TORONTO, August 3, 2016 /PRNewswire/ --
Excluding significant items, first quarter earnings per common
share of $0.05[1]
Return to profitability driven
by performance of Canadian and Australian capital markets business
and wealth management operations in the UK & Europe
(All dollar amounts are stated in Canadian dollars unless
otherwise indicated)
During the first quarter of fiscal 2017, the quarter ended
June 30, 2016, Canaccord Genuity
Group Inc. (Canaccord Genuity, the Company, TSX: CF) generated
$206.2 million in revenue. Excluding
significant items[1], the Company
recorded net income of $8.1 million
or net income of $4.3 million
attributable to common
shareholders[2](earnings per common share of
$0.05). Including all significant
items, on an IFRS basis, the Company recorded net income of
$7.5 million or net income
attributable to common
shareholders[2] of $3.7 million (earnings per common share of
$0.04).
"During the quarter we made strong progress to achieve most of
our cost reduction initiatives and we delivered on our commitment
to strengthen our alignment with our shareholders through the
completion of our employee private placement," said Dan Daviau, President & CEO of Canaccord
Genuity Group Inc. "While we are encouraged by improving
activity levels in Canada,
Australia and the U.S.,
we expect continuing challenges for our UK and Europe capital markets operations given the
uncertainty in that region. In addition, the continued
stability of our wealth business in the UK and
Europe and the return to profitability of our Canadian wealth
business provide added confidence in our outlook."
First Quarter of Fiscal 2017 vs. First Quarter of
Fiscal 2016
- Excluding significant items, revenue of $205.0 million, a decrease of 4.4% or
$9.5 million from $214.5 million[1]
- Excluding significant items, expenses of $193.9 million, a decrease of 2.6% or
$5.2 million from $199.1 million[1]
- Revenue of $206.2 million, a
decrease of 3.9% or $8.3 from
$214.5 million
- Expenses of $196.2 million, a
decrease of 2.9% or $5.8 million from
$202.0 million
- Excluding significant items, earnings per common share of
$0.05 compared to earnings per common
share of $0.10[1]
- Excluding significant items, net income of $8.1 million compared to net income of
$13.3
million[1]
- Net income of $7.5 million
compared to net income of $11.0
million
- Earnings per common share of $0.04 compared to earnings per common share of
$0.08
First Quarter of Fiscal 2017 vs Fourth Quarter of Fiscal
2016
- Excluding significant items, revenue of $205.0 million, an increase of 2.0% or
$4.1 million from $200.9 million[1]
- Excluding significant items, expenses of $193.9 million, a decrease of 5.1% or
$10.4 million from $204.3 million[1]
- Revenue of $206.2 million, an
increase of 2.6% or $5.3 million from
$200.9 million
- Expenses of $196.2 million, a
decrease of 14.0% or $32.0 million
from $228.2 million
- Excluding significant items, earnings per common share of
$0.05 compared to a loss per common
share of $0.06[1]
- Excluding significant items, net income of $8.1 million compared to a net loss of
$2.1
million[1]
- Net income of $7.5 million
compared to a net loss of $22.7
million
- Earnings per common share of $0.04 compared to a loss per common share of
$0.29
Financial Condition at end of First Quarter Fiscal 2017 vs.
Fourth Quarter Fiscal 2016
- Cash and cash equivalents balance of $282.2 million, a decrease of $146.1 million from $428.3
million
- Working capital of $385.7
million, an increase of $4.4
million from $381.3
million
- Total shareholders' equity of $735.7
million, a decrease of $14.2
million from $749.9
million
- Book value per diluted common share of $4.75, a decrease of $0.24 from $4.99[3]
- On August 3, 2016, the Board of
Directors considered the Company's dividend policy in the context
of the market environment and the Company's business activity and
approved a continued suspension of the quarterly common dividend.
This suspension will be reviewed quarterly and a determination will
be made on the basis of business conditions and profitability.
