TORONTO, Aug. 9, 2012 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and six months ended June 30, 2012.
Q2 2012 Overview
"We continue to build our business and recently completed the acquisitions of Flatiron and the Toscana Companies," said Peter Grosskopf, CEO of Sprott Inc. "Together, these transactions further diversify our investment capabilities and product offerings through the addition of top convertible arbitrage and energy yield specialists, allowing us to launch value-added yield products that are currently in high demand."
"Our investment performance was disappointing through the first six months of the year and this negatively impacted our financial results," continued Mr. Grosskopf. "While our macro-economic assessment has been accurate, this has yet to manifest itself in improved performance for most of our funds. It appears likely that central banks will again, and possibly on a continuous basis, be mandated to intervene in the markets in an effort to stimulate growth. We therefore remain committed to our current positioning and believe that both our precious metals positions and our lower-volatility strategies will outperform in the second half of the year."
|For the three months ended||For the six months ended|
|June 30,||June 30,|
|($ in millions)||2012||2011||2012||2011|
|AUM, beginning of period||9,683||9,678||9,137||8,545|
|Net sales (redemptions)||(158||)||565||387||825|
|Market value depreciation of portfolios||(1,040||)||(951||)||(1,039||)||(773||)|
|AUM, end of period||8,485||9,292||8,485||9,292|
Assets Under Management
At June 30, 2012, AUM decreased by 8.7% to $8.5 billion, from $9.3 billion at June 30, 2011. Net redemptions for the three months ended June 30, 2012 were $158 million, which together with $1.0 billion in market value depreciation resulted in the $1.2 billion decrease in AUM for the quarter.
Average AUM for the three months ended June 30, 2012 was $9.0 billion compared with $9.9 billion for the three months ended June 30, 2011, a decrease of 9.3%.
Total revenue for the three months ended June 30, 2012 decreased by 30.2% to $27.4 million, from $39.3 million in 2011. For the six months ended June 30, 2012, total revenue decreased by 8.9% to $71.8 million from $78.8 million in the first six months of 2011.
Management fees decreased by 24.6% during the quarter to $28.1 million, from $37.2 million for the three months ended June 30, 2011 as average AUM decreased over the prior year period. For the first six months of 2012, management fees decreased by 16.1% to $61.1 million from $72.8 million in the first half of 2011. The decrease in management fees is attributable to both the lower average AUM for the three and six-month periods ended June 30, 2012 as well as an increase in lower margin offerings such as the physical bullion trusts and fixed-income products.
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 bullion, totaled $4.0 million for the three months ended June 30, 2012, essentially the same as the quarter ended June 30, 2011. For the six months ended June 30, 2012, gains from proprietary investments totaled $0.3 million, compared with losses of $3.6 million during the first six months of 2011.
Commission revenue for the three months ended June 30, 2012, was $2.1 million compared to $4.9 million during the three months ended June 30, 2011. For the six months ended June 30, 2012, commission revenue decreased by $0.1 million to $7.8 million from $7.9 million during the prior year period.
Other income increased by $0.7 million in the three months ended June 30, 2012 to $1.3 million from $0.6 million in the second quarter of 2011. For the six months ended June 30, 2012, other income increased by $1.6 million to $2.6 million from $1.0 million during the prior year period.
Total expenses for the three months ended June 30, 2012 were $26.2 million, a decrease of $1.9 million or 6.6%, from $28.1 million during the same period last year . Total expenses for the first six months of 2012 were $49.4 million, a decrease of 6.1% from $52.6 million in the six months ended June 30, 2011.
Base EBITDA, which excludes the impact of income taxes and certain non-cash expenses and gains or losses on proprietary investments, decreased by 42.6% to $10.4 million ($0.06 per share) for the three months ended June 30, 2012, compared with $18.1 million ($0.11 per share) in the second quarter of 2011. For the six months ended June 30, 2012, Base EBITDA decreased by 24.3% to $26.5 million from $35.1 million in the first half of 2011.
Net income for the three months ended June 30, 2012 decreased by 90.2% to $0.7 million ($0.00 per share) from $7.5 million ($0.04 per share) in the second quarter of 2011. Net income for the first six months of 2011 was $17.7 million ($0.10 per share), a 2.2% decrease as compared with the $18.1 million ($0.11 per share) earned during the first half of 2011.
On May 8, 2012, a dividend of $0.03 per common share was declared for the quarter ended March 31, 2012. This dividend was paid on June 1, 2012 to shareholders of record at the close of business on May 18, 2012.
In August 2012, a dividend of $0.03 per common share was declared for the quarter ended June 30, 2012.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, August 9, 2012, at 10:00am ET to discuss the Company's financial results. To participate in 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, August 16, 2012 by calling 416-849-0833 or 1-855-859-2056, reference number 12659963. The conference call will be webcast live at www.sprottinc.com and www.newswire.ca.
*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. Sprott U.S. Holdings Inc. includes Sprott 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.
SOURCE: Sprott Inc.
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