Canaccord Capital Inc. reports fourth quarter and fiscal year 2008 results



    (All dollar amounts are stated in Canadian dollars unless otherwise
    indicated)

    VANCOUVER, June 12 /CNW/ - Canaccord Capital Inc.'s (TSX & AIM: CCI)
revenue for the three months ended March 31, 2008 was $143.4 million, down
33.7% from the same quarter a year ago. Net loss for the same period was
$35.2 million, down $61.2 million, and diluted loss per share was $0.80, down
$1.34 from the same period a year ago. Included in these results are
non-recurring (non-GAAP) third party asset-backed commercial paper (ABCP) and
restructuring charges of $58.2 million (pre-tax) related to the Canaccord
Relief Program for clients holding ABCP, as previously announced on April 9,
2008, as well as a fair value adjustment of $4.2 million for the ABCP held by
Canaccord in treasury. Excluding the ABCP and restructuring charges and
adjustments, net income for the quarter would have been $7.2 million, down
$18.8 million from the same period a year ago and diluted earnings per share
(EPS) would have been $0.15.
    Commenting on the quarter, Paul Reynolds, President and CEO said, "The
fourth quarter of Canaccord's fiscal year was a very challenging one, as it
was for the entire industry. We were disappointed by our results and are
committed to our efforts to reduce costs and increase margins in any market
conditions. The charges we previously announced related to the Canaccord
Relief Program and restructuring resulted in a loss for the quarter and
further reduced earnings for the year. Despite this, Canaccord remained
profitable on a fiscal year basis. As we see a return to normal levels of
market activity, we are confident that Canaccord is well positioned and
capitalized to return to normal levels of profitability."
    As announced on April 9, 2008, a non-recurring (non-GAAP) charge of
$58.2 million pre-tax, $39.6 million after tax, or $0.82 per share has been
recorded in Q4 of fiscal 2008 to reflect the cost of the Canaccord Relief
Program and restructuring.
    An adjustment of $4.2 million related to ABCP held by Canaccord in
treasury has been recorded at March 31, 2008 to reflect management's view of
current market conditions and the limited liquidity for these notes. In total,
$12.8 million has been recorded as an ABCP fair value adjustment in fiscal
2008. This ABCP is now valued at $29.9 million on the company's balance sheet.
The fair value was estimated by management and the adjustment has been
recorded as an "ABCP fair value adjustment". The incremental adjustment of
$4.2 million booked this quarter is based on management's estimate of the fair
value of the ABCP by discounting expected future cash flows on a probability
weighted basis considering the best available data.
    Revenue for fiscal 2008 was $731.5 million, down 3.4% from a year ago.
Net income was $31.3 million for fiscal 2008, representing a decrease of 66.5%
from a year ago. Diluted EPS were $0.64, down $1.30 from $1.94 for the same
period a year ago. Excluding the ABCP and restructuring charges and
adjustments, net income would have been $79.3 million, down 15.1% compared to
a year ago, and diluted EPS would have been $1.63, down 16.0%.

    
    Financial highlights: Impact of ABCP adjustments

    -------------------------------------------------------------------------
    (C$ thousands,                           Three months
     except EPS in $)                   ended March 31, 2008
    -------------------------------------------------------------------------
                                                   Net
                                                income        Net
                                                 (loss)    income    Diluted
                         Revenue   Expenses  before tax     (loss)       EPS
    -------------------------------------------------------------------------
    Including ABCP
     adjustments         143,446    194,004    (50,558)   (35,154)     (0.80)
    -------------------------------------------------------------------------
    Canaccord Relief
     Program &
     restructuring             -    (58,200)    58,200     39,576
    -------------------------------------------------------------------------
    ABCP fair value
     adjustment                -     (4,172)     4,172      2,753
    -------------------------------------------------------------------------
    Excluding ABCP
     adjustments(1)      143,446    131,632     11,814      7,175       0.15
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (C$ thousands,                          Twelve months
     except EPS in $)                   ended March 31, 2008
    -------------------------------------------------------------------------
                                                   Net
                                                income
                                                before        Net    Diluted
                         Revenue   Expenses        tax     income        EPS
    -------------------------------------------------------------------------
    Including ABCP
     adjustments         731,539    680,008     51,531     31,334       0.64
    -------------------------------------------------------------------------
    Canaccord Relief
     Program &
     restructuring             -    (58,200)    58,200     39,576       0.82
    -------------------------------------------------------------------------
    ABCP fair value
     adjustment                -    (12,797)    12,797      8,436       0.17
    -------------------------------------------------------------------------
    Excluding ABCP
     adjustments(1)      731,539    609,011    122,528     79,346       1.63
    -------------------------------------------------------------------------

