To us there are no foreign markets.™
2014 Annual Report
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.
Canaccord Genuity Group Inc. is publicly traded under the symbol
CF on the TSX and the symbol CF. on the London Stock Exchange.
View the Company’s 2014 online Annual Report
canaccordgenuitygroup.com
LONDON
Two years ago, in the midst of a historic global correction, we
harnessed an opportunity to create a business combination
that expanded our global footprint and significantly enhanced
our relevance to our clients. Our commitment to this strategy
has enabled us to improve our competitive position in each
of our core markets, and Canaccord Genuity is now a uniquely
positioned global investment bank focused on the mid-
market. Today, more than two-thirds of our revenue is
generated outside of Canada, a testament to the importance
of the global platform we have created.
To us there are no foreign markets.™
CONTENTS
02
08
16
GLOBAL PERFORMANCE
HIGHLIGHTS
CANACCORD
GENUITY
CANACCORD GENUITY
WEALTH MANAGEMENT
LETTER TO
SHAREHOLDERS
FINANCIAL HIGHLIGHTS
THE VALUE OF OUR
GLOBAL PERSPECTIVE
OUR VALUES
SHAREHOLDER
INFORMATION
04
06
07
20
INSIDE
BACK COVER
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
1
1
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.
REVENUE FOR
FISCAL 2014
(C$ millions)
NET INCOME FOR
FISCAL 2014
(C$ millions, excluding
significant items)
DILUTED EARNINGS
PER SHARE
(C$, excluding significant items)
GEOGRAPHIC
DISTRIBUTION OF
REVENUE
(Percent of total fiscal year
revenue)
6
.
3
0
8
$
2
.
5
5
8
$
1
.
7
9
7
$
1
.
4
1
1
$
0
4
.
1
$
5
.
7
7
5
$
9
.
4
0
6
$
.
8
8
6
$
6
7
.
0
$
.
0
2
4
$
.
2
5
2
$
.
6
5
2
$
4
5
.
0
$
5
2
.
0
$
4
1
.
0
$
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
UK
US
Other
Canada
NEW YORK
2
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
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.
68%
OF FISCAL 2014 REVENUE WAS
GENERATED OUTSIDE CANADA
$0.20 PER SHARE
FISCAL 2014 DIVIDEND DISTRIBUTION
$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
2%
26%
72%
Canaccord Genuity
Canaccord Genuity Wealth Management
Corporate and Other
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
3
LETTER TO SHAREHOLDERS
Fellow
Shareholders:
PAUL D. REYNOLDS
Two years ago, in the midst of a historic global correction, we harnessed an opportunity to create
a business combination that expanded our global footprint and significantly enhanced our relevance
to our clients.
The distressed European market allowed us to leverage the
strength of the Canadian dollar and complete our strategic
acquisition of Collins Stewart Hawkpoint in 2012 at a very
attractive valuation. We believed this transaction would prove
highly accretive for our business, and deliver the long term
growth and quality of earnings that our shareholders expect. As a
result, more than two-thirds of Canaccord Genuity’s revenue is
currently generated outside of Canada, a testament to the
importance of the global platform we have created.
During fiscal 2014, we focused on ensuring we were delivering a
consistent client experience and invested strategically in areas
like fixed income, equity research and investment banking. We
also continued to add to the quality and depth of our leadership
teams in each of our regions and divisions, and appointed global
management for each of our disciplines. In doing so, we have
created a platform that encourages cross-border collaboration
and generates stronger outcomes for our clients.
Our commitment to this strategy has enabled us to improve
our competitive position in each of our markets, and
Canaccord Genuity is now a uniquely positioned global
investment banking firm focused on the mid-market.
For the fiscal year, Canaccord Genuity earned $855.2 million in
revenue, a record for our business. Assisted by a resurgent global
market environment, our growth can be attributed to strong
performances from many of our global operations, particularly in
investment banking and principal trading. Expenses for the year
were $790.7 million, a decrease of 4% from the previous year
and evidence that we are growing our business in an efficient and
controlled manner. Our increased revenue, in combination with
our commitment to cost containment and improvements to the
operational efficiency of our business, allowed us to grow our net
income excluding significant items to $68.8 million.
I am pleased to confirm that our Board of Directors approved a
total dividend distribution of $0.20 for the fiscal year. We also
continue to be active in share buybacks, and during fiscal 2014,
we purchased a total of 3,294,144 shares for cancellation under
our normal course issuer bid buy-back programme, as part of our
commitment to enhancing value for our shareholders.
GLOBAL CAPITAL MARKETS
Our capital markets division continues to be a primary driver of
our business, earning 72% of the Company’s total revenue for
the fiscal year, with the largest contributions coming from our US
and UK operations. In all of our regions, we are capturing more
lead mandates and growing our market share, as we diversify our
coverage and assume a lead bookrunner mentality.
The impact of our global expansion efforts was demonstrated in
a number of our key geographies this year. Our US capital
markets team experienced a 158% increase in underwriting
revenues. In the UK, we established consistent advisory and
equity transaction leadership and ranked third amongst all UK
investment banks for the greatest number of corporate broking
clients. In the Asia-Pacific region, we diversified sectorial
coverage and increased investment banking revenue by 73%.
Our Australian capital markets business was named Best
Equities House in the Non-bank Owned category of the 2013
East Coles survey.
Our advisory teams also participated in a number of landmark
transactions that showcased our firm’s cross-border expertise.
Notably, Canaccord Genuity acted as the sole financial advisor to
Canada Goose on the sale of its majority stake to Bain Capital,
to Ontario Teachers’ Pension Plan on its acquisition of Burton’s
Holdings and on the sale of France’s Orpéa to Canada Pension
Plan Investment Board.
4
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
“Our global scale and diversified sector coverage make us
relevant to a growing number of clients. Our high employee
ownership makes us accountable to our business and our
shareholders. Our entrepreneurial culture and independent
thinking allow us to be nimble and responsive to the evolving
needs of our clients.”
In the Canadian capital markets, we have had to contend with
a decline in the traditionally dominant mining sector. A recent
resurgence in volumes and transactional activity in the real
estate, technology and industrials sectors has given us
confidence that the slowdown is behind us. In fact, we are
already seeing an increase in transaction and advisory mandates
in our business. Our strong pipeline, in combination with our
optimistic outlook for the global economy, gives us confidence
in the mid to long term outlook for this business.
In our capital markets division, we have actively promoted
collaboration between our global specialist teams in all
geographies, giving us the ability to share best practices and
better coordinate research coverage, trading efforts and deal
marketing across regions.
STRENGTHENING OUR
WEALTH MANAGEMENT DIVISION
On a global basis, our wealth management operations generated
$228.8 million in revenue for the fiscal year. At the end of fiscal
2014, Canaccord Genuity Wealth Management managed and
administered over $30.9 billion of client assets, approximately
65% of which was through our UK and European operations. In
Australia, our wealth management business is gaining traction
and we are well positioned to gain market share in this geography.
During the year, we continued the strategic refocusing of the
Canadian wealth management division and significantly reduced
operating costs for this business. Despite a challenging market
environment, our Canadian wealth management business grew
its fee-based advisory business to 32% of revenue, consistent
with our goal to increase this stream of business. Reflecting the
success of this approach, discretionary assets under
management in Canada increased by 44% during the year. These
steps, combined with the pending launch of our proprietary
portfolio management product, are expected to help drive higher
fee generation and enhance the margins of this business.
POSITIONED FOR LEADERSHIP
IN THE GLOBAL MID-MARKET
At Canaccord Genuity, we believe the unique cross-border
capabilities and global perspective that we offer our clients are
what differentiate us from our competitors, most of whom are
mainly focused on their domestic markets and limited in scope.
Our priority for the year ahead will be to continue to strengthen
collaboration between our global teams with the goal of
enhancing and delivering a consistent client experience across
all our regions and disciplines. We will continue to support the
growth of our businesses through disciplined investment in key
personnel and verticals to better serve our growing client base.
I would like to thank everyone at Canaccord Genuity for their hard
work and dedication to the evolution and growth of our firm. I am
pleased to see our teams working together so effectively, as we
continue to find opportunities to increase collaboration and
better serve our clients in all of our regions.
Our global scale and diversified sector coverage make us
relevant to a growing number of clients. Our high employee
ownership makes us accountable to our business and our
shareholders, and our entrepreneurial culture and independent
thinking allow us to be nimble and responsive to the evolving
needs of our clients. To us there are no foreign markets.
Paul D. Reynolds
President & Chief Executive Officer
June 2014
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
5
Financial Highlights
SELECTED FINANCIAL INFORMATION(1)(2)
(C$ thousands, except per share and % amounts)
2014
2013
2014/2013 change
For the years ended March 31
Canaccord Genuity Group Inc. (CGGI)
Revenue
Commissions and fees
Investment banking
Advisory fees
Principal trading
Interest
Other
Total revenue
Expenses
Incentive compensation
Salaries and benefits
Other overhead expenses(3)
Restructuring costs(4)
Acquisition-related costs
$ 361,647
221,410
139,142
91,313
24,549
17,183
$ 353,125
145,772
179,690
66,406
29,199
22,930
855,244
797,122
$ 413,289
91,135
280,746
5,486
—
$ 406,724
88,522
292,242
31,617
1,719
Total expenses
790,656
820,824
Income (loss) before income taxes
Net income (loss)
Net income (loss) attributable to CGGI shareholders
Non-controlling interests
Earnings (loss) per common share (EPS) – basic
Earnings (loss) per common share (EPS) – diluted
Dividends per common share
Book value per diluted common share(5)
Excluding significant items(6)
Total expenses
Income before income taxes
Net income
Net income attributable to CGGI shareholders
EPS – basic
EPS – diluted
Balance sheet data
Total assets
Total liabilities
Non-controlling interests
Total shareholders’ equity
64,588
52,057
51,413
644
0.42
0.39
0.20
9.05
$
$
$
$
$
$
$
$ 770,587
84,657
$
68,846
$
67,211
$
0.59
$
0.54
$
$ 5,014,622
3,831,030
14,912
1,168,680
(23,702)
(18,775)
(16,819)
(1,956)
(0.31)
(0.31)
0.20
7.68
$
$
$
$
$
$
$
$ 766,893
30,229
$
25,644
$
26,207
$
0.16
$
0.14
$
$ 4,603,502
3,538,170
16,169
1,049,163
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
8,522
75,638
(40,548)
24,907
(4,650)
(5,747)
58,122
6,565
2,613
(11,496)
(26,131)
(1,719)
(30,168)
88,290
70,832
68,232
2,600
0.73
0.70
—
1.37
3,694
54,428
43,202
41,004
0.43
0.40
$ 411,120
292,860
(1,257)
119,517
2.4%
51.9%
(22.6)%
37.5%
(15.9)%
(25.1)%
7.3%
1.6%
3.0%
(3.9)%
(82.6)%
(100.0)%
(3.7)%
n.m.
n.m.
n.m.
132.9%
235.5%
225.8%
—
17.8%
0.5%
180.1%
168.5%
156.5%
268.8%
285.7%
8.9%
8.3%
(7.8)%
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.
6
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
The Value of Our
Global Perspective
In recent years, we have made strategic investments to improve our
competitive position and further integrate our global operations to
deliver a consistent client experience in all the regions we operate
in. At Canaccord Genuity, we are committed to building lasting client
relationships, generating innovative ideas and creating shareholder
value. Below are some of the ways we are delivering on this promise:
1 STRENGTHENING OUR COMPETITIVE POSITION
to become more relevant in each of our core markets
• Improved global coordination of investment banking, equity research, and sales
and trading capabilities
• Global equity research coverage of more than 1,000 companies, reaching all
of our clients in Canada, the US, the UK and Europe, and the Asia-Pacific region
• Expanded capabilities in fixed income and structured products
• Ability to list companies in six countries on 10 exchanges
2 GROWING OUR GLOBAL WEALTH MANAGEMENT BUSINESS
and guiding Canadian wealth management back to profitability
• Complete Canaccord approach to global wealth management, facilitating growth
of managed and fee-based accounts in all regions
• Worldwide launch of Global Portfolio Solutions (GPS) portfolio management
product expected in 2015
• Launched “Project Dragonfly”, a sophisticated software platform to promote
increased use of electronic processing throughout our UK and Europe wealth
management business
• Invested in advanced advisor training programs to provide our wealth managers
with the necessary tools to meet the evolving needs of our growing wealth
management client base
3 MAINTAINING A SOLID FINANCIAL POSITION
and providing growing returns to shareholders
• Diversified geographic, sector and revenue mix
• Preserved our strong, liquid balance sheet to support increasing business
volumes and investments in our growth
• Stable and healthy dividend, $0.20 for the fiscal year
• Purchased 3,294,144 shares for cancellation under our normal course issuer
bid buy-back programme
• Book value of $9.05 per share
EMPLOYEES BY GEOGRAPHY
(As at March 31, 2014)
5%
14%
48%
33%
Canada
UK and Europe
US
Asia-Pacific and Other
EMPLOYEES BY DIVISION
(As at March 31, 2014)
16%
36%
48%
Canaccord Genuity
Canaccord Genuity
Wealth Management
Corporate and Other
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
7
Canaccord Genuity
Our capital markets division offers corporations and institutional
investors around the world an integrated platform for equity research,
sales and trading, advisory and investment banking services that is
built on extensive operations in Canada, the US, the UK and Europe,
China, Singapore, Australia and Barbados.
CANACCORD GENUITY
REVENUE 2010–2014
(C$ millions, fiscal years)
8
.
5
1
6
$
0
.
1
4
5
$
6
.
8
3
5
$
6
.
3
6
3
$
5
.
3
7
3
$
2010
2011
2012
2013
2014
$616
million in global revenue
$36.5
BILLION
CANACCORD GENUITY
RAISED $36.5 BILLION
DURING FISCAL 2014
345
TRANSACTIONS
CANACCORD GENUITY PARTICIPATED
IN 345 TRANSACTIONS(1)
(1) Transactions over $1.5 million.
LONDON
8
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
Canaccord Genuity provides investment banking, advisory,
sales and trading, research and fixed income services to
corporate and institutional clients in 11 countries worldwide.
We pride ourselves on our ability to provide clients with a
genuinely global perspective on opportunities to grow the
value of their businesses and investments.
During 2014, we continued to improve global coordination
of our investment banking, equity research, and sales and
trading capabilities. We also continued to add to the quality
and depth of our leadership teams in each of our regions
and divisions, and appointed global management for each of
our disciplines. In doing so, we have created a platform that
encourages cross-border collaboration, and creates stronger
outcomes for our clients.
In all of our regions, we have diversified our coverage and
adopted a lead bookrunner mentality, which has led to a
69% increase in our global underwriting revenue for the
fiscal year. By establishing consistent advisory and equity
transaction leadership across our global platform, we have
increased our market share and continue to improve our
relevance to clients.
We will continue to support the growth of our business by
adding key personnel and verticals to serve our growing client
base. Our focus will be on continuing to establish leadership
in our global capital markets business. Additionally, in the
year ahead, we expect to develop robust sales, trading and
research presence in the strategic Singapore market. Our
strong pipeline, in combination with our optimistic outlook
for the global economy over the coming years, gives us
confidence in continued year-over-year improvements
across our global capital markets business.
FISCAL 2013 REVENUE BY ACTIVITY
FISCAL 2014 REVENUE BY ACTIVITY
2%
12%
33%
23%
30%
2%
15%
33%
23%
27%
Advisory
Commissions
Investment Banking
Principal Trading
Interest and Other
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
9
CANACCORD GENUITY
A leading independent
investment bank with
a global presence
FRANKFURT
With record revenue from our UK and Europe, US and Asia-Pacific regions, our capital markets division
was a significant driver of our performance during fiscal 2014. Our operating results demonstrate the
strength of our global business and the success of our efforts to diversify our revenue streams.
COMPREHENSIVE AND DIVERSIFIED SECTOR COVERAGE
Canaccord Genuity’s global team of investment banking,
equity research, and sales and trading professionals are
dedicated to providing clients with actionable ideas and
opportunities in 18 key sectors of the global economy.
Aerospace & Defence
Media & Telecommunications
Agriculture
Metals & Mining
CleanTech & Sustainability
Paper & Forestry Products
Consumer & Retail
Real Estate & Hospitality
Energy
Financials
Support Services
Technology
Healthcare & Life Sciences
Transportation & Industrials
Infrastructure
Leisure
Investment Companies
Private Equity
Canaccord Genuity delivers
exceptional value to
clients through our unique
understanding of global
issues and opportunities
and our diverse institutional
distribution capability.
Our integrated full-service
platform and highly ranked
global research team allow for
extensive access to investors
around the world. With
experienced professionals
located in 11 countries
worldwide and deep
institutional relationships,
we take pride in having the
broadest account coverage
of any mid-market bank.
Our unparalleled service
offering, in addition to our
growing cross-border
capabilities, has become
a key differentiator of our
business. As we continue to
focus on integrating our global
capital markets business, we
expect the momentum built
last year to continue through
fiscal 2015. That is,
Canaccord Genuity should
continue to enjoy strong
contributions from its various
geographical platforms.
29.4%
GROWTH
IN M&A AND ADVISORY
REVENUES SINCE COLLINS
STEWART HAWKPOINT
ACQUISITION
10
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
1,000
COMPANIES
OUR AWARD-WINNING EQUITY RESEARCH
TEAM PROVIDES IDEA-DRIVEN COVERAGE
OF MORE THAN 1,000 COMPANIES
CHICAGO
VANCOUVER
BEIJING
GLOBAL ADVISORY
CAPABILITY
We have talented
professionals forming a
unified multilingual team
operating from our offices
in Canada, the US, the UK,
Ireland, France, Germany,
China and Australia.
Our worldwide M&A
capabilities link our
clients to opportunities
on a global scale.
13.8%
INCREASE
IN ANNUAL REVENUE
GEOGRAPHIC BREAKDOWN
OF GLOBAL M&A AND
ADVISORY REVENUE
DURING FISCAL 2014
3%
12%
21%
64%
Canada
UK and Europe
US
Asia-Pacific and Other
INVESTMENT BANKING TRANSACTIONS AND REVENUE
BY SECTOR DURING FISCAL 2014
Sector
Technology
Healthcare & Life Sciences
Energy
Metals & Mining
Real Estate & Hospitality
Investment Companies
Financials
Consumer & Retail
CleanTech & Sustainability
Media & Telecommunications
Structured Products
Other
As a %
of investment
banking
transactions
As a %
of investment
banking
revenue
13.8%
12.9%
13.5%
9.0%
9.6%
0.8%
5.9%
2.8%
2.2%
0.6%
21.9%
7.0%
26.4%
15.4%
11.9%
10.5%
7.8%
4.9%
4.6%
4.5%
3.9%
2.6%
0.7%
6.8%
Total
100.0%
100.0%
ABILITY TO LIST COMPANIES IN SIX COUNTRIES ON 10 EXCHANGES
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
11
CANACCORD GENUITY
34.3% INCREASE
IN REVENUE YEAR OVER YEAR
DUBLIN
PARIS
LONDON
UK AND EUROPE Canaccord Genuity
achieved a record performance in the UK
and Europe during fiscal 2014, and we have
established ourselves as a market leader in this
geography. The breadth and quality of our service
offering is being recognized by clients now more
than ever before as we continue to win more lead
mandates and outperform our peers across key
sectors of the market.
35.6%
INCREASE
IN ADVISORY REVENUE
80.0%
INCREASE
IN UNDERWRITING
REVENUE
UK AND EUROPE CAPITAL
MARKETS REVENUE
(C$ millions, fiscal years)
.
3
2
1
2
$
.
1
8
5
1
$
.
7
2
9
$
.
5
2
8
$
.
2
1
5
$
2010
2011
2012
2013
2014
In the UK and Europe,
Canaccord Genuity
demonstrated the strength of
our competitive advantage
during fiscal 2014, generating
$212.3 million in revenue for
fiscal 2014, a 34.3% increase
from the previous year and a
record for this business. The
strong performance was
driven largely by our
investment banking division,
which boasted revenue of
$60.2 million, an 80.0%
increase from the previous
year. The scale of our
investment banking practice
was evident throughout the
year as we held leading roles
in several high-profile IPO
transactions including:
• £431 million IPO of
Poundland Group PLC
• £429 million IPO of
Foxtons Group PLC
• £300 million IPO of
The Renewables
Infrastructure Group
• £208 million IPO of
Arrow Group Global PLC
• £160 million IPO of
Tungsten Corporation PLC
RANKED FIRST IN UK BY NUMBER OF IPOs
(All UK IPOs during period from 2006 through April 2014)
Rank Bank
1 Canaccord Genuity
JP Morgan
2
3
Investec
4 Credit Suisse
5 Citi
Source: Bloomberg, Dealogic as at April 8, 2014
Total deal value
($US billions)
$ 14.9
61.5
9.2
41.7
55.7
Deal
count
92
72
49
43
41
12
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
35.2%
OF CANACCORD GENUITY’S TOTAL
2014 REVENUE WAS GENERATED
IN THE US
BOSTON
SAN FRANCISCO
In the United States, Canaccord Genuity’s capital
UNITED STATES
markets group earned record revenues, demonstrating the strength of
this business, and the impact of strategic initiatives we have taken to
grow this business.
Our US capital markets
business generated a record
$216.5 million in revenue
during fiscal 2014 – a 41.2%
increase from the previous
year. This performance was
largely attributable to the
success of our investment
banking business, with
revenue of $62.0 million, a
158.4% increase from the
prior year. In addition, the
active financing market
throughout fiscal 2014 was
coupled with a strong
performance from our
International Equities Group,
which increased revenues
by 52.1%.
Our expansion efforts
in banking, research,
and sales and trading
provide us with greater
opportunities and make
our business well positioned
for continuing success.
158.4%
INCREASE
IN INVESTMENT BANKING
REVENUE IN THE US
COMPARED TO THE
PREVIOUS YEAR
The American market remains
a major opportunity for
Canaccord Genuity, and we
are committed to growing our
relevance in this market.
During the fiscal year, we built
upon our existing US fixed
income capabilities with the
addition of a High Yield and
Loan team, giving us an
immediate presence in the
secondary high yield
institutional market, and the
ability to reach a growing
mid-market client base in the
US. We also added significant
depth and experience to our
research team through new
hires in the Healthcare & Life
Sciences and Technology
sectors, and senior investment
bankers covering Technology,
Consumer & Retail
and Transportation
& Industrials.
RECORD US REVENUE
(C$ millions, fiscal years)
.
5
6
1
2
$
.
4
3
5
1
$
.
2
6
0
1
$
.
6
7
9
$
.
5
9
7
$
2010
2011
2012
2013
2014
On October 23, 2013,
our US capital markets
division held a charity
trading day, where
designated agency
commissions on that
day were donated to
Youth, I.N.C. In total,
Canaccord Genuity’s
US team generated
approximately
US$1.0 million for
at-risk children through
the eighth annual
Trading Day for Kids.
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
13
CANACCORD GENUITY
TORONTO
17.9% GROWTH
IN UNDERWRITING REVENUES
MONTRÉAL
CANADA In Canada, Canaccord Genuity experienced subdued growth as a result of the market
environment that persisted throughout fiscal 2014. Despite the macro challenges in this geography, our
Canadian business contributed 24% to Canaccord Genuity’s overall revenue during the fiscal year.
Canaccord Genuity continues
to be the leading independent
full-service investment bank
in Canada. This business
generated $148.5 million in
revenue during fiscal 2014,
led primarily by an 18%
growth in underwriting
revenues. Throughout the
year, our investment banking
team led several prominent
M&A and advisory
transactions, highlighting the
value of our long-standing
institutional and corporate
relationships:
• Canada Goose Inc. on its
sale of a majority stake to
Bain Capital
• Xsens Technologies on
its sale to Fairchild
Semiconductor
• Uranium One Inc. on its
sale to ARMZ Uranium
Holding Company
The strength of our equity
underwriting business
in Canada remains a
fundamental component of
our success in this geography.
Throughout the year, we led or
co-led 39 transactions over
$1.5 million in Canada,
raising $1.6 billion for clients.
The deep sector knowledge
of our Canadian research
team was recognized this
year as Canaccord Genuity
was ranked as the top
independent dealer in the
2013 Brendan Wood
International Canadian
Institutional Equity Report.
In the 2014 Thomson Reuters
StarMine Broker Awards for
Canada, Canaccord Genuity’s
research was ranked third
overall, earning nine awards
in total. These honours
underscore the quality and
relevance of investment ideas
that we provide our clients.
In total, we participated in
204 transactions, raising
$18.6 billion on behalf of
clients. Our outlook remains
optimistic for fiscal 2015 as
all indicators point toward a
resurgence in Canadian
capital markets activity.
M&A AND ADVISORY RANKINGS
(C$ millions, fiscal 2014. Transactions completed in Canada by Canadian
investment banks)
Rank
Bank
TD Securities
1 RBC Capital Markets
2 CIBC
3 BMO Capital Markets
3
5 Scotiabank
6 Canaccord Genuity Corp.
6 National Bank Financial Inc.
8 GMP Securities
9
FirstEnergy Capital Corp.
Source: Bloomberg
Deal
count
71
41
38
38
33
23
23
18
15
Total deal
value (M)
$ 34,814
25,700
23,587
15,419
24,150
7,232
7,109
3,838
2,167
14
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
MELBOURNE
SINGAPORE
54.4% INCREASE
IN REVENUES FOR FISCAL 2014
HONG KONG
ASIA-PACIFIC With an expanded service offering and diversified
sector coverage, our Asia-Pacific capital markets team has successfully
captured greater investment banking and advisory mandates, and built
a strong pipeline of activity across sector verticals. During 2014, our
investment banking revenue in the region increased by 73%. For the
fiscal year, our Asia-Pacific operations participated in 26 transactions,
raising $635.6 million for clients.
Canaccord Genuity is
a leading mid-market
investment bank on
Singapore’s junior
exchange, SGX Catalist,
sponsoring 22 companies
on this growth-oriented
market, which attracts
international deals
from China, South
and Southeast Asia,
and Australia.
As we continue to establish
our capability in the region,
we have taken an integrated
approach to leadership.
Marcus Freeman will now
lead Canaccord Genuity’s
Asia-Pacific business, in
coordination with Alex Tan in
our Singapore operation. In
addition to overseeing our
Australian operations,
Marcus will now drive
Canaccord Genuity’s
coordination efforts with
Singapore, and lead efforts in
Beijing and Hong Kong, to
facilitate a seamless
approach to providing our
differentiated service offering
to clients. In the year ahead,
we expect to develop robust
sales, trading and research
presence in the strategic
Singapore market.
Notable mandates during
fiscal 2014 include:
• Financial advisor to
Hartawan Holdings
Limited on the reverse
takeover of Wilton
Resources Holdings
Pte Ltd.
• Two transactions totalling
AUD$180.6 million for
G8 Education Limited on
the ASX
• Two transactions totalling
AUD$117.0 million for
Donaco International
Limited on the ASX
• SGD$43.5 million IPO
for Kim Heng Offshore &
Marine Holdings Limited
• SGD$70.4 million for
ValueMax Group Limited
on the SGX
AUSTRALIAN CAPITAL MARKETS BUSINESS NAMED BEST
EQUITIES HOUSE IN THE NON-BANK OWNED CATEGORY OF
THE 2013 EAST COLES SURVEY
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
15
Canaccord Genuity
Wealth Management
Canaccord Genuity Wealth Management provides comprehensive wealth
management solutions and brokerage services to individual investors,
private clients, charities and intermediaries, through a full suite of
services tailored to the needs of our clients. Our advisors are entrusted
with $30.9 billion in assets under administration and management
worldwide and operate from 21 offices in Canada, Australia, the UK
and the Channel Islands.
Canaccord Genuity Wealth
Management provides clients
with the focused, personalized
service they expect from a local
investment manager, along with
the benefits and backing of a
global financial institution.
During fiscal 2015, we expect to launch our proprietary
Global Portfolio Solutions (GPS) product, which combines
research and portfolio management with forward-looking
risk management solutions. Canaccord’s product is based
on our similar, successful model in the UK, which has been
recognized as a best-in-class investing discipline and
is therefore expected to be well received by wealth
management clients across all our geographies.
GLOBAL ASSETS UNDER
ADMINISTRATION AND
MANAGEMENT
(C$ billions, fiscal years)
GLOBAL WEALTH
MANAGEMENT REVENUE
(C$ millions, fiscal years)
1
.
5
3
2
8
.
8
2
2
0
.
3
3
2
3
.
1
0
2
0
.
7
8
1
9
.
0
3
.
9
7
2
8
.
6
2
0
.
7
1
9
.
2
1
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
SYDNEY
16
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
Through acquisitions made over the last two years, we have
strategically expanded our wealth management platform into new
geographies, enhancing the consistency of our revenue streams
through market diversification and increasing our fee-based
wealth management revenues. In fiscal 2014, all of our wealth
management businesses were rebranded Canaccord Genuity
Wealth Management and we invested in a global advertising
campaign to support our value proposition. The seamless
transition was well received by clients and further strengthens
our brand as a global leader in wealth management.
