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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 2023 Fourth Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. [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, Mr. Daviau.
Thank you, operator, and thanks to everyone joining us for today's call. As always, I am 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 SEDAR or on the Investor Relations section of our website at cgs.com.
Within our update, certain reported information has been adjusted to exclude significant items to provide for a transparent and comparative view of our operating performance. These adjusted items are non-IFRS financial measures. Please refer to our notice regarding forward-looking statements and the description of non-IFRS financial measures that appear on our investor presentation and also in our MD&A.
Consistent with prior quarterly conference calls, today I will be discussing our quarterly and annual financial results in detail. After the prepared remarks, Don and I will have a limited amount of time to take related questions. And with that, let's discuss our fourth quarter and fiscal 2023 results.
Without question, this has been an incredibly challenging year with persistent headwinds impacting investor confidence and activity levels across our industry. The small and mid-cap sectors and investors that we serve were particularly impacted by this downturn. While we did not meet our financial targets for the year, we've continued to defend and build upon our excellent market position in all CG regions and verticals.
Firm-wide revenue for our fourth fiscal quarter amounted to $430 million, a year-over-year decrease of 14%. This was our strongest revenue quarter of the year and reflects an increase of 20% from the average of the prior three quarters. For the full fiscal year, we earned revenue of $1.5 billion, a decrease of 26%, compared to the record set in fiscal 2022.
Excluding significant items, adjusted earnings per share of $0.07 was the lowest quarterly result of the year and reflects the impact of a large regulatory provision and elevated compensation expenses, partly due to year-end adjustments and the impact of an elevated common share price on share based compensation programs. Absent those headwinds, this would have been our strongest of the year.
Adjusted earnings per share for the fiscal year amounted to $0.59. Our full-year profitability was impacted by several factors, which included a material reduction in new issue revenue, the mark-to-market impact of a sharp decline in the market value of several inventory positions incurred earlier in the fiscal year, and the incurrence of several large isolated charges.
Turning to expenses. On an adjusted basis, non-compensation expense as a percentage of revenue were 30% for the fiscal year, which is in-line with pre-pandemic levels. Communication and technology costs increased by 14% in the fourth quarter and 16% for the fiscal year, primarily to support increased headcount in connection with our acquisition and recruiting efforts.
Heading into fiscal 2024, we're planning for continued upward pressure on information technology and compliance expenses, which are expected to increase in all geographies. I will also note the beginning in Q3, our quarterly interest expense increased in connection with bank loans obtained for our wealth management acquisitions in the UK and Crown Dependencies.
Notwithstanding our intense focus on cost discipline measures across the organization, we continue to invest in conferences and other business development efforts throughout this difficult year to protect our market leadership in our core segments and verticals. Firm-wide compensation ratio for the fourth fiscal quarter was elevated at 64%, which reflects the aforementioned impact of a higher share price on stock-based compensation, partially offset by lower levels of incentive-based compensation.
For the fiscal year, our compensation ratio was less elevated at 62%. We continue to manage our compensation expenses very carefully in the context of a continued difficult market. 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, which is 6% higher than last year. Given the strategic activities that occurred during the quarter, we did not repurchase any shares.
Turning to the performance of our operating businesses, in prolonged difficult markets, our wealth management division is an important source of earnings power and stability for our business. This division contributed 47% of firm-wide revenue and a 100% of our earnings per share for the fiscal year.
On a consolidated basis, fourth quarter revenue amounted to a $197 million, bringing full-year revenue $708 million, a modest decline of 2%, compared to the record set in the prior fiscal year. Adjusted pretax income for the fourth quarter increased by 26% year-over-year to $37 million, bringing the full-year amount to a $126 million.
Client assets at the end of the fiscal year amounted to $96 billion, below the peak of $102 billion just over a year ago. The decline primarily reflects the impact of lower market valuations, partially offset by new assets from our acquisition of PSW in the UK and our recruiting efforts in Canada and Australia.
