Fellow Shareholders,
Despite a very strong start to the year, the heightened volatility that began late in our second quarter continued to impact global capital markets through the balance of the year.
Fiscal 2015 was a year where we saw our top line revenue grow to $880.8 million, while our net income, excluding significant items, declined by 43%. Activity levels in mid-market equities were impacted by the Scottish referendum, a sharp market correction, followed by a dramatic drop in energy prices and a static business environment in the UK, which was driven by the recent national elections.
While broad market fundamentals decelerated the momentum we have built in recent years, we have maintained a clear focus on managing our costs against our revenue expectations in the current market environment. During the year, we streamlined the leadership and operating structure of our capital markets businesses in the UK & Europe, and in North America, with a focus on improving our cross-border capabilities and strengthening our long term profitability.
In November, our Board of Directors approved a special dividend payment of $0.05, which brought our total dividend distribution to $0.25 for the year. Additionally, we remained active in our normal course issuer bid buy-back programme throughout the year, reflecting our confidence in delivering on our business plan, while continuing to maintain financial flexibility.
Delivering stronger outcomes for clients across a diverse range of sectors
In all regions, we are delivering a consistent client experience, with a uniquely global perspective that has made Canaccord Genuity the partner of choice for clients focused on growth. Despite a challenging global operating environment, we were able to modestly increase our global investment banking and advisory revenues over the course of the fiscal year.
Our Canadian capital markets led the performance of this division, with a year-over-year revenue increase of 38%. Our strong market position and track record of delivering value for clients in the region were evident as we led a number of transformational mandates for our clients and solidified our position as the leading independent investment bank for the online gaming industry.
While we maintained our market position in the US, expenses related to the strategic build-out of our fixed income capital markets business impacted our profitability for this region. In our Asia-Pacific operations, capital markets revenues improved 29% over the fiscal year, driven primarily by the continued growth of our Australian capital markets business. While it was a difficult period for capital raising activities in the UK & Europe, we are pleased to see markets responding positively to the recent election outcome in the United Kingdom. As market fundamentals improve, we look forward to restoring our profitability and further establishing our position as a leading independent investment bank for the mid-market in the region.
Improving recurring revenues across our global wealth management operations
We continue to focus on improving the level of recurring revenues from our wealth management operations, to help offset the inherent earnings volatility of our capital markets business. During the year, we meaningfully improved our advisor and product mix in all regions – initiatives we expect will further contribute to increasing assets under management and delivering stable, consistent revenue growth for this business.
At the end of the fiscal year, Canaccord Genuity Wealth Management managed and administered $33.3 billion in client assets, approximately 65% of which was through our operations in the UK & Europe. We are actively pursuing opportunities to increase the size and scale of our UK wealth management business. The successful implementation of Avaloq during the fiscal year gives us confidence in our ability to rapidly integrate new operations and focus on near term earnings accretion, with the goal of doubling our assets under management in this business over the coming years.
In our Canadian wealth management operations, we have made great strides in reducing losses and bringing this business closer to profitability. The successful launch of our proprietary asset management product, Canaccord Genuity Global Portfolio Solutions (GPS), has been well received by existing and new clients. The strategic refocusing of this business has driven a 30% increase in discretionary and fee-based assets under management for the fiscal year.
Committed to strong leadership – past, present and future
In April, we endured the tragic loss of our Chief Executive, partner and friend, Paul Reynolds. As the architect of our firm’s global transformation, Paul dedicated the final years of his career to the careful selection and integration of deeply established regional businesses, to build a powerful global platform. My goal for all of us at Canaccord Genuity is that we continue to uphold the culture and values that Paul was so instrumental in defining. This is our time to leverage the strengths of our combined businesses and maximize value for our clients, and for our shareholders.
In a business that continues to evolve, we have made it a priority to identify talent and groom a strong pipeline of capable professionals, who are prepared to step into critical leadership roles when needed.
Our Board of Directors is committed to appointing a Chief Executive Officer who possesses the necessary capabilities to advance the best interests of our business and our shareholders over the long term. We expect to announce a successor during the first half of fiscal 2016, and I am personally committed to supporting this transition, as we position the candidate – and our business – for long term success.
In closing, I would like to thank our shareholders, clients and employees for your loyalty, trust and support through a period of continuous adjustment.
Although we expect some volatility to continue throughout fiscal 2016, I am optimistic about the outlook for worldwide equity markets, and for our global businesses. We have a strong and diverse pipeline, and an operating structure that has been carefully adjusted to deliver the strongest benefit for our clients – and our shareholders – in an evolving market environment.
During fiscal 2015, our resilience was tested in many ways. Looking ahead, I am confident that our business has an agile mix of global capabilities to continue to advance our core strengths and deliver sustainable, long term profitability.
David Kassie
Chairman & Chief Executive Officer
June 2015
Our Values at Work
The successful integration of our global businesses has fostered a strong culture of professionals who expertly coordinate the extensive experience and capabilities available across our global platform. In an increasingly dynamic market environment, we are united by our values. Throughout the following pages, we highlight just a few of the ways these values drive our unwavering commitment to delivering results for our clients and our shareholders.
