Q4 2024 Canaccord Genuity Group Inc Earnings Call

Speaker Change: [music].

Good morning, ladies and gentlemen, thank you for standing by.

Operator: Good morning, ladies and gentlemen. Thank you for standing by. I'd like to welcome everyone to the Canaccord Genuity Group Inc. Fiscal 2024 Fourth Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise.

I would like to welcome everyone to the Canaccord Genuity Group, Inc. Fiscal 2020 for fourth quarter results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. If you have any difficulties hearing the conference, please press star then 0 for operator assistance at any time. As a reminder, this conference call is being broadcast live, online, and recorded. I would now like to turn the conference call over to Mr. Dan Daviau, President and CEO. Please go ahead, Mr. Daviau.

If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press star two if you.

Have any difficulties here in the conference. Please press Star then zero for operator assistance at any time.

A reminder, this conference call is being broadcast live online and recorded.

Speaker Change: I'd now like to turn the conference call over to Mr. Dan <unk>, President and CEO. Please go ahead Mr. <unk>.

Daniel Joseph Daviau: Thank you, Operator, and thanks to everyone joining us for today's call. As always, I'm joined by Don MacFayden, our Chief Financial Officer. Today's remarks are complementary to our earnings release, MD&A, and supplemental financials, copies of which have been made available for download on CDARS Plus and on the Investor Relations section of our website at cgf.com. Within our update, certain reported information has been adjusted to exclude significant items to provide a transparent and comparative view of our operating performance. These adjusted items are non-IFRS financial measures.

Daniel Joseph Daviau: Thank you operator, and thanks for everyone joining us for today's call as always I'm joined by Don Mcclain, Our Chief Financial Officer.

Daniel Joseph Daviau: Today's remarks are complementary to our earnings release, MD&A and supplemental financials copies of which have been made available for download on SEDAR plus.

Daniel Joseph Daviau: And on the Investor Relations section of our website at <unk> Dot com within our update certain reported information has been adjusted to exclude significant items to provide a transparent and comparative view of our operating performance.

Daniel Joseph Daviau: These adjusted items, our non <unk> financial measures.

Daniel Joseph Daviau: Please refer to our notice regarding forward-looking statements and our description of non-IFRS financial measures that appear in our investor presentation and in our MD&A. And with that, let's discuss our fourth quarter and fiscal 2024 results. Firm-wide revenue for our fourth fiscal quarter amounted to $409 million, a decrease of 5% compared to the same period a year ago. We're in revenue of $1.5 billion for the full fiscal year, which was relatively in line with fiscal 2023. Excluding significant items, earnings per share amounted to $0.15 for the fourth fiscal quarter, bringing our full year adjusted EPS to $0.40.

Daniel Joseph Daviau: Please refer to our notice regarding forward looking statements and our description of non <unk> financial measures that appear in our investor presentation and in our MD&A.

Daniel Joseph Daviau: Although revenue was similar to the prior year, our fiscal 2024 earnings per share were impacted by higher non-controlling interest expense associated with stronger performance in our UK wealth management business and Australia operations and an increase in the effective tax rate in connection with our share price performance. Turning to expenses, on an adjusted basis, our compensation ratio was within our target range at 58% for the fiscal year. The year-over-year decrease of 3.5 percentage points was partially related to changes in our revenue mix and decreases in the value of certain unvested stock-based compensation awards. Non-compensation expenses as a percentage of revenue were 29% for the fourth quarter and 33% for the fiscal year. This represents a modest increase of 2.7 percentage points over fiscal 2023 and primarily reflects higher interest expense.

Daniel Joseph Daviau: And with that let's discuss our fourth quarter and fiscal 2024 results.

Daniel Joseph Daviau: Firm wide revenue for our fourth fiscal quarter amounted to $409 million, a decrease of 5% compared to the same period a year ago.

Daniel Joseph Daviau: We earned revenue of $1.5 billion for the full fiscal year, which was relatively in line with fiscal 2023.

Daniel Joseph Daviau: Excluding significant items earnings per share amounted to 15 cents for the fourth fiscal quarter.

Daniel Joseph Daviau: Our full year adjusted EPS to <unk> 40.

Daniel Joseph Daviau: Although revenue was similar to the prior year, our fiscal 2024 earnings per share were impacted by higher Noncontrolling interest expense associated with stronger performance in our U K wealth management business, and Australia operations and an increase in the effective.

Daniel Joseph Daviau: <unk> tax rate in connection with our share price performance.

Daniel Joseph Daviau: Turning to expenses on an adjusted basis, our compensation ratio was within our target range at 58% for the fiscal year.

Daniel Joseph Daviau: The year over year decrease of three five percentage points was partially related to changes in our revenue mix and decreases in the value of certain unvested stock based compensation awards.

Daniel Joseph Daviau: Non compensation expenses as a percentage of revenue were 29% for the fourth quarter and 33% for the fiscal year.

Daniel Joseph Daviau: This represents a modest increase of two seven percentage points over fiscal 2023, and primarily reflects higher interest expense.

Daniel Joseph Daviau: Increasing development costs associated with the growth of our wealth management business and increased communication and technology expenses reflecting inflation-driven price increases from certain suppliers. Our business continues to be well capitalized, and the board has approved a common share dividend of $0.085 bringing our full year dividend to $0.34. This reflects continued strong performance of our Wealth Management Division, which has been the primary driver of our resilience in 2024. On a consolidated basis, our Global Wealth Management Division earned revenue of $200 million in the fourth quarter, which was the strongest quarterly results on record.

Daniel Joseph Daviau: Increased development costs associated with the growth of our wealth management business and increased communication and technology expenses, reflecting inflation driven price increases from certain suppliers.

Daniel Joseph Daviau: Our business continues to be well capitalized and the board has approved a common share dividend of eight and a half cents, bringing our full year dividend to <unk> 34.

Daniel Joseph Daviau: This reflects continued strong performance of our wealth management Division, which has been the primary driver of our resilience in 2024.

Daniel Joseph Daviau: On a consolidated basis, our global wealth management Division earned revenue of $200 million in the fourth quarter, which was the strongest quarterly results on record, bringing revenue for the full fiscal year to a record $773 million for the fiscal year, an increase of 9%.

Daniel Joseph Daviau: Bringing revenue for the full fiscal year to a record $773 million, an increase of 9%. Client assets reached a record level of $104 billion, reflecting the positive inflows from recruiting and acquisition efforts, in addition to net client inflows and strengthening market valuation. The adjusted pre-tax income contribution from this division amounted to $34 million for the fourth quarter and $140 million for the fiscal year, an increase of 12% and our second highest result on record. UK wealth management delivered its strongest quarterly and fiscal year results on record.

Daniel Joseph Daviau: Client assets reached a record level of $104 billion, reflecting the positive inflows from recruiting and acquisition efforts. In addition to net client inflows and strengthening market valuations.

Daniel Joseph Daviau: The adjusted pre tax income contribution from this division amounted to $34 million for the fourth quarter and $140 million for the fiscal year, an increase of 12% and our second highest result on record.

Daniel Joseph Daviau: Our U K wealth management delivered its strongest quarterly and fiscal year results on record.

Daniel Joseph Daviau: The adjusted pre-tax net income contribution from this business improved by 18% for the full fiscal year to $102 million, an EBITDA of approximately 75 million pounds. Client assets increased by 7% year over year to $59 billion, and when measured in local currency, they improved by 5% to £35 billion. Revenue for the fourth quarter and the fiscal year amounted to $105 million and $411 million, respectively, year-over-year increases of 2% and 20%, respectively. Notably, interest revenue in this business for the full fiscal year increased substantially to $97 million.

Daniel Joseph Daviau: Adjusted pretax net income contribution from this business improved by 18% for the full fiscal year to $102 million and EBITDA of approximately 75 million pounds.

Daniel Joseph Daviau: Client assets increased by 7% year over year to $59 billion when measured in local currency improved by 5% to 35 billion pounds.

Daniel Joseph Daviau: Revenue for the fourth quarter, and the fiscal year amounted to $105 million and $411 million year over year increases of 2% and 20% respectively.

Daniel Joseph Daviau: Notably interest revenue in this business for the full fiscal year increased substantially to $97 million.