Our UK Wealth business delivered its highest quarterly revenue on record at a $104 million, bringing the full-year revenue contribution to $344 million, an increase of 11% over the last fiscal year. The adjusted pretax net income contribution from this business amounted to $26 million for the fourth quarter and $86 million for the fiscal year. Increases of 12% and 2%, respectively.
Following the completion of recent acquisitions, we've been focused on integrating and organic growth efforts across the UK and Crown Dependencies. While we still have plenty more to do, we are beginning to see the impact of certain synergies and our expanded financial planning capability.
Notably, fourth quarter commission and fee revenue in this business increased by $11 million or 14% year-over-year to $86 million, bringing the full-year contribution from the segment to a record of $311 million. Additionally, fourth quarter interest revenue increased substantially to $18 million, bringing full-year interest revenue to $30 million up from just 3 million in fiscal 2022.
Despite the 71% decline from transaction based revenue over the fiscal year, our Canadian wealth business delivered a relatively strong performance. Commission and fee revenue remained strong at $55 million for the fourth quarter $228 million for the fiscal year. Just slightly above the record set in fiscal 2022. Additionally, the higher interest rate environment positively impacted interest income, which amounted to $14 million for the fourth quarter and $46 million for the fiscal year. Increases of 163% and 144%, respectively.
Adjusted pretax net income for the fiscal year decreased by 30% year-over-year to $39 million, mostly due to the abrupt and sustained decline in transaction based revenue. Subsequent to the end of the quarter, we completed our acquisition of Mercer’s Canadian private wealth business and it has been a real privilege to welcome this group to CG. Together, they are entrusted with approximately 1.5 billion in client assets and we're looking forward to supporting their continued growth and success.
And finally, our Australian wealth business was modestly profitable for the fiscal year, despite the 39% year-over-year decline in investment banking revenue. Client assets in this business increased 2% year-over-year to $5.4 billion, largely due to an increase in net new assets in connection with our recruiting initiatives.
Despite operating through the worst new issue environment that I can recall, our capital markets division was modestly profitable on a consolidated basis for the fiscal year. Full-year revenue in this division was $793 million on par with pre-pandemic levels, but profitability was impacted by higher costs in a reduced revenue environment.
Excluding significant items, CG Global Capital Markets recorded a fourth quarter pretax loss of $5 million and earned pretax net income of $31 million for the full fiscal year, down 91% from the record set in fiscal 2022.
On a consolidated basis, fiscal 2023 investment banking revenue fell by 73% year-over-year to a $127 million, primarily attributed to the market-wide reduction in the activity levels. Additionally, if you've been following our company throughout the fiscal year, you'll recall that the rapid deterioration and market values of certain inventory and warrant positions earned in respect of our investment banking activities in Australia and Canada had a negative impact on revenue of about $40 million as reported in our first fiscal quarter.
Given the industry slowdown and the diversification away from high risk growth assets, I'm pleased with the performance of our teams who delivered for our clients and protected our strong market position among the league table leaders in each of our geographies. In Canada, Australia, and the UK, the decline in new issue revenue was less pronounced than the overall market decline, reflecting a strong competitive position in our core focus sectors.
Solid advisory activity helped to offset the impact of lower new issue activity. Fourth quarter revenue from this segment was $104 million, down 15% year-over-year, but up 38% sequentially. Advisory revenue for the full fiscal year was $363 million, down 26% from the record set last year, but substantially higher than all prior fiscal years and again outpacing broader market activity levels.
Our U.S. business contributed 70% of fiscal 2023 revenue in this segment. While the average size and frequency of new M&A announcements has declined, our engagement with client remains robust and we are well-positioned for when the market confidence improves. Given the industry-wide slowdown, results of our engagements will be most likely reflected in the second half of our fiscal year.
And finally, our sales trading and specialty desks remain steady providing liquidity for our clients and supporting increased volumes during [doubts] [ph] of market volatility. Ongoing investments in our technology and infrastructure position us to scale when volumes return.
Recently, we announced some important leadership changes in our Canadian business, having appointed Stuart Raftus as CEO of the Canadian Broker Dealer; and Jason Melbourne as the head of Canadian Capital Markets. Both Stuart and Jason have demonstrated exemplary leadership in their respective areas of oversight, and we are excited for them to lead our business into the next phase of growth.