    (1) Excluding ABCP adjustments refers to results excluding the charge for
        the Canaccord Relief Program and restructuring for client held ABCP,
        and the ABCP fair value adjustments recorded in fiscal 2008. This
        presentation is considered to be non-GAAP. For more details see the
        F2008 annual MD&A page 18.

    Key developments subsequent to March 31, 2008:

    -   On April 9, 2008, Canaccord announced a non-recurring (non-GAAP) ABCP
        related charge of $58.2 million pre-tax, $39.6 million after tax, or
        $0.82 per share. This charge has been recorded against Canaccord's
        fiscal fourth quarter 2008 earnings

    -   Also on April 9, 2008, Canaccord announced 2 senior management
        departures:
        -  Robert Larose, Executive VP, Head of Private Client Services
        -  William Whalen, Executive VP, Head of the Fixed Income group at
           Canaccord

    -   Paul Reynolds, President and CEO of Canaccord Capital Inc., is acting
        as interim Head of Private Client Services and Mark Maybank will act
        as interim Head of Fixed Income. They are both overseeing the process
        of recruiting permanent leadership for these important divisions

    -   On May 27, 2008, three Regional Managers in Private Client Services
        were named (pending regulatory approval): Matthew Cicci and
        Patrick Lecky were both named Regional Managers (Western Canada), and
        Mike Reynolds was named Regional Manager (Eastern Canada)

    -   On June 11, 2008, Jamie Brown was named President of
        Canaccord Adams Inc. (the US operations), in addition to his duties
        as Head of Investment Banking. He succeeds Kevin Dunn who is assuming
        the title of Vice Chairman of US Operations.

    -   In May 2008, Canaccord closed a fully underwritten financing of
        6.7 million common shares at a price of $10.25 per share for total
        gross proceeds of $69.0 million. The net proceeds of the offering
        will be used for business development and general corporate purposes.
        Following this equity offering, Canaccord has 54.6 million common
        shares issued and outstanding.

    Highlights for the three months ended March 31, 2008 compared to the
    three months ended March 31, 2007:

    -   Revenue of $143.4 million, down 33.7% or $73.0 million from
        $216.4 million
    -   Expenses of $194.0 million, up 10.0% or $17.7 million from
        $176.3 million
    -   Net loss of $35.2 million, down $61.2 million from income of
        $26.0 million
    -   Excluding the Canaccord Relief Program and restructuring charge and
        the ABCP fair value adjustment, net income would have been
        $7.2 million, down 72.4% or $18.8 million from $26.0 million
    -   Diluted EPS of ($0.80), down $1.34 from $0.54
    -   Excluding the Canaccord Relief Program and restructuring charge and
        the ABCP fair value adjustment, diluted EPS would have been $0.15,
        down $0.39 from $0.54
    -   Return on equity (ROE) of (37.8)%, down from 29.0%
    -   Excluding the Canaccord Relief Program and restructuring charge and
        the ABCP fair value adjustment, ROE would have been 7.7%
    -   Working capital of $249.4 million, down 17.1% from $300.7 million
    -   Book value per diluted common share for the period end was $7.21,
        down 6.8% or $0.53 from $7.74
    -   Book value per diluted common share adjusted for the 6,733,250 common
        shares issued subsequent to year end was $7.53 per share
    -   The Board of Directors approved a quarterly dividend of $0.125 per
        share on June 11, 2008, payable on July 3, 2008 with a record date of
        June 24, 2008

    Highlights for fiscal 2008 compared to fiscal 2007:

    -   Revenue of $731.5 million, down 3.4% or $25.4 million from
        $756.9 million
    -   Expenses of $680.0 million, up 9.9% or $61.3 million from
        $618.7 million
    -   Net income of $31.3 million, down 66.5% or $62.2 million from
        $93.5 million
    -   Excluding the Canaccord Relief Program and restructuring charge and
        the ABCP fair value adjustments, net income would have been
        $79.3 million, down 15.1% or $14.2 million from $93.5 million
    -   Diluted EPS of $0.64, down $1.30 from $1.94
    -   ROE of 7.9%, down from 28.4%
    -   Excluding the Canaccord Relief Program and restructuring charge and
        the ABCP fair value adjustments, diluted EPS would have been $1.63,
        down 16.0% or $0.31 from $1.94

