In c3066 transmitted at 7:00e today, an error occurred in the 'Assets Under Management' table; in the column titled "Six months ended June 30, 2009 the last two figures should have read "246" and not "241" and the other figure "4,444" and not "4,439". Corrected copy follows: Sprott Inc. announces second quarter 2009 results
TORONTO, Aug. 6 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three- and six-month periods ended June 30, 2009.
Q2 2009 Highlights
- Assets Under Management (AUM) were $4.4 billion as at June 30, 2009,
compared to $7.7 billion as at June 30, 2008 and $4.7 billion as at
March 31, 2009
- Management Fees were $21.7 million, a decrease of $15.0 million, or
40.8%, over Q2 2008
- Base EBITDA was $7.6 million, compared with $17.2 million in the
prior year period
- Net income was $5.6 million ($0.04 per share), versus $11.4 million
($0.08 per share) in Q2 2008
- Declared a second quarter dividend of $0.025 per share on August 4,
2009
- Completed reorganization of Sprott Asset Management Inc. including
the introduction of the Sprott Private Wealth brand to capitalize on
growth opportunities in the private client market
"North American equity markets rallied during the second quarter of 2009, contributing to strong performance from several of our funds, including the Sprott Small Cap Hedge Fund, managed by Allan Jacobs and Peter Imhof, and the Sprott Gold and Precious Minerals Fund, managed by Charles Oliver and Jamie Horvat," said Eric Sprott, President and CEO of Sprott Inc. "However, some of our larger funds did not fully participate in recent market gains and the short positions in a number of our hedge funds were negatively affected by the upswing in stock prices. Looking ahead, based on our analysis of key economic indicators, we continue to believe that our long-term views will play out to the benefit of our investors, and that Sprott remains well positioned to build on its history of strong performance. Despite operating in a challenging market environment over the past year, our variable cost structure ensures that our largest expenses are correlated with revenues, allowing us to continue to pay dividends to our shareholders. Our balance sheet remains solid, with a net cash position of more than $33 million and no debt."
"We recently completed an internal reorganization, including the introduction of the Sprott Private Wealth brand, to provide new services and investments to our more than 2000 existing private client accounts and to capitalize on opportunities we see in this profitable, growing segment of the market," continued Mr. Sprott. "In addition to developing more detailed plans for this business, we are reviewing our product lineup to identify opportunities for new funds that either reinforce our current investment themes or complement our existing suite of funds."
Assets Under Management
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Three Three Six Six
months months months months
ended June ended June ended June ended June
$ millions 30, 2009 30, 2008 30, 2009 30, 2008
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AUM, beginning of quarter 4,725 6,801 4,449 6,215
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Net sales (redemptions) (43) 259 (251) 561
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Market value appreciation
of portfolios (238) 666 246 950
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AUM, end of quarter 4,444 7,726 4,444 7,726
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In the second quarter of 2009, AUM decreased to $4.4 billion, compared to $4.7 billion at March 31, 2009. The $0.3 billion decrease reflected market value declines of $0.2 billion plus net redemptions of $0.04 billion.
On a year-over-year basis, AUM decreased by 42% to $4.4 billion compared to $7.7 billion at June 30, 2008. The decrease in AUM is due to the lower market value of portfolios combined with net redemptions since June 30, 2008.
Income Statement
Total revenue for the second quarter of 2009 decreased by 41.5% to $23.1 million, from $39.5 million in the second quarter of 2008. For the six months ended June 30, 2009, total revenue was $49.7 million, a decrease of 39.8% from the corresponding period in 2008. Total revenue consists of management fees, crystallized performance fees, net gains and losses from proprietary investments, and interest and other income.
Management fees declined by 40.8% to $21.7 million, from $36.6 million in the second quarter of 2008, as monthly average AUM decreased by approximately 36.7% over the same period. For the first half of 2009, management fees declined by 36.2% to $44.3 million, compared to $69.4 million for the six months ended June 30, 2008.
Crystallized performance fees for the three- and six-month periods ended June 30, 2009 were $0.4 million and $2.2 million, compared to $4.0 million and $4.3 million in the prior year. In the first six months of 2008, significant performance fees accrued by the Funds resulted in the crystallization of the fees when the Funds were redeemed. In the first six months of 2009, accrued performance fees were substantially lower, resulting in reduced crystallized performance fees earned upon redemption of the underlying Funds.
