TORONTO, March 27, 2014 /CNW/ - Sprott Inc. (TSX: SII)
("Sprott" or the "Company") today announced its financial results
for the year ended December 31,
2013.
2013 Financial Overview
- Assets Under Management ("AUM") were $7.0 billion as at December 31, 2013, compared to $9.9 billion as at December 31, 2012 and $7.3 billion as at September 30, 2013
- Assets Under Administration ("AUA") were $2.3 billion as at December 31, 2013, compared to $3.7 billion as at December 31, 2012 and $2.6 billion as at September 30, 2013
- Management Fees were $84.7
million, a decrease of 28.5% compared with the year ended
December 31, 2012
- EBITDA was $34.9 million
($0.17 per share), compared with
$57.3 million ($0.34 per share) for the year ended December 31, 2012, a decrease of 39.1%
- For the year ended December 31,
2013, goodwill resulting from the acquisition of Global
Companies was assessed as being impaired and a charge against
earnings of $88.0 million was taken.
This is a non-cash charge and will not affect the Company's ongoing
operations
- Net loss was $81.3 million
($(0.39) per share) for the year
ended December 31, 2013,
compared with net income of $32.0
million ($0.19 per share) for
the year ended December 31,
2012
- As of December 31, 2013, the
Company had approximately $350
million in available capital
Significant events for the year-ended
December 31, 2013 and year-to-date
2014:
- Named John Wilson and Scott
Colbourne Co-Chief Investment Officers of Sprott Asset Management
LP ("SAM")
- Signed joint venture agreement to launch new offshore fund with
Zijin Mining Group Co., Ltd.
- Completed acquisition of Sprott Resource Lending Corp.
- Secured mandate to co-manage $750
million South Korean private equity fund
- Entered agreement to acquire three real assets focused funds to
be managed by Capital Innovations Ltd., Inc.
- Provided update on Eric Sprott
transition and succession plan and appointed John Wilson Chief Executive Officer of SAM
"In 2013, ongoing weakness in the natural
resource sector, particularly precious metals, took a toll on our
investment performance and financial results, causing our Assets
Under Management to fall to $7
billion at year end," said Peter
Grosskopf, Chief Executive Officer of Sprott. "Our results
for the year were also negatively impacted by a one-time non-cash
charge associated with the 2011 acquisition of the Global
Companies. This charge has no impact on the ongoing business of the
Company."
"While it has been a challenging period for the
Company, we are encouraged by our early results over the first
quarter of 2014. Precious metals and related equities have staged a
strong recovery and all of our funds have posted positive
performance so far this year," added Mr. Grosskopf.
"Going forward, we will work to advance our dual
strategy of establishing Sprott as a global leader in precious
metals and resource investing, while continuing to diversify and
grow our Canadian asset management platform," concluded Mr.
Grosskopf. "With approximately $350
million in available capital, we have the financial strength
to seed and launch new products, while also selectively evaluating
strategic acquisition opportunities."
|
For the year ended |
|
December
31, |
($ in millions) |
2013 |
2012 |
|
|
|
AUM, beginning of period |
9,931 |
9,137 |
Net sales (redemptions) |
(387) |
1,308 |
Business acquisition |
(188) |
428 |
Market value
depreciation of portfolios |
(2,389) |
(942) |
AUM, end of period |
6,967 |
9,931 |
Assets Under Management
AUM at December 31,
2013, decreased by 29.9% to $7.0
billion from $9.9 billion at
December 31, 2012. Net
redemptions for the year ended December 31, 2013 were $0.4 billion. Average AUM for the year ended
December 31, 2013 was
$8.1 billion compared with
$9.6 billion for the year ended
December 31, 2012, a decrease of
16.5%.
Income Statement
Total revenues for the year ended December 31, 2013, decreased by 27.7% to
$114.4 million from $158.2 million for the year ended December 31, 2012.
For the year ended December 31, 2013, Management Fees decreased
by 28.5% to $84.7 million from
$118.5 million in the year ended
December 31, 2012.
Decreases in Management Fees as a percentage of average AUM are
mainly due to an increase in the relative value of AUM of our fixed
income Funds and bullion Funds that have lower average Management
Fees than most of our other Funds.
Gross Performance Fees for the year ended
December 31, 2013 were
$9.0 million, representing a decrease
of $1.0 million over the
corresponding period in 2012.
Commission revenue for the year ended
December 31, 2013, decreased by
$7.3 million to $6.2 million from $13.5
million compared to the year ended December 31, 2012. During the year ended
December 31, 2013, SGRIL and SPW
earned less in commissions from the sale and purchase of stocks by
its clients, particularly private placements as junior resource
companies were not as active in the equity capital markets. Also
there were no new issuances of the physical bullion trusts to SGRIL
and SPW clients during 2013.
Interest income increased substantially for the
year ended December 31, 2013 to
$9.8 million from $2.7 million for the year ended December 31, 2012. The year ended
December 31, 2013 included
interest income from SRLC since its acquisition on July 23, 2013. The majority of interest income
earned by the Company is generated by SRLC through resource-based
loans.
Unrealized and realized losses from capital
invested in proprietary investments and loans for the year ended
December 31, 2013 totaled
$14.5 million compared with gains of
$2.3 million for the year ended
December 31, 2012. During the
year ended December 31, 2013,
sales of proprietary investments resulted in net realized losses of
$2.1 million and the market value of
most of our remaining proprietary investments depreciated resulting
in net unrealized losses of $12.4
million.
