Q1 LOSSTORONTO, Aug. 13, 2008 (Canada NewsWire via COMTEX) -- (NFC)
Northern Financial Corporation (NFC) ("Northern" or the "Company") today reported results for its first quarter ended June 30, 2008 of its 2009 fiscal year. The first quarter of fiscal 2009 was difficult as the economy and capital markets environment remained challenging. Credit markets continued to deteriorate, disrupting global stock markets. Fears of a recession and continued difficult liquidity conditions have resulted in equity market volatility and lack of investor confidence. These factors are even more intensified for the small and micro capitalization sector in which the Company operates.
Issuers have delayed coming to market and investors have remained on the sidelines. However, a serious decline in market values of small cap and microcap companies has led to a corresponding large increase in mergers and acquisition activity. "We have experienced a strong increase in our M&A engagements for companies seeking strategic opportunistic solutions where capital solutions have been scarce" stated Vic Alboini, Chairman and CEO of Northern.
In declining markets there are opportunities for investors to acquire shares in select companies at market values well below intrinsic values. "Especially in these declining markets, investors can focus on companies with market values that are less than total cash resources where the business value is zero or minimal, which provides very good upside potential" added Mr. Alboini.
Net loss for the quarter ended June 30, 2008 was $1,794,573 compared with net income of $503,873 in the first quarter of the prior year. The net loss included a broker warrant write-down of $406,794, a $440,755 non-cash share of the Company's loss in Jaguar Financial Corporation ("Jaguar"), compared to a gain of $97,708 in the first quarter of the prior year, and a $528,000 loss in Northern's wholly owned subsidiary, Northern Securities Inc.
Consolidated revenue for the quarter ended June 30, 2008 was $3,024,875, down from revenue of $6,851,805 in the first quarter of fiscal 2008.
Commission revenue declined in the first quarter in the retail, institutional and high net worth divisions to $1,728,169 compared to $2,918,093 in the prior year. Underwriting and advisory revenue decreased to $974,367 compared to $2,056,961 in the prior year. The decrease was driven by a reduced level of financings, partially offset by an increase in merger and advisory fees. Broker warrant revenue was a loss of $406,794 due to capital market conditions compared to a gain of $1,082,842 in the previous year. Trading revenue was $380,458 in the current year compared to $423,650 in the prior year. Interest revenue of $338,934 was down slightly from $389,486 in the prior year.
Merchant banking activities generated revenue of $16,646 in the current quarter compared to $24,969 in the prior year. The Company now conducts most of its merchant banking activities through its associated merchant bank, Jaguar.
Total expenses for the period ended June 30, 2008 were $4,378,693 compared with $6,445,640 in the prior year. Brokerage operations costs decreased to $3,968,174 from $6,198,633. The decrease was attributable to a decrease in variable compensation associated with the lower level of revenue, as well as expense reduction measures put in place by the Company. Interest expense decreased to $196,158 from $228,365. General and administrative expenses were $148,495 compared to a recovery $37,918 in the prior year.
Northern Financial Corporation wholly owns Northern Securities Inc., a full service investment dealer that provides financial advisory services to retail and institutional clients and investment banking services to small capitalization companies.
SOURCE: Northern Financial Corporation
Ann Krallisch, Director, Business Development, Northern Securities Inc., (416)
644-8113, Fax: (416) 644-0270, e-mail: akrallisch@northernsi.com