Toronto-based Aston Hill Financial Inc. announced on Wednesday that revenue for the second quarter (Q2), ended June 30, was $9.7 million, down by 20% from $12.2 million in Q2 2014 and down by 9% from $10.6 million in the first quarter (Q1) ended March 31.
The revenue decrease is being attributed to a reduction in revenue from subadvisory mandates and institutional assets, which are primarily related to the non-renewal of Aston Hill’s agreement with Toronto-based IA Clarington Investments Inc.
The non-renewal of the agreement with IA Clarington was a part of Aston Hill’s strategy to grow its in-house mutual funds, says Peter Anderson, interim CEO, in a statement.
“The loss of this subadvisory revenue, while impactful in the short-term to our earnings, better positions the company to achieve long-term growth from our in-house mutual funds by appointing [Ben Cheng, president and chief investment officer] as a portfolio manager exclusively for Aston Hill’s investment products in late November 2015,” Anderson adds. “Additionally, the company will be able to increase its focus on sales efforts in the Mutual Fund Dealers Association of Canada channel beginning in late August, something it has not previously been able to do because of the subadvisory relationship.”
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for Q2 2015 was $1.3 million, down substantially from $2.8 million in Q2 2014 and $1.6 million in Q1 2015. Net income for Q2 was a loss of $1.9 million, down from a loss of $7,000 in Q2 2014 and net income of $26,000 in Q1 2015.
Total expenses, excluding finance expense, for Q2 was $11.5 million, an increase from $9.5 million in the first quarter of this year. This is mainly due to $3.6 million in one-time restructuring costs related to ongoing corporate reorganization, which includes consolidating certain corporate functions being run from the Calgary office to the Toronto office.
“The annual cost savings [of the corporate reorganization] are estimated to be approximately $2 million per year, which over the coming quarters will provide the company with a more efficient cost structure upon which future growth can be built,” says Cheng in the statement. “Along with the corporate reorganization is the closure of the Calgary office, which further demonstrates Aston Hill’s commitment to growing our in-house funds, stepping away from our energy management beginnings.”
The asset-management firm also announced its quarterly cash dividend in the amount of 0.5¢ per common share, which will be payable on Aug. 26 to all Aston Hill shareholders of record as of Aug. 14.