Excluding significant items, earned net income of $21.2 million during
the quarter (1)
(All dollar amounts are stated in Canadian dollars unless otherwise
indicated)
TORONTO, Feb. 5, 2014 /CNW/ - In the third quarter of fiscal 2014, the
quarter ended December 31, 2013, Canaccord Genuity Group Inc.
(Canaccord, the Company, TSX: CF, LSE: CF.) generated $231.0 million in
revenue. Excluding significant items(2) (a non-IFRS measure), the Company recorded net income of $21.2 million
or net income of $17.0 million available to common shareholders(3) ($0.17 per diluted common share). Including all expense items, on an
IFRS basis, the Company recorded net income of $18.3 million or net
income available to common shareholders(3) of $14.4 million (earnings per diluted common share of $0.14).
"During our fiscal third quarter, our strong results were driven by the
record performance in the UK and Europe, and we were pleased with the
record contribution made by our Australian operations," stated Paul
Reynolds, President and CEO of Canaccord Genuity Group Inc. "This
quarter, 68% of our revenue came from outside of Canada, driven largely
by a 75% increase in global underwriting compared to last year."
Third quarter of fiscal 2014 vs. second quarter of fiscal 2014
-
Revenue of $231.0 million, up 26% or $47.7 million from $183.3 million
-
Excluding significant items, expenses of $202.9 million, up 16% or $27.5
million from $175.4 million(2)
-
Expenses of $206.5 million, up 12% or $22.2 million from $184.3 million
-
Excluding significant items, net income of $21.2 million compared to net
income of $6.7 million(2)
-
Net income of $18.3 million compared to a net loss of $0.1 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
2014(2)
-
Diluted EPS of $0.14 compared to a loss per common share of $0.03 in the
second quarter of fiscal 2014
Third quarter of fiscal 2014 vs. third quarter of fiscal 2013
-
Revenue of $231.0 million, up $1.0 million from $230.0 million
-
Excluding significant items, expenses of $202.9 million, down 1% or $2.1
million from $205.0 million(2)
-
Expenses of $206.5 million, down 5% or $10.4 million from $216.9 million
-
Excluding significant items, net income of $21.2 million compared to net
income of $20.5 million(2)
-
Net income of $18.3 million compared to net income of $10.3 million
-
Excluding significant items, diluted EPS of $0.17 with no change from
Q3/13(2)
-
Diluted EPS of $0.14 compared to diluted EPS of $0.08
Year-to-date fiscal 2014 vs. year-to-date fiscal 2013
(Nine months ended December 31, 2013 vs. nine months ended December 31,
2012)
-
Revenue of $601.5 million, up 4% or $22.3 million from $579.2 million
-
Excluding significant items, expenses of $552.8 million, down 2% or
$13.6 million from $566.4 million(2)
-
Expenses of $568.9 million, down 7% or $39.9 million from $608.8 million
-
Excluding significant items, net income of $39.8 million compared to net
income of $10.1 million(2)
-
Net income of $26.1 million compared to a net loss of $25.2 million
-
Excluding significant items, diluted EPS of $0.29 compared to diluted
EPS of $0.02(2)
-
Diluted EPS of $0.16 compared to a loss per common share of $0.35
Financial condition at end of third quarter fiscal 2014 vs. fourth
quarter fiscal 2013
-
Cash and cash equivalents balance of $357.7 million, down $133.3 million
from $491.0 million
-
Working capital of $428.9 million, up $35.2 million from $393.7 million
-
Total shareholders' equity of $1.12 billion, up $70 million from $1.05
billion
-
Book value per diluted common share of $8.43, up $0.75 from $7.68(2)
-
On February 5, 2014, the Board of Directors approved a quarterly
dividend of $0.05 per common share payable on March 10, 2014 with a
record date of February 21, 2014
-
On February 5, 2014, the Board of Directors also approved a cash
dividend of $0.34375 per Series A Preferred Share payable on March 31,
2014 with a record date of March 14, 2014, and a cash dividend of
$0.359375 per Series C Preferred Share payable on March 31, 2014 to
Series C Preferred shareholders of record as at March 14, 2014
SUMMARY OF OPERATIONS
Corporate
-
On October 1, 2013, the Company changed its name from Canaccord
Financial Inc. to Canaccord Genuity Group Inc.
