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Good morning, ladies and gentlemen. Thank you for standing by. I'd like to welcome everyone to the Canaccord Genuity Group Inc. Fiscal 2020 Fourth Quarter and Year-end Results Conference Call. [Operator Instructions] As a reminder, this conference call is being broadcast live online and recorded. I would now like to turn the conference over to Mr. Dan Daviau, President and CEO. Please go ahead, sir.
Thank you, Carol, and thanks, everyone, for joining us for today's conference call. As always, I'm joined by Don MacFayden, albeit remotely, our Chief Financial Officer. Following an overview of the fourth quarter and fiscal 2020 results, both Don and I'd be pleased to answer questions from analysts and our institutional investors. A reminder that our remarks and responses during today's call may contain forward-looking statements that involve risks and uncertainties related to the financial and operating results of Canaccord Genuity Group Inc. the company's actual results may differ materially from management's expectations, especially these days, for various reasons that are outlined in our cautionary statement and in the discussion of risk in our MD&A. Our discussion today may also include certain non-IFRS financial measures. A description of these non-IFRS financial measures and a reconciliation to comparable IFRS measures are contained in our earnings release and our MD&A for the quarter -- fiscal quarter. By now, you've all likely had a chance to review these documents and our supplementary financial information, which were made available yesterday evening. They are all available for download on SEDAR or on the Investor Relations section of our website at canaccordgenuity.com. We've also posted our quarterly investor presentation to our website. I won't cover the entire presentation on this call, but I will refer to certain slides to guide our discussion. Given the dramatic change in our operating environment, I'll discuss the relevant highlights of our financial performance in the context of what we've experienced in our business since mid-March as well as our expectations for the coming quarters. The COVID-19 virus has significantly impacted the economy and our daily lives. On that note, I think, it's important that I'd like to start by thanking our employees for their remarkable efforts and their unwavering commitment to support our clients at a time when our clients need us most. While we are operating under very different circumstances than anyone could have predicted, we are fortunate to have entered this environment with a solid financial position and a strong foundation to support our businesses through unprecedented market turmoil. I encourage you to review Slide 4 of our investor presentation, which summarizes our preparedness efforts. In all, fiscal 2020 was a good year for our business, with higher contributions from our global wealth management operation and increased capital raising and advisory activity in our U.S. and Canadian operations, we posted strong revenue and pretax earnings. This is the third consecutive year that our firm-wide revenues have surpassed the $1 billion mark and we've increased 2.8% year-over-year to $1.2 billion. Despite the dramatic downturn that occurred in the final weeks of March, we also delivered a solid fourth quarter performance. On an adjusted basis, net income for the fourth quarter improved by 29% year-over-year to $21.4 million, and full fiscal year net income was flat year-over-year at $106 million. Excluding significant items, diluted earnings per share amounted to $0.17 for the fourth quarter and $0.81 for the full year, which is a modest improvement to the $0.80 from a year ago. Underscoring our commitment to enhance shareholder returns, we successfully returned almost $80 million to our shareholders during fiscal 2020. In addition to our common share dividends, we reduced our common shares outstanding by 7% since the beginning of fiscal 2019 through share buyback activity, which we will continue to pursue as excess capital is available. I'm also pleased to report that our Board of Directors has approved another quarterly dividend of $0.05 per common share. Looking at expenses. We expect to be able to accelerate our previously disclosed strategy of reducing our annual cost base by approximately $20 million, which will help us achieve our sustainable margin growth objectives when conditions improve. Given the continued uncertainty in the broader business environment, we've conducted a thorough review of all aspects of our compensation and non-comp related expenses. The current environment also provides some natural cost savings with respect to travel and entertainment expenses and the transition of some conferences to virtual events. And finally, we've taken steps to defer some significant costs by 6 months, potentially more until we have a better sense of activity levels. As a result of these efforts, we anticipate making substantial progress on our cost savings in the first half of this fiscal year. In recent years, we've invested in our people, and we've also invested in our infrastructure, which has enhanced our operational resilience. The speed at which we were able to pivot to a remote working model has been invaluable, and we have had no material technology disruptions. Over the course of my career, it's been my experience that how you respond in a crisis like this defines your relationships going forward. And the response from our employees across our organization