TORONTO, March 24 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and twelve month periods ended December 31, 2010.
Fiscal 2010 Highlights
"In 2010, driven by both outstanding investment performance and strong inflows into new products and businesses, our Assets Under Management increased almost 80% to $8.5 billion," said Peter Grosskopf, CEO of Sprott "On the year, eleven of our funds posted returns of more than 30% of which four delivered returns greater than 50%. These exceptional results generated more than $200 million in performance fees for Sprott. Based on these results, the Board of Directors declared special dividends totaling 72 cents per share."
"In addition to our record performance for the year, we also made excellent progress advancing our growth strategy and diversifying our business," continued Mr. Grosskopf. "The acquisition of the Global Companies allowed us to establish a foothold in the U.S., while strengthening our already deep investment team with the additions of Rick Rule and his team of technical resource investment experts. We also launched several other platforms for growth, including the Sprott Physical Gold Trust and the Sprott Physical Silver Trust, which together have contributed $2 billion to our Assets Under Management."
"Sprott Consulting was very active in 2010, with Sprott Resource Lending Corp. and Sprott Power Corp. joining Sprott Resource Corp. in its portfolio of managed companies," added Mr. Grosskopf. "Kevin Bambrough and his team have proven to be ahead of the crowd when it comes to investing in real assets to create real wealth. With growing investor interest in agriculture, energy, and precious metals, we believe they are poised to deliver tremendous results in 2011, as the broader market begins to align with our macro-economic views."
|$ millions||Year ended December 31, 2010||Year ended December 31, 2009|
|AUM, beginning of year||4,774||4,449|
|Net sales (redemptions)||1,448||(571)|
|Market value appreciation of portfolios||2,323||896|
|AUM, end of year||8,545||4,774|
Assets Under Management
For the year ended December 31, 2010, AUM were approximately $8.5 billion, compared with $4.8 billion at December 31, 2009. The 79% increase in AUM resulted from a combination of strong net flows and $2.3 billion in market value appreciation of Funds, Managed Accounts and Managed Companies. Net sales for the year were $1.5 billion, compared with net redemptions of $571 million for the year ended December 31, 2009.
During the fourth quarter of 2010, AUM increased by $2.0 billion to $8.5 billion from $6.5 billion at September 30, 2010. The increase reflected the combination of $573 million in net sales and $1.5 billion in net market value appreciation of Funds, Managed Accounts and Managed Companies. The majority of the net sales during the quarter were related to the launch of the Sprott Physical Silver Trust.
Total revenue for the year ended December 31, 2010 increased by 200.4% to $323.0 million, from $107.5 million in 2009.
Management fees increased by 17.8% to $103.7 million, from $88.0 million in 2009, as monthly average AUM increased by approximately 30.7% over the same period. Management fee margins fell to 1.77% in 2010 from 1.96% in 2009. The decrease is mainly due the significant growth in bullion funds, which have a lower management fee than the majority of the other Sprott Funds.
Performance fees for the year ended December 31, 2010 were $200.1 million, compared with $13.0 million in the prior year. In 2010, Performance fees were generated mainly by domestic hedge funds and offshore funds and a number of mutual funds that previously had carry-forward return deficiencies, recaptured those deficiencies and began accruing performance fees. In 2009, the majority of performance fees were generated by the Company's domestic and offshore hedge funds.
Gains from proprietary investments totaled $8.5 million for the year ended December 31, 2010, compared with gains of $5.0 million in 2009. In 2010, sales of public equities resulted in a net realized gain of $0.4 million, and the market value of proprietary investments increased by $8.1 million.
Commissions revenue for the year increased to $6.2 million from $0.l million the prior year. The significant increase was mainly due to commissions earned by Sprott Private Wealth LP on the sale of Sprott products and private placement opportunities to Sprott Private Wealth clients.
Other income increased by $3.1 million in 2010 to $4.5 million from $1.4 million for the year ended December 31, 2009.
Total expenses for the year ended December 31, 2010 were $150.0 million, an increase of $87.6 million, or 140.5%, compared with $62.4 million for 2009. The increase in the current year is mainly attributable to an increase in compensation and benefits of $55.7 million, an increase in stock-based compensation of $25.7 million, trailer fees of $2.4 million, general and administrative costs of $2.6 million, and donations expense of $1.2 million.
Net income for the year ended December 31, 2010 was $131.2 million ($0.87 per share) as compared with net income of $31.8 million ($0.21 per share) in 2009.
For the fourth quarter of 2010, total revenue was $241.9 million compared with $35.7 million in the prior year period. Management fees increased to $31.5 million from $23.1 million. Performance fees increased to $199.1 million from $10.6 million in the fourth quarter of 2009. Base EBITDA was $12.4 million, compared with $10.0 million in the fourth quarter of 2009. Net income was $108.0 million ($0.72 per share) compared to $13.3 million ($0.09 per share) in the prior year period.
On January 10, 2011, a special dividend in the amount of $0.60 per common share was declared. The special dividend related to performance fees received for 2010 and was paid to shareholders of record at the close of business on February 3, 2011.
On March 22, 2011, the Company declared a second special dividend of $0.12 per common share related to performance fees received for 2010. The shares issued from treasury on February 4, 2011 as a result of the acquisition of the Global Companies are not eligible to receive this dividend.
On March 22, 2011, the Company declared a dividend of $0.03 per common share for the quarter ended December 31, 2010. The shares issued from treasury on February 4, 2011 as a result of the acquisition of the Global Companies are not eligible to receive this dividend.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, March 24, 2011, 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, March 31, 2011 by calling 416-849-0833 or 1-800-642-1687, reference number 47229729.
*Non-GAAP 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 Canadian generally accepted accounting principles ("GAAP"). These non-GAAP measures should not be considered alternatives to performance measures determined in accordance with GAAP and may not be comparable to similar measures presented by other issuers. For additional information regarding the Company's use of non-GAAP measures, including the calculation of these measures, please refer to the "Non-GAAP 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 31, 2010. 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, Terra Resource Investment Management Inc., and Resource Capital Investments Inc. 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.