Strength in fixed income mandates contributes to growth in assets
TORONTO, May 5 /CNW/ - Saxon Financial Inc. (TSX:SFI) today reported financial results for the first quarter ended March 31, 2008. Assets under management increased by 2.8% in the first quarter, climbing to $13.3 billion. Significant flows in the Company's institutional fixed income mandates offset the decline in mutual fund assets.
"Saxon's diversified asset mix and prudent investment management contributed positively to AUM growth while global market instability kept equity investors on the sidelines," said Allan Smith, President and CEO.
Saxon enjoyed strong relative performance in its international and small cap mutual funds in the quarter, reversing the trend in the second half of 2007. In spite of improved performance, Saxon's equity funds reported net redemptions, in keeping with the industry-wide trend as nervous investors sought the refuge of money market funds. The decline in equity mutual fund assets in the quarter, the largest fee-generating segment for Saxon, negatively impacted revenues and earnings.
"In the coming quarters, we will focus on leveraging our relative equity performance to supplement our success in institutional fixed income," added Smith.
Highlights:
Financial Highlights
(unaudited - $ thousands, Three month period
except per share data) ended March 31
----------------------------
2008 2007 Change
--------- -------- ---------
$ $
Revenue(x) 12,301 13,625 -10%
EBITDA(xx) 4,935 6,273 -21%
Net Income 3,317 4,088 -19%
Earnings per share 0.24 0.30 -20%
(x) Revenue refers to management fee revenue and excludes investment
income.
(xx) The amount of earnings before interest, taxes, depreciation and
amortization ("EBITDA") is a non-GAAP measure used by management,
investors and analysts to evaluate and analyze the Company's
results. EBITDA does not have a standardized meaning and may not
be comparable to similar measures presented by other companies.
EBITDA is defined as earnings before investment income, interest
expense, income taxes, depreciation and amortization.
- Saxon Financial's assets under management increased by 2.8% or
$363 million in the first quarter to $13.3 billion. Net flows of
$414 million and market appreciation of $80 million in institutional
mandates contributed positively to the first quarter growth in assets
under management.
- Saxon's Q1 2008 management fee revenue was $12.3 million, down from
$13.2 million in the prior quarter. The decline in revenue resulted
from a decline in mutual fund assets, the largest revenue-generating
segment for Saxon.
- Saxon's net income for the quarter was $3.3 million, down from
$4.1 million in the first quarter of 2007. While operating expenses
remained at prior year levels, net income was negatively impacted
primarily by a decline in mutual fund management fees.
- Saxon international and small cap mutual funds generated strong
relative performance in a volatile quarter for global equity markets.
Saxon World Growth and Saxon U.S. Equity Fund outperformed their
respective benchmarks by more than 4% in the quarter.
For detailed financial statements, including management's discussion and analysis, please refer to Saxon's website at www.saxonfinancial.ca.
Conference call
Saxon will host a conference call to discuss these results on Monday May 5, 2008, at 11:00 am EDT. Please dial 416-695-7806, or toll-free 1-888-789-9572. Passcode 3257693 followed by the number sign.
About Saxon Financial Inc.:
Saxon Financial Inc. (SFI) is one of Canada's most respected value-style investment management firms. The Company has three principal businesses: Saxon Funds Management Limited, which manages a family of high-performing mutual funds; Howson Tattersall Investment Counsel Limited, an institutional asset management business; and Howson Tattersall Private Asset Management Inc., a private client asset management business.