Earned net income of $20.5 million during the quarter, excluding
significant items(1)
(All dollar amounts are stated in Canadian dollars unless otherwise
indicated)
TORONTO, Feb. 6, 2013 /CNW/ - In the third quarter of fiscal 2013, the
quarter ended December 31, 2012, Canaccord Financial Inc. (Canaccord,
the Company, TSX: CF, LSE: CF.) generated $230.0 million in revenue.
Excluding significant items(1) (a non-IFRS measure), the Company recorded net income of $20.5 million,
or $0.17 per diluted common share. Including all expense items, on an
IFRS basis, the Company recorded net income of $10.3 million, or $0.08
per diluted common share.
"The results of our fiscal third quarter clearly illustrate the benefits
of the acquisitions we've made over the last several years. With
record advisory revenue, continued growth of our UK wealth management
business, and strong performance in the UK and US, we're pleased with
the results we generated this quarter," stated Paul Reynolds, President
and CEO of Canaccord Financial Inc.
Mr. Reynolds continued, "Over half of Canaccord's revenue is now earned
in markets outside of Canada - underscoring the importance and strength
of our global platform, and the value our clients receive from our
comprehensive service offering."
Third quarter of fiscal 2013 vs. second quarter of fiscal 2013
-
Revenue of $230.0 million, up 23% or $43.4 million from $186.6 million
-
Excluding significant items, expenses of $205.0 million, up 14% or $25.3
million from $179.7 million(1)
-
Expenses of $216.9 million, up 6% or $12.0 million from $204.9 million
-
Excluding significant items, net income of $20.5 million compared to net
income of $5.9 million(1)
-
Net income of $10.3 million compared to a net loss of $14.8 million
-
Excluding significant items, diluted earnings per common share (EPS) of
$0.17 compared to diluted EPS of $0.03 in the second quarter of fiscal
2013(1)
-
Diluted EPS of $0.08 compared to a loss per common share of $0.19 in the
second quarter of fiscal 2013
Third quarter of fiscal 2013 vs. third quarter of fiscal 2012
-
Revenue of $230.0 million, up 56% or $82.1 million from $147.9 million
-
Excluding significant items, expenses of $205.0 million, up 55% or $72.9
million from $132.1 million(1)
-
Expenses of $216.9 million, up 52% or $74.1 million from $142.8 million
-
Excluding significant items, net income of $20.5 million compared to net
income of $10.6 million(1)
-
Net income of $10.3 million compared to net income of $2.5 million
-
Excluding significant items, diluted EPS of $0.17 compared to diluted
EPS of $0.11(1)
-
Diluted EPS of $0.08 compared to diluted EPS of $0.01
Year-to-date fiscal 2013 vs. year-to-date fiscal 2012
(Nine months ended December 31, 2012 vs. nine months ended December 31,
2011)
-
Revenue of $579.2 million, up 36% or $152.0 million from $427.2 million
-
Excluding significant items, expenses of $566.4 million, up 42% or
$168.7 million from $397.7 million(1)
-
Expenses of $608.8 million, up 47% or $195.5 million from $413.3 million
-
Excluding significant items, net income of $10.1 million compared to net
income of $23.1 million(1)
-
Net loss of $25.2 million compared to net income of $10.4 million
-
Excluding significant items, diluted EPS of $0.02 compared to diluted
EPS of $0.23(1)
-
Loss per common share of $0.35 compared to diluted EPS of $0.09
Financial condition at end of third quarter fiscal 2013 vs. third
quarter fiscal 2012
-
Cash and cash equivalents balance of $556.0 million, down $144.9 million
from $700.9 million
-
Working capital of $397.2 million, down $74.7 million from $471.9
million
-
Total shareholders' equity of $1.1 billion, up $198.9 million from
$852.3 million
-
Book value per diluted common share for the period end was $7.62, down
11% or $0.92 from $8.54(1)
-
On February 6, 2013, the Board of Directors approved a quarterly
dividend of $0.05 per common share payable on March 15, 2013 with a record date of March
1, 2013
-
On February 6, 2013, the Board of Directors also approved a cash
dividend of $0.34375 per Series A Preferred Share payable on April 1,
2013 with a record date of March 15, 2013, and a cash dividend of
$0.359375 per Series C Preferred Share payable on April 1, 2013 to
