Sprott (TSX:SII)
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TORONTO, June 2, 2011 /CNW/ --
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
-- Assets Under Management ("AUM") were $9.7 billion as at March
31, 2011, compared to $5.2 billion as at March 31, 2010 and
$8.5 billion as at December 31, 2010
-- Management Fees were $35.5 million, an increase of 52.9%
compared with the first quarter of 2010
-- Base EBITDA was $16.9 million, compared with $10.3 million in
the first quarter of 2010
-- Cash Flow from Operations was $0.07 per share compared with
$0.05 per share in the first quarter of 2010
-- EBITDA was $17.4 million, compared with $9.9 million in the
first quarter of 2010, an increase of 75.5%
-- Net income increased by 64.4% to $10.6 million ($0.07 per
share), from $6.4 million ($0.04 per share) in the first
quarter of 2010
-- Completed acquisition of the Global Group of Companies
-- Paid special dividends totalling $0.72 per share
-- Completed IPO of Sprott 2011 Flow-Through Limited Partnership
for gross proceeds of $90.7 million
-- Named David Franklin Chief Executive Officer of Sprott Private
Wealth
-- Hired Paul Wong as Portfolio Manager
Subsequent events:
-- Launched the Sprott Silver Bullion Fund
-- Sprott Physical Gold Trust completed $340 million follow-on
offering
"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 Three months ended
March 31, 2011 March 31, 2010
AUM, beginning of period 8,545 4,774
Net sales 260 417
Business acquisition 695* —
Market value appreciation 178 (36)
(depreciation) of portfolios
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.
Income Statement
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.
Dividends
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.
The conference call will also be webcast live at www.sprottinc.com and www.newswire.ca. An archived replay of the webcast will be available for 365 days.
*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.
Forward-Looking Statements
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.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/June2011/02/c9952.html
p bInvestor contact information:/b (416) 203-2310 or 1 (877) 403-2310 or a href="mailto:ir@sprott.com"ir@sprott.com/a /p