During the second half of the fiscal year, we appointed new
regional leadership in both our UK and Canadian wealth
management operations to advance the operational efficiency
of the businesses and improve cross-selling and co-operation
between our global offices. Our smaller Australian wealth
management operation is also gaining traction, thanks in part
to improved brand recognition in the region.
Our ongoing priorities for Canaccord Genuity Wealth Management
will be focused on strengthening the performance of our Canadian
business and continuing to grow assets under administration and
management and fee-based revenues globally.
$229
million in global revenue
$30.9 BILLION
IN TOTAL ASSETS UNDER
ADMINISTRATION AND MANAGEMENT
21 WORLDWIDE
WEALTH MANAGEMENT OFFICES
Complete Canaccord
embodies our holistic
approach to wealth planning
by offering a high level of
personalized service
alongside integrated
investment management and
financial planning solutions.
Canaccord Genuity Wealth
Management advisors are
committed to providing
investors with a broad array
of solutions to simplify their
busy lives, achieve their
financial objectives and map
an efficient course towards
the coordinates of their
life’s destinations.
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
17
CANACCORD GENUITY WEALTH MANAGEMENT
ISLE OF MAN
26.5%
INCREASE
IN ASSETS UNDER MANAGEMENT
FOR THE FISCAL YEAR
LONDON
$20.2 BILLION
IN ASSETS UNDER MANAGEMENT
REVENUE
(C$ millions)
.
0
3
1
1
$
.
8
1
9
$
UK AND EUROPE Canaccord Genuity Wealth Management has quickly
become an important participant in the UK and European marketplace.
With $20.2 billion in assets under management, our UK and Europe
wealth management operations earned $113.0 million in revenue. Our
118 investment professionals and fund managers provide highly tailored
wealth management, stockbroking and portfolio management services to
individual investors, institutions and charities across the region.
To prepare for continued
growth in the region, fiscal
2014 marked the kickoff
of Project Dragonfly, the
implementation of a
sophisticated software
platform designed to
increase electronic
processing throughout
our UK and Europe wealth
management business.
Our investment in this
world-class infrastructure
will help further facilitate
significant business
expansion, and this
transformational project
is expected to be
complete within the
2014 calendar year.
The highly competitive UK
wealth management industry
is in the midst of a
consolidation period, and
we expect to be a major
participant in the aggregation
activity in the region. In
March, David Esfandi was
appointed Chief Executive
of Canaccord Genuity Wealth
Management in the UK.
Concurrent with this
appointment, Stephen
Massey assumed the role
of Chairman of Canaccord
Genuity Wealth Management
in the UK. Together, David
and Stephen possess the
necessary leadership to help
propel the growth of this
business in the coming years.
60.6%
FEE-BASED REVENUE
118
PROFESSIONALS
IN FIVE OFFICES
2013
2014
ASSETS UNDER
MANAGEMENT
(C$ billions)
.
2
0
2
$
.
9
5
1
$
2013
2014
18
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
CALGARY
22.2%
DECREASE
IN ANNUAL EXPENSES
SYDNEY
ASSETS UNDER
MANAGEMENT –
DISCRETIONARY, AND
FEE-BASED REVENUE AS
% OF TOTAL REVENUE
32.2%
26.2%
4
0
2
1
$
,
18.9%
7
7
6
$
5
3
8
$
12.8%
13.0%
6
4
5
$
5
4
4
$
2010
2011
2012
2013
2014
Assets under management –
discretionary (C$ millions)
Fee-based revenue as a
% of total revenue
In our Canadian wealth management
CANADA
business, an increase in fee-based and managed
accounts led to a 44% increase in total assets
under management and grew fee-based revenue to
32%, a new record for this region.
Throughout the year, we
continued the strategic
repositioning of this division
and made important changes
to better align our service
offering with the changing
needs and preferences of our
Canadian clients. In January,
we appointed Stuart Raftus
as President of Canaccord
Genuity Wealth Management
in Canada. With more than
28 years of experience in the
securities business, Stuart’s
proven expertise in enhancing
operational environments and
exceptional commitment to
client service make him well
suited to lead this division.
We have focused in markets
where we have developed a
significant presence and
those that show prospects for
market share growth. We have
implemented training
programs to ensure our
wealth management
professionals have the tools
and expertise to provide
holistic wealth management
advice to clients with diverse
financial planning needs. And
importantly, we have made
operational and administrative
adjustments which will
meaningfully impact our
margins. These steps, in
combination with a more
robust Canadian market, are
expected to help this division
become a greater contributor
to the overall franchise.
We are committed to
growing our assets under
management and advisory
fees and, with our stronger
client service philosophy,
gaining new client
relationships and increasing
share-of-wallet from our
existing clients.
ASIA-PACIFIC
Canaccord Genuity Wealth
Management has offices
located in Melbourne and
Sydney and offers services
to a growing number of
Australian and Southeast
Asian investors.
Our team of nine advisors has
continued to build momentum,
increasing assets under
management by 23% during
fiscal 2014, to $555 million. As
we build out our global wealth
management offering, we
expect to expand our presence
in this important geography.
ASSETS UNDER
MANAGEMENT
(C$ millions)
.
0
5
5
5
$
.
0
1
5
4
$
2013
2014
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
19
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.
1 WE PUT OUR CLIENTS FIRST.
We develop deep trust with our clients through detailed consultation, appropriate
investment ideas and value-added services.
2
A GOOD REPUTATION IS OUR MOST-VALUED CURRENCY.
Integrity and respect for client confidentiality are the basis of all our relationships.
3
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.
4
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.
5 WE STRIVE FOR CLIENT INTIMACY.
The more detailed our understanding of our clients’ needs and objectives, the better
positioned we are to meet them.
6
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.
7 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.
20
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT
To us there are no foreign markets.™
Fiscal 2014 Annual MD&A and Financial Statements
Financial Review
21
21
21
23
24
27
27
28
29
33
36
48
49
49
50
50
51
Management’s Discussion and Analysis
Non-Ifrs Measures
Business Overview
Market Data
Key Developments During fiscal 2014
Market Environment During fiscal 2014
fiscal 2015 Outlook
Overview of Preceding Years – fiscal 2013 vs. 2012
financial Overview
Quarterly financial Information
Business segment results
financial Condition
Off-Balance sheet Arrangements
Liquidity and Capital resources
Preferred shares
Outstanding Preferred share Data
Outstanding Common share Data
52
53
53
53
55
58
58
share-Based Payment Plans
International financial Centre
foreign Exchange
related Party Transactions
Critical Accounting Policies and Estimates
future Changes in Accounting Policies
and Estimates
Disclosure Controls and Procedures and
Internal Control over financial reporting
risk Management
Dividend Policy
Dividend Declaration
Additional Information
Independent Auditors’ report
Consolidated financial statements and Notes
59
62
62
62
63
64
110 supplemental Information
116 Glossary
Caution RegaRding FoRwaRd-looking statements:
This document may contain “forward-looking statements” (as defined under applicable securities laws). These statements relate to
future events or future performance and reflect management’s expectations, beliefs, plans, estimates, intentions and similar statements
concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts, including business
and economic conditions and Canaccord’s growth, results of operations, performance and business prospects and opportunities. such
forward-looking statements reflect management’s current beliefs and are based on information currently available to management. In
some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”,
“believe”, “estimate”, “predict”, “potential”, “continue”, “target”, “intend”, “could” or the negative of these terms or other comparable
terminology. Disclosure identified as an “Outlook” including the section entitled “fiscal 2015 Outlook” contains forward-looking
information. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and a
number of factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements.
In evaluating these statements, readers should specifically consider various factors that may cause actual results to differ materially from
any forward-looking statement. These factors include, but are not limited to, market and general economic conditions, the nature of the
financial services industry and the risks and uncertainties discussed from time to time in the Company’s interim condensed and annual
consolidated financial statements and its annual report and AIf filed on www.sedar.com as well as the factors discussed in the section
entitled “risk Management” in this MD&A, which include market, liquidity, credit, operational, legal and regulatory risks. Material factors
or assumptions that were used by the Company to develop the forward-looking information contained in this document include, but are not
limited to, those set out in the fiscal 2015 Outlook section in the annual MD&A and those discussed from time to time in the Company’s
interim condensed and annual consolidated financial statements and its annual report and AIf filed on www.sedar.com. The preceding list
is not exhaustive of all possible risk factors that may influence actual results. readers are cautioned that the preceding list of material
factors or assumptions is not exhaustive.
Although the forward-looking information contained in this document is based upon what management believes are reasonable assumptions,
there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements
contained in this document are made as of the date of this document and should not be relied upon as representing the Company’s views
as of any date subsequent to the date of this document. Certain statements included in this document may be considered “financial
outlook” for purposes of applicable Canadian securities laws, and such financial outlook may not be appropriate for purposes other than
this document. Except as may be required by applicable law, the Company does not undertake, and specifically disclaims, any obligation to
update or revise any forward-looking information, whether as a result of new information, further developments or otherwise.
management’s discussion and analysis
fiscal year 2014 ended March 31, 2014 – this document is dated June 3, 2014.
The following discussion of Canaccord Genuity Group Inc.’s financial condition, financial performance and cash flows is provided
to enable a reader to assess material changes in the financial condition, financial performance and cash flows for the year ended
March 31, 2014 compared to the preceding fiscal year, with an emphasis on the most recent year. Unless otherwise indicated or
the context otherwise requires, the “Company” refers to Canaccord Genuity Group Inc. and “Canaccord” refers to the Company
and its direct and indirect subsidiaries. “Canaccord Genuity” refers to the investment banking and capital markets segment of the
Company. The Management’s Discussion and Analysis (MD&A) should be read in conjunction with the audited consolidated financial
statements for the years ended March 31, 2014 and 2013, beginning on page 63 of this report. Canaccord’s financial information is
expressed in Canadian dollars unless otherwise specified. The Company’s consolidated financial statements for the years ended
March 31, 2014 and 2013 are prepared in accordance with International financial reporting standards (Ifrs).
non-iFRs measures
Certain non-Ifrs measures are utilized by Canaccord as measures of financial performance. Non-Ifrs measures do not have any
standardized meaning prescribed by Ifrs and are therefore unlikely to be comparable to similar measures presented by other
companies. Non-Ifrs measures presented include assets under administration, assets under management, book value per diluted
common share, return on common equity and figures that exclude significant items.
Canaccord’s capital is represented by common shareholders’ equity and, therefore, management uses return on common equity
(rOE) as a performance measure. Also used by the Company as a performance measure is book value per diluted common
share. 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 Q1/14, adjusted for shares purchased under the normal course issuer bid (NCIB)
and not yet cancelled, and estimated forfeitures in respect of unvested share awards under share-based payment plans.
Assets under administration (AUA) and assets under management (AUM) are non-Ifrs measures of client assets that are common
to the wealth management business. AUA – Canada, AUM – UK and Europe, or AUM – Australia is the market value of client
assets managed and administered by Canaccord from which Canaccord earns commissions or fees. This measure includes funds
held in client accounts as well as the aggregate market value of long and short security positions. AUM – Canada includes all
assets managed on a discretionary basis under programs that are generally described as or known as the Complete Canaccord
Investment Counselling Program and the Complete Canaccord Private Investment Management Program. services provided include
the selection of investments and the provision of investment advice. Canaccord’s method of calculating AUA – Canada, AUM –
Canada, AUM – UK and Europe or AUM – Australia may differ from the methods used by other companies and therefore may not be
comparable to other companies. Management uses these measures to assess operational performance of the Canaccord Genuity
Wealth Management business segment. AUM – Canada is also administered by Canaccord and is included in AUA – Canada.
financial statement items that exclude significant items are non-Ifrs measures. significant items for these purposes are defined
as including restructuring costs, amortization of intangible assets and acquisition-related expense items, which include costs
recognized in relation to both prospective and completed acquisitions. see the selected financial Information Excluding significant
Items table on page 30.
Management believes that these non-Ifrs measures will allow for a better evaluation of the operating performance of Canaccord’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 Canaccord’s
core operating results. A limitation of utilizing these figures that exclude significant items is that the Ifrs accounting for these
items does in fact reflect the underlying financial results of Canaccord’s business; thus, these effects should not be ignored
in evaluating and analyzing Canaccord’s financial results. Therefore, management believes that Canaccord’s Ifrs measures of
financial performance and the respective non-Ifrs measures should be considered together.
Business overview
Through its principal subsidiaries, Canaccord Genuity Group Inc. 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, Canaccord 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. Canaccord has offices in 11 countries worldwide, including wealth management offices
located in Canada, Australia, the UK and Europe. Canaccord Genuity, the Company’s international capital markets division, has
operations in Canada, the Us, the UK, france, Germany, Ireland, Hong Kong, mainland China, singapore, Australia and Barbados.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 21
MANAGEMENT’s DIsCUssION AND ANALYsIs
Canaccord Genuity Group Inc. is publicly traded under the symbol Cf on the TsX and the symbol Cf. on the London stock
Exchange. Canaccord series A Preferred shares are listed on the TsX under the symbol Cf.Pr.A. Canaccord series C Preferred
shares are listed on the TsX under the symbol Cf.Pr.C.
Our business is affected by the overall condition of the worldwide equity and debt markets.
aBout CanaCCoRd’s opeRations
Canaccord Genuity Group Inc.’s operations are divided into two business segments: Canaccord Genuity (investment banking
and capital markets operations) and Canaccord Genuity Wealth Management. Together, these operations offer a wide range of
complementary investment banking services, investment products and brokerage services to Canaccord’s institutional, corporate
and private clients. Canaccord’s administrative segment is referred to as Corporate and Other.
Canaccord genuity
Canaccord Genuity offers corporations and institutional investors around the world an integrated platform for equity research,
sales and trading, and investment banking services that is built on extensive operations in Canada, the UK, Europe, the Us, China,
singapore, Australia and Barbados.
Canaccord genuity wealth management
Canaccord’s wealth management operations provide comprehensive wealth management solutions and brokerage services to
individual investors, private clients, charities and intermediaries, through a full suite of services tailored to the needs of clients in
each of the markets the division operates in. Canaccord’s growing wealth management division now has Investment Advisors (IAs),
investment professionals and fund managers in Canada, Australia, the UK and offshore locations (the Channel Islands and the
Isle of Man).
Corporate and other
Canaccord’s administrative segment, described as Corporate and Other, includes revenues and expenses associated with providing
correspondent brokerage services, bank and other interest, foreign exchange gains and losses, and activities not specifically
allocable to either the Canaccord Genuity or Canaccord Genuity Wealth Management divisions. Also included in this segment are
Canaccord’s operations and support services, which are responsible for front- and back-office information technology systems,
compliance and risk management, operations, legal, finance, and all administrative functions.
Corporate structure
Canaccord Genuity
Group Inc.
US
sub-group
50%
Canaccord
Genuity Corp.
(Canada)
Canaccord
Genuity Wealth
Management
(USA) Inc.
Canaccord
Genuity Inc.
(US)
Canaccord
Genuity Wealth
(International)
Limited
(Channel Islands)
Canaccord
Genuity
Wealth Limited
(UK)
Canaccord
Genuity
Limited
(UK)
Canaccord
Genuity Asia
(China and
Hong Kong)
Canaccord
Genuity
(Australia)
Limited
Canaccord
Genuity
(Barbados)
Ltd.
Canaccord
Genuity
Singapore
Pte Ltd.
The chart shows principal operating companies of the Canaccord group.
22
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
Business aCtivity
Our business is subject to the overall condition of the worldwide debt and equity markets.
The timing of revenue recognition can also materially affect Canaccord’s quarterly results. The majority of revenue from underwriting
and advisory transactions is recorded when the transaction has closed and, as a result, quarterly results can also be affected by
the timing of our capital markets business.
Canaccord has taken steps to reduce its exposure to variances in the equity markets and local economies by diversifying not
only its industry sector coverage but also its international scope. Historically, the Company’s diversification across major financial
centres has allowed it to benefit from strong equity markets.
market data
total FinanCing value By exChange
Q1/14
Q2/14
Q3/14
Q4/14
Fiscal 2014
fiscal 2013
fiscal 2014/
2013 change
TsX and TsX Venture (C$ billions)
AIM (£ billions)
NAsDAQ (Us$ billions)
10.9
0.8
15.0
8.9
0.7
16.1
14.1
1.7
21.4
14.8
1.9
19.8
48.7
5.1
72.3
45.8
2.8
49.5
6.3%
82.1%
46.1%
source: TsX statistics, LsE AIM statistics, Equidesk
Total financing values on each of the TsX, TsX Venture Exchange, AIM, and NAsDAQ experienced increases compared to the
previous year.
impaCt oF Changes in Capital maRkets aCtivity
As a brokerage firm, Canaccord derives its revenue primarily from sales commissions, underwriting and advisory fees, and trading
activity. As a result, the Company’s business is materially affected by conditions in the financial marketplace and the economic
environment, primarily in North America and Europe, and to some degree Asia and Australia. Canaccord’s long term international
business development initiatives over the past several years have laid a solid foundation for revenue diversification. Canaccord’s
conservative capital strategy allows the Company to remain competitive in today’s changing financial landscape.
During fiscal 2014, Canaccord’s capital markets activities were focused on the following sectors: Metals and Mining, Energy,
Technology, Health Care and Life sciences, Agriculture, Media and Telecommunications, financials, Consumer and retail, real
Estate and Hospitality, Infrastructure, Transportation and Industrials, Paper and forestry Products, CleanTech and sustainability,
support services, Aerospace and Defense, Leisure, Diversified, Private Equity and Investment Companies. Coverage of these
sectors included investment banking, mergers and acquisitions (M&A) and advisory services, and institutional equity activities,
such as sales, trading and research.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 23
MANAGEMENT’s DIsCUssION AND ANALYsIs
key developments during Fiscal 2014
CoRpoRate
• On July 9, 2013, Canaccord Genuity announced that Paul Reynolds assumed the position of Chairman of Canaccord
Genuity Limited in the UK
• On August 7, 2013, the Company held its 2013 Annual General Meeting of shareholders, where all nominated directors were
re-elected to the Board
• On August 8, 2013, the Company renewed its normal course issuer bid (NCIB)/buy-back programme, which provides the
Company with the ability to purchase, at its discretion, up to 5,136,948 of its common shares through the facilities of the TsX
for cancellation. During fiscal 2014, the Company purchased 3,294,144 of its common shares under the terms of its NCIB
• 3,248,544 common shares purchased under the NCIB up to the end of fiscal 2014 were cancelled and the remaining
45,600 common shares purchased during fiscal 2014 were held in treasury until subsequently cancelled on April 30, 2014
• On October 1, 2013, Canaccord Financial Inc. was renamed Canaccord Genuity Group Inc.
• On October 23, 2013, Canaccord Genuity Inc. (Canaccord Genuity’s US capital markets division) held a charity trading day,
where designated commissions from equity, electronic and agency options trades on that day were donated to Youth, I.N.C.
In total, Canaccord Genuity’s Us team generated approximately Us$1.0 million for at-risk children through the eighth annual
Trading Day for Kids
• On January 15, 2014, Canaccord Genuity appointed Stuart Raftus as President of Canaccord Genuity Wealth Management
in Canada
• On March 26, 2014, Canaccord Genuity appointed David Esfandi as Chief Executive of Canaccord Genuity Wealth Management
in the UK
• On March 26, 2014, Canaccord Genuity announced that Stephen Massey assumed the position of Chairman of Canaccord
Genuity Wealth Management in the UK
CanaCCoRd genuity
• Canaccord Genuity generated record revenue of $615.8 million in fiscal 2014
• Net income before taxes excluding significant items(1) was $86.6 million, an increase of $52.6 million compared to the prior year
• Canaccord Genuity led 79 transactions globally, each over $1.5 million, to raise total proceeds of C$4.0 billion during fiscal
2014. Of this:
• Canada led 39 transactions, which raised C$1.6 billion
• The UK led 12 transactions, which raised C$1.4 billion
• The US led 15 transactions, which raised C$754.7 million
• Asia and Australia operations led 13 transactions, which raised C$316.1 million
• During fiscal 2014, Canaccord Genuity participated in a total of 345 transactions globally, each over $1.5 million, to raise gross
proceeds of C$36.5 billion. Of this:
• Canada participated in 204 transactions, which raised C$18.6 billion
• The UK participated in 31 transactions, which raised C$6.4 billion
• The US participated in 84 transactions, which raised C$10.9 billion
• Asia and Australia operations participated in 26 transactions, which raised C$635.6 million
• During fiscal 2014, Canaccord Genuity led or co-led the following transactions:
• £431.0 million for Poundland Group PLC on the LSE
• £428.7 million for Foxtons Group PLC on the LSE
• US$700.4 million for Abengoa S.A. on the NASDAQ
• Two transactions totalling £366.2 million for The Renewables Infrastructure Group Limited on the LSE
• £326.3 million for Playtech PLC on the LSE
• £240.0 million for Brit Insurance PLC on the LSE
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
24
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
• £211.0 million for Circassia Pharmaceuticals PLC on the LSE
• £210.5 million for Quindell PLC on AIM
• £207.8 million for Arrow Global Group PLC on the LSE
• US$345.0 million for 3D Systems on the NYSE
• £169.0 million for Optimal Payments PLC on AIM
• £160.0 million for Tungsten Corporation PLC on AIM
• Two transactions totalling C$258.9 million for Pure Industrial Real Estate Trust on the TSX
• £125.4 million for Caracal Energy Inc. on the LSE
• £125.0 million for Saffron Housing Finance PLC on the LSE
• Two transactions totalling US$199.8 million for Emerald Oil, Inc. on the NYSE
• C$224.3 million for Goldcorp Inc. in a secondary offering of Primero Mining Corp. shares on the TSX
• £109.2 million for Monitise PLC on AIM
• Two transactions totalling AUD$180.6 million for G8 Education Limited on the ASX
• C$175.0 million for Bellatrix Exploration Limited on the TSX
• Two transactions totalling C$173.6 million for DHX Media Ltd. on the TSX
• C$172.5 million for Artis REIT on the TSX
• £86.0 million for HICL Infrastructure Company Limited on the LSE
• Three transactions totalling C$187.8 million for HealthLease Properties REIT on the TSX
• £73.0 million for Tyman PLC on AIM
• US$116.2 million for Lannett Company, Inc. on the NYSE
• US$113.0 million for DP Aircraft I Limited on the Specialist Fund Market of the LSE and CISE
• Two transactions totalling AUD$117.0 million for Donaco International Limited on the ASX
• US$90.1 million for Synergy Pharmaceuticals on the NASDAQ
• £48.8 million for MedicX Fund Limited on the LSE
• US$86.3 million for Derma Sciences, Inc. on the NASDAQ
• C$75.0 million for Redknee Solutions Inc. on the TSX
• £39.9 million for Brewin Dolphin PLC on the LSE
• Two transactions totalling C$102.1 million for Concordia Healthcare Corporation on the TSX
• Two transactions totalling C$87.7 million for Halogen Software Inc. on the TSX
• C$65.0 million for MINT Income Fund on the TSX
• SGD$70.4 million for ValueMax Group Limited on the SGX
• In Canada, Canaccord Genuity raised $853.1 million for government bond issuances and $74.6 million for corporate bond
issuances during fiscal 2014
• During fiscal 2014, Canaccord Genuity advised on 63 transactions, including the following:
• Xsens Technologies on its sale to Fairchild Semiconductor
• Canada Goose Inc. on its sale of a majority stake to Bain Capital
• Uranium One Inc. on its sale to ARMZ Uranium Holding Company
• The Co-operative Bank PLC on its financial restructuring
• Encore Capital Group and J.C. Flowers & Co. on the acquisition of Cabot Credit Management
• Independent News & Media PLC on the sale of its South African subsidiary
• Montagu Private Equity on the disposal of Unifeeder A/S to Nordic Capital
• Marlin Financial Group on its disposal to Cabot Credit Management Limited
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 25
MANAGEMENT’s DIsCUssION AND ANALYsIs
• Caffè Nero on the refinancing of its debt facilities
• May Gurney Integrated Services PLC on the recommended takeover offer by Kier Group PLC
• Dr. Jean-Claude Marian on the sale of a 15% stake in Orpéa to the Canada Pension Plan Investment Board
• William Investments Limited on the disposal of Norland Managed Services Limited to CBRE Group, Inc.
• Camac Energy on the acquisition of an interest in the OML 120/121 blocks offshore Nigeria
• Ontario Teachers’ Pension Plan on its acquisition of Burton’s Holdings Limited
• AXA Private Equity and Trescal Group’s Management team on its acquisition of Trescal
• Investcorp on the disposal of TDX Group to Equifax Inc.
• Afferro Mining Inc. on its disposal to International Mining & Infrastructure Corporation PLC
• KEYreit on its acquisition by Plazacorp Retail Properties Limited
• Safran Group on its joint venture with Albany International Corp.
• Oaktree Capital Management on its co-investment in the new chemical fleet with Navig8
• Palomar Medical Technologies, Inc. on its acquisition by Cynosure, Inc.
wealth management (gloBal)
• Globally, Canaccord Genuity Wealth Management generated $228.8 million in revenue during fiscal 2014
• Total assets under administration in Canada and assets under management in the UK, Europe and Australia were $30.9 billion
at March 31, 2014(1)
wealth management (noRth ameRiCa)
• Canaccord Genuity Wealth Management (North America) generated $111.0 million in revenue during fiscal 2014
• Net loss before income taxes was $18.1 million
• Assets under administration were $10.2 billion as of March 31, 2014, down 3% from $10.4 billion at the end of fiscal 2013(1)
• Assets under management were $1.2 billion, up 44% from $835 million at the end of fiscal 2013(1)
• At March 31, 2014, Canaccord Genuity Wealth Management had 160 Advisory Teams in Canada(2), a decrease of 18 Advisory
Teams from March 31, 2013
wealth management (uk and euRope)
• Canaccord Genuity Wealth Management (UK and Europe) generated $113.0 million in revenue and, excluding significant items,
recorded net income of $18.6 million before taxes in fiscal 2014(3)
• Assets under management (discretionary and non-discretionary) were $20.1 billion (£10.9 billion), an increase of 27% from
$15.9 billion (£10.2 billion) at the end of fiscal 2013(1)
• At March 31, 2014, Canaccord Genuity Wealth Management had 118 investment professionals and fund managers in the UK
and Europe
see Non-Ifrs Measures on page 21.
Advisory Teams are normally comprised of one or more IAs and their assistants and associates, who together manage a shared set of client accounts. Advisory Teams that are led by, or only include,
an IA who has been licensed for less than three years are not included in our Advisory Team count, as it typically takes a new IA approximately three years to build an average-sized book of business.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
(2)
(3)
26
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
market environment during Fiscal 2014
A strengthening of the Us economy led investors to expect a tapering of the Us federal reserve’s bond purchase programs early
in fiscal 2014. As a result, Us 10-year government bond yields rose above the 2.5% threshold in the second quarter of calendar
2013 for the first time since the second quarter of calendar 2011. The reset in bond yields was global, and emerging markets
were impacted the most as a result of the correction, forcing the central banks in Brazil and India to increase interest rates in
order to halt capital outflows. This monetary tightening, coupled with an economic slowdown in China, compounded fears of a
possible slowdown in developed economies. fortunately, the Us federal reserve and the European Central Bank both indicated that
lending rates would remain low for an extended period of time. The Bank of Canada also dropped its interest rate hike bias, which
consequently triggered a phase of depreciation in the Canadian dollar. Despite much easier monetary conditions in Canada, the
s&P/TsX barely advanced through the first half of fiscal 2014, strongly underperforming in comparison to its world counterparts.
Through the second half of fiscal 2014, unsatisfied by progress on the employment front and facing a political stalemate in
Washington, the Us federal reserve announced in september 2013 that it was postponing the tapering of its bond purchases
until December. Also, Janet Yellen was named the new Us federal reserve Chairman and made various comments reaffirming
former Chairman Ben Bernanke’s dovish strategy, which contributed to keeping equities buoyant in the fourth quarter of calendar
2013. In Europe, a muted economic recovery fuelled deflation, which put pressure on the European Central Bank to ease or
implement Quantitative Easing. However, the central bank did not succumb, instead preferring to talk interest rates down. In the
first quarter of calendar 2014, Chinese authorities took various steps to clamp down speculation related to the Chinese yuan
appreciation. The impact of tightened liquidity conditions engineered by the People’s Bank of China, combined with the impact
of the sharp yuan appreciation relative to emerging market economies’ currencies, triggered another Chinese growth scare. The
People’s Bank of China responded promptly by injecting liquidity again. This about-face reaction led to a re-rating in emerging
market equities, including the s&P/TsX, which strongly outperformed the sPX and world equities. In fact, through fiscal 2014,
Canadian equities rose by 12.1%, outperforming both Us and global equities, which gained 11.3% and 7.1%, respectively.
