Letter from the President & CEO

Fellow Shareholders,

Fiscal 2022 began on strong footing, with a continuance of the robust market for growth stocks that began in 2020. In the first half of the year, our operating revenue, net income, and adjusted earnings per share surpassed the fiscal 2021 comparison period on every measure. The second half presented several industry-wide challenges, which led to increased volatility and a substantial decline in capital raising activity that had been broadly expected after two years of unprecedented activity levels. Through this, CG employees continued to demonstrate remarkable creativity and resilience.

We continued to gain market share in our wealth management and capital markets businesses by leveraging our expanded resources to attract new clients and deepen our existing relationships. As markets became more challenging, we seized every opportunity to execute for our clients while building a solid pipeline for the coming year.

Firm-wide revenue for the fiscal year amounted to $2.0 billion, an increase of 1.9% compared to fiscal 2021. Excluding significant items⁽¹⁾, pre-tax net income increased 8.2% year over year to $418 million, and this translated to adjusted diluted earnings per share⁽¹⁾ of $2.51.

The advantages of our diversified platform have never been clearer. In fiscal 2022, more than 60% of our revenue was earned outside of Canada. Despite a substantial mid-year decline in investment banking activity, we materially increased contributions from higher margin advisory activities, and our wealth management businesses continued to increase recurring revenue and net income contributions. These achievements reflect years of careful planning and disciplined investment.

Turning to the performance of our operating businesses, our combined global capital markets businesses earned revenue of $1.3 billion for the fiscal year. While contributions from our investment banking segment decreased from the unprecedented levels of the prior year, it was still a very productive year by historical standards for our equity capital markets (ECM) activities. Over the fiscal year, we helped raise $61 billion for growth companies with continued strong activity levels in the technology, life sciences, and mining sectors.

When ECM activity began to decline, our M&A teams rose to the occasion and delivered a record performance, reflecting the confidence of the executives, financial sponsors and boards of the growing companies that we advise. Revenue from this segment increased over 2.5 times year over year, led by our US capital markets business, which tripled advisory revenue year over year.

The adjusted pre-tax profit margin⁽¹⁾ in our global capital markets business was in line with the record set in fiscal 2021, at 25% for the fiscal year. These results reflected the constructive backdrop for capital raising activities that we experienced, and the benefits of our previous investments in growing our advisory segment to complement our ECM focus. Building on the successful deployment of this strategy, we welcomed leading consumer-focused advisory firm Sawaya Partners in December, an acquisition that materially enhances our consumer vertical and intersects with several of our core focus sectors globally.

Throughout the year, our teams upheld our long-standing commitment to providing exceptional aftermarket support and experiences for our clients through our unparalleled global distribution capabilities, innovative research, conferences and specialized trading solutions.

As we support our clients through new market realities, we are having discussions about their future needs and taking steps to add ancillary products and services that complement our core mid-market verticals and foster productive, long-term relationships.

Looking ahead, we see numerous opportunities to continue to grow our market share, expand our platform capabilities, and ultimately elevate our earnings capacity across market environments.

Our global wealth management businesses continued to deliver impressive growth. Client assets at the end of the fiscal year amounted to $96.1 billion, a year-over-year increase of 8.2%, but a modest decrease from the high reached in our third fiscal quarter, reflecting lower market valuations at the end of the 12-month period. Notably, commissions and fees revenue increased by 12% to a new record of $587 million, reflecting record levels from all geographies. Excluding significant items, our combined global wealth management businesses contributed record pre-tax net income⁽¹⁾ of $148.5 million, a year-over-year increase of 10%.

Throughout the fiscal year, we continued to invest in the growth of our wealth management businesses in all regions, which protects our ability to deliver predictable results during less certain times.

