1st Quarter Results

Canaccord Financial Inc. Reports First Quarter Fiscal 2014 Results Excluding significant items, earned net income of $11.8 million during thequarter(1) (All dollar amounts are stated in Canadian dollars unless otherwise indicated) TORONTO, Aug. 6, 2013 /CNW/ - In the first quarter of fiscal 2014, the quarterended June 30, 2013, Canaccord Financial Inc. (Canaccord, the Company, TSX: CF,LSE: CF.) generated $187.2 million in revenue. Excluding significant items(1)(a non-IFRS measure), the Company recorded net income of $11.8 million, or$0.09 per diluted common share. Including all expense items, on an IFRS basis,the Company recorded net income of $7.9 million, or $0.06 per diluted commonshare. In addition, the Company announces that Canaccord Financial Inc. will berebranded Canaccord Genuity Group Inc. on October 1, 2013. "Our Q1 results showcased the early benefits of our expanded global platform.This was a record quarter for our US division and another solid performance byour UK and European operations. While challenging market conditions continuedin some of our core markets, Canaccord Genuity's firm-wide cost containmentinitiatives continued to deliver increased value for our shareholders," statedPaul Reynolds, President and CEO of Canaccord Financial Inc. "We will befocusing on further enhancing the operational efficiency of our businessthrough targeted investments in our back-office infrastructure and upgradingelements of our support services." Mr. Reynolds continued: "Notably, 67% of our global revenue, and 96% ofadjusted net income after tax, was generated outside of Canada, a strongreflection of our diversification strategy." First quarter of fiscal 2014 vs. fourth quarter of fiscal 2013 - Revenue of $187.2 million, down 14% or $30.8 million from $218.0million - Excluding significant items, expenses of $174.5 million, down 13% or$26.0 million from $200.5 million(1) - Expenses of $178.1 million, down 16% or $33.9 million from $212.0million - Excluding significant items, net income of $11.8 million compared tonet income of $15.6 million (1) - Net income of $7.9 million compared to net income of $6.4 million - Excluding significant items, diluted earnings per common share (EPS)of $0.09 compared to diluted EPS of $0.12 in the fourth quarter of fiscal 2013(1) - Diluted EPS of $0.06 compared to diluted EPS of $0.04 in the fourthquarter of fiscal 2013 First quarter of fiscal 2014 vs. first quarter of fiscal 2013 - Revenue of $187.2 million, up 15% or $24.7 million from $162.5million - Excluding significant items, expenses of $174.5 million, down 4% or$7.2 million from $181.7 million (1) - Expenses of $178.1 million, down 5% or $8.9 million from $187.0million - Excluding significant items, net income of $11.8 million compared toa net loss of $16.3 million (1) - Net income of $7.9 million compared to a net loss of $20.6 million - Excluding significant items, diluted EPS of $0.09 compared to adiluted loss per common share of $0.20(1) - Diluted EPS of $0.06 compared to a diluted loss per common share of$0.24 Financial condition at end of first quarter fiscal 2014 vs. fourth quarterfiscal 2013 - Cash and cash equivalents balance of $380.9 million, down $110.1million from $491.0 million - Working capital of $408.8 million, up $15.1 million from $393.7million - Total shareholders' equity of $1.1 billion, up $19.5 million from$1.0 billion - Book value per diluted common share of $7.87, up $0.19 from $7.68 (1) - On August 6, 2013, the Board of Directors approved a quarterlydividend of $0.05 per common share payable on September 10, 2013 with a recorddate of August 30, 2013 - On August 6, 2013, the Board of Directors also approved a cashdividend of $0.34375 per Series A Preferred Share payable on September 30, 2013with a record date of September 13, 2013, and a cash dividend of $0.359375 perSeries C Preferred Share payable on September 30, 2013 to Series C Preferredshareholders of record as at September 13, 2013 SUMMARY OF OPERATIONS Corporate - During the fiscal first quarter, Canaccord Financial Inc. repurchased564,504 of its common shares under the terms of its normal course issuer bid(NCIB) - Subsequent to the end of the quarter and as of August 2, 2013,Canaccord Financial Inc. repurchased 278,968 of its common shares under theterms of its NCIB; on July 31, 2013, 843,472 common shares were cancelled. - On August 6, 2013, the Company filed a notice for the renewal of itsNCIB to provide for the ability to purchase, at the Company's discretion, up toa maximum of 5,136,948 common shares through the facilities of the TSX duringthe period from