Despite the fact that the s&P/TsX ended fiscal 2014 on a strong note by rising by 12%, the index lagged behind the s&P 500,
which rose by 19%, due to the weak showing of commodity prices such as gold, which declined by 19%, and base metals, which
declined by 11%. Underlying gold and base metal equities lost 27% and 8%, respectively, through the period. The exit of investors
from commodities was particularly detrimental to small-cap resources stocks, with the s&P/TsX Venture Exchange falling by 10%
in fiscal 2014. finally, the strong Canadian dollar depreciation of 8% was another negative factor as it kept global investors away
from Canada while Canadian investors kept adding to their foreign equity exposure, benefiting from strong currency-adjusted
returns in global markets.
Fiscal 2015 outlook
We expect world economic growth, led by developed economies, to maintain a moderate pace of acceleration as the negative
impacts of global austerity measures weaken, and tame inflationary pressures worldwide allow policymakers to act as a backstop
for banks and financial markets. That being said, with emerging market economies accounting for more than 70% of world GDP
growth in calendar 2014, one key risk consideration for global growth is a policy mistake in China as the government seems
determined to prioritize long term quality growth as opposed to near term economic fluctuations. should China’s GDP drop below
7%, we expect that fears of a hard landing could erupt swiftly. fortunately, receding inflation in other emerging markets could allow
several local central banks to initiate a monetary easing cycle and rekindle growth. Obviously, such a development would be a net
positive for emerging markets proxies such as Canada, considering that reflation would turn global. Overall, it is our expectation
that monetary and fiscal policymakers will continue to provide downside protection to economic growth. As such, capital markets
are expected to take their cues from a steady decline in the equity risk premium, which remains above historical averages.
With regard to capital markets activities, we expect the momentum built last year to persist through fiscal 2015. That is, Canaccord
Genuity should continue to enjoy strong contributions from its various geographical platforms. One encouraging development is
in Canada, where activity levels are improving as a result of the resurgence in equity issuance. As for agency revenues, trading
volumes have begun to improve as renewed global growth prospects have allowed commodity prices to stabilize. Moreover, when
the Canadian dollar depreciation is considered, many export-sensitive and resource-based companies should be able to shore
up their profitability markedly through calendar 2014. A pick-up in relative earnings strength should also allow the s&P/TsX to
stage a performance catch-up in comparison to its world counterparts, hence contributing to increased capital markets activity
in Canada.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 27
MANAGEMENT’s DIsCUssION AND ANALYsIs
While we expect calendar 2014 to mark the synchronization in world monetary policies, it should also give rise to a re-coupling
between developed economies and emerging economic regions before the Us federal reserve begins to gradually normalize
interest rates in calendar 2015. Uncertainty about the exact timing of the federal reserve’s tightening policy may keep the
markets volatile throughout the fiscal year.
overview of preceding years – Fiscal 2013 vs. 2012
Total revenue for the year ended March 31, 2013 (fiscal 2013) was $797.1 million, an increase of $192.3 million or 31.8%
compared to the previous year. This increase was primarily due to the strong economic and market conditions during fiscal 2013
and Canaccord’s global geographic diversification. Most major indices also experienced increases during fiscal 2013 with the TsX
up 3%, the fTsE 100 up 11%, and the NAsDAQ up 6%. However, the TsX Venture Exchange experienced a decrease of 30%.
Canaccord recorded a net loss of $18.8 million during fiscal 2013, which included $53.9 million of restructuring costs and other
acquisition-related expense items. Excluding these significant items(1), net income for fiscal 2013 was $25.6 million.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
28
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Financial overview
seleCted FinanCial inFoRmation(1)(2)
(C$ thousands, except per share and % amounts,
and number of employees)
Canaccord genuity group inc. (Cggi)
revenue
Commissions and fees
Investment banking
Advisory fees
Principal trading
Interest
Other
total revenue
Expenses
Incentive compensation
salaries and benefits
Other overhead expenses(3)
restructuring costs(4)
Acquisition-related costs
Income (loss) before income taxes
net income (loss)
net income (loss) attributable to Cggi shareholders
Non-controlling interests
Earnings (loss) per common share (EPs) – basic
Earnings (loss) per common share (EPs) – diluted
return on common equity (rOE)
Dividends per common share
Book value per diluted common share(5)
excluding significant items(6)
Total expenses
Income before income taxes
Net income
Net income attributable to CGGI shareholders
EPs – basic
EPs – diluted
Balance sheet data
Total assets
Total liabilities
Non-controlling interests
Total shareholders’ equity
Number of employees
MANAGEMENT’s DIsCUssION AND ANALYsIs
for the years ended March 31
2014
2013
2012
2014/2013 change
$
361,647
$
353,125
$
252,877
$
8,522
221,410
139,142
91,313
24,549
17,183
145,772
179,690
66,406
29,199
22,930
175,225
107,370
10,647
31,799
26,946
855,244
797,122
604,864
413,289
91,135
280,746
5,486
—
406,724
88,522
292,242
31,617
1,719
304,908
63,924
200,842
35,253
16,056
64,588
52,057
51,413
644
0.42
0.39
4.4%
0.20
9.05
770,587
84,657
68,846
67,211
0.59
0.54
(23,702)
(18,775)
(16,819)
(1,956)
(0.31)
(0.31)
(3.3)%
0.20
7.68
766,893
30,229
25,644
26,207
0.16
0.14
$
$
$
$
$
$
$
$
$
$
$
$
$
(16,119)
(21,346)
(20,307)
(1,039)
(0.33)
(0.33)
(3.1)%
0.40
8.26
564,182
40,682
25,193
25,591
0.28
0.25
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
75,638
(40,548)
24,907
(4,650)
(5,747)
58,122
6,565
2,613
(11,496)
(26,131)
(1,719)
(30,168)
88,290
70,832
68,232
2,600
0.73
0.70
7.7 p.p.
—
1.37
3,694
54,428
43,202
41,004
0.43
0.40
$ 5,014,622
$ 4,603,502
$ 5,762,723
$
411,120
3,831,030
3,538,170
4,753,144
14,912
16,169
1,168,680
1,049,163
2,004
2,060
17,454
992,125
2,428
292,860
(1,257)
119,517
(56)
2.4%
51.9%
(22.6)%
37.5%
(15.9)%
(25.1)%
7.3%
1.6%
3.0%
(3.9)%
(82.6)%
(100.0)%
(3.7)%
n.m.
n.m.
n.m.
132.9%
235.5%
225.8%
—
17.8%
0.5%
180.1%
168.5%
156.5%
268.8%
285.7%
8.9%
8.3%
(7.8)%
11.4%
(2.7)%
total expenses
790,656
820,824
620,983
(1)
(2)
(3)
(4)
(5)
(6)
Data is in accordance with Ifrs except for rOE, book value per diluted common share, figures excluding significant items and number of employees. see Non-Ifrs Measures on page 21.
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.
Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative, amortization of tangible and intangible assets, and development costs.
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 and 2012 restructuring costs include expense incurred for staff restructuring and reorganization.
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.
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 the next page.
n.m.: not meaningful
p.p.: percentage points
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 29
MANAGEMENT’s DIsCUssION AND ANALYsIs
seleCted FinanCial inFoRmation exCluding signiFiCant items(1)
for the years ended March 31
(C$ thousands, except per share and % amounts)
2014
2013
2012
2014/2013 change
Total revenue per Ifrs
Total expenses per Ifrs
$
855,244
$
797,122
$
604,864
$
58,122
790,656
820,824
620,983
(30,168)
Significant items recorded in Canaccord Genuity
Amortization of intangible assets
restructuring costs
Acquisition-related costs
Significant items recorded in Canaccord Genuity
Wealth Management
Amortization of intangible assets
restructuring costs
Acquisition-related costs
Significant items recorded in Corporate and Other
restructuring costs
Acquisition-related costs
Total significant items
Total expenses excluding significant items
Net income before taxes – adjusted
Income taxes – adjusted
Net income – adjusted
EPs – basic, adjusted
EPs – diluted, adjusted
6,742
5,486
—
7,841
—
—
—
—
20,069
770,587
84,657
15,811
68,846
0.59
0.54
14,740
15,232
388
5,855
15,485
1,331
900
—
53,931
766,893
30,229
4,585
25,644
0.16
0.14
$
$
$
5,492
29,078
10,466
—
900
4,077
5,275
1,513
56,801
564,182
40,682
15,489
25,193
0.28
0.25
$
$
$
$
$
$
(7,998)
(9,746)
(388)
1,986
(15,485)
(1,331)
(900)
—
(33,862)
3,694
54,428
11,226
43,202
0.43
0.40
$
$
$
7.3%
(3.7)%
(54.3)%
(64.0)%
(100.0)%
33.9%
(100.0)%
(100.0)%
(100.0)%
—
(62.8)%
0.5%
180.1%
244.8%
168.5%
268.8%
285.7%
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
Revenue
On a consolidated basis, revenue is generated through six activities: commissions and fees associated with agency trading and
private client wealth management activity, investment banking, advisory fees, principal trading, interest and other.
revenue for fiscal 2014 was $855.2 million, an increase of 7.3% or $58.1 million from fiscal 2013, and represented a record
high for the Company. This demonstrated the strength of our global business and the success of our efforts to diversify our
revenue streams. Overall, the growth in revenue for the year ended March 31, 2014 was mainly due to the strong performances of
our foreign operations, particularly in investment banking and principal trading revenue. As a result of improved market conditions
and increased activity by corporate issuers in our focus sectors, our Us and UK and Europe operations were able to achieve
record revenue in the current fiscal year. The capital markets segment of our UK and Europe operations contributed $54.2 million
to the revenue increase while the wealth management segment contributed $21.3 million. revenue in the Us for the year
ended March 31, 2014 was $218.1 million, up $62.5 million or 40.2% from the prior year, and was driven mostly by the strong
performance of our International Equities Group. Our Other foreign Locations operations increased revenue by $13.2 million to
$38.5 million in fiscal 2014, mostly as a result of the improved performance of our Australian team. Our Canadian operations
generated total revenue of $273.3 million for fiscal 2014, a decline of $93.2 million as a result of a reduction in activity in both
our Canaccord Genuity and Canaccord Genuity Wealth Management operating segments.
While the strength of our global business and diversified revenue streams were the main drivers of our strong revenue performance
in fiscal 2014, the impact of foreign currency translation also partially contributed to the increase in revenue over the prior year.
revenues from our foreign operations are initially recorded in their respective functional currencies and translated into Canadian
dollars at exchange rates prevailing during the period. Therefore, the appreciation of foreign currencies, particularly the pound sterling
and the Us dollar, against the Canadian dollar during fiscal 2014 resulted in higher revenue measured in Canadian dollars.
Commissions and fees revenue is primarily generated from private client trading activity and institutional sales and trading. revenue
generated from commissions and fees increased by $8.5 million or 2.4% from fiscal 2013 to $361.6 million in fiscal 2014. Our
Canaccord Genuity Wealth Management segment contributed $194.4 million while our Canaccord Genuity segment contributed
$167.2 million. Commissions and fees revenue earned in Canada declined by $18.4 million as a result of reduced trading volumes.
The decrease in Canada was offset by increases of $19.0 million and $7.0 million in the UK and Europe and the Us, respectively.
30
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
Investment banking revenue was $221.4 million in fiscal 2014, up $75.6 million or 51.9% from fiscal 2013. The growth in investment
banking revenue was most notable in the UK and Europe and the Us, with increases of $26.6 million and $38.0 million,
respectively, due to increased financing activity in these regions. The Company’s operations in the Other foreign Locations
geographic region, which includes operations in Australia, singapore, mainland China, Hong Kong and Barbados, also contributed
$9.9 million to the increase in investment banking revenue, primarily due to the growth in our Australian operations.
Advisory fees of $139.1 million represented a decrease of 22.6%, or $40.5 million, compared to the prior year. This was primarily
due to lower activity in our capital markets operations in Canada, where advisory fees decreased by $60.0 million compared to
fiscal 2013, which was a record high for our Canadian operations as a result of two substantial mandates completed during the
prior year. Offsetting the decrease in Canada was an increase of $23.2 million in our advisory fees revenue from our UK and
Europe operations. Our UK and Europe operations generated $88.2 million in advisory fees in fiscal 2014, a record high for the
operations, largely driven by the success of our advisory and equity transaction leadership in this market.
revenue derived from principal trading increased by $24.9 million to $91.3 million for the year ended March 31, 2014, primarily
due to the expansion of our UK and Europe and Us operations. Principal trading revenue in our Us operations increased by
$20.9 million compared to the prior year, and was mainly due to the strong performance of our International Equities Group. Our
UK and Europe operations also experienced a $4.6 million increase in principal trading revenue as a result of strength in the
investment company trust market during this fiscal year.
Interest revenue decreased by $4.7 million compared to fiscal 2013, mostly as a result of reductions in our North American
wealth management operations. Other revenue of $17.2 million was $5.7 million or 25.1% lower than in the prior year, largely as
a result of a decrease in our correspondent brokerage services operations as well as lower foreign exchange gains.
expenses
expenses as a percentage of revenue
for the years ended March 31
Incentive compensation
salaries and benefits
Other overhead expenses(1)
restructuring costs(2)(3)
Acquisition-related costs(2)
Total
2014
48.3%
10.7%
32.8%
0.6%
—
92.4%
2013
51.0%
11.1%
36.7%
4.0%
0.2%
2014/2013
change
(2.7) p.p.
(0.4) p.p.
(3.9) p.p.
(3.4) p.p.
(0.2) p.p.
103.0%
(10.6) p.p.
(1)
(2)
(3)
Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative, amortization of tangible and intangible assets and development costs.
refer to the selected financial Information Excluding significant Items table on page 30.
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 and 2012 restructuring costs include expense incurred for staff restructuring and reorganization.
p.p.: percentage points
Expenses for fiscal 2014 were $790.7 million, a decrease of 3.7% or $30.2 million compared to last year. Excluding significant
items(1), total expenses were $770.6 million, up $3.7 million or 0.5% from fiscal 2013. Total expenses as a percentage of revenue
dropped by 10.6 percentage points compared to the prior year.
The impact of the appreciation of foreign currencies against the Canadian dollar partially contributed to the increase in overall
expenses, as operating results of foreign operations are translated into Canadian dollars using the exchange rates prevailing
during the period. Despite the foreign exchange impact and increase in revenue, total expenses excluding significant items(1) only
increased by 0.5% compared to the prior year as a result of our cost reduction initiatives.
Compensation expenses
Incentive compensation expense was $413.3 million, an increase of $6.6 million or 1.6%, which was a smaller increase compared
to the growth in incentive-based revenue achieved as a result of our efforts to monitor the compensation structure and payout
ratios. Incentive compensation expense as a percentage of total revenue decreased by 2.7 percentage points from fiscal 2013, to
48.3% in fiscal 2014. salaries and benefits expense was $91.1 million, an increase of 3.0% from the prior year. The increase in
salaries and benefits expense compared to fiscal 2013 was mainly due to staff redundancy costs incurred in our UK and Europe
operations and reclassification of certain costs to salaries and benefits expense.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 31
MANAGEMENT’s DIsCUssION AND ANALYsIs
The total compensation (incentive compensation plus salaries and benefits) expense as a percentage of consolidated revenue
was 59.0%, down 3.1 percentage points compared to 62.1% in fiscal 2013.
other overhead expenses
(C$ thousands, except % amounts)
Trading costs
Premises and equipment
Communication and technology
Interest
General and administrative
Amortization(1)
Development costs
Total other overhead expenses
for the years ended March 31
2014
2013
2014/2013
change
$
47,872
$
43,892
38,461
46,065
16,359
83,834
26,786
21,369
41,124
49,115
15,302
89,504
33,779
19,526
$
280,746
$
292,242
9.1%
(6.5)%
(6.2)%
6.9%
(6.3)%
(20.7)%
9.4%
(3.9)%
(1)
Includes $14.6 million and $20.6 million of amortization of intangible assets for the years ended March 31, 2014 and March 31, 2013, respectively. see the selected financial Information
Excluding significant Items table on page 30.
Other overhead expenses were $280.7 million or 3.9% lower in fiscal 2014, which as a percentage of revenue represented
a decrease of 3.9 percentage points compared to fiscal 2013. The Company continued to monitor its overhead costs and
implemented global cost reduction strategies, which led to the decrease in total overhead expenses as a percentage of revenue
in fiscal 2014. The overall decline in other overhead expenses was driven by lower premises and equipment, communication and
technology, general and administrative and amortization expenses. These decreases were partially offset by increases in trading
costs, interest expense and development costs.
Premises and equipment expense was $2.7 million lower compared to fiscal 2013 due to the consolidation of office space in
our UK capital markets operations and fewer branches in our Canadian wealth management operations. Communication and
technology expense decreased by $3.1 million, to $46.1 million, primarily as a result of cost synergies realized in our Us and our
UK and Europe operations.
General and administrative expense, which includes reserve expense, promotion and travel expense, office expense, professional
fees and donations expense, was down $5.7 million as a result of cost saving initiatives adopted across all geographies. A decline
in the amortization expense associated with intangible assets acquired through the acquisition of CsHP was the main reason for
the $7.0 million decrease in amortization expense, as certain intangible assets are now fully amortized.
Higher trading volume in our Us capital markets operations was the main reason for the $4.0 million increase in trading costs in
fiscal 2014 compared to the year ended March 31, 2013.
Development costs increased by $1.8 million, mainly due to the amortization cost of the CsH Inducement Plan, offset by lower hiring
incentives in our North American wealth management operation. Interest expense increased by $1.1 million compared to the year
ended March 31, 2013, primarily as a result of an increase in activity in our International Equities Group in the Us in fiscal 2014.
net inCome (loss)
Net income for fiscal 2014 was $52.1 million, up from a loss of $18.8 million in fiscal 2013. Diluted earnings per share (EPs)
was $0.39 in fiscal 2014 compared to a loss per share of $0.31 in the prior year. The increase in net income was attributable to
higher revenue generated by our capital markets division in the Us, the UK and Europe and Other foreign Locations as a result of
strong performances in our focus sectors. The increase in revenue in our foreign jurisdictions was offset by a decline in the revenue
generated by the wealth management and capital markets divisions in Canada. In addition, our compensation expense decreased
as a result of changes in the compensation structure and a reduced payout ratio. Overhead expenses in fiscal 2014 also decreased
compared to last year as a result of cost synergies and efficiencies achieved from the continued restructuring efforts made
throughout fiscal 2014 and 2013, particularly in general and administrative expense and communication and technology expense.
Excluding significant items(1), net income for fiscal 2014 was $68.8 million versus a net income of $25.6 million in fiscal 2013,
and diluted EPs was $0.54 compared to diluted EPs of $0.14 in fiscal 2013.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
32
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
Income tax expense was $12.5 million for fiscal 2014, reflecting an effective tax rate of 19.4% compared to an effective tax
recovery rate of (20.8)% in the prior year. The effective tax rate for fiscal 2014 was mainly driven by temporary differences not
recognized in prior periods by subsidiaries outside of Canada and various permanent items. A further discussion of our taxes is
provided in the Critical Accounting Policies and Estimates section of the MD&A on page 55.
Quarterly Financial information(1)(2)
The following table provides selected quarterly financial information for the eight most recently completed financial quarters ended
March 31, 2014. This information is unaudited, but reflects all adjustments of a recurring nature that are, in the opinion of
management, necessary to present a fair statement of the results of operations for the periods. Quarter-to-quarter comparisons
of financial results are not necessarily meaningful and should not be relied upon as an indication of future performance.
(C$ thousands,
except per share amounts)
revenue
Q4
Q3
Q2
Fiscal 2014
Q1
Q4
Q3
fiscal 2013
Q1
Q2
Commissions and fees
$ 102,199 $ 87,581 $ 81,832 $ 90,035 $ 87,438
$ 89,415
$ 87,525
$ 88,747
Investment banking
Advisory fees
Principal trading
Interest
Other
Total revenue
Total expenses
Net income (loss)
before taxes
78,453
33,585
31,027
5,908
2,576
70,841
40,283
31,833
38,541
40,609
37,961
28,661
39,758
29,894
35,905
56,145
21,863
18,883
19,540
22,780
5,704
5,212
6,132
6,282
6,805
3,113
6,758
6,309
69,348
18,670
7,291
4,670
28,571
25,626
17,109
6,758
8,675
7,847
8,392
3,276
253,748
230,959
183,306
187,231
217,971
230,003
186,599
162,549
221,737
206,539
184,262
178,118
211,984
216,882
204,910
187,048
32,011
24,420
(956)
9,113
5,987
13,121
(18,311)
(24,499)
Net income (loss)
$ 25,920 $ 18,334 $
(80) $
7,883 $
6,424
$ 10,264
$
(14,841) $
(20,622)
Earnings (loss) per share –
basic
Earnings (loss) per share –
diluted
$
$
excluding significant
items(3)
0.24
$
0.15 $
(0.03) $
0.06 $
0.04
$
0.09
$
(0.19) $
(0.24)
0.22
$
0.14 $
(0.03) $
0.06 $
0.04
$
0.08
$
(0.19) $
(0.24)
Net income (loss)
$ 29,075
$ 21,227 $
6,734 $ 11,810 $ 15,579 $ 20,453 $
5,907 $
(16,295)
Earnings (loss) per share –
basic
Earnings (loss) per share –
diluted
$
$
0.28 $
0.18 $
0.03 $
0.10 $
0.14
$
0.19
$
0.03
$
(0.20)
0.25
$
0.17 $
0.03 $
0.09 $
0.12
$
0.17
$
0.03
$
(0.20)
Data is in accordance with Ifrs except for figures excluding significant items. see Non-Ifrs Measures on page 21.
The operating results of our Australian operations have been fully consolidated and a 50% non-controlling interest has been recognized. results of the wealth management business of Eden financial
Ltd. since October 1, 2012 are also included.
figures excluding significant items are non-Ifrs measures. see the Quarterly financial Information Excluding significant Items table on the next page.
(1)
(2)
(3)
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 33
MANAGEMENT’s DIsCUssION AND ANALYsIs
QuaRteRly FinanCial inFoRmation exCluding signiFiCant items(1)(2)
(C$ thousands,
except per share amounts)
Q4
Q3
Q2
Fiscal 2014
Q1
Q4
Q3
fiscal 2013
Q1
Q2
Total revenue per Ifrs
$ 253,748
$ 230,959 $ 183,306 $ 187,231 $ 217,971
$ 230,003
$ 186,599
$ 162,549
Total expenses per Ifrs
221,737
206,539
184,262
178,118
211,984
216,882
204,910
187,048
Significant items recorded
in Canaccord Genuity
restructuring costs
Acquisition-related
costs
Amortization of
—
—
—
—
5,486
—
—
—
5,561
5,276
4,395
—
—
388
—
—
intangible assets
1,702
1,680
1,658
1,702
3,458
3,473
3,436
4,373
Significant items recorded
in Canaccord Genuity
Wealth Management
restructuring costs
Acquisition-related
costs
Amortization of
—
—
—
—
—
—
—
—
884
1,034
13,567
—
431
900
—
—
intangible assets
2,256
1,945
1,751
1,889
1,600
1,643
1,614
998
Significant items
recorded in Corporate
and Other
restructuring costs
Acquisition-related
costs
—
—
—
—
—
—
—
—
—
—
—
—
900
—
—
—
Total significant items
3,958
3,625
8,895
3,591
11,503
11,857
25,200
5,371
Total expenses excluding
significant items
217,779
202,914
175,367
174,527
200,481
205,025
179,710
181,677
Net income (loss)
before taxes – adjusted
35,969
28,045
7,939
12,704
17,490
24,978
6,889
(19,128)
Income taxes (recovery) –
adjusted
Net income (loss) –
6,894
6,818
1,205
894
1,911
4,525
982
(2,833)
adjusted
$ 29,075 $ 21,227 $
6,734 $ 11,810 $ 15,579
$ 20,453
EPs – basic – adjusted
EPs – diluted – adjusted
$
$
0.28 $
0.18 $
0.03 $
0.10 $
0.25
$
0.17 $
0.03 $
0.09 $
0.14
0.12
$
$
0.19
0.17
$
$
$
5,907
$
(16,295)
0.03
0.03
$
$
(0.20)
(0.20)
(1)
(2)
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
The operating results of our Australian operations have been fully consolidated and a 50% non-controlling interest has been recognized. results of the wealth management business of Eden financial
Ltd. since October 1, 2012 are also included.
Quarterly trends and risks
Our quarterly results are not significantly affected by seasonal factors. However, Canaccord’s revenue and income can experience
considerable variations from quarter to quarter and year to year due to factors beyond Canaccord’s control. The business is
affected by the overall condition of the worldwide market. The timing of revenue recognition can also materially affect Canaccord’s
quarterly results. Canaccord’s revenue from an underwriting transaction is recorded only when the transaction has closed.
During the first half of fiscal 2014, our quarterly results were affected by the challenging market conditions as well as by costs
related to restructuring initiatives. However, with market activity returning to a more stabilized level and synergies achieved through
our acquisitions, our operating results started to show a positive trend during the second half of fiscal 2014. The Canaccord
Genuity (capital markets) division is gaining traction from its CsHP acquisition, as reflected by the strong performances of our Us
and UK and Europe operations. Our UK and Europe operations generated record revenue in Q3/14, while Us investment banking
revenue and principal trading revenue experienced a growth trend over the past eight quarters and attained record revenue in
34
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
Q4/14. In Canada, our capital markets division was impacted by the difficult market environment, particularly in the resource
sector, and, as a result, we have not been able to maintain the same level of revenue as in fiscal 2013, particularly in advisory
fees revenue. However, during the last two quarters of fiscal 2014, revenue for Canaccord Genuity in Canada increased over the
first half of fiscal 2014 as market activity improved, resulting in a 31.4% growth in revenue compared to the first half of fiscal
2014. revenue for our Other foreign Locations operations also increased, growing by 88.2% in the second half of fiscal 2014
compared to the first six months of the fiscal year, primarily driven by the performance of our partners in Australia and singapore.
The Canaccord Genuity Wealth Management North America operations continued to experience lower revenue trends in fiscal
2014 compared to fiscal 2013 due to reduced trading volumes. However, the operations experienced an increasing trend in their
assets under management, beginning the year with $880.0 million at Q1/14 and rising to $1.2 billion at Q4/14, a solid indication
of growth in our managed and fee-based accounts.
The Canaccord Genuity Wealth Management UK and Europe operations continued to experience steady revenue growth, reflecting
the synergies obtained through the acquisition of Eden financial Ltd. The fee-related revenue in this division has also been
steadily increasing. It now stands at 60.7% for Q4/14, a 2.8 percentage point increase from the same quarter a year ago. Assets
under management for this group have also continued to grow over the past eight completed financial quarters and increased to
$20.2 billion as at March 31, 2014. Our UK-based wealth management division recognized higher revenue in each of the quarters
in fiscal 2014, compared to the same periods in fiscal 2013. At Q4/14, it also recognized record revenue at $33.2 million, 24.4%
higher than Q4/13.
Fourth quarter 2014 performance
revenue for the fourth quarter was $253.7 million, an increase of $35.8 million or 16.4% compared to the same period in the
previous year, due to the growth in investment banking, principal trading, and commissions and fees revenues, offset partially
by a drop in advisory fees and other revenue. The increase in investment banking revenue was mainly attributable to our UK and
Europe and Us operations, which contributed $15.1 million and $12.9 million to the increase, respectively. Our Us group also
increased its principal trading revenue to $22.6 million in Q4/14, an increase of 69.1% compared to Q4/13, a record high for this
operation. Our Canadian capital markets group contributed $10.0 million to the increase in investment banking revenue in Q4/14
compared to Q4/13. However, advisory fees revenue in Canada decreased by $24.3 million compared to the same period last
year as a result of reduced market activity.
Expenses were $221.7 million, up $9.8 million or 4.6% from Q4/13. This increase was largely attributable to higher compensation
expense, trading costs, and development costs compared to Q4/13. Total expenses excluding significant items(1) were $217.8 million,
an increase of $17.3 million or 8.6% from the same period last year.
Incentive compensation expense was $11.3 million higher compared to Q4/13, consistent with the higher incentive-based revenue.
Total compensation expense as a percentage of revenue was down 3.4 percentage points to 59.0% in Q4/14, attributable to
higher revenue and certain changes in the compensation structure in our UK and Europe capital markets operations. In addition,
in our Us operations, there was higher incentive compensation in the form of restricted share units that will be amortized over
the vesting period. The increase in salaries and benefits expense of $2.3 million to $25.2 million in Q4/14 was mostly related to
redundancy costs incurred in our UK and Europe operations.
Trading costs were up $3.5 million compared to the same quarter of the prior year, mainly due to higher trading activity in the
Us. Development costs were up $1.4 million or 36.3%, mainly due to a recovery of hiring incentive expense in Q4/13 in the Other
foreign Locations geographic segment.
Net income for the fourth quarter of fiscal 2014 was $25.9 million, compared to $6.4 million in Q4/13. The increase in net
income was mainly related to higher revenue generated in our foreign operations, combined with a reduced compensation payout
ratio and lower non-compensation expenses. Diluted earnings per share in the current quarter was $0.22, compared to $0.04 in
Q4/13. Book value per diluted common share increased by 17.8%, from $7.68 in Q4/13 to $9.05 in Q4/14.