    Highlights of operations:

    -   Canaccord Adams led 20 transactions globally to raise total proceeds
        of $475.1 million(1) during fiscal Q4/08
    -   Canaccord Adams participated in a total of 395 transactions globally
        to raise total proceeds of $24.8 billion(1) during fiscal 2008
    -   Canaccord Adams ranked sixth in Canada for block trading market share
        of 5.6% in Q4/08, up from ninth place and 4.4% in Q4/07(2)
    -   Canaccord Adams ranked number one for the greatest number of
        transactions with 53 completed Private Investment in Public Equity
        (PIPE) transactions in North America that raised $912.5 million in
        proceeds during fiscal 2008(3)
    -   During Q4/08, Canaccord Adams led or co-led the following equity
        transactions:
        -  $80.0 million on TSX Venture for Melco China Resorts Investment
           Limited
        -  $64.5 million on AIM for Phorm, Inc.
        -  $58.0 million on TSX for Centenario Copper Corporation
        -  $40.1 million on AMEX for BPZ Energy, Inc.
        -  $35.9 million on AMEX & TSX Venture for Exeter Resource
           Corporation
        -  $30.0 million on TSX for Intrinsyc Software International, Inc.
        -  $28.8 million on TSX for Migao Corporation
        -  $28.5 million on AMEX for Metalico, Inc.
    -   Canaccord Adams analysts won three awards at the 7th Annual StarMine
        Analyst Awards:
        -  First for Industry Estimator in the Chemical & Utilities
           (including Trusts) Industry
        -  Second for Industry Stock Picker in the Diversified Industrials
           Industry
        -  Second for Industry Estimator in the Heath Care Industry
    -   In the Investment Executive's Annual Survey of Investment Advisors'
        2008 Report, Canaccord was ranked(4):
        -  First for Technology Tools and Advisor Desktop
        -  First for Branch Managers
        -  First for IPO and New Issues
        -  Tied for first for Freedom to Make Objective Product Choices
        -  Despite a challenging year, Canaccord's rating remained the same
           in 2008 as in 2007. An improvement was seen in areas where we have
           focused, such as ongoing training, client account statements and
           consumer advertising. With continued focus on the Private Client
           Services division going forward, we hope to improve our score in
           other categories in fiscal 2009
    -   Beginning in Q4/08, we have changed how we report the number of
        Investment Advisors in Private Client Services to reflect the
        composition of our advisor force. We are now reporting our Investment
        Advisors as Advisory Teams to reflect how the business functions.
        Advisory Teams are normally comprised of one or more Investment
        Advisors and their assistants and associates, who together manage a
        shared set of client accounts. In addition to this, we are no longer
        including Advisory Teams that are led by, or only include, an
        Investment Advisor who has been licensed for less than 3 years in our
        Advisory Team count. These teams (also referred to as Rookie Teams)
        have been removed from the count to reflect the fact that it
        typically takes a new Investment Advisor approximately three years to
        build an average sized book. We had 354 Advisory Teams as of Q4/08,
        down 14 from Q4/07
    -   Beginning in Q4/08, we have adjusted how we report fee-based revenue
        to become more consistent with how other firms in the investment
        dealer industry calculate it. Now included in fee-based revenue are
        fees earned in separately managed, advisor managed and fee-based
        accounts, as well as mutual fund and segregated fund trailer revenue.
        As a result of this change, Canaccord's fee-based revenue accounted
        for 16.3% of Private Client Services' revenue in Q4/08, compared to a
        recalculated 11.6% in Q4/07
    -   Assets under administration (AUA) of $14.3 billion, down 4.8% from
        $15.0 billion in Q4/07, compared to a decline in the TSX Venture
        Composite Index of 21.0% and an increase in the S&P/TSX Composite
        Index of 1.4% for fiscal 2008
    -   During fiscal 2008, Private Client Services implemented a new advisor
        managed account program known as Private Investment Management.
        Investment Advisors who have their Associate Portfolio Manager or
        Portfolio Manager designation now have the ability to provide
        discretionary management services similar to those offered by
        Investment Counsellors through this program

    -----------------------------
    (1) Source: FP Infomart and Company information
    (2) Source: Canada Equity
    (3) Source: Placement Tracker: includes placements for companies
        incorporated in Canada and the US
    (4) Ranking among regional and national independents and bank-owned
        investment dealers
    

    ACCESS TO QUARTERLY RESULTS INFORMATION:

    Interested investors, the media and others may review this quarterly
earnings release and supplementary financial information at
canaccord.com/investor/financialreports.

