3rd Quarter Results

Canaccord Genuity Group Inc. reports third quarter fiscal 2014 results Excluding significant items, earned net income of $21.2 million during thequarter (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 quarterended December 31, 2013, Canaccord Genuity Group Inc. (Canaccord, the Company,TSX: CF, LSE: CF.) generated $231.0 million in revenue. Excluding significantitems(2) (a non-IFRS measure), the Company recorded net income of $21.2 millionor net income of $17.0 million available to common shareholders(3) ($0.17 perdiluted common share). Including all expense items, on an IFRS basis, theCompany recorded net income of $18.3 million or net income available to commonshareholders(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 recordperformance in the UK and Europe, and we were pleased with the recordcontribution made by our Australian operations," stated Paul Reynolds,President and CEO of Canaccord Genuity Group Inc. "This quarter, 68% of ourrevenue came from outside of Canada, driven largely by a 75% increase in globalunderwriting 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 $183.3million · 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 $184.3million · Excluding significant items, net income of $21.2 million compared tonet 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 inthe 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 $216.9million · Excluding significant items, net income of $21.2 million compared tonet 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 fromQ3/13(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 $608.8million · Excluding significant items, net income of $39.8 million compared tonet 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 dilutedEPS 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 quarterfiscal 2013 · Cash and cash equivalents balance of $357.7 million, down $133.3million from $491.0 million · Working capital of $428.9 million, up $35.2 million from $393.7million · 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 quarterlydividend of $0.05 per common share payable on March 10, 2014 with a record dateof February 21, 2014 · On February 5, 2014, the Board of Directors also approved a cashdividend of $0.34375 per Series A Preferred Share payable on March 31, 2014with a record date of March 14, 2014, and a cash dividend of $0.359375 perSeries C Preferred Share payable on March 31, 2014 to Series C Preferredshareholders of record as at March 14, 2014 SUMMARY OF OPERATIONS Corporate · On October 1, 2013, the Company changed its name from CanaccordFinancial Inc. to Canaccord Genuity Group Inc. · During the fiscal third quarter, the Company purchased 1,256,792 ofits common shares under the terms of its normal course issuer bid (NCIB) tobring the total purchases for the current fiscal year to 3,156,344 commonshares 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 duringQ3/14 will be held in treasury until subsequently cancelled · Subsequent to the end of the quarter, on January 15, 2014, Canaccordappointed Stuart Raftus as President of Canaccord Genuity Wealth Management inCanada Capital Markets · Canaccord Genuity led or co-led 45 transactions globally, raisingtotal proceeds of C$3.3 billion(4) during fiscal Q3/14 · Canaccord Genuity participated in 95 transactions globally, raisingtotal proceeds of C$8.1 billion(4) during fiscal Q3/14 · During fiscal Q3/14, Canaccord Genuity led or co-led the followinginvestment 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 FundMarket 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 theTSX · 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 andcorporate bond issuances during fiscal Q3/14 · Canaccord Genuity generated advisory revenues of $39.8 million duringfiscal Q3/14, a decrease of 43% compared to the record generated in the samequarter last year · During fiscal Q3/14, Canaccord Genuity advised on the following M&Aand advisory transactions: · Canada Goose Inc. on its sale of a majority stake to Bain Capital · Ontario Teachers' Pension Plan on its acquisition of Burton'sHoldings Limited(5) · Dr. Jean-Claude Marian on the sale of a 15% stake in Orpéa to theCanada Pension Plan Investment Board · William Investments Limited on the disposal of Norland ManagedServices Limited to CBRE Group, Inc. · Colfax Corporation on the acquisition of the Global Infrastructureand Industry business of FläktWoods Group · Ontario Teachers' Pension Plan Board on its acquisition of Busy BeesHoldings Limited (5) · Hartawan Holdings Limited on its reverse takeover of Wilton ResourcesCorporation Limited · Afferro Mining Inc. on its disposal to International Mining andInfrastructure Corporation PLC · Vitruvian Partners LLP on its acquisition of Royal London 360ºInsurance Company Limited · Cubic Corporation on its acquisition of Serco's TransportationSolutions business · Chesnara