Additionally, Jeff Barlow has been appointed CEO of our U.S. Capital Markets business. A role that reflects the increased importance of our U.S. business to our global franchise under his leadership.
While we are disappointed that we did not meet our profitability targets for the year, our business remains on solid ground, even with recent headwinds in the new issue market and the current economic uncertainty. The operating environment remains a challenge across all our geographies and core capital market verticals, but we are navigating headwinds in a much more constructive way than in past downturns.
Importantly, we've come through an incredibly difficult period with our core [strategy intact] [ph]. Past investments to grow our wealth management businesses and expand our M&A offering have contributed to our resilience. And all our core business segments are positioned to benefit from an upturn in investor sentiment and increasing risk tolerance.
We remain fully committed to operating our business in the best interest of our clients, employees, and public shareholders. We look forward to working with our new Board of Directors as we continue to explore a range of opportunities to increase the value for our company, just as we've always done.
Before we move to the question period, I would like to remind you that with respect to our recently expired takeover bid, we are restricted to the detail that has been provided in our public disclosure under applicable securities laws. All related disclosures are available on SEDAR under the Canaccord Genuity Group Inc. profile.
And with that, Don and I will be pleased to take questions. Operator, could you please open the lines?
Thank you, sir. [Operator Instructions] Your first question will come from Jeff Fenwick at Cormark Securities. Please go ahead.
Hi, good morning, everyone.
Hi, Jeff. How are you.
I’m fine. Thanks Dan. So, lots of ground to cover here, obviously, want to start maybe on the Capital Markets side of the business. U.S., specifically here, a few questions there. I mean, I guess, first-off, there's a contingent consideration payable. I guess that's an earn-out associated with some of the acquisitions you've done there that's $14 million in the quarter.
Yeah. That's right. Yeah. Hi, Jeff. Yeah. That's right. We have some consideration recorded as part of some of the acquisitions, and that just gets adjusted from time-to-time. So, that's all that represents.
Okay. And then on a couple of the other items, I think some fairly significant swings over the quarter. When I look at the compensation, ratio quite a bit higher sequentially versus Q3 despite a similar revenue mix and then your G&A was up probably about 10 million or so. So, just, you know, any color you can offer there, I'm guessing maybe there's something in terms of reserving against the regulatory matter that might be in the G&A line? And is there some severance or something in the compensation line that would have elevated it through the end of the year?
Well, I think, on the compensation line, it's really just – it's hard to look at it from quarter-over-quarter. It's just a matter of looking at it from – on an annualized basis. And for the U.S., it was up on an annualized basis, and that's just a reflection of the mix of revenue within the business itself, as well as we've got certain discretionary compensation pools, which we adjust from time-to-time depending upon on the revenue mix as well.
Yeah. But, Jeff, as you know, if you look at the full-year, it's kind of 61%, which is a little elevated. Don't get me wrong. That'd be higher than our kind of typical, you know, low-60s or high 50 number, but that in-part reflects as the softer revenue environment and a certain element of the expenses, comp expenses being fixed.
Yeah. I mean, last year it was 61.2%, this year 61.5% on an annualized basis. So, I think that's the better way to think about it or take a look at it.
And I guess, you know, your point taken on the compensation expense through a period of time where the top line gets a little softer. Maybe just some thoughts in terms of how you're focusing the business through the market here? We see some peers of yours that would be trimming headcount in certain areas? I mean, how are you thinking about navigating here to get back towards the profitability level you'd like to see in the capital markets business broadly speaking?
Yes, great question, obviously a sensitive one. But again, we've been hopeful that the new issue market would return. You know, and it's, you know, it's short-term thinking of a huge headcount reduction or other cost reductions, and then have to replace people later on or rebuild infrastructure later on.
So, we've been trying to see our way through it. That being said, undoubtedly, there is some headcount reduction that will go on in the context of an ongoing market decline. We've gotten through our year-end. So, we continue to do that. Some of that activity occurs naturally at year-end, as you can imagine.
