Monumental Energy Corp. press release
Canaccord Capital Inc. reports record fourth quarter and fiscal year 2006 results
TSXV - TSX Venture Exchange · Lithium · Cesium · Oil · Natural Gas · Rare Earth Elements · Tantalum · Niobium · Zirconium · Canada
Fiscal year 2006 net income up 67.0% and EPS up 56.8% driven by enhanced global distribution capabilities
(All dollar amounts are stated in Canadian dollars unless otherwise indicated)
VANCOUVER, May 17 /CNW/ - Canaccord Capital Inc. (CCI: TSX & AIM) announced that revenue for its fourth quarter of fiscal 2006, ended March 31, 2006, was a record $207.1 million, up $64.1 million from $142.9 million for the same period a year ago. Net income of $30.1 million for the fourth quarter of fiscal 2006 was up $12.8 million from $17.3 million for the same period a year ago, and diluted earnings per share (EPS) for the quarter was $0.63, up $0.25, or 65.8% from $0.38 for the same period a year ago. Fiscal year 2006 revenue was a record $583.4 million, up $150.6 million from $432.8 million for fiscal year 2005. Net income of $81.2 million for fiscal year 2006 was up $32.6 million, or 67.0% from $48.6 million for fiscal 2005. Diluted EPS for the year was $1.74, up $0.63, or 56.8% from $1.11 compared to fiscal year 2005. "Our record success in fiscal 2006 reflects the continued execution of our global strategy to be the pre-eminent investment dealer focused on the small to mid cap market," said Peter Brown, Chairman & CEO. "We look to continue our commitment to growth and operational excellence in fiscal 2007." Michael G. Greenwood, President & COO, added, "We would like to thank our integrated team of professionals in Private Client Services and Canaccord Adams worldwide for their continued dedication. Their hard work has grown our business and increased our shareholders' return to 103% this year, during a period of expansion and change."
Highlights of the fourth quarter fiscal 2006 results (three months ended March 31, 2006), compared to the fourth quarter fiscal 2005 results (three months ended March 31, 2005): Revenue of $207.1 million, up 44.9%, or $64.1 million, from $142.9 million Expenses of $163.6 million, up 39.2%, or $46.1 million, from $117.5 million Total compensation payout as a percentage of revenue was 58.9%, down 430 basis points from 63.2% Net income of $30.1 million, up 73.7% , or $12.8 million, from $17.3 million Diluted EPS of $0.63, up 65.8%, or $0.25, from $0.38 Return on equity (ROE) of 45.7%, up from 32.2% Book value per common share at the period end increased to $6.02, up 24.9%, or $1.20 from $4.82 The Board approved a common share dividend of $0.08 per share on May 16, 2006, payable on June 9, 2006, with a record date of May 26, 2006
Highlights for fiscal 2006 results (year ended March 31, 2006), compared to fiscal 2005 results (year ended March 31, 2005): Revenue of $583.4 million, up 34.8%, or $150.6 million, from $432.8 million Expenses of $464.4 million, up 29.0%, or $104.4 million, from $360.0 million Total compensation payout as a percentage of revenue was 58.5%, down 300 basis points from 61.5% Net income of $81.2 million, up 67.0%, or $32.6 million, from $48.6 million Diluted EPS of $1.74, up 56.8%, or $0.63, from $1.11 ROE of 33.6%, up from 23.9% In fiscal Q1/06, Canaccord recognized a one time pre-tax gain of $1.6 million, equivalent to approximately $0.03 per share after tax (on a diluted basis), from the disposal of an investment in the Bourse de MontrDeal Total cash and cash equivalents of $370.5 million at March 31, 2006, up 5.9% from March 31, 2005 47,827,350 total issued shares outstanding on a diluted basis as of May 16, 2006
Highlights of Operations: During Q4/06, our international capital markets team, Canaccord Adams, led the following transactions: $144 million for a bought deal for UrAsia Energy (BVI) Ltd. (TSX: UUU.V) $113 million for an AIM IPO for Excapsa Software Inc. (AIM: XCP), a Canadian based online gaming firm $81 million for a TSX IPO for European Minerals Corp. (TSX: EPM) $60 million for a bought deal for Viceroy Resources (TSX: VYE) $51 million for an AIM IPO for Sandvine Corporation (AIM: SAND), a Canadian technology firm $54 million for a TSX Venture Exchange IPO for Westfield Real Estate Investment Trust (TSXV: WFD.UN) In addition, our team co-lead the following transactions: $207 million for a best efforts offering for Coalcorp Mining Inc. (TSX: CCJ.V) $150 million for a TSX initial public offering (IPO) for Eastern Platinum Limited (TSX: ELR)
During Q4/06, we experienced significant growth in market share in Canaccord Adams' Canadian Sales and Trading operations. Market share was 3.7% in terms of TSX-traded volume, up from 2.4% the same quarter a year ago and 3.2% in fiscal Q3/06
In the 5th Annual StarMine Analyst Awards, an evaluation of analyst accuracy in stock picking and earnings estimation: Canaccord Adams was the fourth most award-winning firm in Canada, with seven analysts ranked among the top five in their sectors and the 'top stock picker' in the following sectors: Energy Trust; Healthcare; Small Cap; Independent Power Producers and Energy; and Real Estate & REITs Canaccord Adams had three 'top stock pickers' in the US in the Communications Equipment Industry, Semiconductors & Semiconductors Equipment Industry, and Software Industry
In the Investment Executive's Annual Survey of Investment Advisors 2006 Report, Canaccord was ranked: Top investment firm in Canada for delivery on promises Top company for IPOs and new issues corporate finance In the top-three of all Canadian investment firms in Canadian research Number one investment firm for trade execution/back office
ACCESS TO QUARTERLY RESULTS INFORMATION: Interested investors, the media and others may review this quarterly earnings release and supplementary financial information at: www.canaccord.com/investor/financialreports.
