Canaccord Genuity Group Inc. Reports Fourth Quarter Fiscal 2017 Results

• Revenue of $879.5 million, an increase of 11.6% or $91.7 million from $787.8 million
• Excluding significant items, expenses of $817.1 million, an increase of 2.9% or $23.2 million from $793.9 million ⁽¹⁾
• Expenses of $825.7 million, a decrease of 28.3% or $326.1 million from $1.2 billion⁽³⁾
• Excluding significant items, diluted EPS of $0.32 compared to a loss per common share of $0.21 ⁽¹⁾
• Excluding significant items, net income of $49.2 million compared to a net loss of $6.0 million ⁽¹⁾
• Net income of $43.2 million compared to a net loss of $358.6 million⁽³⁾
• Diluted EPS of $0.27 compared to a loss per common share of $4.09⁽³⁾

Financial Condition at End of Fourth Quarter Fiscal 2017 vs. Fourth Quarter Fiscal 2016

• Cash and cash equivalents balance of $677.8 million, an increase of $249.5 million from $428.3 million
• Working capital of $488.5 million, an increase of $107.2 million from $381.3 million
• Total shareholders' equity of $764.8 million, an increase of $14.9 million from $749.9 million
• Book value per diluted common share of $5.08, an increase of $0.09 from $4.99⁽⁴⁾
• On June 1, 2017, the Board of Directors established a revised dividend policy, and in accordance with that policy, approved a dividend of $0.10 per common share, payable on July 3, 2017 with a record date of June 16, 2017. This dividend is comprised of a $0.01 base quarterly dividend and a $0.09 variable supplemental dividend as outlined below.

The revised dividend policy reflects the Company's commitment to return a portion of earnings to shareholders, in balance with the inherent variability of its business, which is impacted by the overall condition of debt and equity markets, and the market for securities in specific growth sectors. In the context of this revised policy, the Company expects to return 25% to 50% of net earnings attributable to common shareholders on an annual basis. The policy is anchored by a quarterly dividend of $0.01 per common share, which will be declared and paid quarterly, commencing with the fourth quarter of fiscal 2017. Following the end of each fiscal year, the Board will review the capital position of the business in the context of the market environment in combination with capital allocation requirements for its strategic priorities, and determine whether a supplemental dividend should be paid. Supplemental dividends, if declared, may be highly variable from year to year, given the nature of the Company's operating environment and the potential need to conserve cash and for certain corporate growth opportunities. Although dividends are expected to be declared and paid on an ongoing basis, the Board of Directors, in its sole discretion, will determine the amount and timing of any dividends. All dividend payments will depend on general business conditions, the Company's financial condition, results of operations, capital requirements and such other factors as the Board determines to be relevant.

• On June 1, 2017, the Board of Directors approved a cash dividend of $0.24281 per Series A Preferred Share payable on June 30, 2017 with a record date of June 16, 2017, and a cash dividend of $0.359375 per Series C Preferred Share payable on June 30, 2017 with a record date of June 16, 2017.

SUMMARY OF OPERATIONS

Corporate

• On February 9, 2017, Canaccord Genuity Group Inc. announced the appointment of Don MacFayden to the position of Executive Vice President and Chief Financial Officer and the appointment of Adrian Pelosi to the position of Executive Vice President, Chief Risk Officer and Treasurer, with immediate effect