In the UK & Crown Dependencies, we entered the Scottish market with our acquisition of Adam & Company, and after our fiscal year end we also completed our acquisition of Punter Southall Wealth, which will increase the scale of both our financial planning and investment management businesses. Our integration efforts to date have been positive and productive, and we maintain a strong focus on organic growth priorities. With strong local leadership and increased support from our strategic and financial partner HPS, we have also established a higher valuation for this business. While we expect that approximately 67% of the net income contribution from this business will be allocated to group results going forward, we are well positioned to expand our presence in this market while driving stronger net income contributions to our overall results.

We have continued to attract talented teams who see differentiated opportunities to grow their businesses with CG. This year, we ranked very strongly in an independent survey of Canada’s Top Wealth Advisors, with the total number of CG advisors exceeding representation from all other independent firms by a wide margin. This business was also recently recognized as a top ranked Canadian wealth management firm in a national survey of investment advisors. Over fiscal 2022, the average book per Advisory Team grew 17% year over year to $260 million, and this business also continued to grow discretionary assets under management by 35% compared to last year.

Finally, our Australian wealth business continues to grow client assets and related revenue, benefiting from its alignment with our leading capital markets business in the region. Since our acquisition to expand this operation in 2019, managed client assets have more than doubled to $5.4 billion. This exceptional performance is helping to establish CG as the premier brand for small- and mid-cap investors in the region and is also driving advisor recruiting momentum.

Whether through acquisitions or recruiting, the businesses and professionals that join CG Wealth Management have been able to unlock greater value on our platform, which is driving exciting growth opportunities in all regions. Looking ahead, we continue to explore a range of opportunities for profitable growth in this important segment.

We are committed to advancing our strategic priorities in ways that provide benefits for both our business and our communities.

We know that our ability to contribute to positive and lasting change can be effective only if we incorporate our principles of corporate social responsibility into every aspect of our business activities. This year, environmental, social and governance (ESG) oversight was added to the formal mandate for our Board of Directors, and we published our first ESG report.

In capital markets, our global sustainability practice is supporting increasing numbers of growth companies in accelerating their sustainable development and energy transition priorities. I am pleased to report that the aggregate value of our underwriting and advisory engagements in this vitally important segment amounted to $16 billion this year.

Within the organization, we are progressively advancing our hiring and retention practices to foster a more diverse workforce. While we have prioritized training, measurement and reporting, some of our most impactful diversity and inclusion initiatives have been shaped by people throughout CG, a testament to our enduring partnership culture.

We have also identified several opportunities to support continued growth and success for all employees, and we are working to implement action plans across regions and businesses. Over the course of fiscal 2022, we conducted employee surveys in all geographies, and I am pleased to report that CG employee engagement levels came in well above the average for financial services firms in our peer group. Many of our employees highlighted that CG excels in offering tools for success and a strong collective vision.

We know that there will be increased uncertainty and volatility in our future, but also opportunity.

The start of fiscal 2023 has presented new challenges with a combination of surging inflation, increased volatility, higher interest rates and recession fears. While many countries and businesses are still charting their recovery from the pandemic, we are also confronted with the economic and humanitarian impacts of the Russia-Ukraine war. While it is first and foremost a humanitarian crisis, and our thoughts are with the people of Ukraine, this developing crisis will also have wide-ranging implications for economies and trade.

We have proven in the past that we can use challenging markets as an incentive to do things differently. We have a strong balance sheet to fuel our future, and we are advantageously positioned to grow in unique ways that allow us to increase the breadth and depth of capabilities for our targeted client base across our wealth management and capital markets businesses.

I have never been as confident in our strategic position as I am today. With support from my partners on the Global Operating Committee, our Board of Directors and over 2,500 CG colleagues, we are committed to using this period productively so that we can continue building value for our shareholders for many years to come.

Thank you for your continued support.

Dan Daviau
President & CEO
Canaccord Genuity Group Inc.

(1) These figures exclude significant items. Figures that exclude significant items are non-IFRS measures. See Non-IFRS Measures on page 14 and a reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures on page 25.