Series C Preferred shareholders of record as at March 15, 2013
SUMMARY OF OPERATIONS
Corporate
-
On October 1, 2012, Canaccord's acquisition of Eden Financial Ltd.'s
wealth management business closed
-
On October 1, 2012, Canaccord appointed Philip Evershed Global Head of
Investment Banking
-
On November 6, 2012 Canaccord appointed Steve Buell Global Head of
Research
-
On November 7, 2012, Canaccord Financial Inc. welcomed Dipesh Shah as an
additional independent director on its Board
Capital Markets
-
Canaccord Genuity led or co-led 33 transactions globally, raising total
proceeds of C$888 million(2) during fiscal Q3/13
-
Canaccord Genuity participated in 123 transactions globally, raising total proceeds of C$9.8 billion(2) during fiscal Q3/13
-
During fiscal Q3/13, Canaccord Genuity led or co-led the following
transactions:
-
Two transactions totalling £105.3 million for HICL Infrastructure
Company Limited on the LSE
-
£100.0 million for Monitise plc on AIM
-
£100.0 million for Newlon Housing Trust (Private Placement)
-
SGD$94.0 million for Geo Energy Resources Ltd. on the SGX
-
C$89.1 million for Trez Capital Senior Mortgage Investment Corporation
(non-exchange listed)
-
£80 million for Intermediate Capital Group Plc through a retail bond
issue
-
C$54.6 million for Pure Industrial Real Estate Trust on the TSX
-
£48.5 million for Alpha Plus Holdings Plc through a retail bond issue
-
US$41.4 million for AceIRX Pharmaceuticals Inc. on the NASDAQ
-
C$34.5 million for SilverCrest Mines Inc. on the TSX-Venture
-
AUD$36.0 million for Lifestyle Communities Limited on the ASX
-
AUD$30.0 million for Neon Energy Limited on the ASX
-
C$30.0 million for Labrador Iron Mines Holdings Limited on the TSX
-
C$28.8 million for TriOil Resources Ltd. on the TSX
-
AUD$21.0 million for Orocobre Limited on the ASX
-
£20.0 million for Secure Trust Bank Plc on AIM
-
In Canada, Canaccord Genuity raised $238.1 million for government bond
issuances and $25.0 million for corporate bond issuances during fiscal
Q3/13
-
Canaccord Genuity generated record advisory revenues of $69.3 million
during fiscal Q3/13, an increase of 80% compared to the previous record
of $38.5 million generated in the same quarter last year
-
During fiscal Q3/13, Canaccord advised on the following M&A and advisory
transactions:
-
Viterra Inc. on its acquisition by Glencore International plc
-
Yellow Media Ltd. on its C$2.8 billion recapitalization
-
Research In Motion on the sale of NewBay Software to Synchronoss
Technologies, Inc.
-
Mateco Group (Odewald & Compagnie) on its acquisition by TVH Group
-
Sprott Power Corp. on its acquisition of Shear Wind Inc.
-
Automotive Technologies Inc. (Wireless Zone) on its acquisition of
Glentel Inc.
-
Eco-Products on its acquisition by WNA, Inc.
-
GT Advanced Technologies on its acquisition of Twin Creek Technologies
-
Mears Group on its acquisition of Morrison Facilities Services Limited
-
Wildroots and TrueBliss on their acquisition by Continental Mills, Inc.
-
Psion on its acquisition by Motorola Solutions, Inc.
-
Buy As You View Holdings Limited on its acquisition by Rutland Partners
-
DHX Media Ltd. on its acquisition of Cookie Jar Entertainment
-
Score Media Inc. on its acquisition by Rogers Communications Corp.
-
Zetar on its acquisition by Zertus UK Holding Limited
-
Unifeeder on its acquisition of Feederlink from Irish Continental Group
Canaccord Wealth Management (Global)
-
Globally, Canaccord Wealth Management generated $60.0 million in revenue
-
Assets under administration in Canada, and assets under management in
the UK and Europe, and Australia, were $27.0 billion at the end of
Q3/13(1)
Canaccord Wealth Management (North America and Australia)
-
Canaccord Wealth Management generated $35.2 million in revenue and,
after intersegment allocations, recorded a net loss of $5.6 million
before taxes in Q3/13
-
Assets under administration in Canada were $11.4 billion as at December
31, 2012, down 14% from $13.3 billion at the end of the previous
quarter and down 21% from $14.4 billion at the end of fiscal Q3/12(1)
-
This decrease is due largely to the reduction of branches operating in
Canada, as was announced on September 24, 2012.