PLC on the acquisition of Direct Line Life Insurance CompanyLimited from Direct Line Insurance Group PLC · Qualium Investissement and MML Capital Partners on the disposal ofCarré Blanc & Cie to Nixen Partners · Safran Group on its joint venture with Albany InternationalCorporation · 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 acquisitionof 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 millionin revenue in Q3/14 · Assets under administration in Canada and assets under management inthe 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 $27.7million 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 atDecember 31, 2013, up 1% from $9.4 billion at the end of the previous quarterand down 17% from $11.4 billion at the end of fiscal Q3/13(2) · Assets under management in Canada (discretionary) were $1.1 billionas at December 31, 2013, up 14% from $935 million at the end of the previousquarter and up 35% from $791 million at the end of fiscal Q3/13(2) · As at December 31, 2013, Canaccord Genuity Wealth Management had 163Advisory Teams(6), a decrease of 21 Advisory Teams from December 31, 2012 andno change from September 30, 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 $3.5 million before taxes in Q3/14(2) · Assets under management (discretionary and non-discretionary) were$19.0 billion (£10.8 billion) (2) Non-IFRS Measures The non-International Financial Reporting Standards (IFRS) measures presentedinclude assets under administration, assets under management, book value perdiluted common share and figures that exclude significant items. Significantitems include restructuring costs, amortization of intangible assets, andacquisition-related expense items, which include costs recognized in relationto both prospective and completed acquisitions. Book value per diluted commonshare is calculated as total common shareholders' equity divided by the numberof diluted common shares outstanding and, commencing in Q1/14, adjusted forshares purchased under the NCIB and not yet cancelled, and estimatedforfeitures in respect of unvested share awards under share-based paymentplans. Management believes that these non-IFRS measures will allow for a betterevaluation of the operating performance of Canaccord's business and facilitatemeaningful comparison of results in the current period to those in priorperiods and future periods. Figures that exclude significant items provideuseful information by excluding certain items that may not be indicative ofCanaccord's core operating results. A limitation of utilizing these figuresthat exclude significant items is that the IFRS accounting effects of theseitems do in fact reflect the underlying financial results of Canaccord'sbusiness; thus, these effects should not be ignored in evaluating and analyzingCanaccord's financial results. Therefore, management believes that Canaccord'sIFRS measures of financial performance and the respective non-IFRS measuresshould be considered together. Selected financial information excluding significant items(1) Three months Quarter Nine months ended YTD- ended -over- December 31 over- December 31 quarter YTD change change (C$ thousands, except pershare 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 CanaccordGenuity Restructuring costs - 5,276 (100.0) 5,486 9,671 (43.3)% % Acquisition-related costs - - - - 388 (100.0) % Amortization of intangible 1,680 3,473 (51.6)% 5,040 11,282 (55.3)%assets Significant items recordedin Canaccord GenuityWealth Management Restructuring costs - 1,034 (100.0) - 14,601 (100.0) % % Acquisition-related costs - 431 (100.0) - 1,331 (100.0) % % Amortization of intangible 1,945 1,643 18.4% 5,585 4,255 31.3%assets Significant items recordedin 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 202,914 205,025 (1.0)% 552,808 566,412 (2.4)%significant items Net income before taxes - $28,045 $24,978 12.3% $48,688 $12,739 282.2%adjusted 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 - $0.18 $0.19 (5.3)% $0.32 $0.02 n.m.basic, adjusted Earnings per common share - $0.17 $0.17 - $0.29 $0.02 n.m.diluted, adjusted (1) Figures excluding significant items are non-IFRS measures. See Non-IFRSMeasures above.n.m.: not meaningful Fellow Shareholders Two years ago, we made a strategic decision to acquire Collins StewartHawkpoint to transform our business and substantially bolster our relevance inkey markets, take advantage of a distressed European market and leverage thehistorical strength of the Canadian dollar. Today, we are clearly seeing thebenefits of this strategic decision, which has allowed us to emerge as animportant player in the resurgent UK and US markets. The results of our fiscalthird quarter demonstrate the strength of our global business and the successof our efforts to diversify our revenue streams. Importantly, 68% of revenuewas earned outside of Canada and we are in an excellent position to