You know, we've just gotten through that and paid our year-end bonuses. So, you know, I think we'll continue to assess that in the context of the natural flow of people as well, Jeff.
And then maybe we could talk a bit about wealth management. You know, the UK has continued to perform very well for you there. Expressed interest and continuing to grow and expand that business. Can you maybe just speak to what you see there in terms of opportunities? I know it's a very competitive market. There's some consolidation that continues to play out there. It sounds like perhaps this is more about adding capabilities and squeezing some incremental margin from the business and maybe just speak to that focus if you could?
Yes. No, I think your [proviso] [ph] when you started the question right. It continues to be a very strong market for us. Our margins continue to be very strong in that market. In fact, continue to improve. There's still some synergies that we have from our PSW acquisition. Those tend to play out over a couple of years. So, we've got a good pipeline in front of us for the year about realizing those synergies. So, we've got a pretty good idea of the predictability of those earnings.
For the next year, we continue to focus on organic growth measures as well in that market and trying to increase our net new assets, and we've got a number of things going on from that perspective, but that business is very well capitalized. It earns a lot of money and we'll continue to look for tuck-in acquisitions as well in our various markets there to grow some of our offices. So, I mean, that's a long way of saying no change in strategy from that business.
I think you heard us say on our quarterly announcement that the board is not actively selling any of our divisions or what speculation that that business would be sold or could be examined in the context of the privatization, and the board has firmly decided that they see the value of that business for the next couple of years, and we're going to keep on managing it for growth and profitability.
And I guess maybe one [nuance] [ph] there that came out through the process is that the partners you worked with over their HPS, there is a liquidation preference or some terms there that would make it disadvantages, I guess, to consider liquidating that asset. Can you offer any color on what that – how that's structured? I assume there's a time component to it. Is there any color you can provide there?
Yeah. Sure. Again, often in pieces of paper like this, Jeff, you'll have kind of minimum return conditions, which really don't affect anything if you hold the investment till term. right? There was a 5-year timeframe on that investment. It doesn't affect us if we hold it to term. If you try and liquidate the investment early, there is some penalty associated that'd be typical of any type of instrument. So I assume that's what you're alluding to.
Yes. Exactly. I mean, it's – I guess people – as you highlighted, people were thinking about that as an asset that might be attractive if there was some contemplation of a strategic [indiscernible]?
Yeah, but I mean, given their total size and the investment and the minimum return criteria, that wouldn't drive a decision. Like the fact that, you know, we'd have to make them whole on a small amount of money for further investment. That wouldn't drive something strategic. But, you know, but it is there. And clearly, the longer you pay, their typical dividends on their preferred shares, the less you'd have to make up. In fact, if you held it for 5 years, you'd have nothing to make up.
Okay. And then and maybe just one last one here on that. I mean, on the flip side, they've been a very good partner for you to you expand your wealth management operations. Is that coordination limited to the UK? Would you contemplate working with them as an opportunity came up in another market like Canada or Australia or anything like that?
Yeah. I mean, there's nothing on the horizon there, Jeff. But, yeah, we've got a very good working relationship with them and they understand our business very well. They obviously going to be the funder of our privatization. So they, you know, they had committed – they’ve had committed capital, you know, $824 million for the privatization. So, we know them very well and they know our business very well.
Great. Thank you very much for that color. I'll requeue.
Thanks. Good questions.
Your next question comes from Rob Goff at Echelon Wealth Partners. Please go ahead.
Good morning and thank you for taking my call. Perhaps, if you could give us a bit more of an update on operations in Australia, both on the wealth and the capital market side in terms of industry dynamics and what you were seeing there?
I'll try and then maybe Don can kind of add in. I mean, on the capital market side, it's pretty simple. Nothing's really changed. I mean, our competitive position in Australia continues to be remarkably strong. I mean depending on the quarter you get us in would be between 1 and 4 in the league tables in Australia, and that's not – that's raised the way you'd think about it, Rob, the same way as we would in-part because we've got such a strong mining franchise in that market.