There were $4.0 million and $11.5 million of significant items included in the fourth quarters of 2014 and 2013, respectively.
Excluding significant items(1), net income for Q4/14 was $29.1 million, compared to net income of $15.6 million in Q4/13, and
diluted EPs was $0.25, compared to diluted EPs of $0.12 in Q4/13.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 35
MANAGEMENT’s DIsCUssION AND ANALYsIs
Business segment Results(1)(2)
for the years ended March 31
Canaccord
genuity
wealth
genuity management
Canaccord
Corporate
and other
2014
total
Canaccord
Genuity
Wealth
Genuity Management
Canaccord
Corporate
and Other
2013
Total
$ 148,514
$ 109,344
$ 15,418
$ 273,276
$ 204,337
$ 137,625
$ 24,477
$ 366,439
(C$ thousands, except
number of employees)
revenue
Canada
UK and Europe
212,307
113,046
Us
Other foreign
Locations
Total revenue
Expenses
216,485
1,646
38,484
—
—
—
—
325,353
158,054
218,131
153,355
91,757
2,230
—
—
249,811
155,585
38,484
25,287
—
—
25,287
615,790
224,036
15,418
855,244
541,033
231,612
24,477
797,122
532,862
206,706
51,088
790,656
533,827
225,359
61,638
820,824
Intersegment allocations
8,537
24,719
(33,256)
—
3,566
42,231
(45,797)
—
Income (loss) before
income taxes
$ 74,391
$
(7,389) $
(2,414) $ 64,588
$
3,640
$
(35,978) $
8,636
$
(23,702)
excluding significant
items(3)
Expenses
520,634
198,865
51,088
770,587
503,467
202,688
60,738
766,893
Intersegment allocations
8,537
24,719
(33,256)
—
3,566
42,231
(45,797)
—
Income (loss) before
income taxes
$ 86,619
$
452
$
(2,414) $ 84,657
$ 34,000
$ (13,307) $
9,536
$ 30,229
Number of employees
974
714
316
2,004
973
755
332
2,060
Data is in accordance with Ifrs except for figures excluding significant items and number of employees. see Non-Ifrs Measures on page 21. Detailed financial results for the business segments
are shown in Note 21 of the Audited Consolidated financial statements on page 105.
The operating results of Canaccord Genuity (Australia) Limited have been consolidated and a 50% non-controlling interest has been recognized and included in the Canaccord Genuity business
segment. results of the wealth management business of Eden financial Ltd. since October 1, 2012 are also included in the Canaccord Genuity Wealth Management business segment.
see the selected financial Information Excluding significant Items table on page 30.
(1)
(2)
(3)
Canaccord’s operations are divided into three segments: Canaccord Genuity and Canaccord Genuity Wealth Management are the
main operating segments while Corporate and Other is mainly an administrative segment.
CanaCCoRd genuity
overview
Canaccord Genuity provides investment banking, research, and sales and trading services to corporate, institutional and
government clients as well as conducting principal trading activities in Canada, the Us, the UK and Europe, and Other foreign
Locations. Canaccord Genuity has 20 locations in 11 countries worldwide.
The operating results of fiscal 2014 demonstrate the strength of our global business and the success of our efforts to diversify our
revenue streams. Over 75% of total Canaccord Genuity revenue was earned outside of Canada compared to 62% in fiscal 2013.
Canaccord Genuity’s expansion efforts in the UK over the past few years have firmly positioned the Company as a leading
independent investment bank in that market. As at March 31, 2014, Canaccord Genuity ranked third of all UK investment banks
for the greatest number of corporate broking clients.
Canaccord Genuity participated in 345 transactions globally for clients, each over $1.5 million, which raised gross proceeds of
$36.5 billion(1). Of these, Canaccord Genuity led or co-led 79 transactions globally, raising total proceeds of $4.0 billion. sector
diversification remains a core component of the Company’s strategy. resource-related revenue was 23% of Canaccord Genuity’s
total investment banking revenue in fiscal 2014, versus 21% in fiscal 2013. resource-related transactions comprised 22% of the
total number of Canaccord Genuity’s investment banking transactions in fiscal 2014, a decrease of 9% from fiscal 2013.
Transactions over $1.5 million
(1)
36
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
outlook
Canaccord Genuity remains very well positioned in many of the Company’s key markets. In the year ahead, management intends to
focus on capturing operating efficiencies and generating revenue synergies through further integrating aspects of its global capital
markets platform and encouraging further cross-border coordination.
In addition, the Company may pursue opportunities to add small teams to specific sector verticals or key service offerings to
further strengthen our operations in areas we believe we can capture additional market share in. Expanding our capabilities in
fixed income services is a focus of management.
We believe Canaccord Genuity’s global platform provides a competitive advantage for the business compared to many of the
domestically focused firms we compete with. smaller regional or local investment dealers are increasingly under pressure,
and some international competitors have recently retrenched to focus on local markets. We believe this changing competitive
landscape provides a significant opportunity for Canaccord Genuity in the mid-market, as this space is currently relatively
underserviced by other global investment banks. Canaccord Genuity’s mid-market strategy focused on key sectors differentiates
the firm from its competition.
The continued shift towards electronic trading, and trading on alternative platforms, is expected to move some trading market
share away from the main stock exchanges. In response to this, Canaccord Genuity is active in offering trading services on many
of the alternative exchanges (Chi-X, CX2, Alpha, Pure, CsE (Canadian stock Exchange), Omega, Lynx, Triact). The Company has
also developed a strong presence in the Us with its American Depository receipts (ADr) and foreign equity trading capabilities
from our International Equities Group. The Company will continue to vigilantly monitor shifts in the capital markets and regulatory
environment.
Canaccord Genuity remains committed to operating as efficiently as possible in order to sustain its global platform during periods
of slower capital markets activity. A culture of cost containment continues to be reinforced throughout the Company, and strategies
to lower operating costs over the long term continue to be explored.
The management team believes the investments Canaccord has made over the last two years to improve the Company’s global
presence and broaden its service offering have positioned the business very well for the future.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 37
MANAGEMENT’s DIsCUssION AND ANALYsIs
FinanCial peRFoRmanCe(1)(2)
for the years ended March 31
2014
Canada
uk and
europe
other
Foreign
locations
us
total
Canada
UK and
Europe
Other
foreign
Locations
Us
2013
Total
$ 148,514 $ 212,307 $ 216,485 $ 38,484 $ 615,790 $ 204,337 $ 158,054 $ 153,355 $ 25,287 $ 541,033
(C$ thousands,
except number
of employees)
revenue
Expenses
Incentive
compensation
72,042
106,339
107,243
21,072
306,696
101,082
93,503
82,353
15,652
292,590
salaries and
benefits
4,819
16,671
9,933
3,366
34,789
6,822
15,593
10,064
2,762
35,241
Other overhead
expenses
45,167
55,519
69,718
15,487
185,891
48,926
61,721
63,538
16,191
190,376
restructuring
costs
4,179
1,307
Acquisition-related
costs
—
—
—
—
—
5,486
575
7,852
6,805
—
15,232
—
—
388
—
—
—
388
Total expenses
126,207
179,836
186,894
39,925
532,862
157,793
178,669
162,760
34,605
533,827
Intersegment
allocations
Income (loss) before
income taxes(3)
excluding significant
items(4)
9,919
(4,233)
2,701
150
8,537
10,302
(6,736)
—
—
3,566
$ 12,388 $ 36,704 $ 26,890 $
(1,591) $ 74,391 $ 36,242 $ (13,879) $
(9,405) $
(9,318) $ 3,640
Total expenses
118,306
178,529
186,890
36,909
520,634
153,110
165,961
155,947
28,449
503,467
Intersegment
allocations
Income (loss) before
income taxes
9,919
(4,233)
2,701
150
8,537
10,302
(6,736)
—
—
3,566
(recovery)
$ 20,289 $ 38,011 $ 26,894 $
1,425 $ 86,619 $ 40,925 $
(1,171) $
(2,592) $
(3,162) $ 34,000
Number of
employees
215
372
286
101
974
222
400
253
98
973
Data is in accordance with Ifrs except for figures excluding significant items and number of employees. see Non-Ifrs Measures on page 21.
The operating results of Canaccord Genuity (Australia) Limited have been consolidated and a 50% non-controlling interest has been recognized and included in the Canaccord Genuity segment.
see the Intersegment Allocated Costs section on page 47.
refer to the selected financial Information Excluding significant Items table on page 30.
(1)
(2)
(3)
(4)
Revenue
Revenue by geography as a percentage of Canaccord genuity revenue
(in percentage points)
revenue generated in:
Canada
UK and Europe
Us
Other foreign Locations
p.p.: percentage points
38
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
for the years ended March 31
2014
2013
24.1%
34.5%
35.2%
6.2%
37.8%
29.2%
28.3%
4.7%
100.0%
100.0%
2014/2013
change
(13.7) p.p.
5.3 p.p.
6.9 p.p.
1.5 p.p.
MANAGEMENT’s DIsCUssION AND ANALYsIs
As a result of improved market conditions in our foreign operations and the Company’s continued focus on global integration
of our capital markets teams, Canaccord Genuity generated revenue of $615.8 million, 13.8% or $74.8 million higher than in
fiscal 2013, and a record high for this operating segment. revenue from our UK and Europe and our Us operations increased by
34.3% and 41.2%, respectively, both representing unprecedented revenue levels for the respective geographies. revenue from
our Other foreign Locations increased by 52.2% in fiscal 2014 compared to the prior year, mainly due to increased activity in our
Australian operations.
The increase in revenue in our foreign operations was offset by slower activity in our Canadian operations during fiscal 2014,
mainly as a result of the subdued pace of equity underwritings, which led to a decline in revenue of 27.3%.
Although improved markets in the UK and Europe and the Us, along with the success of our global strategy, were the main drivers
of our record performance from these foreign operations, the effect of foreign currency translation also partially contributed to the
increase in revenue. revenues from our foreign operations are recorded in their respective functional currencies and translated
into Canadian dollars at average exchange rates prevailing during the period. Therefore, the depreciation of the Canadian dollar
against the reporting currencies of our foreign operations during fiscal 2014 partially contributed to the increase in revenue
compared to fiscal 2013. In particular, our UK and Europe and Us operations were most affected by foreign exchange translation
as the pound sterling and the Us dollar have both appreciated significantly against the Canadian dollar compared to the prior year.
investment banking activity
During fiscal 2014, Canaccord participated in raising $36.5 billion in 345 equity offerings of $1.5 million and greater, excluding
venture capital. Canaccord Genuity’s sector mix in fiscal 2014 showed increasing diversity, with 78% of the transactions occurring
in sectors outside of Metals & Mining and Energy, which have traditionally been Canaccord’s strengths.
Canaccord Genuity’s transactions and revenue by focus sectors are detailed below.
CanaCCoRd genuity – oveRall
investment banking transactions and revenue by sector
sector
Technology
Healthcare & Life sciences
Energy
Metals & Mining
real Estate & Hospitality
Diversified
Investment Companies
financials
Consumer & retail
CleanTech & sustainability
Media & Telecommunications
structured Products
Other
Total
for the year ended March 31, 2014
as % of
investment
banking
transactions
as % of
investment
banking
revenue
13.8%
12.9%
13.5%
9.0%
9.6%
6.2%
0.8%
5.9%
2.8%
2.2%
0.6%
21.9%
0.8%
26.4%
15.4%
11.9%
10.5%
7.8%
6.2%
4.9%
4.6%
4.5%
3.9%
2.6%
0.7%
0.6%
100.0%
100.0%
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 39
MANAGEMENT’s DIsCUssION AND ANALYsIs
CanaCCoRd genuity – By geogRaphy
investment banking transactions by sector (as % of investment banking transactions for each geographic region)
for the year ended March 31, 2014
sector
Technology
Healthcare & Life sciences
Energy
Metals & Mining
real Estate & Hospitality
Diversified
Investment Companies
financials
Consumer & retail
CleanTech & sustainability
Media & Telecommunications
structured Products
Other
Total
Canada
UK and Europe
4.4%
1.5%
14.1%
8.7%
16.0%
9.2%
—
6.3%
—
—
1.0%
37.9%
0.9%
100.0%
20.7%
10.3%
6.9%
3.4%
3.4%
10.3%
10.3%
20.7%
—
—
—
—
14.0%
100.0%
Us
34.4%
42.2%
13.3%
—
—
—
—
—
3.4%
6.7%
—
—
—
Other foreign
Locations
9.7%
6.5%
16.1%
41.9%
—
—
—
6.5%
16.1%
—
—
—
3.2%
100.0%
100.0%
investment banking revenue by sector (as % of investment banking revenue for each geographic region)
for the year ended March 31, 2014
sector
Technology
Healthcare & Life sciences
Energy
Metals & Mining
real Estate & Hospitality
Diversified
Investment Companies
financials
Consumer & retail
CleanTech & sustainability
Media & Telecommunications
structured Products
Other
Total
Canada
UK and Europe
12.7%
5.0%
19.3%
16.1%
16.0%
13.8%
—
2.9%
—
—
10.0%
2.8%
1.4%
33.7%
2.5%
3.0%
12.4%
10.9%
8.0%
16.3%
8.4%
—
—
—
—
4.8%
Us
36.8%
39.1%
9.9%
—
—
—
—
—
2.0%
12.2%
—
—
—
Other foreign
Locations
10.2%
8.9%
23.7%
21.6%
—
—
—
11.4%
21.2%
—
—
—
3.0%
100.0%
100.0%
100.0%
100.0%
40
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
expenses
Expenses for fiscal 2014 were $532.9 million, relatively unchanged with a 0.2% decrease year over year. The Canaccord Genuity
segment recognized $12.2 million of significant items in fiscal 2014 including restructuring costs incurred in connection with the
restructuring of our sales and trading operations in Canada and the UK and Europe, as well as certain office closure costs, and
amortization of intangible assets. In the prior year, Canaccord Genuity recognized $30.4 million of significant items, including staff
restructuring and reorganization expenses and acquisition-related expense items in relation to its acquisition of Kenosis Capital
Partners. Excluding significant items(1), total expenses for fiscal 2014 were $520.6 million, an increase of 3.4% or $17.2 million
compared to fiscal 2013.
incentive compensation and salaries and benefits
Incentive compensation expense for fiscal 2014 grew by $14.1 million or 4.8% compared to fiscal 2013 as a result of the growth
in incentive-based revenue. Incentive compensation expense as a percentage of revenue was 49.8%, down 4.3 percentage points
from fiscal 2013 due to certain changes in the compensation structure arising from the Company’s efforts to continuously monitor
its payout ratios. salaries and benefits expense for fiscal 2014 decreased slightly by $0.5 million or 1.3% compared to fiscal 2013.
Total compensation expense as a percentage of revenue, which decreased across all geographies, was 5.1 percentage points
lower at 55.5% for the year ended March 31, 2014. Higher revenue combined with lower compensation levels arising from
combining our capital markets and advisory operations in the UK and Europe led to a drop of 11.1 percentage points in the total
compensation ratio in this geography. The 1.1 percentage point decrease in total compensation expense as a percentage of
revenue in Canada was attributable mostly to lower amortization of long-term incentive plan (LTIP) awards. Despite higher share-
based incentive compensation expense and increased expenses associated with the expansion of the fixed income group, total
compensation as a percentage of revenue in our Us operations decreased by 6.1 percentage points as a result of increased
revenue as well as higher incentive compensation in the form of restricted stock units that will be amortized over the vesting period.
Our Other foreign Locations segment experienced a 9.3 percentage point decrease in the total compensation ratio, mostly as a
result of an increase in revenue and certain changes to the payout ratio.
Canaccord genuity incentive compensation expense as a percentage of revenue by geography
(in percentage points)
Incentive compensation expense as a percentage of revenue
Canada
UK and Europe
Us
Other foreign Locations
Canaccord genuity (total)
p.p.: percentage points
for the years ended March 31
2014
2013
2014/2013
change
48.5%
50.1%
49.5%
54.8%
49.8%
49.5%
59.2%
53.7%
61.9%
54.1%
(1.0) p.p.
(9.1) p.p.
(4.2) p.p.
(7.1) p.p.
(4.3) p.p.
(1) figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 41
MANAGEMENT’s DIsCUssION AND ANALYsIs
total Compensation as a % oF
CanaCCoRd genuity Revenue – oveRall
total Compensation as a % oF
CanaCCoRd genuity Revenue – Canada
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
4.2%
53.7%
3.0%
46.7%
4.7%
52.1%
6.5%
54.1%
5.7%
49.8%
Salaries and benefits
Incentive compensation
2.6%
52.4%
1.7%
43.1%
2.4%
47.0%
3.3%
49.5%
3.3%
48.5%
Salaries and benefits
Incentive compensation
57.9%
49.7%
56.8%
60.6%
55.5%
Total
55.0%
44.8%
49.4%
52.8%
51.8%
Total
total Compensation as a % oF
CanaCCoRd genuity Revenue – uk and euRope
total Compensation as a % oF
CanaCCoRd genuity Revenue – us
2010
2011
2012
2013
2014
1.9%
7.8%
53.9%
1.8%
5.5%
49.9%
5.3%
10.7%
60.1%
2.8%
9.9%
56.3%
2.6%
7.9%
47.4%
National Insurance Tax
Salaries and benefits
Incentive compensation
2010
2011
2012
2013
2014
4.5%
55.1%
4.6%
54.0%
5.7%
58.3%
6.6%
53.7%
4.6%
49.5%
Salaries and benefits
Incentive compensation
63.6%
57.2%
76.1%
69.0%
57.9%
Total
59.6%
58.6%
64.0%
60.3%
54.1%
Total
total Compensation as a % oF CanaCCoRd genuity
Revenue – otheR FoReign loCations
2010
2011
2012
2013
2014
0.6%
38.5%
53.2%
8.9%
22.0%
51.7%
10.9%
61.9%
8.7%
54.8%
Salaries and benefits
Incentive compensation
39.1%
62.1%
73.7%
72.8%
63.5%
Total
other overhead expenses
Other overhead expenses excluding significant items(1) were $179.1 million for fiscal 2014, an increase of $3.5 million from the
prior year. The largest fluctuation in other overhead expenses was a $10.6 million increase in trading costs. The increase in trading
costs was offset by a $6.2 million decrease in amortization expense, a $5.0 million decrease in general and administrative expense,
a $3.6 million decrease in communication and technology expense and a $2.9 million decrease in premises and equipment expense.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
42
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
Premises and equipment expense was $2.9 million lower compared to fiscal 2013 due to the consolidation of office space.
Communication and technology expense decreased by $3.6 million, to $29.3 million for the year ended March 31, 2014, primarily
as a result of cost synergies realized in our Us and our UK and Europe operations.
General and administrative expense decreased by $5.0 million, mainly due to our cost reduction efforts and lower reserve expense
against unsecured balances. The $6.2 million decrease in amortization expense related to a decrease in the amortization of
intangible assets as certain intangible assets are fully amortized.
Prior to fiscal 2014, certain trading, clearing and settlement charges were included with the intersegment allocated costs in
Canada. Beginning in fiscal 2014, the basis for determining these charges was changed and the charges were classified as a
trading cost in the applicable business unit and as a trading cost recovery in the Corporate and Other segment. This change led to
a $2.2 million increase in trading costs in Canada compared to fiscal 2013. Trading costs in the Us were up by $6.8 million as a
result of higher customer and principal trading activity. Trading costs increased by $1.2 million in the UK and Europe compared to
fiscal 2013 as a result of higher trading volumes.
In addition to the reasons stated above, the foreign exchange translation of the expenses of our foreign operations into Canadian
dollars also partially accounted for the variances from prior year due to the appreciation of the foreign currencies against the
Canadian dollar, particularly for our UK and Europe and Us operations. Despite the foreign exchange impact and an increase in
overall revenue of 13.8% over fiscal 2013, total expenses excluding significant items(1) only increased by 3.4% compared to the
prior year as a result of our continued focus on cost efficiencies.
inCome BeFoRe inCome taxes
Income before income taxes in fiscal 2014 was $74.4 million compared to $3.6 million in fiscal 2013. Excluding significant
items(1), income before income taxes was $86.6 million compared to $34.0 million in fiscal 2013. The record revenue earned
in our Us and UK and Europe operations as well as the reduced compensation ratio and lower operating expenses resulted in a
7.8 percentage point improvement in our pre-tax profit margin excluding significant items(1) compared to fiscal 2013.
CanaCCoRd genuity wealth management
overview
Canaccord’s wealth management division provides a range of comprehensive financial services and investment products to
individual investors (private clients), institutions and intermediaries, and charities. revenue from wealth management is generated
through traditional commission-based brokerage services; the sale of fee-based products and services; client-related interest;
and fees and commissions earned by IAs for investment banking and venture capital transactions. Canaccord now has wealth
management operations in Canada, the UK and Europe, and Australia.
Through acquisition activity over the last two years, Canaccord has strategically expanded its wealth management platform into
new geographies to enhance the consistency of its revenue streams through market diversification and the addition of largely fee-
based wealth management operations.
At March 31, 2014, Canaccord Genuity Wealth Management had 16 offices located across Canada, including eight Independent
Wealth Management (IWM) locations.
In the UK and Europe, Canaccord Genuity Wealth Management has five locations, including offices in the UK, the Channel Islands
and the Isle of Man. revenue earned by this business is largely generated through fee-based accounts and portfolio management
activities. With 60.6% of its revenue generated from fee-based activity, this geography has a significantly higher proportion of fee-
based revenue than Canaccord’s Canadian wealth management business. The business caters to both onshore (UK) and offshore
client accounts and provides clients with investing options from both third party and proprietary financial products, including
27 funds managed by Canaccord Genuity Wealth Management portfolio managers.
During fiscal 2014, Canaccord continued the strategic refocusing of its Canadian wealth management division, targeting its
operations in core Canadian centres. The Company believes this strategy will help to strengthen its Canadian wealth management
platform by centering its investments and support services in markets where it has developed a significant presence and in
markets that show prospects for market share growth. On January 15, 2014, stuart raftus was appointed as President of
Canaccord Genuity Wealth Management in Canada. Mr. raftus has more than 28 years of experience in the securities industry
with a strong track record of execution, making him well suited to lead this division.
Over the last three years, Canaccord has focused on repositioning its Canadian wealth management business to cater to the
changing needs and preferences of Canadian investors. Pairing advisors who take a traditional brokerage approach with advisors
who focus on holistic wealth management services is one example of numerous initiatives the Company has implemented to ensure
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 43
MANAGEMENT’s DIsCUssION AND ANALYsIs
it meets the needs of a more conservative, aging client base with comprehensive financial planning needs. In addition, Canaccord
Genuity Wealth Management has significantly enhanced its training programs over the last several years to ensure Advisory Teams,
investment professionals and fund managers have the broad-based expertise required to provide holistic wealth management advice.
outlook
Management’s priorities for Canaccord Genuity Wealth Management will be focused on strengthening the performance of its
Canadian business, growing assets under administration and management, and growing fee-based revenues.
With 60.6% of its revenue derived from recurring, fee-based activities, the revenue streams generated through Canaccord’s UK
and European wealth management business should help to improve the stability of the division’s overall performance. Canaccord
expects that opportunities to grow the asset and client base of its UK wealth management business will emerge over the next
several years, as increasing regulatory requirements in the UK wealth management industry impose uneconomical demands on
smaller industry participants. An overall consolidation of the UK wealth management industry is expected, with fewer and larger
wealth management firms ultimately competing to provide services in this market.
In Canada, Canaccord’s focus will remain on enhancing margins, managing costs, and growing the business through targeted
recruitment and training. While the recruiting environment remains challenging, we expect to have some recruiting success in
select local markets. The Company also intends to invest further in training programs for new and existing Investment Advisors
to continue developing the skills of our Advisory Teams. These training activities are already gaining traction, and are expected to
support the growth of fee-based services offered through the Canadian business.
During fiscal 2015, Canaccord will launch Global Portfolio solutions (GPs), a proprietary asset management product that combines
research and portfolio management with forward-looking risk management solutions. Canaccord’s successful product, based on a
similar model in the UK, has been recognized as a best-in-class investing discipline and is therefore expected to be well received
by wealth management clients across our geographies.
In Australia, the Company still has a relatively small wealth management operation; however, expansion is expected to occur
through targeted recruiting, and through the build-out of wealth management services and products in this market.
FinanCial peRFoRmanCe – noRth ameRiCa(1)(2)
(C$ thousands, except AUM and AUA (in C$ millions),
number of employees, Advisory Teams and % amounts)
revenue
Expenses
Incentive compensation
salaries and benefits
Other overhead expenses
restructuring costs
Total expenses
Intersegment allocations(3)
Loss before income taxes(3)
AUM – Canada (discretionary)(4)
AUA – Canada(5)
Number of Advisory Teams – Canada
Number of employees
excluding significant items(6)
Total expenses
Intersegment allocations(3)
Loss before income taxes(3)
for the years ended March 31
2014
2013
2014/2013 change
$
110,990
$
139,855
$
(28,865)
(20.6)%
56,521
13,260
42,653
—
112,434
16,672
74,323
13,845
42,768
13,567
144,503
35,495
(17,802)
(585)
(115)
(24.0)%
(4.2)%
(0.3)%
(13,567)
(100.0)%
(32,069)
(18,823)
$
(18,116)
$
(40,143)
$
22,027
1,204
10,160
160
420
835
10,429
178
461
369
(269)
(18)
(41)
$
112,434
$
130,936
$
(18,502)
16,672
(18,116)
35,495
(26,576)
(18,823)
8,460
(22.2)%
(53.0)%
54.9%
44.2%
(2.6)%
(10.1)%
(8.9)%
(14.1)%
(53.0)%
31.8%
Data is in accordance with Ifrs except for figures excluding significant items, AUA, AUM, number of Advisory Teams and number of employees. see Non-Ifrs Measures on page 21.
Includes Canaccord Genuity Wealth Management operations in Canada and the Us.
Loss before income taxes includes intersegment allocations. see the Intersegment Allocated Costs section on page 47.
(1)
(2)
(3)
(4) AUM represents assets managed on a discretionary basis under our programs generally described as or known as the Complete Canaccord Investment Counselling Program and the Complete
Canaccord Private Investment Management Program.
AUA is the market value of client assets administered by Canaccord, for which Canaccord earns commissions or fees.
refer to the selected financial Information Excluding significant Items table on page 30.
(5)
(6)
44
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
revenue from Canaccord Genuity Wealth Management North America was $111.0 million, a decrease of $28.9 million from fiscal
2013 as a result of the difficult market conditions that have prevailed during fiscal 2014.
AUA in Canada dropped by 2.6% to $10.2 billion at March 31, 2014, primarily due to reduced trading activity in Canada. AUM in
Canada increased by 44.2% compared to fiscal 2013 due to the Company’s increased focus on the transition from traditional
commission-based accounts to fee-based and managed accounts. There were 160 Advisory Teams in Canada, down by 18 from
a year ago. The fee-based revenue in our North American operations was 6.0 percentage points higher than in the prior year and
accounted for 32.2% of the wealth management revenue earned in Canada during the year ended March 31, 2014.
Expenses for the current fiscal year were $112.4 million, a decrease of $32.1 million or 22.2% from fiscal 2013.
Incentive compensation expense decreased by $17.8 million as a result of lower incentive-based revenue. Total compensation
expense as a percentage of revenue has remained relatively unchanged from the prior year at 62.9% for the year ended
March 31, 2014.
Overhead expenses such as general and administrative expense, amortization expense and development costs have all decreased
in fiscal 2014 compared to the prior year. General and administrative expense decreased by $3.8 million over the prior year,
partially due to lower promotion and travel expense. Amortization expense decreased by $2.4 million as a result of the acceleration
of amortization expense of leasehold improvements related to the branch closures in fiscal 2013. A reduction in hiring incentives
led to a drop in development costs of $1.5 million compared to the prior year.
Offsetting these decreases in expenses was an increase in trading costs of $8.5 million from the prior year. The increase in
trading costs was a result of a change in the basis for allocating certain trading, clearing and settlement charges among the
Canadian business units. This increase was more than offset by a decrease in intersegment allocations of $18.8 million, for a
combined net decrease of $10.3 million in trading and allocated costs.
