Mutual fund company WP Stewart yesterday announced it had suffered a first quarter loss of $1.8 million or four cents a share after taking a one-time charge of $5.8 million to deal with the termination of certain employees.

Bermuda-based WP Stewart, said the net loss compared to a $12.7 million or 28 cent a share profit in the same period in 2006.

The company said it had cash earnings of $6.4 million before the charge compared to cash earnings of $14.5 million in the same period a year earlier.

The company said of the terminations: "During the first quarter, the Company entered into agreements with certain employees whose employment with the Company terminated in the quarter. In accordance with the terms of these agreements, the Company has incurred one-time, non-recurring cash expenses of approximately $1.6 million and non-cash charges related to restricted shares of approximately $4.2 million in the first quarter of 2007. Combined, these one-time, non-recurring charges equate to approximately US$0.12 per share, diluted."

WP Stewart chairman & chief executive officer Bill Stewart said: "I indicated in February that we were in a classic turnaround situation and that things could get worse before getting better. Our financial results for this first quarter are disappointing but not entirely surprising and certainly not indicative of where our new management team hopes to take the Company over the next several years. I am optimistic that we are on the right track but there is a lot of hard work yet to do."

The flagship W.P. Stewart & Co. Ltd. US Equity Composite's performance for the first quarter fell 0.7 percent in the first quarter pre-fee and 0.7 percent post-fee. For the 12 months ending 31 March 2007, performance in the Composite was 6.7 percent, pre-fee and 5.6 percent post-fee. This compares with 11.8 percent for the S&P 500.

"Our short-term performance is disappointing but continues to largely reflect the hostile environment for high quality large cap growth stocks in the United States but I do believe that with the continuing strong trend in 'look-through' earnings growth and attractive valuations we can look forward to very good returns over the next few years," Mark Phelps, managing director - global investments, said. "It is right for us to remain patient and true to our style."

Assets under management at quarter-end were approximately $6.4 billion, compared with approximately $8.1 billion at December 31, 206 and $9.4 billion at March 31, 2006, the company said.