Sceptre Investment Counsel Reports Q1 2009 Results
Posted in: Accounting, Finance, By: admin, At: March 27th, 2009
TORONTO, ONTARIO–(Marketwire – March 26, 2009) – Sceptre Investment Counsel Limited (TSX:SZ), a leading independent Canadian money management firm, today reported its financial results for the three months ended February 28, 2009.
For the first quarter the Company earned $914,000 or 7 cents per share fully diluted (7 cents per share basic). Earnings for the first quarter of 2008 were $1,532,000 or 11 cents per share.
“Our financial results were adversely impacted by the extraordinary declines in equity markets during the year. Despite the unsettled markets, we continue to see opportunities to add new investment management mandates” said Glenn Inamoto, Chief Executive Officer.
Q1 Revenue
The most important driver affecting revenue during the quarter was the significant decline in the level of equity markets compared to a year ago, which impacted the level of assets under management and therefore the fees charged by the Company.
Total revenue for the first quarter was $6.50 million, compared with $9.32 million for the first quarter of 2008. Total management fee revenue for the quarter was $6.36 million, versus $9.09 million for the first quarter last year. Institutional management fee revenue was $4.22 million compared with $5.05 million for the first quarter last year as assets at the Billing Point (December 31(1)) decreased from $7.36 billion last year to $5.93 billion this year as a result of declines in equity markets, which more than offset positive cash flows. Mutual fund revenue was $1.14 million in this quarter versus $2.63 million in the same quarter last year as average assets decreased from $840 million last year to $375 million this year, with the majority of the fall resulting from significant declines in equity markets. Private Client revenue was $1.00 million for the quarter versus $1.40 million in the same quarter last year as average assets declined from $773 million last year to $529 million this year, with the bulk of the decrease coming from negative returns in equity markets. Investment income of $0.14 million this quarter was lower than last year’s $0.24 million as last year’s quarter benefited from higher short-term note interest and a gain on the sale of seed capital investments in funds managed by the Company.
(1) Sceptre recognizes revenue from most institutional clients based on
asset levels at the end of each calendar quarter ("the billing
points"). Therefore, Q1 institutional revenue is based on
institutional assets at December 31st. This applies only to
institutional revenues as mutual fund and private client revenues
are charged based on daily market values during each fiscal quarter
Q1 Expenses
Revenue related expenses (sub-advisory fees, trailer fees and referral fees) declined by $0.5 million this quarter versus a year ago, from $1.5 million to $1.0 million, in line with the decline in assets subject to those charges. Other Expenses decreased by $1.32 million versus a year-ago, to $4.11 million from $5.43 million. Lower compensation expense accounted for most of the decline, falling by $1.20 million due to staff reductions and lower profitability related remuneration.
The Company, having considered its financial requirements, has declared a quarterly dividend of 6 cents per share on outstanding common shares, payable on April 30, 2009 to shareholders of record April 6, 2009. The previous quarterly dividend was 6 cents per share.
Fiscal Period Asset Continuity
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Q1 2009
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(in $ thousands) Opening AUM Net Cash Flows Market Closing AUM
Appreciation
(Depreciation)
$ $ $ $
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Pension and other
Institutional
funds $ 5,816,021 $ 46,000 $ (357,146) $ 5,504,875
Private Client 599,125 (36,649) (29,577) 532,899
Retail Mutual
Funds 391,323 (23,648) (10,362) 357,313
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Total $ 6,806,469 $ (14,297) $ (397,085) $ 6,395,087
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About Sceptre Investment Counsel
Sceptre Investment Counsel Limited is a leading Canadian independent investment management firm with assets under supervision of approximately $6.4 billion. The Company’s Pension and Institutional Fund group manages investment portfolios for a wide range of clients, including corporations, governments, hospitals, charitable foundations, endowments, universities and unions. Through its Wealth Management group, Sceptre provides discretionary funds and segregated account management for high net-worth individuals and offers a family of eight mutual funds. Sceptre employs approximately 62 people in its offices in Toronto, Waterloo, Montreal and Vancouver. Sceptre’s common shares trade on the Toronto Stock Exchange, under the symbol SZ.
INTERIM CONSOLIDATED BALANCE SHEETS
In thousands of dollars
(Unaudited)
As at
February 28 November 30
2009 2008
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Assets
Current Assets
Cash $ 101 $ 160
Available-for-sale financial assets 12,578 15,553
Accounts receivable 2,384 1,717
Income taxes recoverable 1,106 219
Current portion of future income taxes 413 346
Current portion of loans to related parties 10 25
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16,592 18,020
Deferred compensation - -
Furniture, equipment and leaseholds 923 932
Loans to related parties 15 21
Future income taxes 448 453
Value of customer relationships and other
intangibles net of accumulated amortization 3,806 3,911
Goodwill 3,575 3,575
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$ 25,359 $ 26,912
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Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 3,168 $ 3,528
Bonuses due to employees 503 1,453
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3,671 4,981
Accrued liabilities 816 1,057
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4,487 6,038
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Shareholders' Equity
Capital stock 16,228 16,228
Contributed surplus 1,839 1,749
Retained earnings 4,778 4,706
Accumulated other comprehensive income (1,973) (1,809)
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20,872 20,874
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$ 25,359 $ 26,912
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INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
In thousands of dollars except per share amounts
(Unaudited)
For the three months ended
February 28 February 29
2009 2008
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Revenue
Investment management fees $ 6,359 $ 9,086
Investment income 136 235
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6,495 9,321
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Expenses
Operating expenses 3,954 5,265
Trailer and referral fees 215 597
Sub-advisory fees 781 904
Amortization of furniture, equipment and
leaseholds 50 56
Amortization of intangible assets 105 105
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5,105 6,927
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Earnings before income taxes 1,390 2,394
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Provision for income taxes 486 971
Provision for future income taxes (10) (109)
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476 862
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Net earnings for the period $ 914 $ 1,532
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Earnings per share
Basic $ 0.07 $ 0.11
Diluted $ 0.07 $ 0.11
Could this be the year when the ordinary accountant shapes future tax developments? Or am I dreaming an impossible dream?