August 13, 2013 to August 12, 2014. The purpose of anypurchases under this program is to enable the Company to acquire shares forcancellation. The maximum number of shares that may be purchased represents5.0% of the Company's outstanding common shares. - Subsequent to the end of the quarter, on July 9, 2013, Canaccordannounced that Tim Hoare has stepped down as Chairman of Canaccord GenuityLimited. Mr. Hoare is continuing his involvement with Canaccord as a member ofCanaccord Financial's Global Advisory Board. - Subsequent to the end of the quarter and related to the above, onJuly 9, 2013, Canaccord announced that Paul Reynolds assumed the position ofChairman of Canaccord Genuity Limited Capital Markets - Canaccord Genuity led or co-led 36 transactions globally, raisingtotal proceeds of C$1.7 billion(2) during fiscal Q1/14 - Canaccord Genuity participated in 82transactions globally, raisingtotal proceeds of C$5.9 billion(2) during fiscal Q1/14 - During fiscal Q1/14, Canaccord Genuity led or co-led the followingtransactions : - US$345 million for 3D Systems on the NYSE - C$184.1 million for Pure Industrial Real Estate Trust on the TSX - C$172.5 million for Artis REIT on the TSX - US$90.1 million for Synergy Pharmaceuticals on the NASDAQ - US$84.2 million for Emerald Oil, Inc. on the NYSE - C$69.0 million for HealthLease Properties REIT on the TSX - C$63.5 million for Halogen Software Inc. on the TSX - £60.7 million for Tyman PLC on AIM - US$57.9 million for Novadaq Technologies Inc. on the NASDAQ - C$51.7 million for MBAC Fertilizer Corp. on the TSX - AUD$50.0 million for Sundance Energy Limited on the ASX - £39.9 million for Brewin Dolphin Inc. on the LSE - £37.1 million for Lombard Medical Technologies PLC on AIM - US$35.0 million for Pure Multi-Family REIT LP on the TSX Venture - US$32.7 million for GW Pharmaceuticals PLC on the NASDAQ - AUD$34.4 million for Bucaneer Energy Limited on the ASX - US$28.1 million for Mast Therapeutics, Inc. on the NYSE - £19.7 million for Mears Group PLC on the LSE - In Canada, Canaccord Genuity raised $209.5 million for governmentbond issuances and $24.3 million for corporate bond issuances during fiscal Q1/14 - Canaccord Genuity generated advisory revenues of $35.9 million duringfiscal Q1/14, an increase of 43% compared to the same quarter last year - During fiscal Q1/14, Canaccord advised on the following M&A andadvisory transactions: - Encore Capital Group on their acquisition of Cabot Credit Managementfrom JC Flowers & Co. - Montagu Private Equity LLP on its disposal of Unifeeder A/S to NordicCapital Ltd. - KEYreit on its acquisition by Plazacorp Retail Properties Ltd. - Palomar Medical Technologies, Inc. on its acquisition by Cynosure,Inc. - EACOM Timber Corporation on its sale to Kelso & Company - Pure Gym Limited on its sale to CCMP - Régie Linge Distribution on the restructuring of its debt facilities - Kingfisher PLC on its acquisition of Bricostore Romania - SAExploration Holdings, Inc. on the merger with Trio Merger Corp. - Ares Capital Europe Limited and Toscafund Asset Management LLP ontheir acquisition of Healthcare Locums PLC and the restructuring of its bankingfacilities - Earth Video Camera Inc. on its reverse takeover transaction withUrthecast Corp. - Petrogas Global Limited on the acquisition of its debt facilities - TCR Capital on its disposal of Laboratories Chemineau to Groupe Anjac - Cub Energy Inc. on its acquisition of TechnoGasIndustria - Solais Lighting Inc. on its acquisition by PowerSecure International,Inc. - Thermal Technology LLC on its acquisition by GT Advanced TechnologiesInc. - BENEV Capital Inc. on the sale of its Saint Ambroise waste treatmentplant Canaccord Genuity Wealth Management (Global) - Globally, Canaccord Genuity Wealth Management generated $54.6 millionin revenue - Assets under administration in Canada and assets under management inthe UK and Europe, and Australia, were $25.8 billion at the end of Q1/14 (1) Canaccord Genuity Wealth Management (North America) - Canaccord Genuity Wealth Management (North America) generated $26.8million in revenue and, after intersegment allocations, recorded a net loss of$5.1 million before taxes in Q1/14 - Assets under administration in Canada were $9.3 billion as at June30, 2013, down 11% from $10.4 billion at the end of the previous quarter anddown 29% from $13.1 billion at the end of fiscal Q1/13 (1) - Assets under management in Canada (discretionary) were $880 millionas at June 30, 2013, up 5% from $835 million at the end of the previous quarterand up 24% from $709 million at the end of fiscal Q1/13(1) - As at June 30, 2013, Canaccord Genuity