has almost to a person been extraordinary. It's been incredible to see our core values represented so strongly. Our teams moved swiftly to share ideas and best practices among geographies, and the collective focus on helping our clients in their best possible ways. Slide 5 provides some additional context about the initial business impact following the abrupt changes to the market. Many of the strategic decisions that we've made in previous years has helped us during this crisis, and I'm confident that these decisions will continue to prove valuable, well beyond. We are certainly not immune to the economic and financial impacts of COVID-19, but we are preparing for significant near-term headwinds if they happen. That said, we have a much more resilient business than we did before the last crisis. Our business mix limits our reliance on any single business or sector. Our financial position provides us the flexibility to operate effectively and manage through the market turmoil. Turning to Slide 6, you'll find a brief overview of our continued progress over the course of fiscal 2020. So now let's review the contributions from our business segments, starting with our Wealth Management business. As many of you are aware, that a cornerstone of our efforts to increase firm-wide stability has been our strategy to grow our Wealth Management business. This continues to be an important priority. Our combined global wealth businesses contributed adjusted pretax net income of $80.2 million for the fiscal year. This translated to an adjusted diluted earnings per share contribution of $0.46 or 57% of the diluted earnings per share for our combined operating businesses. Fourth quarter adjusted pretax net income was flat year-over-year, and we attribute the sequential decrease to the impact of COVID-19 market decline on the value of our client assets. Total client assets at March 31 amounted to $61 billion, a decrease of 17% compared to our peak of $73 billion at the end of the previous fiscal quarter. Accordingly, fee-based revenues based on the value of these assets decreased during our fourth quarter, but this was partially offset by increased commission revenue generated by obviously higher trading activity. Fourth quarter revenue earned by our global wealth businesses improved by 7% sequentially to $138 million. As at May 31, a few days ago, total assets have risen to approximately $66 billion, reflecting improved market prices and contributions from net new assets. Although we anticipate continued fluctuations as we progress through the COVID-19 environment, we are pleased to be reporting positive inflows in all of our geographies, reflecting the demand for advice-based solutions. The adjusted pretax net income contribution from our U.K. and European business improved 17% year-over-year to a record $56.5 million. Despite the market-driven setbacks in the fourth quarter, this business achieved a slight margin improvement compared to the previous fiscal year, and we've continued our margin enhancement activities in place for the year ahead. In Canada, the reduced pretax net income contribution is primarily attributable to lower new issue revenues that flow through that business. I will note that the fee-based revenue accounted for 40% of the revenue in this business during fiscal 2020, a year-over-year improvement of 5.3 percentage points. As you would expect, the abrupt market downturn in March put downward pressure on the value of securities held as collateral in our margin loan book. Accordingly, the provisions recorded were higher in our fourth fiscal quarter. We continue to be very disciplined in managing our exposure to risk with prudent oversight to ensure compliance with best practices and regulatory requirements. While the recruiting environment remains competitive, we have an active and growing pipeline, and we expect that our continuous improvement efforts will drive further success in selected markets. However, even with a strong pipeline, it's reasonable to expect some delays until restrictions are lifted and people feel comfortable traveling and meeting in person. Speaking of our ongoing improvement efforts, 2 weeks ago, we announced that Canaccord Genuity has been selected as a platform provider for the launch of Morgan Stanley's Wealth Management business in Canada. This development is a testament to the breadth and quality of our capabilities and the investments we have made to advance our platform in the recent years. We are certainly looking forward to a positive and productive partnership with Morgan Stanley. And finally, I'll highlight the growing contributions from our Australian Wealth business in the second half of the fiscal year. We have had an excellent experience integrating the Patersons business, and this is reflected in the fourth quarter revenue contribution of $13 million, an improvement of 16% sequentially. Looking ahead, we will leverage our differentiated offering to grow assets organically and also pursue targeted recruiting in the region. As you can see, we've made excellent headway in all our Wealth Management businesses despite the challenges presented by COVID-19. The responsiveness of our teams in each of our geographies has helped us attract new clients, limit outflows in a period -- and limit outflows in a period of extreme volatility. We remain constructive in our outlook for this segment, and we are committed to investing prudently in its growth to support our priority of enhancing stability for our business and adding value for you, our