TORONTO, Nov. 14, 2013 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and nine months ended September 30, 2013.
Q3 2013 Overview
"Throughout 2013 we have taken steps to improve our investment management processes," said Peter Grosskopf, Chief Executive Officer of Sprott. "Going forward, our portfolios will be more actively managed, more concentrated, and focused on limiting downside risk while maintaining strong upside potential. We will continue to diversify our Canadian platform through the addition of new products and investment capabilities. We will also look for opportunities to more efficiently leverage our platform by increasing our managed asset base through new products and acquisitions."
"During the third quarter, we completed the acquisition of Sprott Resource Lending Corp. in a transaction that further strengthens our balance sheet and gives us the ability to re-launch our resource lending strategy in a structure that will be more attractive to institutional investors," said Steven Rostowsky, Chief Financial Officer of Sprott. "We currently have close to $350 million in available capital that will be deployed for various growth initiatives including seeding and launching new funds such as our new offshore fund with Zijin; the pending Sprott Resource Lending LP; and other products under review."
|For the three months ended||For the nine months ended|
|September 30,||September 30,|
|($ in millions)||2013||2012||2013||2012|
|AUM, beginning of period||7,147||8,485||9,931||9,137|
|Net sales (redemptions)||24||449||(393)||836|
|Market value appreciation (depreciation) of portfolios||353||940||(2,014)||(99)|
|AUM, end of period||7,336||10,303||7,336||10,303|
Assets Under Management
At September 30, 2013, AUM decreased by 28.8% to $7.3 billion from $10.3 billion at September 30, 2012. Net sales for the three months ended September 30, 2013 were $24.5 million. Average AUM for the three months ended September 30, 2013 was $7.4 billion compared with $9.3 billion for the three months ended September 30, 2012, a decrease of 20.6%.
Total revenues for the three months ended September 30, 2013, increased by 12.3% to $40.2 million from $35.8 million for the three months ended September 30, 2012. For the nine months ended September 30, 2013, total revenues decreased by 21.6% to $84.3 million from $107.6 million in the nine months ended September 30, 2012.
For the three months ended September 30, 2013, Management Fees decreased by 30.9% to $19.5 million from $28.2 million in the three months ended September 30, 2012. For the nine months ended September 30, 2013, Management Fees decreased by 25.1% to $66.9 million from $89.3 million in the nine months ended September 30, 2012. The decrease in Management Fees is primarily attributable to both the lower average AUM for the three and nine months ended September 30, 2013 as well as the change in composition of the Company's AUM with lower fee products comprising a greater percentage of AUM.
Gross Performance Fees for the three and nine months ended September 30, 2013 were $0.9 million and $2.4 million, respectively, representing an increase of $0.8 million and $2.2 million over the corresponding periods in 2012.
Commission revenue for three months ended September 30, 2013, decreased by $0.9 million to $1.5 million from $2.4 million during the three months ended September 30, 2012. For the nine months ended September 30, 2013, commission revenue decreased by $5.2 million to $5.0 million from $10.2 million compared to nine months ended September 30, 2012.
Interest income increased substantially for the three and nine months ended September 30, 2013 to $3.3 million and $5.0 million from $0.7 million and $2.0 million for the three and nine months ended September 30, 2012, respectively. This is a result of the acquisition of SRLC whose business is lending to companies in the mining and energy sectors.
Gains from proprietary investments, which include investments in products that Sprott manages, certain other resource-related stocks and warrants, fixed income securities, foreclosed properties and bullion, totaled $1.3 million, compared with $3.8 million in the three months ended September 30, 2012. For the nine months ended September 30, 2013, losses from proprietary investments totaled $11.2 million, compared with gains of $4.1 million during the nine months ended September 30, 2012.
Total expenses for the three months ended September 30, 2013, were $30.4 million, an increase of $9.5 million or 45.5% compared with $20.9 million for the three months ended September 30, 2012. Total expenses for the nine months ended September 30, 2013 were $80.8 million, an increase of 14.9% from $70.3 million in the nine months ended September 30, 2012.
EBITDA for the three months ended September 30, 2013 was $5.9 million, representing a decrease of $4.6 million or 44.0% compared with the three months ended September 30, 2012. For the nine months ended September 30, 2013, EBITDA decreased by 34.2% to $24.4 million from $37.1 million in the nine months ended September 30, 2012.
Net income for the three months ended September 30, 2013 was $13.5 million ($0.06 per share) compared to net income of $11.0 million ($0.07 per share) for the three months ended September 30, 2012. Net income for the nine months ended September 30, 2013 was $8.9 million ($0.05 per share), compared to net income of $28.7 million ($0.17 per share) for the nine months ended September 30, 2012.
On August 7, 2013, a dividend of $0.03 per common share was declared for the quarter ended June 30, 2013. On November 12, 2013, a dividend of $0.03 per common share was declared for the quarter ended September 30, 2013.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, November 14, 2013 at 10:00am ET to discuss the Company's financial results. To participate in the call, please dial 416-764-8688 or 1-888-390-0546 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Thursday, November 21, 2013 by calling 416-764-8677 or 1-888-390-0541, reference number 98714867. 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, AUA, EBITDA 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 26, 2013. 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 five business units: Sprott Asset Management LP, Sprott Private Wealth LP, Sprott Consulting LP, Sprott Resource Lending Corp. 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 Resource Lending provides lending services to mining and energy sectors. 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.
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