SCEPTRE INVESTMENT COUNSEL LIMITED
TSX : SZ

SCEPTRE INVESTMENT COUNSEL LIMITED

January 14, 2010 16:19 ET

Sceptre Investment Counsel Reports Q4 & Fiscal 2009 Results

TORONTO, ONTARIO--(Marketwire - Jan. 14, 2010) - Sceptre Investment Counsel Limited (TSX:SZ), a leading independent Canadian money management firm, today reported its financial results for the 3 and 12 month periods ended November 30, 2009.

For the fourth quarter the Company earned $1,122,000 or 8 cents per share fully diluted (8 cents per share basic). For the fourth quarter of 2008 the Company incurred a loss of $103 thousand or 1 cent per share after recognizing a charge of $2.16 million before tax ($1.44 million after tax) for the full cost relating to the departure of the Company's former CEO in October 2008 ("Settlement Charge"). Earnings for the 12 months ended November 30, 2009 were $3,512,000 or 25 cents per share (25 cents per share basic), compared with $5,002,000 or 35 cents per share (36 cents per share basic) in 2008.

Q4 Revenue

Total revenue for the quarter ended November 30, 2009 was $7.53 million versus $7.69 million in 2008, representing a decrease of $0.16 million or 2.1%. During the same period, management fee revenue declined slightly by $0.07 million, from $7.53 million to $7.46 million.

Institutional management fee revenue was $4.98 million compared with $4.87 million for the fourth quarter last year. A slight decline in assets at the Billing Point (September 30) from $6.85 billion last year to $6.39 billion this year was more than offset by a slightly higher overall management fee rate.

Retail Mutual Fund revenue was $1.46 million in the fourth quarter this year versus $1.52 million in the same quarter last year as average assets declined 4.5%, from $497.60 million to $475.26 million. Private Client revenue was $1.02 million in the fourth quarter this year versus $1.13 million in the same quarter last year as average assets declined from $602.04 million last year to $541.55 million this year. Investment income of $68 thousand this quarter was lower than last year's $165 thousand due to lower short-term note interest and lower distributions from fund investments.

Q4 Expenses

Revenue related expenses (sub-advisory fees, trailer fees and referral fees) declined by $0.04 million in the fourth quarter versus a year ago, from $1.21 million to $1.17 million, in line with the decline in assets subject to those charges. Other Expenses decreased by $2.29 million versus a year-ago, to $4.47 million from $6.76 million primarily due to the Settlement Charge in 2008.

Fiscal Year Revenue

The Company's revenue in 2009 compared to 2008 reflects the volatility that stock market returns had in each of those years on assets under management. The Toronto Stock Exchange hit an all time high in May 2008 followed by a precipitous decline over the remainder of 2008. In March 2009 the Canadian market reached multi-year lows followed by an impressive rally that resulted in 2009 providing the best annual return since 1979. Despite an increase in assets under management during the year, the Company's assets at the time of billing were higher in 2008 than in 2009 due to the timing of the market returns described above.

Total revenue for the year ended November 30, 2009 was $27.17 million versus $35.40 million in 2008, representing a decrease of $8.23 million or 23.2%. During the same period, management fee revenue declined by $7.23 million, from $34.54 million to $27.31 million or 20.9%. Institutional revenue decreased by $2.16 million or 10.6%, from $20.32 million in 2008 to $18.16 million in 2009. Average billing point assets in 2009 were $6.22 billion compared to $7.34 billion in 2008, representing a decrease of $1.12 billion or 15.3%. Retail Mutual Fund revenue decreased by $3.87 million or 43.1%, from $8.98 million in 2008 to $5.11 million in 2009. Average retail mutual fund assets during the year were $415.65 million compared to $721.59 million in 2008 with the majority of this decrease resulting from negative returns in equity markets. Private Client revenue was $4.04 million this year compared to $5.24 million last year as average assets declined from $702.22 million to $536.15 million, or 23.6%.

Investment income declined from $0.86 million in 2008 to a loss of $0.14 million this year due to (i) reversing investment income recognized in 2008 from distributions from an investment, which was subsequently determined to be a "return of capital", (ii) capital losses incurred in 2009 on the sale of seed capital investments in mutual funds versus capital gains earned in 2008, (iii) lower ongoing distributions from investments and (iv) lower short-term note interest partly offset by higher bond interest income.

