TORONTO, March 11 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three- and 12-month periods ended December 31, 2009.
Fiscal 2009 Highlights:
- Assets Under Management ("AUM") were $4.8 billion as at December 31,
2009, compared to $4.4 billion as at December 31, 2008 and $4.3
billion as at September 30, 2009
- Management Fees were $88.0 million, a decrease of 29% compared with
2008
- Base EBITDA was $33.7 million, compared with $57.1 million the prior
year
- Net income was $31.8 million ($0.21 per share), versus $52.1 million
($0.36 per share) in 2008
- Completed corporate reorganization dividing Sprott Asset Management
("SAM") into three business lines: Sprott Asset Management LP; Sprott
Private Wealth LP; and Sprott Consulting LP
- Announced several key appointments, including:
- Kevin Bambrough, President, Sprott Inc.
- James Fox, President, SAM
- Peter Loach, Executive Vice President of Product Development, SAM
Subsequent to Year-End:
- Launched first flow-through fund, the Sprott 2010 Flow-Through
Limited Partnership
- Launched the Sprott Physical Gold Trust
- Named Scott Colbourne, Senior Portfolio Manager, SAM
"As the markets rallied in 2009, the majority of our long funds outperformed their benchmarks, some by a wide margin, while most of our hedge funds were constrained by their short positions during the year, limiting them to modest returns. The Sprott Gold and Precious Minerals Fund, managed by Charles Oliver and Jamie Horvat, was our best performer all year, posting a return of 113% versus 7% for its benchmark," said Eric Sprott, CEO of Sprott Inc. "The results delivered by our investment team in 2009 generated performance fees for some of our funds and reduced the performance deficits that others carried forward into 2009. These results position us well to return to generating potentially significant performance fees in the year ahead."
"We reorganized our business in 2009 to create three separate units: Sprott Asset Management; Sprott Private Wealth; and Sprott Consulting. We have recently made key hires in each of these areas, as we work to build out our management teams to drive the growth strategies of these businesses," continued Mr. Sprott. "Going forward, we will continue to introduce new products and services. So far this year we have launched two new funds: the Sprott 2010 Flow-Through Limited Partnership and the Sprott Physical Gold Trust. With the recent additions of Peter Loach and Scott Colbourne to our team, we expect to continue expanding our fund lineup throughout 2010."
Assets Under Management
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Year ended Year ended
$ millions December 31, 2009 December 31, 2008
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AUM, beginning of year 4,449 6,215
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Net sales (redemptions) (571) 95
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Market value appreciation
(depreciation) of portfolios 896 (1,861)
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AUM, end of period 4,774 4,449
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For the year ended December 31, 2009, AUM increased to $4,774 million, compared to $4,449 million at December 31, 2008. The $325 million increase reflected market value increases of $896 million, offset by net redemptions of $571 million.
During the fourth quarter of 2009, AUM increased by $436 million from $4,338 million as of September 30, 2009 to $4,774 million at the end of December, 2009. The increase during the quarter reflected a combination of net redemptions of $68.0 million and net market value appreciation of portfolios of $504 million.
Income Statement
Total revenue for the year ended December 31, 2009 decreased by 35.1% to $107.5 million, from $165.8 million in 2008. Most of the decrease in overall revenue was attributable to lower management fees and performance fees earned in 2009, compared with 2008, and was partially offset by unrealized and realized gains of $5.0 million, compared with unrealized and realized losses of $11.7 million in 2008.
Management fees declined by 29.0% to $88.0 million, from $124.0 million in 2008, as monthly average AUM decreased by approximately 28.8% over the same period. Management fee margins remained fairly constant at 2.0% during 2009.
Performance fees for the year ended December 31, 2009 were $13.0 million, compared with $47.9 million the prior year. In 2008, $35.6 million in performance fees was earned by Sprott Consulting LP through its management of Sprott Resource Corp., with the remainder generated primarily from Sprott's domestic and offshore hedge funds. In 2009, the majority of performance fees were generated by the company's domestic and offshore hedge funds
Gains from proprietary investments totaled $5.0 million for the year ended December 31, 2009, compared with a loss of $11.7 million in 2008. In 2009, sales of public equities resulted in a net realized gain of $2.3 million, in addition to the unrealized appreciation in the market value of proprietary investments of $2.7 million.