Capital Markets ⁽⁵⁾

• Canaccord Genuity participated in 111 investment banking transactions globally, raising total proceeds of C$13.2 billion⁽⁵⁾ during fiscal Q4/17
• Canaccord Genuity led or co-led 44 transactions globally, raising total proceeds of C$2.3 billion⁽⁵⁾ during fiscal Q4/17
• Significant investment banking transactions for Canaccord Genuity during fiscal Q4/17 include:
• £27.8 million for Harworth Group plc on the LSE
• £32.0 million IPO for GBGI Limited on the LSE
• £260.0 million for HICL Infrastructure Company Limited on the LSE
• £110.0 m for TRIG on the LSE
• £41.0 m for Eurocell on the LSE
• AUD$45.0 million for AirXpanders, Inc. on the ASX
• AUD$61.0 million for Galaxy Resources Limited on the ASX
• AUD$35.0 million for Blackham Resources Limited on the ASX
• AUD$33.3 million IPO for Visioneering Technologies, Inc on the ASX
• AUD$151.2 million for Cooper Energy Limited on the ASX
• US$17.0 million for Galena Biopharma on NASDAQ
• US$69.0 million for Abraxas Petroleum Corp on NASDAQ
• US$125.0 million for Synergy Pharmaceuticals, Inc. on NASDAQ
• US$46.0 million for MeetMe, Inc. on NASDAQ
• US$86.3 million for Kratos Defense & Security Solutions, Inc. on NASDAQ
• US$42.0 million for Health Insurance Innovations, Inc. on NASDAQ
• C$75.0 million for Aurora Cannabis Inc. on the TSXV
• C$20.0 million for iAnthus Capital Holdings Inc. on the CSE
• C$82.2 million for Osisko Mining Inc. on the TSX
• C$22.5 million for Aveda Transportation and Energy Services Inc. on the TSXV
• C$160.0 million for Acasta Enterprises Inc. on the TSX
• C$46.2 million for Automotive Properties REIT on the TSX
• C$20.0 million for Advantage Lithium Corp. on the TSXV
• C$40.0 million for North American Energy Partners Inc. on the TSX
• C$17.3 million for Augyva Mining Resources Inc. on the TSXV
• C$17.3 million for eCobalt Solutions Inc. on the TSX
• C$16.2 million for Invictus MD Strategies Corp. on the CSE
• C$19.6 million for UrtheCast Corp on the TSX
• C$15.0 million for Lithium X Energy Corp. on the TSXV
• C$15.0 million for CannaRoyalty Corp. on the CSE
• In Canada, Canaccord Genuity participated in raising $205.8 million for government and corporate bond issuances during fiscal Q4/17
• Advisory fees recorded during fiscal Q4/17 were $52.5 million, a decrease of $2.5 million or 4.5% compared to the same quarter last year
• During fiscal Q4/17, significant M&A and advisory transactions included:
• DP World on its US$3.7 billion Investment Vehicle in partnership with Caisse de dépôt et placement du Québec
• ThinkSmart Limited on its admission to AIM
• Learning Technologies Group plc on its successful offer for AIM listed NetDimensions
• Sirius Real Estate Limited on its move from AIM to the Main Market
• Lavendon Group PLC on its sale to Loxam SAS
• Chequers Capital on its acquisition of Alkern from Fondations Capital
• CM-CIC Investissement on the financing of La Croissanterie
• ICG plc on the sale of Groupe Viasphère
• ICG plc on the sale of Via Location
• Besso Insurance Group Limited on its sale to BGC Partners
• Exxellia on its IK Investment Partners-backed debt refinancing
• Erin Energy on its US$100 million three-year secured Pre-Export Finance Facility Agreement with The Mauritius Commercial Bank Limited
• Westgold Resources on the toll processing and AUD$80 million purchase agreement with RNC Minerals for its South Kalgoorlie Operations
• Fishbowl, Inc. on its sale to Symphony Technology Group
• Dakota Plains Holdings, Inc. on its sale to BioUrja Trading, LLC pursuant to §363 of the U.S. Bankruptcy Code
• Pristine Environments, Inc. on its sale to PE Facility Services, LLC

Canaccord Genuity Wealth Management (Global)

• Globally, Canaccord Genuity Wealth Management generated $74.7 million in revenue during Q4/17
• Assets under administration in Canada and assets under management in the UK & Europe and Australia were $38.6 billion at the end of Q4/17⁽⁴⁾, an increase of 6.9% or $2.5 billion at the end of the previous quarter and an increase of 18.0% or $5.9 billion at the end of fiscal Q4/16

Canaccord Genuity Wealth Management (North America)

• Canaccord Genuity Wealth Management (North America) generated $40.3 million in revenue and, after intersegment allocations and before taxes, recorded a net income of $1.5 million during Q4/17
• Assets under administration in North America were $13.2 billion as at March 31, 2017, an increase of 10.5% from $12.0 billion at the end of the previous quarter and an increase of 43.9% from $9.2 billion at the end of fiscal Q4/16⁽⁴⁾
• Assets under management in North America (discretionary) were $2.6 billion as at March 31, 2017, an increase of 4.4 % from $2.5 billion at the end of the previous quarter and an increase of 109.8% from $1.3 billion at the end of fiscal Q4/16⁽⁴⁾ (included in assets under administration)
• Canaccord Genuity Wealth Management had 141 Advisory Teams⁽⁶⁾ at the end of fiscal Q4/17, an increase of two Advisory teams from December 31, 2016 and from March 31, 2016

