Sprott(SII) - 2022 Q3 - Quarterly Report

Letter to Shareholders The third quarter saw broad market declines across S&P 500, bonds, and gold, yet the company's AUM, despite a 4% QoQ decrease, grew 3% YTD, driven by strategic inflows and acquisitions Market Overview and Assets Under Management (AUM) The third quarter experienced widespread market declines, with the S&P 500, bonds, and gold all showing significant drops - Third quarter market performance was poor, with the S&P 500 down 4.89% (YTD down 23.88%), bonds down 4.75% (YTD down 14.6%), and gold down 8.1% (YTD down 9%)[3] Assets Under Management (AUM) Change | Metric | Amount (billions of USD) | Change (QoQ) | Change (YTD) | | :--- | :--- | :--- | :--- | | AUM as of September 30, 2022 | 21 | -0.9 (4%) | +0.6 (3%) | - The negative impact on AUM primarily stemmed from the depreciation of market values in fund products, but year-to-date declines were offset by strong capital inflows into physical trusts, private strategies, and the acquisition of the North Shore Global Uranium Mining ETF[3] Financial Performance Highlights The company's third-quarter net income significantly decreased by 65% year-over-year and 55% year-to-date, while adjusted basic EBITDA showed resilience with a 1% QoQ increase and 14% YTD growth Key Financial Metrics (as of September 30, 2022) | Metric | Q3 (millions of USD) | YoY Change | YTD (millions of USD) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | 3.1 | -65% (-$5.6) | 10.3 | -55% (-$12.7) | | Adjusted Basic EBITDA | 16.8 | +1% (+$0.1) | 52.9 | +14% (+$6.6) | Business Highlights The company expanded its exchange-listed products business in the third quarter by launching the Sprott ESG Gold ETF and achieving strong sales in its physical silver and uranium trusts, complemented by robust net sales in private strategies - The exchange-listed products business continued to expand its market share, launching the Sprott ESG Gold ETF[5] - Sprott Physical Silver Trust (PSLV) and Sprott Physical Uranium Trust (SPUT) achieved strong sales in the third quarter[5] - The private strategies business achieved $380 million in net sales this quarter, adding new fund years and strategy expansions[6] New Initiatives Energy transition is identified as a future growth engine, with the company establishing a strong presence in uranium-related products and expanding into the European market, alongside launching a new active management strategy for energy transition materials - Energy transition is an increasingly important investment theme for Sprott, viewed as a future growth engine[7] - The company has established a strong presence in uranium-related products (SPUT and Sprott Uranium Miners ETF) and introduced the Uranium Miners ETF to the European market through a partnership with HANetf[7] - In the third quarter, the company launched an active management strategy focused on energy transition materials[7] Outlook The company acknowledges 2022 as an exceptionally challenging year for investors due to global inflation and rapid interest rate hikes, yet remains confident in its resilient business model and innovative products for the coming decade, particularly in energy transition - 2022 has been an exceptionally difficult year for investors, with global inflation and rapid interest rate hikes causing market turmoil, especially concerning currency exchange rates[9] - The company believes central banks are not the true culprits of current global inflationary pressures, attributing the root causes to deglobalization and developed world energy policies, which monetary policy cannot correct[9] - Sprott is confident it is well-prepared for the next decade, possessing innovative products suited for current market uncertainties and anticipated opportunities, particularly in energy transition[10] Management's Discussion and Analysis Forward-Looking Statements This MD&A contains forward-looking information regarding the company's belief in energy transition as a growth engine, views on macroeconomic impacts, confidence in market positioning for the next decade, expectations for strong operating results, and dividend policy, all subject to various risk factors that could cause actual results to differ materially - The MD&A contains forward-looking statements regarding energy transition as a future growth engine, macroeconomic impacts, the company's market positioning, expected operating results, and dividend policy[14] - Forward-looking statements are not guarantees of future results, and actual outcomes may differ significantly due to factors such as market conditions, poor investment performance, loss of personnel, regulatory compliance risks, competitive pressures, foreign exchange risks, and litigation risks[15] - Dividend payments are not guaranteed, with their amount and timing determined by the Board of Directors based on company earnings, solvency tests, and other relevant factors[15] Presentation of Financial Information The financial information in this MD&A is presented as of September 30, 2022, compared to December 31, 2021, and analyzes operating results for the three and nine months ended September 30, 2022, against the corresponding periods in 2021, all prepared under IFRS and reported in USD - The financial information in this MD&A is presented as of September 30, 2022, and compared to December 31, 2021, as well as the corresponding periods in 2021[16] - Financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and presented in US dollars[17] Key Performance Indicators and Non-IFRS Financial Measures The company utilizes a range of key performance indicators and non-IFRS financial measures, including AUM, net inflows, net fees, net commissions, net compensation, total shareholder return, return on capital, EBITDA, Adjusted EBITDA, and Adjusted Basic EBITDA, to evaluate business success, providing quantitative reconciliations to IFRS - The company uses non-IFRS financial measures to assess business success, which should not be considered as substitutes for net income[18] - Key performance indicators include Assets Under Management (AUM), Net Inflows (net sales, capital calls, and committed capital), Net Fees, Net Commissions, Net Compensation, Total Shareholder Return, and Return on Capital[19][20][21][22][23][24][25][26] - EBITDA, Adjusted EBITDA, and Adjusted Basic EBITDA are commonly used investment industry measures, with the company believing Adjusted Basic EBITDA provides a clearer comparison of its core business operations[28] EBITDA, Adjusted EBITDA, and Adjusted Basic EBITDA Reconciliation (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Net income for the period | 3,071 | 8,718 | 10,301 | 23,014 | | Interest expense | 884 | 312 | 1,847 | 922 | | Provision for income taxes | 721 | 2,550 | 5,075 | 8,651 | | Depreciation