The business has really matured. It stepped up from doing $20 million and $30 million and $40 million raises to $140 million raises. So, we've got a very significant presence in the market. It continues to be very active. Our inventory positions in that market, you know that we tend to take a fair amount of [fee stock] [ph]. They're lower. We monetized a lot of those positions throughout the year, but they're going to continue to be volatility in that business.
It's unavoidable given the subsegments that they operate in, but it's again, as part of the privatization. Initially, we were going to take in 100% of that business that was disclosed. We're going to keep the ownership structure the way it is now, given what's going forward. So, we continue to have a very, very strong base of partners and employees in that market and continue to invest in the business.
The business is very new issue centric. We're going to continue to build out our M&A presence in that market. That was always part of our plan, and we'll continue to expand that. That's basically what I would say on the capital markets. On the wealth business, I mean, it's think about Canada, 5 years ago and us replicating what we did. That's what we articulated a while ago. We've already taken our assets.
Our fee paying assets there from, roughly $3 billion to roughly $6 billion. We continue to attract a fair number of advisers in that market and up to or the nature of the adviser. The market is similar to Canada from that perspective. We're a very, very strong, independent and – we've built out a very good infrastructure for people to join us. So that business is a business that we continue to invest in, and we're excited by.
I mean, the way the – when we bring in a new adviser, the amortization is a lot quicker. So. as you grow, your profitability is impacted a little bit more than it is in Canada, but long-term, you'll still get to the same place, a very profitable business. So, we've got a plan to build that business up. So, it looks a lot like our Canadian wealth business. It will still take us several years, but we're pretty excited by the runway in front of us. Is that, kind of answer to your question, Rob? Or were you looking for more detail on that?
No, that's helpful. Perhaps turning to the advisory business, it's been a priority business and a successful business for you. Is there [indiscernible] one of organic growth or organic complemented by tuck-in acquisitions?
Yes. I mean the first point I'd make is, our M&A business continues to be strong. Like, it was obviously remarkable last year, but when you look at our revenue, our M&A revenue for the first 6 months of the year, I mean, maybe we're down 30-ish percent, and the market is down 50%. So, relatively speaking, we continue to be strong. And the reason for that is, we go very deep into sectors that we've good at.
We're not trying to be everything to everybody. We're trying to be a lot to a narrower group of subsectors where we can really perform strongly. So, we've already, as you know, bought Petsky 4 years ago and that's performed remarkably well, and our partners there are incredibly good partners to the firm. We brought in Sawaya and that's been strong in the consumer segment and our partners there are great.
We closed the acquisition of Results in the UK, which ties very much into our U.S. franchise, as well as our UK franchise in terms of their tech and health care focus. So, to the extent that we did more in M&A, it continues to be our strategy to grow that subsegment. It would be in the narrow sectors that we're really good at because there's natural synergies there. So, that's where we would continue to focus.
I wouldn't assume that there's something immediately on the horizon. We continue to look at a number of various firms, but these are all firms that we've known for a while and that we're looking to expand our partnership and ultimately do an acquisition of – unless something changes materially, I wouldn't expect an announcement in the next 3 months or something like that. It's something that we continue to assess on an ongoing basis.
Thank you. And if I may one more. Could you give us any additional insights in terms of how the industry headwinds have been coming through in this current quarter versus the Q4 just reported? Any signs of encouragement there?
No.
Okay. Okay. Simple answer.
You're in the market as I am. No. I think, Rob, well, I shouldn't be so full. But I mean you know that we're the Number 1 mining underwriter in the world. Mining, precious metals, rare earth, like we continue to be very strong in that subsegment, but we were strong in that subsegment last quarter as well. So – but some of our other sectors, technology, health care, I mean there's signs – there’s signs, Rob, but not enough for us to say that the war is over, so to speak.
So, it continues to be a tough new issue market. And our wealth businesses continue to perform well and our M&A business is over time, strong. Obviously, things get a little pushed out as interest rates increase. But there's no reason for us to stand up today and say we're going back to some of the new issue volumes we saw in the past. We do think it's going to happen. I could guess, but I'll be wrong. I always [heard, either] [ph] make a prediction or give a time frame, don't give both. It's going to get better.