shareholders. Having said that, we are also navigating an unprecedented and evolving situation, and we are acutely aware of the impact that another market downturn can have on the value of our assets and the financial performance associated with those assets. Additionally, a prolonged environment of low-to-negative interest rates will negatively impact the profitability connected with our lending activities in this segment. We do not see these as long-term threats, and our decisions will be guided by our long-term priority of increasing assets from new and existing clients and advancing our product offerings to meet the increasingly complex needs of our clients. Turning to the performance of our global Capital markets business. Healthy levels of client engagement and cross-border collaboration supported a productive fourth quarter and fiscal year for all our activities in our global capital markets business. Our efforts to diversify our revenue mix in this segment have improved our resilience in uncertain markets. Fourth quarter revenue from this segment increased by 10% year-over-year, attributable to stronger advisory revenue, higher trading and commission and fees, earned from supporting our clients through the increased volatility. In the context of lower overall volumes for capital raising, full year revenues amounted to 698 -- sorry, $689 million, a solid result by historical standards. Adjusted pretax net income for the fiscal year was a healthy $60 million, but did decrease by 26% compared to the exceptional year in 2019. For the fourth quarter, adjusted pretax net income contribution from this segment improved by 36% year-over-year. Full year advisory revenue improved by 46% year-over-year to a record $206 million. In recent weeks, we completed several mandates that were initiated before the COVID-19 lockdowns began. Our U.S. Capital markets business contributed more than 50% of our firm-wide capital markets revenue for both the fourth quarter and the fiscal year. Notably, this business achieved a 97% year-over-year increase in advisory revenue, reflecting organic growth and contributions from our expanded operation in that region. In Canada, Capital markets revenue was 22% lower compared to the exceptionally strong prior year, but we continue to be a top ranked domestic equity underwriter in this country. For both fourth quarter and fiscal 2020, Canaccord Genuity Capital Markets is ranked #1 for IPOs and the #1 equity underwriter for number of deals based on league table provided by FP Infomart. I encourage you to look at the league tables on Slide 20 and 21 of our investor presentation, which highlights the strength of our franchise in North America. Looking outside North America, activity levels in our Australian Capital markets business improved markably during the fourth quarter and the fiscal year. Full year revenue contribution improved by 22% from the previous year. I am also pleased to report that our U.K. and European Capital markets business achieved profitability for the full fiscal year. Excluding significant items, the business earned net income of $3.6 million for the fiscal year. We take very seriously our role in helping small and mid-cap companies access capital and relationships that are essential to helping them move forward and confront new challenges. In the days and weeks following the historic -- I'm sorry, in the days and weeks following the historic market rout, our teams mobilized quickly to identify the clients that needed us most, and we put forth remarkable efforts to support them. Our trading and specialty desks successfully managed through the volatility, placing Canaccord Genuity ahead of our mid-market peers as well as many of the bulge firms. We created thousands of virtual touch points for our clients. Despite the volatility and uncertainty, our capital markets teams in all regions have been very successful in closing several transactions. To date, we have not experienced any material declines in our capital raising activity. Secondary and follow-on offerings amongst our clients, particularly in health care, technology and mining, have been increasing as issuers prepare for new challenges and opportunities in preparation for a less certain future. Our restructuring and fixed income practices have also won several new mandates and we expect that strategic activity will increase over the coming year. Unbiased advice is critical in markets like this, and we are simply not conflicted by the balance sheet issues that our bulge-bracket competitors are. By staying focused and playing to our historical strengths, we've built a very healthy pipeline of investment banking, advisory and restructuring mandates heading into our first quarter. That said, we do expect significant near-term disruptions across our industry, certainly for at least the next couple of months. The longer-term outlook for activities in our capital markets business remains constructive, but we will carefully balance our near-term investment with our expectations for profitability. We've always maintained a level of agility in our business that allows us to stay competitive and meet evolving needs of our clients while taking steps to control our expenses. And finally, a word on our infrastructure and technology platforms. In recent years, there's been a rigorous effort to strengthen and modernize our technology and systems infrastructure globally. We could have never obviously predicted this virus or the environment is at -- or the environment it created, but we could not