Daniel Joseph Daviau: We expect that contributions in this segment have peaked as we look towards an environment of gradual interest rate reduction. And finally, last week, we announced the acquisition of Cantab Asset Management, a chartered independent financial planning business with just over 900 million pounds of assets based in Cambridge, UK. Pending regulatory approval and customary closing conditions, this transaction is expected to close in the quarter ended September 2024.

Daniel Joseph Daviau: We expect the contributions in this segment have Pete as we look towards an environment of gradual interest rate reductions and.

Daniel Joseph Daviau: And we very much look forward to supporting the continued success of the employees and clients of this business. Client assets in our Canadian wealth business increased by 8% year-over-year to $38 billion, reflecting positive net inflows as well as an increase in market value. Notably, discretionary assets under management reached a record of $12 billion, up 34% year-over-year.

Daniel Joseph Daviau: And finally last week, we announced the acquisition of CANTAB asset management.

Daniel Joseph Daviau: Charter independent financial planning business with just over 900 million pounds of assets based in Cambridge, UK pending regulatory approval and customary closing conditions. This transaction is expected to close in the quarter ended September 2024, and we vary.

Daniel Joseph Daviau: Much look forward to supporting the continued success of the employees and clients of this business.

Daniel Joseph Daviau: Client assets in our Canadian wealth business increased by 8% year over year to $38 billion.

Daniel Joseph Daviau: Reflecting positive net inflows as well as increase in market values.

Daniel Joseph Daviau: Notably discretionary assets under management reached a record of $12 billion up 34% year over year.

Daniel Joseph Daviau: This business contributed revenue of $298 million for the fiscal year, a modest decline of 1.4%, primarily reflecting the downturn in new issue activity which persisted throughout the year. For context, full-year new issue revenue of $17 million in this business was more in line with our quarterly performance during periods where risk appetite is higher. As the new issue market improves and the appetite for risk increases, we anticipate this revenue stream to materially improve.

Daniel Joseph Daviau: This business contributed revenue of $298 million for the fiscal year, a modest decline of one 4%, primarily reflecting the downturn in new issue activity, which persisted throughout the year.

Daniel Joseph Daviau: For context full year, new issue revenue of $17 million in this business was more in line with our quarterly performance during periods, where risk appetite is higher.

Daniel Joseph Daviau: As the new issue market improves and the appetite for risk increases we anticipate this revenue stream to materially improve.

Daniel Joseph Daviau: The adjusted pre-tax net income contribution from our Canadian business amounted to $7 million and $36 million for the three and 12-month periods, respectively. And finally, our Australian business earned revenue of $17 million and $64 million for the fourth quarter and fiscal year, increases of 14% and 2% respectively. Managed client assets increased by 18% year over year to $6.4 billion and improved by 21%, surpassing the $7 billion mark when measured in local currency.

Daniel Joseph Daviau: The adjusted pretax net income contribution from our Canadian business amounted to $7 million and $36 million for the three and 12 month periods.

Daniel Joseph Daviau: And finally, our Australian business earned revenue of $17 million and $64 million for the fourth quarter and fiscal year increases of 14% and 2% respectively manner.

Daniel Joseph Daviau: Manage client assets increased by 18% year over year to $6 $4 billion and improved by 21%, surpassing the 7 billion dollar mark when measured in local currency.

Daniel Joseph Daviau: Revenue from new issue activities continued to be negatively impacted by the prolonged market downturn, but this decline was partially offset by higher commission and fee revenues, which improved by 5% year over year to $54 million. The adjusted pre-tax net income contribution from this business strengthened to $3.2 million for the fiscal year, but remained below the 2021-2022 level. We continue to recruit significantly into this business. I will note that this activity increases development costs, which are amortized faster than in North America, thereby impacting short-term profitability.

Daniel Joseph Daviau: Revenue from new issue activities continued to be negatively impacted by the prolonged market downturn, but this decline was partially offset by higher commission and fee revenues, which improved by 5% year over year to $54 million.

Daniel Joseph Daviau: The adjusted pretax net income contribution from this business strengthen to $3 $2 million for the fiscal year, but remain below 2021 2022 levels.

Daniel Joseph Daviau: We continue to significantly recruit into this business I will note that this activity increases development costs, which are amortized faster than in North America, thereby impacting short term profitability.

Daniel Joseph Daviau: Fiscal 2024 results in our capital markets Division continued to reflect a persistent sluggish backdrop, which resulted in a substantially lower appetite for risk equities and a notable decline in advisory completions over our core mid market focused sectors.

Daniel Joseph Daviau: Fiscal 2024 results in our capital markets division continue to reflect a persistent sluggish backdrop, which resulted in a substantially lower appetite for risk equities and a notable decline in advisory completions across our core mid market focus sector. When measured on an adjusted basis, this division returned to modest profitability in the second half of the fiscal year, reflecting positive contributions from Canada and Australia, which were offset by losses in our UK and US businesses. On a consolidated basis, revenue of $203 million for the fourth fiscal quarter decreased by 10% year-over-year but improved by 7% sequentially.

Daniel Joseph Daviau: When measured on an adjusted basis. This division returned to modest profitability in the second half of the fiscal year, reflecting positive contributions from Canada, and Australia, which were offset by losses in our U K and U S businesses on a consolidated basis revenue of $203 million for the fourth.

Daniel Joseph Daviau: With fiscal quarter decreased by 10% year over year, but improved by 7% sequentially.

Daniel Joseph Daviau: The increase primarily reflects a modest improvement in revenue from underwriting activities, which appear to be gaining momentum into the start of our current or. Full year revenue in this division was 14% lower than last year at $683 million and largely reflects the impact of lower advisory revenue contributions, primarily from our US business. Despite outpacing the broader market in fiscal 2023, we experienced a more challenging backdrop for advisory completions in our core mid-market focus sectors this year. Advisory revenue for the full fiscal year decreased by 37% to $230 million.

Daniel Joseph Daviau: The increase primarily reflects a modest improvement in revenue from underwriting activities, which appear to be gaining momentum into the start of our current quarter.

Daniel Joseph Daviau: Full year revenue in this division was 14% lower than last year at $683 million and largely reflects the impact of lower advisory revenue contributions primarily from our U S business.

Daniel Joseph Daviau: Despite outpacing the broader market in fiscal 2023, we experienced a more challenging backdrop for advisory completions in our core mid market focused sectors. This year.

Advisory revenue for the full fiscal year decreased by 37% to $230 million.

Daniel Joseph Daviau: Although our U.S. business was still our largest contributor in this segment with a revenue of $130 million, it also experienced the most notable year-over-year decline of 48%. I will note that Q4 advisory revenue in our Canadian business improved by 17% year over year to $33 million. This is the strongest result of the last seven fiscal quarters and largely reflects the completion of a substantial transaction in the technology sector. Consistent with broader industry sentiment, we believe we have passed the trough for activity levels in the advisory segment, and we look forward to delivering on a strong pipeline of mandates as market confidence improves. Investment banking revenue for the fourth quarter and fiscal year increased by 21% and 18%, respectively, when compared to the prior year's comparison period.

Daniel Joseph Daviau: Although our U S business was still our largest contributor in this segment with revenue of $130 million. It also experienced the most notable year over year decline of 48%.

Daniel Joseph Daviau: I will note that Q4 advisory revenue in our Canadian business improved by 17% year over year to $33 million.

Daniel Joseph Daviau: This is the strongest result of the last seven fiscal quarters and largely reflects the completion of a substantial transaction in the technology sector consistent.

Daniel Joseph Daviau: Consistent with broader industry sentiment, we believe we passed the trough for activity levels in the advisory segment, and we look forward to delivering on our strong pipeline of mandates as market confidence improves.

Daniel Joseph Daviau: Investment banking revenue for the fourth quarter and fiscal year increased by 21% and 18% respectively when compared to the prior year's comparison periods.

Daniel Joseph Daviau: Fourth quarter investment ranking revenue of $49 million remains well below historical levels but also represents the strongest result in the last seven fiscal quarters. We anticipate continued improvement and new issue activity, as you will have seen this trend playing out in the broader market since the start of the current fiscal quarter. And finally, our sales, trading, and specialty desks remain steady, supporting our clients through bouts of uncertainty and providing liquidity where required.

