SEAMARK Asset Management Ltd. Reports Third Quarter Financial Results



    HALIFAX, Nov. 1 /CNW/ - SEAMARK Asset Management Ltd. today announced
third quarter earnings of $0.06 per share. Included in these results are costs
related to the launch of SEAMARK's new family of mutual funds, which had the
effect of reducing earnings per share by approximately $0.01. A discussion of
the financial results for the third quarter follows below.
    SEAMARK will host a conference call to discuss these results tomorrow,
November 2 at 9:30 a.m. Atlantic time (8:30 a.m. Eastern). The call will be
web-cast live by CNW Group and available for replay for thirty days. A link to
the call is available from the shareholder information section of:
www.seamark.ca
    SEAMARK Asset Management Ltd. (TSX:SM) provides investment management
services across Canada to institutional clients, mutual funds, private
clients, and the managed portfolio advisory programs (wrap programs) of many
of Canada's leading investment dealers.


    
    SUMMARY OF RESULTS
    UNAUDITED

    For the period ended
     September 30
     ($ in thousands,                    Three months          Year to date
     except per share)                 2007       2006       2007       2006
    -------------------------------------------------------------------------

    Total revenue                  $  3,385   $  3,990   $ 10,954   $ 16,351
    Earnings before income taxes      1,039      1,265      3,709      8,200

    Net earnings                        641        777      2,315      5,008

    Per Share
    Basic earnings per share       $   0.06   $   0.07   $   0.22   $   0.47
    Diluted earnings per share         0.06       0.07       0.21       0.44

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


    Certain information regarding SEAMARK Asset Management Ltd. contained
herein may constitute forward looking statements within the meaning of
applicable securities laws. Forward looking statements include estimates,
plans, expectations, opinions, forecasts, projections, guidance or other
statements that are not statements of fact. These statements reflect
management's current expectations based on the business conditions under which
the company is currently operating, and are believed to be reasonable, but
management can give no assurance that such expectations will prove to have
been correct.
    By their very nature, forward-looking statements involve inherent risks
and uncertainties, as actual results and events will be affected by a number
of factors, many of which are beyond the company's control. Actual results and
events may therefore differ materially from those predicted by the forward
looking statements. Readers are cautioned not to place undue reliance on any
forward looking statement. Forward looking statements are expressly qualified
in their entirety by this cautionary statement.

    FINANCIAL OVERVIEW

    Earnings for the quarter were $0.06 per share compared to $0.07 for the
third quarter 2006. Year-to-date, earnings per share are $0.21 in 2007
compared to $0.44 in 2006. The comparability of the year-to-date and quarterly
 earnings for 2007 and 2006 are impacted by the following non-recurring items:

    -  Year-to-date 2006 included $3.7 million in revenue from
       ClaringtonFunds Inc. ("Clarington"), which contributed $0.20 to
       earnings per share;
    -  Year-to-date 2006 included $1.0 million in expense associated with the
       recruitment of the new President & CEO, which decreased earnings per
       share by approximately $0.06;
    -  Third quarter 2006 included severance costs, which reduced earnings by
       $0.02; and,
    -  Third quarter 2007 included costs incurred to launch three mutual
       funds, which decreased earnings per share by approximately $0.01

    Revenues for the quarter were $3.4 million, down from $4.0 million for the
third quarter 2006. The decline in revenues for the quarter is a result of a
decline in average assets under management. Revenues year-to-date are
$11.0 million, down from $16.4 million for the first nine months of 2006. The
decline reflects the impact of the Clarington revenues received in 2006 along
with the overall decline in assets under management. Included in 2007
year-to-date revenues is a realized gain of $0.2 million on the sale of
temporary investments, which contributed $0.01 to earnings per share.
    Expenses were lower in the third quarter 2007 compared to the third
quarter 2006. Year-to-date, excluding the impact of the non-recurring expenses
noted above, expenses are higher in 2007 compared to 2006, reflecting
increased stock-based compensation costs in 2007, partially offset by an
overall reduction in costs in other areas.
    Earnings before income taxes represented 31% of revenues for the quarter
and 34% year-to-date in 2007, compared with margins of 32% and 50% in 2006
respectively. After including the impact of income taxes, net earnings as a
percentage of revenues were 19% for the third quarter and 21% year-to-date
2007, compared to 19% for the quarter and 31% year-to-date for the same period
in 2006.

    OPERATING HIGHLIGHTS

    Assets under management ("AUM") were $4.2 billion as of September 30,
2007, down from $4.5 billion at the beginning of the quarter and $5.13 billion
a year ago. The following tables summarize the changes in AUM during the third
quarter and year-to-date.