Wealth Management had 173Advisory Teams(3), a decrease of 96 Advisory Teams from June 30, 2012 and adecrease of five from March 31, 2013 Canaccord Genuity Wealth Management (UK and Europe) - Wealth management operations in the UK and Europe generated $27.0million in revenue and, after intersegment allocations, and excludingsignificant items, recorded net income of $5.1 million before taxes in Q1/14 - Assets under management (discretionary and non-discretionary) were$16.1 billion (£10.1 billion) Non-IFRS MeasuresThe non-International Financial Reporting Standards (IFRS) measures presentedinclude assets under administration, assets under management, book value perdiluted common share and figures that exclude significant items. Significantitems include restructuring costs, amortization of intangible assets, andacquisition-related expense items, which include costs recognized in relationto both prospective and completed acquisitions. Management believes that thesenon-IFRS measures will allow for a better evaluation of the operatingperformance of Canaccord's business and facilitate meaningful comparison ofresults in the current period to those in prior periods and future periods.Figures that exclude significant items provide useful information by excludingcertain items that may not be indicative of Canaccord's core operating results.A limitation of utilizing these figures that exclude significant items is thatthe IFRS accounting effects of these items do in fact reflect the underlyingfinancial results of Canaccord's business; thus, these effects should not beignored in evaluating and analyzing Canaccord's financial results. Therefore,management believes that Canaccord's IFRS measures of financial performance andthe respective non-IFRS measures should be considered together. Selected financial information excluding significant items Three months ended Quarter- June 30 over-quarter(C$ thousands, except per share and % amounts) 2013 2012 change Total revenue per IFRS $187,231 $162,549 15.2% Total expenses per IFRS $178,118 $187,048 (4.8)% Significant items recorded in Canaccord Genuity Amortization of intangible assets 1,702 4,373 (61.1)% Significant items recorded in Canaccord GenuityWealth Management Amortization of intangible assets 1,889 998 (89.3)% Total significant items 3,591 5,371 (33.1)% Total expenses excluding significant items 174,527 181,677 (3.9)% Net income (loss) before taxes - adjusted $12,704 $(19,128) 166.4% Income taxes (recovery) - adjusted 894 (2,833) 131.6% Net income (loss) - adjusted $11,810 $(16,295) 172.5% Earnings (loss) per common share - basic, $0.10 $(0.20) 150.0%adjusted Earnings (loss) per common share - diluted, $0.09 $(0.20) 145.0%adjusted Fellow shareholders: Our results this quarter reflect the progress we've made in diversifying ourrevenue streams, growing our market position globally, and enhancing ourrelevance to our clients. While our overall performance is in line with theslower global market environment, we made great strides in capturing the costand revenue synergies of our significantly expanded platform. Thisdiversification is evidenced by two-thirds of our revenue this quarter comingfrom outside of Canada. Canaccord Genuity strives to provide our clients with global service anddifferentiated ideas. We have worked diligently to strengthen our cross-bordercollaboration in an effort to provide our clients with increased globalopportunities. We have strong teams in each of our geographies, and we'reworking hard to ensure our clients receive exceptional service and our globalperspective. Our new slogan - to us there are no foreign markets - showcasesthe benefits we offer through our global platform. In this challenging market environment, Canaccord Genuity increased revenue by15% compared to the same quarter last year. We have established a culture ofcost containment within the firm, and during the quarter, we successfullylowered overall expense levels by 5% compared to the same quarter last year.This decrease was driven by lowering our overhead expenses, adjusting ourcompensation levels and consolidating office space. In addition, we loweredour compensation ratio to 58.4% of revenue, a decrease from 66.5% and 62.4%compared to last year and the previous quarter, respectively. Looking ahead, wewill continue to pursue opportunities to improve operational efficienciesacross our global platform. A Record Performance in the US Canaccord Genuity's revenue increase compared to Q1/13 was led by the recordperformance of our US division and another strong quarter from our UK-basedbusiness. In these geographies, we're finding