-
Assets under management in Australia were $408 million at the end of
fiscal Q3/13, up 15% from $354 million at the end of the previous
quarter(1)
-
Assets under management in Canada (discretionary) were $791 million as
at December 31, 2012, up 1% from $784 million at the end of the
previous quarter and up 30% from $607 million at the end of fiscal
Q3/12(1)
-
As at December 31, 2012, Canaccord Wealth Management had 184 Advisory
Teams(3), a decrease of 94 Advisory Teams from December 31, 2011 and a decrease of
47 from September 30, 2012
Canaccord Wealth Management (UK and Europe)
-
Collins Stewart Wealth Management generated $24.8 million in revenue
and, excluding significant items, recorded net income of $2.4 million
before taxes in Q3/13
-
This division recognized $1.5 million of restructuring and
acquisition-related costs related to the purchase of Eden Financial
Ltd.'s wealth management business and $1.6 million of amortization of
intangible assets acquired in connection with the acquisition of CSHP.
Including these significant items, Collins Stewart Wealth Management
recorded a net loss after intersegment allocations and before income
taxes of $0.7 million during the quarter ended December 31, 2012
-
Assets under management (discretionary and non-discretionary) were $15.2
billion (£9.5 billion)
Non-IFRS Measures
The non-International Financial Reporting Standards (IFRS) measures
presented include assets under administration, assets under management,
book value per diluted common share and figures that exclude
significant items. Significant items include restructuring costs,
amortization of intangible assets, and acquisition-related expense
items, which include costs recognized in relation to both prospective
and completed acquisitions. Management believes that these non-IFRS
measures will allow for a better evaluation of the operating
performance of Canaccord's business and facilitate meaningful
comparison of results in the current period to those in prior periods
and future periods. Figures that exclude significant items provide
useful information by excluding certain items that may not be
indicative of Canaccord's core operating results. A limitation of
utilizing these figures that exclude significant items is that the IFRS
accounting effects of these items do in fact reflect the underlying
financial results of Canaccord's business; thus, these effects should
not be ignored in evaluating and analyzing Canaccord's financial
results. Therefore, management believes that Canaccord's IFRS measures
of financial performance and the respective non-IFRS measures should be
considered together.
Selected financial information excluding significant items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter-
|
|
|
|
|
|
|
YTD-
|
|
|
Three months ended
|
|
|
over-
|
|
|
Nine months ended
|
|
|
over-
|
|
|
December 31
|
|
|
quarter
|
|
|
December 31
|
|
|
YTD
|
(C$ thousands, except per share and % amounts)
|
|
2012
|
2011
|
|
|
change
|
|
|
2012
|
2011
|
|
|
change
|
Total revenue per IFRS
|
|
$230,003
|
$147,889
|
|
|
55.5%
|
|
|
$579,151
|
$427,172
|
|
|
35.6%
|
Total expenses per IFRS
|
|
216,882
|
$142,822
|
|
|
51.9%
|
|
|
608,840
|
$413,252
|
|
|
47.3%
|
Significant items recorded in Canaccord Genuity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs
|
|
5,276
|
1,292
|
|
|
n.m.
|
|
|
9,671
|
1,292
|
|
|
n.m.
|
|
Acquisition-related costs
|
|
—
|
2,700
|
|
|
(100.0)%
|
|
|
388
|
4,143
|
|
|
(90.6)%
|
|
Amortization of intangible assets
|
|
3,473
|
1,767
|
|
|
96.5%
|
|
|
11,282
|
3,627
|
|
|
211.1%
|
Significant items recorded in Canaccord Wealth Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs
|
|
1,034
|
—
|
|
|
n.m.
|
|
|
14,601
|
—
|
|
|
n.m.
|
|
Acquisition-related costs
|
|
431
|
—
|
|
|
n.m.
