Our results for the fiscal year reflect the impact of persistent global growth concerns and depressed energy and commodity prices, which led to significantly reduced activity across financial markets. While our global diversification strategy has provided excellent and ongoing stability for our business, this was a year of unprecedented volatility, which significantly impacted all of our regional operations. The operating loss we reported serves as a bold reminder of the challenges facing our industry and our business.
It is our mission to become the dominant independent global investment bank and wealth management firm. As we navigate new market realities alongside our clients and shareholders, it is clear that in order to achieve this goal, we must work together to operate our business more efficiently and more effectively.
Strengthening alignment with our shareholders to improve our net income focus
Our success depends on the strength of many components. As incoming CEO, I have made it my priority to address the challenges facing our business, so that we can improve returns for shareholders and empower employees to do the best work of their careers. Alongside my partners, I am committed to creating a robust culture of accountability and partnership.
We have worked to eliminate any barriers that have previously inhibited our regional businesses from maximizing opportunities globally and have prioritized initiatives to deliver long term value creation. With a stronger bottom-line focus, we have taken steps to enhance global coordination across our firm, and have placed a renewed emphasis on the key verticals where we know we can drive growth.
A key priority for our business is ensuring that employees and senior managers are directly aligned with our shareholders’ best interests. To deliver on this priority, we have made adjustments to our compensation strategy and implemented a program to increase share ownership by our senior, revenue-producing employees. Additionally, in light of weakened financial conditions throughout the year, I, along with Pat Burke, President of Canadian Capital Markets, made the decision to surrender the full amount of the stock awards made to us during the third fiscal quarter in connection with our new senior executive roles. Going forward, the share-based portion of our compensation will come in the form of equity we will purchase through our long-term incentive plan.
Against the backdrop of a challenging year, I am pleased to say we were able to deliver a compensation strategy that ensures stability across our platform and protects the best interests of our company, our employees and our investors. Looking ahead, we will continue to adjust our long-term incentive plan structure to better align our compensation strategy with our performance.
Committed to sustainably reducing our fixed costs
With an enhanced leadership team in place, we are continuously examining opportunities to improve efficiencies across our organization. During the second half of the fiscal year, we made significant progress. We reduced fixed costs across our business, and we took steps to rationalize our global infrastructure and exit underperforming business lines. While the costs associated with our restructuring efforts impacted our profitability for the year, we made significant advancements to improve alignment across our operations, while enhancing the delivery of regional and global service levels to our clients.
The impact of these initiatives was evident in our fourth quarter results, where we were able to reduce our firm-wide operating expenses, less incentive compensation, by $7.1 million, which included a 23% decrease in general and administrative expense when compared to the previous fiscal quarter. Our restructuring initiatives over recent months leave us well positioned to return all of our business operations to profitability, and with this progress, I am confident that we are on track to deliver our projected $30 million in annualized savings.
Importantly, our renewed commitment to managing our costs is not a response to the changes in our operating environment – this is quite simply how we will manage our business from now on. We remain diligent in controlling our expenses and ensuring that we have the appropriate mix of staffing and resources to ensure that our company is appropriately positioned for success in any operating environment.
Positioning our business to excel as global growth visibility improves
The benefits of improving our alignment and driving incremental revenue growth are substantial. Throughout the organization, we offer our clients access to deep global resources and expertise, which gives us a tremendous opportunity to lead the market in all of the business segments where we operate. By operating globally, we are able to improve performance by extracting more value from our existing business and further strengthening our competitive advantage.
In our global wealth management operations, we have worked hard to establish Canaccord Genuity as the leading independent advisory group for the high net worth segment. We continue to enjoy an excellent recruiting environment and have welcomed industry professionals to help us grow our market share in all geographies.
We maintain a strong focus on improving the level of recurring revenues from our wealth management operations, to offset the inherent volatility of our capital markets businesses. At the end of the fiscal year, fee-based assets in our UK wealth management business comprised 70% of total assets. Assets in our Canadian in-house investment products have increased by 215% over the fiscal year, to $285 million. Looking ahead, we will continue to focus on improving the infrastructure, advisor and product mix across our global wealth management businesses – initiatives we expect will further contribute to delivering stable and consistent recurring revenue growth for our business.
Across our capital markets operations, we are working hard to align our core offerings to compete globally in our focus sectors, increase cross-selling opportunities and, ultimately, grow our profitability. Recently, we have made terrific strides in reorganizing our institutional sales and trading desks to strengthen collaboration between regions and disciplines. Our specialty teams are now working together to harness opportunities and deepen client relationships, to drive incremental revenue growth in all markets. Similarly, we have taken advantage of an excellent recruiting environment in all our markets to add talented professionals to our investment banking and equity research teams, to deliver enhanced global coverage across our core focus sectors. A multimillion-dollar revenue opportunity is readily available if we can provide opportunities for customers in our domestic markets across all of our global platforms.
A stronger, more aligned organization to drive shareholder value
By continuing to strategically reposition our businesses, I am confident that Canaccord Genuity is well positioned to emerge as the dominant independent mid-market investment bank and wealth management firm, capable of improving our revenues, achieving above-average market share and delivering growing long term returns for our shareholders.
Broad market fundamentals indicate that we are entering a more favourable environment for our business, and we are encouraged by improving activity levels across core focus sectors in all markets.
As we continue to drive our business forward, our organizational culture has to be front and centre in everything we do. We are partners. We are entrepreneurial. We are collegial, collaborative and open. We work hard. We will always operate with integrity – ethically and honestly. Finally, we are earnings focused and aligned with our shareholders.
As we navigate these difficult markets together, I encourage you to measure our success with a longer term view of creating significant shareholder value.
President & CEO
Canaccord Genuity Group Inc.