MONTREAL, Dec. 9 /CNW Telbec/ - Fiera Sceptre Inc. (TSX: FSZ) ("Fiera Sceptre" or "the Firm") a leading independent Canadian money management firm, today reported its financial results for the fourth quarter and twelve-month fiscal year ended September 30, 2010.
Basis for Comparison
On September 1, 2010 Fiera Sceptre Inc. announced that it had completed the statutory plan of arrangement pursuant to which the businesses of Sceptre Investment Counsel Limited ("Sceptre") and Fiera Capital Inc. ("Fiera Capital") were combined to create a leading, publicly traded independent money manager. For accounting purposes, Fiera Capital was deemed to be the buyer in the business combination. Therefore, current and future financial reporting will be based on Fiera Capital's historical data up to and including September 1, 2010 and the combined results for the periods after the September 1 merger date. For the year ended September 30, 2010, the financial results consist of 11 months of Fiera Capital's results and one month of the combined entity. The comparative figures for fiscal 2009 are taken from Fiera Capital's prior year results and not from the financial results of Sceptre.
The combined entity will maintain Fiera Capital's quarters and year-end. As a result, the quarterly reporting cycle for Fiera Sceptre will be December, March and June, while the fiscal year-end will be September 30.
Sceptre's final quarterly filing covered the three-months ended August 31, 2010. Figures for this period were reported publicly on October 6, 2010.
Fourth Quarter Highlights
- Total Assets Under Management (''AUM'') increased by $8.1 billion or 35.7% to $30.8 billion during the three-month period ended September 30, 2010 compared to $22.7 billion on June 30, 2010.
- Revenues for the three-month period ended September 30, 2010 increased 35.7% to $11.4 million, a $3.0 million increase over $8.4 million in revenue for the same period in the prior year.
- Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (a non-GAAP measure of performance) were $1.26 million compared to $514,000 for the three months ended September 30, 2009. (Adjusted EBITDA eliminates the effect of performance fees on EBITDA.)
- Net earnings for the three-month period were $91,400 or $0.006 per share (both basic and fully diluted) compared to $527,000 or $0.038 per share for the same quarter last year. Net earnings for the quarter were affected by a restructuring provision and listing charge amounting to $560,000 (net of income tax of $218,000) totaling $0.026 per share. Without these charges, the net earnings for the period would have been $651,400 or $0.032 per share.
"We are now operating as a firm with a single focus - our clients," said Jean-Guy Desjardins, Chairman CEO and CIO of Fiera Sceptre. "Through our combined team, we offer proven depth and expertise in equity and fixed income management, asset allocation and alternative investments. We are dedicated to delivering optimal performance through intelligent innovation and a strong commitment to risk management."
Sept 30, 2010
Sept 30, 2009
Sept 30, 2010
Sept 30, 2009
|Earnings per share||$0.006||$0.038||$0.22||$0.23|
Revenue for the three-month period ended September 30, 2010 rose to $11.4 million representing a 35.7% or $3.0 million increase over the same period in the prior year of $8.4 million. The increase was driven mainly by higher AUM following the merger with Sceptre. As the merger between Fiera Capital and Sceptre became effective as of September 1, 2010, the addition of Sceptre's assets translates into one month's revenue of $2.3 million.
Revenue for the year ended September 30, 2010 rose to $41.4 million, a 17% or $6.0 million increase compared to $35.4 million for the twelve months ended September 30, 2009. The increase was driven mainly by higher AUM as a result of the merger with Sceptre, representing one month's additional revenues, or $2.3 million.
In addition to increased revenue from the merger with Sceptre, management revenue was positively impacted by improved performance in equity markets during 2010 compared to the same period one year ago. Improved markets impacted the average level of assets under management and, ultimately, the fees charged by the Firm.
Operating expenses are comprised of Selling, general and administration fees (''SG&A'') and External manager fees. For the three-month period ended September 30, 2010, operating expenses totaled $10.1 million, an increase of $2.9 million over $7.2 million for the same period in 2009. The increase was driven mainly by an overall rise in SG&A fees of $2.8 million to $9.7 million for the three-month period ended September 30, 2010 compared to $6.9 million for the three-month period ended September 30, 2009. This increase is mainly due to the addition of one month of Sceptre expenses ($1.0 million), higher SG&A expenses from the joint venture ($0.1 million), higher compensation costs and professional fees ($1.7 million) and increased external manager expenses ($0.1 million) for the same period.
Annual operating expenses of $33.7 million increased by 18% or $5.1 million for the year ended September 30, 2010 from $28.5 million for the same period in 2009. The increase was driven mainly by an overall rise in SG&A of $5.2 million to $32.6 million for the year ended September 30, 2010 compared to $27.3 million for the same period in 2009, following the addition of one month's expenses ($1.0 million) due to the acquisition of Sceptre. Also, higher compensation costs from the Axium joint venture of $1.6 million, combined with a $2.6 million increase in compensation costs and professional fees related to the transaction, contributed to the increase in operating expenses for the year ended September 30, 2010. These increases were offset in part by an 11% or $0.1 million decrease in external manager expenses from $1.2 million for the year ended September 30, 2009 to $1.1 million for the year ended September 30, 2010.