Canaccord Genuity Wealth Management (UK & Europe)

• Wealth management operations in the UK & Europe generated $33.1 million in revenue and, after intersegment allocations, and excluding significant items, recorded net income of $5.5 million before taxes during Q4/17⁽¹⁾
• Assets under management (discretionary and non-discretionary) were $24.5 billion (£14.7 billion) as at March 31, 2017, an increase of 4.7% from $23.4 billion (£14.1 billion) as at the end of the previous quarter and an increase of 7.6% from $22.8 billion (£12.2 billion) as at March 31, 2016⁽⁴⁾. In local currency (GBP), assets under management at March 31, 2017 increased by 3.9% compared to December 31, 2016 and by 19.9% compared to Q4/16⁽⁴⁾
• On March 3, 2017, Canaccord Genuity Wealth Management in the UK & Europe acquired client portfolios from Duncan Lawrie Private Banking in the Isle of Man
• On March 24, 2017, Canaccord Genuity Wealth Management in the UK & Europe acquired the UK-based investment dealing and custody business from C. Hoare & Co.

Non-IFRS Measures

The non-International Financial Reporting Standards (IFRS) measures presented include assets under administration, assets under management, book value per diluted common share and figures that exclude significant items. Significant items include restructuring costs, amortization of intangible assets acquired in connection with a business combination, impairment of goodwill and other assets and acquisition-related expense items, which include costs recognized in relation to both prospective and completed acquisitions,  gains or losses related to business disposals including recognition of realized translation gains on the disposal of foreign operations, as well as certain expense items, typically included in development costs, which are considered by management to reflect a singular charge of a non-operating nature. Book value per diluted common share is calculated as total common shareholders' equity adjusted for assumed proceeds from the exercise of options and warrants and conversion of convertible debentures divided by the number of diluted common shares outstanding including estimated amounts in respect of share issuance commitments including options, warrants and convertible debentures, and, commencing in Q1/14, adjusted for shares purchased under the Company's normal course issuer bid (NCIB) and not yet cancelled and estimated forfeitures in respect of unvested share awards under share-based payment plans.

Management believes that these non-IFRS measures will allow for a better evaluation of the operating performance of the Company's business and facilitate meaningful comparison of results in the current period to those in prior periods and future periods. Figures that exclude significant items provide useful information by excluding certain items that may not be indicative of the Company's core operating results. A limitation of utilizing these figures that exclude significant items is that the IFRS accounting effects of these items do in fact reflect the underlying financial results of the Company's business; thus, these effects should not be ignored in evaluating and analyzing the Company's financial results. Therefore, management believes that the Company's IFRS measures of financial performance and the respective non-IFRS measures should be considered together. 

Selected financial information excluding significant items⁽¹⁾

		Three months ended March 31		Quarter- over- quarter change	Years ended March 31		Year – over – Year change
(C$ thousands, except per share and % amounts)		2017	2016		2017	2016
Total revenue per IFRS		271,656	$200,912	35.2%	879,546	$787,805	11.6%
Total expenses per IFRS		234,251	228,210	2.6%	825,662	1,151,776	(28.3)%
Revenue
Significant items included in Canaccord Genuity
	Realized translation gains on disposal of Singapore	—	—	—	1,193	—	n.m.
Total revenue excluding significant items		271,656	200,912	35.2%	878,353	787,805	11.5%
Expenses Significant items recorded in Canaccord Genuity
	Amortization of intangible assets	830	1,346	(38.3)%	3,304	5,409	(38.9%)
	Impairment of goodwill and other assets	—	—	—	—	321,037	(100%)
	Restructuring costs	—	8,328	(100%)	—	11,305	(100%)
	Development costs	—	1,157	(100%)	—	1,157	(100%)
Significant items recorded in Canaccord Genuity Wealth Management
	Amortization of intangible assets	1,260	1,471	(14.3)%	5,262	6,055	(13.1%)
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