QUARTERLY CONFERENCE CALL AND WEBCAST PRESENTATION: Interested parties can listen to our fourth quarter fiscal 2006 results conference call with analysts and institutional investors live and archived, via the Internet and toll free telephone. The conference call is scheduled for Wednesday, May 17, 2006 at 10:00 a.m. (Pacific Time (PDT))/1:00 p.m. (Eastern Time (EDT))/6:00 p.m. (UK Time (BST)). At that time, senior executives will comment on the results for the fourth quarter fiscal 2006 and respond to questions from analysts and institutional investors. The conference call may be accessed live and archived on a listen-only basis via the Internet at: www.canaccord.com/investor/webcast
Analysts and institutional investors can call in via telephone at: 416-644-3424 (within Toronto) 1-800-814-4941 (toll-free outside Toronto) 00-800-0000-2288 (toll-free from the United Kingdom)
A replay of the conference call can be accessed after 12:00 p.m. (PDT)/3:00 p.m. (EDT)/8:00 p.m. (BST) on May 17, 2006 until 12:00 a.m. (PDT)/3:00 a.m. (EDT)/8:00 a.m. (BST) Friday, June 9, 2006 at 416-640-1917 or 1-877-289-8525 by entering passcode 21180116 followed by the number sign.
ABOUT CANACCORD CAPITAL INC.: Through its principal subsidiaries, Canaccord Capital Inc. (CCI: TSX & AIM) is a leading independent full service investment dealer in Canada with capital markets operations in the United Kingdom and the United States of America. Canaccord is publicly traded on both the Toronto Stock Exchange and AIM, a market operated by the London Stock Exchange. Canaccord has operations in two of the principal segments of the securities industry: private client services and capital markets. Together, these operations offer a wide range of complementary investment products, brokerage services and investment banking services to Canaccord's private, institutional and corporate clients. Canaccord has approximately 1,480 employees worldwide in 32 offices, including 26 Private Client Services offices located across Canada. Canaccord Adams, the international capital markets division, has operations in Toronto, London, Boston, Vancouver, New York, Calgary, Montreal, San Francisco and Houston.
FOR FURTHER INFORMATION CONTACT:
Anthony Ostler London: Senior Vice President, Investor Bobby Morse or Ben Willey Relations & Communications Buchanan Communications Phone: 604-643-7647 Phone: +44 (0) 207 466 5000 Email: anthony_ostler(at)canaccord.com Email: bobbym(at)buchanan.uk.com
None of the information in Canaccord's Web site www.canaccord.com should be considered incorporated herein by reference.
Management's Discussion and Analysis Fourth quarter fiscal 2006 for the three months ended March 31, 2006 - this document is dated May 17, 2006 Canaccord's fourth quarter fiscal 2006 was the three-month period ended March 31, 2006, and is also referred to as fourth quarter fiscal 2006 and as Q4/06 in this press release. Canaccord's fiscal year ended on March 31, 2006 and is also referred to herein as fiscal year 2006 and as 2006. This press release should be read in conjunction with the Management's Discussion and Analysis (MD&A) and the audited consolidated financial statements for the fiscal year ended March 31, 2005, in Canaccord's Annual Report dated June 27, 2005 (the Annual Report). There has been no material change to the information contained in the annual MD&A for fiscal 2005 except as disclosed in this MD&A and in the MD&As for Q1/06, Q2/06 and Q3/06. Canaccord's financial information is expressed in Canadian dollars unless otherwise specified. The interim financial statements accompanying this document are prepared in accordance with Canadian generally accepted accounting principles (GAAP) with reconciliation to international financial reporting standards (IFRS) provided in Note 15 to the interim consolidated financial statements. All the financial data below is unaudited except for the annual fiscal year 2005 data.