- On August 3, 2016, the Board of
Directors approved a cash dividend of $0.34375 per Series A Preferred Share payable on
September 30, 2016 with a record date
of September 16, 2016, and a cash
dividend of $0.359375 per Series C
Preferred Share payable on September 30,
2016 to Series C Preferred shareholders of record as at
September 16, 2016.
SUMMARY OF OPERATIONS
Corporate
- On June 6, 2016 Canaccord Genuity
Group Inc. announced a non-brokered private placement ("Private
Placement") to employees of the Company at a purchase price of
C$4.17 per Unit, with each Unit
consisting of one common share of the Company and one-half of one
Common Share purchase warrant. Each whole warrant will entitle the
holder to acquire one common share of the Company at an exercise
price of $4.99 for a period of six
months following the third anniversary of closing. Proceeds of the
Private Placement were used to fund the Company's employee benefits
trusts, established under its long term incentive plan, which will
purchase common shares in the market to cover grants of restricted
share units to those employees who have participated in the Private
Placement
- The Company issued an aggregate of 6,876,824 Units at a price
of C$4.17 per Unit in connection with
the Private Placement (6,730,561 Units were issued prior to
June 30, 2016 with the balance issued
after June 30, 2016)
- On June 30, 2016, the Company
completed its sale of Canaccord Genuity Singapore Pte Ltd. to SAC
Capital Private Limited.
Capital Markets
- Canaccord Genuity participated in 86 investment banking
transactions globally, raising total proceeds of C$10.3
billion[4] during fiscal
Q1/17
- Canaccord Genuity led or co-led 34 transactions globally,
raising total proceeds of C$1.1
billion[4
]during fiscal Q1/17
- Significant investment banking transactions for Canaccord
Genuity during fiscal Q1/17 include:
- AUD$20.0 million for Airxpanders Inc. on the ASX
- AUD$60.5 million for TFS Corporation Limited on the ASX
- AUD$50.0 million for NetComm Wireless Limited on the ASX
- AUD$39.8 million for Redbubble Limited on the ASX
- AUD$10 million for Oklo Resources Limited on the ASX
- AUD$32.0 million for Yowie Group Limited on the ASX
- AUD$20.0 million for Altura Mining Limited on the ASX
- £19.1 million for Tyman Plc on the LSE
- £16.8 million for Goals Soccer Centres Plc on the LSE
- £27.2 million for Mortgage Advice Bureau (Holdings) plc on the
LSE
- £40.0 million for Vernalis Plc on the LSE
- £30.3 million for The Renewables Infrastructure Group on the
LSE
- £100 million bond issue for Burford Capital on LSE
- US$28.8 million for Abraxas
Petroleum Corp on NASDAQ
- US$22.5 million for SCYNEXIS,
Inc. on NASDAQ
- US$70.0 million Initial Public
Offering for Selecta Biosciences, Inc. on NASDAQ
- US$152.0 million for Renewable
Energy Group, Inc. on NASDAQ
- US$172.5 million Initial Public
Offering for Twilio, Inc. on NYSE
- C$65.0 million for DHX Media Ltd.
on the TSX
- C$60.1 million for ProMetic Life
Sciences Inc. on the TSX
- C$32.3 million for Sabina Gold & Silver Corp. on the TSX
- US$109.3 million for Mainstreet
Health Investments Inc. on the TSX
- C$49.1 million for Rye Patch Gold
Corp. on the TSXV
- C$150.0 million for NYX Gaming
Group on the TSXV
- C$20.7 million for Seabridge Gold
Inc. on the TSX
- In Canada, Canaccord Genuity
participated in raising $275.4
million for government and corporate bond issuances during
fiscal Q1/17
- Canaccord Genuity generated advisory revenues of $39.1 million during fiscal Q1/17, an increase of
$17.4 million or 80.3% compared to
the same quarter last year
- During fiscal Q1/17, significant M&A and advisory
transactions included :
- NYX in connection with its acquisition of OpenBet for £270
million
- Tahoe Resources Inc. on its C$945.0
million acquisition of Lake Shore Gold Corp.