and amortization | 710 | 1,134 | 2,645 | 3,416 | | EBITDA | 5,386 | 12,714 | 19,868 | 36,003 | | (Gain) loss on investments | (45) | (310) | 9,312 | 1,840 | | Share-based compensation amortization | 3,633 | 452 | 10,911 | 1,248 | | Other expenses | 7,863 | 3,857 | 13,369 | 9,913 | | Adjusted EBITDA | 16,837 | 16,713 | 53,460 | 49,004 | | Carried interest and performance fees | — | — | (2,046) | (7,937) | | Carried interest and performance fees paid - internal | — | — | 1,029 | 4,706 | | Carried interest and performance fees paid - external | — | — | 476 | 595 | | Adjusted Basic EBITDA | 16,837 | 16,713 | 52,919 | 46,368 | | Operating margin | 55 % | 52 % | 55 % | 52 % | Business Overview The company's operations are structured into five reportable segments: Exchange Listed Products, Managed Equities, Private Strategies, Brokerage, and Corporate, along with all other non-reportable segments, following a Q1 reorganization that reclassified certain client assets from Brokerage to Managed Equities - The company has five reportable operating segments: Exchange Listed Products (closed-end physical trusts and ETFs), Managed Equities (internally managed and sub-advised alternative investment strategies), Private Strategies (lending and streaming activities through limited partnership vehicles), Brokerage (regulated broker-dealer activities), and Corporate (providing capital, balance sheet management, and other shared services)[30][31][32][33][34][35] - In the first quarter, the company reorganized its US discretionary accounts business, reclassifying client assets from the Brokerage segment to the Managed Equities segment[32][34] - The Private Strategies segment was renamed from "Lending" to "Private Strategies" to reflect the successful growth of its streaming funds[33] Outlook Despite persistent challenges across global markets and asset classes, the company's operating performance remains robust, with expectations for continued strong operating results throughout the remainder of the current year - Despite ongoing global market and asset class challenges, the company's operating performance remains robust, with expectations for strong operating results for the remainder of the year[39] Results of Operations The company's third-quarter net income and EPS significantly decreased year-over-year, primarily due to foreign exchange translation losses and legacy legal claim settlements; however, adjusted basic EBITDA increased 1% YoY, driven by strong exchange-listed product net inflows and the URNM acquisition, while AUM saw a 4% QoQ decrease but a 3% YTD increase, fueled by physical trusts, private strategies, and the URNM acquisition Summary Financial Information Quarterly Summary Financial Information (thousands of USD) | Metric | Q3 2022 | Q3 2021 | Q2 2022 | Q1 2022 | Q4 2021 | Q2 2021 | Q1 2021 | Q4 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Management fees | 29,158 | 28,612 | 30,620 | 27,783 | 27,172 | 25,062 | 22,452 | 22,032 | | Net fees | 26,759 | 26,083 | 28,090 | 26,536 | 25,476 | 23,186 | 23,725 | 25,300 | | Net commissions | 3,240 | 5,802 | 3,446 | 7,009 | 6,633 | 4,292 | 6,921 | 4,570 | | Financial income | 933 | 567 | 1,186 | 788 | 1,433 | 932 | 1,248 | 1,629 | | Investment gain (loss) | 45 | 310 | (7,884) | (43) | (1,473) | 2,502 | (4,652) | (3,089) | | Total net revenue | 30,750 | 33,291 | 25,008 | 34,603 | 32,277 | 31,350 | 27,545 | 29,359 | | Net compensation | 14,079 | 12,813 | 13,945 | 12,434 | 15,728 | 10,799 | 11,833 | 11,811 | | Selling, general & administrative expenses | 4,239 | 3,682 | 4,221 | 4,172 | 3,438 | 3,492 | 3,351 | 2,320 | | Total expenses | 26,958 | 22,023 | 22,589 | 21,078 | 23,112 | 16,885 | 21,613 | 20,078 | | Net income | 3,071 | 8,718 | 757 | 10,171 | 6,473 | 11,075 | 3,221 | 6,720 | | Net income per share | 0.12 | 0.35 | 0.03 | 0.41 | 0.26 | 0.44 | 0.13 | 0.27 | | Adjusted Basic EBITDA | 16,837 | 16,713 | 17,909 | 17,705 | 18,173 | 15,050 | 14,605 | 14,751 | | Operating margin | 55 % | 52 % | 55 % | 55 % | 57 % | 52 % | 51 % | 51 % | | Total assets | 375,386 | 375,819 | 376,128 | 365,873 | 380,843 | 361,121 | 356,986 | 377,348 | | Total liabilities | 103,972 | 84,231 | 89,264 | 74,654 | 83,584 | 64,081 | 67,015 | 86,365 | | Total AUM | 21,044,252 | 19,016,313 | 21,944,675 | 23,679,354 | 20,443,088 | 18,550,106 | 17,073,078 | 17,390,389 | | Average AUM | 21,420,015 | 19,090,702 | 23,388,568 | 21,646,082 | 20,229,119 | 18,343,846 | 17,188,205 | 16,719,815 | AUM Summary AUM Change (millions of USD) | Metric | AUM as of Jun 30, 2022 | Net Inflows | Market Value Change | Other | AUM as of Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | | Exchange Listed Products | 16,923 | 161 | (1,031) | — | 16,053 | | Managed Equities | 2,679 | (42) | (230) | — | 2,407 | | Private Strategies | 1,611 | 382 | (6) | (91) | 1,896 | | Non-Core AUM | 732 | — | (44) | — | 688 | | Total | 21,945 | 501 | (1,311) | (91) | 21,044 | | Metric | AUM as of Dec 31, 2021 | Net Inflows | Market Value Change | Other | AUM as of Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | | Exchange Listed Products | 14,959 | 2,004 | (1,952) | 1,042 | 16,053 | | Managed Equities | 3,282 | (6) | (869) | — | 2,407 | | Private Strategies | 1,426 | 692 | (13) | (209) | 1,896 | | Non-Core AUM | 776 | — | (88) | — | 688 | | Total | 20,443 | 2,690 | (2,922) | 833 | 21,044 | - As of September 30, 2022, AUM was $21.0 billion, a decrease of $0.9 billion (4%) from June 30, 2022, but an increase of $0.6 billion (3%) from December 31, 2021[43] - AUM growth was primarily driven by strong capital inflows into physical trusts, private strategies, and $1.0 billion in AUM from the URNM acquisition, offsetting the impact of market value depreciation[43] Key Revenue Lines Key Revenue Lines Change (thousands of USD) | Revenue Type | As of Sep 30, 2022 (3 months) | YoY Change | As of Sep 30, 2022 (9 months) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Management fees | 29,200 | +2% (+$0.5) | 87,000 | +14% (+$10.8) | | Carried interest and performance fees | — | N/A | 2,000 | -74% (-$5.9) | | Net fees | 26,800 | +3% (+$0.7) | 80,300 | +10% (+$7.3) | | Commission revenue | 6,100 | -46% (-$5.2) | 25,600 | -18% (-$5.5) | | Net commissions | 3,200 | -44% (-$2.6) | 13,300 | -22% (-$3.7) | | Financial income | 900 | +65% (+$0.4) | 3,600 | +29% (+$0.8) | - Management fees increased primarily due to strong net inflows into exchange-listed products (particularly physical uranium and gold trusts) and increased average AUM from the URNM acquisition[45] - Commission revenue decreased due to weaker mining equity issuance activity in the brokerage business and reduced uranium purchase commissions in the exchange-listed products segment[46] - Financial income growth was primarily driven by higher income generated from