EBITDA for the three-months ended September 30, 2010 was $1.29 million, a 4.8% increase over EBITDA of $1.23 million for the same period in 2009. Adjusted EBITDA, which eliminates the effect of performance fees, was $1.26 million compared to $514,000 the previous year. For the full year, EBITDA was $7.75 million compared to $6.90 million for the same twelve months in 2009. Adjusted EBITDA was $6.38 million, a significant increase over Adjusted EBITDA of $2.01 million the previous year.
Amortization of intangible assets increased to $0.4 million for the three-month period ended September 30, 2010 ($67,000 for the same period in 2009) as a result of a change in the classification of intangible assets from indefinite life to definite life in 2010 combined with the one month of amortization of the new definite life assets created from the combination with Sceptre. For the year ended September 30, 2010, management revised the useful life of its asset management contracts to 20 years. Previously, management considered that the asset management contracts had an indefinite useful life and consequently the assets were not amortized, but subject to an annual impairment test. This change in accounting estimate and classification has been applied prospectively and resulted in an increase in amortization expense of $1.1 million ($1.4 million and $0.3 million for the years ended September 30, 2010 and 2009 respectively).
Net earnings for the three-months ended September 30, 2010 were $91,400 or less than one cent per share compared to net earnings of $527,000 or $0.038 per share for the same period last year. The decrease in net earnings is primarily due to higher amortization of intangible assets as well as the inclusion of restructuring and severance costs related to the merger with Sceptre, offset in part by lower future income taxes.
For the year ended September 30, 2010 the Firm recorded net earnings of $3.49 million or $0.22 per share compared to $3.19 million or $0.23 per share on fewer shares outstanding.
As was stated at the time of the merger with Sceptre, Fiera Sceptre intends to maintain Sceptre's policy of paying $0.06 per share.
On November 16, 2010, Fiera Sceptre paid a $0.06 per share dividend, based on Sceptre's quarterly earnings and dividend cycle. As Fiera Sceptre will adopt Fiera Capital's quarterly reporting cycle, the Board has decided to align Fiera Sceptre's dividend cycle with the reporting cycle. Subject to the normal Board decision process and other usual considerations, the Board therefore intends to declare the next dividend at its meeting in February 2011, payable to shareholders in March 2011.
Subject to the Firm's ability to pay and to market conditions at the time, the Board will at its February meeting, declare a dividend to cover the extended period between dividend payments that is created by the switch to the new quarterly earnings cycle.
Changes to the Board Composition
Fiera Sceptre also announced today that Mr. Raymond Laurin, Senior Vice President, Finance, Treasury and Chief Financial Officer of Desjardins Group, has resigned as a director and as chair of the audit committee, effective at the adjournment of a meeting of the Board today. He will be replaced on the Board by Mr. Denis Berthiaume, Senior Vice-President and General Manager, Wealth Management and Life and Health Insurance, Desjardins Group. Mr. Berthiaume, who has extensive experience in the industry, will also be a member of the human resources committee of the Board.
Current director Christiane Bergevin, Executive Vice-President Strategic Partnerships, Desjardins Group, replaces Mr. Laurin as chair of the audit committee. She steps down as a member of the human resources committee.
"I would like to express our sincere gratitude to Mr. Laurin for his work on the Board these past few years," said Jean-Guy Desjardins. "In his place, we welcome Mr. Berthiaume, who is a valuable addition to our board."
This document may contain certain forward-looking statements. These statements relate to future events or future performance and reflect management's expectations or beliefs regarding future events including business and economic conditions and Fiera Sceptre's growth, results of operations, performance and business prospects and opportunities. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", "target", "intend" or the negative of these terms or other comparable terminology.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and a number of factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating these statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement.
These factors include, but are not limited to, market and general economic conditions, the nature of the financial services industry and the risks and uncertainties detailed from time to time in Fiera Sceptre's interim and annual consolidated financial statements and its Annual Report and Annual Information Form filed on www.sedar.com. These forward-looking statements are made as of the date of this document, and Fiera Sceptre assumes no obligation to update or revise them to reflect new events or circumstances.
About Fiera Sceptre
Fiera Sceptre is a leading publicly traded, independent money manager. The Firm is one of only a handful of full service, multi-product investment firms in Canada, offering clients a proven top tier track record in equity and fixed income management as well as depth and expertise in asset allocation and alternative investments. www.fierasceptre.ca
Additional information relating to the Company, including the Company's annual information form, is on SEDAR at www.sedar.com.