- Reservoir Minerals on its merger with Nevsun Resources for
total consideration of US$440.0
million, and exercise of its rights of first offer related
to Reservoir's Timok Copper Project for total consideration of
US$262.5 million.
- Plug Power Inc. on its US$40.0
million loan facility
- GuestLogix on the US$38.5 million
sale of its OpenJaw Business to TravelSky Technology Ltd.
- Claude Resources Inc. on its C$337.0
million sale to Silver Standard Resources Inc.
- MeetMe on its US$54.6 million
acquisition of Skout
- Blacksmith Applications, Inc. on its sale to Strattam
Capital
- Seabridge Gold Inc. on its acquisition of SnipGold Inc.
- Maxwell Technologies, Inc. on the US$
21.0 million sale of its Microelectronics product line to
Data Device Corporation
- DLH Holdings in connection with its US$38.8 million acquisition of Danya
International
- The Luminaires Group on its recapitalization by Sentinel
Capital Partners
- Daintree Networks, Inc. on its sale to Current, a subsidiary of
General Electric
- Lyceum Capital Partners on the £50 million acquisition of Sabio
Limited
Canaccord Genuity Wealth Management
(Global)
- Globally, Canaccord Genuity Wealth Management generated
$63.9 million in revenue in
Q1/17
- Assets under administration in Canada and assets under management in the UK
& Europe and Australia were $33.0
billion at the end of Q1/17[3]
Canaccord Genuity Wealth Management (North America)
- Canaccord Genuity Wealth Management (North America) generated $29.5 million in revenue and, after intersegment
allocations and before taxes, recorded a net income of $0.4 million in Q1/17
- Assets under administration in Canada were $9.8
billion as at June 30, 2016 an
increase of 6.8% from $9.2 billion at
the end of the previous quarter and a decrease of 7.8% from
$10.6 billion at the end of fiscal
Q1/16[3]
- Assets under management in Canada (discretionary) were $1.27 billion as at June
30, 2016, an increase of 0.9% from $1.26 billion at the end of the previous quarter
and a decrease of 10.6% from $1.4
billion at the end of fiscal
Q1/16[3]
- Canaccord Genuity Wealth Management had 138 Advisory
Teams[5]at the end of fiscal Q1/17, a
decrease of one Advisory Team from March 31,
2016 and a decrease of nine from June
30, 2015
Canaccord Genuity Wealth Management (UK & Europe)
- Wealth management operations in the UK & Europe generated $33.2
million in revenue and, after intersegment allocations, and
excluding significant items, recorded net income of $6.4 million before taxes in
Q1/17[1]
- Assets under management (discretionary and non-discretionary)
were $22.4 billion (£12.9 billion) as
at June 30, 2016, a decrease of 1.8%
from $22.8 billion (£12.2 billion) at
the end of the previous quarter and a decrease of 1.8% from
$22.8 billion (£11.6 billion) at
June 30,
2015[3].In local currency
(GBP), assets under management at June 30,
2016 increased by 5.7% compared to March 31, 2016 and 11.2% compared to Q1/16.
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 acquired in
connection with a business combination, impairment of goodwill and
other assets, acquisition-related expense items, which include
costs recognized in relation to both prospective and completed
acquisitions, as well as gains or losses related to business
disposals including recognition of realized translation gains on
the disposal of foreign operations. Book value per diluted common
share is calculated as total common shareholders' equity adjusted
for assumed proceeds from the exercise of options and warrants
divided by the number of diluted common shares outstanding
including estimated amounts in respect of share issuance
commitments including options and warrants, as applicable, 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 the Company'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 the
Company'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 the Company's business; thus, these effects should not
be ignored in evaluating and analyzing the Company's financial
results. Therefore, management believes that the Company's IFRS
measures of financial performance and the respective non-IFRS
measures should be considered together.