-
During the fiscal third quarter, the Company purchased 1,256,792 of its
common shares under the terms of its normal course issuer bid (NCIB) to
bring the total purchases for the current fiscal year to 3,156,344
common shares as of February 3, 2014 (2,618,288 common shares as of
December 31, 2013)
-
2,547,576 common shares purchased under the NCIB up to the end of Q3/14
have been cancelled and the remaining 70,712 common shares purchased
during Q3/14 will be held in treasury until subsequently cancelled
-
Subsequent to the end of the quarter, on January 15, 2014, Canaccord
appointed Stuart Raftus as President of Canaccord Genuity Wealth
Management in Canada
Capital Markets
-
Canaccord Genuity led or co-led 45 transactions globally, raising total
proceeds of C$3.3 billion(4) during fiscal Q3/14
-
Canaccord Genuity participated in 95 transactions globally, raising
total proceeds of C$8.1 billion(4) during fiscal Q3/14
-
During fiscal Q3/14, Canaccord Genuity led or co-led the following
investment banking transactions:
-
US$726.1 million for Abengoa S.A. on the NASDAQ
-
£210.5 million for Quindell PLC on AIM
-
£207.8 million for Arrow Global Group PLC on the LSE
-
£160.0 million for Tungsten Corporation PLC on AIM
-
£125.4 million for Caracal Energy Inc. on the LSE
-
C$175.0 million for Bellatrix Exploration Limited on the TSX
-
US$116.2 million for Lannett Company, Inc. on the NYSE
-
US$115.6 million for Emerald Oil, Inc. on the NYSE
-
US$113.0 million for DP Aircraft I Limited on the Specialist Fund Market
of the LSE and CISE
-
£48.8 million for MedicX Fund Limited on the LSE
-
SGD$70.4 million for ValueMax Group Limited on the SGX
-
C$50.0 million for HealthLease Properties REIT on the TSX
-
C$46.1 million for Altus Group Limited on the TSX
-
C$45.0 million for WesternOne Inc. on the TSX
-
US$39.1 million for MiMedx Group, Inc. on the NASDAQ
-
AUD$42.5 million for Tiger Resources Limited on the ASX
-
AUD$42.0 million for Donaco International Limited on the ASX
-
C$40.3 million for American Hotel Income Properties REIT LP on the TSX
-
C$40.3 million for DHX Media Limited on the TSX
-
AUD$37.0 million for iBuy Group Limited on the ASX
-
C$34.5 million for Concordia Healthcare Inc. on the TSX
-
AUD$35.0 million for Syrah Resources Limited on the ASX
-
AUD$30.0 million for Orocobre Limited on the ASX
-
C$23.0 million for Solium Capital Inc. on the TSX
-
In Canada, Canaccord Genuity raised $249.1 million for government and
corporate bond issuances during fiscal Q3/14
-
Canaccord Genuity generated advisory revenues of $39.8 million during
fiscal Q3/14, a decrease of 43% compared to the record generated in the
same quarter last year
-
During fiscal Q3/14, Canaccord Genuity advised on the following M&A and
advisory transactions:
-
Canada Goose Inc. on its sale of a majority stake to Bain Capital
-
Ontario Teachers' Pension Plan on its acquisition of Burton's Holdings
Limited(5)
-
Dr. Jean-Claude Marian on the sale of a 15% stake in Orpéa to the Canada
Pension Plan Investment Board
-
William Investments Limited on the disposal of Norland Managed Services
Limited to CBRE Group, Inc.