Gains from proprietary investments in the second quarter and first six months of 2009, totaled $0.8 million and $2.9 million, respectively, compared with a loss of $2.8 million and gain of $5.4 million for the second quarter and first six months of 2008, respectively. The unrealized gains in the quarter and six months of 2009 were mainly due to market appreciation of the investments. As of June 30, 2009, proprietary investments consist 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., gold bullion, and an investment in a senior secured note and related warrants.
Other income decreased by $1.4 million to $0.2 million during the quarter ended June 30, 2009 and declined by $3.2 million to $0.3 million for the six months ended June 30, 2009, compared with the corresponding periods the prior year. In the first six months of 2008, Sprott realized a foreign exchange gains, higher early redemption fees and commission income. In the first six months of 2009, there was a foreign exchange loss and redemption fees were lower, resulting in a decrease in other income.
Total expenses for the three- and six-month periods ended June 30, 2009 were $15.3 million and $31.1 million, respectively, a decrease of $7.4 million, or 32.6%, and $9.7 million, or 23.7%, compared with the corresponding periods in 2008. The year-over-year decrease during the second quarter was mainly attributable to a decrease in compensation and benefits of $4.2 million and a decline in trailer fees of $3.1 million. Similarly, the decline during the first six months of 2009 resulted mainly from a $5.6 million decrease in trailer fees and a $5.0 million decrease in compensation and benefits, partially offset by a $0.8 million increase in General and Administrative expenses.
Net income was $5.6 million ($0.04 per share) for the second quarter of 2009 and $13.0 million ($0.09 per share) in the first half of 2009, compared with net income of $11.4 million ($0.08 per share) and $28.1 million ($0.20 per share) for the corresponding periods in 2008.
Dividends
On August 4, 2009 the Company declared an eligible dividend of $0.025 per share for the quarter ended June 30, 2009. The dividend will be paid on August 28, 2009 to shareholders of record on August 13, 2009.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, August 6, 2009, at 10:00am EDT to discuss the Company's financial results. To access the call, please dial 416-646-3097 or 1-866-250-4907. 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.
(x)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 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 L.P. ("Sprott Asset Management"), Sprott Private Wealth L.P. ("Sprott Private Wealth"), and Sprott Consulting L.P. ("Sprott Consulting").
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 Inc. is headquartered in Toronto, Canada, and is listed on the Toronto Stock Exchange under the symbol "SII".
Balance Sheet Information
As at As at
(In $ 000's) June 30, 2009 December 31, 2008
Total Assets 77.920 123,430
Total Liabilities 14,247 43,916
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Shareholders' Equity 63,673 79,514
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Summary Income Statement
For the For the For the For the
three three six six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
(In $ 000's, except 2009 2008 2009 2008
per share amounts) $ $ $ $
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Revenue
Management fees 21,673 36,628 44,269 69,391
Crystallized Performance
Fees 405 3,992 2,215 4,297
Unrealized and realized
gains (losses) on
proprietary investments 767 (2,754) 2,910 5,396
Other income 247 1,634 354 3,545
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Total revenue 23,092 39,500 49,748 82,629
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Expenses
Compensation and benefits 7,114 11,305 14,813 19,801
Trailer fees 4,831 7,948 9,420 15,056
General and administration 2,794 2,824 5,834 5,075
Donations 292 366 576 691
Amortization 223 172 439 113
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Total expenses 15,254 22,615 31,082 40,736
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Income before income taxes 7,838 16,885 18,666 41,893
Provision for income taxes 2,248 5,495 5,655 13,793
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Net income and comprehensive
income for the period 5,590 11,390 13,011 28,100
Other expenses (1) 797 548 1,587 489
Provision for income taxes 2,248 5,495 5,655 13,793
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EBITDA 8,635 17,433 20,253 42,382
Unrealized and realized
(gains) losses on
proprietary investments (767) 2,754 (2,910) (5,396)
Performance fees net of
performance fee related
bonus pool (2) (304) (2,994) (1,661) (3,223)
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Base EBITDA 7,564 17,193 15,682 33,763
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Net Income Per Share
- basic .04 .08 .09 .20
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Net Income Per Share
-fully diluted .04 .08 .09 .20
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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