Selected financial information excluding significant
items[1]
Quarter-over-
(C$ thousands, except per share Three months ended June 30 quarter change
and % amounts) 2016 2015
Total revenue per IFRS $206,180 $214,454 (3.9)%
Total expenses per IFRS 196,169 202,007 (2.9)%
Significant items recorded in
Canaccord Genuity
Amortization of
intangible assets
(expenses) 818 1,410 (42.0)%
Net gain realized on
business disposal
(revenue) (1,193) - n.m.
Significant items recorded in
Canaccord Genuity Wealth
Management
Amortization of
intangible assets
(expenses) 1,405 1,467 (4.3)%
Total significant items 1,030 2,877 (64.2)%
Total revenue excluding
significant items 204,987 214,454 (4.4)%
Total expenses excluding
significant items 193,946 199,130 (2.6)%
Net income before taxes - adjusted $11,041 $15,324 (27.9)%
Income taxes - adjusted 2,902 2,005 44.7%
Net income - adjusted $8,139 $13,319 (38.9)%
Earnings per common share - basic,
adjusted $0.05 $0.10 (50.0)%
Earnings per common share -
diluted, adjusted $0.05 $0.10 (50.0)%
(1) Figures excluding significant items are non-IFRS
measures. See Non-IFRS Measures on page 4.
n.m.: mot meaningful
Fellow Shareholders:
Our first fiscal quarter was again characterized by heightened
volatility across global markets. Following the UK referendum vote
to leave the European Union in late June ("Brexit"), global stock
markets initially sold off before staging a partial recovery during
the last week of the quarter. Despite the excessive volatility
throughout the period, the S&P/TSX Composite finished the
quarter 5.1% higher on a total return basis, primarily owing to a
safe haven gold rally and continued oil price appreciation. The
less resource-centric S&P 500 posted more modest gains of 2.5%
for the quarter, while the MSCI EAFE index declined 1.2% on the
back of weak European performance related to the UK referendum.
Delivering on our commitment to reduce operating expenses and
drive profitability
Despite industry headwinds and the environment of persistent
uncertainty leading up to the Brexit referendum, I am pleased to
report that we have returned our business to profitability during
the first fiscal quarter of 2017. We achieved this improved result
by managing our business more effectively across our platform,
while maintaining a strong client focus in an improving, but still
challenging environment.
Excluding significant items and incentive compensation, in the
first fiscal quarter we have reduced our firm wide operating
expenses by 6.8% compared to the same period last year and our
general and administrative costs by 11.8% on a year-over-year
basis. Since we began our restructuring initiatives six months ago,
we have achieved most of our cost reduction objectives, with an
additional benefit from the fluctuation in foreign exchange rates
towards the end of our first fiscal quarter. We continue to
explore additional expense reduction measures and we are well on
track to deliver our targeted $30
million reduction.
Improving fundamentals in Canadian and Australian capital
markets
During the first quarter of fiscal 2017, Canaccord Genuity
participated in 86 transactions globally, to raise total proceeds
of $10.3 billion for growth
companies. Our global capital markets operations generated revenues
of $140.6 million during the quarter,
an increase of 1.4% compared to the previous fiscal quarter. The
strongest contributions came from our Canadian and Australian
capital markets businesses, which recorded sequential revenue
increases of 25% and 15.4% respectively. This performance was
offset by a small loss in our US capital markets operation, and
more substantially by losses in our UK & Europe capital markets business, which was the
most impacted by general uncertainty leading up to the recent
Brexit referendum.
Total financing activity in our key markets was lower compared
to the same period last year, a result of ongoing broad market
volatility. With the exception of our Australian investment
banking operation, all regions recorded a decline in investment
banking revenue on a year-over-year basis. However, I am pleased to
report that investment banking revenue increased by 117.9% when
compared to our most recent fiscal quarter, and we are encouraged
by the improving activity levels in our core focus sectors and
specifically in the natural resource sectors, a historic area of
strength for our business.