Loss before income taxes for fiscal 2014 was $18.1 million compared to a loss before income taxes of $40.1 million for fiscal
2013. Excluding significant items(1), loss before income taxes for fiscal 2014 was $18.1 million compared to $26.6 million for the
prior year. Despite the lower revenue, the Company’s efforts to continuously monitor costs and implement cost reduction initiatives
resulted in a lower loss before income taxes for the year compared to fiscal 2013.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
FinanCial peRFoRmanCe – uk and euRope(1)(2)
(C$ thousands, except AUM (in C$ millions), number of employees,
investment professionals and fund managers, and % amounts)
revenue
Expenses
Incentive compensation
salaries and benefits
Other overhead expenses
restructuring costs
Acquisition-related costs
Total expenses
Intersegment allocations(3)
Income before income taxes(3)
AUM – UK and Europe(4)
Number of investment professionals and fund managers – UK and Europe
Number of employees
excluding significant items(5)
Total expenses
Intersegment allocations(3)
Income before income taxes(3)
for the years ended March 31
2014
2013
2014/2013 change
$
113,046
$
91,757
$
21,289
23.2%
40,139
14,656
39,477
—
—
94,272
8,047
34,780
9,735
33,092
1,918
1,331
80,856
6,736
$
10,727
$
4,165
$
20,156
15,936
118
294
122
294
5,359
4,921
6,385
(1,918)
(1,331)
13,416
1,311
6,562
4,220
(4)
—
$
86,431
$
71,752
$
14,679
8,047
18,568
6,736
13,269
1,311
5,299
15.4%
50.5%
19.3%
(100.0)%
(100.0)%
16.6%
19.5%
157.6%
26.5%
(3.3)%
—
20.5%
19.5%
39.9%
Data is in accordance with Ifrs except for figures excluding significant items, AUM, number of investment professionals and fund managers, and number of employees. see Non-Ifrs Measures on
page 21.
results of the wealth management business of Eden financial Ltd. since October 1, 2012 are also included.
Income before income taxes includes intersegment allocations. see the Intersegment Allocated Costs section on page 47.
AUM in the UK and Europe is the market value of client assets managed and administered by Canaccord, for which Canaccord earns commissions or fees. This measure includes both discretionary
and non-discretionary accounts.
refer to the selected financial Information Excluding significant Items table on page 30.
(1)
(2)
(3)
(4)
(5)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 45
MANAGEMENT’s DIsCUssION AND ANALYsIs
revenue generated by our UK and Europe operations is largely produced through fee-based accounts and portfolio management
activities, and, as such, is less sensitive to changes in market conditions. revenue for fiscal 2014 was $113.0 million, an
increase of 23.2% compared to fiscal 2013.
AUM in the UK and Europe as of March 31, 2014 was $20.2 billion. The fee-based revenue in our UK and European operations
accounted for 60.6% of total revenue in this geography, a slight decrease of 0.5 percentage points compared to fiscal 2013. As
discussed above, this business has a higher proportion of fee-based revenue and managed accounts compared to our Canadian
wealth management business.
Incentive compensation expense was $40.1 million, up from $34.8 million in fiscal 2013. Total compensation (incentive
compensation plus salaries and benefits) as a percentage of revenue showed no change from 48.5% in fiscal 2013. The increase
in salaries and benefits expense of $4.9 million was due to certain redundancy costs incurred in the operation during the current
fiscal year as well as a reclassification of certain costs to salaries and benefits expense. Development costs were $4.9 million
in fiscal 2014, an increase of $1.8 million, resulting from the amortization cost related to the CsH Inducement Plan and other
incentive plans.
Amortization expense increased by $1.9 million as a result of the amortization of intangible assets acquired through the
acquisition of the wealth management business of Eden financial Ltd.
Income before income taxes was $10.7 million compared to $4.2 million in the prior year as a result of higher revenue generated
in fiscal 2014, as well as a reduction in acquisition-related and restructuring costs. Excluding significant items(1), income before
income taxes was $18.6 million, an increase of 39.9% from the prior year.
CoRpoRate and otheR segment
overview
The Corporate and Other segment includes Pinnacle Correspondent services (Canaccord’s correspondent brokerage services
division), interest, foreign exchange revenue, and expenses not specifically allocable to Canaccord Genuity or Canaccord Genuity
Wealth Management. Pinnacle provides trade execution, clearing, settlement, custody, and other middle- and back-office services to
other introducing brokerage firms, Portfolio Managers and other financial intermediaries. The Pinnacle business unit was developed
as an extension and application of Canaccord’s substantial investment in its information technology and operating infrastructure.
Also included in this segment are Canaccord’s administrative, operational and support services departments, which are
responsible for front- and back-office information technology systems, compliance and risk management, operations, legal,
finance, and other administrative functions. Canaccord has approximately 316 employees in the Corporate and Other segment.
The majority of Canaccord’s corporate support functions are based in Vancouver and Toronto, Canada.
Our operations group is responsible for all activity in connection with processing securities transactions, including the clearing
and settlement of securities transactions, account administration and custody of client securities. The finance department is
responsible for internal financial accounting and controls, and external financial and regulatory reporting, while the compliance
department is responsible for client credit and account monitoring in relation to certain legal and financial regulatory requirements.
Canaccord’s risk management and compliance activities include procedures to identify, control, measure and monitor Canaccord’s
risk exposure at all times.
During fiscal 2014, the back-office team at Canaccord focused on further IT and systems integration between geographies to
ensure efficient information sharing; identifying cost saving opportunities within the Company’s operating platform; brand and
communication strategies; and supporting operational changes in the Company’s wealth management division. staffing levels
were also evaluated and adjusted in some support departments during the year, to better align support levels with changing
demands from the business.
figures excluding significant items are non-Ifrs measures. see Non-Ifrs Measures on page 21.
(1)
46
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
FinanCial peRFoRmanCe(1)
for the years ended March 31
(C$ thousands, except number of employees and % amounts)
2014
2013
2014/2013 change
revenue
Expenses
Incentive compensation
salaries and benefits
Other overhead expenses
restructuring costs
Total expenses
Intersegment allocations(2)
(Loss) income before income taxes(2)
Number of employees
excluding significant items(3)
Total expenses
Intersegment allocations(2)
(Loss) income before income taxes(2)
$
15,418
$
24,477
$
(9,059)
(37.0)%
9,933
28,430
12,725
—
51,088
(33,256)
5,031
29,701
26,006
900
61,638
(45,797)
4,902
(1,271)
(13,281)
(900)
(10,550)
12,541
$
(2,414)
$
8,636
$
(11,050)
316
332
(16)
$
51,088
$
60,738
$
(9,650)
(33,256)
(2,414)
(45,797)
9,536
12,541
(11,950)
97.4%
(4.3)%
(51.1)%
(100.0)%
(17.1)%
27.4%
(128.0)%
(4.8)%
(15.9)%
27.4%
(125.3)%
Data is in accordance with Ifrs except for figures excluding significant items and number of employees. see Non-Ifrs Measures on page 21.
Loss before income taxes includes intersegment allocations. see the Intersegment Allocated Costs section below.
refer to the selected financial Information Excluding significant Items table on page 30.
(1)
(2)
(3)
revenue for fiscal 2014 was $15.4 million, a decrease of $9.1 million or 37.0% from fiscal 2013. The change was mainly due
to a $3.7 million decrease in revenue earned from our correspondent brokerage services activity, a $2.3 million decrease in
foreign exchange gains, and a $2.1 million decrease in interest income. The reduction in foreign exchange gains related to the
fluctuations in the Canadian dollar, while interest revenue decreased due to lower interest rates and lower balances held in
interest-earning accounts.
fiscal 2014 expenses were $51.1 million, a decrease of $10.6 million or 17.1%. The $4.9 million increase in incentive
compensation expense resulted from the higher profitability of the consolidated group of companies. salaries and benefits expense
decreased by $1.3 million, mainly due to reorganization expense incurred in fiscal 2013 related to headcount reduction in
this segment.
The majority of the increase in other overhead expenses relate to trading costs and general and administrative expense. General
and administrative expense increased by $2.2 million or 24.5% due to recovery of client expense recorded in fiscal 2013. During
the year ended March 31, 2014, the Company changed the basis for recording certain trading, clearing and settlement charges to
Canaccord Genuity and Canaccord Genuity Wealth Management business units in Canada, resulting in a $14.7 million decrease in
trading costs.
Loss before income taxes was $2.4 million for fiscal 2014 compared to income before income taxes of $8.6 million for the prior
year, mostly due to lower revenue earned during the current fiscal year.
inteRsegment alloCated Costs
Included in the Corporate and Other segment are certain support services, research and other expenses that have been incurred
to support the activities within the Canaccord Genuity and Canaccord Genuity Wealth Management segments in Canada. Prior to
fiscal 2014, certain trading, clearing and settlement charges were included as an intersegment allocated cost. Beginning in fiscal
2014, these costs were classified as a trading cost in the applicable business units and as a trading cost recovery in Corporate
and Other. In addition, certain overhead costs are charged by Canaccord Genuity UK and Europe to Canaccord Genuity Wealth
Management UK and Europe and included in intersegment allocated costs for these business units.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 47
MANAGEMENT’s DIsCUssION AND ANALYsIs
Financial Condition
Below are selected balance sheet items for the past five years:(1)
(C$ thousands)
assets
Balance sheet summary as at March 31
2014
iFRs
2013
Ifrs
2012
Ifrs
2011
Ifrs
2010
CGAAP
Cash and cash equivalents
$
364,296
$
491,012
$
814,238
$
954,068
$
731,852
securities owned
Accounts receivable
Income taxes recoverable
Deferred tax assets
Investments
Equipment and leasehold improvements
Goodwill and other intangible assets
1,143,201
924,337
1,171,988
947,185
362,755
2,785,898
2,513,958
3,081,640
2,828,812
1,972,924
3,983
9,735
9,977
50,975
646,557
—
12,552
3,695
42,979
614,969
8,301
3,959
9,493
51,084
622,020
—
1,503
5,934
40,818
319,180
—
13,190
5,000
38,127
—
Total assets
$ 5,014,622
$ 4,603,502
$ 5,762,723
$ 5,097,500
$ 3,123,848
liabilities and shareholders’ equity
Bank indebtedness
short term credit facility
securities sold short
$
—
—
$
66,138
$
75,141
$
13,580
$
29,435
913,913
689,020
—
150,000
914,649
—
—
722,613
364,137
Accounts payable and accrued liabilities
2,877,933
2,726,735
3,550,600
3,551,124
2,308,146
Provisions
Income taxes payable
Contingent consideration
Deferred tax liabilities
subordinated debt
shareholders’ equity
Non-controlling interests
10,334
10,822
—
3,028
15,000
20,055
4,428
14,218
2,576
15,000
1,168,680
1,049,163
14,912
16,169
39,666
—
—
8,088
15,000
992,125
17,454
6,151
23,977
—
8,163
15,000
756,892
—
—
5,385
—
—
15,000
401,745
—
Total liabilities and shareholders’ equity
$ 5,014,622
$ 4,603,502
$ 5,762,723
$ 5,097,500
$ 3,123,848
The Company adopted Ifrs beginning April 1, 2011. figures for periods prior to March 31, 2011 are in accordance with CGAAP.
(1)
assets
Cash and cash equivalents were $364.3 million on March 31, 2014 compared to $491.0 million on March 31, 2013. refer to the
Liquidity and Capital resources section for more details.
securities owned were $1.1 billion compared to $0.9 billion on March 31, 2013, mainly attributable to an increase in both
corporate and government debt, and equities and convertible debentures.
Accounts receivable were $2.8 billion on March 31, 2014 compared to $2.5 billion on March 31, 2013, as a result of higher
receivable balances from brokers and investment dealers and clients. Goodwill was $514.9 million and intangible assets were
$131.7 million, representing the goodwill and intangible assets acquired through the acquisitions of Genuity, The Balloch Group
(TBG), a 50% interest in Canaccord Genuity (Australia) Limited, CsHP, certain assets and liabilities of Kenosis Capital Partners,
and the wealth management business of Eden financial Ltd.
Other assets in aggregate were $74.7 million at March 31, 2014 compared to $59.2 million at March 31, 2013. The increase
was mainly due to increases in income taxes recoverable, investments and equipment and leasehold improvements, offset by a
decrease in deferred tax assets. Equipment and leasehold improvements increased mainly as a result of the addition of leasehold
improvements in our UK and Europe and Canadian operations. The increase was also due to the impact of foreign exchange
translation of equipment and leasehold improvements held by our foreign subsidiaries. The $5.7 million investment made during
fiscal 2014 in Canadian first financial Holdings Limited (Canadian first), a private company which has been established as a
Canadian retail financial services organization, led to the increase in investments compared to fiscal 2013. Deferred tax assets
decreased mainly due to the reversal of deductible temporary differences as a result of the utilization of tax loss carryforwards in
the UK and Europe.
48
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
liaBilities and shaReholdeRs’ eQuity
Bank overdrafts and call loan facilities utilized by Canaccord may vary significantly on a day-to-day basis and depend on securities
trading activity. On March 31, 2014, Canaccord had available credit facilities with banks in Canada and the UK and Europe in the
aggregate amount of $720.8 million [March 31, 2013 – $705.5 million]. These credit facilities, consisting of call loans, letters of
credit and daylight overdraft facilities, are collateralized by unpaid client securities and/or securities owned by the Company. On
March 31, 2014, there was no bank indebtedness balance, compared to $66.1 million on March 31, 2013.
Accounts payable and accrued liabilities were $2.9 billion, an increase from $2.7 billion on March 31, 2013, mainly due to an
increase in payables to brokers and investment dealers. Provisions decreased by $9.8 million, from $20.1 million to $10.3 million,
as restructuring and legal provisions utilized exceeded additional provisions accrued during the year.
securities sold short were $913.9 million, an increase of $224.9 million compared to $689.0 million at March 31, 2013, due mostly
to an increase in holdings of short positions in both corporate and government debt, and equities and convertible debentures.
Other liabilities, including subordinated debt, contingent consideration, deferred tax liabilities, and income taxes payable, were
$28.9 million at March 31, 2014 and $36.2 million at March 31, 2013. This decrease was mainly due to the payment of
contingent consideration related to the acquisition of Eden financial Ltd. and the reversal of the contingent consideration for the
acquisition of certain assets and liabilities of Kenosis Capital Partners as performance targets were not met. The decrease was
partially offset by a $6.4 million increase in income taxes payable from March 31, 2013.
Non-controlling interests were $14.9 million at March 31, 2014 compared to $16.2 million at March 31, 2013, which represents
50% of the net assets of our operations in Australia.
off-Balance sheet arrangements
A subsidiary of the Company has entered into secured irrevocable standby letters of credit from a financial institution totalling
$0.9 million (Us$0.9 million) [March 31, 2013 – $3.3 million (Us$3.2 million)] as rent guarantees for its leased premises in
New York.
The following table summarizes Canaccord’s long term contractual obligations on March 31, 2014.
Contractual obligations payments due by period
(C$ thousands)
Total
fiscal 2015
fiscal 2016–
fiscal 2017
fiscal 2018–
fiscal 2019
Thereafter
Premises and equipment operating leases
$ 199,951
$
33,896
$
58,420
$
41,670
$
65,965
liquidity and Capital Resources
Canaccord has a capital structure comprised of preferred shares, common shares, contributed surplus, retained earnings and
accumulated other comprehensive losses, which is further complemented by subordinated debt.
On March 31, 2014, cash and cash equivalents were $364.3 million, a decrease of $126.7 million from $491.0 million as of
March 31, 2013. During the fiscal year ended March 31, 2014, financing activities used cash in the amount of $131.1 million,
which was primarily due to the decrease in bank indebtedness of $66.1 million, $32.8 million used for cash dividends paid on
common and preferred shares, $21.1 million used for redemption of share capital, and $11.0 million used for the acquisition of
common shares for the long-term incentive plan. Investing activities used cash in the amount of $38.0 million, primarily related to
the purchase of equipment and leasehold improvements, the payment of contingent consideration related to Eden financial Ltd.,
the purchase of intangible assets, and the investment in Canadian first. Operating activities provided cash in the amount
of $17.0 million, which was due to net income recognized during the year and changes in working capital. An increase in cash of
$25.4 million was attributable to the effect of foreign exchange on cash balances. In total, there was a decrease in cash of
$126.7 million compared to March 31, 2013.
Canaccord’s business requires capital for operating and regulatory purposes. The majority of current assets reflected on Canaccord’s
balance sheet are highly liquid. The majority of the positions held as securities owned are readily marketable and all are recorded
at their fair value. The fair value of these securities fluctuates daily as factors such as changes in market conditions, economic
conditions and investor outlook affect market prices. Client receivables are secured by readily marketable securities and are
reviewed daily for impairment in value and collectibility. receivables and payables from brokers and dealers represent the
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 49
MANAGEMENT’s DIsCUssION AND ANALYsIs
following: current open transactions that generally settle within the normal three-day settlement cycle; collateralized securities
borrowed and/or loaned in transactions that can be closed within a few days on demand; and balances on behalf of introducing
brokers representing net balances in connection with their client accounts.
preferred shares
seRies a pReFeRRed shaRes
In fiscal 2012, the Company issued 4,540,000 Cumulative 5-Year rate reset first Preferred shares, series A (series A Preferred
shares) at a purchase price of $25.00 per share for gross proceeds of $113.5 million. The aggregate net amount recognized after
deducting issue costs, net of deferred taxes of $1.0 million, was $110.8 million.
Quarterly cumulative cash dividends, if declared, will be paid at an annual rate of 5.5% for the initial five-year period ending on
september 30, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of
Canada bond yield plus 3.21%.
Holders of series A Preferred shares have the right, at their option, to convert any or all of their shares into an equal number
of Cumulative floating rate first Preferred shares, series B (series B Preferred shares), subject to certain conditions, on
september 30, 2016 and on september 30 every five years thereafter. Holders of the series B Preferred shares will be entitled
to receive floating rate, cumulative, preferential dividends payable quarterly, if declared, at a rate equal to the three-month
Government of Canada Treasury Bill yield plus 3.21%.
The Company has the option to redeem the series A Preferred shares on september 30, 2016 and on september 30 every five
years thereafter, in whole or in part, at $25.00 per share together with all declared and unpaid dividends. The series B Preferred
shares are redeemable at the Company’s option on september 30, 2021 and on september 30 every five years thereafter, in
whole or in part, at $25.00 per share together with all declared and unpaid dividends.
seRies C pReFeRRed shaRes
In fiscal 2013, the Company issued 4,000,000 Cumulative 5-Year rate reset first Preferred shares, series C (series C Preferred
shares) at a purchase price of $25.00 per share for gross proceeds of $100 million. The aggregate net amount recognized after
deducting issue costs, net of deferred taxes of $1.0 million, was $97.5 million. Quarterly cumulative cash dividends, if declared, will
be paid at an annual rate of 5.75% for the initial five-year period ending on september 30, 2016. Thereafter, the dividend rate
will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 4.03%.
Holders of series C Preferred shares have the right, at their option, to convert any or all of their shares into an equal number of
Cumulative floating rate first Preferred shares, series D (series D Preferred shares), subject to certain conditions, on June 30,
2017 and on June 30 every five years thereafter. Holders of the series D Preferred shares will be entitled to receive floating rate,
cumulative, preferential dividends payable quarterly, if declared, at a rate equal to the three-month Government of Canada Treasury
Bill yield plus 4.03%.
The Company has the option to redeem the series C Preferred shares on June 30, 2017 and on June 30 every five years
thereafter, in whole or in part, at $25.00 per share together with all declared and unpaid dividends. The series D Preferred shares
are redeemable at the Company’s option on June 30, 2022 and on June 30 every five years thereafter, in whole or in part, at
$25.00 per share together with all declared and unpaid dividends.
outstanding preferred share data
issuanCe oF pReFeRRed shaRe Capital
Preferred shares issued and outstanding as of March 31, 2012
Preferred share issuance
shares held in treasury
Preferred shares issued and outstanding as of March 31, 2013
shares held in treasury
total preferred shares issued and outstanding as of march 31, 2014
50
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
series A
series C
4,540,000
—
—
—
4,000,000
(106,794)
4,540,000
3,893,206
—
—
4,540,000
3,893,206
outstanding Common share data
Issued shares outstanding excluding unvested shares(1)
Issued shares outstanding(2)
Issued shares outstanding – diluted(3)
Average shares outstanding – basic
Average shares outstanding – diluted(4)
MANAGEMENT’s DIsCUssION AND ANALYsIs
Outstanding common shares
as of March 31
2014
2013
93,115,359
93,061,796
101,471,456
102,896,172
107,937,492
109,879,724
94,124,672
92,217,726
101,992,679
n/a
(1)
(2)
(3)
(4)
Excludes 3,576,051 outstanding unvested shares related to share purchase loans for recruitment, 4,734,446 unvested shares purchased by the employee benefit trust for the LTIP and
45,600 shares held in treasury.
Includes 3,576,051 unvested shares related to share purchase loans for recruitment, 4,734,446 unvested shares purchased by the employee benefit trust for the LTIP and 45,600 shares held
in treasury.
Includes 6,466,036 of share issuance commitments.
This is the diluted share number used to calculate diluted EPs. for the year ended March 31, 2013, all instruments involving potential common shares were excluded from the calculation of diluted
earnings per share as they were anti-dilutive.
In August 2012, the Company filed a notice for a normal course issuer bid (NCIB) to provide for the ability to purchase, at the
Company’s discretion, up to 3,000,000 of its common shares through the facilities of the TsX from August 13, 2012 to August 12,
2013. The purpose of the purchase of common shares under the NCIB is to enable the Company to acquire shares for cancellation.
The shares that may be repurchased represent 2.93% of the Company’s common shares outstanding at the time of the notice.
There were 924,040 shares purchased through the NCIB between August 13, 2012 and August 12, 2013 and cancelled.
On August 6, 2013, the Company filed a notice to renew the NCIB to provide the Company with the choice to purchase up to a
maximum of 5,136,948 of its common shares during the period from August 13, 2013 to August 12, 2014 through the facilities
of the TsX and on alternative trading systems in accordance with the requirements of the TsX. The maximum number of shares
that may be purchased through the NCIB represents 5.0% of the Company’s outstanding common shares at the time of the notice.
There were 2,370,104 shares purchased through the NCIB between August 13, 2013 and March 31, 2014, of which 45,600 shares
were held in treasury until subsequently cancelled on April 30, 2014.
The Company has entered into a predefined plan with a designated broker to allow for the repurchase of its common shares under
this NCIB. The Company’s broker may repurchase the common shares under the plan on any trading day during the NCIB, including
at any time during the Company’s internal trading blackout periods. The plan has been reviewed by the TsX and will terminate on
the earlier of the termination of the plan by the Company in accordance with its terms and the expiry of the NCIB.
Purchases under the current NCIB commenced on August 13, 2013, and will continue for one year (to August 12, 2014) at the
discretion of the Company. The maximum consideration will be the market price of the securities at the time of acquisition. In
order to comply with the trading rules of the TsX and the conditions for trading under the EU Buy-back and Stabilisation Regulation,
the daily purchases are limited to 26,456 common shares of the Company (which is the lesser of (a) 25% of the average daily
trading volume of common shares of the Company on the TsX in the six calendar months from february 2013 to July 2013 and
(b) 25% of the average daily trading volume of common shares of the Company on the TsX in the month of July 2013). To fulfill
its regulatory reporting requirements in Canada and in the UK, Canaccord will issue a press release no later than the end of the
seventh daily market session following the date of execution of the purchases.
As of June 3, 2014, the Company has 100,982,528 common shares issued and outstanding.
issuanCe and CanCellation oF Common shaRe Capital
total common shares issued and outstanding as of march 31, 2013
shares issued in connection with the LTIP
shares issued in connection with retention plan
shares issued in connection with replacement plans
shares cancelled
total common shares issued and outstanding as of march 31, 2014
Fiscal 2014
102,896,172
1,629,285
160,656
526,483
(3,741,140)
101,471,456
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 51
MANAGEMENT’s DIsCUssION AND ANALYsIs
share-Based payment plans
long-teRm inCentive plan
Under the LTIP, eligible participants are awarded restricted share units (rsUs), which generally vest over three years. for employees
in Canada, an employee benefit trust (the Trust) has been established, and either (a) the Company will fund the Trust with cash,
which will be used by the trustee to purchase on the open market common shares of the Company that will be held in trust by the
trustee until the rsUs vest or (b) the Company will issue common shares from treasury to participants following vesting of the
rsUs. Historically, for employees in the United states and the United Kingdom, at the time of each restricted share unit award,
the Company has allotted common shares and these shares have been issued from treasury to plan participants following vesting
of restricted share units. Effective from June 2014, key employee benefit trusts have also been established in the United states
and the United Kingdom and the Company or Canaccord Genuity Inc. or Canaccord Genuity Limited, as the case may be, will fund
the trusts with cash which is used by a trustee to purchase common shares on the open market that will be held in trusts by their
trustees until restricted share units vest, or the Company will issue common shares from treasury to plan participants following
vesting of restricted share units.
FoRgivaBle Common shaRe puRChase loans
The Company provides forgivable common share purchase loans to employees in order to purchase common shares. These loans
are forgiven over a vesting period. No interest is charged related to the share purchase loans. The common share purchase loans
include the employee stock incentive plan, the bonus compensation plan, and the appreciation program.
ReplaCement plans
As a result of the acquisition of CsHP, the Company introduced the replacement Annual Bonus Equity Deferral (ABED) plan, which
replaced the ABED plans that existed at CsHP as of the acquisition date. Eligible employees who participated in the CsHP ABED
plan were granted awards under the replacement ABED plan. In addition, the Company introduced the replacement Long-term
Incentive Plan (LTIP), which replaced the existing LTIPs at CsHP as of the acquisition date for eligible employees.
Csh induCement plan
In connection with the acquisition of CsHP, the Company agreed to establish a retention plan for key CsHP staff. In september 2012,
the Company finalized the terms of this plan and communicated the plan arrangements to the relevant employees. On each vesting
date, the rsUs entitle the awardee to receive cash or common shares of the Company. If at the vesting date the share price is
less than $8.50 per share, then the Company, at its election, will either (a) pay cash to the employee equal to $8.50 multiplied by
the number of rsUs vesting on such date, or (b) pay cash to the employee equal to the difference between $8.50 and the vesting
date share price, multiplied by the number of rsUs vesting on that date plus that number of shares equal to the number of rsUs
vesting on such date. If the share price is greater than $8.50, then the Company will settle the rsUs in common shares.
shaRe options
The Company grants share options to purchase common shares of the Company to independent directors and senior management.
The independent directors and senior management have been granted options to purchase common shares of the Company. As
at March 31, 2014, there were 2,034,632 options outstanding. The stock options vest over a four- to five-year period and expire
seven years after the grant date. The weighted average exercise price of the share options is $9.23 per common share.
deFeRRed shaRe units
Beginning April 1, 2011, the Company adopted a deferred share unit (DsU) plan for its independent directors. The independent
directors can elect to have fees payable to them paid in the form of DsUs or in cash. Directors must elect annually as to how
they wish their directors’ fees to be paid and can specify the allocation of their directors’ fees between DsUs and cash. When
a director leaves the Board of Directors, outstanding DsUs are paid out in cash, with the amount equal to the number of DsUs
granted multiplied by the closing share price as of the end of the fiscal quarter immediately following such terminations. Under the
plan, the directors are not entitled to receive any common shares in the Company, and under no circumstances will DsUs confer
on any participant any of the rights or privileges of a holder of common shares.
52
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
otheR Retention and inCentive plans
During the course of the fiscal year, there were other retention and incentive plans, including the employee stock purchase plan,
with individual employees, for which the amount incurred was not significant in aggregate.
international Financial Centre
Canaccord is a member of the AdvantageBC International Business Centre society (formerly known as the International financial
Centre British Columbia Society) and the Montréal International Financial Centre, both of which provide certain tax and financial
benefits pursuant to the International Business Activity Act of British Columbia and the Act Respecting International Financial Centres
of Québec. Accordingly, Canaccord’s overall income tax rate is less than the rate that would otherwise be applicable.
Foreign exchange
Canaccord manages its foreign exchange risk by periodically hedging pending settlements in foreign currencies. realized and
unrealized gains and losses related to these transactions are recognized in income during the period. On March 31, 2014, forward
contracts outstanding to sell Us dollars had a notional amount of Us$13.8 million, a decrease of Us$1.0 million from a year
ago. forward contracts outstanding to buy Us dollars had a notional amount of Us$5.5 million, an increase of Us$1.7 million
compared to a year ago. Canaccord’s operations in the Us, the UK and Europe, Australia, Hong Kong and China are conducted in
the local currency; however, any foreign exchange risk in respect of these transactions is generally limited as pending settlements
on both sides of the transaction are typically in the local currency.
The Company’s Canaccord Genuity Wealth Management segment in the UK and Europe deals foreign exchange forward contracts
on behalf of its clients, and establishes matching contracts with the counterparties. The Company has no net exposure assuming
no counterparty default.
Related party transactions
The Company’s related parties include the following persons and/or entities: (a) entities that are controlled or significantly
influenced by the Company, and (b) key management personnel, who are comprised of the directors of the Company, as well as
executives involved in strategic decision-making for the Company.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 53
MANAGEMENT’s DIsCUssION AND ANALYsIs
The Company’s principal trading subsidiaries and principal intermediate holding companies are listed in the following table:
% equity interest
Country of
incorporation
March 31,
2014
March 31,
2013
Canaccord Genuity Corp.
Canaccord Genuity sAs
Canaccord Genuity Wealth (International) Limited
Canada
france
Guernsey
Canaccord Genuity financial Planning Limited (formerly Canaccord Genuity 360 Limited)
United Kingdom
Canaccord Genuity Investment Management Limited
Canaccord Genuity Wealth Limited
Canaccord Genuity financial Advisors Limited
Canaccord Genuity Wealth Group Limited
Canaccord Genuity Limited
Canaccord Genuity Inc.
