Canaccord Genuity Group Inc. · TSX:CF
Canaccord Genuity — Canaccord Capital — Merger or Acquisition (September 2005)
27 slides from Canaccord Genuity's merger presentation, Sep 13, 2005
Slide 1: Canaccord Capital Inc. to acquire Adams Harkness Financial Group, Inc.
Canaccord Capital Inc. to acquire Adams Harkness Financial Group, Inc. Expanding global small to mid cap market niche into the United States Highlights for the Investment Community September 13, 2005 (CCI on TSX & AIM)
Slide 2: Forward-looking statements
Forward-looking statements This presentation shall not constitute an offer to sell or solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification under the securities
Slide 3: Table of contents
Table of contents Strategic Deal Transaction Appendix Rationale Strengths Summary 2
Slide 4: Strategic rationale for expanded US market presence
Strategic rationale for expanded US market presence • Maintain competitiveness in changing landscape – Client expectations demanding seamless delivery of products and services in three key capital markets – Canada, the US and Europe • Advances strategy of delivering global perspective – Leverage cap
Slide 5: Adams Harkness: strong reputation and franchise
Adams Harkness: strong reputation and franchise • Boutique institutional investment dealer • Approximately 165 employees with offices in Boston, New York and San Francisco • Entrepreneurial, client-centric service culture • Niche sector focus in small to mid cap market on Technology, Healthcare and
Slide 6: Adams Harkness: solid capabilities
Adams Harkness: solid capabilities Investment Banking Research 34 professionals with individual expertise in 14 technology, 13 analysts covering 178 public companies in 14 technology, healthcare and consumer growth sectors healthcare, and consumer growth sectors Long history of providing full-servic
Slide 7: Canaccord: continuing global growth strategy
Canaccord: continuing global growth strategy • Independent, full-service institutional investment dealer • Approximately 1,300 employees with corporate offices in Vancouver, Calgary, Toronto, Montréal and London; Global Capital Markets team of 180 professionals • Entrepreneurial, client-centric serv
Slide 8: Compatible business models and cultures
Compatible business models and cultures Global Capital Adams Canaccord Adams Advantage Markets Harkness Niche sector focus √ √ Effectively aligned, with growth to come in resource franchise in the US Geographic strength √ √ Seamless access to Canadian, US and European markets Client-centric culture
Slide 9: Adams Harkness enhances our client service capabilities
Adams Harkness enhances our client service capabilities United States Client service focus: • Market access • Research coverage • Distribution • Financial advisory UK & Europe Canada 8
Slide 10: Adams Harkness is the next step in our global vision
Adams Harkness is the next step in our global vision 1994 May 1999 June 2004 September 2005 Growing into the largest global independent small to mid cap niche investment dealer Adding / integrating UK product Initial Public Offering Adding / integrating US product Leveraging global platform 9
Slide 11: Shared commitment to research excellence
Shared commitment to research excellence • Adams Harkness has 13 analysts covering 180 public companies – Thematic approach to research creating highly differentiated franchises • Resource Optimization Technologies™ (Technology) • Advanced Enabling Materials (Technology) • Healthy Living™ (Consumer)
Slide 12: Complementary sector coverage
Complementary sector coverage Global Capital Markets sector coverage: Adams Harkness sector coverage: (% of revenue, FY2005) (% of revenue, FY2004) Diversified Industries Health 11% Sciences 2% Mining & Metals Technology Technology 30% Healthcare 52% 16% 27% Energy Consumer 41% 21% Effectively align
Slide 13: Adams Harkness further diversifies CCI's revenue…
Adams Harkness further diversifies CCI’s revenue… % of total Canaccord Capital Inc. revenue (C$ millions) Canada Pro Forma1 Fiscal 2005 UK and Europe Fiscal 2005 United States $433 $509 27% 15% $116 $76 73% 62% $317 23% $317 $116 (1) Adams Harkness fiscal 2004 revenue of US$62 million at exchange ra
Slide 14: …and enhances Global Capital Markets' coverage
