Sprott Inc. announces first quarter 2009 results

    TORONTO, May 7 /CNW/ - Sprott Inc. (TSX:SII) ("Sprott" or the "Company")
today announced its financial results for the three months ended March 31,

    Q1 2009 Highlights

    -   Assets Under Management (AUM) were $4.7 billion as at March 31, 2009,
        compared to $6.8 billion as at March 31, 2008 and $4.4 billion as at
        December 31, 2008
    -   Management Fees were $22.6 million, a decrease of $10.2 million, or
        31%, over Q1 2008
    -   Base EBITDA was $8.1 million compared to $16.6 million in the prior
        year period
    -   Net income was $7.4 million ($0.05 per share), versus $16.7 million
        ($0.12 per share) in Q1 2008
    -   Declared a first quarter dividend of $0.025 per share on May 6, 2009
    -   Launched two new funds - the Sprott Gold Bullion Fund and the FNSSC
        (1) Multi-Manager Fund
    -   SAM hosted "Night with the Bears", an event that drew over 1,500
        clients, prospects and media
    -   Planned launch of Sprott Private Wealth LP in the second quarter of

    (1) Federation of National Specialty Societies of Canada

    "Overall, our Funds performed well in the first quarter of 2009,
particularly in January and February, as we were rewarded for our position on
the markets and large weighting in precious metals," said Eric Sprott,
President and CEO of Sprott Inc. "The rate of redemptions slowed significantly
during the quarter, while sales increased. March was the first positive net
sales month since August 2008, reflecting strong performance of our Funds,
reduced de-leveraging activity from our institutional hedge fund clients and
the launch of the Sprott Gold Bullion Fund, which has generated strong early
sales. Despite net redemptions for the quarter, AUM increased due to market
appreciation of our Funds' investments. We also maintained our quarterly
dividend of $0.025 per share."
    "Although high market volatility has led to fluctuations in accruals for
performance fees, at various times during the first quarter, Funds accounting
for nearly 90% of our AUM, excluding Managed Accounts and the Sprott Gold
Bullion Fund, had accrued performance fees. We continue to believe Sprott is
positioned to earn performance fees in 2009."

    Assets Under Management

    $ millions                      Three months ended    Three months ended
                                        March 31, 2009        March 31, 2008
    AUM, beginning of period                     4,449                 6,215
    Net sales (redemptions)                       (208)                  298
    Market value appreciation
     of portfolios                                 484                   287
    AUM, end of period                           4,725                 6,800

    In the first quarter of 2009, AUM rose to $4.7 billion, compared to $4.4
billion at December 31, 2008. The $0.3 billion increase reflected market
appreciation of $0.5 billion less net redemptions of $0.2 billion. The
majority of the Company's first quarter redemptions related to offshore hedge
funds, which are primarily owned by institutional investors.

    Income Statement

    In the first quarter of 2009, total revenue decreased by $16.5 million,
or 38%, to $26.7 million from $43.1 million in the first quarter of 2008.
Total revenue consists of management fees, crystallized performance fees,
gains from proprietary investments, and interest and other income.
    Management fees declined by $10.2 million, or 31%, to $22.6 million from
$32.8 million in the first quarter of 2008, as monthly average AUM decreased
by approximately 29% over the same period.
    Crystallized performance fees were $1.8 million compared to $0.3 million
in the prior year. The $1.5 million increase is due to higher redemptions and
strong performance of the Sprott Funds in early 2009.
    Gains from proprietary investments totaled $2.1 million compared with
$8.1 million in the first quarter of 2008. In anticipation of the initial
public offering in May 2008, SAM sold the majority of its proprietary
investments during the first half of 2008. Proprietary investments, which are
reported on a mark-to-market basis, currently comprise of an investment in
Sprott Molybdenum Participation Corporation, investments in various funds
managed by SAM, investments purchased pursuant to the liquidation of the
Sprott Strategic Gold Master Fund, Ltd and gold bullion.
    Other income fell by $1.8 million to $0.1 million compared with the prior
year period. In the first quarter of 2008, Sprott earned a foreign exchange
gain on the receipt of fees from offshore funds as well as higher early
redemption fees. In the first quarter of 2009, foreign exchange fees were
nominal and early redemption fees were lower, resulting in a lower amount of
other income.
    Total expenses for the quarter were $15.8 million, a decrease of $2.3
million, or 13%, compared with $18.1 million in the prior year. The decrease
is mainly attributable to a decrease in trailer fees of $2.5 million, a
decrease in compensation and benefits of $0.8 million, partially offset by an
$0.8 million increase in general and administrative costs. Although higher
year over year, general and administrative costs have decreased by 5% compared
to the fourth quarter of 2008.
    Net income was $7.4 million ($0.05 per share), compared with net income
of $16.7 million ($0.12 per share) for the corresponding period in 2008.


