TORONTO, March 29, 2012 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and twelve month periods ended December 31, 2011.
"In 2011, the sovereign debt crisis led to unprecedented volatility and central bank intervention in the financial markets," said Peter Grosskopf, CEO of Sprott Inc. "Our funds were defensively positioned throughout the year. However, weakening prices in precious metals and, particularly, their related equities, negatively impacted our investment results and performance fee generation."
"Despite the challenging operating environment, we continue to invest in building and diversifying our business," continued Mr. Grosskopf. "During the year, we added new products, increased our presence in the U.S. market and made a number of key hires to further strengthen our investment and sales teams. We continued to see the benefits of the increased scale of our organization, as Base EBITDA increased by 60% and we grew our Assets Under Management, due largely to $1.4 billion in net sales."
|For the year ended|
|($ in millions)||2011||2010|
|AUM, beginning of year||8,545||4,774|
|Market value appreciation (depreciation) of portfolios||(1,521)||2,323|
|AUM, end of year||9,137||8,545|
Assets Under Management
At December 31, 2011, AUM increased by 6.9% to $9.1 billion, from $8.5 billion at December 31, 2010.
Net sales for the year ended December 31, 2011 were $1.4 billion, together with the addition of the acquired AUM of the Global Companies of $0.7 billion, offset partially by market depreciation of $1.5 billion resulted in a $0.6 billion increase in AUM for the year. The initial and follow-on offering of Sprott 2011 Flow-Through LP, follow-on offerings of Sprott Physical Gold Trust, the launch of Sprott Silver Bullion Fund and Sprott Strategic Fixed Income Fund and the addition of a new managed account, added approximately $1.2 billion to sales for the year.
Average AUM for the year ended December 31, 2011 was $9.8 billion compared with $5.9 billion for the year ended December 31, 2010, an increase of 66.7%.
Total revenue for the year ended December 31, 2011 decreased by 50.2% to $161.3 million, from $323.5 million in 2010.
Management fees increased by 41.6% during the year to $146.8 million, from $103.7 million for the year ended December 31, 2010, as average AUM increased by approximately 66.7% over the prior year. Management fee margins fell to 1.5% from 1.8% in 2010. The decrease is mainly due to the significant growth in bullion funds and fixed income funds, which have lower management fees than the majority of the other Sprott Funds.
Losses from proprietary investments, which include investments in funds that Sprott manages, an investment in Sprott Resource Lending Corp, certain other resource-related stocks and warrants, and gold and silver bullion, totaled $8.0 million for the year ended December 31, 2011, compared with a gain of $9.0 million in the year ended December 31, 2010.
Commission revenue for the year ended December 31, 2011, was $14.2 million compared to $6.2 million during the year ended December 31, 2010. In the year ended December 31, 2011, commission revenue was mainly due to commissions generated by Global Resource Investments Ltd. and to a lesser extent, Sprott Private Wealth.
Other income decreased by $1.6 million in the year ended December 31, 2011 to $2.9 million from $4.5 million in 2010.
Total expenses for the year ended December 31, 2011 were $117.3 million, a decrease of $31.7 million or 21.3%, from $148.9 million for 2010.
Base EBITDA, which excludes the impact of income taxes and certain non-cash expenses and gains or losses on proprietary investments, increased by 59.9% to $69.4 million ($0.41 per share) for the year ended December 31, 2011, compared with $43.4 million ($0.29 per share) in 2010.
Net income for the year ended December 31, 2011 decreased by 75.1% to $33.0 million ($0.20 per share) from $132.7 million ($0.88 per share) in 2010.
For the fourth quarter of 2011, total revenue was $38.1 million compared with $242.1 million in the prior year period. Management fee revenues increased to $33.7 million from $31.5 million during fourth quarter of 2010. Gross performance fees decreased to $2.5 million from $199.1 million in the fourth quarter of 2010. Base EBITDA was $16.1 million, compared with $12.4 million in the fourth quarter of 2010. Net income was $4.6 million ($0.03 per share) compared to $108.6 million ($0.72 per share) in the prior year period.
On November 8, 2011, a dividend of $0.03 per common share was declared for the quarter ended September 30, 2011. This dividend was paid on December 2, 2011 to shareholders of record at the close of business on November 17, 2011.
In March 2012, a dividend of $0.03 per common share was declared for the quarter ended December 31, 2011.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday March 29, 2012, at 10:00am ET to discuss the Company's financial results. To access the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Thursday, April 5, 2012 by calling 416-849-0833 or 1-855-859-2056, reference number 64100849.
*Non-IFRS Financial Measures
This press release includes financial terms (including AUM, EBITDA, Base EBITDA, Cash Flow from Operations and net sales) that the Company utilizes to assess the financial performance of its business that are not measures recognized under International Financial Reporting Standards ("IFRS"). These non-IFRS measures should not be considered alternatives to performance measures determined in accordance with IFRS and may not be comparable to similar measures presented by other issuers. For additional information regarding the Company's use of non-IFRS measures, including the calculation of these measures, please refer to the "Non-IFRS Financial Measures" section of the Company's Management's Discussion and Analysis and its financial statements available on the Company's website at www.sprottinc.com and on SEDAR at www.sedar.com.
This release contains "forward-looking statements" which reflect the current expectations of the Company. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements including, without limitation, those listed under the heading "Risk Factors" in the Company's annual information form dated March 27, 2012. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this release. Although the forward-looking statements contained in this release are based upon what the Company believes to be reasonable assumptions, the Company cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and the Company does not assume any obligation to update or revise them to reflect new events or circumstances.
About Sprott Inc.
Sprott Inc. is a leading independent asset manager dedicated to achieving superior returns for its clients over the long term. The Company currently operates through four business units: Sprott Asset Management LP, Sprott Private Wealth LP, Sprott Consulting LP, and Sprott U.S. Holdings Inc. Sprott Asset Management is the investment manager of the Sprott family of mutual funds and hedge funds and discretionary managed accounts; Sprott Private Wealth provides wealth management services to high net worth individuals; and Sprott Consulting provides management, administrative and consulting services to other companies, including Sprott Resource Corp. (TSX: SCP), Sprott Resource Lending Corp. (TSX: SIL) (NYSE AMEX: SILU) and Sprott Power Corp. (TSX: SPZ). Sprott U.S. Holdings Inc. includes Global Resource Investments Ltd, Sprott Asset Management USA Inc., and Resource Capital Investments Corporation. Sprott Inc. is headquartered in Toronto, Canada, and is listed on the Toronto Stock Exchange under the symbol "SII". For more information on Sprott Inc., please visit www.sprottinc.com.
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