SCEPTRE INVESTMENT COUNSEL LIMITED
TSX : SZ

SCEPTRE INVESTMENT COUNSEL LIMITED

June 17, 2010 16:06 ET

Sceptre Investment Counsel Limited Reports Q2 2010 Results

TORONTO, ONTARIO--(Marketwire - June 17, 2010) - Sceptre Investment Counsel Limited (TSX:SZ), a leading independent Canadian money management firm, today reported its financial results for the three months ended May 31, 2010.

In the second quarter of 2010, the Company earned $351,000 or 2.5 cents per share fully diluted (2.5 cents per share basic), after expensing transaction costs incurred during the quarter related to the merger transaction announced on June 16, 2010. Without these transaction costs and other one time expenses, the company would have earned 8.8 cents per share. Earnings for the second quarter of 2009 were $519,000 or 3.7 cents per share fully diluted (3.7 cents per share basic).

Q2 Revenue

The appreciation in the level of equity markets compared to a year ago increased the level of assets under management, and positively impacted the Company's second quarter 2010 revenues relative to the second quarter in 2009.

Total revenue for the second quarter of 2010 was $7.41 million versus $6.24 million in the second quarter of 2009, representing an increase of $1.16 million or 18.6%. This resulted from a $0.99 million increase in investment management revenue and an increase in investment income of $0.17 million.

Total investment management revenue for the quarter was $7.36 million, versus $6.37 million for the second quarter last year. Institutional revenue increased by 11.4% to $4.69 million from $4.21 million in the second quarter of 2009, as assets at the Billing Point (March 31st (1)) increased from $5.89 billion to $6.28 billion due to the recovery in equity markets. Mutual fund revenue was $1.66 million this quarter versus $1.17 million in the same quarter last year as average assets increased by 36.1%, from $384 million to $522 million due primarily to market appreciation. Private Client revenue was $1.02 million for the quarter versus $0.99 million in the same quarter last year as average assets increased from $524 million to $536 million.

Q2 Expenses

Revenue related expenses (sub-advisory fees, trailer fees and referral fees) increased by $0.11 million this quarter from a year ago, from $1.02 million to $1.13 million, in line with the growth in assets subject to those charges. Other operating expenses increased by $0.94 million versus a year-ago, to $5.31 million from $4.37 million primarily due to transaction costs associated with the merger agreement, higher profitability related remuneration and employee promotions.

The Company, having considered its financial requirements, has declared a quarterly dividend of 6 cents per share on outstanding common shares, payable on July 30, 2010 to shareholders of record June 28, 2010. The previous quarterly dividend was 6 cents per share.

Fiscal Period Asset Continuity
                   
Q2 2010
(in $ thousands)
    Opening   Net Cash     Market   Closing
     AUM   Flows     Appreciation   AUM
    $   $     $   $
Pension and other Institutional $ 6,167,699 $ 50,000   $ 3,762 $ 6,221,461
Private Client   582,563   (15,190 )   3,036   570,409
Retail Mutual Funds   509,032   (14,450 )   8,530   503,112
Total $ 7,259,294 $ 20,360   $ 15,328 $ 7,294,982
 
(1) Sceptre recognizes revenue from most institutional clients based on asset levels at the end of each calendar quarter ("the billing points"). Therefore, Q2 institutional revenue is based on institutional assets at March 31st. This applies only to institutional revenues as mutual fund and private client revenues are charged based on average daily market values during each fiscal quarter.

About Sceptre Investment Counsel

Sceptre Investment Counsel Limited is a leading Canadian independent investment management firm with assets under supervision of approximately $7.3 billion at May 31, 2010. 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 58 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  
    May 31       November 30  
    2010       2009  
   
Assets              
Current Assets              
  Cash $ 231     $ 44  
  Available-for-sale financial assets   13,818       13,920  
  Accounts receivable   2,405       1,842  
  Income taxes recoverable   1,871       2,102  
  Pre-funded compensation   738       738  
  Current portion of loans to related parties   15       11  
    19,078       18,657  
Furniture, equipment and leaseholds   756       767  
Loans to related parties   -       10  
Pre-funded compensation   354       676  
Value of customer relationships and other intangibles net of accumulated amortization   3,281       3,491  
Goodwill   3,575       3,575  
  $ 27,044     $ 27,176  
Liabilities              
Current Liabilities              
  Accounts payable and accrued liabilities $ 2,995     $ 2,703  
  Current portion of future income taxes   67       10  
  Bonuses due to employees   1,203       1,557  
    4,265       4,270  
Future income taxes   72       168  
    4,337       4,438  
   
Shareholders' Equity              
Capital stock   16,228       16,228  
Contributed surplus   2,305       2,110  
Retained earnings   4,672       4,848  
Accumulated other comprehensive loss   (498 )     (448 )
    22,707       22,738  
  $ 27,044     $ 27,176  
           
           
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS  
In thousands of dollars except per share amounts  
(Unaudited)  
  For the three months ended  
    May 31       May 31  
    2010       2009  
   
   
Revenue              
Investment management fees $ 7,363     $ 6,371  
Investment (loss) income   42       (128 )
    7,405       6,243  
Expenses              
Operating expenses   4,454       4,207  
Transaction costs   701       -  
Trailer and referral fees   341       248  
Sub-advisory fees   790       769  
Amortization of furniture, equipment and leaseholds   47       55  
Amortization of intangible assets   105       105  
    6,438       5,384  
Earnings before income taxes   967       860  
Provision for income taxes   631       263  
Provision for future income taxes   (15 )     77  
    616       340  
Net earnings for the period $ 351     $ 519  
   
Earnings per share              
Basic $ 0.03     $ 0.04  
Diluted $ 0.03     $ 0.04  
   
   
  For the six months ended
    May 31       May 31
    2010       2009
 
 
Revenue            
Investment management fees $ 14,640     $ 12,730
Investment income   222       8
    14,862       12,738
Expenses            
Operating expenses   8,798       8,161
Transaction costs   771       -
Trailer and referral fees   680       463
Sub-advisory fees   1,627       1,550
Amortization of furniture, equipment and leaseholds   93       105
Amortization of intangible assets   210       210
    12,179       10,489
Earnings before income taxes   2,683       2,250
Provision for income taxes   1,204       749
Provision for future income taxes   (31 )     67
    1,173       816
Net earnings for the period $ 1,510     $ 1,433
 
Earnings per share            
Basic $ 0.11     $ 0.10
Diluted $ 0.11     $ 0.10

Contact Information

  • Sceptre Investment Counsel Limited
    David R. Morris
    Chief Operating Officer and Chief Financial Officer
    (416) 360-4805