Mr. George Mavroudis reports
GUARDIAN CAPITAL GROUP LIMITED (TSX: GCG; GCG.A) ANNOUNCES 2022 ANNUAL OPERATING RESULTS
Guardian Capital Group Ltd. has released its 2022 annual operating results.
All per-share figures disclosed in this news release are stated on a diluted basis.
The company successfully closed, on March 1, 2023, the previously announced transaction to sell its subsidiaries, IDC Worldsource Insurance Network Inc. (IDC WIN), Worldsource Financial Management Inc. and Worldsource Securities Inc., for $750-million, subject to adjustments for net working capital, less amounts due to minority shareholders of IDC WIN. In this news release and in the 2022 financial statements, the Worldsource businesses are referred to as discontinued operations and their financial results are disclosed as net earnings from discontinued operations. Prior-period results have also been restated to reflect this presentation. Assets under administration of the Worldsource businesses have also been reclassified as assets under administration, discontinued operations. All other disclosures in this news release relate to the continuing businesses only.
The company is reporting $53.3-billion in total client assets as at Dec. 31, 2022, a reduction of 12 per cent from the $60.7-billion reported at Dec. 31, 2021. These client assets consisted of assets under management (AUM) of $49.6-billion, a 12-per-cent reduction from the $56.3-billion reported a year earlier, and assets under administration (AUA) of $3.7-billion, a slight decrease from the $4.3-billion reported a year earlier. The decrease in AUM was driven largely by the negative global financial market performance and, to a lesser extent, net redemptions.
The sale of the Worldsource businesses has resulted in a significant increase in liquid capital. Therefore, the board has decided that a higher allocation of cash flows from operating businesses can be made toward dividend payout for its shareholders. The board of directors is pleased to have declared a quarterly eligible dividend of 34 cents per share, a 42-per-cent increase from the last declared dividend of 24 cents per share, payable on April 19, 2023, to shareholders of record on April 12, 2023.
The company is reporting net revenue for the year ended Dec. 31, 2022, of $200.1-million, a 4-per-cent increase from $194.0-million in 2021. An increase in dividend income earned on the corporate holdings of securities was the largest driver of the increase.
Operating earnings of $44.1-million are being reported for the year, a decrease of 20 per cent from the $54.9-million reported in 2021.
Expenses in the current year were $156.9-million, a 13-per-cent increase from $139.1-million in the prior year. The higher expenses reflect higher interest expense incurred on the company's borrowings and the continuing investments in the strategically important initiatives of building its retail distribution capabilities, the private infrastructure business (Guardian Smart Infrastructure Management Inc.), the digital advisory platform and the outsourced chief investment officer business. The total operating loss incurred in 2022 in these businesses was approximately $12-million.
Net losses in the current year were $104.2-million, compared with net gains of $139.7-million in the prior year. The large swing from net gains to net losses reflects the volatility in the equities markets globally. The declines in those markets in the current year caused the fair value of the corporate holdings of securities to decline, resulting in these losses being recorded. These losses were substantially all unrealized losses.
Net earnings from discontinued operations were $22.3-million in the current year and $21.8-million in the prior year, as restated. The operating earnings of these businesses were $25.4-million in the current year and $26.8-million in the prior year.
EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA attributable to shareholders for the current year were $64.2-million and $59.9-million, respectively, compared with $69.6-million and $64.6-million, respectively, in the prior year. Adjusted cash flow from operations and adjusted cash flow from operations attributable to shareholders for the current year were $44.3-million and $39.8-million, respectively, compared with $55.8-million and $50.8-million, respectively, in the prior year.
The company's shareholders' equity as at Dec. 31, 2022 was $768-million or $29.43 per share, compared with $839-million or $31.53 per share as at Dec. 31, 2021. During the current year, the company returned to shareholders $23.3-million in dividends and $23.1-million in share buybacks. The fair value of the company's securities as at Dec. 31, 2022, was $660-million or $25.31 per share, compared with $752-million or $28.27 per share as at Dec. 31, 2021. These measures increased significantly from the sale of the Worldsource businesses. The company received approximately $39-million of cash as a result of excess working capital from these businesses immediately prior to the sale and received approximately $627-million in net proceeds from the purchaser on closing, which is net of amounts owed to minority shareholders and other adjustments.
The company's financial results for the past eight quarters are summarized in the attached table.
Guardian is a diversified, global financial services company operating in two main business segments -- investment management and wealth management. Guardian provides extensive investment and wealth management solutions to institutional, retail and private high- and ultrahigh-net-worth clients through its subsidiaries. Founded in 1962, Guardian's reputation for steady growth and long-term relationships, and its core values of trustworthiness, integrity and stability have been key to its success over six decades. Its common and Class A shares are listed on the Toronto Stock Exchange as GCG and GCG.A, respectively.
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