Caution regarding forward-looking statements This document may contain certain forward-looking statements. These statements relate to future events or future performance and reflect management's expectations or beliefs regarding future events including business and economic conditions and Canaccord's growth, results of operations, performance and business prospects and opportunities. Such forward- looking statements reflect management's current beliefs and are based on information currently available to management. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", "target", "intend" or the negative of these terms or other comparable terminology. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and a number of factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating these statements, readers should specifically consider various factors which may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions, the nature of the financial services industry and the risks and uncertainties detailed from time to time in Canaccord's interim and annual financial statements and its Annual Report and Annual Information Form filed on www.sedar.com. These forward-looking statements are made as of the date of this document, and Canaccord assumes no obligation to update or revise them to reflect new events or circumstances.
Non-GAAP measures Certain non-GAAP measures are utilized by Canaccord as measures of financial performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Canaccord's capital is represented by common shareholders' equity and, therefore, management uses return on average common equity (ROE) as a performance measure. Assets under administration (AUA) and assets under management (AUM) are non-GAAP measures of client assets that are common to the wealth management aspects of the private client services industry. AUA is the market value of client assets administered by Canaccord in respect of which Canaccord earns commissions or fees. This measure includes funds held in client accounts as well as the aggregate market value of long and short security positions. Canaccord's method of calculating AUA may differ from the methods used by other companies and therefore may not be comparable to other companies. Management uses this measure to assess operational performance of the Private Client Services business segment. AUM are assets discretionarily managed by Canaccord as part of our Independence Accounts program that are beneficially owned by clients. Services provided include the selection of investments and the provision of investment advice. AUM are also administered by Canaccord and are included in AUA.
Overview Business environment Canaccord's business is cyclical and experiences considerable variations in revenue and income from quarter to quarter and year to year due to factors beyond Canaccord's control and, accordingly, revenue and net income are expected to fluctuate as they have historically. Our business is subject to the overall condition of the North American and the European equity markets, including the seasonal variance in these markets. In general, North American capital markets are slower during the first half of our fiscal year, during which we typically generate approximately 35% to 40% of our annual revenue. During the second half of our fiscal year we typically generate 60% to 65% of our annual revenue. In early fiscal 2007, North American capital markets have performed better compared to previous historical seasonality. During fiscal 2006, the Morgan Stanley Capital International Inc. (MSCI) Canada Index returned 7.96% (in CDN$), and 8.1% (in US$) compared to 5.62% (in CDN$), and 6.15% (in US$) for the World Index. Canadian equities comprised 3.42% of the World Index in calendar 2005, up from 2.94% the previous year, indicating a strong attraction by foreign investors to Canadian equities, a trend that is expected to continue should energy and commodity prices maintain or increase from their current levels.
About Canaccord's operations Canaccord Capital Inc.'s operations are divided into three segments: The first two, Private Client Services and Canaccord Adams, are principally operating segments, while the third one, Other, is mainly an administrative segment. Private Client Services provides brokerage services and investment advice to retail or private clients primarily in Canada, and to a lesser degree, in the US. Canaccord Adams (formerly known as Canaccord's Global Capital Markets), includes investment banking, research and trading activities on behalf of corporate, institutional and government clients as well as principal trading activities in Canada, the United Kingdom and the United States of America. Canaccord acquired 100% of Adams Harkness Financial Group, Inc. (engaged primarily in capital markets activities in the US), on January 3, 2006. As a result of this acquisition, the Adams Harkness Financial Group, Inc. operating subsidiary was renamed Canaccord Adams Inc. and Canaccord's Global Capital Markets (Canada, UK and US) was re-branded globally as Canaccord Adams. Canaccord Adams Inc. together with Canaccord Capital Corporation (USA), Inc., which includes US Private Client Services and Other operations, constitute Canaccord's US geographic segment. In addition, Canaccord Capital (Europe) Limited (engaged primarily in capital markets activities in the United Kingdom), was renamed Canaccord Adams Limited and it constitutes Canaccord's UK geographic segment. The division of Canaccord Capital Corporation that is engaged in capital markets activities in Canada was branded as Canaccord Adams, and together with Canadian Private Client Services and Other operations, they constitute Canaccord's Canada geographic segment. Other includes correspondent brokerage services, interest and foreign exchange revenue and expenses not specifically allocable to Private Client Services and Canaccord Adams.