limited partnership co-investment positions held by the private strategies segment[47] Key Expense Lines Key Expense Lines Change (thousands of USD) | Expense Type | As of Sep 30, 2022 (3 months) | YoY Change | As of Sep 30, 2022 (9 months) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Net compensation expense | 14,100 | +10% (+$1.3) | 43,800 | +23% (+$8.3) | | Selling, general & administrative expenses (SG&A) | 4,200 | +15% (+$0.6) | 11,900 | +13% (+$1.4) | - Net compensation expense increased primarily due to higher long-term incentive plan (LTIP) amortization and increased salaries for new hires, partially offset by lower annual incentive plan (AIP) compensation[48] - SG&A increased primarily due to higher marketing and technology costs[49] Earnings Earnings Metrics Change (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | YoY Change | As of Sep 30, 2022 (9 months) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | 3,100 | -65% (-$5.6) | 10,300 | -55% (-$12.7) | | Net Income per share | 0.12 | -0.23 | 0.41 | -0.51 | | Adjusted Basic EBITDA | 16,800 | +1% (+$0.1) | 52,900 | +14% (+$6.6) | | Adjusted Basic EBITDA per share | 0.67 | N/A | 2.11 | N/A | - Net income was negatively impacted by foreign exchange translation losses and legacy legal claim settlements, and year-to-date by the net market value depreciation of co-investments and digital gold strategies[50] - Adjusted Basic EBITDA benefited from strong net inflows into physical trusts (particularly physical uranium and gold trusts) and the URNM acquisition, partially offset by weaker brokerage mining equity issuance activity and lower AUM in the managed equities segment[51] Additional Revenues and Expenses - Investment income was minimal this quarter, with year-to-date investment losses primarily stemming from the net market value depreciation of co-investments and digital gold strategies[53] - Other income decreased due to lower income attributable to non-controlling interests[53] - Intangible asset amortization was lower year-over-year, primarily due to the reclassification of a management contract from a finite to an indefinite life in the first quarter; other expenses increased this quarter, mainly due to foreign exchange translation losses and legacy legal claim settlement costs[54][55] Balance Sheet Balance Sheet Key Metrics (thousands of USD) | Metric | As of Sep 30, 2022 | As of Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Total Assets | 375,400 | 365,900 | +$9,500 | | Total Liabilities | 104,000 | 74,700 | +$29,300 | | Total Shareholders' Equity | 271,400 | 291,200 | -$19,800 | - Total assets increased primarily due to indefinite life fund management contracts from the URNM acquisition, increased assets attributable to non-controlling interests, and increased co-investments, partially offset by foreign exchange translation losses[56] - Total liabilities increased mainly due to loans drawn for the URNM acquisition and co-investments, as well as increased liabilities related to non-controlling interests[56] - Total shareholders' equity decreased due to foreign exchange translation losses during the period[56] Reportable Operating Segments The company's operating segments exhibited varied performance, with Exchange Listed Products significantly improving profitability due to AUM growth and the URNM acquisition, while Managed Equities and Brokerage faced declining management fees, reduced commission income, and weak market activity, leading to lower profitability; Private Strategies were impacted by high commitment fees and legal settlements but saw improved co-investment gains, and Corporate, as a cost center, was affected by digital gold strategy investment losses and increased compensation Exchange Listed Products Exchange Listed Products Segment Performance (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | YoY Change | As of Sep 30, 2022 (9 months) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Income before tax | 9,579 | -3% (-$0.3) | 36,644 | +23% (+$6.9) | | Adjusted Basic EBITDA | 13,667 | +7% (+$0.9) | 43,148 | +29% (+$9.7) | | Operating margin | 83% | +1% | 83% | +2% | | Average AUM | 16,443,055 | +17.8% | 16,615,624 | +26.5% | - Performance benefited from strong inflows into physical trusts (particularly physical uranium and gold trusts) and increased average AUM from the URNM acquisition[59] - Year-to-date, increased uranium purchase commissions also positively impacted performance[59] Managed Equities Managed Equities Segment Performance (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | YoY Change | As of Sep 30, 2022 (9 months) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Income before tax | 735 | +99% (+$0.4) | (98) | -$0.6 (from gain to loss) | | Adjusted Basic EBITDA | 2,085 | -33% (-$1.0) | 8,087 | -23% (-$2.4) | | Operating margin | 37% | -9% | 41% | -8% | | Average AUM | 2,559,687 | -22% | 3,031,804 | -9% | - Quarterly income before tax increased primarily due to reduced co-investment losses, partially offset by lower management fees, increased foreign exchange translation losses, and higher SG&A[62] - Year-to-date income before tax loss and Adjusted Basic EBITDA decrease were primarily due to lower management fees, increased co-investment losses, and higher compensation and SG&A[63] Private Strategies Private Strategies Segment Performance (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | YoY Change | As of Sep 30, 2022 (9 months) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Income before tax | 1,886 | -43% (-$1.4) | 6,489 | +5% (+$0.3) | | Adjusted Basic EBITDA | 2,503 | -28% (-$1.0) | 6,411 | -4% (-$0.3) | | Operating margin | 51% | -10% | 51% | -8% | | Average AUM | 1,706,127 | +54.5% | 1,562,318 | +58.0% | - Quarterly income before tax decreased primarily due to high commitment fees from certain limited partnership rebalancing last year and increased other expenses from legacy legal claim settlements this quarter, partially offset by co-investment gains[65] - Year-to-date income before tax increased primarily due to higher co-investment gains and financial income, partially offset by reduced net carried interest, increased other expenses, and higher compensation costs[66] Brokerage Brokerage Segment Performance (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | YoY Change | As of Sep 30, 2022 (9 months) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Income before tax | 156 | -69% (-$0.3) | 1,300 | -80% (-$5.2) | | Adjusted Basic EBITDA | 615 | -67% (-$1.2) | 3,206 | -58% (-$4.4) | | Operating margin | 21% | -22% | 32% | -15% | - Performance decreased primarily due to weaker mining equity issuance activity in Canadian and US broker-dealers[68] - Year-to-date, losses on certain equity holdings also negatively impacted performance[68] Corporate Corporate