(March 21 – 10:30 ET) – Sceptre Investment Counsel Ltd. reported reduced earnings for the first quarter ended February 28. It lowered its dividend as a result, but has committed to pay out more than it earns.

First-quarter earnings were $2.1 million, or 16¢ a share down from $3.65 million or 27¢ a share for the same period last year. Revenue for the three months ended February 28 was $10.4 million down from $13.3 million.

The firm says that results for the first quarter were affected by, “a continued decline in assets under management related to previous investment underperformance in both the retail and institutional client groups as well as the overall downturn in financial market values”. In the first quarter the firm also made its first full payment of sub-advisory fees to Putnam Investments for the management of Sceptre’s foreign equity funds.

Sceptre has always made a point of paying about 90% of its earnings in a dividend. But with this last quarter’s drop off in performance, earnings have fallen far below the 26¢ dividend the firm was paying. As a result it will reduce its dividend, but only to 20¢, paying a dividend greater than its earnings.

The firm says that it has reviewed its dividend policy and has concluded that its cash resources, weighed against expected cash requirements, permit it to pay a dividend in excess of earnings. This policy will be reviewed on a regular basis but barring an unforeseen event it expects the new dividend level to be maintained for the foreseeable future.

“We are encouraged by the turnaround in investment performance and the strong response to our co-branded global products,” said William Malouin, president and CEO of Sceptre. “While some challenges remain, we continue to improve the company at every level and have already begun to emerge from this difficult period as a stronger organization.”

In the Pension and Institutional Fund group, performance-related outflows have slowed as a result of improved investment returns. Sceptre says it continues to accumulate new foreign equity assets under its strategic alliance with Putnam Investments. During the first quarter, 17 new mandates were secured, and the pipeline of potential new business continues to build. The positive financial impact of these new assets will be delayed, as there is a time lag between a mandate win, the actual transfer of assets, and revenue.

Total expenses for the first quarter were lower than the comparable period last year, led by a decrease in overall remuneration costs. In the first quarter, it continued to invest in technology and system upgrades to enhance its client service and portfolio management capabilities.