Sprott Announces 2017 Annual Results

TORONTO, March 02, 2018 (GLOBE NEWSWIRE) -- Sprott Inc. (TSX:SII) (“Sprott” or the “Company”) today announced its financial results for the year ended December 31, 2017.

Financial Overview for the year-ended December 31, 2017:

  • Assets Under Management (“AUM”) were $7.3 billion as at December 31, 2017, compared to $9.2 billion as at December 31, 2016. In January 2018, after giving effect to the acquisition of CFCL, total AUM increased to $11.5 billion.

  • Total net revenues (net of commission expenses, trailer fees, sub-advisor fees and performance fee payouts) were $121.8 million, reflecting a decrease of $11.4 million (9%) from the year ended December 31, 2016.

  • Total expenses (excluding commission expenses, trailer and sub-advisor fees and performance fee payouts) were $78.5 million, reflecting a decrease of $16.9 million (18%) from the year ended December 31, 2016.

  • Net income was $37.5 million ($0.16 per share), reflecting an increase of $6.0 million (19%) from the year ended December 31, 2016.

  • Adjusted base EBITDA was $40.2 million ($0.16 per share), reflecting an increase of $16.1 million from the year ended December 31, 2016.

  • Investable capital stood at $293 million as at December 31, 2017, compared to $309 million as at December 31, 2016.

Significant events for the year-ended December 31, 2017 and year-to-date 2018:

  • Sold Canadian diversified fund assets and private wealth client business for $46 million (the "Sale Transaction")

  • Launched merchant banking business, Sprott Capital Partners

  • Closed inaugural Private Lending LPs, raising US$640 million

  • Completed strategic acquisition of Central Fund of Canada Ltd. ("CFCL"), adding $4.3 billion in assets to physical bullion franchise and increasing total AUM to $11.5 billion

"In 2017, we completed the repositioning of the business to focus on our historical strengths in precious metal and real asset investments," said Peter Grosskopf, CEO of Sprott. "As we have refocused to our core strengths, we have also delivered steadily improving financial results. Over the past three years, we have shifted our asset base to higher EBITDA margin products, causing our EBITDA to more than double from $16.2 million in 2015 to $40.2 million in 2017. We continue to grow our asset base both organically and through strategic acquisitions. Our AUM currently stands at approximately $11.5 billion, 90% of which is concentrated in precious metal and natural resource investments."

"Our focus this year is driving profitable growth in each of our operating segments while selectively evaluating opportunities to cement our leadership position as global leaders in precious metal investments through complementary acquisitions and strategic partnerships," added Mr. Grosskopf.

Assets Under Management

$ (in millions)AUM
December 31,
2016
Net Sales /
(Redemptions)
Net Market
Value Change
Transfers /
Acquisitions /
(Divestitures)
AUM
December 31,
2017
Exchange Listed Products4,412 50 172 4,634
Alternative Asset Management:
Mutual Funds (1)2,465 (235)(109)(1,231)890
Alternative Investment Funds (2)1,085 54 18 (980)177
Managed Accounts104 (42)(1)(13)48
Private Resource Investments:
Private Resource Lending Funds49 193 10 252
Fixed-term limited partnerships343 (35) 308
Managed Companies653 32 22 707
Managed Accounts137 26 144 307
Total Enterprise AUM9,248 52 103 (2,080)7,323

(1) As part of the Sale Transaction, the Company sold $1.9 billion of Mutual fund AUM and concurrent with this began sub-advising $0.7 billion of those same assets effective August 1, 2017
(2) As part of the Sale Transaction, the Company sold $0.9 billion of Alternative fund AUM and concurrent with this began sub-advising $0.1 billion of those same assets effective August 1, 2017

Dividends

On March 1, 2018, a dividend of $0.03 per common share was declared for the quarter ended December 31, 2017.

Sprott Adopts Advance Notice By-Law Amendment

On March 2, 2018 Sprott's board of directors (the “Board”) adopted amendments to its By-Law No. 1 (the “Amendments”) to include advance notice provisions (the “Advance Notice Provisions”) requiring that advance notice be provided to the Company in circumstances where nominations of persons for election to the Board are made by shareholders other than pursuant to: (i) a requisition to call a shareholders meeting; or (ii) a shareholder proposal, in each case as made in accordance with the provisions of the Business Corporations Act (Ontario) (the “Act”).

Among other things, the Advance Notice Provisions fix a deadline by which shareholders must notify the Company of nominations of persons for election to the Board and set forth the information that a shareholder must include in the notice for it to be valid.