-
Colfax Corporation on the acquisition of the Global Infrastructure and
Industry business of FläktWoods Group
-
Ontario Teachers' Pension Plan Board on its acquisition of Busy Bees
Holdings Limited (5)
-
Hartawan Holdings Limited on its reverse takeover of Wilton Resources
Corporation Limited
-
Afferro Mining Inc. on its disposal to International Mining and
Infrastructure Corporation PLC
-
Vitruvian Partners LLP on its acquisition of Royal London 360º Insurance
Company Limited
-
Cubic Corporation on its acquisition of Serco's Transportation Solutions
business
-
Chesnara PLC on the acquisition of Direct Line Life Insurance Company
Limited from Direct Line Insurance Group PLC
-
Qualium Investissement and MML Capital Partners on the disposal of Carré
Blanc & Cie to Nixen Partners
-
Safran Group on its joint venture with Albany International Corporation
-
Essar Steel Algoma Inc. on secured loan financing
-
Pacific Rim Mining Corporation on its sale of OceanaGold Corporation
-
Bregal Partners (AquaTerra Water Management, L.P.) on its acquisition of
Four Winds Energy Services Limited
-
Duke Street LLP on its strategic partnership with Tikehau Group
Canaccord Genuity Wealth Management (Global)
-
Globally, Canaccord Genuity Wealth Management generated $56.2 million in
revenue in Q3/14
-
Assets under administration in Canada and assets under management in the
UK and Europe and Australia were $29.0 billion at the end of Q3/14(2)
Canaccord Genuity Wealth Management (North America)
-
Canaccord Genuity Wealth Management (North America) generated $27.7
million in revenue and, after intersegment allocations, recorded a net
loss of $4.7 million before taxes in Q3/14
-
Assets under administration in Canada were $9.5 billion as at December
31, 2013, up 1% from $9.4 billion at the end of the previous quarter
and down 17% from $11.4 billion at the end of fiscal Q3/13(2)
-
Assets under management in Canada (discretionary) were $1.1 billion as
at December 31, 2013, up 14% from $935 million at the end of the
previous quarter and up 35% from $791 million at the end of fiscal
Q3/13(2)
-
As at December 31, 2013, Canaccord Genuity Wealth Management had 163
Advisory Teams(6), a decrease of 21 Advisory Teams from December 31, 2012 and no change
from September 30, 2013
Canaccord Genuity Wealth Management (UK and Europe)
-
Wealth management operations in the UK and Europe generated $27.0
million in revenue and, after intersegment allocations, and excluding
significant items, recorded net income of $3.5 million before taxes in
Q3/14(2)
-
Assets under management (discretionary and non-discretionary) were $19.0
billion (£10.8 billion) (2)
Non-IFRS Measures
The non-International Financial Reporting Standards (IFRS) measures
presented include assets under administration, assets under management,
book value per diluted common share and figures that exclude
significant items. Significant items include restructuring costs,
amortization of intangible assets, and acquisition-related expense
items, which include costs recognized in relation to both prospective
and completed acquisitions. Book value per diluted common share is
calculated as total common shareholders' equity divided by the number
of diluted common shares outstanding and, commencing in Q1/14, adjusted
for shares purchased under the NCIB and not yet cancelled, and
estimated forfeitures in respect of unvested share awards under
share-based payment plans.
Management believes that these non-IFRS measures will allow for a better
evaluation of the operating performance of Canaccord's business and
facilitate meaningful comparison of results in the current period to
those in prior periods and future periods. Figures that exclude
significant items provide useful information by excluding certain items
that may not be indicative of Canaccord's core operating results. A
limitation of utilizing these figures that exclude significant items is
that the IFRS accounting effects of these items do in fact reflect the
underlying financial results of Canaccord's business; thus, these
effects should not be ignored in evaluating and analyzing Canaccord's
financial results. Therefore, management believes that Canaccord's IFRS
measures of financial performance and the respective non-IFRS measures
should be considered together.