I'm just not going to say when. We're hopeful in the next couple of quarters, things improve. And our core franchise stays in place, and I think we'll see the benefits of that when it does.
Thank you and good luck.
Thank you and thanks for the questions.
Your next question comes from Stephen Boland at Raymond James, Please go ahead.
Good morning. Just one question, I guess, is just, maybe you could just talk to – I know you said you can't talk much about the regulatory privatization due to regulatory issues, but maybe you could just talk to what's the morale like within the firm on the capital market side, as well as wealth management. Has this helped your cause or the failed bid is that hurt recruiting on the wealth management side? I'm just wondering what the morale is within the firm right now?
Yes, yes. Great, great nuance question. Yes. I think as you alluded to, we're very restricted on what we can say in our public disclosure about the regulatory matters and securities laws, but I think the way you asked your question is a good one. And I'll tell you a couple of things. What I can say is, in the context of the privatization, the initial bidding group was 50 people.
We had another 150 colleagues that had – form will support, we probably had another 300 expressions of interest, like we had an incredible amount of support from the employee base to own more of the company. That shouldn't come as a surprise to you. And as a result, we're going to continue to look at ways to improve employee ownership in the business as a public company. There's lots of ways to do things that [indiscernible] privatization, we get half the way there.
From the regulatory perspective, we operate in a heavily regulated industry, us and you. And it's appropriate that these regulators are going to have a view and something is important as a change of control. So, we respect their view that the issue was not that we wouldn't get through our regulatory issue. That's not a concern to us. We weren't going to get through it in time to complete our bid. That was the problem.
So, listen, we've got a deal with our Board right now, it’s at standstill, where we're going to work with them to create shareholder value collectively and together for all our shareholders. We're excited by that. We've got a great working relationship with the new Board. And we’ll continue to work with them to create value for all shareholders. So, the environment and mood inside the company is very strong. The way we've communicated the regulatory issue, it's not existential to our business. It's something that we just need to deal with, and we're continuing to deal with it.
So, if there was bad news to give you, Stephen, I would. There's no particular bad news to give you. Everything has been disclosed to the marketplace. And as was previously alluded to, you've seen an increase in some charges that could reflect some regulatory provisions, so we feel pretty good that we're well-positioned to deal with this.
Okay. And just on the wealth management, particularly in Canada, I mean, has this helped recruiting or has it hurt recruiting through the period over the past month or months?
I don't know. Stuart Raftus, who runs that business tells me it has not hurt recruiting. He would have [thought] [ph] on its face, maybe some of the uncertainty would hurt recruiting. But our recruiting pipeline is as strong as it's ever been. It could be a function of the industry. It could be – typically, it's hard to recruit when the markets are bad because people don’t really like to transition their books, but our recruiting pipeline is as strong as it's ever been. And I suspect that we've got a very strong path that continue to grow our book of business, both organically grow it, advisers growing, but also through bringing on teams of advisers.
Okay. And maybe just one more. I don't know if you can answer this, but through all the documents that you have been published recently, it wasn't disclosed what jurisdiction was the issue on the regulatory side. Is that something you can just on a high-level say is…?
No, I can't. I'd like to, but I can't. But thank you.
Alright. Appreciate that. Thank you.
No problem.
Your next question comes from Graham Ryding at TD Securities. Please go ahead.
Hi, good morning.
Hi, Graham. How are you?
Good. I guess now that the bid has expired, can you comment on maybe why you didn't choose to extend the offer and the time line, was it all related to the regulatory issue or did other things perhaps change that?
No, no. Graham, we weren't – there was a financing commitment window that was well disclosed. It ended in early August. So, we could have extended to the beginning of early August, but there was zero [indiscernible] – it was highly, highly, highly unlikely that we'd be able to satisfy conditions by the end of August or by the end of our financing commitment window. So, extending would have just been an added cost, a waste of time and misleading the market, Graham.