Revenue generated from advisory fees during our first quarter
increased by 80.3% on a year-over-year basis. Our Canadian capital
markets operation reported the highest increase in advisory fees
revenue of 362%, mainly due to the completion of Reservoir Minerals
Inc., NYX Gaming Group and Luminaires Group transactions during the
quarter. The competitive environment for independent investment
banks in Canada is changing
rapidly, and the strength of our local team in combination with our
differentiated global platform leaves Canaccord Genuity very well
positioned for long term success in this market. Our US operations
also reported an increase of $7.3
million in advisory fees revenue compared to the first
quarter of last year, further strengthening the diversity of our
revenue streams in the region. Offsetting these increases was a
decline of $8.0 million in our UK
& Europe operations compared
to the same period last year.
Volatile market conditions helped our trading operations deliver
strong results. On a year-over-year basis, revenues generated
through principal trading activities increased by 22.1%, to
$27.5 million. Our US capital markets
business was the primary contributor to this result, which recorded
an increase of 12.3%, driven by strong performance by our
International Equities Group, in addition to stronger fixed income
and options activity. In an environment of continued pressure on
traditional equity commissions, this business has successfully
shifted its revenue mix into areas of near-term growth.
In recent months we have undertaken important initiatives to
streamline our UK & Europe
capital markets business that we expect will help this business to
better withstand challenging market conditions. We anticipate that
the ongoing uncertainty related to the Brexit referendum result
will continue to put pressure on near- to medium-term capital
raising activities in the region. However, our efforts to better
align our investment banking, advisory and sales & trading
teams across regions ensures that clients in this geography can
benefit from the perspectives and resources available across our
global platform, at a time when they need us most.
In any operating environment, we continue to focus on driving
profitable growth with a heightened emphasis on improving
efficiencies across our operation in a client-centric manner.
We are pleased to see activity levels improving, and we expect that
our ongoing efforts to realign our businesses will improve our long
term profitability.
Stable contribution from UK & Europe Wealth
Management
Our global wealth management operations generated revenue of
$63.9 million during our first fiscal
quarter.
Our wealth management operations in the UK & Europe have continued to increase assets under
management during the quarter in local currency terms, a testament
to the world class product offering and commitment to clients
demonstrated by our asset management, portfolio management and
wealth planning teams in the region. At the end of the fiscal
quarter assets under management measured in local currency
increased by 11.2%, to £12.9 billion compared to the first quarter
of the last fiscal year. With the benefit of our recently upgraded
platform and a commitment to exceptional client service, I am also
pleased to say that our teams successfully managed the elevated
trading volumes following the news of the Brexit referendum
outcome. This strong franchise continues to deliver stable,
recurring revenues and net income for our firm.
I am also pleased to report that our Canadian wealth management
business has returned to profitability for the first time since the
second quarter of fiscal 2012. While assets under administration
and management in our Canadian wealth management operations were
negatively impacted by lower market values and a reduced number of
advisory teams when compared to the same period a year ago, income
before income taxes for the first fiscal quarter of 2017 was
$0.4 million, up from a loss of the
same amount during the same period last year. This result was
largely driven by our ongoing expense reduction initiatives.
Looking ahead, we will continue to focus on improving recurring
revenue growth across our wealth management operations, to help
offset the inherent volatility of our global capital markets
businesses.
Strengthening alignment with our shareholders and changes to
our Board of Directors
A key priority for our organization is ensuring that employees
and senior managers are directly aligned with the best interests of
our shareholders. We implemented a program to increase share
ownership by our most senior, revenue producing employees during
the quarter. To accomplish this we initiated and closed a
private placement of common shares and warrants to employees which
was fully subscribed. I am pleased to report that employees now own
approximately 40% of common shares on a fully diluted basis.
