SPROTT INC. ANNOUNCES 2011 FIRST QUARTER RESULTS
02 June 2011 - 9:00PM
PR Newswire (Canada)
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
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