Two years ago, in the midst of a historic global correction, we harnessed an opportunity to create a business combination that expanded our global footprint and significantly enhanced our relevance to our clients.
The distressed European market allowed us to leverage the strength of the Canadian dollar and complete our strategic acquisition of Collins Stewart Hawkpoint in 2012 at a very attractive valuation. We believed this transaction would prove highly accretive for our business, and deliver the long term growth and quality of earnings that our shareholders expect. As a result, more than two-thirds of Canaccord Genuity’s revenue is currently generated outside of Canada, a testament to the importance of the global platform we have created.
During fiscal 2014, we focused on ensuring we were delivering a consistent client experience and invested strategically in areas like fixed income, equity research and investment banking. We also continued to add to the quality and depth of our leadership teams in each of our regions and divisions, and appointed global management for each of our disciplines. In doing so, we have created a platform that encourages cross-border collaboration and generates stronger outcomes for our clients.
Our commitment to this strategy has enabled us to improve our competitive position in each of our markets, and Canaccord Genuity is now a uniquely positioned global investment banking firm focused on the mid-market.
For the fiscal year, Canaccord Genuity earned $855.2 million in revenue, a record for our business. Assisted by a resurgent global market environment, our growth can be attributed to strong performances from many of our global operations, particularly in investment banking and principal trading. Expenses for the year were $790.7 million, a decrease of 4% from the previous year and evidence that we are growing our business in an efficient and controlled manner. Our increased revenue, in combination with our commitment to cost containment and improvements to the operational efficiency of our business, allowed us to grow our net income excluding significant items to $68.8 million.
I am pleased to confirm that our Board of Directors approved a total dividend distribution of $0.20 for the fiscal year. We also continue to be active in share buybacks, and during fiscal 2014, we purchased a total of 3,294,144 shares for cancellation under our normal course issuer bid buy-back programme, as part of our commitment to enhancing value for our shareholders.
GLOBAL CAPITAL MARKETS
Our capital markets division continues to be a primary driver of our business, earning 72% of the Company’s total revenue for the fiscal year, with the largest contributions coming from our US and UK operations. In all of our regions, we are capturing more lead mandates and growing our market share, as we diversify our coverage and assume a lead bookrunner mentality.
The impact of our global expansion efforts was demonstrated in a number of our key geographies this year. Our US capital markets team experienced a 158% increase in underwriting revenues. In the UK, we established consistent advisory and equity transaction leadership and ranked third amongst all UK investment banks for the greatest number of corporate broking clients. In the Asia-Pacific region, we diversified sectorial coverage and increased investment banking revenue by 73%. Our Australian capital markets business was named Best Equities House in the Non-bank Owned category of the 2013 East Coles survey.
Our advisory teams also participated in a number of landmark transactions that showcased our firm’s cross-border expertise. Notably, Canaccord Genuity acted as the sole financial advisor to Canada Goose on the sale of its majority stake to Bain Capital, to Ontario Teachers’ Pension Plan on its acquisition of Burton’s Holdings and on the sale of France’s Orpéa to Canada Pension Plan Investment Board.
In the Canadian capital markets, we have had to contend with a decline in the traditionally dominant mining sector. A recent resurgence in volumes and transactional activity in the real estate, technology and industrials sectors has given us confidence that the slowdown is behind us. In fact, we are already seeing an increase in transaction and advisory mandates in our business. Our strong pipeline, in combination with our optimistic outlook for the global economy, gives us confidence in the mid to long term outlook for this business.
In our capital markets division, we have actively promoted collaboration between our global specialist teams in all geographies, giving us the ability to share best practices and better coordinate research coverage, trading efforts and deal marketing across regions.
STRENGTHENING OUR WEALTH MANAGEMENT DIVISION
On a global basis, our wealth management operations generated $228.8 million in revenue for the fiscal year. At the end of fiscal 2014, Canaccord Genuity Wealth Management managed and administered over $30.9 billion of client assets, approximately 65% of which was through our UK and European operations. In Australia, our wealth management business is gaining traction and we are well positioned to gain market share in this geography.
During the year, we continued the strategic refocusing of the Canadian wealth management division and significantly reduced operating costs for this business. Despite a challenging market environment, our Canadian wealth management business grew its fee-based advisory business to 32% of revenue, consistent with our goal to increase this stream of business. Reflecting the success of this approach, discretionary assets under management in Canada increased by 44% during the year. These steps, combined with the pending launch of our proprietary portfolio management product, are expected to help drive higher fee generation and enhance the margins of this business.
POSITIONED FOR LEADERSHIP IN THE GLOBAL MID-MARKET
At Canaccord Genuity, we believe the unique cross-border capabilities and global perspective that we offer our clients are what differentiate us from our competitors, most of whom are mainly focused on their domestic markets and limited in scope. Our priority for the year ahead will be to continue to strengthen collaboration between our global teams with the goal of enhancing and delivering a consistent client experience across all our regions and disciplines. We will continue to support the growth of our businesses through disciplined investment in key personnel and verticals to better serve our growing client base.
I would like to thank everyone at Canaccord Genuity for their hard work and dedication to the evolution and growth of our firm. I am pleased to see our teams working together so effectively, as we continue to find opportunities to increase collaboration and better serve our clients in all of our regions.
Our global scale and diversified sector coverage make us relevant to a growing number of clients. Our high employee ownership makes us accountable to our business and our shareholders, and our entrepreneurial culture and independent thinking allow us to be nimble and responsive to the evolving needs of our clients. To us there are no foreign markets.
Paul D. Reynolds
President & Chief Executive Officer
June 2014