Daniel Joseph Daviau: Fourth quarter investment banking revenue of $49 million remained well below historical levels, but also represents the strongest result in the last seven fiscal quarters we.

Daniel Joseph Daviau: We anticipate continued improvement in new issue activity as you will have seen this trend playing out in the broader market since the start of the current fiscal quarter and.

Daniel Joseph Daviau: And finally, our sales trading and specialty das remains steady supporting our clients through bouts of uncertainty and providing liquidity where required.

Daniel Joseph Daviau: Okay.

Daniel Joseph Daviau: We begin the new fiscal year with good momentum across all business lines. While many headwinds have tapered, giving us optimism for the coming year, our outlook is not without risk. Performance could still be impacted by ongoing geopolitical crises, persistent inflation, and uncertainty regarding the U.S. presidential election.

Speaker Change: We begin the new fiscal year with good momentum across all business lines, while many headwinds have tapered, giving us optimism for the coming year. Our outlook is not without risk performance could still be impacted by ongoing geopolitical crises persistent.

Speaker Change: <unk> and uncertainty regarding the U S presidential elections.

Daniel Joseph Daviau: We have consistently used market downturns productively with a focus on making our business more competitive and strengthening alignment with our shareholders. During the quarter, we completed a non-brokered private placement of convertible ventures with a long-term supportive shareholder for gross proceeds of $110 million. A portion of the proceeds has been allocated to supporting increased activity levels in our business and protecting our ability to be opportunistic. The remainder was used to support the formation of an independent limited partnership to be owned by the employees of the company, which supports our long-standing objective of increasing equity ownership among our top producing employees.

Speaker Change: Have consistently used market downturns productively with a focus on making our business more competitive and strengthening alignment with our shareholders.

Speaker Change: During the quarter, we completed a non brokered private placement of convertible debentures with a long term supportive shareholder for gross proceeds of $110 million.

Speaker Change: A portion of the proceeds have been allocated to supporting increased activity levels in our business and protect our ability to be opportunistic. The remainder were used to support the formation of an independent limited partnership to be owned by the employees of the company, which supports our long standing objective.

Speaker Change: <unk>, increasing equity ownership among our top producing employees.

Speaker Change: Importantly, this partnership creates a perpetual and dynamic employee investment vehicle to ensure a consistent minimum level of employee ownership in our company, while creating a heightened sense of ownership over decisions results and performance that aligns with our shareholders' best interest.

Daniel Joseph Daviau: Importantly, this partnership creates a perpetual and dynamic employee investment vehicle to ensure a consistent minimum level of employee ownership in our company, while creating a heightened sense of ownership over decisions, results, and performance that aligns with our shareholders' best interests. Last night, we also announced some plan changes to our board of directors. We believe that the current slate of directors nominated for election at our upcoming annual general meeting in August possesses an optimal mix of experience to guide the long-term strategy and ongoing business operations of the company.

Speaker Change: Last night, we also announced some planned changes to our board of directors.

Speaker Change: We believe that the current slate of directors nominated for election at our upcoming annual General meeting in August possesses an optimal mix of experience to guide the long term strategy and ongoing business operations of the company.

Daniel Joseph Daviau: Importantly, a smaller focus board will improve our agility and increase accountability over strategic priorities while providing an appropriate balance of independence to ensure accountability and sound risk management. I look forward to working with our long-serving and newer independent directors as we continue to explore a range of opportunities to increase the value of our company, just as we have always done. In closing, I'd like to thank our valued shareholders for your continued support.

Speaker Change: Importantly, a smaller focused board will improve our agility and increase accountability over strategic priorities, while providing an appropriate balance of independence to ensure accountability and sound risk management I look forward to working with our long serving and newer independent directors as well.

Speaker Change: Continue to explore a range of opportunities to increase the value of our company just as we have always done.

Speaker Change: In closing I'd like to thank our valued shareholders for your continued support together with my colleagues from across our wealth and capital markets businesses. We remain steadfastly committed to operating in your best interest as we strive to increase the value of our company.

Daniel Joseph Daviau: Together with my colleagues from across our wealth and capital markets businesses, we remain steadfastly committed to operating in your best interest as we strive to increase the value of our company. With that, Dawn and I will be pleased to take questions. Operator, if you could please open the lines.

Speaker Change: With that Don and I will be pleased to take questions. Operator, if you could please open the lines.

Operator: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you would like to ask a question, press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star two. There will be a brief pause while we compile the Q&A list. Your first question comes from Jeff Fenwick with Cormark Securities. Your line is now open.

Speaker Change: Thank you, ladies and gentlemen, we will now conduct a question and answer session. If you would like to ask a question Press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press star two there will be a brief pause while we compile the Q&A roster.

Speaker Change: Your first question comes from Jeff Fenwick with <unk> Securities. Your line is now open.

Speaker Change: Hi, Good morning, everyone. Good morning, Jeff.

Jeffrey Michael Fenwick: So Dan, just wanted to circle back on the employee share purchase program that you just articulated for us. I see in the description there in your release that there's now a component that's, I think, a top-up provision. It looks like it is going to be participating as the employees pay back by topping up some from their end. So could you just maybe speak to that? I think that's a bit of a new wrinkle compared to what we've heard from you guys before.

Jeffrey Michael Fenwick: So Dan just wanted to circle back on the.

Jeffrey Michael Fenwick: The employee share purchase program that you just articulated there for us I see in the description there on your release that there is now a component that's I think a top up provision it looks like <unk>.

Jeffrey Michael Fenwick: And of course, it's going to be participating.

Speaker Change: As the employees payback by by topping up some from it sounds so could you just maybe speak to that that I think that's a bit of a new wrinkle versus what we'd heard from you guys before yes, sorry.

Daniel Joseph Daviau: Yeah, sorry. It certainly wasn't meant to be a new wrinkle, Jeff.

Speaker Change: Certainly wasn't meant to be a new wrinkle, Jeff so.

Speaker Change: What will happen is as you know.

Daniel Joseph Daviau: So what will happen is, as you know, a very small portion of the bonuses that we pay go to repay the loan. It's very similar to our LTIP program. We used to deduct 20% of our bonuses into a stock-based program. So it's the same 20% that we used to deduct. Those obviously come in and are taxed at full tax rates, some of which, a small portion of which we're recovering.

Speaker Change: The very small portion of the bonuses that we pay go to repay the loan it's very similar to our <unk> program, we used to deduct 20% of our of our bonuses and stock based program. So it's the same 20% that we used to deduct those obviously come in and our tax that full tax rates some of which.

Speaker Change: Which is a small portion of which were recovering we would take that down as a comp charge in our statements. It won't change our overall comp ratio at all it's a relatively negligible number in the bigger picture of stock.

Daniel Joseph Daviau: We would take that down as a comp charge in our statements. It won't change our overall comp ratio at all. It's a relatively negligible number in the bigger picture of things, so you'll see no real change to our historical comp rates. You'll see no real change to our numbers and the guidance that we've given you with respect to comp charges. So it really is meant as a slight catch-up on the tax impact of the after-tax effect on the bonuses on a very small portion of bonuses. So, like I say, it's a very, very negligible number in the broader picture of our comp charges, and you won't see it in any substantial way on our statements.

Speaker Change: So youll see no real change to our historical comp rates Youll see no real change to our numbers in the guidance that we've given you with respect to comp charges. So it really is meant as a slight catch up on the tax impact.

Speaker Change: The after tax effect on the bonuses on a very small portion of bonuses like I say it isn't.

Speaker Change: As a very very negligible number in the broader picture of our comp charges and you won't see it in any substantial.

Speaker Change: Through our through our statements. Okay. Thank you that's helpful and I was looking for you on that front and then I.

Jeffrey Michael Fenwick: Okay, thank you. That's helpful. Yeah, I was a little confused on that front. And then, I guess, going forward, does it change? Does the comp model change at all going forward with respect to other stock-based comp, like incentives that you typically pay out? Or how do we think about that? I guess this is a follow-on.