Selected financial information excluding significant items(1)
|
|
|
|
|
|
|
|
Three months ended
December 31
|
Quarter
-over-
quarter
change
|
Nine months ended
December 31
|
YTD-
over-
YTD
change
|
(C$ thousands, except per share and % amounts)
|
2013
|
2012
|
2013
|
2012
|
Total revenue per IFRS
|
$230,959
|
$230,003
|
0.4%
|
$601,496
|
$579,151
|
3.9%
|
Total expenses per IFRS
|
206,539
|
216,882
|
(4.8)%
|
568,919
|
608,840
|
(6.6)%
|
Significant items recorded in Canaccord Genuity
|
|
|
|
|
Restructuring costs
|
—
|
5,276
|
(100.0)%
|
5,486
|
9,671
|
(43.3)%
|
Acquisition-related costs
|
—
|
—
|
—
|
—
|
388
|
(100.0)%
|
Amortization of intangible assets
|
1,680
|
3,473
|
(51.6)%
|
5,040
|
11,282
|
(55.3)%
|
Significant items recorded in Canaccord Genuity
Wealth Management
|
|
|
|
|
|
|
Restructuring costs
|
—
|
1,034
|
(100.0)%
|
—
|
14,601
|
(100.0)%
|
Acquisition-related costs
|
—
|
431
|
(100.0)%
|
—
|
1,331
|
(100.0)%
|
Amortization of intangible assets
|
1,945
|
1,643
|
18.4%
|
5,585
|
4,255
|
31.3%
|
Significant items recorded in Corporate and Other
|
|
|
|
|
|
|
Restructuring costs
|
—
|
—
|
—
|
—
|
900
|
(100.0)%
|
Total significant items
|
3,625
|
11,857
|
(69.4)%
|
16,111
|
42,428
|
(62.0)%
|
Total expenses excluding significant items
|
202,914
|
205,025
|
(1.0)%
|
552,808
|
566,412
|
(2.4)%
|
Net income before taxes - adjusted
|
$28,045
|
$24,978
|
12.3%
|
$48,688
|
$12,739
|
282.2%
|
Income taxes - adjusted
|
6,818
|
4,525
|
50.7%
|
8,917
|
2,674
|
233.5%
|
Net income - adjusted
|
$21,227
|
$20,453
|
3.8%
|
$39,771
|
$10,065
|
295.1%
|
Earnings per common share - basic, adjusted
|
$0.18
|
$0.19
|
(5.3)%
|
$0.32
|
$0.02
|
n.m.
|
Earnings per common share - diluted, adjusted
|
$0.17
|
$0.17
|
—
|
$0.29
|
$0.02
|
n.m.
|
(1) Figures excluding significant items are non-IFRS measures. See
Non-IFRS Measures above.
n.m.: not meaningful
Fellow Shareholders
Two years ago, we made a strategic decision to acquire Collins Stewart
Hawkpoint to transform our business and substantially bolster our
relevance in key markets, take advantage of a distressed European
market and leverage the historical strength of the Canadian dollar.
Today, we are clearly seeing the benefits of this strategic decision,
which has allowed us to emerge as an important player in the resurgent
UK and US markets. The results of our fiscal third quarter demonstrate
the strength of our global business and the success of our efforts to
diversify our revenue streams. Importantly, 68% of revenue was earned
outside of Canada and we are in an excellent position to continue
providing clients with international perspectives from all of the
markets that we operate in.
This quarter featured the record performance of our UK-based businesses,
achieved by both our wealth management and capital markets divisions.
Our UK and European practice has once again showcased its pivotal role
in our global franchise and the exceptional quality of service we
provide our institutional, corporate and private clients in this very
important market.