If we could have got it done by extending, we would have. But that – as the special committee and ourselves agreed to, there was no reasonable probability of getting that done in that time frame. And mainly, yes, I don't want to say exclusively related, but primarily related to a change of control approval and a regulatory issue.
Okay. Understood. Did you have discussions with HBS about extending the financing time line?
Yes. Yes. Again, I don't want to get into an immense amount of detail here for obvious reasons. But yes, of course, we did.
And then I guess the other piece that I thought was interesting was just the update saying that you're not actively, the Board is not actively looking to sell any of the divisions. But there was an indication, I guess, in the supplement to the circular that you had received some preliminary indications of interest, like, should we interpret that as though you've got some indications of interest and you didn't think they're attractive enough and you decided not to pursue anything or am I reading too much into that?
I don't know. I wasn't in all the special committee meetings, but yes, like we have – what I can tell you is, we have some very valuable assets in our business. That's the good news of the bid. Like we know we do. That's one piece of good news. The other piece of good news is, the incredible employee support we had for the bid. Those are all tangible takeaways from the process.
There's lots of negatives, too, including confusion and confusion in the street and all that kind of stuff. So, we know what the value of those businesses are. We did receive expressions of interest, preliminary – the special committee received, preliminary expressions of interest. But the special committee, the Board, and the management team also understands what the long-term value of the business is. And with the long-term perspective is for all these businesses.
And right now, you never say never about anything, but right now, it's – I don't want to put words in the special committees note, but from what I understand is come to a view that our shareholders will do better if we realize on the objectives that we've set out. So, again, I'll never say never. The special committee has a mandate to maximize value for all shareholders, including employee shareholders. The businesses work incredibly well together. And I think the special committee realized that. So, as I said, never say never, but right now, my instructions as the CEO of the business are to maximize value over the medium to long-term.
Okay. Understood. And the UK wealth business, assets were flat quarter-over-quarter, and I didn't see any mention of inflows in the MD&A, but you did flag inflows as driving Canadian Wealth AUA in the quarter. Are you seeing any client outflows in UK wealth? And I'm just wondering why the assets there didn't move up with, I think the FTSE was up quarter-over-quarter. I'm just wondering what's going on in that platform?
Hi, Graham, it's Don. I think in the UK, it's been relatively flat in terms of outflows and inflows matching each other. Part of those – part of that asset base does turn on the – some of the small cap funds that we manage that came along with the Hargreave Hale acquisition back in 2017, and that's been a tough market. So, I think the outflows have really been, sort of concentrated on that side of the business, but as you would naturally expect given the small cap difficulties over the last year, really.
Yes. We're cautiously optimistic, Graham that that business will grow organically. We've got a huge effort to grow that business organically over the next several years. We've invested and continuing to grow that business. Our financial planning aspect of that business is becoming increasingly integrated. So, we've got a 5-pronged strategy to grow that business organically. And speaking to David Esfandi, who runs that business, he would tell you that we're going to see the results of that over the next 12 months.
Okay. Maybe if we could jump just to the outlook for profitability in your capital markets platform, I think it essentially broke even or a modest loss in fiscal 2023. If capital markets remain soft in this, sort of revenue, sort of backdrop persist, how should we be thinking of profitability for this platform going forward?
Yes. I'd argue a couple of things here. The first thing, and I kind of mentioned it a little bit before, from a capital markets perspective, we've actually done – and I'm not funding from here because there's no market to blow horn or [pound a drum] [ph]. But we've actually, in 3 of our 4 core markets we've done better, right? If you look at new issue revenues across the street in Canada, it's down 55% or only down 45% or – the aim is down 20%, we're only down 10%.
So, we can kind of continue to push that. So, our competitive position hasn't changed in the markets, arguably has slightly improved. So, we still feel pretty strong about our capital markets business. We can't predict the new issue flow, but we also can't be blind to the realities that new issues may not come back. So, we are aggressively looking to prune costs where we can. It's difficult, and I think you know this, it's difficult to cut costs.