Speaker Change: I guess going forward I mean does it does it change does the comp model change at all going forward with respect to other other stock based comp incentives that you typically pay out or how do we think about it that I guess this is a follow on there.

Daniel Joseph Daviau: No, I mean, the employee share program, the program that we just finished, or just announced, and we're just instituting right now, it really replaces, you know, the LTIP program that was historically there. Like I said, we used to take 20% of the bonuses and buy stock with it. Now we've kind of bought it all up front, so to speak, and then repay the loan.

Speaker Change: No I mean.

The employee share program the program that we just finished.

Speaker Change: Announced and we're instituting right now it really for a chunk of employees replaces.

Speaker Change: The <unk> program that historically was there like I said, we used to take 20% of the bonuses and buy stock with it and now we've kind of bought it all upfront so to speak and then repay the loan. So there is no substantive change in anything with senior executives of the firm will continue to participate in the.

Speaker Change: And the PSU program the performance share unit program.

Speaker Change: Which will depend on future results of the business. So there's no material change in any of our other comp programs. Our employee stock purchase program will stay in place all of the existing programs and stay in place and more importantly, our overall comp charges won't change materially.

Daniel Joseph Daviau: So there's no substantive change in anything. The senior executives of the firm will continue to participate in the PSU program and the performance share unit program, which will depend on future results of the business. So there's no material change in any of our other comp programs. Our employee stock purchase program will stay in place. All the existing programs will stay in place. And, more importantly, our overall comp charges won't change materially.

Jeffrey Michael Fenwick: And then maybe to follow on from that is a bit more of a philosophical question, just about, you know, the obviously importance of retaining and incentivizing your existing employee base versus, you know, investing for growth. You could have raised 100 million or 110 million and put that towards, you know, acquisitions and UK or Canadian wealth. Like, how do you think about where you are at this point? I mean, we haven't seen growth in some areas, like Canadian wealth, for example, for a while. And how do you think about managing that balance within the

Speaker Change: Okay, and then maybe the follow on to that is a bit more of a philosophical question just about there'll be obviously the importance of retaining an incentive your existing employee base versus investing for growth you could have raised $100 million of $110 million and put that towards acquisitions in UK welfare, Canada well. Thanks.

Speaker Change: How do you think about where you are at this point I mean.

Speaker Change: We haven't seen growth in some areas like Canadian well for example in a while and how do you think about managing that that balance within the firm, yes, we still have.

Daniel Joseph Daviau: Yeah, well, we still have, you know, a significantly available balance sheet for growth programs or growth programs in wealth. You say you haven't seen growth in the Canadian wealth business, but you know, we've been fighting the lack of new issue markets. So although we've seen, you know, our, our fee-based income go up, our commission-based income hasn't gone up. So when you see the combined line, it doesn't look like it's moved a lot.

Speaker Change: Significantly available balance sheet for growth programs, our growth programs are in wealth.

Speaker Change: You said you haven't seen growth in the Canadian wealth business.

Speaker Change: We've been fighting.

Speaker Change: The lack of new issue market, so although we've seen.

Speaker Change: Our our fee based income go up our commission based income Hasnt gone up so when you see the blended line. It doesn't look like it's moved a lot but under under the surface. There is.

Jeffrey Michael Fenwick: But under the surface, there is, you know, the plan is executing perfectly according to plan, we continue to have capital to grow, and realize that those loans that that $80 million loan to the employee trust repay quickly, right? It repays, you know, over four or five years. So even this year, it'll repay. So those proceeds are available to the company to help it grow, albeit, you know, over a four-year period. So we continue to have capital to facilitate growth in the business.

Speaker Change: <unk> is executing perfectly. According to plan, we continue to have capital to grow realized that those loans that $80 million loan to the employee Trust repays quickly alright. It repays.

Speaker Change: Four or five years, so even this year it'll repay so those proceeds are available to the company to help it grow albeit.

Speaker Change: Over over a four year period. So we continue to have capital to facilitate the growth in the business.

Daniel Joseph Daviau: And then maybe just one last one on this front. Can you give us an estimate then on the, if we think about sort of the ownership here, if we include the efforts you just did by insiders, where does it settle in, I guess, on a fully diluted basis?

Speaker Change: Okay. That's helpful. Thank you and then maybe just one last one on this front.

Speaker Change: Can you give us an estimate of then on the if we think about sort of the ownership here.

Speaker Change: The efforts you just did buy by insiders, where does it settle out I guess on a fully diluted basis.

Jeffrey Michael Fenwick: It's honestly really hard to project because I don't have visibility into all the employees. What I do have visibility into is this employee stock program. All of the insiders of the company who have to report, I know that. I truly have visibility into the Canadian employees, too, because they all hold their accounts here. And then, when we add all that up, we think the number is at least 40% in terms of employee ownership in the business right now, maybe a little bit higher. But from what I can see, 40. It could be higher because I can't see everything. Well, thanks for that question.

Speaker Change: It's honestly hard to project because I don't have the visibility into all of the employees.

Speaker Change: Have visibility into is this employee stock program all of the insiders of the company who have to report I know that.

Speaker Change: Truly a visibility into the Canadian employees do because they all hold their accounts here and then finally.

Speaker Change: And when we add all that up we think the numbers at least 40%.

Speaker Change: In terms of employee ownership in the business right now, maybe a little bit through that but from what I can see 40, it could be higher because I can't see everyday.

Jeffrey Michael Fenwick: Okay, fair enough. Well, thanks for that caller. I'll requeue.

Speaker Change: Okay fair enough well, thanks for that color I'll requeue.

Jeffrey Michael Fenwick: Thanks, Jeff.

Speaker Change: Your next question comes from Tien Gabriel with Echelon wealth partners. Your line is now open.

Operator: Your next question comes from Tanvi Gabriel with Eshon Wealth Partners. Your line is now open.

Tanvi Gabriel: Hi, good morning. I'll be sub-scribing for my analyst, Rob Goff. And one of the first questions that I have is, could you please elaborate on your outlook in terms of both the underwriting pipelines and the advisory pipelines?

Tien Gabriel: Hi, good morning, I'll be subbing in for my Analyst, Rob Cox and one of the first questions that I have is could you. Please elaborate on your outlook in terms of both the underwriting pipelines in the advisory pipeline.

Speaker Change: Sure Tambien good question and as you know an impossible question to answer but.

Daniel Joseph Daviau: Sure, Tanvi, good question. And, as you know, an impossible question to answer, but especially as it relates to the underwriting pipeline. I mean, the M&A pipeline, as I've always said, we've got reasonably good visibility on it. We feel, you know, increasingly comfortable with that, you know, going up to the right. You know, last quarter, the quarter that we just reported was a bit of an anomaly in that we had, you know, a fair number of transactions in and about year-end, and it's really hard to project the date that something will close and that we can book revenue. It's easier, more easy to project that they're going to close.

Speaker Change: Especially as it relates.

Speaker Change: <unk> underwriting pipeline I mean, the M&A pipeline as I've always said, we've got reasonably good visibility on it we feel increasingly comfortable that thats going up to the right.

Speaker Change: Last quarter the quarter that we just reported was a bit of an anomaly in that we have a fair number of transactions and in about year end and it's really hard to project that date, that's something will close and that we can book in revenue, it's easy to more Easter project that theyre going to close so I think at the end of the quarter, we probably ran into a bit of a delay on.

Daniel Joseph Daviau: So I think at the end of the quarter, we probably ran into a bit of a delay on some of the deals we were working on. Again, we continue to feel that that line is moving up, and feel pretty good about our M&A pipeline going forward. You know, I don't think we'll get back to pandemic levels, but certainly, it will continue to improve from here.

Speaker Change: Some of them some of the deals we're working on again, we continue to feel that that line is moving up.

Speaker Change: And feel pretty good about about our M&A pipeline going forward.

Speaker Change: Don't think we get back to pandemic levels, but we certainly.

Daniel Joseph Daviau: Underwriting, you just need to look at the underwriting tables for the last two months and you can see that there's been a fair amount of activity, particularly in the resource sector and the mining sector, but not exclusively in the mining sector. I mean, half of our underwriting activity in the quarter that we just announced was mining-related, primarily in Canada and Australia. There is a reason why Canada and Australia made money last quarter, and the UK and the US didn't make money because mining is less important to those two markets.

