TORONTO, June 2, 2011 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three month period ended March 31, 2011.
Q1 2011 Highlights
"In the first quarter of 2011, we continued to be active, executing on a number of growth initiatives to attract top talent, diversify our organization and extend the geographic reach of our brand," said Peter Grosskopf, CEO of Sprott "We completed the acquisition of the Global Group of Companies and are now fully engaged in the integration process. We are pleased with the synergistic opportunities that this transaction has brought to our organization. In the near future, we expect to use this growth platform to launch new Sprott-branded products targeted to U.S. investors."
"In 2010, we were successful in growing our asset base and adding potentially lucrative new businesses lines and, with the integration of the Global Group of Companies, we are now beginning to see the earning potential of our larger, more diversified organization. This added scale contributed to a 53% increase in management fees and a 64% increase in base EBITDA over the same period last year," continued Mr. Grosskopf. "We continue to broaden our product offerings and during the quarter we raised $91 million through our second flow-through offering. Subsequent to the end of the quarter, we launched the Sprott Silver Bullion fund, an open ended mutual fund designed to capitalize on the sustained investor demand for investments backed by physical metals."
"While precious metals have experienced a correction in recent weeks, their fundamentals remain extremely compelling in the face of rising inflation and ongoing international debt issues. We expect prices to continue to rise in the coming quarters," concluded Mr. Grosskopf.
|$ millions|| Three months ended |
March 31, 2011
| Three months ended |
March 31, 2010
|AUM, beginning of period||8,545||4,774|
|Market value appreciation (depreciation) of portfolios||178||(36)|
|AUM, end of period||9,678||5,155|
* These represent the AUM of Terra Investment Management, Inc. and Resource Capital Investment Corporation.
Assets Under Management
For the quarter ended March 31, 2011, AUM were approximately $9.7 billion, compared with $5.2 billion at March 31, 2010. The 88% increase in AUM resulted from a combination of the addition of $0.7 billion in AUM through the acquisition of the Global Group of Companies, strong net flows and $0.2 billion in market value appreciation of Funds, Managed Accounts and Managed Companies. Net sales for the quarter were $260 million, compared with net sales of $417 million for the quarter ended March 31, 2010. During the quarter, $91 million of the net sales came from the launch of the Sprott 2011 Flow-Through Limited Partnership. The remaining $169 million in net sales were spread across Sprott's domestic mutual and hedge funds as well as the company's offshore funds. The majority of the net sales in the first quarter of 2010 were attributable to the Initial Public Offering of the Sprott Physical Gold Trust.
Total revenue for the quarter ended March 31, 2011 increased by 53.6% to $39.5 million, from $25.7 million in the first quarter of 2010.
Management fees increased by 53.6% to $35.5 million, from $23.2 million in the first quarter of 2010, as monthly average AUM increased by approximately 81.1% over the same period. Management fee margins fell to 1.5% in the first quarter of 2011 from 1.9% in the first quarter of 2010. 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.
Gains from proprietary investments totaled $0.4 million for the first quarter of 2011, compared with a loss of $0.4 million in the first quarter of 2010.
Commission revenue for the quarter ended March 31, 2011, was $3.0 million compared to $2.6 million during the prior year period. In the first quarter of 2011, commission revenue was mainly due to commissions generated by Global Resource Investments Limited. During the first quarter of 2010, Sprott Private Wealth earned commissions from the sale of units of Sprott Power Corp., Sprott 2011 Flow Through Limited Partnership and Sprott Physical Gold trust to its private clients.
Other income increased by $0.1 million in the first quarter of 2011 to $0.4 million from $0.3 million for the first quarter of 2010.
Total expenses for the quarter ended March 31, 2011 were $24.6 million, an increase of $8.1 million or 49.0%, compared with $16.5 million for 2010. The increase is primarily due to the acquisition of the Global Group of Companies (including the amortization of the related intangible assets and stock-based compensation relating to the earn-out shares) and higher costs associated with the growth of business.
Net income for the quarter ended March 31, 2011 was $10.6 million ($0.07 per share) as compared with net income of $6.5 million ($0.04 per share) in the first quarter of 2010.
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 were 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 were not eligible to receive this dividend.
On June 1, 2011, subsequent to the end of the first quarter, a dividend of $0.03 per common share was declared for the quarter ended March 31, 2011.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, June 2, 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, June 9, 2011 by calling 416-849-0833 or 1-800-642-1687, reference number 47229729.
*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 22, 2011. 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.