For the three months ended December 31, 2013, Canaccord Genuity
generated $231 million of revenue, a 26% increase compared to the
previous quarter and a slight uptick from the strong performance
reported a year ago. Through our continued focus on controlling our
operating leverage, we lowered our expenses by 5% compared to the same
quarter last year, during which similar revenue levels were achieved.
Excluding significant items(7), the Company recorded net income of $21.2 million or net income of
$17.0 million available to common shareholders(8), earning $0.17 per diluted common share. On an IFRS basis, the Company
recorded net income of $18.3 million or $14.4 million available to
common shareholders(8), earning $0.14 per diluted common share.
Our balance sheet metrics indicate our ongoing commitment to a diligent
capital strategy, and at the end of the third quarter, Canaccord
Genuity had $428.9 million in working capital, $357.7 million in cash
and cash equivalents and $1.1 billion in shareholders' equity. During
the quarter, the Company purchased for cancellation 1,256,792 common
shares, and throughout our fiscal year to date(9), we have purchased 3,156,344 common shares for cancellation under our
normal course issuer bid/buy-back programme. Finally, I'm pleased to
confirm that our Board of Directors has approved a dividend of $0.05
this quarter.
Record Performance by UK-based Capital Markets Business
Canaccord Genuity's global capital markets division generated $171.2
million in revenue, a solid increase of 35% compared to the previous
quarter and a 3% increase compared to the same quarter last year.
Globally, we led or co-led 45 transactions, raising total proceeds of
$3.3 billion on behalf of our clients. As a result, we increased global
underwriting revenue by 80% compared to the previous quarter and by 95%
compared to the same period last year, a clear indicator of the
successful investment banking enterprise that we have developed across
our global platform.
In the UK and Europe, we generated $65.7 million in revenue for the
quarter, a 53% increase from the previous quarter, and a record result
for this group that was driven largely by the success of our advisory
and equity transaction leadership in this market. Compared to the
previous quarter, investment banking revenue increased by 119%, while
advisory revenue increased by 66%, highlighting the exceptional service
levels we provide our clients in this geography. We are consistently
showcasing the leading role we play in the UK mid-market space.
In Canada, the market began to show early signs of a recovery and our
Canadian capital markets practice returned to profitability during the
quarter. We generated $41.3 million in revenue, a 32% increase compared
to the previous quarter, while increasing expenses by only 1%.
Excluding significant items(1), this group earned net income before tax of $6.0 million.
We continue to be pleased with the performance of our US team, who
successfully increased revenue during the quarter by 10% to $48.3
million compared to the previous quarter, and by 28% compared to the
same period last year. This division has maintained a strong momentum
of capturing more lead mandates and broadening our sector coverage to
serve a growing client base in this geography. In addition, we made a
decision to grow our fixed income capabilities in the US that resulted
in a $2 million impact on our earnings this quarter. We anticipate a
similar impact next quarter, with the expectation that this group will
run on a break-even basis in the next fiscal year.
Canaccord Genuity's other international operations delivered record
metrics to our global business for the three months ended December 31,
2013, driven primarily by the performance of our partners in Australia
and Singapore. This group generated $16.0 million in revenue, an 88%
increase compared to the results recorded in the previous quarter, and
earned net income before tax and excluding significant items(1) of $4.6 million.
Wealth Management
Globally, Canaccord Genuity Wealth Management generated $54.7 million in
revenue during the quarter, the division's largest revenue contribution
during this fiscal year, and increased client assets on a global basis
to $29.0 billion.
Our UK-based wealth management division achieved record revenue since
joining our platform of $27.0 million and further increased assets
under management to $19.0 billion - a 45% increase in client assets
since we acquired this business in March 2012. This division continues
to be a key differentiator of our global franchise, through the broad
range of solutions and exceptional service levels provided by our
high-calibre team of investment professionals.
