SCEPTRE INVESTMENT COUNSEL LIMITED
TSX : SZ

SCEPTRE INVESTMENT COUNSEL LIMITED

September 16, 2009 15:58 ET

Sceptre Investment Counsel Limited Reports Q3 2009 Results

TORONTO, ONTARIO--(Marketwire – Sept. 16, 2009) - Sceptre Investment Counsel Limited (TSX:SZ), a leading independent Canadian money management firm, today reported its financial results for the three months ended August 31, 2009.

For the third quarter the Company earned $958,000 or 7 cents per share fully diluted (7 cents per share basic). Earnings for the third quarter of 2008 were $1,873,000 or 13 cents per share.

Q3 Revenue

The significant decline in equity markets compared to a year ago substantially reduced the level of assets under management and therefore the fees charged by the Company. However, equity markets have recovered some of these losses this year, which positively impacted the Company's third quarter revenues compared to the second quarter.

Total revenue for the third quarter was $6.91 million, compared with $9.33 million for the third quarter of 2008. Total management fee revenue for the quarter was $7.12 million, versus $9.03 million for the third quarter last year. Institutional management fee revenue was $4.74 million compared with $5.39 million for the third quarter last year as assets at the Billing Point (June 30(1)) decreased from $7.94 billion last year to $6.68 billion this year due primarily to the decline in equity markets. Mutual fund revenue was $1.35 million in this quarter versus $2.31 million in the same quarter last year as average assets decreased from $745 million last year to $428 million this year, with the majority of the fall resulting from significant declines in equity markets. Private Client revenue was $1.03 million for the quarter versus $1.33 million in the same quarter last year as average assets declined from $713 million last year to $551 million this year. Investment income declined when compared with both the previous quarter and the third quarter of 2008, by $83 thousand and $511 thousand, respectively, resulting in an investment loss of $211 thousand. This quarter's investment loss was caused by a capital loss of $277 thousand related to the dissolution of a fund managed under an alliance with a third-party client.

Q3 Expenses

Revenue related expenses (sub-advisory fees, trailer fees and referral fees) declined by $0.30 million this quarter from a year ago, from $1.45 million to $1.14 million, in line with the decline in assets subject to those charges. Other operating expenses decreased by $742 thousand versus a year-ago, to $4.32 million from $5.06 million, due almost entirely to compensation expense which declined by $732 thousand on 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 October 30, 2009 to shareholders of record September 28, 2009. The previous quarterly dividend was 6 cents per share.

Fiscal Period Asset Continuity
              
Q3 2009                     
(in $ thousands)    Opening AUM   Net Cash Flows Market Appreciation   Closing AUM
                 (Depreciation)    
       $   $   $   $
Pension and other Institutional $ 6,609,098  $ (780,000) *  $ 362,114  $ 6,191,212
Private Client   577,984    (8,434)      31,906    601,456
Retail Mutual Funds   424,644    (9,768)      35,131    450,007
Total $7,611,726 $(798,202)   $429,151 $7,242,675

*Institutional net cash outflow during the quarter represents a partial withdrawal of very low management fee assets of a large continuing client.

(1) Sceptre recognizes revenue from most institutional clients based on asset levels at the end of each calendar quarter ("the billing points"). Therefore, Q3 institutional revenue is based on institutional assets at June 30th. 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 $7.2 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 60 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 
    August 31  November 30
    2009  2008
 
 
Assets           
 
Current Assets            
  Cash $50    $ 160
  Available-for-sale financial assets   11,245      15,553
  Accounts receivable   2,512      1,717
  Income taxes recoverable   1,982      219
  Current portion of future income taxes   222      346
  Current portion of deferred compensation   734      -
  Current portion of loans to related parties   11      25
    16,756      18,020
 
Furniture, equipment and leaseholds   820      932
Loans to related parties   10      21
Future income taxes   -      453
Deferred compensation   922      -
Value of customer relationships and other            
 intangibles net of accumulated amortization   3,596      3,911
Goodwill   3,575      3,575
  $25,679    $ 26,912
 
Liabilities           
 
Current Liabilities            
  Accounts payable            
   and accrued liabilities $2,465    $ 3,528
  Bonuses due to employees   511      1,453
    2,976      4,981
Accrued liabilities   301      1,057
Future income taxes   216      -
 
    3,493      6,038
 
 
Shareholders' Equity           
Capital stock   16,228      16,228
Contributed surplus   2,019      1,749
Retained earnings   4,569      4,706
Accumulated other comprehensive income   (630)      (1,809)
    22,186      20,874
 
  $25,679    $ 26,912

 

INTERIM CONSOLIDATED STATEMENTS OF EARNINGS      
In thousands of dollars except per share amounts          
(Unaudited)          
    For the three months ended
    August 31    August 31
    2009    2008
 
 
 
Revenue         
Investment management fees $7,117$ 9,032
Investment (loss) income   (211)    300
 
    6,906    9,332
 
Expenses         
Operating expenses   4,159    4,898
Trailer and referral fees   283    466
Sub-advisory fees   861    982
Amortization of furniture, equipment and leaseholds   53    55
Amortization of intangible assets   105    105
 
    5,461    6,506
 
Earnings before income taxes  1,445    2,826
 
Provision for income taxes   (26)    1,072
Provision for future income taxes   513    (119)
    487    953
 
Net earnings for the period$958  $ 1,873
 
Earnings per share         
Basic $0.07$ 0.13
Diluted $0.07$ 0.13

 

    For the nine months ended
    August 31    August 31
    2009    2008
 
 
 
 
Revenue         
Investment management fees $19,847$ 27,012
Investment income   (203)    696
    19,644    27,708
 
Expenses         
Operating expenses   12,320    15,090
Trailer and referral fees   746    1,553
Sub-advisory fees   2,411    2,774
Amortization of furniture, equipment and leaseholds   157    167
Amortization of intangible assets   315    315
 
    15,950    19,899
 
Earnings before income taxes  3,694    7,809
Provision for income taxes   723    2,936
Provision for future income taxes   580    (232)
    1,303    2,704
Net earnings for the period$2,391  $ 5,105
 
 
Earnings per share         
Basic $0.17$ 0.37
Diluted $0.17$ 0.36

Contact Information

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