AGF posts quarterly loss amid tax dispute, drop in revenue
TORONTO, June 26
TORONTO, June 26 (Reuters) - Canadian fund manager AGF Management Ltd on Wednesday posted a net loss for its fiscal second quarter as tax troubles and a decline in revenue and assets under management ate away profits.
The Toronto-based asset manager said the net loss from continuing operations was C$10.4 million ($9.9 million), or 12 Canadian cents per share, in the three months ended May 31, compared with earnings of C$16.8 million, or 17 Canadian cents a share, a year earlier.
The company recorded a tax provision of C$25.9 million tax during the quarter to reflect uncertainty about a continuing dispute with the Canada Revenue Agency over the transfer pricing and allocation of income between one of AGF's Canadian entities and a foreign subsidiary.
Adjusted earnings were 17 Canadian cents a share. On that basis, analysts had expected 16 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Revenue from continuing operations was C$126.9 million, down from C$133.5 million a year earlier. Assets under management fell to C$37.6 billion from C$43.2 billion.
Analysts surveyed by Thomson Reuters I/B/E/S had expected revenue of C$120.9 million. Economic uncertainty and poor financial markets have kept many investors on the sidelines, hurting results at many global wealth managers.
"We are optimistic about the business going into the second half of 2013. From encouraging macroeconomic signals to some significant business wins for AGF, we are well positioned to take advantage of the improving economic climate and demand for global mandates," AGF Chief Executive Blake Goldring said in a statement.
The company said it expects to receive a notice of reassessment from the Canadian tax authority related to the dispute over transfer pricing and allocation of income between its units.
Regarding the tax dispute, AGF said it "believes its tax filing positions continue to be reasonable, based on its transfer pricing methodology, and the company is contesting the CRA's position.
"However, to reflect the uncertainties of the CRA's appeals process, the company has recorded a tax provision of C$25.9 million related to this matter in the second quarter of 2013."