Canaccord Genuity Wealth Management (UsA) Inc.
Canaccord Estate Planning services Ltd.
Canaccord Asset Management Inc.
Canaccord Adams financial Group Inc.
Collins stewart Inc.
Canaccord Adams (Delaware) Inc.
Canaccord Adams financial Group ULC
Canaccord Genuity securities LLC
stockwave Equities Ltd.
CLD financial Opportunities Limited
Canaccord Genuity singapore Pte Ltd.
Canaccord Genuity (Hong Kong) Limited
Canaccord financial Group (Australia) Pty Ltd.
Canaccord Genuity (Australia) Limited
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United states
United states
Canada
Canada
United states
United states
United states
Canada
United states
Canada
Canada
singapore
China (Hong Kong sAr)
Australia
Australia
加通贝祥（北京）投资顾问有限公司 (the English name “Canaccord Genuity Asia Limited”
is used but it has no legal effect in the People’s republic of China; the English name formerly
used was Beijing Parkview Balloch Investment Advisory Co., Limited) (to be renamed
Canaccord Genuity Asia (Beijing) Limited)
The Balloch Group Limited
Canaccord Genuity Asia (Hong Kong) Limited
China
British Virgin Islands
China (Hong Kong sAr)
Canaccord Genuity (Barbados) Ltd. (formerly Canaccord International Ltd.)
Barbados
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
n/a
n/a
n/a
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
100%
100%
100%
100%
security trades executed for employees, officers and directors of Canaccord are transacted in accordance with terms and
conditions applicable to all clients. Commission income on such transactions in the aggregate is not material in relation to the
overall operations of Canaccord.
The Company offers various share-based payment plans to its key management personnel, including common share purchase loans,
a long-term incentive plan and share options. Directors have also been granted share options and have the right to acquire DsUs.
Disclosed in the table below are the amounts recognized as expenses related to individuals who are key management personnel
as at March 31, 2014 and March 31, 2013.
short term employee benefits
share-based payments
total compensation paid to key management personnel
54
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
march 31,
2014
March 31,
2013
$
16,790
$
2,001
5,922
1,823
$
18,791
$
7,745
MANAGEMENT’s DIsCUssION AND ANALYsIs
Accounts payable and accrued liabilities include the following balances with key management personnel:
Accounts payable and accrued liabilities
Critical accounting policies and estimates
march 31,
2014
March 31,
2013
$
4,769
$
1,206
The following is a summary of Canaccord’s critical accounting estimates. Canaccord’s accounting policies are in accordance with Ifrs
and are described in Note 5 to the Audited Consolidated financial statements for the year ended March 31, 2014. The Company’s
consolidated financial statements for the years ended March 31, 2013 and 2012 were also prepared in accordance with Ifrs.
The preparation of the March 31, 2014 Audited Consolidated financial statements in conformity with Ifrs requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements. Therefore, actual results may differ from those estimates and
assumptions. The significant estimates include share-based payments, income taxes, tax losses available for carryforward,
impairment of goodwill, indefinite life intangible assets and other long-lived assets, allowance for credit losses, fair value of
financial instruments, and provisions. significant accounting policies used and policies requiring management’s judgment and
estimates are disclosed in Notes 2 and 5 of the Audited Consolidated financial statements for the year ended March 31, 2014.
Consolidation
Although the Company does not own more than 50% of the voting shares of Canaccord Genuity (Australia) Limited (formerly
Canaccord BGf), the Company completed an evaluation of its contractual arrangement with the other shareholders and the power
it has over the financial and operating policies of Canaccord Genuity (Australia) Limited and determined it should consolidate under
Ifrs 10, “Consolidated Financial Statements” (Ifrs 10). Therefore, the financial position, financial performance, and cash flows of
Canaccord Genuity (Australia) Limited have been consolidated. The Company has also recognized a 50% non-controlling interest,
which represents the portion of Canaccord Genuity (Australia) Limited’s net identifiable assets not owned by the Company. At
the date of acquisition, the non-controlling interest was determined using the proportionate method. Net income (loss) and each
component of other comprehensive income (loss) are attributed to the non-controlling interest and to the owners of the parent.
The Company has established an employee benefit trust, a special purpose entity (sPE), to fulfill obligations to employees arising
from the Company’s share-based payment plans. The employee benefit trust has been consolidated in accordance with Ifrs 10
since its activities are conducted on behalf of the Company, and the Company retains the majority of the benefits and risks of the
employee benefit trust.
intangiBle assets
Identifiable intangible assets acquired separately are measured on initial recognition at cost. The cost of identifiable intangible
assets acquired in a business combination is equal to their fair value as at the date of acquisition. following initial recognition,
identifiable intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.
The useful lives of identifiable intangible assets are assessed to be either finite or indefinite. Identifiable intangible assets with
finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the
identifiable intangible asset may be impaired. The amortization period and the amortization method for an identifiable intangible
asset are reviewed at least annually, at each financial year end. Identifiable intangible assets with indefinite useful lives are not
amortized, but are tested for impairment annually.
Technology development expenditures on an individual project are recognized as an intangible asset when the Company can
demonstrate that the technical feasibility of the asset for use has been established. The asset is carried at cost less any
accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete
and the asset is available for use. It is amortized over the period of expected future benefit.
impaiRment oF non-FinanCial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value-in-
use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount, and recognized in the income statement.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 55
MANAGEMENT’s DIsCUssION AND ANALYsIs
In assessing fair value less costs to sell, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The
Company bases its impairment calculation on annual budget calculations, which are prepared separately for each of the Company’s
CGUs to which the individual assets are allocated. These budget calculations generally cover a period of five years. for longer
periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses are recognized in the consolidated statements of operations in expense categories consistent with the function
of the impaired asset.
for assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates
the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in
the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal
is limited so that the carrying amount of the asset does not exceed its recoverable amount, or exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. such
reversal is recognized in the income statement unless the asset is carried at a revalued amount, in which case the reversal is
treated as a revaluation increase.
The following assets have specific characteristics for impairment testing:
goodwill
Goodwill is tested for impairment at least annually as at March 31 and when circumstances indicate that the carrying value may
be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which goodwill
relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment
losses relating to goodwill cannot be reversed in future periods.
intangible assets
Intangible assets with indefinite useful lives are tested for impairment annually as at March 31 at the CGU level and when
circumstances indicate that the carrying value may be impaired.
Revenue ReCognition
revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can
be reliably measured. The Company assesses its revenue arrangements in order to determine if it is acting as principal or agent.
Commissions and fees revenue consists of revenue generated through commission-based brokerage services, recognized on
a trade date basis, and the sale of fee-based products and services, recognized on an accrual basis. realized and unrealized
gains and losses on securities purchased for client-related transactions are reported as net facilitation losses and recorded as a
reduction of commission revenues.
Investment banking revenue consists of underwriting fees and commissions earned on corporate finance activities. revenue from
underwritings and other corporate finance activities is recorded when the underlying transaction is substantially completed under
the engagement terms and the related revenue is reasonably determinable.
Advisory fees consist of management and advisory fees that are recognized on an accrual basis. Also included in advisory fees is
revenue from mergers and acquisitions activities, which is recognized when the underlying transaction is substantially completed
under the engagement terms and the related revenue is reasonably determinable.
Principal trading revenue consists of income earned in connection with principal trading operations and is recognized on a trade
date basis.
Interest revenue consists of interest earned on client margin accounts, interest earned on the Company’s cash and cash equivalents
balances, interest earned on cash delivered in support of securities borrowing activity, and dividends earned on securities owned.
Interest revenue is recognized on an effective interest rate basis. Dividend income is recognized when the right to receive payment
is established.
Other revenue includes foreign exchange gains or losses, revenue earned from our correspondent brokerage services and
administrative fees revenues.
56
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
inCome taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively
enacted, at the reporting date, in the countries where the Company operates and generates taxable income.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations
are subject to interpretation and establishes provisions where appropriate.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statements
of operations.
deferred tax
Deferred taxes are accounted for using the liability method. This method requires that deferred taxes reflect the expected deferred
tax effect of temporary differences at the reporting date between the carrying amounts of assets and liabilities for financial
statement purposes and their tax bases.
Deferred tax liabilities are recognized for all taxable temporary differences, except for taxable temporary differences associated
with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and carryforward
of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences and the carryforward of unused tax credits and unused tax losses can be utilized. The carrying amounts of deferred
tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are assessed at
each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred
tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the reporting period. Deferred tax is charged or credited in the statements of operations except where it relates to items that may
be credited directly to equity, in which case the deferred tax is recognized directly against equity.
sales tax
revenues, expenses and assets are recognized net of the amount of sales tax, except where the amount of sales tax incurred
is not recoverable from the tax authority. In these circumstances, sales tax is recognized as part of the cost of acquisition of the
asset or as part of an item of the expense. The net amount of sales tax recoverable from, or payable to, the taxation authority is
included as part of accounts receivable or accounts payable in the consolidated statements of financial position.
shaRe-Based payments
Employees (including senior executives and directors) of the Company receive remuneration in the form of share-based payment
transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions). Independent
directors also receive DsUs as part of their remuneration, which can only be settled in cash (cash-settled transactions). The dilutive
effect of outstanding options and share-based payments is reflected as additional share dilution in the computation of diluted
earnings per common share.
equity-settled transactions
for equity-settled transactions, the Company measures the fair value of share-based awards as of the grant date and recognizes
the cost as an expense over the applicable vesting period with a corresponding increase in contributed surplus. The cost is
recognized on a graded basis.
The Company estimates the number of equity instruments that will ultimately vest when calculating the expense attributable to
equity-settled transactions. No expense is recognized for awards that do not ultimately vest.
When share-based awards vest, contributed surplus is reduced by the applicable amount and share capital is increased by the
same amount.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 57
MANAGEMENT’s DIsCUssION AND ANALYsIs
Cash-settled transactions
Cash-settled transactions are measured initially at fair value at the grant date. The fair values of DsUs are expensed upon
grant, as there are no vesting conditions. The liability is remeasured to fair value at each reporting date up to and including the
settlement date, with changes in fair value recognized through the statements of operations.
tRanslation oF FoReign CuRRenCy tRansaCtions and FoReign suBsidiaRies
The Company’s consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional
currency. Each subsidiary of the Company determines its own functional currency, and items included in the financial statements
of each subsidiary are measured using that functional currency.
transactions and balances
Transactions in foreign currencies are initially recorded by the Company and its subsidiaries at their respective functional currencies
using exchange rates prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated by the Company and its subsidiaries into
their respective functional currencies at the exchange rate in effect at the reporting date. All differences upon translation are
recognized in the consolidated statements of operations.
Non-monetary assets and liabilities denominated in foreign currencies are translated by the Company and its subsidiaries into
their respective functional currencies at historical rates. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates in effect at the date when the fair value is determined.
translation of foreign subsidiaries
Assets and liabilities of foreign subsidiaries with a functional currency other than the Canadian dollar are translated into Canadian
dollars at rates prevailing at the reporting date, and income and expenses are translated at average exchange rates prevailing
during the period. Unrealized gains or losses arising as a result of the translation of the foreign subsidiaries are recorded in
accumulated other comprehensive income (loss). On disposal of a foreign operation, the component of other comprehensive
income relating to that particular foreign operation is recognized in the consolidated statements of operations.
The Company also has monetary assets and liabilities that are receivable or payable from a foreign operation. If settlement of the receivable
or payable is neither planned nor likely to occur in the foreseeable future, the differences upon translation are recognized in accumulated
other comprehensive income (loss) as these receivables and payables form part of the net investment in the foreign operation.
pRovisions
Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. The expense relating to any provision is presented in the statements of operations net of any
reimbursement. If the effect of the time value of money is significant, provisions are discounted using a current pre-tax rate that
reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognized as an interest expense.
Future Changes in accounting policies and estimates
The Company monitors the potential changes proposed by the International Accounting standards Board on an ongoing basis and
analyzes the effect that changes in the standards may have on the Company’s operations.
Please see Note 4 of the Audited Consolidated financial statements for the year ended March 31, 2014 for further information.
disclosure Controls and procedures and internal Control over Financial Reporting
disClosuRe ContRols and pRoCeduRes
As of March 31, 2014, an evaluation was carried out, under the supervision of and with the participation of management, including
the President & CEO and the Executive Vice President & CfO, of the effectiveness of our disclosure controls and procedures as
defined under National Instrument 52-109. Based on that evaluation, the President & CEO and the Executive Vice President & CfO
concluded that the design and operation of these disclosure controls and procedures were effective as of and during the fiscal
year ended March 31, 2014.
58
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
inteRnal ContRol oveR FinanCial RepoRting
Management, including the President & CEO and the Executive Vice President & CfO, has designed internal control over financial
reporting as defined under National Instrument 52-109 to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with Ifrs. Based on that evaluation, the
President & CEO and the Executive Vice President & CfO concluded that the Company’s internal control over financial reporting
was designed and operating effectively as of and during the year ended March 31, 2014 and that there were no material
weaknesses in our internal control over financial reporting.
Changes in inteRnal ContRol oveR FinanCial RepoRting
There were no changes in internal control over financial reporting that occurred during the year ended March 31, 2014 that have
materially affected, or are reasonably likely to materially affect, Canaccord’s internal control over financial reporting.
Risk management
oveRview
Uncertainty and risk are inherent in any financial markets activity. As an active participant in the Canadian and international
capital markets, Canaccord is exposed to risks that could result in financial losses. Canaccord has identified its principal risks as:
market risk, credit risk, operational risk and other risks. Accordingly, risk management and control of the balance between risk and
return are critical elements in maintaining Canaccord’s financial stability and profitability. Therefore, an effective risk management
framework is integral to the success of Canaccord.
Risk management stRuCtuRe and goveRnanCe
Canaccord’s disciplined risk management process encompasses a number of functional areas and requires frequent communication,
judgment and knowledge of the business, products and markets. The Company’s senior management is actively involved in the
risk management process and has developed policies and reports that require specific administrative procedures and actions to
assess and control risks. These policies and procedures are subject to ongoing review and modification as activities, markets and
circumstances change.
As part of Canaccord’s risk philosophy, the first line of responsibility for managing risk lies with branch managers, department
heads and trading desk managers (within prescribed limits). The monitoring and control of Canaccord’s risk exposure is conducted
through a variety of separate, but complementary, financial, credit, operational, compliance and legal reporting systems.
Canaccord’s governance structure includes the following elements:
Board of Directors
Audit Committee
Corporate Governance and
Compensation Committee
Canaccord Genuity Group Inc.
Risk Management
Committee
Canaccord Genuity Global
Executive Committee
Canaccord Genuity Wealth
Management Executive Committee
Infrastructure
Executive Committee
The Board of Directors (the Board) has oversight of the company-wide risk management framework. These responsibilities are
delegated to the Audit and risk Management Committees. The Audit Committee’s mandate was updated in fiscal 2013 to better
reflect the committee’s oversight of the Company’s risk management function. see Canaccord’s 2014 Annual Information form
(AIf) for more details.
The Audit Committee assists the Board in fulfilling its oversight responsibility by monitoring the effectiveness of internal controls
and the control environment. It also receives and reviews various quarterly and annual updates, and reports on key risk metrics as
well as the overall risk management program.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 59
MANAGEMENT’s DIsCUssION AND ANALYsIs
The risk Management Committee assists the Board in fulfilling its responsibilities for monitoring risk exposures against the
defined risk appetite and for general oversight of the risk management process. The risk Management Committee is led by
the CfO, and committee members include the CEO and senior management representation from the key revenue-producing
businesses and functional areas of Canaccord. The Committee identifies, measures and monitors the principal risks facing the
business through review and approval of Canaccord’s risk appetite, policies, procedures, and limits/thresholds.
The segregation of duties and management oversight are important aspects of Canaccord’s risk management process. Canaccord
has a number of functions that are independent of the revenue-producing businesses that perform risk management activities,
including the monitoring, evaluating and analyzing of risk. These functions include Enterprise risk Management, Compliance,
Operations, Internal Controls and financial Analysis, Treasury, finance and Legal.
maRket Risk
Market risk is the risk that a change in market prices and/or any of the underlying market factors will result in losses. Each
business area is responsible for ensuring that its market risk exposures are prudent. In addition, Canaccord has established
procedures to ensure that risks are measured, closely monitored, controlled and visible to senior levels of management.
Canaccord is exposed to equity price risk, liquidity risk and volatility risk as a result of its principal trading activities in equity
securities. Canaccord is also exposed to specific interest rate risk, credit spread risk and liquidity risk in respect of its principal
trading in fixed income securities. In addition to active supervision and review of trading activities by senior management,
Canaccord mitigates its risk exposure through a variety of limits to control concentration, capital allocation and usage, as well
as through trading policies and guidelines. Canaccord manages and monitors its risks in this area using both qualitative and
quantitative measures, on a company-wide basis, and also by trading desk and by individual trader. Canaccord operates a firm-
wide scenario analysis and Value-at-risk (Var) risk measurement system for its equity and fixed income inventories. Management
also regularly reviews and monitors inventory levels and positions, trading results, aging and concentration levels. Consequently,
Canaccord can ensure that it is adequately diversified with respect to market risk factors and that trading activity is within the risk
tolerance levels established by senior management. for a detailed description of Canaccord’s Var methodology, see the Market
risk section in Canaccord’s fiscal 2014 AIf.
CRedit Risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The primary source for
credit risk to Canaccord is in connection with trading activity by clients in the Canaccord Genuity Wealth Management business
segment and private client margin accounts. In order to minimize financial exposure in this area, Canaccord applies certain credit
standards and conducts financial reviews with respect to clients and new accounts.
Canaccord provides financing to clients by way of margin lending. In a margin-based transaction, Canaccord extends credit for a
portion of the market value of a securities transaction in a client’s account, up to certain limits. Margin loans are collateralized by
securities in the client’s account. In connection with this lending activity, Canaccord faces a risk of financial loss in the event that
a client fails to meet a margin call if market prices for securities held as collateral decline and if Canaccord is unable to recover
sufficient value from the collateral held. for margin lending purposes, Canaccord has established limits that are generally more
restrictive than those required by applicable regulatory policies.
Canaccord also faces a risk of financial loss with respect to trading activity by clients if such trading results in overdue or unpaid
amounts in under-secured cash accounts. Canaccord has developed a number of controls within its automated trade order
management system to ensure that trading by individual account and advisor is done in accordance with customized limits and
risk parameters.
Canaccord is engaged in various trading and brokerage activities whose counterparties primarily include broker dealers,
banks, clearing agents, exchanges, financial intermediaries and other financial institutions. These activities include agency
trading, securities borrowing and lending, and entering into repurchase agreements and reverse repurchase agreements. In
the event that counterparties do not fulfill their obligations, Canaccord may be exposed to risk. The risk of default depends on
the creditworthiness of the counterparty and/or the issuer of the instrument. Canaccord manages this risk by imposing and
monitoring individual and aggregate position limits within each business segment, for each counterparty, conducting regular credit
reviews of financial counterparties, reviewing security and loan concentrations, holding and marking to market collateral on certain
transactions, and conducting business through clearing organizations that guarantee performance.
Canaccord records a provision for bad debts in general and administrative expense. Any actual losses arising from or associated
with client trading activity as described above are charged to this provision. Historically, this provision has been sufficient to cover
actual losses.
60
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
MANAGEMENT’s DIsCUssION AND ANALYsIs
opeRational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, fraud, people and systems, or from
external events such as the occurrence of disasters or security threats. Operational risk exists in all of Canaccord’s activities,
including processes, systems and controls used to manage other risks. failure to manage operational risk can result in financial
loss, reputational damage, regulatory fines and failure to manage market or credit risks.
Canaccord operates in different markets and relies on its employees and systems to process a high number of transactions. In
order to mitigate this risk, Canaccord has developed a system of internal controls and checks and balances at appropriate levels,
which includes overnight trade reconciliation, control procedures related to clearing and settlement, transaction and daily value
limits within all trading applications, cash controls, physical security, independent review procedures, documentation standards,
billing and collection procedures, and authorization and processing controls for transactions and accounts. In addition, Canaccord
has implemented an operational risk program that helps Canaccord measure, manage, report and monitor operational risk issues
(see rCsA below). Canaccord also has disaster recovery procedures in place, business continuity plans and built-in redundancies
in the event of a systems or technological failure. In addition, Canaccord utilizes third party service agreements and security
audits where appropriate.
Risk and Control self-assessment (RCsa)
The purpose of rCsAs is to:
• Identify and assess key risks inherent to the business and categorize them based on severity and frequency of occurrence
• Rate the effectiveness of the control environment associated with the key risks
• Mitigate the risks through the identification of action plans to improve the control environment where appropriate
• Provide management with a consistent approach to articulate and communicate the risk profiles of their areas of responsibility
• Meet regulatory requirements and industry standards
Canaccord has established a process to determine what the strategic objectives of each group/unit/department are and identify,
assess and quantify operational risks that hinder the Company’s ability to achieve those objectives. The rCsA results are specifically
used to calculate the operational risk regulatory capital requirements for Canaccord in the UK and operational risk exposure in all
geographies. The rCsAs are periodically updated and results are reported to the risk Management and Audit Committees.
otheR Risks
Other risks encompass those risks that can have an adverse material effect on the business but do not belong to market, credit
or operational risk categories.
Regulatory and legal risk
regulatory risk results from non-compliance with regulatory requirements, which could lead to fines and/or sanctions. Canaccord
has established procedures to ensure compliance with all applicable statutory and regulatory requirements in each jurisdiction.
These procedures address issues such as regulatory capital requirements, disclosure requirements, internal controls over
financial reporting, sales and trading practices, use of and safekeeping of client funds, credit granting, collection activity, anti-
money laundering, insider trading, conflicts of interest and recordkeeping.
Legal risk results from potential criminal, civil or regulatory litigation against Canaccord that could materially affect Canaccord’s
business, operations or financial condition. Canaccord has in-house legal counsel, as well as access to external legal counsel, to
assist the Company in addressing legal matters related to operations and to defend Canaccord’s interests in various legal actions.
Losses or costs associated with routine regulatory and legal matters are included in general and administrative expense in
Canaccord’s Audited Consolidated financial statements.
Reputational risk
reputational risk is the risk that an activity undertaken by an organization or its representatives will impair its image in the
community or lower public confidence in it, resulting in a loss of business, legal action or increased regulatory oversight. Possible
sources of reputational risk could come from operational failures, non-compliance with laws and regulations, or leading an
unsuccessful financing. reputational risk can also be reflected within customer satisfaction and external ratings, such as equity
analyst reports. In addition to its various risk management policies, controls and procedures, Canaccord has a formal Code of
Business Conduct and Ethics and an integrated program of marketing, branding, communications and investor relations to help
manage and support Canaccord’s reputation.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 61
MANAGEMENT’s DIsCUssION AND ANALYsIs
Risk FaCtoRs
for a detailed list of the risk factors that are relevant to Canaccord’s business and the industry in which it operates, see the risk
factors section in Canaccord’s fiscal 2014 AIf. risks include, but are not necessarily limited to, those listed in the AIf. Investors
should carefully consider the information about risks, together with the other information in this document, before making
investment decisions. It should be noted that this list is not exhaustive, but contains risks that Canaccord considers to be of
particular relevance. Other risk factors may apply.
ContRol Risk
As of March 31, 2014, senior officers and directors of Canaccord collectively owned approximately 19.8% of the issued and
outstanding common shares of Canaccord Genuity Group Inc. If a sufficient number of these shareholders act or vote together,
they will have the power to exercise significant influence over all matters requiring shareholder approval, including the election of
the Company’s directors, amendments to its articles, amalgamations and plans of arrangement under Canadian law and mergers
or sales of substantially all of its assets. This could prevent Canaccord from entering into transactions that could be beneficial
to the Company or its other shareholders. Also, third parties could be discouraged from making a tender offer or takeover bid to
acquire any or all of the outstanding common shares of the Company.
In addition, as at March 31, 2014, the single largest shareholder that management was aware of was franklin Templeton
Investments Corp. by one or more of its mutual funds or other managed accounts. The most recent filing that confirms its total
holdings was filed on December 15, 2011, which indicated the company owned 5,464,873 shares of Canaccord Genuity Group
Inc. Canaccord has not been made aware of any shareholding changes since this filing. The company’s ownership outlined in this
filing represents 5.4% of common shares issued and outstanding as at March 31, 2014.
Any significant change in these shareholdings through sale or other disposition, or significant acquisitions by others of the
common shares in the public market or by way of private transactions, could result in a change of control and changes in business
focus or practices that could affect the profitability of Canaccord’s business.
Restrictions on ownership and transfer of common shares
restrictions on ownership and transfer of common shares in the articles of Canaccord to prevent unauthorized change in control
without regulatory approval could, in certain cases, affect the marketability and liquidity of the common shares.
dividend policy
Although dividends are expected to be declared and paid quarterly, 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, Canaccord’s financial
condition, results of operations, capital requirements and such other factors as the Board determines to be relevant.
dividend declaration
On June 3, 2014, the Board of Directors approved a quarterly dividend of $0.05 per common share payable on July 2, 2014 with
a record date of June 20, 2014. The Board of Directors also approved a cash dividend of $0.34375 per series A Preferred share
payable on June 30, 2014 with a record date of June 13, 2014; as well as a cash dividend of $0.359375 per series C Preferred
share payable on June 30, 2014 with a record date of June 13, 2014.
additional information
Additional information relating to Canaccord, including Canaccord’s Annual Information form, can be found on sEDAr’s website at
www.sedar.com.
62
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
independent auditors’ Report
To the shareholders of
Canaccord genuity group inc. (formerly Canaccord Financial inc.)
We have audited the accompanying consolidated financial statements of Canaccord Genuity Group Inc. (formerly Canaccord
financial Inc.), which comprise the consolidated statements of financial position as at March 31, 2014 and 2013, and the
consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for the years ended
March 31, 2014 and 2013, and a summary of significant accounting policies and other explanatory information.
management’s Responsibility for the Consolidated Financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with International financial reporting standards, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the
auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our
audit opinion.
opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Canaccord
Genuity Group Inc. (formerly Canaccord financial Inc.) as at March 31, 2014 and 2013, and its financial performance and its cash
flows for the years then ended in accordance with International financial reporting standards.