Number one, we were coming out of COVID. We are investing in conferences and all of the typical spending that you would invest in when you haven't seen your client for several years. So, we did that – we were doing a lot of that. We were pushing for it, quite frankly. In addition, this is a business that you don't change head count overnight. It takes a little bit of time, particularly off the back of several strong years.
So, I think now that the privatization efforts are terminated, I think you'll see us much more aggressively managing costs. So, if your question is, on the same revenue level, would we expect to make the same amount of money? The answer would be no. We would expect to be making more money off the same revenue levels. It's just hard for me to predict exactly what those revenue levels would be. But apples-to-apples or same store, so to speak, we would be making more money this year than less money this year if our revenues were the same.
Okay. That's helpful. My last question, if I could, just – can you give us some color as to how you're feeling about your balance sheet, any excess cash for buybacks or do you feel like this is the environment where you want to maybe hold on to cash and be a bit more conservative?
Yeah. Listen, we've continued to keep a relatively conservative balance sheet right throughout this period. So, we continue to be reasonably well capitalized. All of our capital is being used in our businesses. Maybe we've got some excess capital in certain subsidiaries like UK wealth or what have you. But notwithstanding that, I mean, we will look at shareholder value-creating strategies.
We could look at another substantial issuer bid. We could look at our normal course issuer bid in terms of buying back additional shares as – it goes without saying, the management team tried to buy the company at [11.25] [ph]. The stock is trading well below that. I think you can easily guess what our view on value would be here and what the Board's view on value would be here.
So, we could use leverage to buy back stock. We could look at enhanced employee participation by employees committing capital. So there's a number of things we're considering. I'm not trying to allude to too much here right now because we're just out of the bed and into the reexamination stage, but everything is on the table. But if your question is simply, hey, do you have enough cash to operate your business and continue to drive things forward?
Yes, we do. And we have enough cash to continue to pursue smaller strategic opportunities as well, which we'll continue to invest capital the way we have to grow our wealth businesses, either through recruiting or through acquisitions in the U.K. or recruiting in Australia. So, we'll continue to do all of that activity. Nothing has changed. Our core strategy remains completely intact.
Okay. But it doesn't sound like you're sitting on the excess cash like you were maybe over a year ago and whatnot when you were doing substantial issuer bids aggressively buying back shares.
Yes. Yes, I think that's fair to say. We probably don't have hundreds of millions of dollars lying around. I think we spent 150 million last time. I mean, that's a – it's a great strategy. And you'll remember this Graham, and I'll just reiterate the point. Our point was always, listen, we're going to pay a dividend. We're going to pay it in-line with our wealth earnings. We kept our dividend this quarter because our wealth earnings were, kind of what they were.
And then as we made excess profitability in our capital markets business like we did for the last two years, we'd use that cash to buy back stock. We've reduced our share count. I'm using rough numbers. So, please don't put me on this, from 135 million fully diluted shares down to about 100 million fully diluted shares, that's – we brought down our share count significantly when the capital markets business was strong.
Obviously, the capital markets business is not strong right now. So, we don't have that excess cash flow from capital markets to look at a significant share repurchase. But – so the answer to your question is, yes, we don't have that excess profitability from there.
That’s it from me. Thank you.
Thank you. Those are great questions.
Ladies and gentlemen, at this time, there are no further questions. So, I will turn the conference back to Mr. Daviau for any closing remarks.
Well, thanks everyone, and thanks for joining us today. Listen, I appreciate it's been a couple of twists and turns and lots of things in the news over the last couple of quarters, hopefully, things quiet down for the foreseeable future, and we can get back to running a very profitable and successful business. So, this concludes our fourth quarter call, and we'll be back at you again pretty soon.
Obviously, this was our year-end results. Our first quarter will be out at the beginning of August and look forward to speaking to everyone again. If there's other questions off-line, Don and I, of course, are available. So, really appreciate your time. Thanks very much.
Ladies and gentlemen, this does indeed conclude our conference call for this morning. We would like to thank you all for participating. And at this time, ask you to please disconnect your lines.