Speaker Change: It continues to improve from here underwriting you just need to look at the <unk>.

Speaker Change: Underwriting tables for the last two months that you can see that there's been a fair amount of activity, particularly in the resource sector and the mining sector, but not exclusively in the mining sector I mean half of our underwriting activity in the quarter that we just announced was mining was mining related primarily in Canada and Australia. There is a reason why.

Speaker Change: Canada, and Australia have made money last quarter in the UK and the U S didn't make money because mining is less important to those two markets. So.

Daniel Joseph Daviau: So we continue to see a pretty robust mining pipeline. If you believe that manufacturing is picking up, which we do, then you believe that mining will continue to do well. And we've seen a fair amount of financing in that sector. Your own firm, my firm, and a lot of other firms have invested in that. And as I suspect, you know, we're one of the dominant mining underwriters in the world.

Speaker Change: We continue to see a pretty robust mining pipeline. If you believe that manufacturing is picking up.

Speaker Change: Which we do.

Then you believe that mining will continue to do well and we've seen a fair a fair amount of financing in that sector your own firm by firm and a lot of other firms have seen that.

Speaker Change: As I suspect you know, we're one of the dominant mining underwriters in the world. So we've seen the advantages that in a large number of trades this year alone and again.

Daniel Joseph Daviau: We've seen the advantages of that in a large number of trades this year alone. And again, you know, Christine or someone can just send you a list of all the publicly announced deals. We don't see that changing. I think what we're hopeful for, and I'm not sure if we're hopeful for it this upcoming quarter or the quarter after the quarter after that, is a bit more of a return to risk capital, which is where independent firms tend to be incredibly active, whether it's life science, technology, or other sectors. I'm cautiously optimistic that it's coming back. It feels like it's coming back. There are early signs in our underwriting pipeline and underwriting activity that it's coming back.

Speaker Change: <unk> going to send you a list of all the publicly announced deals we don't see that changing I think what we're hopeful for and I'm not sure. If we're hopeful for this upcoming quarter or the quarter. After the quarter. After that is a bit more of a return to risk capital, which is where independent firms tend to be incredibly active in whether it's the life science technology or other.

Speaker Change: Their sectors.

Speaker Change: Im cautiously optimistic that that's coming back it feels like it's coming back there's early signs in our underwriting pipeline in underwriting activity, it's coming back we've done crypto transactions, we've done lots of other transactions outside of mining and we think that that line item will improve that we're at a cyclical low.

Daniel Joseph Daviau: We've done crypto transactions. We've done lots of other transactions outside of mining. And we think that, you know, that line item will improve, that we're at a typical low, that we're through the trough, and we're certainly starting to, you know, certainly our results to date and our pipeline going forward feel that that's going to continue to increase. But that's a more difficult question to answer, because you just don't have that forward visibility like you have in M&A.

We are through the trough and we're certainly starting to certainly our results to date and our pipeline going forward feels that that's going to continue to increase but thats a more difficult question to answer because you just don't have that forward visibility like you have an M&A.

Speaker Change: Right, Okay and <unk>.

Tanvi Gabriel: Right, okay. And on the wealth management side, and specifically in the UK, do you see any notable trends that are affecting client portfolios?

Speaker Change: Just on the wealth management side.

Speaker Change: Typically in the UK do you see any notable trends that are affecting.

Speaker Change: Our client portfolio.

Speaker Change: No not really I mean in the UK in particular as we've said in the past we've really been focused on.

Daniel Joseph Daviau: Not really. I mean, in the UK in particular, as we've said in the past, we've really been focused on, you know, net new assets and organic growth. That's been our focus for the last year and a half, two years, and it's working. We are attracting [inaudible] customers, and we're seeing early signs of that. So as a result, you're going to see net new assets grow because you won't have the negative offset of the positives that we have. And that's what we're starting to see. We're seeing it in the UK, and we're seeing it in Canada.

Speaker Change: Net new assets in organic growth that's been our focus for the last year and a half two years.

Speaker Change: And it's working we are attracting.

Speaker Change: A huge number of assets into our U K wealth platform that hasn't been the issue. The issue is people pulling out assets out of that platform and it is not because we're doing a poor job or we're losing clients as people reworking their personal balance sheets or using their investment portfolios to fund their lifestyle.

Speaker Change: In particular, because we've been in a difficult economy raising rates mortgages that have to be refinanced and we track all the money that flows out of the system, we think that the money flowing out of the system will reduce.

Speaker Change: And we're seeing early signs of that so as a result, youre going to see net new assets grow.

Speaker Change: Because you won't have the negative offset of the positives that we have and Thats what were starting to see we're seeing that in the U K, we're seeing that in Canada.

Daniel Joseph Daviau: And so we feel pretty comfortable about our asset growth, independent of just market asset growth. If you look through all of our wealth businesses this year, and it's for a variety of reasons, you know, it really, excuse me, is for a variety of reasons. But, you know, when you look through our business, the UK assets grew 7%, Canada's assets grew 8%, and Australia's assets grew 18% this year. So, you know, that's not all market growth.

Speaker Change: And so we feel pretty comfortable about our asset growth independent of just market asset growth if you will.

Speaker Change: Look through all of our wealth businesses this year and it's for a variety.

Speaker Change: Excuse me is for a variety of reasons, but.

Speaker Change: When you look through our business the UK assets grew 7% Canada's assets grew 8% and Australia. These assets grew 18%. This year. So that's not all market growth.

Speaker Change: That's other things as well, whether it's bringing on new advisors or organic growth inside our <unk>.

Daniel Joseph Daviau: That's, you know, that's other things as well, whether it's bringing on new advisors or organic growth inside our, you know, inside our book, all of those things have helped cause our assets to hit a record new level this year of $104 billion.

Speaker Change: Inside our book all of those things have helped cause our assets at a record new level this year of $104 billion.

Speaker Change: Right. Okay. Thank you thank.

Tanvi Gabriel: Right. Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Steven Bohlen with Raymond James Your line is now.

Operator: Your next question comes from Stephen Boland with Raymond James. The line is open now.

Stephen Boland: Hey Stephen, good morning.

Unknown Attendee: Hey, Steven.

Dan: Good morning, Dan I, just wanted to talk about the changes at the board.

Unknown Attendee: Yes.

Speaker Change: Look at Canaccord. This organization is more complex than ever.

Speaker Change: Standard regulatory issues, yet this may be the smallest board that the company.

Speaker Change: Maybe ever had at least from my memory over the past several years and the two members you brought in certainly have.

Speaker Change: Expertise.

Speaker Change: But there is no real continuity over the past couple of years. So I'm just wondering.

Speaker Change: Are you.

Speaker Change: Is there any risk that you are spread too thin here like youre going to have these board members on multiple committees I presume.

Speaker Change: So.

Speaker Change: You are going to be to spread on governance.

Speaker Change: Yes.

Speaker Change: Too many too many task to take on whats a five person board.

Stephen Boland: Dan, I just want to talk about the changes on the board. You know, when I look at Canaccord, this organization is more complex than ever, you've got some outstanding regulatory issues, yet this may be the smallest board that the company has probably ever had, at least from my memory over the past several years. And the two members you brought in certainly have, you know, expertise, but there's been no real continuity over the past couple of years.

Steve: Yes, no good question, Steve and we thought long and hard about that and then the <unk>.

Steve: Trade off of that is having an agile board that can operate really quickly that we can bring together at a moment's notice and being very hands on and the people on the board. The five people on the board all want to be incredibly hands ongoing forward. You'll also note that of the new board I'm, the only non independent person on the board as the.

Stephen Boland: So I'm just wondering, I mean, is there any risk that you're spread too thin here? Like you're going to have these board members on multiple committees, I presume. So is there a risk that, you know, you are going to be too spread out on governance and You know, too many, too many tasks to take on with a five person board?

Daniel Joseph Daviau: Yeah, no, a good question, Stephen. We thought long and hard about that. And then, you know, the trade-off for that is having an agile board that can operate really quickly that we can bring together at a moment's notice and be very hands-on. And the people on the board, the five people on the board, all want to be incredibly hands-on going forward. You'll also note that, you know, on the new board, I'm the only non-independent person on the board as the CEO; everybody else is independent.