Chartered accountants
Vancouver, Canada
June 3, 2014
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 63
Consolidated statements of Financial position
As at (in thousands of Canadian dollars)
notes
march 31,
2014
March 31,
2013
assets
Current
Cash and cash equivalents
securities owned
Accounts receivable
Income taxes receivable
total current assets
Deferred tax assets
Investments
Equipment and leasehold improvements
Intangible assets
Goodwill
liaBilities and eQuity
Current
Bank indebtedness
securities sold short
$
364,296
$
491,012
1,143,201
924,337
2,785,898
2,513,958
3,983
—
4,297,378
3,929,307
9,735
9,977
50,975
131,650
514,907
12,552
3,695
42,979
130,283
484,686
$ 5,014,622
$ 4,603,502
$
—
$
66,138
913,913
689,020
6
9
14
10
11
13
13
7
6
Accounts payable and accrued liabilities
9, 20
2,877,933
2,726,735
Provisions
Income taxes payable
Contingent consideration
subordinated debt
total current liabilities
Deferred tax liabilities
equity
Preferred shares
Common shares
Contributed surplus
retained earnings
Accumulated other comprehensive income (loss)
total shareholders’ equity
Non-controlling interests
total equity
see accompanying notes
On behalf of the Board:
24
7
15
14
16
17
10,334
10,822
—
15,000
20,055
4,428
14,218
15,000
3,828,002
3,535,594
3,028
2,576
3,831,030
3,538,170
205,641
653,189
74,037
144,799
91,014
205,641
638,456
85,981
126,203
(7,118)
1,168,680
1,049,163
14,912
16,169
1,183,592
1,065,332
$ 5,014,622
$ 4,603,502
paul d. Reynolds
Director
teRRenCe a. lyons
Director
64
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Consolidated statements of operations
for the years ended (in thousands of Canadian dollars, except per share amounts)
notes
Revenue
Commissions and fees
Investment banking
Advisory fees
Principal trading
Interest
Other
expenses
Incentive compensation
salaries and benefits
Trading costs
Premises and equipment
Communication and technology
Interest
General and administrative
Amortization
Development costs
restructuring costs
Acquisition-related costs
Income (loss) before income taxes
Income tax expense (recovery)
Current
Deferred
net income (loss) for the year
net income (loss) attributable to:
CGGI shareholders
Non-controlling interests
weighted average number of common shares outstanding (thousands)
Basic
Diluted
net income (loss) per common share
Basic
Diluted
dividend per series a preferred share
dividend per series C preferred share
dividend per common share
see accompanying notes
24
14
17
17
17
17
18
18
18
march 31,
2014
March 31,
2013
$
361,647
$
353,125
221,410
139,142
91,313
24,549
17,183
145,772
179,690
66,406
29,199
22,930
855,244
797,122
413,289
406,724
91,135
47,872
38,461
46,065
16,359
83,834
26,786
21,369
5,486
—
88,522
43,892
41,124
49,115
15,302
89,504
33,779
19,526
31,617
1,719
790,656
820,824
64,588
(23,702)
8,270
4,261
12,531
8,202
(13,129)
(4,927)
$
52,057
$
(18,775)
$
$
51,413
644
$
$
(16,819)
(1,956)
94,125
101,993
$
$
$
$
$
0.42
0.39
1.375
1.4375
0.20
$
$
$
$
$
92,218
n/a
(0.31)
(0.31)
1.375
1.4375
0.20
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 65
Consolidated statements of Comprehensive income (loss)
for the years ended (in thousands of Canadian dollars)
Net income (loss) for the year
Other comprehensive income (loss) (OCI) to be reclassified to net income (loss) in future periods
Net change in valuation of available for sale investments (net of tax: 2014 – $47; 2013 – $32)
Transfer of net realized gain on disposal of available for sale asset (net of tax: $234)
march 31,
2014
March 31,
2013
$
52,057
$
(18,775)
(149)
—
449
(700)
Net change in unrealized gains (losses) on translation of foreign operations, net of tax
97,791
(15,033)
Comprehensive income (loss) for the year
Comprehensive income (loss) attributable to:
CGGI shareholders
Non-controlling interests
see accompanying notes
$
149,699
$
(34,059)
$
$
149,545
154
$
$
(32,421)
(1,638)
66
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Consolidated statements of Changes in equity
As at and for the years ended (in thousands of Canadian dollars)
Preferred shares, opening
shares issued, net of share issuance costs
shares cancelled
preferred shares, closing
Common shares, opening
shares issued in connection with share-based payments
shares issued in connection with Corazon Capital Group Limited (Corazon)
Acquisition of common shares for long-term incentive plan (LTIP)
release of vested common shares from employee benefit trust
shares cancelled
Net unvested share purchase loans
Common shares, closing
Contributed surplus, opening
replacement stock plan awards related to the acquisition of Collins stewart Hawkpoint plc (CsHP)
share-based payments
Cancellation of common shares
shares issued in connection with Corazon
Unvested share purchase loans
Contributed surplus, closing
retained earnings, opening
Net income (loss) attributable to CGGI shareholders
Common shares dividends
Preferred shares dividends
Retained earnings, closing
Accumulated other comprehensive (loss) income, opening
Other comprehensive income (loss) attributable to CGGI shareholders
accumulated other comprehensive income (loss), closing
total shareholders’ equity
Non-controlling interests, opening
foreign exchange on non-controlling interests
Comprehensive income (loss) attributable to non-controlling interests
Dividends paid to non-controlling interests
non-controlling interests, closing
total equity
see accompanying notes
notes
march 31,
2014
March 31,
2013
$
205,641
$
110,818
—
—
205,641
638,456
21,375
—
(11,046)
18,059
(26,393)
12,738
97,450
(2,627)
205,641
623,739
11,926
1,503
(14,872)
17,834
(814)
(860)
653,189
638,456
85,981
(4,612)
559
3,891
—
(11,782)
68,336
6,399
11,445
(146)
(1,503)
1,450
74,037
85,981
126,203
51,413
(21,055)
(11,762)
180,748
(16,819)
(26,006)
(11,720)
144,799
126,203
(7,118)
98,132
91,014
8,484
(15,602)
(7,118)
1,168,680
1,049,163
16,169
(751)
154
(660)
17,454
353
(1,638)
—
14,912
16,169
$ 1,183,592
$ 1,065,332
18
18
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 67
Consolidated statements of Cash Flows
for the years ended (in thousands of Canadian dollars)
opeRating aCtivities
Net income (loss) for the year
Items not affecting cash
Amortization
Deferred income tax expense (recovery)
share-based compensation expense
Impairment of property, plant and equipment
Changes in non-cash working capital
(Increase) decrease in securities owned
(Increase) decrease in accounts receivable
Increase in income taxes payable, net
Increase (decrease) in securities sold short
Increase (decrease) in accounts payable, accrued liabilities and provisions
notes
march 31,
2014
March 31,
2013
$
52,057
$
(18,775)
19
26,786
4,261
52,363
—
(193,629)
(221,777)
2,268
213,725
80,951
33,779
(13,129)
60,359
2,627
245,873
590,090
2,963
(224,590)
(855,728)
Cash provided (used) by operating activities
17,005
(176,531)
FinanCing aCtivities
Decrease in bank indebtedness
redemption of share capital
Acquisition of common shares for long-term incentive plan
Cash dividends paid on common shares
Cash dividends paid on preferred shares
repayment of short term credit facility
Issuance of preferred shares, net of share issuance costs
Decrease in net vesting of share purchase loans
Cash used by financing activities
investing aCtivities
Purchase of equipment and leasehold improvements
Purchase of intangible assets
Investment in Canaccord Genuity (Hong Kong) Limited
Investment in Canadian first financial Holdings Limited (Canadian first)
Contingent consideration paid on the acquisition of Eden financial Ltd. (Eden financial)
Acquisition of Eden financial, net of cash acquired
Acquisition of Kenosis Capital Partners
Cash used in investing activities
effect of foreign exchange on cash balances
decrease in cash position
Cash position, beginning of year
Cash position, end of year
supplemental cash flow information
Interest received
Interest paid
Income taxes paid
see accompanying notes
(66,138)
(21,117)
(11,046)
(21,055)
(11,762)
—
—
—
(9,003)
—
(14,872)
(26,004)
(11,720)
(150,000)
94,823
(13,583)
(131,118)
(130,359)
(15,475)
(6,972)
(7,002)
(699)
(5,730)
(9,129)
—
—
—
—
—
—
(4,953)
(1,182)
(38,035)
(13,107)
25,432
(3,229)
(126,716)
491,012
(323,226)
814,238
$
364,296
$
491,012
$
$
$
22,788
14,877
8,359
$
$
$
32,689
14,425
10,320
68
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
notes to Consolidated Financial statements
As at March 31, 2014, March 31, 2013
and for the years ended March 31, 2014 and 2013
(in thousands of Canadian dollars, except per share amounts)
note 01
Corporate information
Through its principal subsidiaries, Canaccord Genuity Group Inc. (the Company) is a leading independent, full-service investment
dealer in Canada with capital markets operations in Canada, the United Kingdom (UK) and Europe, the United states of America
(Us), Australia, China, singapore and Barbados. The Company also has wealth management operations in Canada, the UK and
Europe, and Australia. The Company has operations in each of the two principal segments of the securities industry: capital
markets and wealth management. Together, these operations offer a wide range of complementary investment products, brokerage
services and investment banking services to the Company’s private, institutional and corporate clients. The Company changed its
name to Canaccord Genuity Group Inc. from Canaccord financial Inc. on October 1, 2013.
Canaccord Genuity Group Inc. was incorporated on february 14, 1997 by the filing of a memorandum and articles with the
registrar of Companies for British Columbia under the Company Act (British Columbia) and continues in existence under
the Business Corporations Act (British Columbia). The Company’s head office is located at suite 2200 – 609 Granville street,
Vancouver, British Columbia, V7Y 1H2. The Company’s registered office is located at suite 1000 – 840 Howe street, Vancouver,
British Columbia, V6Z 2M1.
The Company’s common shares are publicly traded under the symbol Cf on the Toronto stock Exchange (TsX) and the symbol Cf.
on the London stock Exchange. The Company’s series A Preferred shares are listed on the TsX under the symbol Cf.Pr.A. The
Company’s series C Preferred shares are listed on the TsX under the symbol Cf.Pr.C.
The Company’s business experiences considerable variations in revenue and income from quarter to quarter and year to year due
to factors beyond the Company’s control. The Company’s business is affected by the overall condition of the worldwide equity and
debt markets.
note 02
Basis of preparation
statement oF ComplianCe
These consolidated financial statements have been prepared in accordance with International financial reporting standards (Ifrs)
as issued by the International Accounting standards Board (IAsB).
The consolidated financial statements have been prepared on a historical cost basis except for financial instruments, which have
been measured at fair value as set out in the relevant accounting policies.
The consolidated financial statements are presented in Canadian dollars and all values are in thousands of dollars, except when
otherwise indicated.
These audited consolidated financial statements were authorized for issuance by the Company’s Board of Directors on June 3, 2014.
pRinCiples oF Consolidation
These consolidated financial statements include the financial statements of the Company, its subsidiaries and controlled special
purpose entities (sPEs).
The financial results of a subsidiary or controlled sPEs should be consolidated if the Company acquires control. Control is achieved
when an entity is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee.
The results of subsidiaries acquired or disposed of during the year are included in the statements of operations from the effective
date of the acquisition or up to the effective date of the disposal, as appropriate.
All intercompany transactions and balances have been eliminated. In cases where an accounting policy of a subsidiary differs from
the Company’s accounting policies, the Company has made the appropriate adjustments to ensure conformity for purposes of the
preparation of these consolidated financial statements. The financial statements of the subsidiaries are prepared for the same
reporting period as the parent company.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 69
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
use oF judgments, estimates and assumptions
The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions
that affect the reported amounts of assets and liabilities, accompanying note disclosures, and the disclosure of contingent assets
and liabilities at the reporting date. Therefore, actual results may differ from those estimates and assumptions. The significant
estimates include share-based payments, income taxes, the valuation of deferred tax assets, impairment of goodwill, intangible
assets and other long-lived assets, allowance for credit losses, fair value of financial instruments, and provisions.
Consolidation
Although the Company does not own more than 50% of the voting shares of Canaccord Genuity (Australia) Limited (formerly
Canaccord BGf), the Company completed an evaluation of its contractual arrangement with the other shareholders and the power
it has over the financial and operating policies of Canaccord Genuity (Australia) Limited and determined it should consolidate under
Ifrs 10, “Consolidated Financial Statements” (Ifrs 10). Therefore, the financial position, financial performance, and cash flows of
Canaccord Genuity (Australia) Limited have been consolidated. The Company has also recognized a 50% non-controlling interest,
which represents the portion of Canaccord Genuity (Australia) Limited’s net identifiable assets not owned by the Company. At
the date of acquisition, the non-controlling interest was determined using the proportionate method. Net income (loss) and each
component of other comprehensive income (loss) are attributed to the non-controlling interest and to the owners of the parent.
The Company has an employee benefit trust, an sPE [Notes 19 and 20], to fulfill obligations to employees arising from the Company’s
share-based payment plans. The employee benefit trust has been consolidated in accordance with Ifrs 10 since its activities are
conducted on behalf of the Company, and the Company retains the majority of the benefits and risks of the employee benefit trust.
share-based payments
The Company measures the cost of equity-settled and cash-settled transactions with employees and directors based on the
fair value of the awards granted. The fair value is determined based on the observable share prices or by using an appropriate
valuation model. The use of option pricing models to determine the fair value requires the input of highly subjective assumptions
including the expected price volatility, expected forfeitures, expected life of the award and dividend yield. Changes in the subjective
assumptions can materially affect the fair value estimates. The assumptions and models used for estimating the fair value of
share-based payments, if and as applicable, are disclosed in Note 19.
income taxes
Accruals for income tax liabilities require management to make estimates and judgments with respect to the ultimate outcome
of tax filings and assessments. Actual results could vary from these estimates. The Company operates within different tax
jurisdictions and is subject to individual assessments by these jurisdictions. Tax filings can involve complex issues, which may
require an extended period of time to resolve in the event of a dispute or re-assessment by tax authorities. Deferred taxes
are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the
losses can be utilized. significant management judgment is required to determine the amount of deferred tax assets that can be
recognized based upon the likely timing and the level of future taxable profit.
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws and the amount and timing
of future taxable income. The Company establishes tax provisions, based on reasonable estimates, for possible consequences of
audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various
factors, such as the Company’s experience of previous tax audits.
impairment of goodwill and indefinite life intangible assets
Goodwill and indefinite life intangible assets are tested for impairment at least annually, or whenever an event or change in
circumstance may indicate potential impairment, to ensure that the recoverable amount of the cash-generating unit to which
goodwill and indefinite life intangible assets are attributed is greater than or equal to their carrying values.
In determining the recoverable amount, which is the higher of fair value less costs to sell (fVLCs) and value-in-use, management
uses valuation models that consider such factors as projected earnings, price-to-earnings multiples, relief of royalties related
to brand names, and discount rates. Management must apply judgment in the selection of the approach to determining the
recoverable amount and in making any necessary assumptions. These judgments may affect the recoverable amount and any
resulting impairment write-down. The key assumptions used to determine recoverable amounts for the different cash-generating
units are disclosed in Note 13.
70
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
impairment of other long-lived assets
The Company assesses its amortizable long-lived assets at each reporting date to determine whether there is an indication that
an asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount using management’s
best estimates and available information.
allowance for credit losses
The Company records allowances for credit losses associated with clients’ receivables, loans, advances and other receivables. The
Company establishes an allowance for credit losses based on management’s estimate of probable unrecoverable amounts. Judgment
is required as to the timing of establishing an allowance for credit losses and the amount of the required specific allowance, taking into
consideration counterparty creditworthiness, current economic trends and past experience. Clients’ receivable balances are generally
collateralized by securities; therefore, any provision is generally measured after considering the market value of the collateral, if any.
valuation of financial instruments
The Company measures its financial instruments at fair value at initial recognition. fair value is determined on the basis of market
prices from independent sources, if available. If there is no available market price, then the fair value is determined by using valuation
models. The inputs to these models, such as expected volatility and liquidity discounts, are derived from observable market data
where possible, but where observable data is not available, judgment is required to select or determine inputs to a fair value model.
There is inherent uncertainty and imprecision in estimating the factors that can affect fair value, and in estimating fair values
generally, when observable data is not available. Changes in assumptions and inputs used in valuing financial instruments could
affect the reported fair values.
provisions
The Company records provisions related to pending or outstanding legal matters and regulatory investigations. Provisions
in connection with legal matters are determined on the basis of management’s judgment in consultation with legal counsel,
considering such factors as the amount of the claim, the possibility of wrongdoing by an employee of the Company and
precedents. Contingent litigation loss provisions are recorded by the Company when it is probable that the Company will incur
a loss as a result of a past event and the amount of the loss can be reliably estimated. The Company also records provisions
related to restructuring costs when the recognition criteria for provisions are fulfilled.
note 03
adoption of new and Revised standards
The Company adopted certain standards and amendments, discussed below, effective as of April 1, 2013.
pResentation oF FinanCial statements
Amendments to IAs 1, “Presentation of Financial Statements” (IAs 1), introduce a grouping of items presented in other
comprehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time are to be
presented separately from items that will never be reclassified. There were no presentation changes to items within OCI and
net income or loss as a result of the adoption of these amendments to IAs 1. All amounts currently recorded in OCI will be
reclassified to profit or loss in subsequent periods.
Consolidation standaRds
The IAsB issued the following standards in May 2011. These standards are effective for the Company as of April 1, 2013, and
have been applied retrospectively.
iFRs 10 – “Consolidated Financial Statements” (iFRs 10)
Ifrs 10 establishes a single control model that applies to all entities including special purpose entities. Ifrs 10 replaces the
parts of previously existing International Accounting standards (IAs) 27, “Consolidated and Separate Financial Statements”, that
dealt with consolidated financial statements and sIC-12, “Consolidation – Special Purpose Entities”. Ifrs 10 changes the definition
of control such that an investor controls an investee when it is exposed, or has rights to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. This replaced the previous approach,
which emphasized legal control or exposure to risks and rewards, depending on the nature of the entity. The adoption of Ifrs 10
had no impact on the entities that are consolidated by the Company.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 71
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
iFRs 12 – “Disclosure of Interests in Other Entities” (iFRs 12)
Ifrs 12 includes the disclosure requirements for subsidiaries, joint arrangement and associates and introduces new requirements
for unconsolidated structured entities. The requirements in Ifrs 12 are more comprehensive than the previously existing
disclosure requirements for subsidiaries. The Company has subsidiaries with non-controlling interests; however, there are no
unconsolidated structured entities. Additional disclosures required by this standard are presented in Note 8.
otheR standaRds
iFRs 13 – “Fair Value Measurement” (iFRs 13)
Ifrs 13 is a comprehensive standard that defines fair value and sets out a single Ifrs framework for measuring fair value. Ifrs 13
establishes a single source of guidance under Ifrs for all fair value measurements. Ifrs 13 does not change when an entity
is required to use fair value, but rather provides guidance on how to measure fair value under Ifrs when fair value is required
or permitted. Ifrs 13 fair value defines fair value as an exit price. The prospective application of Ifrs 13 has not materially
impacted the fair value measurements carried out by the Company.
Ifrs 13 also requires specific disclosures related to assets and liabilities measured at fair value. Additional disclosures, where
required, are provided in the individual notes relating to the assets and liabilities measured at fair value. The fair value hierarchy is
provided in Note 7.
ias 19 (Revised) – “Employee Benefits” (ias 19R)
Amendments to IAs 19r contain a number of changes to the accounting for employment benefit plans including recognition and
disclosure of defined benefit pension plans and clarification on the recognition of post-employment and termination benefits. The
amendments did not have a significant impact on the Company’s consolidated financial statements.
Recoverable amount disclosures for non-Financial assets – amendments to ias 36 – “Impairment of Assets” (ias 36)
Amendments to IAs 36 restrict the requirement to disclose the recoverable amount of an asset or cash-generating unit (CGU) to
periods in which an impairment loss has been recognized or reversed. The amendments to IAs 36 also expand and clarify the
disclosure requirements applicable when an asset’s or CGU’s recoverable amount has been determined on the basis of fair value less
costs of disposal. The amendments are effective from January 1, 2014; the Company has early adopted this standard retrospectively.
note 04
Future Changes in accounting policies
The Company monitors the potential changes in standards proposed by the IAsB and analyzes the effect that changes in the
standards may have on the Company’s operations. Potential changes are as follows:
FinanCial instRuments
Ifrs 9, “Financial Instruments” (Ifrs 9), was issued in November 2009 and amended in October 2010 and November 2013, and
is intended to replace IAs 39, “Financial Instruments: Recognition and Measurement”. The project has been divided into three
phases: classification and measurement, impairment of financial assets, and hedge accounting. Ifrs 9 requires financial assets
to be measured at fair value or amortized cost on the basis of their contractual cash flow characteristics and the Company’s
business model for managing the assets. The classification and measurement for financial liabilities remain generally unchanged;
however, revisions have been made in the accounting for changes in fair value of a financial liability attributable to changes in
the credit risk of that liability. Gains or losses caused by changes in an entity’s own credit risk on such liabilities are no longer
recognized in profit or loss but instead are reflected in OCI.
The mandatory effective date for Ifrs 9 is January 1, 2018 with early adoption permitted. The Company is still in the process of
assessing the impact of these changes.
ias 32 – “Offsetting Financial Assets and Financial Liabilities” (ias 32)
In December 2011, the IAsB issued amendments to IAs 32, clarifying the requirements for offsetting financial instruments and
addressing inconsistencies in current practice when applying the offsetting criteria in IAs 32, “Financial Instruments: Presentation”.
The amendments are effective for annual periods beginning on or after January 1, 2014 with early adoption permitted, and are
required to be applied retrospectively. The Company has not yet determined the impact of the amendments on the Company’s
financial statements.
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otheR
international Financial Reporting interpretations Committee (iFRiC) 21 – “Levies”
In May 2013, the IAsB published a new IfrIC Interpretation 21, “Levies”, which provides guidance on when to recognize a liability
for a levy imposed by a government, both for levies that are accounted for in accordance with IAs 37, “Provisions, Contingent
Liabilities and Contingent Assets”, and for those where the timing and amount of the levy is certain. This interpretation is effective
for annual periods beginning on or after January 1, 2014. The Company has not yet determined the impact of this interpretation
on the Company’s financial statements.
iFRs 15 – “Revenue from Contracts with Customers” (iFRs 15)
In May 2014, the IAsB issued Ifrs 15, “Revenue from Contracts with Customers”. Ifrs 15 specifies how and when to recognize
revenue as well as requiring entities to provide users of financial statements with more informative, relevant disclosures. The
standard supersedes IAs 18, “Revenue”, IAs 11, “Construction Contracts”, and a number of revenue-related interpretations.
Application of the standard is mandatory for all Ifrs reporters and it applies to nearly all contracts with customers: the main
exceptions are leases, financial instruments and insurance contracts. Ifrs 15 must be applied in an entity’s first annual Ifrs
financial statements for periods beginning on or after January 1, 2017. Application of the standard is mandatory and early adoption
is permitted. The Company has not yet determined the impact of the amendments on the Company’s financial statements.
note 05
summary of significant accounting policies
Business ComBinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, measured at acquisition date fair value, and the amount of any non-controlling interest in the
acquiree. for each business combination, the Company elects whether to measure the non-controlling interest in the acquiree at
fair value or at the proportionate share of the fair value of the acquiree’s identifiable net assets. Acquisition costs are expensed
as incurred.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under Ifrs 3,
“Business Combinations”, are recognized at their fair value at the acquisition date except for non-current assets (or disposal groups)
that are classified as held for sale in accordance with Ifrs 5, “Non-current Assets Held for Sale and Discontinued Operations”, which
are recognized and measured at fVLCs.
Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date at the best
estimate of such amount. subsequent changes in the fair value of the contingent consideration that are deemed to be a liability
are recognized in the statements of operations.
Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the consideration
transferred over the fair value of the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the difference is recognized in the statements of operations.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. for the purpose of impairment
testing, goodwill acquired in each of the business combinations is, from the acquisition date, allocated to each of the Company’s
cash-generating units that are expected to benefit from the corresponding combinations, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
tRanslation oF FoReign CuRRenCy tRansaCtions and FoReign suBsidiaRies
The Company’s consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional
currency. Each subsidiary of the Company determines its own functional currency, and items included in the financial statements
of each subsidiary are measured using that functional currency.
transactions and balances
Transactions in foreign currencies are initially recorded by the Company and its subsidiaries at their respective functional currencies
using exchange rates prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated by the Company and its subsidiaries into
their respective functional currencies at the exchange rate in effect at the reporting date. All differences upon translation are
recognized in the consolidated statements of operations.
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NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
Non-monetary assets and liabilities denominated in foreign currencies are translated by the Company and its subsidiaries into
their respective functional currencies at historical rates. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates in effect at the date when the fair value is determined.
translation of foreign subsidiaries
Assets and liabilities of foreign subsidiaries with a functional currency other than the Canadian dollar are translated into Canadian
dollars at rates prevailing at the reporting date, and income and expenses are translated at average exchange rates prevailing
during the period. Unrealized gains or losses arising as a result of the translation of the foreign subsidiaries are recorded in
accumulated other comprehensive income (loss). On disposal of a foreign operation, the component of other comprehensive
income relating to that particular foreign operation is recognized in the consolidated statements of operations.
The Company also has monetary assets and liabilities that are receivable or payable from a foreign operation. If settlement of
the receivable or payable is neither planned nor likely to occur in the foreseeable future, the differences upon translation are
recognized in accumulated other comprehensive income (loss) as these receivables and payables form part of the net investment
in the foreign operation.
intangiBle assets
Identifiable intangible assets acquired separately are measured on initial recognition at cost. The cost of identifiable intangible
assets acquired in a business combination is equal to their fair value as at the date of acquisition. following initial recognition,
identifiable intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. The
amortization of intangible assets is recognized in the consolidated statements of operations as part of amortization expense.
The useful lives of identifiable intangible assets are assessed to be either finite or indefinite. Identifiable intangible assets with
finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the
identifiable intangible asset may be impaired. The amortization period and the amortization method for an identifiable intangible
asset are reviewed at least annually, at each financial year end.
Identifiable intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually.
Identifiable intangible assets purchased through the acquisitions of Genuity Capital Markets (Genuity), the 50% interest in
Canaccord Genuity (Australia) Limited (Canaccord Genuity Australia), Collins stewart Hawkpoint plc (CsHP), and Eden financial are
brand names, customer relationships, non-competition agreements, trading licences and technology, which have finite lives and
are amortized on a straight-line basis over their estimated useful lives. The estimated amortization periods of these amortizable
intangible assets are as follows:
Brand names
Customer relationships
Non-competition agreements
Trading licences
Technology
indefinite
11 years
5 years
n/a
n/a
Canaccord Genuity
Australia
Genuity
CsHP
n/a
n/a
5 years
8 to 24 years
4.5 years
indefinite
n/a
n/a
n/a
3 years
Eden
financial
n/a
8 years
n/a
n/a
n/a
Trading licences acquired through the acquisition of the 50% interest in Canaccord Genuity Australia are considered to have an
indefinite life as they are expected to provide benefit to the Company over a continuous period. Branding acquired through the
acquisition of Genuity is considered to have an indefinite life, as it will provide benefit to the Company over a continuous period.
technology development costs
Technology development expenditures on an individual project are recognized as an intangible asset when the Company can
demonstrate that the technical feasibility of the asset for use has been established. The asset is carried at cost less any
accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete
and the asset is available for use. The asset is amortized over the period of expected future benefit.
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CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
impaiRment oF non-FinanCial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An
asset’s recoverable amount is the higher of the fVLCs and the value-in-use of a particular asset or CGU. The recoverable amount
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount, and recognized in the consolidated statements of operations.
In assessing fVLCs, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. The Company bases its
impairment calculation on annual budget calculations, which are prepared separately for each of the Company’s CGUs to which the
individual assets are allocated. These budget calculations generally cover a period of five years. A long term growth rate is then
calculated and applied to project future cash flows after the fifth year.
Impairment losses are recognized in the consolidated statements of operations.
for assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates
the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in
the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal
is limited so that the carrying amount of the asset does not exceed its recoverable amount, or exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. such
reversal is recognized in the consolidated statements of operations.
The following assets have specific characteristics for impairment testing:
goodwill
Goodwill is tested for impairment annually as at March 31 and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which goodwill
relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment
losses relating to goodwill cannot be reversed in future periods.
intangible assets
Intangible assets with indefinite useful lives are tested for impairment annually as at March 31 at the CGU level and when
circumstances indicate that the carrying value may be impaired.
Cash and Cash eQuivalents
Cash and cash equivalents consist of cash on deposit, commercial paper and bankers’ acceptances with a term to maturity of
less than three months from the date of purchase.
FinanCial instRuments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
[i] Financial assets
Initial recognition and measurement
financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables,
held to maturity investments or available for sale financial assets, as applicable.
financial assets are recognized when the entity becomes a party to the contractual provisions of the instrument. for financial
assets, trade date accounting is applied, the trade date being the date at which the Company commits itself to either the
purchase or sale of the asset.
All financial assets are initially measured at fair value. Transaction costs related to financial instruments classified as fair value
through profit or loss are recognized in the consolidated statements of operations when incurred. Transaction costs for all financial
instruments other than those classified as fair value through profit or loss are included in the costs of the assets.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 75
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
Classification and subsequent measurement
Financial assets classified as fair value through profit or loss
financial assets classified as fair value through profit or loss include financial assets held for trading and financial assets
designated upon initial recognition as fair value through profit or loss. financial assets purchased for trading activities are classified
as held for trading and are measured at fair value, with unrealized gains (losses) recognized in the consolidated statements of
operations. In addition, provided that the fair value can be reliably determined, IAs 39 permits an entity to designate any financial
instrument as fair value through profit or loss on initial recognition or adoption of this standard even if that instrument would
not otherwise meet the definition of fair value through profit or loss as specified in IAs 39. The Company did not designate any
financial assets upon initial recognition as fair value through profit or loss. The Company’s financial assets classified as held for
trading include cash and cash equivalents, and securities owned, including derivative financial instruments.
The Company periodically evaluates the classification of its financial assets as held for trading based on whether the intent to
sell the financial assets in the near term is still appropriate. If the Company is unable to trade these financial assets due to
inactive markets or if management’s intent to sell them in the foreseeable future significantly changes, the Company may elect to
reclassify these financial assets in rare circumstances.
Financial assets classified as available for sale
Available for sale assets are measured at fair value, with subsequent changes in fair value recorded in other comprehensive
income, net of tax, until the assets are sold or impaired, at which time the difference is recognized in net income for the year.
Investments in equity instruments classified as available for sale that do not have a quoted market price in an active market are
measured at fair value unless fair value is not reliably measurable. The Company’s investments in Euroclear and Canadian first
financial Holdings Limited are classified as available for sale and measured at their estimated fair value.
Financial assets classified as loans and receivables and held to maturity
financial assets classified as loans and receivables and held to maturity are measured at amortized cost using the effective
interest rate method (EIr), less impairment. Amortized cost is calculated by taking into account discount or premium on
acquisition and fees or costs that are an integral part of the EIr. The EIr amortization is included in the consolidated statements
of operations. The Company classifies accounts receivable as loans and receivables. The Company did not have any held to
maturity investments during the years ended March 31, 2014 and 2013.
Impairment of financial assets
The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or group of financial assets is deemed to be impaired if there is objective evidence of
impairment as a result of one or more events that have occurred since the initial recognition of the asset and those events have
had an impact on the estimated future cash flows of the asset that can be reliably estimated.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is recognized in the consolidated
statements of operations and is measured as the difference between the carrying value and the fair value.
