Canaccord Genuity Fiscal 2014 Annual Report

Global Performance Highlights

Canaccord Genuity earned record revenue in 2014. Assisted by a resurgent global market environment, our growth can be attributed to strong performances from many of our foreign operations, particularly in investment banking and principal trading. Additionally, our commitment to cost containment and improvements to the operational efficiency of our business has directly and positively impacted our profitability.

Canaccord Genuity Group Inc. is the publicly traded parent company of a group of financial services businesses that provide investment banking and wealth management services to corporate, institutional and private clients around the world. The two main operating divisions of the Company are Canaccord Genuity, our global capital markets division, and Canaccord Genuity Wealth Management, our global wealth management operation. In fiscal 2014, all our businesses were rebranded under the Canaccord Genuity banner.

Revenue for fiscal 2014

(C$ millions)

Revenue for fiscal 2014 chart

Revenue For Fiscal 2014 (C$ millions)

Year	Revenue For Fiscal 2014 (C$ millions)
2010	577.5
2011	803.6
2012	604.9
2013	797.1
2014	855.2

Net Income for fiscal 2014

(C$ millions, excluding significant items)

Net Income for fiscal 2014 chart

Net Income for fiscal 2014
(C$ millions, excluding significant items)

Year	Net Income for fiscal 2014 (C$ millions, excluding significant items)
2010	42.0
2011	114.1
2012	25.2
2013	25.6
68.8	855.2

DILUTED EARNINGS PER SHARE

(C$, excluding significant items)

DILUTED EARNINGS/LOSS PER SHARE chart

DILUTED EARNINGS/LOSS PER SHARE
(C$, excluding significant items)

Year	DILUTED EARNINGS/LOSS PER SHARE (C$, excluding significant items)
2010	0.76
2011	1.40
2012	0.25
2013	0.14
68.8	0.54

GEOGRAPHIC DISTRIBUTION OF REVENUE

(Percent of total fiscal year revenue)

GEOGRAPHIC DISTRIBUTION OF REVENUE chart

GEOGRAPHIC DISTRIBUTION OF REVENUE (Percent of total fiscal year revenue)

Country	GEOGRAPHIC DISTRIBUTION OF REVENUE (Percent of total fiscal year revenue)
	2010	2011	2013	2013	2014
UK	14.3	11.5	8.8	31.3	38.0
US	17.4	13.8	13.7	19.5	25.3
Canada	67.3	74.5	75.7	45.9	32.1
Other	1.0	0.1	1.7	3.2	32.1

^$855

million in annual revenue

NCIB PROGRAMME

As part of our commitment to improving value for shareholders, we purchased 3,294,144 shares for cancellation under our normal course issuer bid (NCIB) buy-back programme, at an average cost per share of $6.43 during fiscal 2014.

fiscal 2014 revenue by division

Fiscal 2014 revenue by division chart

Fiscal 2014 revenue by division (Percent of total fiscal year revenue)

Division	Fiscal 2014 revenue by division (Percent of total fiscal year revenue)
Canaccord Genuity	72
Canaccord Genuity Wealth Management	26
Corporate and Other	2

Financial Highlights

SELECTED FINANCIAL INFORMATION⁽¹⁾⁽²⁾	For the years ended March 31
(C$ thousands, except per share and % amounts)	2014		2013		2014/2013 change
Canaccord Genuity Group Inc. (CGGI)
Revenue
Commissions and fees	$	361,647	$	353,125	$	8,522	2.4%
Investment banking		221,410		145,772		75,638	51.9%
Advisory fees		139,142		179,690		(40,548)	(22.6)%
Principal trading		91,313		66,406		24,907	37.5%
Interest		24,549		29,199		(4,650)	(15.9)%
Other		17,183		22,930		(5,747)	(25.1)%
Total revenue		855,244		797,122		58,122	7.3%
Expenses
Incentive compensation	$	413,289	$	406,724	$	6,565	1.6%
Salaries and benefits		91,135		88,522		2,613	3.0%
Other overhead expenses⁽³⁾		280,746		292,242		(11,496)	(3.9)%
Restructuring costs⁽⁴⁾		5,486		31,617		(26,131)	(82.6)%
Acquisition-related costs		—		1,719		(1,719)	(100.0)%
Total expenses		790,656		820,824		(30,168)	(3.7)%
Income (loss) before income taxes		64,588		(23,702)		88,290	n.m.
Net income (loss)	$	52,057	$	(18,775)	$	70,832	n.m.
Net income (loss) attributable to CGGI shareholders	$	51,413	$	(16,819)	$	68,232	n.m.
Non-controlling interests	$	644	$	(1,956)	$	2,600	132.9%
Earnings (loss) per common share (EPS) – basic	$	0.42	$	(0.31)	$	0.73	235.5%
Earnings (loss) per common share (EPS) – diluted	$	0.39	$	(0.31)	$	0.70	225.8%
Dividends per common share	$	0.20	$	0.20	$	—	—
Book value per diluted common share⁽⁵⁾	$	9.05	$	7.68	$	1.37	17.8%
Excluding significant items⁽⁶⁾
Total expenses	$	770,587	$	766,893	$	3,694	0.5%
Income before income taxes	$	84,657	$	30,229	$	54,428	180.1%
Net income	$	68,846	$	25,644	$	43,202	168.5%
Net income attributable to CGGI shareholders	$	67,211	$	26,207	$	41,004	156.5%
EPS – basic	$	0.59	$	0.16	$	0.43	268.8%
EPS – diluted	$	0.54	$	0.14	$	0.40	285.7%
Balance sheet data
Total assets	$	5,014,622	$	4,603,502	$	411,120	8.9%
Total liabilities		3,831,030		3,538,170		292,860	8.3%
Non-controlling interests		14,912		16,169		(1,257)	(7.8)%
Total shareholders’ equity		1,168,680		1,049,163		119,517	11.4%

(1) Data is in accordance with IFRS except for book value per diluted common share and figures excluding significant items. See Non-IFRS Measures on page 21.