<< Consolidated operating results Fourth fiscal quarter and fiscal 2006 summary data(1) Three months ended Year-over- Year ended Year-over- (C$ thousands, except per March 31 year March 31 year share, employee and % increase increase amounts) 2006 2005 (decrease) 2006 2005 (decrease) Canaccord Capital Inc. Revenue(2) Commissions 88,846 54,598 62.7% 239,461 168,978 41.7% Investment banking 87,977 69,558 26.5% 266,206 214,450 24.1% Principal trading 13,677 7,795 75.5% 27,388 13,584 101.6% Interest 11,424 7,723 47.9% 36,914 26,488 39.4% Other 5,150 3,255 58.2% 13,446 9,278 44.9% Total Revenue 207,074 142,929 44.9% 583,415 432,778 34.8% Expenses Incentive compensation 108,296 77,191 40.3% 299,188 220,454 35.7% Salaries and benefits 13,716 13,130 4.5% 42,019 45,715 (8.1)% Other overhead expenses(3) 41,607 27,181 53.1% 123,178 93,853 31.2% Total Expenses 163,619 117,502 39.2% 464,385 360,022 29.0% Income before income taxes 43,455 25,427 70.9% 119,030 72,756 63.6% Net income 30,070 17,307 73.7% 81,150 48,579 67.0% Earnings per share (EPS) diluted(4) 0.63 0.38 65.8% 1.74 1.11 56.8% Return on average common equity (ROE)(4) 45.7% 32.2% 13.5% 33.6% 23.9% 9.7% Book value per share - period end 6.02 4.82 24.9% Number of employees 1,488 1,260 18.1% US geographic segment(5) Revenue 20,106 - n.m. 20,106 - n.m. Expenses - n.m. - n.m. Incentive compensation 9,134 - n.m. 9,134 - n.m. Salaries and benefits 1,613 - n.m. 1,613 - n.m. Other overhead expenses(3) 6,797 - n.m. 6,797 - n.m. Total Expenses 17,544 - n.m. 17,544 - n.m. Income before income taxes 2,562 - n.m. 2,562 - n.m. Net income 1,716 - n.m. 1,716 - n.m. Canaccord Capital Inc. excluding US geographic segment Revenue 186,968 142,929 30.8% 563,309 432,778 30.2% Expenses Incentive compensation 99,162 77,191 28.5% 290,054 220,454 31.6% Salaries and benefits 12,103 13,130 (7.8)% 40,406 45,715 (11.6)% Other overhead expenses(3) 34,810 27,181 28.1% 116,381 93,853 24.0% Total Expenses 146,075 117,502 24.3% 446,841 360,022 24.1% Income before income taxes 40,893 25,427 60.8% 116,468 72,756 60.1% Net income 28,354 17,307 63.8% 79,434 48,579 63.5% (1) Some of this data is considered to be non-GAAP. (2) To enhance our disclosure and to facilitate comparisons with other companies in the industry, consolidated revenue has been changed from 'revenue by business segment' to 'revenue by activity'. For revenue by business segment information please refer to the Results of Operations section on page 12. (3) Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative expense, amortization, development costs and gain on disposal of investment. (4) The slower growth in diluted EPS and ROE than net income for fiscal 2006 partially reflects the issuance of $70 million in equity on June 30, 2004, and the issuance of shares in association with stock- based compensation activities. (5) Starting on January 3, 2006, revenues and expenses for Canaccord Capital Corporation (USA), Inc. and Canaccord Adams Inc. are disclosed together under the US geographic segment. Therefore, US geographic segment results are not to be interpreted as generated exclusively from Canaccord Adams Inc. or as a result of the acquisition of Adams Harkness Financial Group, Inc. Includes revenue associated with Canaccord Capital Corporation (USA), Inc. n.m.: not meaningful
Geographic distribution of revenue Three months ended Year ended March 31 Year-over- March 31 Year-over- (C$ thousands, year year except % amount) 2006 2005 increase 2006 2005 increase Canada(1) 145,194 110,094 31.9% 437,409 316,688 38.1% UK(2) 41,774 32,835 27.2% 125,900 116,090 8.5% US(3) 20,106 - n.m. 20,106 - n.m. (1) Canada geographic segment includes operations for Private Client Services, Canaccord Adams (a division of Canaccord Capital Corporation) and Other business segments. (2) UK geographic segment includes operations for Canaccord Adams Limited. (3) Commencing on January 3, 2006, as a result of the acquisition of Adams Harkness Financial Group, Inc., US geographic segment includes operations for Canaccord Adams Inc. and Canaccord Capital Corporation (USA), Inc., which also includes operations from Private Client Services and Other business segments. n.m.: not meaningful