Steve: CEO everybody else is independent Michael <unk>, who has been on.

Daniel Joseph Daviau: Michael Orbach, who has been, you know, on the board for the last several years, he'll continue to be, he'll be the lead independent director. Terry Lyons, who has been on the board off and on for 19 years, is staying on the board. I only say off because he's been off the board for a year.

Steve: On the board for the last several years.

Steve: He'll continue to be.

It will be the lead independent director Terry Lyons, who has been on the board often on for 19 years is staying on the board and I only say off because it was off the board for a year.

Daniel Joseph Daviau: You know, he chairs our audit committee, he has incredible corporate history and incredible corporate memory in terms of who's there. And it was important that he stay on the board and continue to chair the audit committee. And then, of course, we brought on Cindy Tripp.

He chairs our audit committee he has incredible corporate history, and an incredible corporate memory in terms of who is there and it was important that he stay on the board and continue the chair of the Audit Committee and then of course, we brought on Cindy Cindy.

Daniel Joseph Daviau: Cindy is well known to the Canadian investment community. She worked for one of our competitors for years, and more importantly of late, you know, on the Ontario Securities Commission's board and chaired the task force on securities law reform. So she's been important.

Steve: <unk> is well known to the Canadian investment community. She worked at one of our competitors for years and more importantly of late.

Steve: The Ontario Securities Commission Board and chair of the Task Force and Securities Law reforms. So she has been important and then finally Shannon runs a very substantial.

Daniel Joseph Daviau: Then finally, Shannon runs a very substantial U.S. wealth business and certainly brings that experience to our board, as, you know, a lot of the trends in the U.S. play out elsewhere in the world. So I think we've got the right-sized board for how quick and agile our organization is. And that's the trade-off between a big board and a smaller board.

Steve: The us wealth business and certainly brings that experience to our board as a lot of the trends in the U S play out elsewhere in the world. So I think we've got a right sized board for how quick and agile our organization is.

Daniel Joseph Daviau: Everyone knows what they're getting involved in. The committees are all staffed. Really, there are just two major committees, a governance committee, which Michael chairs, and an audit and risk committee, which Terry chairs. So I think we're in a pretty good place right now to kind of, you know, drive value for the company. Our plan, you know, to be clear, is to build value for our shareholders. Yes, we tried to go private years ago, a year ago, and yes, there's a persistent rumor out there that we'll try again, but that's not what this board's for.

Steve: And that's the trade off between a big board and the smaller board everyone knows what Theyre getting involved in the communities are all staff really Theres, just two major committees and governance Committee, which Michael's chairs and an audit committee audit and risk Committee, which Terry chairs. So I think we're in a pretty good place right now to kind of.

Steve: Drive value for the company our plan.

Steve: To be clear is to build value for our shareholders. Yes, we tried to go private years, a year ago and yet there's a persistent rumor out there that we will try again, but thats not what this board for this board to allow us to as.

Daniel Joseph Daviau: This board is to allow us to, you know, as quickly as possible and as prudently as possible, create immense value for our shareholders. We believe, and I think you agree, that we've got incredible asset value in our business and incredible earnings potential, and our job is to realize that and make that stock go up a lot. And that'll be the goal here over the next year.

As quickly as possible and as prudently possible create immense value for our shareholders. We believe and I think you agree that we've got an incredible asset value in our business, an incredible earnings potential and our job is to realize that and make that stock go up a lot and that that'll be that'll be the.

Steve: Yes.

Steve: The goal here over the next over the next year. So I think we've got a board well setup I become chairman that's just a matter of efficiency really the job of the chairman as I think you know when you have a lead independent director are all chairman David Kassie deliver out he still owns the stock.

Daniel Joseph Daviau: So I think we've got a board well set up. I've become chairman. That's just a matter of efficiency, you know, really the job of a chairman, as I think you know, when you have a lead independent director. Our old chairman, David Cassie, he's still around. He still owns the stock. He's, you know, still involved in the business. But really, the job of the chairman is to facilitate information flow between the management team, the company, and the board. I can do that best. And I can do that most quickly.

Steve: Still involved in the business.

Stephen Boland: We certainly still have all the governance associated with it. And like I say, the board's more independent today than it's ever been, at 80% independent. So, you know, we feel pretty good about the structure here going forward. And we just felt a small, efficient, cost-effective board was the right way to kind of move forward.

Steve: But really the job of chairman is to facilitate information flow between.

Steve: The management team the company and the board I can do that best I can do that most quickly.

Steve: We certainly still have all the governance associated and like I say the board is more independent today than it's ever been at 80% independent So we feel pretty good about the structure here going forward and we just felt the small efficient cost effective board was the right way to kind of move forward.

Daniel Joseph Daviau: Okay, and so just to be clear, you don't expect to add any members during the next for the next 12 months like this?

Steve: Okay.

Speaker Change: Just to be clear you don't expect to add any members during the next over the next 12 months.

Stephen Boland: That's not the plan right now. The plan is to kind of operate with this board and kind of really try and drive value.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: That's not that's not the plan right now.

Speaker Change: The plan is trying to operate with this board and kind of really try and drive value.

Daniel Joseph Daviau: Okay, maybe just on to some operational stuff. I mean, I think in your comments, you definitely said that, well, I think you said, I would definitely say, that, you know, you passed the trough, a new issue for a New Issue in Advisory, you know, is in the past, you know, in past, I would say, cycles, when there's a particular segment that becomes, you know, where underwriting becomes very Do you see that in your horizon here that you're going to need resources that, you know, whether it's metals, whether it's technology, something that is, you know, a certain segment that is, in your mind, you know, hitting that point where we need to be prepared for, you know, a material increase in activity?

Speaker Change: Maybe just on to some operational.

Speaker Change: I think in your comments you definitely said that.

Speaker Change: You said you definitely got it yes.

Speaker Change: Past the trough on new issue.

Speaker Change: New issue and advisory.

Speaker Change: It was in the past.

Speaker Change: In past I would say cycles. When there is a particular segment that becomes.

Speaker Change: We are underwriting becomes very very hot M&A, whether it's Canada crypto kenacort as always I would say it had a first mover advantage.

Speaker Change: By adding resources to those segments.

Speaker Change: Do you see that in your horizon here too is that youre going to need resources that.

Speaker Change: Whether its metals and other technology something that is.

Speaker Change: A certain segment that is in your mind hit.

Speaker Change: Hitting a point, where we need to be prepared for a material increase in activity.

Daniel Joseph Daviau: Yeah, I think we're right sized, to be honest. I think we can kind of execute on anything we need to execute on. Things can change, things can get crazy. And, you know, don't hold me to it if I end up pulling 10 people into a team somewhere.

Speaker Change: Yeah.

Speaker Change: I think we're right sized to be honest I think we can kind of execute on anything we need to execute on things can change things can get crazy.

Speaker Change: Don't hold me to it if I end up Poland 10 people into a team somewhere but right now I think I think we're right sized we've kept a significant investment in mining we've had that for years. We continue to have that I don't see us having to change that.

Daniel Joseph Daviau: But right now, I think we're right sized. We've kept a significant investment in mining. We've had that for years. We continue to have that. I don't see us having to change that, you know, or increase that materially. Our tech investment has been stable throughout, you know, the entire period.

Speaker Change: Increase that materially our tech investment has been stable throughout the entire period, we haven't really cut or added anyone there. So I feel pretty good about what our investment is in there, but you never know something like cannabis could come up again or something could get very busy that I'm not expecting.

Stephen Boland: We haven't really cut or added anyone there, so I feel pretty good about what our investment is in there. But you never know, something like cannabis could come up again, or, you know, something could get very busy that I'm not expecting. And yes, we would, as you rightly indicated, we would. If we're not first in, we'll be second in, but we'll come in in a very, very material way. And I haven't seen our need to do that yet. I hope we do.

Yes, we would as you rightly indicated we would if we're not first in what will be second in but we'll come in and very very material way.

Speaker Change: And I haven't seen or need to do that yet I hope we do.