Total expenses for the year ended December 31, 2009 were $62.4 million, a decrease of $24.1 million, or 27.9%, compared with $86.5 million for 2008. The decline in 2009 is mainly due to a decrease in compensation and benefits of $16.5 million, a decrease in trailer fees of $7.3 million, along with decreases in general and administrative costs $0.3 million, and decreases in donations of $0.5 million, partially offset by an increase in fixed assets amortization expense.
Net income for the year ended December 31, 2009 was $31.8 million ($0.21 per share) as compared with net income of $52.1 million ($0.36 per share) in 2008.
For the fourth quarter of 2009, total revenue was $35.7 million compared with $57.7 million in the prior year period. Management Fees increased to $23.1 million from $21.7 million. Accrued Performance Fees fell by $31.8 million to $10.6 million, from $42.4 million in the fourth quarter of 2009. Base EBITDA was $10.0 million, compared with $8.1 million in the fourth quarter of 2008. Net income was $13.3 million ($0.09 per share) compared to $20.4 million ($0.14 per share) in the prior year period.
Dividends
On February 17, 2010 the Company declared an eligible dividend of $0.025 per share for the quarter ended December 31, 2009. The dividend was paid on March 9, 2010 to shareholders of record on February 20, 2010.
On March 9, 2010, the Board of Directors declared a special eligible dividend of $0.04 per Common Share for the fiscal year ended December 31, 2009, payable on April 5, 2010 to shareholders of record at the close of business on March 19, 2010.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, March 11, 2010, 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. To access the live webcast, please visit www.sprottinc.com or www.newswire.ca. Participants will require Windows Media Player(TM) to listen to the webcast.
*Non-GAAP Financial Measures
This press release includes financial terms (including AUM 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.
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 24, 2009. 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 three distinct business units: Sprott Asset Management LP, Sprott Private Wealth LP and Sprott Consulting LP. 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 SRC (TSX: SCP). 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.
Selected Annual Financial Information
As at December 31
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(In $ 000's) 2009 2008 2007
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Assets Under Management
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Assets Under Management 4,773,789 4,448,708 $6,215,273
Balance Sheet Information
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Total Assets 97,694 123,430 280,873
Total Liabilities 21,554 43,916 142,785
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Shareholders' Equity 76,140 79,514 138,088
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Income Statement Information
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Total Revenue 107,525 165,757 227,621
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Net Income 31,830 52,136 42,282
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Net Income Per Share - basic .21 .36 .32
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Net Income Per Share - fully diluted .21 .36 .32
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Summary Financial Information
For the For the
year ended year ended
December December
31, 2009 31, 2008
$ $
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Revenue
Management fees 88,023 123,970
Performance Fees 12,981 47,922
Unrealized and realized gains (losses)
on proprietary investments 5,032 (11,722)
Other income 1,489 5,587
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Total revenue 107,525 165,757
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Expenses
Compensation and benefits 30,294 46,823
Trailer fees 19,191 26,491
General and administration 10,747 11,006
Donations 1,143 1,651
Amortization 988 574
Interest expense - -
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Total expenses 62,363 86,545
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Income before income taxes 45,162 79,212
Provision for income taxes 13,332 27,076
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Net income and comprehensive income for the period 31,830 52,136
Other expenses(1) 3,288 2,098
Provision for income taxes 13,332 27,076
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EBITDA 48,450 81,310
Unrealized and realized (gain) loss
on proprietary investments (5,032) 11,722
Performance fees net of performance fee
related bonus pool(2) (9,736) (35,941)
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Base EBITDA 33,682 57,091
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(1) Includes interest, amortization and non-cash stock-based compensation
expense.
(2) Performance Fee related bonus pool is equal to 25% of Performance Fee
Revenue.