    ACCESS TO ANNUAL INFORMATION:

    Canaccord Capital Inc. will be filing its Audited Annual Financial
Statements and Management's Discussion and Analysis for the year ended
March 31, 2008 today on SEDAR (sedar.com)

    CONFERENCE CALL AND WEBCAST PRESENTATION:

    Interested parties can listen to our fiscal fourth quarter 2008 results
conference call with analysts and institutional investors, live and archived,
via the Internet and a toll free number. The conference call is scheduled for
Thursday, June 12, 2008, at 8:30 a.m. (Pacific Time), 11:30 a.m. (Eastern
Time), and 4:30 p.m. (UK Time). At that time, senior executives will comment
on the results for the fourth quarter of fiscal 2008 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 canaccord.com/investor/webcast.

    
    Analysts and institutional investors can call in via telephone at:
    -   416-644-3415 (within Toronto)
    -   1-800-732-6179 (toll free outside Toronto)
    -   00-800-2288-3501(toll free from the United Kingdom)
    

    A replay of the conference call can be accessed after 10:30 a.m. (Pacific
Time), 1:30 p.m. (Eastern Time) and 6:30 p.m. (UK Time) on June 12, 2008,
until 8:59p.m. (Pacific Time), 11:59 a.m. (Eastern Time) and 4:59 a.m. (UK
Time) on June 26, 2008, at 416-640-1917 or 1-877-289-8525 by entering passcode
21261151 followed by the number sign.

    ABOUT CANACCORD

    Through its principal subsidiaries, Canaccord Capital Inc. (TSX & AIM:
CCI) is a leading independent, full service investment dealer in Canada with
capital markets operations in the United Kingdom and the United States.
Canaccord is publicly traded on both the Toronto Stock Exchange (TSX) and
Alternative Investment Market (AIM), a market operated by the London Stock
Exchange. Canaccord has operations in two of the principal segments of the
securities industry: capital markets and private client services. Together,
these operations offer a wide range of complementary investment banking
services, investment products, and brokerage services to Canaccord's
institutional, corporate and private clients. Canaccord has approximately 1683
employees worldwide in 30 offices, including 23 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, Houston and Barbados.

    
    FOR FURTHER INFORMATION, CONTACT:

    North American media:                Investor relations inquiries:
    Scott Davidson                       Katherine Young
    Managing Director, Global Head       Vice President, Investor Relations
    of Marketing & Communications        Phone: 604-643-7013, email:
    Phone: 416-869-3875, email:          katherine_young@canaccord.com
    scott_davidson@canaccord.com

    London media:                        Nominated Adviser and Broker:
    Bobby Morse or Ben Willey            Simon Bridges or Tom Hulme
    Buchanan Communications (London)     Landsbanki Securities (UK) Limited
    Phone: +44 (0) 207 466 5000,         Phone: +44-0-207-426-9000,
    email: bobbym@buchanan.uk.com     email: tom.hulme@landsbanki.com
    

    -------------------------------------------------------------------------
    None of the information on Canaccord's Web site at: canaccord.com
    should be considered incorporated herein by reference.
    -------------------------------------------------------------------------





For further information:

For further information: North American media: Scott Davidson, Managing
Director, Global Head of Marketing & Communications, Phone: (416) 869-3875,
email: scott_davidson@canaccord.com; London media: Bobby Morse or Ben Willey,
Buchanan Communications (London), Phone: +44 (0) 207 466 5000, email:
bobbym@buchanan.uk.com; Investor relations inquiries: Katherine Young, Vice
President, Investor Relations, Phone: (604) 643-7013, email:
katherine_young@canaccord.com; Nominated Adviser and Broker: Simon Bridges or
Tom Hulme, Landsbanki Securities (UK) Limited, Phone: +44-0-207-426-9000,
email: tom.hulme@landsbanki.com


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