opportunities to leverage thecurrent market environment and deliver value to the broader franchise.Combined, our US and UK divisions generated 65% of Canaccord Genuity's globalrevenue during our fiscal first quarter, underscoring the important additionswe've made to our platform over the last several years. We have established astrong market position in the US, notably through gains in market share andthrough the success of our trading desks, and we're seeing the benefits of ourintegrated investment banking practice in the UK. In the three months ended June 30, 2013, Canaccord Genuity generated $187million of revenue and, excluding significant items(i), recorded net income of$11.8 million or $0.09 per diluted common share. Including significant items,Canaccord recorded net income of $7.9 million, or $0.06 per diluted commonshare. We continue to carefully monitor our balance sheet and our cash and workingcapital positions remain strong and liquid. Canaccord Genuity is wellcapitalized to operate in these challenging market conditions. At the close ofour fiscal first quarter, the Company had $409 million in working capital,$380.9 million in cash and cash equivalents and $1.1 billion in shareholders'equity. Our Board of Directors has approved a quarterly dividend of $0.05 tothank our shareholders for their continued support. Canaccord Genuity Capital Markets Canaccord Genuity capital markets generated $131.2 million in revenue, a markedincrease of 30% compared to the same quarter last year, and a 15% decreasecompared to the previous quarter. Importantly, global expenses decreased by 13%sequentially, which helped the division contribute $13.6 million of net income,excluding significant items(i), to our bottom line. Including significant items,Canaccord Genuity capital markets recorded net income, before taxes, of $11.9million, on par with the previous quarter, which was achieved even with lowerrevenue, by decreasing expenses by over 14%, excluding restructuring chargesincurred during the last quarter. In the US, record revenue of $52.9 million was achieved, a sizeable increase ofover 70% compared to the same period last year and a 17% increase compared tothe previous quarter, due mainly to our enlarged team and expanded platform.Our UK and European capital markets team generated $40.5 million in revenue anddelivered net income before taxes of $5.7 million, a result of solid advisoryand trading activity, combined with the prudent control of our expense levels. The exceptional quality of our sales and trading teams was evidenced by theirconsistently strong performance during the quarter, with commission revenue at$42.8 million and principal trading revenue at $19.9 million. This achievementhighlights the value of this expanded department and their ability to leveragethe market environment on behalf of our clients. Canaccord Genuity Wealth Management The changes we have implemented to strengthen our wealth management operationsare beginning to take hold. Globally, Canaccord Genuity Wealth Managementgenerated $54.6 million in revenue, but experienced a slight decline in clientassets to $25.8 billion as of June 30, 2013. In the UK and Europe, our solid performance was characterized by stable marketsand strengthened by our acquisition of Eden Financial's wealth managementbusiness. The benefits of our integration efforts propelled the division'srevenue to $27.0 million, an increase of 38% compared to the same period lastyear. We are gaining market share in this important geography, as assets undermanagement increased to $16.1 billion. During the quarter, we made the decisionto modernize our back-office infrastructure through an investment in asophisticated software platform designed to promote the increased use ofelectronic processing. We expect this investment will allow us to grow ourbusiness by adding scale to our service levels while lowering our ongoingoperational cost base. Our Canadian wealth management business continues to face headwinds due todifficult market conditions and the current risk-averse appetite of Canadianinvestors. That said, we are seeing positive changes from the strategic shiftwe implemented last year. Fee-related revenue has increased to 31.8% during thequarter, a record high for the division and a key indicator of the progresswe're making to stabilize revenue streams. Additionally, we increased assetsunder management to $880 million. Looking Forward Canaccord Genuity's priorities over the next several quarters will focus ondriving further cross-border collaboration, advancing other cost containmentinitiatives and taking steps to continue to