    -------------------------------------------------------------------------
                       Quarterly Change in AUM Summary
                                (in billions)
    -------------------------------------------------------------------------
                      3rd Quarter 2007                 3rd Quarter 2006

                AUM     Net  Market     AUM      AUM     Net  Market     AUM
             End of     New   Value  End of   End of     New   Value  End of
                3rd  Assets  Change     2nd      3rd  Assets  Change     2nd
            Quarter                 Quarter  Quarter                 Quarter
               2007                    2007     2006                    2006
    ----------------------------------------  -------------------------------
    Total
     Firm     $4.21   (0.29)   0.01   $4.50    $5.13   (0.34)   0.20   $5.27
    ----------------------------------------  -------------------------------
    Institu-
     tional
     clients   2.39   (0.24)   0.01    2.62     3.16   (0.24)   0.14    3.25
    ----------------------------------------  -------------------------------
    Mutual
     funds     0.19   (0.01)      -    0.21     0.25   (0.01)   0.01    0.25
    ----------------------------------------  -------------------------------
    Wrap
     programs  1.46   (0.04)      -    1.50     1.56   (0.12)   0.05    1.63
    ----------------------------------------  -------------------------------
    Private
     clients    0.17      -       -    0.17     0.17    0.03       -    0.14
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                     Year to Date Change in AUM Summary
                                (in billions)
    -------------------------------------------------------------------------
                      First 9 Months                   First 9 Months
                           2007                             2006

                AUM     Net  Market     AUM      AUM     Net  Market     AUM
             End of     New   Value  End of   End of     New   Value  End of
                3rd  Assets  Change     4th      3rd  Assets  Change     4th
            Quarter                 Quarter  Quarter                 Quarter
               2007                    2006     2006                    2005
    ----------------------------------------  -------------------------------
    Total
     Firm     $4.21  ($1.11)  $0.11   $5.21    $5.13   (4.65)   0.44   $9.34
    ----------------------------------------  -------------------------------
    Institu-
     tional
     clients   2.39   (0.90)   0.10    3.19     3.16   (1.19)   0.22    4.13
    ----------------------------------------  -------------------------------
    Mutual
     funds     0.19   (0.06)  (0.01)   0.26     0.25   (3.05)   0.13    3.16
    ----------------------------------------  -------------------------------
    Wrap
     programs  1.46   (0.14)   0.02    1.59     1.56   (0.40)   0.07    1.88
    ----------------------------------------  -------------------------------
    Private
     clients   0.17   (0.01)      -    0.18     0.17   (0.01)   0.01    0.17
    -------------------------------------------------------------------------


    Net asset flows improved in absolute terms both for the third quarter and
for the year-to-date period compared to 2006, but remained negative. The
decline in AUM during both the third quarter and year-to-date 2007 primarily
reflects the result of net asset withdrawals by institutional clients.

