interest in Sterling Capital Management LLC (“Sterling”) from Truist Financial Corporation
(“Truist”). Headquartered in Charlotte, North Carolina, Sterling had on closing approximately US$75,779,000 (C$104,106,000) in assets
under management and advisement. Sterling invests on behalf of a broad range of institutional and individual investors through separate
accounts, model portfolios, and commingled vehicles, including mutual funds. The addition of Sterling enhances the Company’s overall product
offering diversification, scale as a global asset manager and provides a US platform for future growth in the US market. Sterling’s management
and key employees have been retained and are continuing their employment with Sterling.
The financial terms of the transaction included payments of US$78,492 on closing, including certain post-closing adjustments. In addition,
potential future earn-out payments are payable between the third and fifth year after closing to a maximum of US$45,000, dependent on the
level of revenue earned from Truist related client relationships over that period. The Company, based on a Monte Carlo simulation analysis,
estimated that the fair value of the earn-outs to be $15,090 on acquisition. The final accounting for this transaction is as follows:
Fair value of consideration
Cash
$
107,511
Fair value of earn-out payments
15,090
$
122,601
Fair value of identifiable net assets acquired
Cash
$
11,291
Non-cash working capital
151
Leases and other assets
16,432
Intangibles
67,645
Lease liabilities
(14,297)
81,222
Goodwill
41,379
$
122,601
a.
During 2024, the Company determined that it has ceased to control the Guardian Directed Equity Path Fund and Guardian i3 US
Quality Growth ETF due to increased third party investments and as a result the Company ceased to consolidate those funds in 2024.
The Alexandria Directed Equity Path Fund ceased operations and was liquidated in 2024.
68
Annual Report 2024 | Guardian Capital Group Limited
Included in the above results are one-time transaction and initial business integration efforts costs that have been incurred by Sterling. These
expenditures include transaction success fees, legal and tax advisory fees, retention incentives for key employees, and technology and other
business integration costs.
ii. Galibier Capital Management Ltd.
On September 3, 2024, the Company acquired 100% of Galibier Capital Management Ltd. (“Galibier”), an independent Toronto-based investment
management firm. The acquisition will enhance the Company’s Canadian equity investment management capabilities and added approximately
$1,125,000 in assets under management on closing.
The final accounting for this transaction is as follows:
The earn-out payments are payable on the first and fifth years after closing and are dependent on the level of assets under management and projected
revenues on those dates and limited to a maximum of $7,500. The Company, based on a Monte Carlo simulation analysis, estimated that the fair value
of the earn-outs to be $5,053 on acquisition. The intangible assets relate to existing investment management contracts that Galibier has with clients.
The fair value of the intangible assets was determined using an income approach – the multi-period excess earnings method. The valuation method
was based on the discounted cash flows expected to be derived from the ownership of the intangibles. The acquisition costs included in other operating
expenses of the Consolidated Statements of Operations were not material.
Galibier’s contributions to the Company’s operating results since acquisition are as follows:
iii. Pro-forma information on acquisitions
If the acquisition date for the above acquisitions had been January 1 of the year in which the acquisition had happened rather than the actual
date then the Company estimates that its reported Net revenues and Net earnings would have been as follows:
Fair value of consideration
Cash
$
3,604
Fair value of earn-out payments
5,053
$
8,657
Fair value of identifiable net assets acquired
Cash
$
565
Non-cash working capital
539
Other assets
136
Intangibles
10,306
Other liabilities
(158)
Deferred taxes
(2,731)
$
8,657
For the year ended December 31
2024
Net revenues
$
1,227
Net loss and comprehensive loss
(271)
For the years ended December 31
2024
2023
Net revenues
$
405,102
$
–
Net earnings
108,785
–
For the year ended December 31
2024
Net revenues
$
74,183
Net loss
(2,048)
Comprehensive income
3,080
The intangible assets relate to existing investment management contracts that Sterling has with clients. The fair value of the intangible assets
was determined using an income approach – the multi-period excess earnings method. The valuation method was based on the discounted cash
flows expected to be derived from the ownership of the intangibles. The significant assumptions and estimates used to determine the fair value
of the intangibles include projected revenue growth attributable to the acquired intangible assets, client attrition and the discount rate.
Goodwill relates to the retention of Sterling’s senior leadership team, access to established distribution, contacts in key markets, addition of new
products and other potential synergies. The Company expects the goodwill to be deductible for income tax purposes.