|
|
|
1,331
|
—
|
|
|
n.m.
|
|
Amortization of intangible assets
|
|
1,643
|
—
|
|
|
n.m.
|
|
|
4,255
|
—
|
|
|
n.m.
|
Significant items recorded in Corporate and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs
|
|
—
|
5,000
|
|
|
(100.0)%
|
|
|
900
|
5,000
|
|
|
(82.0)%
|
|
Acquisition-related costs
|
|
—
|
—
|
|
|
n.m.
|
|
|
—
|
1,513
|
|
|
(100.0)%
|
Total significant items
|
|
11,857
|
10,759
|
|
|
10.2%
|
|
|
42,428
|
15,575
|
|
|
172.4%
|
Total expenses excluding significant items
|
|
205,025
|
132,063
|
|
|
55.2%
|
|
|
566,412
|
397,677
|
|
|
42.4%
|
Net income before taxes - adjusted
|
|
$24,978
|
$15,826
|
|
|
57.8%
|
|
|
$12,739
|
$29,495
|
|
|
(56.8)%
|
Income taxes - adjusted
|
|
4,525
|
5,182
|
|
|
(12.7)%
|
|
|
2,674
|
6,391
|
|
|
(58.2)%
|
Net income - adjusted
|
|
$20,453
|
$10,644
|
|
|
92.2%
|
|
|
$10,065
|
$23,104
|
|
|
(56.4)%
|
Earnings per common share - basic, adjusted
|
|
$0.19
|
$0.12
|
|
|
58.3%
|
|
|
$0.02
|
$0.26
|
|
|
(92.3)%
|
Earnings per common share - diluted, adjusted
|
|
$0.17
|
$0.11
|
|
|
54.5%
|
|
|
$0.02
|
$0.23
|
|
|
(91.3)%
|
n.m.: not meaningful
Fellow shareholders:
The results of our fiscal third quarter demonstrate the value of our
larger, global platform and the importance of the investments we've
made over the last several years. Most notably, the successful
integration of our acquisition of Collins Stewart Hawkpoint is evident
across our business. Our UK and US operations are now operating
profitablyi. We're benefiting from a strong UK and European wealth management
platform, in markets that should provide even more opportunities to
grow client assets. And we've established Canaccord Genuity as a
leading investment bank in the UK. In fact, Canaccord Genuity was the
second most active investment bank in the UK for the number of
transactions led or co-led during calendar 2012, and ninth overall for
total proceeds raised for clients, in this highly competitive marketii.
Our strategy of geographic diversification appears to be well timed. By
expanding our operations in the UK, US and overseas markets, we are
much better positioned to leverage international market opportunities
and withstand regional fluctuations of capital markets activity. The
results of which are apparent in our performance. Half of Canaccord's
revenue is now generated in markets outside of Canada - underscoring
the importance of the expansion activities we successfully executed
over the last several years.
Quarterly performance
Record advisory fees drove significant revenue gains during our fiscal
third quarter. In the three months ended December 31, 2012, Canaccord
Financial Inc. generated revenue of $230.0 million and adjusted net
incomei of $20.5 million, or $0.17 per diluted common share. During the
quarter we implemented a number of strategies aimed at enhancing the
performance of some of our businesses. These initiatives resulted in
$11.9 million of restructuring costs and other significant items not
related to continuing operating activities. Including significant
items, on an IFRS basis, the Company generated net income of $10.3
million, or $0.08 per diluted share.
Annualized return on common shareholders' equity, excluding significant
items, increased to 7.8% during the quarter. We're pleased with the
progress we're making to enhance ROE. Just as important, the increased
diversification of our business should allow us to achieve more
consistent returns going forward.
We remain committed to a conservative capital strategy. Our business
continues to be well capitalized to serve our clients, both in the
current market environment and during periods with much more robust
market activity. At the end of the fiscal third quarter, Canaccord had
$556.0 million in cash and cash equivalents, $397.2 million in net
working capital and $1.1 billion in shareholders' equity. I'm also
pleased to confirm that our Board of Directors approved a dividend of
$0.05 this quarter.