    LIQUIDITY & CAPITAL RE

SOURCES Total available liquid assets, consisting of cash, short-term investments, and temporary investments, stood at $12.4 million as of September 30, 2007, up from $12.0 million as of the beginning of the quarter and $11.6 million a year ago. Of this total, cash and short-term investments represented $9.3 million, down from $11.2 at the beginning of the quarter and up from $6.2 million a year ago. The increase in cash and short-term investments from a year ago reflects the sale of $5.0 million of temporary investments, of which $2.5 million were re-invested in temporary investments during the third quarter. OUTLOOK Business conditions have improved somewhat. SEAMARK's disciplined and conservative approach to investment management generally fared well during the credit market turmoil of the third quarter. Overall, investment results are encouraging, particularly in Canadian equity, Canadian fixed income, and international equity mandates. The rising Canadian dollar, however, negatively impacted the market value of portfolios with U.S. equities, contributing to balanced mandates generally performing in line with benchmarks over the quarter and the one year period. Recently launched mutual funds are expected to gradually contribute to the diversification of our client base, although no meaningful impact on revenues is expected until 2008. It remains challenging to win new business. Sustained improvement in investment results remains a requirement to restore SEAMARK's competitive position in the industry. Management intends to continue to invest in the business in order to broaden our client base, deliver investment performance, strengthen client relations, and enhance the long-term profitability of the company. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ------------------------------------------------------------------------- As at September 30, 2007 and December 31, 2006 ($ in thousands) 2007 2006 ------------------------------------------------------------------------- ASSETS Current Cash and short-term investments $ 9,260 $ 7,372 Temporary investments 3,183 3,620 Accounts receivable and prepaid expenses 3,452 4,074 Income tax receivable 224 47 Future income tax asset 100 107 -------------------- 16,219 15,220 Capital assets 603 646 Intangible assets 356 386 Goodwill 389 276 -------------------- $ 17,567 $ 16,528 -------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities $ 1,880 $ 1,539 Future income tax 225 226 -------------------- 2,105 1,765 -------------------- Capital stock 6,034 5,796 Less share purchase financing (4,317) (4,729) Contributed surplus 911 432 Retained earnings 12,792 13,264 Accumulated other comprehensive income 42 - -------------------- 15,462 14,763 -------------------- $ 17,567 $ 16,528 -------------------- CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ------------------------------------------------------------------------- For the period ended September 30 ($ in thousands, Three months Year to date except per share) 2007 2006 2007 2006 ------------------------------------------------------------------------- REVENUE Institutional clients $ 1,353 $ 1,806 $ 4,440 $ 5,788 Mutual fund clients 135 162 447 4,151 Private clients and WRAP accounts 1,778 1,896 5,454 6,068 Investment income 119 126 613 344 ------------------------------------------ 3,385 3,990 10,954 16,351 ------------------------------------------ EXPENSES General and administrative 2,287 2,671 7,061 6,978 Amortization 59 54 184 153 ------------------------------------------ 2,346 2,725 7,245 7,131 ------------------------------------------ Unusual items - - - 1,020 ------------------------------------------ Earnings before income taxes 1,039 1,265 3,709 8,200 ------------------------------------------ Income taxes Current income taxes 392 483 1,398 3,116 Future income taxes 6 5 (4) 76 ------------------------------------------ 398 488 1,394 3,192 ------------------------------------------ ------------------------------------------ Net earnings $ 641 $ 777 $ 2,315 $ 5,008 ------------------------------------------ ------------------------------------------ EARNINGS PER SHARE Basic $ 0.06 $ 0.07 $ 0.22 $ 0.47 Diluted $ 0.06 $ 0.07 $ 0.21 $ 0.44 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in thousands) Basic 10,466 10,711 10,460 10,718 Diluted 11,421 11,376 11,129 11,418 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) ------------------------------------------------------------------------- For period ended September 30 Three months Year to date ($ in thousands) 2007 2006 2007 2006 ------------------------------------------------------------------------- Retained earnings - beginning of period $ 13,012 $ 14,068 $ 13,264 $ 12,732 Net earnings 641 777 2,315 5,008 ------------------------------------------ 13,653 14,845 15,579 17,740 Less Excess on acquisition of common shares 120 568 Dividends paid 741 760 2,219 3,655 ------------------------------------------ Retained earnings - end of period $ 12,792 $ 14,085 $ 12,792 $ 14,085 ------------------------------------------ ------------------------------------------ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) ------------------------------------------------------------------------- For period ended September 30 Three months Year to date ($ in thousands) 2007 2006 2007 2006 ------------------------------------------------------------------------- Net income $ 641 $ $ 2,315 $ ------------------------------------------ Other comprehensive income: Unrealized losses on temporary investments, net of income taxes of $4 thousand and $20 thousand for the three month and nine month period ended September 30, 2007 respectively. (19) (87) Realized gains on temporary investments sold and included in net income, net of income taxes of $47 thousand for the nine month period ended September 30, 2007. - (203) ------------------------------------------ Other comprehensive income (19) (290) ------------------------------------------ Comprehensive income $ 622 $ $ 2,025 $ ------------------------------------------ ------------------------------------------ CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) ------------------------------------------------------------------------- For the period ended September 30 Three months Year to date ($ in thousands) 2007 2006 2007 2006 ------------------------------------------------------------------------- OPERATING ACTIVITIES Net earnings for the period $ 641 $ 777 $ 2,315 $ 5,008 Items not affecting cash Amortization 59 54 184 153 Non-cash compensation expense 205 30 650 104 Future income tax 6 5 (4) 76 Gain on disposal of temporary investments - (12) (250) (12) Share purchase financing 137 (117) 412 (4,867) ------------------------------------------ 1,048 737 3,307 462 Changes in non-cash working capital related to operations 337 356 786 3,249 ------------------------------------------ 1,385 1,093 4,093 3,711 ------------------------------------------ FINANCING ACTIVITIES Dividends paid (741) (760) (2,219) (3,655) Share issue costs - (4) - (4) Acquisition of common shares (132) - (614) - ------------------------------------------ (873) (764) (2,833) (3,659) ------------------------------------------ INVESTING ACTIVITIES Acquisition of capital assets - (52) (111) (105) Purchase of temporary investments (2,445) (3) (2,509) (13) Business acquisition - (410) - (410) Proceeds from the sale of temporary investments - 299 3,248 299 ------------------------------------------ (2,445) (166) 628 (229) ------------------------------------------ Increase (decrease) in cash and short-term investments (1,933) 163 1,888 (177) Cash and cash equivalents - beginning of period 11,193 6,047 7,372 6,387 ------------------------------------------ Cash and cash equivalents, end of period $ 9,260 $ 6,210 $ 9,260 $ 6,210 ------------------------------------------ Cash is comprised of Cash $ 601 $ 435 $ 601 $ 435 Short-term investments 8,659 5,775 8,659 5,775 ------------------------------------------ Cash and cash equivalents, end of period $ 9,260 $ 6,210 $ 9,260 $ 6,210 ------------------------------------------ %SEDAR: 00016315E

For further information:

For further information: Brent Barrie, VP & Corporate Secretary, SEAMARK
Asset Management Ltd., (902) 423-9367

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