Today reported a net loss its second quarter ended Sept. 30, 2006, as brokerage activity slowed.
The net loss for the quarter was $1,687,996, or 18¢ a share, compared with a net profit of $191,861, or 2¢, per share in the prior year. Traditional brokerage activities were slower in the quarter and overall results were negatively impacted by a decline in market values of investments held in the merchant banking portfolio.
Consolidated revenue for the quarter was $2,391,859, compared with $5,013,732 in the second quarter of fiscal 2006. Underwriting and advisory revenue was $1,331,403, down from $3,076,368 the previous year. Weaker commodity prices reduced the number of underwritings, especially in the mining and oil and gas sectors. Commission revenue, at $1,759,879 for the quarter, was up from $1,346,867 in the previous year. Trading revenue decreased from $326,650 to $187,458 due to difficult market conditions.
Merchant banking activities resulted in a net loss of $1,206,340 for the quarter. In the prior year Northern did not have any merchant banking revenue. In the fourth quarter of fiscal 2006, a decision was made by management to dispose of certain long-term investments. As a result of this decision, the investments were reported as current assets and carried at market value resulting in merchant banking revenue of $6,439,787 being reported. In the current quarter, due largely to the recent market downturn, several of these investments have suffered a decline in their market value, resulting in the reported loss.
As at Sept. 30, 2006, Northern had cash, deposits, securities and long-term investments of $11,522,244 compared with $14,485,987 as at September 30, 2005.
Northern wholly owns Northern Securities, a full service investment dealer that provides financial advisory services to retail and institutional clients and investment banking services to small capitalization companies.
Northern Financial reports Q2 loss
Weaker commodity prices reduced the number of underwritings
- By: IE Staff
- November 15, 2006 November 15, 2006
- 11:30