Fellow Shareholders,

Fiscal 2016 was a transformative year for Canaccord Genuity. It was a year during which we, along with our peers and our clients, faced an environment of unprecedented volatility that impacted activity levels across the industry. It was also a year during which we significantly refocused our business to deliver stronger, long term returns for our shareholders.

Following the appointment of Dan Daviau as President & CEO in October, we announced a new strategy to operate our business with a firm-wide focus on shareholder alignment and we embarked decisively on implementing it. We reduced complexity across our operations and implemented a fully accountable leadership team, with representation from all of our businesses and geographies, to improve decision-making as we execute on our strategy.

We made steady progress in reducing general and administrative, communication and technology and trading costs across our operations. We have exited underperforming businesses and taken steps to focus our business in the areas where we can achieve dominance as an independent mid-market global investment bank and wealth management firm.

While increasing regulatory demands have driven many independents to retrench, we have always placed a strong emphasis on monitoring risk across our business and ensuring an appropriate level of preparedness to manage changes in the regulatory environments where we operate. This protects our stability and also our ability to maintain long term partnerships with the many clients we have worked with over the years.

We have also made important changes to our compensation strategy. As a result of prolonged weaker market conditions, certain incentive compensation pools were deemed lower than would be required to provide necessary compensation to key production staff. As a result, the Board agreed to temporarily increase the level of compensation as a percentage of revenue, as an investment in maintaining production capacity for future performance.

Taking into account the impact this decision would have on shareholders’ equity, we worked with management to implement a program that would increase long term share ownership by senior business leaders, while compensating them for their contributions to the success of the firm and its shareholders. Aligning employees and senior business leaders with shareholders is a key priority for the organization, and I am pleased to say the resulting private placement received overwhelming interest from this group.

Equity participation has been an important part of our partnership culture, and, looking ahead, the fiscal 2017 compensation program will have an increased relationship to net income.

The Board is committed to ensuring the firm has a strong capital position to execute on opportunities and protect value for shareholders. During fiscal 2016, the Company returned a total of $32.3 million to shareholders through common and preferred dividend payments and our share buybacks. In February, following a careful review of the impact the market environment has had on our business activity, the Board made the decision to suspend our quarterly common share dividend. We remain committed to returning capital to our shareholders and look forward to reinstating our quarterly dividend payment when sustainable profitability returns.

Consistent with our firm-wide cost cutting measures and our emphasis on profitability, we have reduced board-related costs by over 30% through a number of measures including reduction of subsidiary governance costs. In that regard, Dennis Miller and Bill Eeuwes have decided not to stand for re-election to the Board of Directors at our Annual General Meeting in August. I would like to thank Dennis for his wise counsel and contribution. I would also like to thank Bill for his 14 years of service and commitment during which time he oversaw Canaccord Genuity’s transition from a private company to a public company, several major acquisitions as well as our navigation of the financial crisis of 2008. Both Dennis and Bill will be greatly missed.

We believe the actions taken throughout the fiscal year are in the best interests of the Company and our shareholders.

On behalf of the Board of Directors, I would like to thank the senior management team and all employees of Canaccord Genuity Group for their hard work and dedication during a year of prolonged adjustment. Our people are our greatest asset and underpin our ability to deliver our differentiated offering to clients across the globe.

And to my fellow shareholders, I thank you for your patience and support throughout this challenging period. We remain committed to representing your best interests as we work together to make Canaccord Genuity Group the leading global independent investment bank and wealth management firm.

David Kassie
Executive Chairman