SCEPTRE INVESTMENT COUNSEL LIMITED
TSX : SZ

SCEPTRE INVESTMENT COUNSEL LIMITED

June 18, 2009 15:28 ET

Sceptre Investment Counsel Reports Q2 2009 Results

TORONTO, ONTARIO--(Marketwire - June 18, 2009) - 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, 2009.

For the second quarter the Company earned $519,000 or 4 cents per share fully diluted (4 cents per share basic). Earnings for the second quarter of 2008 were $1,700,000 or 12 cents per share.

Earnings in the quarter were reduced by the reclassification of $206,000 (after tax) of distributions from investments recognized as income in 2008, which were subsequently determined to be a "return of capital". Without this, and certain unusual expenses such as severance costs, our normalized earnings would have been 6 cents per share.

Positive cash flows of $194 million and market appreciation of $1.02 billion during the quarter resulted in assets under management increasing by $1.22 billion to $7.61 billion at the end of May 2009 compared to the end of February 2009. However, much of this appreciation occurred subsequent to the March 31 billing date for institutional revenue and therefore, is not reflected in this quarter's revenue.

"We continue to win new investment mandates as a result of strong relative investment performance and we believe this is key to delivering shareholder value over the long term" said Glenn Inamoto, Chief Executive Officer.

Q2 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.

Total revenue for the second quarter was $6.24 million, compared with $9.06 million for the second quarter of 2008. Total management fee revenue for the quarter was $6.37 million, versus $8.90 million for the second quarter last year. Institutional management fee revenue was $4.21 million compared with $5.01 million for the second quarter last year as assets at the Billing Point (March 31(1)) decreased from $7.37 billion last year to $5.89 billion this year as a result of declines in equity markets, which more than offset positive cash flows. Mutual fund revenue was $1.17 million in this quarter versus $2.51 million in the same quarter last year as average assets decreased from $804 million last year to $384 million this year, with the majority of the fall resulting from significant declines in equity markets. Private Client revenue was $0.99 million for the quarter versus $1.38 million in the same quarter last year as average assets declined from $720 million last year to $524 million this year, with the bulk of the decrease coming from negative returns in equity markets. The Company incurred an investment loss of $128 thousand this quarter due to reversing investment income recognized in 2008 from distributions from an investment, which was subsequently determined to be a "return of capital". Investment income was $161 thousand in the second quarter of 2008.

Q2 Expenses

Revenue related expenses (sub-advisory fees, trailer fees and referral fees) declined by $0.34 million this quarter versus a year ago, from $1.36 million to $1.02 million, in line with the decline in assets subject to those charges. Other operating expenses decreased by $736 thousand versus a year-ago, to $4.36 million from $5.10 million. Compensation expense was lower by $776 thousand due to staff reductions and lower profitability related remuneration. Less favorable expense recoveries from mutual funds of $180 thousand was offset by lower professional and consulting fees, and by lower travel and promotion expenses.

The Company, having considered its financial requirements, has declared a quarterly dividend of 6 cents per share on outstanding common shares, payable on July 31, 2009 to shareholders of record June 29, 2009. The previous quarterly dividend was 6 cents per share.



Fiscal Period Asset Continuity
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Q2 2009
---------------------------------------------------------------------------
(in $ thousands) Opening AUM Net Cash Flows Market Closing AUM
Appreciation
(Depreciation)
$ $ $ $
--------------------------------------------------------
Pension and other
Institutional $ 5,504,875 $ 214,000 $ 890,223 $ 6,609,098
Private Client 532,899 (12,611) 57,695 577,984
Retail Mutual Funds 357,313 (7,601) 74,932 424,644
---------------------------------------------------------------------------
Total $ 6,395,087 $ 193,788 $ 1,022,850 $ 7,611,726
---------------------------------------------------------------------------


(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 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 $7.6 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 STATEMENTS OF EARNINGS
In thousands of dollars except per share amounts
(Unaudited)

For the three months ended
May 31 May 31
2009 2008

-------------------------------------------------------------- ----------

Revenue
Investment management fees $ 6,371 $ 8,895
Investment (loss) income (128) 161
---------- ----------
6,243 9,056
---------- ----------
---------- ----------

Expenses
Operating expenses 4,207 4,929
Trailer and referral fees 248 490
Sub-advisory fees 769 888
Amortization of furniture, equipment and leaseholds 55 55
Amortization of intangible assets 105 105
---------- ----------
5,384 6,467
---------- ----------
---------- ----------
Earnings before income taxes 860 2,589
---------- ----------

Provision for income taxes 263 893
Provision for future income taxes 77 (4)
---------- ----------
340 889

---------- ----------
Net earnings for the period $ 519 $ 1,700
---------- ----------
---------- ----------
Earnings per share
Basic $ 0.04 $ 0.12
Diluted $ 0.04 $ 0.12


For the six months ended
May 31 May 31
2009 2008

-------------------------------------------------------------- ----------

Revenue
Investment management fees $ 12,730 $ 17,981
Investment income 8 396
---------- ----------
12,738 18,377
---------- ----------

Expenses
Operating expenses 8,161 10,194
Trailer and referral fees 463 1,087
Sub-advisory fees 1,550 1,792
Amortization of furniture, equipment and leaseholds 105 111
Amortization of intangible assets 210 210
---------- ----------

10,489 13,394
---------- ----------
Earnings before income taxes 2,250 4,983
---------- ----------
Provision for income taxes 749 1,864
Provision for future income taxes 67 (113)
---------- ----------
816 1,751
---------- ----------
Net earnings for the period $ 1,433 $ 3,232
---------- ----------
---------- ----------

Earnings per share
Basic $ 0.10 $ 0.23
Diluted $ 0.10 $ 0.23


INTERIM CONSOLIDATED BALANCE SHEETS
In thousands of dollars
(Unaudited)

As at
May 31 November 30
2009 2008
------------------------------------------------------------ ------------

Assets

Current Assets
Cash $ 128 $ 160
Available-for-sale financial assets 13,165 15,553
Accounts receivable 2,474 1,717
Income taxes recoverable 1,871 219
Current portion of future income taxes 427 346
Current portion of loans to related parties 10 25
------------ ------------
18,075 18,020

Furniture, equipment and leaseholds 871 932
Loans to related parties 15 21
Future income taxes 192 453
Value of customer relationships and other
intangibles net of accumulated amortization 3,701 3,911
Goodwill 3,575 3,575
------------ ------------
$ 26,429 $ 26,912
------------ ------------
------------ ------------

Liabilities

Current Liabilities
Accounts payable
and accrued liabilities $ 3,534 $ 3,528
Bonuses due to employees 863 1,453
------------ ------------
4,397 4,981

Accrued liabilities 558 1,057

------------ ------------

4,955 6,038
------------ ------------

Shareholders' Equity
Capital stock 16,228 16,228
Contributed surplus 1,929 1,749
Retained earnings 4,454 4,706
Accumulated other comprehensive income (1,137) (1,809)
------------ ------------
21,474 20,874
------------ ------------
$ 26,429 $ 26,912
------------ ------------
------------ ------------


Contact Information

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