Northern Financial Corporation
TSX : NFC

Northern Financial Corporation

October 29, 2007 16:46 ET

Northern Financial Reports Second Quarter of Fiscal 2008 Results

TORONTO, ONTARIO--(Marketwire - Oct. 29, 2007) - Northern Financial Corporation (TSX:NFC) ("Northern" or the "Company") today reported results for its second quarter and six month period ended September 30, 2007 of its 2008 fiscal year. Net income for the second quarter was $1,150,814 or $0.12 per share compared with a restated net loss of $2,652,996 or $0.29 per share in the second quarter in the prior year. Core brokerage activities improved over the prior year and the Company also recorded equity income of $1,019,495 from its investment in Jaguar Financial Inc. ("Jaguar") and Lakeside Steel Corporation ("Lakeside").

Consolidated revenue for the quarter ended September 30, 2007 was $4,619,904 compared to revenue of $1,426,859 in the second quarter of fiscal 2007.

Commission revenue was $1,835,349 for the quarter ended September 30, 2007 compared to $1,759,879 in the prior year. Underwriting and advisory revenue was $2,401,295, an increase of $2,034,892 from the restated revenue in the second quarter in fiscal 2007. The increase was primarily a result of gains and valuation of the Company's broker warrant portfolio. Trading revenue was $30,783 in the current year, down from $187,458 in the prior year, as a result of market declines experienced in August. Interest revenue was $382,320 compared to $326,044 last year.

Merchant banking activities generated revenue of $36,363 in the current quarter compared to a loss of $1,209,340 in the prior year. The Company sold most of its merchant banking investments during the latter part of the prior fiscal year.

Total expenses for the period ended September 30, 2007 were $4,488,585 compared with $4,079,855 in the prior year. Brokerage operations costs increased to $4,129,012 from $3,626,079 as a result of an increase in variable compensation associated with the higher level of revenue. Interest expense decreased to $224,182 from $263,299 due to a lower balance of loans outstanding through the period. Merchant banking expenses were nil compared to a recovery of $661,160 in the prior year. The recovery in the prior year represented a reduction in accrued variable compensation relating to the decline in value of the merchant banking investments. General and administrative expenses were down considerably, from $790,289 to $71,615, as a result of lower professional fees and the closure of the Company's London office at the end of fiscal 2007.

The Company accounts for its investments in Jaguar and Lakeside using the equity method, recording its share of earnings as income. During the second quarter, the Company recorded equity income in the amounts of $689,849 for Jaguar and $329,646 for Lakeside. There were no equivalent amounts in the prior year.

As at September 30, 2007 the Company had cash, deposits, and securities of $8,600,961.

Net income for the six months ended September 30, 2007 was $1,654,687 or $0.17 per share compared with a restated net loss of $5,114,020 or $0.58 per share in the prior period. The improved results were attributable to stronger core brokerage activities and equity income from Jaguar and Lakeside.

Revenue for the period ended September 30, 2007 was $11,471,709 compared to $4,268,184 in the prior period. Commission revenue was $4,753,442 compared to $4,217,873 last year. Underwriting and advisory revenue increased to $5,541,098 from $1,992,083 in the previous year, as restated. The increase was a result of realized gains and an increased valuation of the broker warrant portfolio. Trading revenue was relatively consistent with the prior year. Interest revenue was $771,806 compared to $682,962 last year. Merchant banking activities generated revenue of $61,332 compared to a loss of $3,101,723 in the prior period.

Total expenses for the period ended September 30, 2007 were $10,934,225 compared with $9,382,204 in the prior year. Brokerage operations costs increased to $10,327,645 from $9,293,730 resulting from increased variable compensation associated with the higher level of revenue. Interest expense decreased to $452,547 from $564,662, as loan balances were lower through the period. Merchant banking expenses were nil compared to a recovery of $1,727,421, representing a reduction in accrued variable compensation relating to the decline in value of the merchant banking investments. General and administrative expenses were $33,697 compared to $1,133,566 as a result of lower professional fees, the closure of the Company's London office at the end of fiscal 2007 and the recovery of costs previously incurred.

The Company recorded equity income in the amounts of $787,557 for Jaguar and $329,646 for Lakeside for the six months ended September 30, 2007. There were no comparable amounts in the prior year.

Northern Financial Corporation wholly owns Northern Securities, a full service investment dealer that provides financial advisory services to retail and institutional clients and investment banking services to small capitalization companies.

Contact Information

  • Northern Securities Inc.
    Ann Krallisch
    Director, Business Development
    (416) 644-8113
    (416) 644-0270 (FAX)
    Email: akrallisch@northernsi.com