continueproviding clients with international perspectives from all of the markets thatwe operate in. This quarter featured the record performance of our UK-based businesses,achieved by both our wealth management and capital markets divisions. Our UKand European practice has once again showcased its pivotal role in our globalfranchise 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 $231million of revenue, a 26% increase compared to the previous quarter and aslight uptick from the strong performance reported a year ago. Through ourcontinued focus on controlling our operating leverage, we lowered our expensesby 5% compared to the same quarter last year, during which similar revenuelevels were achieved. Excluding significant items(7), the Company recorded netincome of $21.2 million or net income of $17.0 million available to commonshareholders(8), earning $0.17 per diluted common share. On an IFRS basis, theCompany recorded net income of $18.3 million or $14.4 million available tocommon shareholders(8), earning $0.14 per diluted common share. Our balance sheet metrics indicate our ongoing commitment to a diligent capitalstrategy, and at the end of the third quarter, Canaccord Genuity had $428.9million in working capital, $357.7 million in cash and cash equivalents and$1.1 billion in shareholders' equity. During the quarter, the Company purchasedfor cancellation 1,256,792 common shares, and throughout our fiscal year todate(9), we have purchased 3,156,344 common shares for cancellation under ournormal course issuer bid/buy-back programme. Finally, I'm pleased to confirmthat 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 inrevenue, 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 45transactions, raising total proceeds of $3.3 billion on behalf of our clients.As a result, we increased global underwriting revenue by 80% compared to theprevious quarter and by 95% compared to the same period last year, a clearindicator of the successful investment banking enterprise that we havedeveloped across our global platform. In the UK and Europe, we generated $65.7 million in revenue for the quarter, a53% increase from the previous quarter, and a record result for this group thatwas driven largely by the success of our advisory and equity transactionleadership in this market. Compared to the previous quarter, investment bankingrevenue increased by 119%, while advisory revenue increased by 66%,highlighting the exceptional service levels we provide our clients in thisgeography. We are consistently showcasing the leading role we play in the UKmid-market space. In Canada, the market began to show early signs of a recovery and our Canadiancapital markets practice returned to profitability during the quarter. Wegenerated $41.3 million in revenue, a 32% increase compared to the previousquarter, 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 successfullyincreased revenue during the quarter by 10% to $48.3 million compared to theprevious quarter, and by 28% compared to the same period last year. Thisdivision has maintained a strong momentum of capturing more lead mandates andbroadening our sector coverage to serve a growing client base in thisgeography. In addition, we made a decision to grow our fixed incomecapabilities in the US that resulted in a $2 million impact on our earningsthis quarter. We anticipate a similar impact next quarter, with the expectationthat this group will run on a break-even basis in the next fiscal year. Canaccord Genuity's other international operations delivered record metrics toour global business for the three months ended December 31, 2013, drivenprimarily by the performance of our partners in Australia and Singapore. Thisgroup generated $16.0 million in revenue, an 88% increase compared to theresults recorded in the previous quarter, and earned net income before tax andexcluding significant items(1) of $4.6 million. Wealth Management Globally, Canaccord Genuity Wealth Management generated $54.7 million inrevenue during the quarter, the division's largest revenue contribution duringthis fiscal year, and increased client assets on a global basis to $29.0billion. Our UK-based wealth management division achieved record revenue since joiningour 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 businessin March 2012. This division continues to be a key differentiator of our globalfranchise, through the broad range of solutions and exceptional service levelsprovided by our high-calibre team of investment professionals. Wealth management revenue generated in North America increased to $27.7 millionand discretionary assets under management rose to $1.1 billion, a 35% increasecompared to the same period last year. Looking ahead, our priorities for thisdivision will centre on enhancing our margins, managing our costs, and growingthe business through targeted recruitment and training. In addition, we