Segment Performance (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Investment gain (loss) | 112 | 4,008 | (3,506) | 4,625 | | Total revenue | 120 | 4,032 | (3,453) | 4,672 | | Net compensation | 4,445 | 3,977 | 14,292 | 10,504 | | Income (loss) before tax | (8,609) | (2,693) | (28,351) | (10,553) | | Adjusted Basic EBITDA | (2,593) | (4,377) | (8,399) | (11,754) | - Corporate primarily functions as a cost center, providing capital, balance sheet management, and shared services[70] - Year-to-date investment losses primarily stemmed from the market value depreciation of certain digital gold strategies[73] - Net compensation increased primarily due to higher long-term incentive plan (LTIP) amortization, partially offset by lower annual incentive plan (AIP) compensation; other expenses increased mainly due to foreign exchange translation changes[73] Dividends For the nine months ended September 30, 2022, the company declared three regular dividends of $0.25 per share, totaling $19.451 million, with another regular dividend of $0.25 per share announced on November 3, 2022, after the quarter-end Declared Dividends (as of September 30, 2022) | Record Date | Payment Date | Cash Dividend per Share | Total Dividends (thousands of USD) | | :--- | :--- | :--- | :--- | | March 7, 2022 - Q4 2021 Regular Dividend | March 22, 2022 | $0.25 | 6,467 | | May 5, 2022 - Q1 2022 Regular Dividend | May 31, 2022 | $0.25 | 6,500 | | August 12, 2022 - Q2 2022 Regular Dividend | August 29, 2022 | $0.25 | 6,484 | | Total Dividends | | | 19,451 | - Subsequent to the quarter-end, the company declared a regular dividend of $0.25 per share for the quarter ended September 30, 2022, on November 3, 2022[74] Capital Stock As of September 30, 2022, the company had 25.9 million common shares issued and outstanding, with 72,464 shares issued for the URNM acquisition offset by 81,538 shares repurchased and cancelled, resulting in a year-over-year decrease in both basic and diluted EPS - As of September 30, 2022, 25.9 million common shares were issued and outstanding (including 0.9 million unvested common shares held by the EPSP Trust)[75] - This year, 72,464 shares were issued for the URNM acquisition, offset by 81,538 shares repurchased and cancelled under the normal course issuer bid[75] Earnings Per Share (EPS) Change | Metric | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.12 | $0.35 | $0.41 | $0.92 | | Diluted EPS | $0.12 | $0.34 | $0.39 | $0.89 | Liquidity and Capital Resources As of September 30, 2022, the company's credit facility had $55.2 million outstanding, an increase from December 31, 2021, primarily funding the URNM acquisition and certain co-investments; the company maintains a $120 million credit facility and adheres to all covenants, including minimum AUM, debt-to-EBITDA, and EBITDA-to-interest expense ratios Credit Facility Utilization (thousands of USD) | Metric | As of Sep 30, 2022 | As of Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Outstanding amount on credit facility | 55,200 | 29,800 | +$25,400 | | Total credit facility | 120,000 | 120,000 | — | - The increase in the outstanding amount was primarily used to fund the URNM acquisition and certain co-investments[78] - The company complies with all credit facility covenants, including maintaining a minimum AUM (70% of AUM as of November 13, 2020), a debt-to-EBITDA ratio not exceeding 2.5:1, and an EBITDA-to-interest expense ratio not less than 2.5:1[79][80] Critical Accounting Estimates, Judgements, and Changes in Accounting Policies The preparation of financial statements necessitates critical accounting estimates and judgments, including impairment assessments of goodwill and intangible assets, fair value measurement of financial instruments, and contingent consideration estimates, all involving high subjectivity and complexity regarding future cash flows, discount rates, market growth, and fund flow assumptions, which could significantly impact reported asset, liability, income, and expense values Critical Accounting Estimates - Goodwill and intangible asset impairment assessment: involves estimates and assumptions for future cash flows, discount rates, AUM, and asset lives, requiring significant judgment on market growth rates, fund flow assumptions, expected margins, and costs[82] - Fair value of financial instruments: for financial instruments without active market fair values, valuation techniques and models are used, which may include unobservable inputs such as projected cash flows, discount rates, and mining project extraction recovery rates[83] - Contingent consideration: the URNM acquisition's contingent consideration is estimated based on financial performance conditions related to the fund's average AUM, with fund flow assumptions being a key judgment[84] Significant Judgements - Investments in other entities: under IFRS 10 and IAS 28, significant judgment is required to determine whether an investment entity is consolidated into the financial statements, based on the company's power over the investee, rights to variable returns, and ability to affect the amount of those returns[85] Managing Financial Risks The company manages market risks (price, interest rate, foreign exchange), credit risk, liquidity risk, and concentration risk through diversified investments, hedging strategies, active credit exposure monitoring, maintaining sufficient liquid assets and credit lines, and continuous cash flow monitoring, with concentration risk being particularly important given the focus on natural resources Market Risk - Market risk encompasses price risk (changes in asset prices affecting valuation and revenue), interest rate risk (changes in interest rates affecting financial instrument values and cash flows, particularly in the private strategies segment), and foreign exchange risk (fluctuations in foreign exchange rates affecting financial assets and liabilities denominated in non-functional currencies)[87][88][89][90] - The company may employ hedging strategies to mitigate foreign exchange risk[90] Credit Risk - Credit risk is the risk of loss to the company resulting from a borrower's failure to fulfill its obligations, primarily present in the company's investment portfolio[91][92] - Accounts receivable, mainly related to management fees, carried interest, and performance fees, are managed by dealing with reputable counterparties and actively monitoring credit exposure[93] Liquidity Risk - Liquidity risk is the risk that the company will be unable to meet its cash needs or fulfill its obligations as they fall due; the company minimizes this risk by maintaining sufficient liquid assets, having a $120 million credit facility, and investing in short-term government debt securities[94] - Co-investment liquidity risk is managed through continuous