Wealth management revenue generated in North America increased to $27.7
million and discretionary assets under management rose to $1.1 billion,
a 35% increase compared to the same period last year. Looking ahead,
our priorities for this division will centre on enhancing our margins,
managing our costs, and growing the business through targeted
recruitment and training. In addition, we will be launching Global
Portfolio Solutions (GPS) in the spring, a proprietary asset management
product that will build out the investment solutions we offer our
clients. These initiatives will be overseen by Stuart Raftus, the new
President of our Canadian wealth management business, who we welcomed
to Canaccord Genuity on January 15, 2014. Stuart brings over 28 years
of industry experience to the firm and is very well suited to lead this
division.
Looking Forward
The decisions we've made to dramatically alter the revenue composition
of our business were pursued over the past several years in order to
provide our clients with differentiated global services and our
shareholders with significantly diversified revenue streams. Our fiscal
third quarter showcased the earnings power of our global business and
the important progress we've made in becoming a fully integrated,
collaborative global franchise. Our teams are working more effectively
together than ever before and are very optimistic about our near-term
prospects of success. I share in this enthusiasm as we look to further
enhance the global alignment of our product offering and distribution,
and continue to increase our relevance to clients.
Kind regards,
Paul D. Reynolds
President & CEO
ACCESS TO QUARTERLY RESULTS INFORMATION
Interested investors, the media and others may review this quarterly
earnings release and supplementary financial information at http://www.canaccordgenuitygroup.com/EN/IR/Pages/default.aspx.
CONFERENCE CALL AND WEBCAST PRESENTATION
Interested parties are invited to listen to Canaccord's third quarter
fiscal 2014 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 5, 2014 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 Eastern Daylight Time)
on Thursday, February 6, 2014. At that time, senior executives will
comment on the results for the third quarter of the fiscal 2014 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: http://www.canaccordgenuitygroup.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 in 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 Genuity Group Inc.'s Q3/14
earnings call. If a passcode is requested, please use 43452863.
A replay of the conference call can be accessed after 5:00 p.m. (Pacific
Time), 8:00 p.m. (Eastern Time) Wednesday, February 5, 2014 until March
31, 2014 at 416-849-0833 or 1-855-859-2056 by entering passcode
43452863 followed by the pound (#) sign.
ABOUT CANACCORD GENUITY GROUP INC.:
Through its principal subsidiaries, Canaccord Genuity Group Inc. (the
Company) is a leading independent, full-service financial services
firm, with operations in two principal segments of the securities
industry: wealth management and capital markets. Since its
establishment in 1950, the Company 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. The Company has offices in 11
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, Hong Kong, mainland China, Singapore,
Australia and Barbados. To us there are no foreign markets.TM
Canaccord Genuity Group 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.
FOR FURTHER INFORMATION, CONTACT:
North American media:
Scott Davidson
Executive Vice President, Global
Head of Corporate Development &
Strategy
Phone: 416-869-3875
Email: scott.davidson@canaccord.com
London media:
Bobby Morse or Ben Romney
Buchanan Communications (London)
Phone: +44 (0) 207 466 5000
Email: bobbym@buchanan.uk.com
|
Investor relations inquiries:
Andrea Sergautis
Manager, Investor Relations &
Communications
Phone: 416-687-5507
Email: andrea.sergautis@canaccord.com
|
Broker:
Oliver Hearsey
RBC Europe Limited
Phone: +44 (0) 20 7653 4000
Email: oliver.hearsey@rbccm.com
|
__________________________________
1 Excluding significant items. See Non-IFRS Measures.
2 See Non-IFRS Measures.
3 Net income available to common shareholders is calculated as net income
adjusted for non-controlling interests and preferred share dividends.
4 Source: Transactions over $1.5 million. Internally sourced information.
5 Buy-side debt advisory mandate
6 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.
7 A non-IFRS measure.
8 Net income available to common shareholders is calculated as net income
adjusted for non-controlling interests and preferred share dividends.
9 As of February 3, 2014.
SOURCE Canaccord Genuity Group Inc.