have been better prepared. Our investments have provided both resilience and flexibility for today but they also support our ambitions for the future. Getting people out of the office was easy, but getting them back to work will obviously be a lot more challenging. While lockdowns are easing in some of our regions, we're committed to supporting our employees and our clients in a work-from-home environment because we believe it's the safest option for the time being. That said, we are actively preparing for an eventual return and implementing advanced safety and hygiene protocols in all our locations. We've not established a return date in any of our markets. When we are confident that conditions are safe, we will endeavor to welcome back our colleagues to their offices in a careful and phased manner. Until then, we are using this experience to advance our collaboration and client engagement practices as we adjust to the new market realities. We're prepared for an extended period of dislocation but also for better times ahead. I'm not going to try and predict the shape of the recovery, but I am confident that we have the appropriate business mix, competitive position and most importantly, culture to make fiscal 2021 a very productive year. We'll continue to be guided by our long-term values and manage our business for stability and predictability. We'll commit to staying agile and innovative, so that we can continue to move swiftly into new areas of opportunity. And we'll protect the strength of our balance sheet and manage our capital prudently, just as we would in any market backdrop. No matter what the environment presents, we will remain committed to aggressively adding value for our clients and creating long-term shareholder value as we strive to emerge from this crisis as a stronger company. Thank you for your continued support. And with that, Don and I would be pleased to take questions. Operator, please open up the lines.
[Operator Instructions] Your first question comes from Rob Goff from Echelon Wealth Partners.
Very good results in tough times. Perhaps could you talk to the U.S. capital markets in terms of the strength of the revenues across all categories? How you might have seen that spill over into the first quarter?
Yes. I mean, if you just look through -- a great question and great leading into where we'd like to go here, obviously. But when you look through the U.S. Dealogic or whatever stats you want to look at, I mean, May was a record month in the U.S., I mean, record capital raising month. So we're obviously part of that market. So we continue to be incredibly active in the capital raising arena, no different than we were in the quarter that you saw. Our trading businesses either are just cash equity business or related businesses or our principal trading business or IEG business, they benefit in periods of volatility. People change their positions and trade a lot. And ones the flow business, we make a lot of money in that. The other is just a principal position business, an overnight type of business, and we do well in that. So that environment hasn't changed. We expect that to slow down in fairness. I'm not sure we've seen it slowdown yet, but we expect that to slow down. The business is probably negatively impacted, and I don't think that's different anywhere else is the M&A business. Not that M&A is not happening. It's just we book revenue when we close deals. And it's hard to close deals in this environment right now. Things seem like they're a little pushed out to the right, so to speak. We continue to have an incredibly robust pipeline and change creates opportunity. But I think what we'll probably see at some point, and I'm not sure in the last dawn if we've seen it lately. But at some point, there has to be a lull in the revenue booking activity. But Don, I'm not sure if you got a more sophisticated answer than that on the M&A side.
No. I think that's right. I mean with the sort of new valuations in the marketplace, a number of the deals that we have in the works sort of naturally get pushed out a little bit. The pipeline continues to get filled with sort of new transactions or new mandates under the current valuations, but they naturally take time to close and have the revenue recognized. So I think we'll probably see some pause in the revenue recognition on the advisory front. But that's really just sort of over a quarter or 2, I would think.
And if I may, as a follow-up, you mentioned looking to diversify your revenues for stability. Are you seeing opportunities to play offense here and make tuck-in acquisitions in the U.S.? And would that likely be along the advisory business?
Yes. I don't think that's a priority right now. I mean, I would love to be in a position that allowed us to play offense, but I think the more prudent route right now is to manage your capital. We still believe our shares are probably the most undervalued thing we could buy. And I wouldn't see us doing a big material acquisition in the capital market side, even with deflated valuations and opportunities that could arise. We did a large acquisition of Petsky Prunier that's worked incredibly well for us. They've become very strong and good partners in our business. I think we've got some -- we're 1 year into that acquisition. I think we're still integrating that through and realizing all the revenue synergies that we see in that business before we do something else material at this stage in that market.
Your next question comes from Jeff Fenwick from Cormark Securities.