monitoring of capital calls and distributions ("matching funds") and broader fund management plans[96] - Measures the company can take to address liquidity shortfalls include: slowing co-investment activity, adjusting or suspending annual incentive compensation, reducing or suspending dividends, drawing on credit facilities, liquidating net investments, and/or issuing common shares[98] Concentration Risk - A significant portion of the company's AUM and investments are concentrated in the natural resources sector, particularly in precious metals and commodity-related investments and trading, which may lead to concentration risk[99] Disclosure Controls and Procedures ("DC&P") and Internal Control Over Financial Reporting ("ICFR") Management is responsible for designing and implementing effective disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR) to ensure the accuracy and reliability of the company's financial information; as of September 30, 2022, management assessed DC&P and ICFR as reasonably designed and operating effectively, with no significant changes to ICFR this quarter - Management is responsible for designing and operating DC&P and ICFR to provide reasonable assurance regarding the reliability of the company's material disclosures and financial reporting[100] - As of September 30, 2022, the Chief Executive Officer and Chief Financial Officer assessed the company's DC&P and ICFR as reasonably designed and operating effectively[101] - There were no significant changes to ICFR this quarter[101] Managing Non-Financial Risks For detailed information on other non-financial risks managed by the company, such as information confidentiality and conflicts of interest, please refer to the company's annual report and annual information form - For detailed information on other non-financial risks (e.g., information confidentiality, conflicts of interest), refer to the company's annual report and annual information form[102] Consolidated Financial Statements Interim Condensed Consolidated Balance Sheets (Unaudited) As of September 30, 2022, the company reported total assets of $375 million, total liabilities of $104 million, and shareholders' equity of $271 million, reflecting a slight increase in total assets, a significant rise in total liabilities, and a decrease in shareholders' equity compared to December 31, 2021 Interim Condensed Consolidated Balance Sheets (thousands of USD) | Metric | As of Sep 30, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 48,786 | 49,805 | | Fees receivable | 12,405 | 13,183 | | Short-term investments | 3,534 | 6,133 | | Other assets (current) | 8,664 | 6,793 | | Income taxes recoverable | 1,987 | 1,613 | | Total current assets | 75,376 | 77,527 | | Co-investments | 71,463 | 68,765 | | Other assets (non-current) | 18,642 | 12,433 | | Property and equipment, net | 12,788 | 16,479 | | Intangible assets | 176,442 | 170,061 | | Goodwill | 19,149 | 19,149 | | Deferred income tax assets | 1,526 | 1,459 | | Total non-current assets | 300,010 | 288,346 | | Total assets | 375,386 | 365,873 | | Liabilities and Shareholders' Equity | | | | Accounts payable and accrued liabilities | 11,875 | 9,362 | | Compensation payable | 9,487 | 15,751 | | Income taxes payable | 1,720 | 3,005 | | Total current liabilities | 23,082 | 28,118 | | Other accrued liabilities | 17,404 | 8,280 | | Loan facility | 55,249 | 29,769 | | Deferred income tax liabilities | 8,237 | 8,487 | | Total liabilities | 103,972 | 74,654 | | Share capital | 415,796 | 417,425 | | Contributed surplus | 45,156 | 35,357 | | Deficit | (106,156) | (97,006) | | Accumulated other comprehensive loss | (83,382) | (64,557) | | Total shareholders' equity | 271,414 | 291,219 | | Total liabilities and shareholders' equity | 375,386 | 365,873 | Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) For the three and nine months ended September 30, 2022, the company experienced a year-over-year decrease in both total revenue and net income, while total expenses increased; net income for the period was $3.1 million (three months) and $10.301 million (nine months), compared to $8.718 million and $23.014 million in the prior year periods, with foreign exchange translation losses significantly impacting other comprehensive income Interim Condensed Consolidated Statements of Operations and Comprehensive Income (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Revenue | | | | | | Management fees | 29,158 | 28,612 | 86,950 | 76,126 | | Carried interest and performance fees | — | — | 2,046 | 7,937 | | Commissions | 6,101 | 11,273 | 25,636 | 31,113 | | Financial income | 933 | 567 | 3,552 | 2,747 | | Investment gain (loss) | 45 | 310 | (9,312) | (1,840) | | Other income | (227) | 529 | 151 | 1,270 | | Total revenue | 36,010 | 41,291 | 109,023 | 117,353 | | Expenses | | | | | | Compensation | 18,934 | 18,001 | 60,087 | 56,089 | | Trailer fees, sub-advised and fund expenses | 1,754 | 3,019 | 8,629 | 5,067 | | Selling, general & administrative expenses | 4,239 | 3,682 | 11,898 | 10,525 | | Interest expense | 884 | 312 | 1,847 | 922 | | Amortization of intangible assets | — | 231 | — | 699 | | Depreciation of property and equipment | 710 | 903 | 2,645 | 2,717 | | Other expenses | 5,697 | 3,875 | 8,541 | 9,669 | | Total expenses | 32,218 | 30,023 | 93,647 | 85,688 | | Income before income taxes | 3,792 | 11,268 | 15,376 | 31,665 | | Provision for income taxes | 721 | 2,550 | 5,075 | 8,651 | | Net income for the period | 3,071 | 8,718 | 10,301 | 23,014 | | Basic net income per share | 0.12 | 0.35 | 0.41 | 0.92 | | Diluted net income per share | 0.12 | 0.34 | 0.39 | 0.89 | | Other comprehensive income (loss) | | | | | | Foreign exchange translation gain (loss) | (14,572) | (7,288) | (18,825) | 105 | | Comprehensive income (loss) | (11,501) | 1,430 | (8,524) | 23,119 | Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) As of September 30, 2022, total shareholders' equity was $271 million, a decrease from $291 million on December 31, 2021, with key movements including share acquisitions for equity incentive plans, stock option exercises, share issuance for management contract purchases, share repurchases and cancellations, and dividend payments, while foreign exchange translation losses significantly impacted accumulated other comprehensive income (loss) Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (thousands of USD) | Metric | Share Capital | Contributed Surplus | Deficit | Accumulated Other Comprehensive Gain (Loss) | Total Shareholders' Equity | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of Dec 31, 2021 | 417,425 | 35,357 | (97,006) | (64,557) | 291,219 | | Shares acquired for equity incentive plans | (6,948) | — | — | — | (6,948) | | Share capital issued on exercise of stock options | 1,807 | (680) | — | — | 1,127 | | Shares released on vesting of equity incentive plans | 1,652 | (1,652) | — | — | — | | Foreign exchange translation gain (loss) | — | — | — | (18,825) | (18,825) | | Share-based compensation | — | 12,908 | — | — | 12,908 | | Share capital issued on RSU conversion | 777 | (777) | — | — | — | | Share capital issued on purchase of management contract | 4,000 | — | — | — | 4,000 | | Shares repurchased and cancelled under normal course issuer bid | (3,036) | — | — | — | (3,036) | | Dividends declared | 119 | — | (19,451) | — | (19,332) | | Net income | — | — | 10,301 | — | 10,301 | | Balance as of Sep 30, 2022 | 415,796 | 45,156 | (106,156) | (83,382) | 271,414 | Interim Condensed Consolidated Statements of Cash Flows (Unaudited) For the nine months ended September 30, 2022, cash inflow from operating activities was $18.037 million, cash outflow from investing activities was $21.273 million, and cash inflow from financing activities was $3.267 million, resulting in a net decrease in cash and cash equivalents at period-end compared to the beginning Interim Condensed Consolidated Statements of Cash Flows (thousands of USD) | Cash Flow Activity | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | | Cash flow from (used in) operating activities | 18,037 | 46,526 | | Cash flow from (used in) investing activities | (21,273) | (23,419) | | Cash flow from (used in) financing activities | 3,267 | (7,013) | | Effect of foreign exchange on cash balances | (1,050) | (23) | | Net increase (decrease) in cash and cash equivalents | (1,019) | 16,071 | | Cash and cash equivalents, beginning of period | 49,805 | 44,106 | | Cash and cash equivalents, end of period | 48,786 | 60,177 | Notes to the Consolidated Financial Statements Corporate Information Sprott Inc. was incorporated on February 13, 2008, under the Business Corporations Act (Ontario), with its registered office located in Toronto - Sprott Inc. was incorporated on February 13, 2008, in Ontario[111] Summary of Significant Accounting Policies These unaudited interim condensed consolidated financial statements are prepared under IFRS IAS 34, presented in USD, and apply the historical cost convention, except for financial assets and liabilities measured at fair value; the company consolidates all controlled limited partnerships and corporations, and this year, the US discretionary accounts business was reorganized and reclassified from Brokerage to Managed Equities, with comparative data retrospectively adjusted - Financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34, presented in US dollars, and apply the historical cost convention, except for financial assets and liabilities classified as FVTPL or FVOCI measured at fair value[112][115] - The company consolidates all controlled limited partnerships and corporations, with control based on power over the entity, rights to variable returns, and the ability to affect the amount of those returns[116][118] - This year, the US discretionary accounts business was reorganized, reclassifying it from the Brokerage segment to the Managed Equities segment, with all comparative data retrospectively adjusted[120] - The URNM acquisition's contingent consideration is measured at fair value and included in other accrued liabilities, with fund flow assumptions being a key judgment in its estimation[121] Short-Term Investments Short-term investments primarily consist of listed and unlisted equity investments acquired through private strategies, managed equities, and brokerage activities, all classified as fair value through profit or loss (FVTPL); as of September 30, 2022, total short-term investments amounted to $3.534 million, a decrease from $6.133 million on December 31, 2021 Short-Term Investments Composition (thousands of USD) | Investment Type | As of Sep 30, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Listed equity and warrants | 1,834 | 4,113 | | Unlisted equity | 1,700 | 2,020 | | Total short-term investments | 3,534 | 6,133 | - Short-term investments primarily include equity investments acquired through private strategies, managed equities, and brokerage activities, all classified as FVTPL[124] Co-investments Co-investments primarily comprise the company's investments in limited partnerships, classified as fair value through profit or loss (FVTPL); as of September 30, 2022, total co-investments increased to $71.463 million from $68.765 million on December 31, 2021 Co-investments Composition (thousands of USD) | Investment Type | As of Sep 30, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Co-investments | 71,463 | 68,765 | | Total co-investments | 71,463 | 68,765 | - Co-investments are classified as FVTPL, with their gains and losses recognized in the investment gain (loss) line of the consolidated statements of operations and comprehensive income[125] Other Assets, Income, Expenses, and Non-Controlling Interest Other assets include those attributable to non-controlling interests, unrealized carried interest advances, prepaid expenses, fund recoveries, and digital gold strategies; other income primarily consists of investment income and income attributable to non-controlling interests, while other expenses are mainly influenced by foreign exchange gains (losses) and legacy legal claim settlement costs; non-controlling interests refer to third-party interests in the company's consolidated co-investments Other Assets Composition (thousands of USD) | Asset Type | As of Sep 30, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Assets attributable to non-controlling interests | 10,431 | 3,780 | | Unrealized carried interest advances | 4,423 | — | | Prepaid expenses | 3,736 | 3,637 | | Fund recoveries and investment receivables | 3,631 | 2,509 | | Digital gold strategies | 3,375 | 7,060 | | Other | 1,710 | 2,240 | | Total other assets | 27,306 | 19,226 | Other Income Composition (thousands of USD) | Income Type | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Investment income | 590 | 304 | 1,003 | 970 | | Income attributable to non-controlling interests | (817) | 225 | (852) | 300 | | Total other income | (227) | 529 | 151 | 1,270 | Other Expenses Composition (thousands of USD) | Expense Type | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Foreign exchange gain (loss) | 3,020 | 847 | 5,138 | 670 | | Increase in Tocqueville transaction related contingent consideration | — | — | — | 4,449 | | Other | 2,677 | 3,028 | 3,403 | 4,550 | | Total other expenses | 5,697 | 3,875 | 8,541 | 9,669 | - Non-controlling interests primarily refer to third-party interests in the company's consolidated co-investments, with both their assets and liabilities increasing[129] Goodwill and Intangible Assets As of September 30, 2022, the company reported $19.149 million in goodwill and $176 million in indefinite