TORONTO, Nov. 14, 2012 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and nine months ended September 30, 2012.
Q3 2012 Overview
- Assets Under Management ("AUM") were $10.3 billion as at September 30, 2012, compared to $9.9 billion as at September 30, 2011 and $8.5 billion as at June 30, 2012
- Assets Under Administration ("AUA") were $4.0 billion as at September 30, 2012, compared to $4.9 billion as at September 30, 2011
- Management Fees were $28.2 million, a decrease of 30.1% compared with the three months ended September 30, 2011
- Base EBITDA was $10.4 million ($0.06 per share) compared with $18.3 million ($0.11 per share) for the three months ended September 30, 2011, a decrease of 42.9%
- EBITDA was $14.3 million ($0.08 per share), compared with $17.4 million ($0.10 per share) for the three months ended September 30, 2011, a decrease of 17.8%
- Net income was $11.0 million ($0.07 per share) for the three months ended September 30, 2012, an increase of 6.3% from $10.4 million ($0.06 per share) in the comparable quarter of 2011
- Completed US $220 million follow-on offering of Sprott Physical Silver Trust Units
- Completed US $392 million follow-on offering of Sprott Physical Gold Trust Units
- Launched Sprott Flatiron Yield Trust
- Finalized acquisition of Toscana Capital Corporation and Toscana Energy Corporation (now "Sprott Toscana")
- Closed acquisition of Flatiron Capital Management Partners (now "Sprott Flatiron")
- Filed prospectus for Flatiron Canadian Convertible Strategies Trust
- U.S. subsidiary, Resource Capital Investment Corp. raised US $50 million through new fixed-term Limited Partnership
- Completed US $279 million offering of Sprott Physical Silver Trust Units
"During the third quarter we raised more than US$600 million through follow-on offerings of our Sprott Physical Silver Trust and Sprott Physical Gold Trust. We are pleased with the continued growth of our physical bullion business and expect to expand this franchise before the end of the year with the launch of the Sprott Physical Platinum and Palladium Trust," said Peter Grosskopf, Chief Executive Officer of Sprott. "We continue to enhance our investment capabilities through complementary acquisitions of new managers and products. We have now completed the acquisitions of Sprott Flatiron and Sprott Toscana, two transactions that give us additional specialty yield expertise in the energy and fixed-income areas. Both companies recently launched new yield-oriented products that we expect to be very attractive to investors in the current market environment."
"After a challenging first half of the year, our investment performance improved during the third quarter, due largely to a rebound in precious metals and their related equities," continued Mr. Grosskopf. "With the U.S. Federal Reserve's open-ended extension of its quantitative easing programs and the ongoing instability in Europe, we are confident in our positioning and remain focused on delivering superior investment results to our investors over the long term."
"In September, Sprott Resource Corp. marked its five-year anniversary, having established a strong track record of value creation. The company recently completed the successful sale of its subsidiary, Waseca Energy Inc., for total proceeds of approximately $111.7 million. Based largely on the success of this transaction, Sprott Consulting is well positioned to earn performance fees in 2012, through its management services agreement with Sprott Resource Corp.," added Mr. Grosskopf. "We believe the private equity space represents a potential growth area for our business. Increasingly, the pursuit of this growth has led us to explore international mandates."
|For the three months ended||For the nine months ended|
|September 30,||September 30,|
|($ in millions)||2012||2011||2012||2011|
|AUM, beginning of period||8,485||9,292||9,137||8,545|
|Market value appreciation (depreciation) of portfolios||940||(66)||(99)||(839)|
|AUM, end of period||10,303||9,881||10,303||9,881|
Assets Under Management
At September 30, 2012, AUM increased by 4.3% to $10.3 billion from $9.9 billion at September 30, 2011. Net sales for the three months ended September 30, 2012 were $0.5 billion and market value appreciation was $0.9 billion. The Sprott Flatiron acquisition added approximately $0.3 billion to AUM and the acquisition of Sprott Toscana added approximately $0.1 billion to AUM, resulting in total AUM increase of $1.8 billion for the quarter.