Canaccord Genuity
Our strategy to further integrate our global capital markets platform,
particularly within our investment banking practice, is progressing
very well. We believe these efforts will further enhance the value of
the services we offer and increase our relevance to clients. We also
expect additional synergies will be achieved through further
cross-border collaboration - benefiting both our business and our
clients.
Canaccord Genuity generated $165.4 million of revenue globally, an
increase of 39% from last quarter and 77% from the same period last
year. While revenue grew substantially, operating expenses only
increased 16% from the previous quarter, which lowered expense ratios
in this division meaningfully. Canaccord Genuity contributed $29.3
million of adjusted net income before taxi to the Company during the fiscal quarter, an increase of 116% compared
to the same period last year.
This quarter set a new company record for M&A and advisory revenue. At
$69.3 million, more revenue was generated through our global advisory
practice than in the past two quarters combined. In addition, in the
first nine months of fiscal 2013 we have generated 15% more advisory
revenue than all of last year. This performance was helped by two
substantial and high-profile advisory mandates completed in Canada, as
well as increased advisory activity in the UK and Europe. It is a
strong representation of the value being generated from our
acquisitions of Genuity Capital Markets in 2010 and Collins Stewart
Hawkpoint last year. We are particularly pleased with the performance
of our advisory practice, and continue to have a very healthy pipeline
of advisory mandates.
In the last several months we have taken steps to better integrate the
advisory business of Canaccord Genuity Hawkpoint into our broader
global investment banking group. We expect our UK and European clients
will benefit greatly from this integrated approach, through our ability
to meet multiple corporate needs with one dedicated team. When this
initiative completes on March 1, this business will operate under the
Canaccord Genuity brand.
Capital raising activity also benefited from the expanded reach of our
operations this quarter, with contributions from all the markets we
service. On a global basis, Canaccord Genuity led or co-led 33
transactions over $1.5 million during the quarter, raising over C$887
million for clients. Investment banking activities generated $34.2
million of revenue for the division, a 10% increase from last quarter,
and a 45% increase from the same period last year.
Wealth Management
Much of our focus this quarter was dedicated to enhancing our global
wealth management platform. In the UK, we were very pleased to welcome
our new colleagues from Eden Financial on October 1. Approximately 35
wealth management professionals joined our firm, as did 2,500 client
accounts and £835 million of new client assets. This team is now
working side-by-side with colleagues from Collins Stewart Wealth
Management and will ultimately work from the same support platform.
In Canada, we continued with our strategy of strengthening our platform
by focusing our operations in core Canadian centres. Canaccord Wealth
Management now has 16 branches across the country. At the end of the
quarter, our Canadian wealth management division had 184 Investment
Advisory teams and $11.4 billion of assets under administration.
Combined, Canaccord's wealth management operations generated $60.0
million of revenue, an increase of 4% compared to last quarter and 35%
compared to the same period last year.
Today, our global wealth management platform operates in Canada, the UK,
Switzerland, the Channel Islands, the Isle of Man and Australia. We
oversee $27.0 billion of client assetsiii. And we offer clients tailored services through our team of over 800
wealth management employees.
To better reflect the scope of this division, I'm pleased to announce
that our global wealth management operations will soon be unified under
one universal brand: Canaccord Genuity Wealth Management. We believe
this change will more accurately communicate the span of our wealth
management businesses to our clients and stakeholders, and will allow
us to more easily share resources amongst the markets we operate in.
We expect this branding change will be implemented during the second
calendar quarter.
Looking forward
While the market environment has been less than optimal for several
quarters, we are beginning to see promising signs of capital markets
activity. We're optimistic that equity markets and financing
transactions will rebound in the coming months, as we are already
seeing positive inflows to equities from fixed income products. As
appetite for risk returns, particularly in the US and the UK, we expect
our well-established transactional capabilities will benefit alongside
our already robust M&A pipeline.
Our focus continues to be on further integrating our business within our
investment banking practice and across our wealth management platform,
in order to capture the full value of our operating scale. We also
remain committed to evaluating ways to enhance the earnings
capabilities of our firm, whether they involve activities aimed at
lowering our expense ratios or growing our relevance to clients. All
of our efforts have been, and will continue to be, aimed at expanding
our client relationships and increasing the value of our business for
our shareholders.
Kind regards,
Paul Reynolds
President & CEO
Canaccord Financial Inc.