Stephen Boland: Okay, and just to make sure it's clear. It's probably buried in the MD day somewhere, but is it fair to say that each wealth management business did report net inflows in the quarter? Yes. Okay, that's great. That's all for me. Thanks, guys.

Speaker Change: Okay.

Speaker Change: Just don't want to make sure its clear its probably buried in the MD&A somewhere but is it fair to say that each wealth management business did report net inflows in the quarter.

Speaker Change: Yes.

Speaker Change: Okay. That's great. That's all for me thanks, guys.

Speaker Change: Your next question comes from Graham Ryding with TD Securities. Your line is now.

Operator: Your next question comes from Graham Ryding with TD Securities. Your line is now open.

Graham Ryding: Hi, good morning.

Graham Ryding: Hi, good morning. I just wanted to follow up on just the sort of capital markets activity and make sure I'm sort of getting the message right. So in fiscal Q1, 25.

Graham Ryding: I just wanted to.

Graham Ryding: You can hear me okay.

Speaker Change: Great great Okay great.

Speaker Change: I just wanted to follow up on just the sort of capital markets activity to make sure I'm sort of getting the message right.

Speaker Change: So in.

Speaker Change: In fiscal Q1 'twenty five.

Graham Ryding: Robert Goff, Jeffrey Fenwick, Daniel Daviau, Donald MacFayden, David Kassie, Unknown Attendee, Stephen Boland, Daniel Daviau, Donald MacFayden, But your outlook sort of going forward is cautiously optimistic. Am I framing this sort of description? Yes. No words can be put into one sentence.

Speaker Change: What you've seen today, because we're almost through the quarter.

Speaker Change: Is it reasonable to expect that on a sort of quarter over quarter basis, <unk> seen better activity on the equity underwriting and M&A side.

Speaker Change: Your outlook sort of going forward.

Speaker Change: Is cautiously optimistic.

Speaker Change: Sorry.

Speaker Change: Scripting theoretical words can we put into <unk>, yes, yes.

Daniel Joseph Daviau: Great. Yeah. Yes. Right. We are

Speaker Change: Right.

Speaker Change: Our.

Daniel Joseph Daviau: The 66 days into a 90 day quarter. So we've got a pretty good idea of what our underwriting activity is. And again, I'm not telling all of our investors and our analysts something special; you just look at the underwriting activity levels, you know, we'll pull them off of Bloomberg or something. Yes, there's been more underwriting in our core verticals. And over the last, you know, over the last 60 days, we've seen huge activity in Australia, and we've seen good activity in Canada and some improving activity.

Speaker Change: 66 days into a 90 day quarter. So we'll do a pretty good idea of what our underwriting activity is and again. This isn't me, telling all of our investors and our analysts something.

Speaker Change: <unk> you just look at the underwriting activity levels.

Speaker Change: We'll pull them up Bloomberg or something yes, theres been more underwriting in our core verticals.

Speaker Change: Over the last.

Speaker Change: Over the last 60 days.

Speaker Change: Seen huge activity in Australia, we've seen good activity in Canada, and some improving activity in the U S. The UK continues to be.

Daniel Joseph Daviau: In the US, the UK continues to be, you know, a little bit laggard relative to the other markets. I'm not sure if it's a market thing or a UK thing. But, you know, in our certainly our biggest capital markets businesses, we continue to see good levels of activity, both from the new issue side, for sure. And, and, and the M&A side. That being said, M&A is always a little lumpy, and we have, you know, a month left in the quarter. So, but yes, generally up to the right.

Speaker Change: A little bit laggard relative to the other markets I'm not sure if it's a market thing or a UK thing but in.

Certainly our biggest capital markets businesses, we continue to see good levels of activity both from the new issue side for sure and the M&A side that being said M&A is always a little lumpy and we have a month left in the quarter, So, but yes generally up to the right.

Speaker Change: And the cautious optimism the cautious part of the comment is we really don't have phenomenal visibility into our next quarter outside of M&A right.

Graham Ryding: Okay, and the cautious optimism, the cautious part of the comment is, you know, we really don't have phenomenal visibility into our next quarter outside of M&A, right? It's just, you never know; we've seen stops and starts in the new issue market so far. Now you've seen Canada cut rates; we expect the UK and Europe to cut rates here over the summer. You know, obviously, we're into an election year in the US, so that creates some uncertainties.

Speaker Change: You never know we've seen stops and starts in the new issue market. So far now you've seen Canada cut rates, we expect the U K and Europe to cut rates here over the summer.

Speaker Change: Obviously, we're into an election year in the U S. So that created some uncertainties.

Speaker Change: So.

Speaker Change: If youre hearing a little bit of the cautious side of me. What you are hearing it's what goes on beyond this quarter.

Graham Ryding: So, you know, If you're hearing a little bit of the cautious side of me, which you are hearing, it's, you know, what goes on beyond this quarter is where my cautiousness would kick in, but equally speaking, it could go very, very...

Speaker Change: Is where it might cautiousness would kick in but equally speaking it could go very very well.

Speaker Change: Yes, okay.

Daniel Joseph Daviau: Yep, okay. That's fair. You mentioned 40%. You estimate employee ownership at 40%. Is that after the recent, like are you factoring in the recent 80 million shares that were taken up by? I think a more accurate statement would be at least 40%. I can identify 40%. And there's a bunch I can't identify.

Speaker Change: That's fair.

Speaker Change: <unk>.

Speaker Change: You mentioned, 40% you estimate employee ownership at 40% is that after the recent like are you factoring in the recent $80 million of shares.

Speaker Change: Were taken up by now.

Speaker Change: I think a more accurate statement would be at least 40% I can identify 40% and theres a bunch I can't identify so.

Speaker Change: Okay.

Graham Ryding: So, you know, hold the number at a thin arrow, and it would be higher than 40%. But what I can say on a recorded conference call is, Okay, understood. And on the compensation ratio line, I think [inaudible] have driven down our comp ratio this year. One is exactly as you identified, you know, when the stock price goes down, we recover money that we would have otherwise charged against it because those things get marked to market, you know, through a very complicated formula get marked to market.

Speaker Change: Both the number of <unk>, it would be higher than 40%, but what I can say on a reported conference call. This 40%.

Speaker Change: Okay understood.

Speaker Change: On the compensation ratio line I think.

Speaker Change: For fiscal 'twenty, 40, or 58%, which is low for you guys relative to sort of looking at the last five years.

Speaker Change: Is that because the share price was weaker this year.

Speaker Change: Was that a factor.

Speaker Change: Because I've always thought sort of closer to 60% is what what you would target.

Speaker Change: Let's start range right number or range Hasnt changed it should be around 60%. There was two things that would have driven down our comp ratio. This year. One is exactly as you identified we were.

Speaker Change: When the stock price goes down we recover money that we would have otherwise charged against that because those things get mark to market.

Speaker Change: Through a very complicated formula to get Mark to market. The second thing and it's a more nuanced thing as interest income goes up.

Graham Ryding: The second thing, and it's a more nuanced thing. We don't pay comp on interest. So when interest income ends up being a more substantial part of our revenue mix, and it was this year, it was $80 million, you know, that doesn't attract comp charges. So that brings down the comp. Okay, that makes a lot of sense.

Speaker Change: We don't pay comp on interest income so interest income ends up being a more substantial part of our revenue mix and it was this year it was $80 million.

Speaker Change: That doesn't attract comp charges, so that brings down the comp ratio.

Speaker Change: Okay.

Speaker Change: A lot of sense.

Speaker Change: My <unk>.

Daniel Joseph Daviau: [inaudible] My last question would just be on your HBS partner in your UK wealth business. Can you remind us of the timeline for the HBS partnership? I think there's a liquidity preference there that sort of expires after five years. Can you remind us of the timing of that and perhaps what are your options or most likely scenarios for HBS to sort of monetize their investment here? Should we be thinking of you guys likely exploring some transaction around the time of that five-year expiry?

Speaker Change: My last question would just be on the Hbf partner in your U K wealth business can you remind us of the timeline for the I think there is a liquidity preference there that sort of expires. After five years can you remind us of the timing of that and.

Speaker Change: Perhaps what are your options or most likely scenarios for for hbf to sort of monetize their investment here should we be thinking of.