Average AUM for the three months ended September 30, 2012 was $9.3 billion compared with $10.4 billion for the three months ended September 30, 2011, a decrease of 10.4%.
Total revenue for the three months ended September 30, 2012 decreased by 19.3% to $35.8 million, from $44.3 million in the same period in 2011. For the nine months ended September 30, 2012, total revenue decreased by 12.6% to $107.6 million from $123.1 million in the first nine months of 2011.
Management fees decreased by 30.1% during the quarter to $28.2 million, from $40.4 million for the three months ended September 30, 2011. For the first nine months of 2012, management fees decreased by 21.1% to $89.3 million from $113.1 million in the first three quarters of 2011. The decrease in management fees is attributable to both the lower average AUM for the three and nine-month periods ended September 30, 2012 as well as an increase in lower margin offerings such as the physical bullion trusts and fixed-income products.
Gains from proprietary investments, which include investments in products that Sprott manages, certain other resource-related stocks and warrants, and bullion, totaled $3.8 million for the three months ended September 30, 2012, compared to losses of$2.4 million for the quarter ended September 30, 2011. For the nine months ended September 30, 2012, gains (realized and unrealized) from proprietary investments totaled $4.1 million, compared with losses of $6.0 million during the first nine months of 2011.
Commission revenue for the three months ended September 30, 2012, was $2.4 million compared to $3.4 million during the three months ended September 30, 2011. For the nine months ended September 30, 2012, commission revenue decreased by $1.1 million to $10.2 million from $11.3 million during the prior year period.
Other income increased by $0.3 million in the three months ended September 30, 2012 to $1.3 million from $1.0 million in the third quarter of 2011. For the nine months ended September 30, 2012, other income increased by $2.0 million to $3.9 million from $1.9 million during the prior year period.
Total expenses for the three months ended September 30, 2012 were $20.9 million, a decrease of $9.4 million or 31.1%, from $30.3 million during the same period last year. Total expenses for the first nine months of 2012 were $70.3 million, a decrease of 15.2% from $83.0 million in the nine months ended September 30, 2011.
Base EBITDA, which excludes the impact of income taxes and certain non-cash expenses and gains or losses on proprietary investments, decreased by 42.9% to $10.4 million ($0.06 per share) for the three months ended September 30, 2012, compared with $18.3 million ($0.11 per share) in the third quarter of 2011. For the nine months ended September 30, 2012, Base EBITDA decreased by 30.7% to $37.0 million from $53.3 million in the first nine months of 2011.
Net income for the three months ended September 30, 2012 increased by 6.3% to $11.0 million ($0.07 per share) from $10.4 million ($0.06 per share) in the second quarter of 2011. Net income for the first nine months of 2012 was $28.7 million ($0.17 per share), compared with $28.4 million ($0.17 per share) earned during the nine months ended September 30, 2011.
On August 8, 2012, a dividend of $0.03 per common share was declared for the quarter ended June 30, 2012. This dividend was paid on September 4, 2012 to shareholders of record at the close of business on August 17, 2012.
In November 2012, a dividend of $0.03 per common share was declared for the quarter ended September 30, 2012.
Conference Call and Webcast
A conference call and webcast will be held today, Wednesday, November 14, 2012, at 10:00am ET to discuss the Company's financial results. To participate in 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 Wednesday, November 21, 2012 by calling 416-849-0833 or 1-855-859-2056, reference number 58876486. The conference call will be webcast live at www.sprottinc.com and www.newswire.ca
*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 27, 2012. 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. Sprott U.S. Holdings Inc. includes Sprott Global Resource Investments Ltd, Sprott Asset Management USA Inc., and Resource Capital Investments Corporation. 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.
SOURCE: Sprott Inc.
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