SCEPTRE INVESTMENT COUNSEL LIMITED
TSX : SZ

SCEPTRE INVESTMENT COUNSEL LIMITED

September 18, 2008 15:59 ET

Sceptre Investment Counsel Reports Q3 Results

TORONTO, ONTARIO--(Marketwire - Sept. 18, 2008) - Sceptre Investment Counsel Limited (TSX:SZ), a leading independent Canadian money management firm, today reported its financial results for its third quarter ending August 31, 2008.

Third quarter earnings were $1,873,000 or 13 cents per share fully diluted (13 cents per share basic) compared with $2,098,000 or 15 cents per share diluted (15 cents per share basic) for the same period last year, a decline of 10.8% year over year.

Sceptre's strong relative investment performance versus competitors in its institutional business continued to result in new mandates being won and positive cash-flow. Year-on-year this resulted in higher institutional investment fees. However, this fiscal quarter's institutional revenue does not reflect the deterioration in market values since the end of June and should this persist we expect next quarter's institutional revenue to be lower than this quarter. Negative absolute investment returns reduced mutual fund and private client assets and revenues. Total revenue for the third quarter was $9,332,000 compared with $10,081,000 for the third quarter last year. Institutional revenues increased by approximately $344,000, mutual fund revenues were down by $905,000 and private client revenues were down by $97,000. Total expenses for the quarter decreased by 4% from the similar quarter last year. Revenue related expenses decreased by 10.6% from $1,620,000 to $1,447,000 and other expenses declined by 2.1% from $5,166,000 to $5,059,000.

"Capital markets remain challenged" stated Richard Knowles, President and Chief Executive Officer. He added, "We believe our strong investment discipline which has served us well in the past will continue to allow us to manage through the current turbulence and attract new clients."

The Company, having considered its financial requirements, new business opportunities and market outlook, has declared a quarterly dividend of 12 cents per share on outstanding common shares, payable on October 31, 2008 to shareholders of record September 29, 2008. The previous quarterly dividend was 12 cents per share.

About Sceptre Investment Counsel

Sceptre Investment Counsel Limited is a leading Canadian independent investment management firm with assets under supervision of approximately $9.0 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 65 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
2008 2007
------------------------------------------------------------ --------------

Assets

Current Assets
Cash $ 83 $ 35
Available-for-sale financial assets 16,155 20,697
Accounts receivable 3,023 2,496
Current portion of deferred compensation 334 1,337
Current portion of loan to related party 15 38
----------- --------------
19,610 24,603

Furniture, equipment and leaseholds 981 1,063
Loan to related party - 19
Value of customer relationships and other
intangibles net of accumulated amortization 4,016 4,331
Goodwill 3,575 3,575
----------- --------------
$ 28,182 $ 33,591
----------- --------------
----------- --------------

Liabilities

Current Liabilities
Accounts payable
and accrued liabilities $ 3,061 $ 4,754
Bonuses due to employees 711 2,500
Income taxes payable 177 1,346
Current portion of future income taxes 46 450
----------- --------------
3,995 9,050

Future income taxes 212 165
----------- --------------
4,207 9,215
----------- --------------

Shareholders' Equity
Capital stock 15,788 15,913
Contributed surplus 1,730 1,518
Retained earnings 6,497 6,437
Accumulated other comprehensive income (40) 508
----------- --------------
23,975 24,376
----------- --------------
$ 28,182 $ 33,591
----------- --------------
----------- --------------



INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
In thousands of dollars except per share amounts
(Unaudited)
For the three months ended
August 31 August 31
2008 2007
(restated -
note 1)
---------------------------------------------------------- ----------------

Revenue
Investment management fees $ 9,032 $ 9,691
Investment income 300 390
----------- ----------------
9,332 10,081
----------- ----------------
----------- ----------------

Expenses
Operating expenses 4,898 4,987
Trailer and referral fees 466 665
Sub-advisory fees 982 955
Amortization of furniture, equipment and
leaseholds 55 74
Amortization of intangible assets 105 105
----------- ----------------
6,506 6,786
----------- ----------------
----------- ----------------
Earnings before income taxes 2,826 3,295
----------- ----------------
Provision for income taxes 1,072 1,303
Provision for future income taxes (119) (106)
----------- ----------------
953 1,197
----------- ----------------
Net earnings for the period $ 1,873 $ 2,098
----------- ----------------
----------- ----------------

Earnings per share
Basic $ 0.13 $ 0.15
Diluted $ 0.13 $ 0.15



For the nine months ended
August 31 August 31
2008 2007
(restated -
note 1)
---------------------------------------------------------- ----------------

Revenue
Investment management fees $ 27,012 $ 27,234
Investment income 696 694
----------- ----------------
27,708 27,928
----------- ----------------

Expenses
Operating expenses 15,090 15,402
Trailer and referral fees 1,553 1,698
Sub-advisory fees 2,774 2,743
Amortization of furniture, equipment and
leaseholds 167 218
Amortization of intangible assets 315 280
----------- ----------------
19,899 20,341
----------- ----------------
Earnings before income taxes 7,809 7,587
----------- ----------------
Provision for income taxes 2,936 3,106
Provision for future income taxes (232) (344)
----------- ----------------
2,704 2,762
----------- ----------------
Net earnings for the period $ 5,105 $ 4,825
----------- ----------------
----------- ----------------

Earnings per share
Basic $ 0.37 $ 0.35
Diluted $ 0.36 $ 0.34


1. Restatement of prior year's comparative earnings numbers

As described in the 2007 audited consolidated financial statements, the Company changed its revenue recognition policy for mutual fund revenue effective in the fourth quarter of 2007. Consequently, comparative financial statement numbers have been restated to reflect this change. The effect of the change on comparative numbers was as follows: Investment management fees decreased by $82 thousand in the third quarter and increased by $191 thousand year-to-date; Provision for income taxes decreased by $30 thousand in the third quarter and increased $69 thousand year-to-date; net earnings decreased by $52 thousand in the third quarter and increased $122 thousand year-to-date; and retained earning - beginning of the period increased by $476 thousand.

Contact Information

  • Sceptre Investment Counsel Limited
    Richard L. Knowles
    President and Chief Executive Officer
    (416) 866-2380