Canaccord Financial Inc. (TSX:CF) had a fiscally tough first quarter largely because of expenses related to purcashing rival Genuity Capital Markets in April.
The Vancouver brokerage firm announced August 5 that its profit fell 46.5% to $4.9 million in the quarter ending June 30. That is down from $9.1 million in the same quarter last year despite revenue rising 10.5% to $151.9 million from $137.5 million.
The cause? A $12.4 million expense tied to buying Toronto-based investment bank Genuity Capital.
Canaccord CEO Paul Reynolds said, “The acquisition of Genuity during the first quarter was a transformative event in Canaccord’s business. As such, we believe that a sequential comparison, rather than year over year, offers a more-meaningful perspective on Canaccord’s operating performance for Q1/11.”
But even using a sequential comparison with the fourth quarter of 2010, Canaccord’s net income dropped 35.2%. Revenue rose 6.1%.
Reynolds said, “Despite the challenging market environment that existed through much of the quarter, our Q1 2011 results reflect the early signs of success we’ve achieved through our acquisition of Genuity Capital Markets.”