In the case of an annual meeting of shareholders, notice to the Company must be made not less than 30 days prior to the date of the annual meeting; provided however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement. In the case of a special meeting of shareholders (which is not also an annual meeting) notice to the Company must be made no later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made. However, if “notice and access” is used for the delivery of proxy-related materials for an annual general or special meeting and the initial public announcement is not less than 50 days before the date of the meeting, notice must be made not less than 40 days prior to the date of the meeting. The Board may, in its discretion, waive any requirement of the Advance Notice Provisions.

The Advance Notice Provisions provide a clear process for shareholders to follow to nominate directors and set out a reasonable time frame for nominee submissions along with a requirement for accompanying information. The purpose of the Advance Notice Provisions is to treat all shareholders fairly by ensuring that all shareholders, including those participating in a meeting by proxy rather than in person, receive adequate notice of the nominations to be considered at a meeting and can thereby exercise their voting rights in an informed manner. In addition, the Advance Notice Provisions should assist in facilitating an orderly and efficient meeting process.

The Amendments are effective immediately. In accordance with the provisions of the Act, the Amendments will be subject to confirmation by shareholders at the annual and special meeting of shareholders of the Company, which will be held on May 11, 2018.

A copy of the Amendments have been filed under the Company’s profile on SEDAR at www.sedar.com.

Conference Call and Webcast

A conference call and webcast will be held today, March 2, 2018 at 10:00 am ET to discuss the Company's financial results. To participate in the call, please dial (855) 458-4215 ten minutes prior to the scheduled start of the call and provide conference ID 2197549. A taped replay of the conference call will be available until Friday, March 10, 2018 by calling (855) 859-2056, reference number 2197549. The conference call will be webcast live at www.sprott.com and http://edge.media-server.com/m/p/hzahzuhc.

*Non-IFRS Financial Measures

This press release includes financial terms (including AUM, EBITDA, adjusted base 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 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) growth of our asset base; (ii) our focus this year on driving profitable growth in each of our operating segments while selectively evaluating opportunities to cement our leadership position as global leaders in precious metal investments through complementary acquisitions and strategic partnerships; and (iii) 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) the impact of increasing competition in each business in which the Company operates will not be material; (ii) quality management will be available; (iii) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments and Estimates" in the Company’s MD&A for the period ended December 31, 2017. 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) poor investment performance; (iii) failure to continue to retain and attract quality staff; (iv) employee errors or misconduct could result in regulatory sanctions or reputational harm; (v) performance fee fluctuations; (vi) changes in the investment management industry; (vii) failure to implement effective information security policies, procedures and capabilities; (viii) lack of investment opportunities; (ix) risks related to regulatory compliance; (x) failure to manage risks appropriately; (xi) failure to deal appropriately with conflicts of interest; (xii) competitive pressures; (xiii) corporate growth may be difficult to sustain and may place significant demands on existing administrative, operational and financial resources; (xiv) failure to successfully implement succession planning; (xv) foreign exchange risk relating to the relative value of the U.S. dollar; (xvi) litigation risk; (xvii) failure to develop effective business resiliency plans; (xviii) failure to obtain or maintain sufficient insurance coverage on favourable economic terms; (xix) historical financial information is not necessarily indicative of future performance; (xx) the market price of common shares of the Company may fluctuate widely and rapidly; (xxi) risks relating to the Company’s investment products; (xxii) risks relating to the Company's proprietary investments; (xxiii) risks relating to the Company's lending business; (xxiv) risks relating to the Company’s merchant bank and advisory business; (xxv) those risks described under the heading "Risk Factors" in the Company’s annual information form dated March 2, 2018; and (xxvi) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" in the Company’s MD&A for the period ended December 31, 2017. 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
Sprott is an alternative asset manager and a global leader in precious metal and real asset investments. Through its subsidiaries in Canada, the US and Asia, the Corporation is dedicated to providing investors with best-in-class investment strategies that include Exchange Listed Products, Alternative Asset Management and Private Resource Investments. The Corporation also operates Merchant Banking and Brokerage businesses in both Canada and the US. Sprott is based in Toronto with offices in New York, Carlsbad and Vancouver and its common shares are listed on the Toronto Stock Exchange under the symbol (TSX:SII). For more information, please visit www.sprott.com.

Investor contact information:

Glen Williams
Managing Director
(416) 943-4394
gwilliams@sprott.com

Source: Sprott Inc.

Source: Sprott, Inc.