SII Sprott Inc

TORONTO, Nov. 13, 2014 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three months ended September 30, 2014.

 Q3 2014 Financial Overview

• Assets Under Management ("AUM") were $7.4 billion as at September 30, 2014, compared to $7.3 billion as at September 30, 2013 and $7.8 billion as at June 30, 2014
• Assets Under Administration ("AUA") were $2.2 billion as at September 30, 2014, compared to $2.6 billion as at September 30, 2013 and $2.6 billion as at June 30, 2014
• Management fees were $20.3 million, reflecting an increase of $0.8 million (4.0%) from the three months ended September 30, 2013
• Commission revenues were $2.0 million reflecting an increase of $0.5 million (36.3%) from the three months ended September 30, 2013
• Invested capital stood at $321.9 million, reflecting a $7.7 million (2.5%) increase from December 31, 2013
• Adjusted base EBITDA was $11.4 million ($0.05 per share), reflecting an increase of $5.5 million (91.9%) from the three months ended September 30, 2013
• Net income was $4.5 million ($0.02 per share), reflecting a decrease of $9.0 million (66.6%) from the three months ended September 30, 2013

Significant events for the three months ended September 30, 2014 and year-to-date 2014

• Launched  Sprott Gold Miners ETF on the New York Stock Exchange
• Launched the Sprott Bridging Income Fund LP
• Completed secondary offering of 23 million shares previously held by a company controlled by Eric Sprott and private placement of an additional five million shares to the Sprott employee trust
• Announced hiring of Whitney George as Senior Portfolio Manager
• Announced hiring of James Bowen and Jonathan Wiesblatt as Portfolio Managers

"After delivering solid performance across the board through the first eight months of the year, our resource-related funds suffered from the broad decline in commodity prices and the sell-off in resource equities since September," said Peter Grosskopf, Chief Executive Officer of Sprott. "Our investment performance remained positive through the first three quarters of 2014 with $170 million in market value appreciation, and our overall assets under management levels have proved resilient."

"We continue to diversify our product lineup, launching two new funds during the quarter," added Mr. Grosskopf. "We expanded our specialty lending franchise with the Sprott Bridging Income LP and introduced our first ETF on the NYSE, the Sprott Gold Miners ETF ("SGDM"). We are pleased by the growth of SGDM since it was launched in July and are currently exploring other potential avenues to expand this product line."

"Earlier this week, we announced three new additions to our investment team, including Whitney George, who will be joining Sprott as a Senior Portfolio manager," continued Mr. Grosskopf. "Over the past 23 years, Whitney played a key role in helping to build Royce & Associates LLC into one of the largest and most successful asset management firms in the US. He will be based in New York and will be focused on building our US business as well as managing two funds with a combined AUM of $285 million that we intend to transfer from Royce, pending the necessary approvals."

The breakdown of AUM by investment product type on a quarter-over-quarter basis is as follows:

Assets Under Management

AUM as at September 30, 2014 was $7.4 billion, reflecting a decrease of $0.5 billion (6.1%) from June 30, 2014. Net sales for the three months ended September 30, 2014 were $0.1 billion. Average AUM for the three months ended September 30, 2014 was $7.8 billion, reflecting an increase of $0.4 billion (4.9%) from average AUM levels in the prior quarter.

Income Statement

Total revenues for the three months ended September 30, 2014 decreased by $12.1 million (30.1%) to $28.1 million from the comparative period in 2013.

Management fees for the three months ended September 30, 2014 increased by $0.8 million (4.0%) to $20.3 million from the comparative period in 2013, reflecting an increase in average AUM over the period.

Commission revenue for the three months ended September 30, 2014 increased by $0.5 million (36.3%) to $2.0 million from the comparative period in 2013. Commission revenue is generated primarily through private placements by Sprott Global Resource Investments Ltd., and to a lesser extent, Sprott Private Wealth.

Interest income for the three months ended September 30, 2014 increased by $2.0 million (61.1%) to $5.3 million from the comparative period in 2013.  Interest income earned by the Company is generated primarily by Sprott Resource Lending Corp., which was acquired by the Company on July 23, 2013.

Unrealized and realized losses on proprietary investments and loans were $4.3 million, reflecting a decrease of $5.6 million from the comparative period gains in 2013.

Other income for the three months ended September 30, 2014 decreased by $9.4 million (68.6%) to $4.3 million from the comparative period in 2013.

Total expenses for the three months ended September 30, 2014 decreased by $8.9 million (29.3%) to $21.5 million from the comparative period in 2013.

Adjusted base EBITDA for the three months ended September 30, 2014 increased by $5.5 million (91.9%) to $11.4 million from the comparative period in 2013.

Net income for the three months ended September 30, 2014 decreased by $9.0 million (66.6%) to $4.5 million from the comparative period in 2013.

Basic and diluted earnings per share were $0.02, versus $0.06 for the comparative period in 2013.

Dividends

On November 11, 2014, a dividend of $0.03 per common share was declared for the quarter ended September 30, 2014.

Conference Call and Webcast

A conference call and webcast will be held today, Thursday, November 13, 2014 at 10:00am ET to discuss the Company's financial results. To participate in the call, please dial 647-427-7450 or 1-888-231-8191 and provide conference ID 29007673 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Thursday, November 20, 2014 by calling 416-849-0833 or 1-855-859-2056, reference number 29007673. 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

Certain statements in this press release contain forward-looking information (collectively referred to herein as the "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 press release contains Forward-Looking Statements pertaining to: (i) the continued diversification of the Company's product lineup; (ii) expansion of the SGDM product line; (iii) expectations regarding Mr. George's role at the Company; (iv) expectations regarding the transfer of two funds from Royce; and (v) the declaration, payment and designation of dividends.

Although the Company believes that the Forward-Looking Statements are reasonable, they are not guarantees of future results, performance or achievements.  A number of factors or assumptions have been used to develop the Forward-Looking Statements, including: (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; and (vi) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment.   Actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements should assumptions underlying the Forward-Looking Statements prove incorrect or should one or more risks or other factors materialize, including: (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) foreign exchange risk relating to the relative value of the U.S. dollar; (ix) historical financial information is not necessarily indicative of future performance; * those risks described under the heading "Risk Factors" in the Company's annual information form dated March 27, 2014; and (xi) those risks described under the headings "Managing Risk - Financial" and "Managing Risk - Other" in the Company's MD&A for the three and nine months ended September 30, 2014.  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 speak only as of the date hereof, unless otherwise specifically noted, and the Company does not assume any obligation to publicly update any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable Canadian 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.