Fiscal Year Expenses

Revenue related expenses (sub-advisory fees, trailer fees and referral fees) fell by $1.19 million or 21.6%, from $5.52 million in 2008 to $4.33 million in 2009, in line with the decrease in assets subject to those charges. Other expenses declined by $5.08 million versus a year-ago, to $17.27 million from $22.35 million primarily due to compensation expense which declined by $4.81 million. Total compensation expense was $13.20 million in 2009 versus $18.01 million in 2008. This decline was the result of the $2.16 million Settlement Charge in 2008 and lower profitability-related remuneration in 2009.

The Company, having considered its financial requirements, has declared a quarterly dividend of 6 cents per share on outstanding common shares, payable on January 29, 2010 to shareholders of record January 25, 2010. The previous quarterly dividend was 6 cents per share.

Fiscal Asset Continuity

FY 2009                    
(in $ thousands)   Opening AUM Net Cash Flows     Market   Closing AUM
                Appreciation    
      $   $     $   $
Pension and other Institutional $ 5,816,021 $ (893,000) 1   $ 1,176,530 $ 6,099,550
Private Client     599,125   (79,870 )   81,757   601,012
Retail Mutual Funds     391,323   (53,593 )   154,664   492,394
Total $ 6,806,469 $ (1,026,463 ) $ 1,412,951 $ 7,192,956

1 Includes a partial withdrawal of $840 million by a large continuing client. The fee rate on these assets was less than half the Company's average fee rate on its overall Institutional business.

About Sceptre Investment Counsel

Sceptre Investment Counsel Limited is a leading Canadian independent investment management firm with assets under supervision at December 31, 2009 of approximately $7.4 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 61 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  
    November 30     November 30  
    2009     2008  
   
Assets            
Current Assets            
    Cash $ 44   $ 160  
    Available-for-sale financial assets   13,920     15,553  
    Accounts receivable   1,842     1,717  
    Income taxes recoverable   2,102     219  
    Current portion of future income taxes   -     346  
    Current portion of pre-funded compensation   738     -  
    Current portion of loans to related parties   11     25  
    18,657     18,020  
Furniture, equipment and leaseholds   767     932  
Loans to related parties   10     21  
Future income taxes   -     453  
Pre-funded compensation   676     -  
Value of customer relationships and other            
  intangibles net of accumulated amortization   3,491     3,911  
Goodwill   3,575     3,575  
  $ 27,176   $ 26,912  
Liabilities            
Current Liabilities            
    Accounts payable            
      and accrued liabilities $ 2,703   $ 3,528  
    Current portion of future income taxes   10   $ -  
    Bonuses due to employees   1,557     1,453  
    4,270     4,981  
Accrued liabilities   -     1,057  
Future income taxes   168     -  
    4,438     6,038  
   
Shareholders' Equity            
Capital stock   16,228     16,228  
Contributed surplus   2,110     1,749  
Retained earnings   4,848     4,706  
Accumulated other comprehensive income   (448 )   (1,809 )
    22,738     20,874  
  $ 27,176   $ 26,912  
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS      
In thousands of dollars except per share amounts          
(Unaudited)          
    For the three months ended  
  November 30   November  
    2009   2008  
   
Revenue          
Investment management fees $ 7,462 $ 7,525  
Investment income   68   165  
    7,530   7,690  
Expenses          
Operating expenses   4,314   6,601  
Trailer and referral fees   325   333  
Sub-advisory fees   843   872  
Amortization of furniture, equipment and leaseholds   53   56  
Amortization of intangible assets   105   105  
    5,640   7,967  
Earnings before income taxes   1,890   (277 )
Provision for income taxes   621   554  
Provision for future income taxes   147   (728 )
    768   (174 )
Net earnings for the period $ 1,122 $ (103 )
   
Earnings per share          
Basic $ 0.08 $ (0.01 )
Diluted $ 0.08 $ (0.01 )
    For the years ended  
  November 30   November 30  
    2009     2008  
   
   
Revenue            
Investment management fees $ 27,309   $ 34,537  
Investment income   (135 )   861  
    27,174     35,398  
Expenses            
Operating expenses   16,636     21,705  
Trailer and referral fees   1,071     1,873  
Sub-advisory fees   3,254     3,646  
Amortization of furniture, equipment and leaseholds   210     223  
Amortization of intangible assets   420     420  
    21,591     27,867  
Earnings before income taxes   5,583     7,531  
Provision for income taxes   1,344     3,489  
Provision for future income taxes   727     (960 )
    2,071     2,529  
Net earnings for the period $ 3,512   $ 5,002  
   
Earnings per share            
Basic $ 0.25   $ 0.36  
Diluted $ 0.25   $ 0.35  

Contact Information

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