Other income increased by $7.9 million from $11.2
million in the year ended December 31, 2012 to $19.1 million in the year ended December 31, 2013.
Total expenses for the year ended December 31, 2013 were $200.4 million, an increase of $84.0 million or 72.1% compared with $116.4 million for the year ended December 31, 2012. Excluding the impairment
of goodwill, total expenses increased by $5.0 million (4.6%), when compared with the year
ended December 31, 2012.
EBITDA for the year ended December 31, 2013, decreased by 39.1% to
$34.9 million from $57.3 million in the year ended December 31, 2012.
Net loss for the year ended December 31, 2013 was $81.3 million compared to net income of
$32.0 million for the year ended
December 31, 2012. The loss
during the year ended December 31,
2013 was due in part to a goodwill impairment charge against
earnings in the amount of $88.0
million that related to the 2011 acquisition of Global
Companies. This is a non-cash charge and will not affect the
Company's ongoing operations.
Basic and diluted earnings per share for the
year ended December 31, 2013 was
negative $0.39, versus $0.19 for the year ended December 31, 2012.
Dividends
On November 12,
2013, a dividend of $0.03 per
common share was declared for the quarter ended September 30, 2013. On March 25, 2014, a dividend of $0.03 per common share was declared for the
quarter ended December 31,
2013.
Conference Call and Webcast
A conference call and webcast will be held
today, Thursday, March 27, 2014 at
10:00am ET to discuss the Company's
financial results. To participate in the call, please dial
647-427-7451 or 1-888-231-8192 ten minutes prior to the scheduled
start of the call. A taped replay of the conference call will be
available until Thursday, April 3,
2014 by calling 416-764-8677or 1-888-390-0541, reference
number 23440154. 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.
Forward-Looking Information and Statements
This news release contains certain
forward-looking information and statements (collectively referred
to herein as "Forward-Looking Statements") within the meaning of
applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify Forward-Looking Statements. In particular, but
without limiting the forgoing, this news release contains
Forward-Looking Statements pertaining to: (i) the advancement of
the Company's dual strategy of establishing Sprott as a global
leader in precious metals and resource investing, while continuing
to diversify and grow its Canadian asset management platform; and
(ii) the seeding and launching of new products and the evaluation
of strategic acquisition opportunities.
Forward-Looking Statements are based on a number
of expectations or assumptions, which have been used to develop
such information and statements but which may prove to be
incorrect, including, but not limited to: (i) future exchange rates
will remain consistent with the current environment; (ii) the price
of precious metals will increase; (iii) the resource sector will
recover; (iv) the impact of increasing competition in each business
in which the Company operates will not be material; (v) quality
management will be available; (vi) the effects of regulation and
tax laws of governmental agencies will be consistent with the
current environment; and (vii) those assumptions disclosed under
the heading "Critical Accounting Judgments and Estimates" in the
Company's Management's Discussion and Analysis ("MD&A") for the
year ended December 31, 2013.
Although the Company believes the expectations and assumptions
reflected in such Forward-Looking Statements are reasonable, undue
reliance should not be placed on Forward-Looking Statements because
the Company can give no assurance that such expectations and
assumptions will prove to be correct. The Forward-Looking
Statements included in this news release are not guarantees of
future performance and should not be unduly relied upon. Such
information and statements, including the assumptions made in
respect thereof, involve known and unknown risks, uncertainties and
other factors, which may cause actual results or events to differ
materially from those anticipated in such Forward-Looking
Statements, including, without limitation, (i) difficult market
conditions; (ii) changes in the investment management industry;
(iii) risks related to regulatory compliance; (iv) failure to deal
appropriately with conflicts of interest; (v) failure to continue
to retain and attract quality staff; (vi) competitive pressures;
(vii) corporate growth may be difficult to sustain and may place
significant demands on existing administrative, operational and
financial resources; (viii) failure to execute the Company's
succession plan; (ix) litigation risk; * employee errors or
misconduct could result in regulatory sanctions or reputational
harm; (xi) failure to implement effective information security
policies, procedures and capabilities; (xii) failure to develop
effective business resiliency plans; (xiii) failure to obtain or
maintain sufficient insurance coverage on favourable economic
terms; (xiv) foreign exchange risk relating to the relative value
of the U.S. dollar; (xv) historical financial information is not
necessarily indicative of future performance; (xvi) the market
price of common shares of the Company may fluctuate widely and
rapidly; (xvii) those risks listed under the heading "Risk Factors"
in the Company's annual information form dated March 27, 2014; (xviii) those risks disclosed
under the heading "Managing Risk" in the Company's MD&A for the
year ended December 31, 2013; and
(xix) other risks, which are beyond the control of the Company or
its subsidiaries. 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 news release. In addition, the payment of dividends is not
guaranteed and the amount and timing of any dividends payable by
the Company will be at the discretion of the Board of Directors of
the Company and will be established on the basis of the Company's
earnings, the satisfaction of solvency tests imposed by applicable
corporate law for the declaration and payment of dividends, and
other relevant factors.
The Forward-Looking Statements contained in this
news release speak only as of the date of this news release, and
the Company does not assume any obligation to publicly update or
revise any of the included Forward-Looking Statements, whether as a
result of new information, future events or otherwise, except as
may be expressly required by applicable securities laws.
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 primarily
through six business units: Sprott Asset Management LP, Sprott
Private Wealth LP, Sprott Consulting LP, Sprott Resource Lending
Corp., Sprott Toscana 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 and Sprott Toscana
provide 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.
SOURCE Sprott Inc.