SII Sprott Inc

TORONTO, Aug. 12 /CNW/ -- TORONTO, Aug. 12 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and six-month periods ended June 30, 2010. Q2 2010 Highlights - Assets Under Management ("AUM") were $5.5 billion as at June 30, 2010, compared to $4.4 billion as at June 30, 2009 and $5.1 billion as at March 31, 2010 - Management Fees were $24.2 million, an increase of 11.7% compared with Q2 2009 - Base EBITDA was $10.3 million, compared with $7.6 million for Q2 2009 - Net income increased by 37.3% to $7.7 million ($0.05 per share), from $5.6 million ($0.04 per share) in Q2 2009 - Completed $280 million follow-on offering of Sprott Physical Gold Trust units - Launched Sprott Private Credit Fund Subsequent to the end of Q2 2010 - Appointed Peter Grosskopf Chief Executive Officer of Sprott - Launched SAM suite of Fixed Income products - Sprott Consulting signed Letter of Intent with Quest Capital Corp. regarding a management services agreement and re-branding the company Sprott Resource Lending Corp. "We enjoyed strong investment performance during the quarter, with most of our funds posting gains. Our best performers were funds with significant gold exposure, such as the Sprott Physical Gold Trust, the Sprott Gold Bullion Fund, and the Sprott Gold and Precious Minerals Fund," said Eric Sprott, CEO of Sprott Inc. "In May, we completed a follow-on offering of units of the Sprott Physical Gold Trust and introduced the Sprott Private Credit Fund. We have also continued our efforts to broaden our product lineup with the launch of a new suite of fixed-income funds. These funds will be managed by award-winning fixed-income managers Scott Colbourne and Michael Craig, and will provide our clients with a more diverse range of options to help meet their investment needs. So far this year we have introduced six new funds and filed a preliminary prospectus for the Sprott Physical Silver Trust." "Sprott Consulting LP ("SCLP") continues to expand its roster of managed companies, and recently signed a letter of intent with Quest Capital Corp. to re-brand the company Sprott Resource Lending Corp. The transaction is subject to shareholder approval, however, the intent of the new entity will be to focus on providing mezzanine and bridge financing to companies in the oil and gas and mining sectors, areas where our team can provide tremendous expertise," added Mr. Sprott. "SCLP has also developed a presence in the renewable energy space through the formation of Sprott Power Corp. The new company will be run by Jeff Jenner, an accomplished energy professional, and will be committed to the acquisition, development and financing of renewable energy projects. Both projects will be managed by SCLP through management services agreements." "Finally, on July 15, we announced that I will be stepping down as CEO of Sprott Inc. to focus on the management of my funds and my responsibilities as Chief Investment Officer of Sprott Asset Management. In September, I will be replaced by Peter Grosskopf, a leading financial industry executive who was most recently President of Cormark Securities Inc.," continued Mr. Sprott. "I have had the opportunity to work closely with Peter in the past and have every confidence in his ability to drive the continued growth of our organization and lead its development into a globally recognized brand." ------------------------------------------------------------------------- $ millions Three months Three months Six months Six months ended ended ended ended June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ------------------------------------------------------------------------- AUM, beginning of quarter 5,155 4,725 4,774 4,449 ------------------------------------------------------------------------- Net sales (redemptions) 104 (43) 521 (251) ------------------------------------------------------------------------- Market value appreciation (depreciation) of portfolios 287 (238) 251 246 ------------------------------------------------------------------------- AUM, end of quarter 5,546 4,444 5,546 4,444 ------------------------------------------------------------------------- Assets Under Management At the end of the second quarter of 2010, AUM were approximately $5.5 billion as compared with $4.4 billion at June 30, 2009 and $5.1 million at March 31, 2010. During the quarter, net sales were $0.1 billion and market value increases of portfolios totaled $0.3 billion, resulting in a net $0.4 billion increase in AUM. Monthly average AUM for the quarter and six months ended June 30, 2010 was $5.4 billion and $5.1 billion respectively compared with $4.5 billion and $4.6 billion in the comparative prior year periods. Income Statement Total revenue for the quarter ended June 30, 2010 increased by 16.0% to $26.8 million, from $23.1 million in the second quarter of 2009. For the six-months ended June 30, 2010, total revenue increased by 4.6% to $52.0 million from $49.7 million in the first half of 2009. Management fees for the second quarter of 2010 increased by $2.5 million to $24.2 million from $21.7 million for the period ended June 30, 2009. The increased management fees reflect the 20.1% increase in average monthly AUM as compared with the prior year. For the six-months ended June 30, 2010, management fees increased by 7.2% to $47.5 million from $44.3 million in the first six months of 2009, as average monthly AUM increased by 12.7% over the same period. Crystallized performance fees for the second quarter and first six months of 2010 were $0.2 million. In the same periods the prior year, the Company earned $0.4 million and $2.2 million respectively in crystallized performance fees resulting from higher redemptions and strong performance by the funds during the 2009 periods. Gains from proprietary investments (realized and unrealized) totaled $1.1 million for the second quarter of 2010, compared with gains of $0.8 million in the second quarter of 2009. For the six-months ended June 30, 2010, gains from proprietary investments totaled $0.2 million, compared with $2.9 million during the first half of 2009. The gains in both 2010 periods were mainly driven by the increase in the value of gold bullion and the sale of publicly traded equities in the gold sector. Other income of $1.2 million includes commissions earned by SPW LP and interest on a secured note. Other income for the second quarter of 2009 was $0.2 million. For the six-months ended June 30, 2010, other income increased by $3.8 million to $4.2 million from $0.4 million in the first half of 2009. Total expenses for the three months ended June 30, 2010 were $16.0 million, an increase of 5.0% from $15.3 million for the second quarter of 2009. The increase is mainly attributable to a $0.4 million increase in compensation and benefits and a $0.3 million increase in trailer fees versus the same period in 2009 and a $0.2 million increase in general and administrative costs, partially offset by a $0.1 million decline in amortization expense. Total expenses for the first half of 2010 were $32.6 million, an increase of 4.8% from $31.1 million in the six-months ended June 30, 2009. Base EBITDA increased to $10.3 million for the quarter ended June 30, 2010 from $7,6 million in the second quarter of 2009. For the six-months ended June 30, 2010, base EBITDA increased by 31.5% to $20.6 million from $15.7 million during the first half of 2009. Net income for the quarter ended June 30, 2010 increased 37.3% to $7.7 million ($0.05 per share) from net $5.6 million ($0.04 per share) in the second quarter of 2009. For the six-months ended June 30, 2010, net income increased by 4.5% to $13.6 million from $13.0 million for the same period the prior year. Dividends In May 2010, a dividend of $0.025 per common share was declared for the quarter ended March 31, 2010. In August 2010, a dividend of $0.025 per common share was declared for the quarter ended June 30, 2010. Conference Call and Webcast A conference call and webcast will be held today, Thursday, August 12, 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 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Thursday, August 19, 2010 by calling 416-849-0833 or 1-800-642-687, reference number 92377733. 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-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 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. Investor contact information: (416) 203-2310, or 1 (877) 403-2310, or ir@sprott.com

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