Declining precious metals prices lead to a large drop in management fees for 2012, Toronto-based asset management firm Sprott Inc. (TSX:SII) said Thursday.
Management fees were $118.5 million for the year ended Dec. 31, 2012, a drop of 19.3% compared with 2011, while net income for 2012 was $32 million, or $0.19 per share, down 3.2% from $33 million, or $0.20 per share in 2011.
Assets under management (AUM) were $9.9 billion as at Dec. 31, 2012, compared to $9.1 billion as at Dec. 31, 2011, but down from $10.3 billion as at Sept. 30, 2012.
Assets under administration (AUA) dropped to $3.7 billion as at Dec. 31, 2012, compared to $4.4 billion as at Dec. 31, 2011
“In 2012, precious metals equities traded at increasingly depressed valuations over the year, while government stimulus programs pushed broader equity indices higher,” said Peter Grosskopf, CEO of Sprott, in release. “The combination of these factors caused several of our principal equities strategies to post losses for the year, which had a negative impact on our financial results.”
The company is taking steps to improve its performance by naming John Wilson and Scott Colbourne as co-chief investment officers of subsidiary Sprott Asset Management, Grosskopf said.
“John and Scott will direct the investment management functions of Sprott Asset Management and will be focused on optimizing idea sharing and risk management while reinforcing our results-oriented culture,” he said.
“Looking ahead, one of our key priorities will be leveraging our global brand recognition to establish partnerships to manage capital for international clients,” added Grosskopf.
Sprott recently signed signed a joint venture agreement to launch a new offshore fund in partnership with China’s largest gold miner.
Net sales for the year were $1.3 billion.
The initial and follow-on offering of Sprott 2012 Flow-Through LP, the launch of the Sprott Silver Equities Class, the Sprott Enhanced Equity Class, the Sprott Enhanced Balanced Fund and follow-on offerings of Sprott Physical Gold Trust and Sprott Physical Silver Trust along with the IPO of Sprott Physical Platinum and Palladium Trust added approximately $1.9 billion to sales for the year.
Collectively, the company’s other mutual funds, managed accounts and domestic alternative investment strategies experienced net redemptions of approximately $0.4 billion for the year. Offshore funds, collectively, had redemptions resulting in net outflows of approximately $0.2 billion or 39.9% of offshore AUM at the beginning of the year.