ensure that our clients are wellserved on a global basis. I am confident that the market position we have established for CanaccordGenuity provides our firm with a strong competitive advantage as well asexceptional earnings power. We've added the scale we needed to be competitiveglobally, and I believe our global franchise provides a differentiated serviceoffering with a client-centric approach. Finally, our shareholders are at theforefront of every decision we make, and we remain committed to delivering thevalue that our global platform has to offer. Kind regards, Paul ReynoldsPresident & CEOCanaccord Financial Inc. ACCESS TO QUARTERLY RESULTS INFORMATIONInterested investors, the media and others may review this quarterly earningsrelease and supplementary financial information athttp://www.canaccordfinancial.com/EN/IR/Pages/default.aspx. CONFERENCE CALL AND WEBCAST PRESENTATIONInterested parties are invited to listen to Canaccord's first quarter fiscal 2014results conference call with analysts and institutional investors, via a livewebcast or a toll free number. The conference call is scheduled for Wednesday,August 7, 2013 at 5:00 a.m. (Pacific Time), 8:00 a.m. (Eastern Time), and 1:00 p.m.(UK Time). At that time, senior executives will comment on the results for thefirst quarter of the fiscal 2014 year and respond to questions from analysts andinstitutional investors. The conference call may be accessed live and archived on a listen-only basis viathe 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 Q1/14 earnings call. A replay of the conference call can be accessed after 8:00 a.m. (Pacific Time),11:00 a.m. (Eastern Time), 4:00 p.m. (UK Time) on Wednesday, August 7, 2013 untilSeptember 20, 2013 at 416-849-0833 or 1-855-859-2056 by entering passcode 21019610followed by the pound (#) sign. ABOUT CANACCORD FINANCIAL INC.: Through its principal subsidiaries, Canaccord Financial Inc. is a leadingindependent, full-service financial services firm, with operations in twoprincipal segments of the securities industry: wealth management and capitalmarkets. Since its establishment in 1950, Canaccord has been driven by anunwavering commitment to building lasting client relationships. We achieve thisby generating value for our individual, institutional and corporate clientsthrough comprehensive investment solutions, brokerage services and investmentbanking services. Canaccord has offices in 12 countries worldwide, includingwealth management offices located in Canada, Australia, the UK and Europe.Canaccord Genuity, the international capital markets division, operates inCanada, the US, the UK, France, Germany, Ireland, Italy, Hong Kong, mainlandChina, Singapore, Australia and Barbados. Canaccord Financial Inc. is publicly traded under the symbol CF on the TSX andthe symbol CF. on the London Stock Exchange. Canaccord Series A PreferredShares are listed on the TSX under the symbol CF.PR.A. Canaccord Series CPreferred Shares are listed on the TSX under the symbol CF.PR.C. FOR FURTHER INFORMATION, CONTACT: North American media: Investor relations inquiries: Broker:Scott Davidson Andrea Sergautis Oliver Hearsey or James KellyExecutive Vice President, Manager, Investor Relations & Communications RBC Europe LimitedGlobal Head of Corporate Phone: 416-687-5507 Phone: +44 (0) 20 7653 4000Development & Strategy Email: [email protected] Email: [email protected]: 416-869-3875Email:[email protected] London media:Bobby Morse or Ben RomneyBuchanan Communications(London)Phone: +44 (0) 207 466 5000Email:[email protected] None of the information on Canaccord's websites at www.canaccordfinancial.com,www.canaccordgenuity.com, and www.canaccord.com should be consideredincorporated 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 ofclient accounts. Advisory Teams that are led by, or only include, an IA who hasbeen licensed for less than three years are not included in our Advisory Teamcount, as it typically takes a new IA approximately three years to build anaverage-sized book of business. (i) A Non-IFRS measure SOURCE: Canaccord Financial Inc. For further information: North American media:Scott DavidsonExecutive Vice President, Global Head of Corporate Development & StrategyPhone: 416-869-3875Email: [email protected] Investor relations inquiries:Andrea SergautisManager, Investor Relations & CommunicationsPhone: 416-687-5507Email: [email protected] Broker:Oliver Hearsey or James KellyRBC Europe LimitedPhone: +44 (0) 20 7653 4000Email: [email protected] London media:Bobby Morse or Ben RomneyBuchanan Communications (London)Phone: +44 (0) 207 466 5000Email: [email protected]

(CF. CF)