will belaunching Global Portfolio Solutions (GPS) in the spring, a proprietary assetmanagement product that will build out the investment solutions we offer ourclients. These initiatives will be overseen by Stuart Raftus, the new Presidentof our Canadian wealth management business, who we welcomed to CanaccordGenuity on January 15, 2014. Stuart brings over 28 years of industry experienceto 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 ourbusiness were pursued over the past several years in order to provide ourclients with differentiated global services and our shareholders withsignificantly diversified revenue streams. Our fiscal third quarter showcasedthe earnings power of our global business and the important progress we've madein becoming a fully integrated, collaborative global franchise. Our teams areworking more effectively together than ever before and are very optimisticabout our near-term prospects of success. I share in this enthusiasm as we lookto further enhance the global alignment of our product offering anddistribution, and continue to increase our relevance to clients. Kind regards,Paul D. ReynoldsPresident & CEO ACCESS TO QUARTERLY RESULTS INFORMATIONInterested investors, the media and others may review this quarterly earningsrelease and supplementary financial information athttp://www.canaccordgenuitygroup.com/EN/IR/Pages/default.aspx. CONFERENCE CALL AND WEBCAST PRESENTATIONInterested parties are invited to listen to Canaccord's third quarter fiscal2014 results conference call with analysts and institutional investors, via alive webcast or a toll free number. The conference call is scheduled forWednesday, February 5, 2014 at 2:00 p.m. (Pacific Time), 5:00 p.m. (EasternTime), 10:00 p.m. (UK Time), and at 6:00 a.m. (China Standard Time) and 9:00a.m. (Australia Eastern Daylight Time) on Thursday, February 6, 2014. At thattime, senior executives will comment on the results for the third quarter ofthe fiscal 2014 year and respond to questions from analysts and institutionalinvestors. The conference call may be accessed live and archived on a listen-only basisvia 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 earningscall. 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 at416-849-0833 or 1-855-859-2056 by entering passcode 43452863 followed by thepound (#) 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 operationsin two principal segments of the securities industry: wealth management andcapital markets. Since its establishment in 1950, the Company has been drivenby an unwavering commitment to building lasting client relationships. Weachieve this by generating value for our individual, institutional andcorporate clients through comprehensive investment solutions, brokerageservices and investment banking services. The Company has offices in 11countries worldwide, including wealth management offices located in Canada,Australia, the UK and Europe. Canaccord Genuity, the international capitalmarkets division, operates in Canada, the US, the UK, France, Germany, Ireland,Hong Kong, mainland China, Singapore, Australia and Barbados. To us there areno foreign markets.TM Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the TSXand the 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 HearseyExecutive Vice President, Manager, Investor Relations & RBC Europe LimitedGlobal Communications Phone: +44 (0) 20 7653Head of Corporate Phone: 416-687-5507 4000Development & Email: Email:Strategy [email protected] [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 the Company's websites at www.canaccordgenuity.com,www.canaccordgenuitygroup.com, and www.canaccordgenuity.com/cm should beconsidered incorporated herein by reference. __________________________________1 Excluding significant items. See Non-IFRS Measures.2 See Non-IFRS Measures.3 Net income available to common shareholders is calculated as net incomeadjusted for non-controlling interests and preferred share dividends.4 Source: Transactions over $1.5 million. Internally sourced information.5 Buy-side debt advisory mandate6 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.7 A non-IFRS measure.8 Net income available to common shareholders is calculated as net incomeadjusted for non-controlling interests and preferred share dividends.9 As of February 3, 2014. SOURCE: Canaccord Genuity Group Inc. For further information: North American media:Scott DavidsonExecutive Vice President, Global Head of Corporate Development & StrategyPhone: 416-869-3875Email: [email protected] London media:Bobby Morse or Ben RomneyBuchanan Communications (London)Phone: +44 (0) 207 466 5000Email: [email protected] Investor relations inquiries:Andrea SergautisManager, Investor Relations & CommunicationsPhone: 416-687-5507Email: [email protected] Broker:Oliver HearseyRBC Europe LimitedPhone: +44 (0) 20 7653 4000Email: [email protected]

(CF, CF.)