So Dan, why don't you start with wealth management. Maybe you could just characterize what you were seeing in terms of differences around client asset levels through the quarter. When I look at the movement in Canada, roughly tracked with what I would have expected. I think it fell off a bit more maybe in the U.K. market. And what were you seeing in terms of things like clients pulling funds out of accounts? I mean things happened so quickly, I'm not sure there was a lot of time to react versus maybe just some differences in mix across debt equity between the different regions.
Yes. That was -- it's a big broad question. Let's start with the Canadian business because I think everyone's most familiar with it just because it's here. I mean, the decline that we suffered in our Canadian book was less than the overall market. That being said, it's not all in equity book, so you'd expect it to be less than the overall market, and it was. We didn't see any material outflows. I'm being a little cautious when I say that because I don't know that off the top of my head, Jeff. But I don't -- there was no material outflows in our book. And in fact, there was significant net inflows. So when I look through -- we obviously track that waterfall very carefully. There was significant net inflows into our Canadian book, nonrecruiting net inflow. So that's pretty remarkable.What we found, and you'd expect me to say this, is that in these periods of volatility, people don't like self-managing their money. And we probably saw the advisory base model performed relatively better than, say, Robo offering or some kind of electronic self-managed offering. So we saw -- and I expect that's probably true in other firms as well as ours. So we saw that increase. As of yesterday, and we've tried to give you the updated stats. I mean, we're right back at our peak asset levels are very close to our peak asset levels in Canada. So March 31 was a bad day to measure asset levels. It was in the heat of the decline. So we've recovered that business substantially. And when I look -- again, I don't want to give forward-looking information per se, but when I look at our daily financials, and monthly financials I mean May was a -- April and May were very, very good months for Wealth business. So I think, absent another market correction, I think we're in a place where we feel very confident that our -- this was a onetime event as opposed to an ongoing event for the quarter. And you'll notice our profitability in our Canadian business, again, I don't want to call something a special charge or a onetime charge. I mean, it was a charge. We have to take a margin charge in that business for the quarter, which impacted our profitability. Our profitability would have been very good without that charge.So I think we're back in a place in Canada where I'm feeling very confident, absent another market correction. The U.K. business has performed exceptionally well. I mean, again, a big asset decline, but that business has a lot of transactions in it, our U.K. Wealth business as we transition that business. And it's been a very active mining market, it's been a very active small-cap market, so we've been incredibly active in that business. We made $1 million adjusted in our U.K. Wealth business last quarter. Remember, that's a business that we bought for $25 million. So it is working out very well from our perspective and notwithstanding a massive market correction.And again, the U.K. business, the impacts on the U.K. business, yes, there was some asset impact. And yes, a fair amount of that has been recovered. I don't think we've had -- again, I know instances of net inflows, I think, gone from an overall perspective, there was no net outflow. I think the inflows were washed out by the outflows for the most part.
Yes. I think they fairly well balance each other off in the U.K. That's right.
So again, not net up, but not net down. It's just market down. And in that business, the bigger impact is on the interest. We've kind of alluded to it. With interest rates going to 0, that does not help our business. That's -- there's good income there in interest and holding clients' cash. And right now, we're not making any money on that. Query, if short-term rates will ever go up. But right now, we're not making any money on that. And that ultimately does impact the profitability of that business. And you've seen it a little in the Q4, and you'll continue to see that as we go through.That being said, we've expedited a lot of cost savings in that business, and we'll continue to expedite a lot of cost savings in that business to recover that.
Okay. And then you did touch on it in Canada, you had some charges. I guess it was a bad debt expense against some margin calls that you had there. Maybe, Don, maybe you could speak to just the mechanics. What happens there? I mean, you have the margin call, you get the clients sell some of their underlying assets? I mean can you just -- was this just 1 or 2 accounts where someone was way offside, you just couldn't fully collect? Or is this more of just a broader general provision that you're taking?
No, it's fairly isolated. I mean when you have the rapid market deterioration like we saw at the end of March, there's naturally pressure on margin accounts. And there's always going to be a small number that are going to be more challenging than others. So it wasn't like a broad swept systemic kind of a problem, it's isolated. And there's naturally regular level margin kind of provisions that we take for that kind of activity, and they just become a little bit higher when you get that kind of market generation going on like we saw in March. It's just kind of the normal course, just a little higher than normal, that's all.