_________________________________
i
|
Excluding restructuring and acquisition-related items referred to as
"significant items" elsewhere in this report. Adjusted net income
before tax is net income before tax excluding significant items.
|
ii
|
Thomson Reuters information
|
iii
|
As at December 31, 2012
|
|
|
ACCESS TO QUARTERLY RESULTS INFORMATION
Interested investors, the media and others may review this quarterly
earnings release and supplementary financial information at http://www.canaccordfinancial.com/EN/IR/Pages/default.aspx.
CONFERENCE CALL AND WEBCAST PRESENTATION
Interested parties are invited to listen to Canaccord's third quarter
fiscal 2013 results conference call with analysts and institutional
investors, via a live webcast or a toll free number. The conference
call is scheduled for Wednesday, February 6, 2013 at 2:00 p.m. (Pacific
Time), 5:00 p.m. (Eastern Time), 10:00 p.m. (UK Time), and at 6:00 a.m.
(China Standard Time), and 9:00 a.m. (Australia EDT Time) on Thursday,
February 7, 2013. At that time, senior executives will comment on the
results for the third quarter of the fiscal 2013 year and respond to
questions from analysts and institutional investors.
The conference call may be accessed live and archived on a listen-only
basis via the Internet at: www.canaccordfinancial.com/EN/NewsEvents/Pages/Events.aspx
Analysts and institutional investors can call in via telephone at:
-
647-427-7450 (within Toronto)
-
1-888-231-8191 (toll free North America)
-
0-800-051-7107 (toll free from the UK)
-
1-800-760-620 (toll free from Ireland)
-
0-800-917-449 (toll free from France)
-
0-800-183-0171 (toll free from Germany)
-
10-800-714-1191 (toll free from Northern China)
-
10-800-140-1195 (toll free from Southern China)
-
1-800-287-011 (toll free from Australia)
Please request to participate in Canaccord Financial's Q3/13 earnings
call.
A replay of the conference call can be accessed after 5:00 p.m. (Pacific
Time), 8:00 p.m. (Eastern Time) Wednesday, February 6, 2013, and after
1:00 a.m. (UK Time), 9:00 a.m. (China Standard Time) and 12:00 p.m.
(Australia EDT Time) on Thursday, February 7, 2013 until March 23, 2013
at 416-849-0833 or 1-855-859-2056 by entering passcode 87744173
followed by the pound (#) sign.
ABOUT CANACCORD FINANCIAL INC.:
Through its principal subsidiaries, Canaccord Financial Inc. is a
leading independent, full-service financial services firm, with
operations in two principal segments of the securities industry: wealth
management and global capital markets. Since its establishment in
1950, Canaccord has been driven by an unwavering commitment to building
lasting client relationships. We achieve this by generating value for
our individual, institutional and corporate clients through
comprehensive investment solutions, brokerage services and investment
banking services. Canaccord has offices in 13 countries worldwide,
including wealth management offices located in Canada, Australia, the
UK and Europe. Canaccord Genuity, the international capital markets
division, operates in Canada, the US, the UK, France, Germany, Ireland,
Italy, Hong Kong, mainland China, Singapore, Myanmar, Australia and
Barbados.
Canaccord Financial Inc. is publicly traded under the symbol CF on the
TSX and the symbol CF. on the London Stock Exchange. Canaccord Series A
Preferred Shares are listed on the TSX under the symbol CF.PR.A.
Canaccord Series C Preferred Shares are listed on the TSX under the
symbol CF.PR.C.
None of the information on Canaccord's websites at www.canaccordfinancial.com, www.canaccordgenuity.com, and www.canaccord.com should be considered incorporated herein by reference.
|
__________________________________
1
|
See Non-IFRS measures.
|
2
|
Source: Transactions over $1.5 million. Internally sourced information.
|
3
|
Advisory Teams are normally comprised of one or more Investment Advisors
(IAs) and their assistants and associates, who together manage a shared
set of client accounts. Advisory Teams that are led by, or only
include, an IA who has been licensed for less than three years are not
included in our Advisory Team count, as it typically takes a new IA
approximately three years to build an average-sized book of business.
|
SOURCE: Canaccord Financial Inc.