…and enhances Global Capital Markets’ coverage % of total Global Capital Markets revenue (C$ millions) Canada Pro Forma1 Fiscal 2005 UK and Europe Fiscal 2005 United States $240 $316 24% $76 39% 48% 52% $116 $124 $124 37% $116 (1) Adams Harkness fiscal 2004 revenue of US$62 million at exchange rate
Slide 15: The new entity will be known as Canaccord Adams
The new entity will be known as Canaccord Adams • This enhanced identity reflects the significance and strategic nature of the transaction • The combined entity of Canaccord’s Global Capital Markets and Adams Harkness will be named Canaccord Adams. This is a reflection of the significant nature of t
Slide 16: Transaction summary
Transaction summary • Strategic rationale – Maintain competitiveness in changing landscape – Further global strategy of delivering international perspective in niche focus sectors – Integrate in sector-based service teams for superior client execution – Further diversify revenue and earnings base •
Slide 17: Transaction details
Transaction details • Purchase price - US$20 million - US$8.0 million will be paid in cash - US$12.0 million will be paid in the form of approximately 1.36 million common shares of Canaccord Capital Inc. - All shares will be held in escrow for three years with equal annual releases starting June 30,
Slide 18: EPS neutral in FY06, accretive in FY07
EPS neutral in FY06, accretive in FY07 • US$10 million incentive and retention program in place – To be paid after a three-year vesting period – Linked to a maximum of approximately 1.13 million CCI common shares • Total of 2.5 million common shares required for purchase and employee retention – Ass
Slide 19: Valuation attractive compared to other deals
Valuation attractive compared to other deals Adams Harkness Boutique deals since 1999 Value Multiple High Median Low Book value1 US$11 mm 1.8x 16.3x 1.9x 0.94x Revenue (Last FY) US$62 mm 0.32x 3.33x 1.08x 0.32x Projected adjusted 2005 earnings US$3.0 mm 6.7x 20.2x 10.8x 3.9x Source: Thomson Financia
Slide 20: Fiscal 2004, a year of transition for Adams Harkness
Fiscal 2004, a year of transition for Adams Harkness • Adams Harkness incurred a US$9 million loss in FY2004 – Despite posting US$62 million in revenue in FY2004 • A large portion of the loss was linked to US$8 million in pre-tax one time items: – US$5.9 million in lease impairment charges – US$0.6
Slide 21: Required approvals
Required approvals • In Canada: – Investment Dealers Association and TSX • In the US: – NASD • Adams Harkness shareholder approval – Adams Harkness Board has already approved deal – Key principal shareholders have already approved deal • Other standard approvals 20
Slide 22: Appendix
Appendix Adams Harkness 14 CANACCORD Your Partner in Growth
Slide 23: Adams Harkness - facts
Adams Harkness - facts • Corporate structure privately held • Headquarters in Boston, MA with a total of three offices across the United States • Founded in 1937 Boston • Approximately 165 employees New York • Website: www.adamsharkness.com • Member of the NASD and SIPC San Francisco 22
Slide 24: Adams Harkness financial highlights
Adams Harkness financial highlights Fiscal year 2004 (ending December 31, 2004) • Revenue US$62 million Includes (pre-tax, US$ millions): • $5.9 in lease impairment charges • Net income US$(9) million • $0.6 in severance costs • Total assets US$48 million • $1.5 in other one time items • Total liabi
Slide 25: CCI – a unique Canadian independent investment dealer
CCI – a unique Canadian independent investment dealer • Established in 1950, publicly traded on TSX June 30, 2004 and on AIM June 22, 2005 • Approximately 1,300 employees, 180 Global Capital Markets professionals • 28 offices across Canada and internationally • C$432.8 million revenue in FY2005 Lond
Slide 26: CCI summary financial information
CCI summary financial information (C$ thousands, except share count) 2000 2001 2002 2003 2004 2005 Q1/06 Revenue: Private Client Services 169,892 140,251 90,534 97,784 175,983 178,176 39,630 Global Capital Markets 110,484 66,288 72,264 91,629 211,758 239,654 54,457 Other 14,300 12,230 7,635 9,793 14
Slide 27: CCI balance sheet highlights
CCI balance sheet highlights (C$ thousands) 2000 2001 2002 2003 2004 2005 Q1/06 Total assets 909,440 512,303 783,221 830,737 1,508,366 1,638,165 1,323,153 Total liabilities 845,821 445,803 732,964 778,034 1,409,679 1,415,954 1,096,495 Total shareholders’ equity 63,619 66,500 50,257 52,703 98,687 222
Canaccord Capital — Merger or Acquisition (September 2005) on 6ix