And Jeff, even a charge like that in the context of a multi-hundred million dollar margin book, it's bad. Don't get me wrong, and we hope to recover down the road, but it's a relatively small charge given the size of our margin book.
Yes. I totally understand. Just wasn't sure if it was a specific isolated event, which it sounds like versus something more broad. So that's good color. And then one area we should touch on, I guess, is Australia. I mean they obviously felt the pressure there, too. This is still an early stage venture for you guys. Does the -- what we saw over the last few months changed at all, your approach into that market or what's happening there?
No, nothing has really changed. I mean we didn't buy Patersons Securities on the back of -- we thought there was a huge market correction. We also didn't buy it on the back of, we thought there'd be a massive mining market. And both things have happened, one negatively, one very positively to the results there. So I think we're cautiously optimistic about that business. I think it's performing better than what we anticipated. It's very, very early. So I don't want to overplay it, but the integration is going well. The teams are gelling incredibly well. It's -- the premise in buying that business, you remember, was not only to grow our Wealth business and stabilize our Wealth business, it was to improve our Capital Markets business, and we've seen that as well. The synergies of putting those 2 businesses together and having a bigger operation there, feel very early, like it's working really well. And again, based on the activities we're seeing in April and May, particularly in the resource sector, but elsewhere, we anticipate continued good results, strong results in that region.
Okay. And you mentioned buybacks over the last year. That was obviously a pretty big factor for you in the fiscal year. As you mentioned, the stocks not behaved the way you wanted it, I would say, although holding quite well through this period. How are you feeling in terms of the potential here, maybe doing another substantial issuer bid and continuing to buy back your stock?
Yes. I mean, buying back our stock continues to be a priority, notwithstanding the uncertainty in the market. That being said, the market is uncertain. So I wouldn't want to be in a position where I had to buy back our stock and then have another massive market decline and worry about where our capital is at. We're going to keep a healthy balance of capital in this period of volatility. So when we have the liquidity, we will obviously continue to do our normal course issuer bids. Whether we do another substantial issuer bid or not, will really just depend on the volatility in the market and our -- how much money we've made in the last -- in the quarters proceeding that buyback. Certainly continue to be confident in our dividend. And certainly, we do believe our stock to be materially undervalued. Last time we bought back stock, I think we bought it back Don at $5.50?
$5.50, that's right.
Yes. That's kind of where the stock is today. So nothing has fundamentally changed. We feel increasingly confident about our business today than we did a year ago or less than a year ago when we bought back stock, so did our other substantial issuer bid.
Okay. And I guess that sort of cautious approach, just given the environment, is that what's the decision about not doing a special dividend this year?
Yes. I mean, what we found, Jeff, and maybe we didn't articulate this well and communicated it well enough and if we didn't, then my apologies. The -- we didn't find that we were getting the benefit of special dividends. We didn't find that we were -- we'd rather have a regular dividend, an increasing regular dividend. I think the way we try to communicate it to our investors was we pay a dividend and we'd grow it as our wealth profitability grew because our wealth profitability was more predictable, obviously, than our capital markets profitability. And certainly, I think you can expect this as our wealth profitability grows, which didn't happen this quarter because of COVID, you would expect to see our dividend grow as well, commensurate with that profitability. So that's kind of the position we're taking. Last year, we did do special dividends. This year, we increased our dividend to $0.05, and the idea is to continue to grow that dividend over time.Yes. So there really was never a contemplation of a special dividend this quarter. And my apologies if we led you to believe otherwise.
Your next question comes from Graham Ryding from TD Securities.
The recoveries in the quarter around the incentive and acquisition-related costs in your U.K. Wealth business. What acquisitions were those related to? And could those recoveries reverse if you continue to see sort of a recovery in your assets there?