We made the decision to reduce the size of our board and
consequently Dennis Miller and
Bill Eeuwes have decided not to
stand for re-election to the Board of Directors at our upcoming
Annual General Meeting. I would like to thank both Dennis and Bill
for their wise counsel and valuable contributions.
Looking ahead
Broad market fundamentals indicate that we should be entering an
improving environment for our business and there are signs of
improving activity levels across core focus sectors.
As the world reacts to the impact of the recent outcome of the
Brexit referendum, I assure you that our commitment to our
businesses and our clients across our capital markets and wealth
management operations in the UK & Europe has not changed. While the long
term outcome of this development is uncertain, we remain focused on
the opportunities we can create for our business and for our
clients and our business.
We remain committed to delivering our strategic priorities for
our clients and our shareholders and I thank you for your ongoing
support.
Dan Daviau
President & CEO
Canaccord Genuity Group Inc.
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/FinReports/Pages/default.aspx
CONFERENCE CALL AND WEBCAST PRESENTATION
Interested parties are invited to listen to Canaccord Genuity's
fiscal first quarter 2017 results conference call, via live webcast
or a toll free number. The conference call is scheduled for
Thursday, August 4, 2016 , 2016 at
5:00 a.m. Pacific time, 8:00 a.m. Eastern time, 1:00 p.m. UK time, 8:00
p.m. China Standard Time, and 10:00
p.m. Australia EST. During the call, senior executives will
comment on the results and respond to questions from analysts and
institutional investors.
The conference call may be accessed live and archived on a
listen-only basis online 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 outside Toronto)
- 0-800-051-7107 (toll free from the United Kingdom)
- 0-800-917-449 (Toll free from France)
- 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)
- 800-017-8071 (toll free from United
Arab Emirates)
Please ask to participate in the Canaccord Genuity Group Inc.
Q1/17 results call. If a passcode is requested, please use
32141306.
A replay of the conference call will be available on
August 4, 2016, after 8:00 a.m. (Pacific Time), 11:00 a.m. (Eastern Time) 4:00 p.m. (UK Time), 11:00
p.m. (China Standard Time), and on August 5, 2016, at 1:00
a.m. (Australia EST Time) until September 19, 2016 at 416-849-0833 or
1-855-859-2056 by entering passcode 32141306 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 10 countries worldwide, including wealth management
offices located in Canada, the UK,
Guernsey, Jersey, the Isle of Man and Australia. Canaccord Genuity, the
international capital markets division, operates in Canada, the US, the UK, France, Ireland, Hong Kong,
China, Australia and
Dubai. To us there are no foreign
markets.[TM]
Canaccord Genuity Group Inc. is publicly traded under the symbol
CF on the TSX. Canaccord Genuity Series A Preferred Shares are
listed on the TSX under the symbol CF.PR.A. Canaccord Genuity
Series C Preferred Shares are listed on the TSX under the symbol
CF.PR.C.
FOR FURTHER INFORMATION, CONTACT:
Investor and media relations inquiries:
Christina Marinoff
Vice President, Investor Relations and Communications
Phone: +1-416-687-5507
Email: christina.marinoff@canaccord.com
http://www.canaccordgenuitygroup.com
Investor and media relations inquiries: Christina Marinoff, Vice President, Investor
Relations and Communications, Phone: 416-687-5507, Email:
christina.marinoff@canaccord.com, http://www.canaccordgenuitygroup.com
______________________________________________________
[1] Figures excluding significant items are non-IFRS measures. See
Non-IFRS measures on pages 4.
[2] Net income attributable to common shareholders is calculated as
the net income adjusted for non-controlling interests and preferred
share dividends.
[3] See Non-IFRS Measures on pages 4.
[4] Transactions over $1.5 million.
Internally sourced information.
[5] 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.
None of the information on the Company's websites
at http://www.canaccordgenuity.com
,http://www.canaccordgenuitygroup.com,
and http://www.canaccordgenuity.com/cm should be considered
incorporated herein by reference.