    On May 6, 2009 the Company declared an eligible dividend of $0.025 per
share for the quarter ended March 31, 2009. The dividend will be paid on June
1, 2009 to shareholders of record on May 15, 2009.

    Conference Call and Webcast

    A conference call and webcast will be held today, Thursday, May 7, 2009,
at 10:30 am EDT to discuss the Company's financial results. To access the
call, please dial 416-644-3423 or 1-800-732-1073. 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.

    Annual General Meeting

    Sprott Inc. will be hosting its Annual General Meeting ("AGM") today,
Thursday, May 7, 2009 at 4:00 pm, ET. The AGM will be held at the Design
Exchange, 234 Bay Street, Toronto, Canada.

    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 prospectus. 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 and Sprott Asset Management
Inc. (SAM) believe to be reasonable assumptions, neither the Company nor SAM
can 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 neither the Company nor
SAM assumes any obligation to update or revise them to reflect new events or

    About Sprott Inc.

    Sprott Inc., through its wholly-owned subsidiary Sprott Asset Management
Inc., is an independent asset management company dedicated to achieving
superior returns for its investors over time. Sprott Asset Management manages
assets primarily for high net worth individuals and institutions, and is the
investment manager of the Sprott family of funds. For more information about
the Company, please visit www.sprottinc.com.

    Selected Annual Financial Information
                                                              As at March 31
    (In $ 000's)                              2009         2008         2007
    Assets Under Management              4,724,653    6,800,601    4,648,224

    Balance Sheet Information

    Total Assets                           109,172       84,572      163,895
    Total Liabilities                       47,913       24,732       29,372
    Shareholders' Equity                    61,259       59,840      134,523

    Income Statement Information

    Total Revenue                           26,656       43,129       39,054
    Net Income                               7,421       16,710       18,787
    Net Income Per Share - basic              0.05         0.12         0.14
    Net Income Per Share - fully diluted      0.05         0.12         0.14

    Summary Income Statement

                                                For the three  For the three
                                                 months ended   months ended
                                                     March 31,      March 31,
                                                         2009           2008
                                                            $              $
    Management fees                                    22,596         32,763
    Crystallized Performance Fees                       1,810            305
    Unrealized and realized losses
     on proprietary investments                         2,143          8,150
    Other income                                          107          1,911

    Total revenue                                      26,656         43,129
    Compensation and benefits                           7,699          8,496
    Trailer fees                                        4,589          7,108
    General and administration                          3,040          2,251
    Donations                                             284            325
    Amortization                                          216            (59)

    Total expenses                                     15,828         18,121
    Income before income taxes                         10,827         25,008

    Provision for income taxes                          3,407          8,298
    Net income and comprehensive income                 7,421         16,710
    Other expenses(1)                                     790            (59)
    Provision for income taxes                          3,407          8,298
    EBITDA                                             11,618         24,949

    Unrealized and realized (gain) loss
     on proprietary investments                        (2,143)        (8,150)

    Performance fees net of performance
     fee related bonus pool(2)                         (1,357)          (229)

    Base EBITDA                                         8,118         16,570

    (1) Includes interest, amortization and non-cash stock-based compensation
    (2) Performance Fee related bonus pool is equal to 25% of Performance Fee

For further information:

For further information: Investor contact information: (416) 203-2310 or
1-877-403-2310 or ir@sprott.com

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