Sterling’s contributions to the Company’s operating results since acquisition are as follows:
69
Annual Report 2024 | Guardian Capital Group Limited
26. DISPOSITION OF SUBSIDIARIES
On March 1, 2023, the Company sold its subsidiaries, IDC Worldsource Insurance Networks Inc. (“IDC WIN”), Worldsource Financial Management
Inc. and Worldsource Securities Inc. (collectively “Worldsource Subsidiaries”) to the Desjardins Group for $750,000, subject to customary price
adjustments for excess working capital. The proceeds of disposition were divided between the Company and the non-controlling interests in IDC
WIN. The Worldsource Subsidiaries had been classified as discontinued operations since November 30, 2022.
The summarized operating results of the Worldsource Subsidiaries which are included in the Company’s Consolidated Statement of Operations
as Net earnings from discontinued operations are as follows:
For the years ended December 31,
2024
2023
Operating activities:
Net revenue
$
–
$
17,615
Expenses
–
14,333
Operating earnings
–
3,282
Net gains
–
387
Income tax expense
$
–
(803)
2,866
Gain on disposition
$
–
619,511
Income tax expense
–
67,444
$
552,067
Net earnings from discontinued operations
–
$
554,933
Net earnings from discontinued operations attributable to:
Shareholders
–
$
462,679
Non-controlling interests
–
92,254
–
$
554,933
Per share (note 18):
Basic
–
$
19.46
Diluted
–
18.13
For the years ended December 31,
2024
2023
Net cash from (used in)
Operating activities
$
–
$
10,087
Investing activities
–
726,580
Financing activities
–
(43,390)
$
–
$
693,277
The summarised cash flows for the Worldsource subsidiaries which have been included in the Company’s Consolidated Statements of Cash Flow
are as follows:
For the years ended December 31
2024
2023
Sterling
$
107,511
$
–
Galibier
3,604
–
Acquisitions closed prior to 2023
1,800
–
Less cash acquired in above transactions
(11,856)
–
$
101,059
$
–
(B) CASH USED FOR (ACQUIRED IN) ACQUISITIONS
An analysis of the cash used for (acquired in) acquisitions is as follows:
70
Annual Report 2024 | Guardian Capital Group Limited
For the years ended December 31,
2023
Cash
$
6,452
Receivables from clients and broker
65,536
Other current assets
26,133
Intangibles
83,980
Goodwill
32,622
Other non-current assets
8,828
Payable to clients
(65,536)
Other current liabilities
(32,877)
Non-current liabilities
(9,219)
Net assets and liabilities disposed
113,919
Consideration received, cash (i)
749,286
Cost of disposal
(16,254)
Cash disposed
(6,452)
Net cash inflows
726,580
Less amounts paid to Non-controlling interests
(103,830)
$
622,750
The effects of the disposal on the financial position of the Company are as follows:
71
THE TEAM AT
GUARDIAN
James S. Anas †,§
A. Michael Christodoulou
Petros Christodoulou §
Marilyn De Mara §
Harold W. Hillier §
George Mavroudis
Edward T. McDermott §
Barry J. Myers §
Hans-Georg Rudloff §
George Mavroudis
President and Chief Executive Officer
A. Michael Christodoulou
Senior Vice-President, Strategic Planning
and Development
Paula Dunlop
Executive Vice-President, Human
Resources
Robin Lacey
Head of Institutional Asset Management
Matthew D. Turner
Senior Vice-President, Chief Compliance
Officer and Secretary
Donald Yi
Chief Financial Officer
Ernest B. Dunphy
Vice-President and Controller
Eddy Fung
Vice-President, Retail Finance and
Administration
Rachel Hindson
Vice-President, Legal
Angela Shim
Vice-President, Corporate Initiatives
† Chairman
§ Independent Director
COMMITTEES
DIRECTORS
PRINCIPAL EXECUTIVES
A. Michael Christodoulou
Marilyn De Mara §
Edward T. McDermott †,§
Barry J. Myers §
Corporate governance
and nominating
James S. Anas §
Harold W. Hillier †,§
Edward T. McDermott §
Hans-Georg Rudloff §
Compensation
James S. Anas §
Harold W. Hillier §
Marilyn De Mara §
Barry J. Myers †,§
Audit
SUPLEMENTARY INFO
Corporate Office
Commerce Court West
Suite 2700, P.O. Box 201
Toronto, Ontario M5L 1E8
Phone: (416) 364-8341
Fax: (416) 364-2067
guardiancapital.com
Registrar and Transfer Agent
Computershare Investor Services Inc.
1 (800) 564-6253
investorcentre.com/service
Annual Meeting
May 9, 2025
Pearce Bunting and Barbara Stymiest
Rooms, TMX Market Centre
120 Adelaide Street West
Toronto, Ontario M5H 1S3
Investor Relations
George Mavroudis
info@guardiancapital.com
Principal Bankers
Canadian Imperial Bank of Commerce
Bank of Montreal
Toronto Stock Exchange Listing
Common: GCG
Class A: GCG.A
Auditor
KPMG LLP