With some of the acquisitions that we've been making over the last year, there's a contingency consideration -- part of the consideration is contingent on various performance metrics, so out into the future based upon revenue, assets, that kind of thing. So we measure those at the time of the acquisition and constantly remeasure them and true it up depending upon what we think the ultimate contingent consideration is going to be. So with the market activity over the last quarter, there's some natural reduction in what that consideration is going to be, so we just true it up. We don't expect that it's going to change, but it might change a little bit in which case there would be a true up, either an increase or a decrease to the provision that we've currently got recorded.
Okay. Got it. Jumping to the expense side. So I guess there's a couple of things going on. First of all, you talked about lower cost this year just due to the sort of the remote environment that you're working in and deferring some costs, but then you also have a $20 million in expense savings target. Should I think of those as 2 separate items and not related to each other?
Yes. I'll let Don give his color as well. We had always had $20 million targeted as a cost saving measure, and we're well along the lines of realizing that and planning on that and doing what we needed to do to get there. And then COVID hit. I think -- unfortunately, we just don't know what the new normal is yet. And I don't mean to -- I wish we've kind of been through COVID, and we're kind of sitting here, and we knew where new business levels should be and then we can manage our cost and budget appropriately, but we don't know. That's the dead honest truth. So what we're doing right now is saying, let's cut all those costs right now. We don't have to kind of ease into it through the year. Let's just kind of get it all done. And to be clear, it's non-comp costs and comp costs, so -- read in headcount. So we're going to kind of get that done now. And then once we understand where a new normal is, I'd like to give you better visibility, it's hard to do. Maybe we'll have some more cost cuts, maybe we won't. But until -- right now, when I look at our business levels in the quarter ended March and the quarter we're going to end in June, they're pretty good. But what's the quarter ended in September going to look like? And what's the quarter after that going to look like, that is hard to have visibility at this stage given the volatility. So I think we're just going to kind of manage this dynamically for a little bit. I know that's not the precision you're looking for. But I think you'll see that cost number come out of the organization, virtually immediately. And then we'll see if we need to do more after that.
Okay. Understood. Jumping to the Canadian wealth platform, just a good recovery in your assets in fiscal Q1. Any color on sort of what degree of the client flows had an impact over the past couple of months?
You just -- I'm not sure if it's my line or yours, but I didn't hear the end of it. The degree of what -- what were you saying?
The client flows, how much of an impacted client flows actually have and -- over the last couple of months in that AUA recovery?
Yes. There was definitely inflows. Don, I don't know if you know the exact number, you want to articulate the exact number. We definitely had net positive inflows in that recovery. Don, do you want to give some color on that?
Yes. Yes, I don't have the exact number. I mean the increase since we -- from the asset level at March is a combination of net new assets being added as well as market growth. I think, as Dan had mentioned earlier, what we have definitely seen has been sort of clients moving away from the more self-directed platforms into more advisory platforms, and we've been a net beneficiary of that. As advisers been able to attract additional assets from existing clients as well as new relationships.
Okay. And then you took some provisions which you talked to. Can you quantify what those were in the Canadian Wealth platform?
Well, I think those flow through our G&A line on the Canadian Wealth page. And I think you've kind of looked at the differential from what a run rate would have been normally to sort of what we experienced in the quarter, and that would kind of give you a pretty good indication as to what that sort of -- kind of went from an average of 2.5% to 7.5%. So that's probably indicative of what was -- what that level was.
I don't want to tell you that, that adds up to 5.
And then just my last question. You've got a target of 20% pretax margins for your Global Wealth business, and just with the lower interest income with this low rate environment, and then you've also brought in the Australian platform, like does that target still hold? Or is it potentially get revised or pushed out?
No. I mean, no, we still -- we're not changing our targets. I mean, yes, that interest income is very high-margin business for us, 100% margin, actually. So -- but we're talking about a business that has almost $500 million-plus in revenue. So yes, $10 million is bad if it disappears or whatever that number is at high margin, but we're not changing our overall margin assumptions. We'll just more aggressively cut costs to get to those margins. That's a hard number that we will get to.
Mr. Daviau, there are no further questions at this time. Please continue.
Well, great. Thanks, everyone, for joining us today. And we certainly look forward to providing another update when we release our Q1 results, which will be relatively soon, in early August. Until then, please stay safe and healthy. And operator, I think, we can close the lines. Thank you.
Thank you. Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. You may now disconnect your lines.