Speaker Change: You guys likely exploring some transaction around the time of that.

Speaker Change: Is that five year expiring.

Donald Duncan MacFayden: Hi Graham, it's Don. That investment was a typical structured investment product that is typical for these kinds of transactions. So it has a five-year time frame, but nothing magical happens at the end of five years. It's just that the investors start to look for an exit event at that five-year mark, which comes up in July of 2026. So, yeah, and, you know,

Dawn: Hi, Graham it's dawn.

Yes.

Speaker Change: That investment was structured was a typical structured investment product that is typical for these kinds of transactions. So it has a five year timeframe, but nothing magical happens at the end of five years is just that.

Dawn: The investors start to look for an exit event.

Dawn: At that five year, Mark, which as it comes up in July of 2026.

Daniel Joseph Daviau: Yeah, and from an option perspective, Graham, you know, July 2026 is a long way off. And there's a whole bunch of things we have an ability to take out. We'd have to come up with hundreds of millions of dollars to do that. So that's, that's a very good option.

Dawn: So yes.

Speaker Change: From an option perspective Graham.

Speaker Change: <unk> 2026 is a long way away and there's a whole bunch of things.

Speaker Change: Have an ability to take them out we would have to come up with hundreds of millions of dollars to do that so that's that's a very good option.

Daniel Joseph Daviau: We could IPO the company. We could sell the company. We could refinance them with something else. So, you know, it's premature to say what those options are.

Speaker Change: The IPO of the company, we could sell the company, we could refinance them with something else.

Speaker Change: So it's premature to say what those options are.

Daniel Joseph Daviau: You know, it really will be a function of what's happening with the broader business, you know, in a year from now, what's happening with the value of that business, because the value of that business keeps on going up, as you see; they put up record results again this year. So, as the value of that business goes up, what's happening with our broader business and where the financing and M&A market are. So, I don't mean to not give you a precise answer, but all of those alternatives are on the table, and they're constantly being analyzed, bearing in mind that our really primary objective in that business right now is to net new assets, grow the business, and continue to improve the value of that business.

Speaker Change: It really will be a function of what's happening with the broader business a year from now.

Speaker Change: What's happening with.

The value of that business because that value of that business keeps on going up as you see they put up record results again this year.

Speaker Change: So as the value of that business goes up what's happening with our broader business and where the financing and M&A market is so I don't mean to not give you a precise answer but all of those alternatives are on the table and they're constantly being analyzed bearing in mind that our really primary objective in that business right now is net new.

Speaker Change: Assets grow the business continued to improve the value of that business is a phenomenal asset.

Daniel Joseph Daviau: It's a phenomenal asset. We disclosed this year for the first time in our MD&A that the EBITDA of that business this year is £75 million. You know, you can put any reasonable multiple you want on, you know, UK wealth businesses, and you can quickly determine how valuable that business is.

Speaker Change: We disclosed this year for the first time in our MD&A that the EBITDA of that business. This year is 75 million pounds.

Speaker Change: Yes, you can put any multiple you any reasonable multiple you want off.

Speaker Change: K wealth businesses and you can quickly determine how valuable that businesses.

Speaker Change: Okay.

Graham Ryding: Okay, understood. And I believe they have some rights after five years to initiate a liquidity event. But how material is that?

Speaker Change: And I believe they have some.

Speaker Change: They have some rights up to five years to initiate a liquidity event like how material is that delayed six years.

Daniel Joseph Daviau: Can they...

Speaker Change: 660 water rights kicked in.

Speaker Change: Five years, we've got to start looking and if we don't do something in six years. They can start looking.

Daniel Joseph Daviau: [inaudible]

Speaker Change: Understood.

We just have to be proactive at that point in time, but.

Daniel Joseph Daviau: Yeah, really. We just have to be proactive at that point in time.

Speaker Change: But listen we're not waiting to July 2020.

Speaker Change: No.

Speaker Change: That's that's still two years away.

Daniel Joseph Daviau: But listen, we're not waiting until July 2026. So, you know, that's still two years away. And so, you know, in a year from now, ask me the question a year from now, and I'll give you a better answer.

Speaker Change: So on a year from now.

Speaker Change: You asked me the question in a year from now.

Speaker Change: Okay, and I'll give you a better answer how's that I will I will sounds good what about just my last question net flows for that U K wealth business. Our organic growth is there. Some number you could give us for maybe what what youre able to deliver in fiscal 2014.

Graham Ryding: I will. I will.

Graham Ryding: Sounds good. What about just my last question, net flows for that UK wealth business or organic growth? Is there some number you could give us for maybe what you're able to deliver in fiscal 24? Don and I started to talk about that the other day.

Speaker Change: John and I started to talk about that the other day I think we're going to improve our public disclosure so im going to ask for a pass right now until until next quarter, because I think we're going to start disclosing organic flows and outflows and inflows the way most wealth businesses wood.

Daniel Joseph Daviau: I think we're going to improve our public disclosure. So I'm going to ask for a pass right now until next quarter because I think we're going to start disclosing organic flows and outflows and inflows the way most wealth businesses would with a greater degree of precision. We have an organic growth plan in place. It's written and it's tangible, and we know what the components of it are.

With a greater degree of precision we have a <unk>.

Speaker Change: Organic growth plan in place.

Speaker Change: It's written and it's tangible and we know what the components of it are spending.

Daniel Joseph Daviau: And we're spending a fair amount of money on marketing and client inflows and stemming outflows and everything you would expect in a well-run wealth business. So I think we'll start disclosing that either in our next quarter, the quarter after, and we'll give you very good precision. There will be organic growth in that business absent anything that I don't know right now. We had organic growth, net new asset growth last year

Speaker Change: Spending a fair amount of money on marketing and client inflows and stemming outflows and everything you would expect in a well run wealth business. So I think we'll start disclosing that either in our next quarter to quarter. After and we will give you a very good precision.

Speaker Change: Will be organic growth in that business absent anything that.

Speaker Change: I don't know right now we had organic growth net new asset growth. This last year, we had net new asset growth this last quarter.

Speaker Change: But before I start, giving your projections I would just like to spend a little bit more time before him out there with publicly stated targets.

Daniel Joseph Daviau: We had net new asset growth this last quarter, but before I start giving you projections, I would just like to spend a little bit more time before I'm out there with publicly stated targets. But they're a good business in the UK, and they're growing organically. You're looking at net new assets of 3% or 4%. I'm not telling you what our target is. I'm telling you that's what a lot of very good, growing UK wealth businesses do.

Speaker Change: Sure.

Speaker Change: A good business in the U K is growing organic.

Speaker Change: Looking at net new assets of 3% to 4% that's I'm not telling you what our target is I'm, telling you that's what a lot of very good growing UK wealth businesses do.

Speaker Change: Perfect that's helpful.

Graham Ryding: Perfect. That's helpful. That's it for me. Thank you.

Thank you.

Speaker Change: There are no further questions at this time I will now.

Operator: There are no further questions at this time. I will now turn the call over to Mr. Daviau for closing remarks.

Speaker Change: Ill turn the call over to Mr. David <unk> for closing remarks.

Daniel Joseph Daviau: Okay, well, thank you, operator. And thanks, everyone, for joining us today.

Speaker Change: Okay, well, thank you operator, and thanks, everyone for joining today I think as you are hearing the underlying message, we're very very focused here on shareholder value.

Daniel Joseph Daviau: I think as you're hearing the underlying message, we're very, very focused here on shareholder value going forward. And we're going to continue to push through that and try and create value for all our shareholders. This really concludes our fourth quarter call and our fiscal 2024 conference call. As always, Don and I will be available to answer any further questions. So, thank you very much. Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.

unknown: [inaudible]

Speaker Change: Going forward and we're going to continue to push through that and frame for and create value for all our shareholders. This really concludes our fourth quarter call in our fiscal 2000.

Speaker Change: <unk> 2004 conference call.

Speaker Change #100: As always Don and I will be available to answer any further questions. So thank you very much.

Speaker Change #101: Ladies and gentlemen, this concludes the conference call for today. Thank you for participating please disconnect your lines.

Speaker Change #101: Yeah.

Speaker Change #102: All right.

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Speaker Change #101: Right.