life fund management contract intangible assets, with the latter increasing primarily due to the URNM acquisition; annual impairment tests for goodwill and indefinite life intangible assets found no impairment this period, and finite life fund management contracts were reclassified to indefinite life in Q1 due to a change in estimated remaining useful life Goodwill and Intangible Assets Movement (thousands of USD) | Metric | Goodwill | Fund Management Contracts (Indefinite Life) | Fund Management Contracts (Finite Life) | Total | | :--- | :--- | :--- | :--- | :--- | | Net book value as of Dec 31, 2021 | 19,149 | 160,973 | 9,088 | 189,210 | | Net book value as of Sep 30, 2022 | 19,149 | 176,442 | — | 195,591 | | Cost | | | | | | December 31, 2021 | 132,251 | 160,973 | 36,587 | 329,811 | | Additions | — | 20,360 | — | 20,360 | | Transfers | — | 9,088 | (9,088) | — | | Net foreign exchange difference | — | (13,979) | — | (13,979) | | September 30, 2022 | 132,251 | 176,442 | 27,499 | 336,192 | | Accumulated Amortization | | | | | | December 31, 2021 | (113,102) | — | (27,499) | (140,601) | | Amortization expense for the period | — | — | — | — | | September 30, 2022 | (113,102) | — | (27,499) | (140,601) | - The company has allocated $19.149 million of goodwill to the Exchange Listed Products and Managed Equities cash-generating units (CGUs), with no impairment identified this period[131][132] - Indefinite life fund management contract intangible assets increased primarily due to the URNM acquisition on April 22, 2022, which included a $14.5 million transaction price, $4.3 million in contingent consideration, and $1.6 million in transaction costs[133] - In the first quarter, $9.1 million of finite life management contracts were reclassified to indefinite life due to a change in their estimated remaining useful life and are no longer amortized[134] Shareholders' Equity Total shareholders' equity stood at $271 million as of September 30, 2022, with share capital movements primarily influenced by equity incentive plans, stock option exercises, management contract purchases, and share repurchases and cancellations; the company operates stock option and equity incentive plans to motivate employees, and both basic and diluted EPS decreased year-over-year, while capital management objectives focus on regulatory compliance, going concern, financial flexibility, and shareholder returns Capital Stock and Contributed Surplus Capital Stock Movement (thousands of USD) | Movement Item | Number of Shares | Book Value | | :--- | :--- | :--- | | December 31, 2021 | 24,991,620 | 417,425 | | Shares acquired for equity incentive plans | (180,594) | (6,948) | | Share capital issued on exercise of stock options | 115,102 | 1,807 | | Shares released on vesting of equity incentive plans | 51,066 | 1,652 | | Share capital issued on RSU conversion | 43,709 | 777 | | Share capital issued on purchase of management contract | 72,464 | 4,000 | | Shares repurchased and cancelled under normal course issuer bid | (81,538) | (3,036) | | Share capital issued on dividend reinvestment plan | 3,070 | 119 | | September 30, 2022 | 25,014,899 | 415,796 | Contributed Surplus Movement (thousands of USD) | Movement Item | Book Value | | :--- | :--- | | December 31, 2021 | 35,357 | | Exercise of stock options | (680) | | Vesting of equity incentive plans | (1,652) | | Share-based compensation | 12,908 | | RSU conversion | (777) | | September 30, 2022 | 45,156 | - Contributed surplus includes stock option expense, Earnings Sharing Plan (EPSP) Trust expense, equity incentive plan expense, and additional purchase consideration[136] Stock Option Plan - The company maintains a stock option plan to incentivize directors, officers, and employees, with option exercise prices not less than the market price of common shares at the time of grant, typically vesting annually over three years, and an exercise period not exceeding 10 years[139] - As of September 30, 2022, no stock options were granted this period, but 150,000 stock options were exercised[140] Stock Option Movement Summary | Metric | Number of Options | Weighted Average Exercise Price (CAD) | | :--- | :--- | :--- | | Unexercised options as of Dec 31, 2021 | 162,500 | 23.61 | | Options exercised | (150,000) | 23.30 | | Unexercised options as of Sep 30, 2022 | 12,500 | 27.30 | | Exercisable options as of Sep 30, 2022 | 12,500 | 27.30 | Equity Incentive Plan - Canadian employees hold common shares through an Earnings Sharing Plan (EPSP) Trust, while US employees receive restricted shares, unrestricted shares, or Restricted Share Units (RSUs) through an Equity Incentive Plan (EIP)[144] - As of September 30, 2022, no RSUs were granted this period, but 372,000 RSUs were granted year-to-date[146] Equity Incentive Compensation (thousands of USD) | Metric | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Share-based compensation amortization | 4,120 | 693 | 12,374 | 1,906 | | Deferred annual incentive plan | 30 | — | 534 | — | | Total share-based compensation | 4,150 | 693 | 12,908 | 1,906 | Basic and Diluted Earnings Per Share Basic and Diluted Earnings Per Share Calculation (thousands of USD, thousands of shares) | Metric | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Net income - basic and diluted | 3,071 | 8,718 | 10,301 | 23,014 | | Weighted average number of common shares | 25,934 | 25,705 | 25,925 | 25,688 | | Less: unvested shares purchased by trust | (872) | (844) | (841) | (792) | | Basic weighted average number of common shares | 25,062 | 24,861 | 25,084 | 24,896 | | Weighted average number of dilutive stock options | 13 | 163 | 13 | 163 | | Weighted average number of unvested shares under EIP | 1,250 | 943 | 1,219 | 891 | | Diluted weighted average number of common shares | 26,325 | 25,967 | 26,316 | 25,950 | | Net income per share | | | | | | Basic | 0.12 | 0.35 | 0.41 | 0.92 | | Diluted | 0.12 | 0.34 | 0.39 | 0.89 | Capital Management - The company's capital management objectives include meeting regulatory requirements, ensuring continuous operation, providing financial flexibility to support acquisitions and seed capital for new products, and delivering shareholder returns through AUM growth, management fees, and return on invested capital[151] - Various company entities (e.g., SCP, SAM, SGRIL) are required to maintain minimum regulatory capital levels, which management regularly monitors to ensure compliance[151] Income Taxes For the nine months ended September 30, 2022, income tax expense was $5.075 million, a decrease from $8.651 million in the prior year, comprising current and deferred income tax, with changes in deferred tax assets and liabilities reflecting the net impact of temporary differences between financial reporting and income tax purposes Income Tax Expense Composition (thousands of USD) | Metric | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | | Current income tax expense | 4,814 | 9,060 | | Deferred income tax expense (recovery) | 261 | (409) | | Income tax expense presented in consolidated statements of operations | 5,075 | 8,651 | Income Tax Expense Reconciliation to Theoretical Tax (thousands of USD) | Metric | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | | Income before income taxes | 15,376 | 31,665 | | Tax at applicable domestic rate | 4,100 | 8,445 | | Tax effect of non-deductible share-based compensation | (22) | 160 | | Non-taxable capital (gains) and losses | 797 | 27 | | Adjustments for prior periods | (472) | (853) | | Temporary differences not utilized | 664 | 415 | | Exchange rate differences and other | 8 | 399 | | Tax expense | 5,075 | 8,651 | Deferred Income Tax Assets and Liabilities Movement (thousands of USD) | Metric | Dec 31, 2021 | Recognized in Profit or Loss | Exchange Rate Differences | Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total deferred income tax assets | 5,726 | 1,364 | (735) | 6,355 | | Total deferred income tax liabilities | 12,754 | 1,625 | (1,313) | 13,066 | | Net deferred income tax assets (liabilities) | (7,028) | (261) | 578 | (6,711) | Fair Value Measurements The company regularly measures short-term investments, co-investments, and other assets at fair value according to the fair value hierarchy (Level 1, Level 2, Level 3); fair value changes in Level 3 financial assets are primarily influenced by unobservable inputs such as grey market financing prices, volatility, discount rates, and mining project extraction recovery rates, whose changes could significantly impact fair value measurements Short-Term Investments Fair Value Hierarchy (thousands of USD) | Investment Type | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | As of Sep 30, 2022 | | | | | | Listed equity and warrants | 1,217 | 588 | 29 | 1,834 | | Unlisted equity | — | — | 1,700 | 1,700 | | Total | 1,217 | 588 | 1,729 | 3,534 | | As of Dec 31, 2021 | | | | | | Listed equity and warrants | 1,790 | 2,188 | 135 | 4,113 | | Unlisted equity | — | — | 2,020 | 2,020 | | Total | 1,790 | 2,188 | 2,155 | 6,133 | Co-investments Fair Value Hierarchy (thousands of USD) | Investment Type | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | As of Sep 30, 2022 | | | | | | Co-investments | 14,494 | 56,969 | — | 71,463 | | Total | 14,494 | 56,969 | — | 71,463 | | As of Dec 31, 2021 | | | | | | Co-investments | — | 68,765 | — | 68,765 | | Total | — | 68,765 | — | 68,765 | Other Assets Fair Value Hierarchy (thousands of USD) | Asset Type | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | As of Sep 30, 2022 | | | | | | Digital gold strategies | — | — | 3,375 | 3,375 | | Assets attributable to non-controlling interests | 7,430 | 3,001 | — | 10,431 | | Total | 7,430 | 3,001 | 3,375 | 13,806 | | As of Dec 31, 2021 | | | | | | Digital gold strategies | — | — | 7,060 | 7,060 | | Assets attributable to non-controlling interests | — | 3,780 | — | 3,780 | | Total | — | 3,780 | 7,060 | 10,840 | - Level 3 securities include unlisted equities, private equity funds, warrants, and private company fixed income securities; their valuation techniques use unobservable inputs such as grey market financing prices, volatility, discount rates, and mining project extraction recovery rates, where a 5% change could impact profit or loss by approximately $0.3 million[167] Dividends For the nine months ended September 30, 2022, the company declared three regular dividends of $0.25 per share, totaling $19.451 million, with another regular dividend of $0.25 per share announced on November 3, 2022, after the quarter-end Declared Dividends (as of September 30, 2022) | Record Date | Payment Date | Cash Dividend per Share | Total Dividends (thousands of USD) | | :--- | :--- | :--- | :--- | | March 7, 2022 - Q4 2021 Regular Dividend | March 22, 2022 | $0.25 | 6,467 | | May 5, 2022 - Q1 2022 Regular Dividend | May 31, 2022 | $0.25 | 6,500 | | August 12, 2022 - Q2 2022 Regular Dividend | August 29, 2022 | $0.25 | 6,484 | | Total Dividends | | | 19,451 | - Subsequent to the quarter-end, the company declared a regular dividend of $0.25 per share for the quarter ended September 30, 2022, on November 3, 2022[169] Segmented Information The company is structured into five reportable segments based on products, services, and geography: Exchange Listed Products, Managed Equities, Private Strategies, Brokerage, and Corporate, plus all other non-reportable segments, with segment performance evaluated using Adjusted Basic EBITDA; Canada and the US are the primary geographical revenue sources, with Canada contributing the vast majority - The company has five reportable segments: Exchange Listed Products, Managed Equities, Private Strategies, Brokerage, and Corporate, along with all other non-reportable segments[170][172] - Segment performance is assessed based on Adjusted Basic EBITDA, which is a non-IFRS measure[170][171] Revenue by Geography (thousands of USD) | Geography | As of Sep 30, 2022 (3 months) | As of Sep 30, 2021 (3 months) | As of Sep 30, 2022 (9 months) | As of Sep 30, 2021 (9 months) | | :--- | :--- | :--- | :--- | :--- | | Canada | 33,357 | 37,808 | 98,731 | 104,979 | | United States | 2,653 | 3,483 | 10,292 | 12,374 | | Total | 36,010 | 41,291 | 109,023 | 117,353 | Loan Facility As of September 30, 2022, the company's credit facility had $55.2 million outstanding, an increase from December 31, 2021, primarily funding the URNM acquisition and certain co-investments; the company maintains a $120 million credit facility and adheres to all covenants, including minimum AUM, debt-to-EBITDA, and EBITDA-to-interest expense ratios Credit Facility Utilization (thousands of USD) | Metric | As of Sep 30, 2022 | As of Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Outstanding amount on credit facility | 55,200 | 29,800 | +$25,400 | | Total credit facility | 120,000 | 120,000 | — | - The increase in the outstanding amount was primarily used to fund the URNM acquisition and certain co-investments[177] - The company complies with all credit facility covenants, including maintaining a minimum AUM (70% of AUM as of November 13, 2020), a debt-to-EBITDA ratio not exceeding 2.5:1, and an EBITDA-to-interest expense ratio not less than 2.5:1[178][179] Commitments and Provisions As of September 30, 2022, the company had $8.1 million in co-investment commitments in private strategies limited partnerships due within one year, with an additional $1 million due after 12 months Co-investment Commitments (thousands of USD) | Due Date | As of Sep 30, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Within one year | 8,100 | 7,700 | | After 12 months | 1,000 | — | | Total | 9,100 | 7,700 |