(2) The operating results of the Australian operations have been fully consolidated and a 50% non-controlling interest has been recognized. Results of former Collins Stewart Hawkpoint plc (CSHP) since March 22, 2012 and the wealth management business of Eden Financial Ltd. since October 1, 2012 are also included.

(3) Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative, amortization of tangible and intangible assets, and development costs.

(4) Consists of restructuring costs mainly in connection with restructuring of our sales and trading operations in Canada and the UK and Europe, as well as certain office closure costs in fiscal 2014. Fiscal 2013 restructuring costs include expense incurred for staff restructuring and reorganization.

(5) Book value per diluted common share is calculated as total common shareholders’ equity divided by the number of diluted common shares outstanding and, commencing in fiscal 2014, adjusted for shares purchased under the normal course issuer bid and not yet cancelled, and estimated forfeitures in respect of unvested share awards under share-based payment plans.

(6) Net income and earnings per common share excluding significant items reflect tax-effected adjustments related to such items. See the Selected Financial Information Excluding Significant Items table on page 30.

n.m.: not meaningful

Unless otherwise noted, all figures in this report are presented in Canadian dollars and year-over-year percentage changes are calculated based on figures as reported in Canadian dollars.

Our Values

Seven key values drive Canaccord Genuity employees and management in delivering results to our shareholders, clients and community. These values support our unwavering commitment to building lasting client relationships, creating shareholder value and generating innovative ideas. Pursuing and living up to these values is something we take great pride in.

WE PUT OUR CLIENTS FIRST.
We develop deep trust with our clients through detailed consultation, appropriate investment ideas and value-added services.

A GOOD REPUTATION IS OUR MOST-VALUED CURRENCY.
Integrity and respect for client confidentiality are the basis of all our relationships.

IDEAS ARE THE ENGINE OF OUR BUSINESS.
Our ability to generate original, quality ideas – for clients and for ourselves – positions us ahead of the competition globally.

WE ARE AN ENTREPRENEURIAL, HARD-WORKING CULTURE.
We believe that highly qualified, motivated professionals working together in an entrepreneurial environment results in superior client service and shareholder value.

WE STRIVE FOR CLIENT INTIMACY.
The more detailed our understanding of our clients' needs and objectives, the better positioned we are to meet them.

WE ARE DEDICATED TO CREATING EXEMPLARY SHAREHOLDER VALUE.
We are committed to aligning the interests of our people with fellow Canaccord shareholders through high employee share ownership. We believe that ownership motivates the ideas and efforts that lead to value creation.

TO US THERE ARE NO FOREIGN MARKETS.™
Our clients benefit from our truly global perspective. We deliver insightful, actionable ideas from local and international markets through our continued pursuit and evaluation of global opportunities.

Our Business

About Canaccord Genuity Group Inc.

Through its principal subsidiaries, Canaccord Genuity Group Inc. (the Company) is a leading independent, full-service financial services firm, with operations in two principal segments of the securities industry: wealth management and capital markets. Since its establishment in 1950, the Company has been driven by an unwavering commitment to building lasting client relationships. We achieve this by generating value for our individual, institutional and corporate clients through comprehensive investment solutions, brokerage services and investment banking services.

The Company has offices in 11 countries worldwide, including wealth management offices located in Canada, Australia, the UK and Europe. Canaccord Genuity, the international capital markets division, operates in Canada, the US, the UK, France, Germany, Ireland, Hong Kong, mainland China, Singapore, Australia and Barbados.

Locations

Canada

Toronto

Vancouver

Burlington

Calgary

Edmonton

Gatineau

Halifax

Kelowna

Kitchener
Montréal
Ottawa
Prince George
Trail
Waterloo

USA

New York
Boston
Chicago
Houston
Minneapolis
San Francisco

UK & Europe

London
Dublin
Frankfurt
Guernsey
Isle of Man
Jersey
Paris

Asia

Beijing
Hong Kong
Singapore

Australia

Melbourne
Sydney

Canaccord Genuity Group Inc. is the publicly traded parent company to Canaccord's group of companies. Canaccord Genuity Group Inc. is listed on the TSX (as CF) and LSE (as CF.).

Canaccord Genuity provides global investment banking, M&A, advisory, research, and sales and trading services to Canaccord's institutional and corporate clients. Canaccord Genuity has offices in Canada, the US, the UK, France, Germany, Ireland, Hong Kong, mainland China, Singapore, Australia and Barbados.

Canaccord Genuity Wealth Management is a global provider of wealth management solutions to private investors in Canada, the UK, Europe and Australia.

Pinnacle provides correspondent services (administrative and clearing solutions) to Canada's wealth management industry by leveraging Canaccord's investment in leading-edge back-office infrastructure and technology.