Derecognition
A financial asset is derecognized primarily when the rights to receive cash flows from the asset have expired, or the Company has
transferred its right to receive cash flows from the asset.
[ii] Financial liabilities
Initial recognition and measurement
financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, or loans and
borrowings. All financial liabilities are recognized initially at fair value less, in the case of other financial liabilities, directly attributable
transaction costs.
Classification and subsequent measurement
Financial liabilities classified as fair value through profit and loss
financial liabilities classified as fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as fair value through profit or loss. financial liabilities are classified as held for trading if they are
acquired for the purpose of selling in the near term. Gains or losses on liabilities held for trading are recognized in the statements
of operations. The Company has not designated any financial liabilities as fair value through profit or loss that would not otherwise
meet the definition of fair value through profit or loss upon initial recognition. Bank indebtedness, contingent consideration and
securities sold short, including derivative financial instruments, are classified as held for trading and recognized at fair value.
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CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
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Financial liabilities classified as loans and borrowings
After initial recognition, financial liabilities classified as loans and borrowings are subsequently measured at amortized cost
using the EIr method. Gains and losses are recognized in the statements of operations through the EIr method of amortization.
Loans and borrowings include accounts payable and accrued liabilities, and subordinated debt. The carrying value of loans and
borrowings approximates their fair value.
[iii] offsetting of financial instruments
financial assets and financial liabilities are offset and the net amount is reported in the consolidated statements of financial
position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to
settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
[iv] derivative financial instruments
Derivative financial instruments are financial contracts, the value of which is derived from the value of the underlying assets,
interest rates, indices or currency exchange rates.
The Company uses derivative financial instruments to manage foreign exchange risk on pending security settlements in foreign
currencies. The fair value of these contracts is nominal due to their short term to maturity. realized and unrealized gains and
losses related to these contracts are recognized in the consolidated statements of operations during the reporting period.
The Company trades in futures contracts, which are agreements to buy or sell standardized amounts of a financial instrument at
a predetermined future date and price, in accordance with terms specified by a regulated futures exchange, and subject to daily
cash margining. The Company trades in futures in an attempt to mitigate interest rate risk, yield curve risk and liquidity risk.
The Company also trades in forward contracts, which are non-standardized contracts to buy or sell a financial instrument at a
specified price on a future date. The Company trades in forward contracts in an attempt to mitigate foreign exchange risk on
pending security settlements in foreign currencies.
FaiR value measuRement
The Company measures financial instruments at fair value at each reporting period. fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The
fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability, or, in the absence of a principal market, in the most advantageous market
for the asset or liability.
When available, quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions),
without any deduction for transaction costs are used to determine fair value. for financial instruments not traded in an active
market, the fair value is determined using appropriate and reliable valuation techniques. such techniques may include recent
arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same;
discounted cash flow analysis or other valuation models. Valuation techniques may require the use of estimates or management
assumptions if observable market data is not available. When the fair value cannot be reliably measured using a valuation
technique, then the financial instrument is measured at cost.
The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs
used by the Company’s valuations techniques. A level is assigned to each fair value measured based on the lowest level
input significant to the fair value measurement in its entirety [see Note 7]. for assets and liabilities that are recognized in the
consolidated financial statements on a recurring basis, the Company determines whether transfers have occurred between levels
in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period.
seCuRities owned and sold shoRt
securities owned and sold short are recorded at fair value based on quoted market prices in an active market or a valuation
model if no market prices are available. Unrealized gains and losses are reflected in income. Certain securities owned have been
pledged as collateral for securities borrowing transactions. securities owned and sold short are classified as held-for-trading
financial instruments.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 77
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
seCuRities lending and BoRRowing
The Company employs securities lending and borrowing activities primarily to facilitate the securities settlement process. These
arrangements are typically short term in nature, with interest being received when cash is delivered and interest being paid when
cash is received. securities borrowed and securities loaned are carried at the amounts of cash collateral delivered and received
in connection with the transactions. securities borrowed transactions require the Company to deposit cash, letters of credit or
other collateral with the lender. for securities loaned, the Company receives collateral in the form of cash or other collateral in an
amount generally in excess of the market value of the securities loaned. The Company monitors the fair value of the securities
loaned and borrowed against the cash collateral on a daily basis and, when appropriate, the Company may require counterparties
to deposit additional collateral or it may return collateral pledged to ensure such transactions are adequately collateralized.
securities purchased under agreements to resell and securities sold under agreements to repurchase represent collateralized
financing transactions. The Company receives securities purchased under agreements to resell, makes delivery of securities sold
under agreements to repurchase, monitors the market value of these securities on a daily basis and delivers or obtains additional
collateral as appropriate.
The Company manages its credit exposure by establishing and monitoring aggregate limits by customer for these transactions.
Interest earned on cash collateral is based on a floating rate.
Revenue ReCognition
revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can
be reliably measured. The Company assesses its revenue arrangements in order to determine if it is acting as principal or agent.
Commission and fees revenue consists of revenue generated through commission-based brokerage services, recognized on a trade
date basis, and the sale of fee-based products and services, recognized on an accrual basis. realized and unrealized gains and
losses on securities purchased for client-related transactions are reported as net facilitation losses and recorded as a reduction of
commission revenues. facilitation losses for the year ended March 31, 2014 were $14.8 million [March 31, 2013 – $15.4 million].
Investment banking revenue consists of underwriting fees and commissions earned on corporate finance activities. revenue
from underwritings and other corporate finance activities is recorded when the underlying transaction is completed under the
engagement terms and the related revenue is reasonably determinable.
Advisory fees consist of management and advisory fees that are recognized on an accrual basis. Also included in advisory fees
is revenue from mergers and acquisitions activities, which is recognized when the underlying transaction is completed under the
engagement terms and the related revenue is reasonably determinable.
Principal trading revenue consists of revenue earned in connection with principal trading operations and is recognized on a trade
date basis.
Interest revenue consists of interest earned on client margin accounts, interest earned on the Company’s cash and cash
equivalents balances, interest earned on cash delivered in support of securities borrowing activity, and dividends earned on
securities owned. Interest revenue is recognized on an effective interest rate basis. Dividend income is recognized when the right
to receive payment is established.
Other revenue includes foreign exchange gains or losses, revenue earned from our correspondent brokerage services and
administrative fees revenues.
eQuipment and leasehold impRovements
Computer equipment, furniture and equipment, and leasehold improvements are recorded at cost less accumulated amortization.
Amortization is being recorded as follows:
Computer equipment
furniture and equipment
Leasehold improvements
33% declining balance basis
10% to 20% declining balance basis
straight-line over the shorter of useful life and respective term of the leases
An item of property, plant and equipment, and any specific part initially recognized, is derecognized upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
consolidated statements of operations when the asset is derecognized.
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The assets’ residual values, useful lives and method of amortization are reviewed at each financial year end, and are adjusted
prospectively where appropriate.
inCome taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively
enacted, at the reporting date, in the countries where the Company operates and generates taxable income.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations
are subject to interpretation and establishes provisions where appropriate.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statements
of operations.
deferred tax
Deferred taxes are accounted for using the liability method. This method requires that deferred taxes reflect the expected deferred
tax effect of temporary differences at the reporting date between the carrying amounts of assets and liabilities for financial
statement purposes and their tax bases.
Deferred tax liabilities are recognized for all taxable temporary differences, except for taxable temporary differences associated
with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and carryforward
of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carryforward of unused tax credits and unused tax losses, can be utilized. The carrying amounts of deferred
tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are assessed at
each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred
tax asset to be recovered.
No deferred tax liability has been recognized for taxable temporary differences associated with investments in subsidiaries from
undistributed profits and foreign exchange translation differences as the Company is able to control the timing of the reversal
of these temporary differences. The Company has no plans or intention to perform any actions that will cause the temporary
differences to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the reporting period. Deferred tax is charged or credited in the statements of operations except where it relates to items that may
be credited directly to equity, in which case the deferred tax is recognized directly against equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation
authority on the same taxable entity.
sales tax
revenues, expenses and assets are recognized net of the amount of sales tax, except where the amount of sales tax incurred
is not recoverable from the tax authority. In these circumstances, sales tax is recognized as part of the cost of acquisition of the
asset or as part of an item of the expense. The net amount of sales tax recoverable from, or payable to, the taxation authority is
included as part of accounts receivable or accounts payable in the consolidated statements of financial position.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 79
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
tReasuRy shaRes
The Company’s own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. This
includes shares held in our long-term incentive plan and unvested share purchase loans and preferred shares. No gain or loss is
recognized in the statements of operations in the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Any difference between the carrying amount and the consideration, if reissued, is recognized in contributed surplus. Voting rights
related to treasury shares are nullified for the Company and no dividends are allocated to them.
eaRnings peR Common shaRe
Basic earnings per common share is computed by dividing the net income attributable to common shareholders for the period by
the weighted average number of common shares outstanding. Diluted earnings per common share reflects the dilutive effect in
connection with the long-term incentive plan (LTIP) and other share-based payment plans based on the treasury stock method.
The treasury stock method determines the number of incremental common shares by assuming that the number of shares the
Company has granted to employees has been issued.
shaRe-Based payments
Employees (including senior executives and directors) of the Company receive remuneration in the form of share-based
payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Independent directors also receive deferred share units (DsUs) as part of their remuneration, which can only be settled in cash
(cash-settled transactions). The dilutive effect, if any, of outstanding options and share-based payments is reflected as additional
share dilution in the computation of diluted earnings per common share.
equity-settled transactions
for equity-settled transactions, the Company measures the fair value of share-based awards as of the grant date and recognizes
the cost as an expense over the applicable vesting period with a corresponding increase in contributed surplus. The cost is
recognized on a graded basis.
The Company estimates the number of equity instruments that will ultimately vest when calculating the expense attributable to
equity-settled transactions. No expense is recognized for awards that do not ultimately vest.
When share-based awards vest, contributed surplus is reduced by the applicable amount and share capital is increased by the
same amount.
Cash-settled transactions
The cost of cash-settled transactions is measured initially at fair value at the grant date. The fair values of DsUs are expensed
upon grant, as there are no vesting conditions [Note 19]. The liability is remeasured to fair value at each reporting date up to and
including the settlement date, with changes in fair value recognized through the statements of operations.
pRovisions
Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. The expense relating to any provision is presented in the statements of operations net of any
reimbursement. If the effect of the time value of money is significant, provisions are discounted using a current pre-tax rate that
reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognized as an interest expense.
80
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
legal provisions
Legal provisions are recognized when it is probable that the Company will be liable for the future obligation as a result of a past
event related to legal settlements or litigations.
Restructuring provisions
restructuring provisions are only recognized when the recognition criteria for provisions are fulfilled. In order for the recognition
criteria to be met, the Company needs to have in place a detailed formal plan about the business or part of the business
concerned, the location and number of employees affected, a detailed estimate of associated costs and an appropriate timeline.
In addition, either the personnel affected must have a valid expectation that the restructuring is being carried out or the
implementation must have been initiated. The restructuring provision recognized includes staff restructuring costs, reorganization
expenses, onerous lease provisions and impairment of equipment and leasehold improvements.
leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception
date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys
a right to use the asset, even if that right is not explicitly specified in an arrangement. The Company has assessed its lease
arrangements and concluded that the Company only has leases that have the characteristics of an operating lease. An operating
lease is a lease that does not transfer substantially all of the risks and benefits and ownership of an asset to the lessee. Operating
lease payments are recognized as an expense in the statements of operations on a straight-line basis over the lease term.
Client money
The Company’s UK and Europe operations hold money on behalf of its clients in accordance with the client money rules of the
financial Conduct Authority in the United Kingdom. such money and the corresponding liabilities to clients are not included in the
consolidated statements of financial position as the Company is not beneficially entitled thereto. The amounts held on behalf of
clients at the reporting date are included in Note 23.
segment RepoRting
The Company’s segment reporting is based on the following operating segments: Canaccord Genuity, Canaccord Genuity Wealth
Management and Corporate and Other. The Company’s business operations are grouped into the following geographic regions:
Canada, the UK and Europe, Other foreign Locations, and the Us.
note 06
securities owned and securities sold short
Corporate and government debt
Equities and convertible debentures
march 31, 2014
March 31, 2013
securities
owned
securities
sold short
securities
owned
securities
sold short
$
924,149 $
823,148
$
753,256
$
617,841
219,052
90,765
171,081
71,179
$
1,143,201 $
913,913
$
924,337
$
689,020
As at March 31, 2014, corporate and government debt maturities range from 2014 to 2097 [March 31, 2013 – 2013 to 2097]
and bear interest ranging from 0.00% to 15.00% [March 31, 2013 – 0.00% to 15.00%].
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 81
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
note 07
Financial instruments
CategoRies oF FinanCial instRuments
The categories of financial instruments, other than cash and cash equivalents and bank indebtedness, held by the Company at
March 31, 2014 are as follows:
Held for
trading
Available
for sale
Loans and
receivables
Loans and
borrowings
Total
Financial assets
securities owned
$ 1,143,201
$
Accounts receivable from brokers and investment dealers
Accounts receivable from clients
rrsP cash balances held in trust
Other accounts receivable
Investments
total financial assets
Financial liabilities
securities sold short
Accounts payable to brokers and investment dealers
Accounts payable to clients
Other accounts payable and accrued liabilities
subordinated debt
total financial liabilities
—
—
—
—
—
—
—
—
—
—
9,977
$
—
$
2,006,183
418,799
259,614
101,302
—
$ 1,143,201
$
9,977
$ 2,785,898
$
—
—
—
—
—
—
—
$ 1,143,201
2,006,183
418,799
259,614
101,302
9,977
$ 3,939,076
$
913,913
$
—
—
—
—
$
913,913
$
—
—
—
—
—
—
$
$
—
—
—
—
—
—
$
—
$
913,913
1,659,617
1,659,617
965,229
253,087
15,000
965,229
253,087
15,000
$ 2,892,933
$ 3,806,846
The Company has not designated any financial instruments as fair value through profit or loss upon initial recognition.
FaiR value hieRaRChy
All financial instruments for which fair value is recognized or disclosed are categorized within a fair value hierarchy, described as
follows, and based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 – Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities
Level 2 – Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable)
Level 3 – Valuation techniques (for which the lowest level input that is significant to the fair value measurement
is unobservable)
82
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
for financial instruments that are recognized at fair value on a recurring basis, the Company determines whether transfers have
occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each reporting period.
As at March 31, 2014, the Company held the following classes of financial instruments measured at fair value:
securities owned
Corporate debt
Government debt
Corporate and government debt
Equities
Convertible debentures
Private investments
equities and convertible debentures
securities sold short
Corporate debt
Government debt
Corporate and government debt
Equities
march 31, 2014
estimated fair value
march 31, 2014
level 2
level 1
$
41,181
$
—
$
41,181
$
882,968
924,149
201,666
5,501
11,885
219,052
1,143,201
(31,017)
(792,131)
(823,148)
(90,765)
357,917
357,917
175,228
—
—
175,228
533,145
—
(366,894)
(366,894)
(83,166)
525,051
566,232
26,125
2,801
—
28,926
595,158
(31,017)
(425,237)
(456,254)
(7,599)
(913,913)
(450,060)
(463,853)
level 3
—
—
—
313
2,700
11,885
14,898
14,898
—
—
—
—
—
available for sale investments
9,977
—
4,247
5,730
March 31, 2013
March 31, 2013
Level 2
Level 1
Level 3
Estimated fair value
securities owned
Corporate debt
Government debt
Corporate and government debt
Equities
Convertible debentures
Private investments
$
50,873
$
—
$
50,873
$
702,383
258,188
444,195
753,256
258,188
495,068
151,685
135,758
14,759
5,304
14,092
5,304
—
—
—
equities and convertible debentures
171,081
141,062
14,759
—
—
—
1,168
—
14,092
15,260
15,260
—
—
—
—
—
924,337
399,250
509,827
(27,895)
—
(27,895)
(589,946)
(218,756)
(371,190)
(617,841)
(218,756)
(399,085)
(71,179)
(70,484)
(695)
(689,020)
(289,240)
(399,780)
3,695
(14,218)
—
—
—
—
3,695
(14,218)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 83
securities sold short
Corporate debt
Government debt
Corporate and government debt
Equities
available for sale investments
Contingent consideration
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
movement in net level 3 financial assets
March 31, 2013
Purchases of Level 3 assets during the year
Transfer to Level 1 assets
Transfer to Level 2 assets
Transfer from Level 2 to Level 3 assets
Net unrealized loss during the year
reversal of contingent consideration
Payment of contingent consideration
Other
realized loss in settlement of contingent consideration
Net disposals during the year
march 31, 2014
$
4,737
14,943
(8,339)
(3,695)
2,700
(4,026)
6,000
8,218
251
(126)
(35)
$
20,628
During the fiscal year ended March 31, 2014, there was $8.3 million of Level 3 assets that were transferred to Level 1 as a result
of a private company stock that became publicly traded in the UK. In addition, the Company’s equity investment in Euroclear was
transferred from Level 3 to Level 2 as the basis for determining the fair value has changed to a market-based approach. There
was a transfer of $2.7 million of assets from Level 2 to Level 3 as the valuation methodology used to determine the fair value
utilized an unobservable discount factor. There were no transfers between Level 1 and Level 2 fair value measurements. Of the
total fair value net unrealized loss recognized during the year, $3.3 million was included as a facilitation loss, which reduced
commissions and fees revenue, and the remaining balance was recognized through principal trading revenue.
Fair value estimation
Level 2 financial instruments
i.
Level 2 financial instruments include the Company’s investment in certain corporate and government debt, convertible debt,
and over-the-counter equities. The fair values of corporate and government debt, and convertible debt classified as Level 2 are
determined using the quoted market prices of identical assets or liabilities in markets that do not have transactions which take
place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company regularly reviews the
transaction frequency and volume of trading in these instruments to determine the accuracy of pricing information.
ii.
Available for sale investments
Available for sale investments include the Company’s equity investment in Euroclear, which has an estimated fair value of
$4.2 million as at March 31, 2014 [March 31, 2013 – $3.7 million]. The current fair value is determined using a market-based
approach based on recent share buyback transactions. Previously, the fair value for the Euroclear investment was determined
using the carrying value of net assets as there was no other observable market data available. However, due to the recent share
buyback transaction, the market-based approach was deemed more reliable.
Available for sale investments also include the Company’s equity and debenture investment in Canadian first financial Holdings
Limited (Canadian first), which has an estimated fair value of $5.7 million as at March 31, 2014 [Note 10]. The fair value for
Canadian first is determined by the Company using a market-based approach with information that the Company has determined
to be reliable, and represents the best estimate of fair value readily available. In the absence of any market indicators, the
historical cost basis was used.
Private investments held for trading
iii.
The fair value for private investments classified as held for trading is determined by the Company using a market-based approach
with information that the Company has determined to be reliable, and represents the best estimate of fair value readily available.
Prices for private investments are determined based on the last trade price or offer price, or, if these prices are considered stale,
the Company obtains information based on certain inquiries, recent trades or pending new issues. The fair value of the private
investments as at March 31, 2014 was $11.9 million [March 31, 2013 – $14.1 million].
The fair value measurements determined as described above may not be indicative of net realizable value or reflective of future
values. furthermore, the Company believes its valuation methods are appropriate and consistent with those which would be
utilized by a market participant.
84
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
Contingent considerations
iv.
The Company recognized contingent considerations as a result of its acquisitions of Eden financial Ltd. and certain assets and
liabilities of Kenosis Capital Partners. As of March 31, 2014, the contingent consideration related to the acquisition of certain
assets and liabilities of Kenosis Capital Partners was nil [March 31, 2013 – $6.0 million] as performance targets were not met and
the accrual for the contingent consideration was reversed. During the year ended March 31, 2014, the Company paid $9.1 million
in contingent consideration as a result of its acquisition of Eden financial Ltd., of which $8.9 million was previously accrued.
Risk management
Credit risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. Credit risk arises from cash
and cash equivalents, net receivables from clients and brokers and investment dealers, and other accounts receivable. The maximum
exposure of the Company to credit risk before taking into account any collateral held or other credit enhancements is the carrying
amount of financial assets as disclosed in the consolidated financial statements as at March 31, 2014 and 2013.
The primary source of credit risk to the Company is in connection with trading activity by private clients and private client margin
accounts. To minimize its exposure, the Company applies certain credit standards, applies limits to transactions and requires
settlement of securities transactions on a cash basis or delivery against payment. Margin transactions are collateralized by
securities in the clients’ accounts in accordance with limits established by the applicable regulatory authorities and are subject to
the Company’s credit review and daily monitoring procedures. Management monitors the collectibility of receivables and estimates
an allowance for doubtful accounts. The accounts receivable outstanding are expected to be collectible within one year. The Company
has recorded an allowance for doubtful accounts of $13.2 million as at March 31, 2014 [March 31, 2013 – $14.0 million] [Note 9].
The Company is also exposed to the risk that counterparties to transactions will not fulfill their obligations. Counterparties primarily
include investment dealers, clearing agencies, banks and other financial institutions. The Company does not rely entirely on
ratings assigned by credit rating agencies in evaluating counterparty risk. The Company mitigates credit risk by performing its own
due diligence assessments on the counterparties, obtaining and analyzing information regarding the structure of the financial
instruments, and keeping current with new innovations in the market. The Company also manages this risk by conducting regular
credit reviews to assess creditworthiness, reviewing security and loan concentrations, holding and marking to market collateral on
certain transactions and conducting business through clearing organizations with performance guarantees.
As at March 31, 2014 and 2013, the Company’s most significant counterparty concentrations were with financial institutions
and institutional clients. Management believes that they are in the normal course of business and does not anticipate loss for
non-performance.
liquidity risk
Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its obligations as they become due. The
Company’s management is responsible for reviewing liquidity resources to ensure funds are readily available to meet its financial
obligations as they become due, as well as ensuring adequate funds exist to support business strategies and operational growth.
The Company’s business requires capital for operating and regulatory purposes. The current assets reflected on the statements
of financial position are highly liquid. The majority of the positions held as securities owned are readily marketable and all are
recorded at their fair value. Client receivables are generally collateralized by readily marketable securities and are reviewed daily
for impairment in value and collectibility. receivables and payables from brokers and dealers represent the following: current open
transactions that generally settle within the normal three-day settlement cycle; collateralized securities borrowed and/or loaned
in transactions that can be closed within a few days on demand; and balances on behalf of introducing brokers representing net
balances in connection with their client accounts. Additional information regarding the Company’s capital structure and capital
management objectives is discussed in Note 22.
The following table presents the contractual terms to maturity of the financial liabilities owed by the Company as at March 31, 2014:
financial liability
Accounts payable and accrued liabilities
securities sold short
subordinated debt
subject to Investment Industry regulatory Organization of Canada’s approval.
(1)
Carrying amount
Contractual term to maturity
$ 2,877,933
913,913
15,000
Due within one year
Due within one year
Due on demand(1)
The fair values for accounts payable and accrued liabilities approximate their carrying values and will be paid within 12 months.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 85
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
market risk
Market risk is the risk that the fair value of financial instruments will fluctuate because of changes in market prices. The Company
separates market risk into three categories: fair value risk, interest rate risk and foreign exchange risk.
Fair value risk
When participating in underwriting activities, the Company may incur losses if it is unable to resell the securities it is committed to
purchase or if it is forced to liquidate its commitment at less than the agreed upon purchase price. The Company is also exposed
to fair value risk as a result of its principal trading activities in equity securities, fixed income securities, and derivative financial
instruments. securities at fair value are valued based on quoted market prices where available and, as such, changes in fair value
affect earnings as they occur. fair value risk also arises from the possibility that changes in market prices will affect the value
of the securities the Company holds as collateral for client margin accounts. The Company mitigates its fair value risk exposure
through controls to limit concentration levels and capital usage within its inventory trading accounts, as well as through monitoring
procedures of the margin accounts.
The following table summarizes the effect on earnings as a result of a fair value change in financial instruments as at March 31,
2014. This analysis assumes all other variables remain constant. The methodology used to calculate the fair value sensitivity is
consistent with the prior year.
Carrying value
financial instrument
asset (liability)
Equities and convertible
march 31, 2014
March 31, 2013
effect of a
10% increase
in fair value on
net income
effect of a
10% decrease
in fair value on
net income
Carrying value
Asset (Liability)
Effect of a
10% increase
in fair value on
net income
Effect of a
10% decrease
in fair value on
net income
debentures owned
$
219,052
$
8,593
$
(8,593) $
171,081
$
5,425
$
(5,425)
Equities and convertible
debentures sold short
(90,765)
(3,560)
3,560
(71,179)
(2,257)
2,257
The following table summarizes the effect on OCI as a result of a fair value change in the financial instruments classified
as available for sale. This analysis assumes all other variables remain constant and there is no permanent impairment. The
methodology used to calculate the fair value sensitivity is consistent with the prior year.
financial instrument
Carrying value
march 31, 2014
March 31, 2013
effect of a
10% increase
in fair value
on other
comprehensive
income
effect of a
10% decrease
in fair value
on other
comprehensive
income
Effect of a
10% increase
in fair value
on other
comprehensive
income
Effect of a
10% decrease
in fair value
on other
comprehensive
income
Carrying value
Investments
$
9,977
$
712
$
(712) $
3,695
$
195
$
(195)
interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect the fair value or future cash flows of financial
instruments held by the Company. The Company incurs interest rate risk on its cash and cash equivalent balances, bank
indebtedness, short term credit facility, fixed income portion of securities owned and securities sold short, net clients’ balances,
and net brokers’ and investment dealers’ balances, as well as its subordinated debt. The Company attempts to minimize and
monitor its exposure to interest rate risk through quantitative analysis of its net positions of fixed income securities, clients’
balances, securities lending and borrowing activities, and short term borrowings. The Company also trades in futures in an
attempt to mitigate interest rate risk. futures are included in marketable securities owned, net of marketable securities sold
short, for the purpose of calculating interest rate sensitivity.
All cash and cash equivalents mature within three months. Net clients’ receivable (payable) balances charge (incur) interest based
on floating interest rates. subordinated debt bears interest at a rate of prime plus 4%, payable monthly. The short term credit
facility bears interest based on a prime-linked rate payable monthly.
86
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
The following table provides the effect on net income (loss) for the years ended March 31, 2014 and 2013 if interest rates
had increased or decreased by 100 basis points applied to balances as of March 31, 2014 and 2013. fluctuations in interest
rates do not have an effect on OCI. This sensitivity analysis assumes all other variables are constant. The methodology used to
calculate the interest rate sensitivity is consistent with the prior year.
march 31, 2014
March 31, 2013
Carrying value
asset (liability)
net income
effect of a
100 bps
increase in
interest rates
net income
effect of a
100 bps
decrease in
Carrying value
interest rates(1) Asset (Liability)
Net income
effect of a
100 bps
increase in
interest rates
Net income
effect of a
100 bps
decrease in
interest rates(1)
Cash and cash equivalents,
net of bank indebtedness
$
364,296 $
2,470
$
(2,470) $
424,874
$
2,430
$
(2,582)
Marketable securities owned, net of
marketable securities sold short
Clients’ payable, net
rrsP cash balances held in trust
Brokers’ and investment dealers’
balance, net
subordinated debt
subject to a floor of zero.
(1)
Foreign exchange risk
229,288
(546,430)
259,614
346,566
(15,000)
(872)
(3,888)
1,852
(47)
(107)
959
(2,082)
(1,852)
235,317
(695,733)
327,173
2
107
299,985
(15,000)
(2,154)
(4,043)
1,886
(300)
(87)
2,654
(1,205)
(1,886)
15
87
foreign exchange risk arises from the possibility that changes in foreign currency exchange rates will result in losses. The
Company’s primary foreign exchange risk results from its investment in its Us, Australia, and UK and Europe subsidiaries. These
subsidiaries are translated using the foreign exchange rate at the reporting date. Any fluctuation in the Canadian dollar against
the Us dollar, the pound sterling, or the Australian dollar will result in a change in the unrealized gains (losses) on translation of
foreign operations recognized in accumulated other comprehensive income (loss).
All of the subsidiaries may also hold financial instruments in currencies other than their functional currency; therefore, any
fluctuations in foreign exchange rates will impact foreign exchange gains or losses.
The following table summarizes the effects on net income (loss) and OCI as a result of a 10% change in the value of the foreign
currencies where there is significant exposure. The analysis assumes all other variables remain constant. The methodology used
to calculate the foreign exchange rate sensitivity is consistent with the prior year.
As at March 31, 2014:
Currency
Us dollar
Pound sterling
Australian dollar
As at March 31, 2013:
Currency
Us dollar
Pound sterling
Australian dollar
effect of a
5% appreciation
in foreign
exchange rate
on net income
effect of a
5% depreciation
in foreign
exchange rate
on net income
effect of a
5% appreciation
in foreign
exchange rate
on oCi
effect of a
5% depreciation
in foreign
exchange rate
on oCi
$
(913) $
913
$
5,485
$
(5,485)
(2,891)
nil
2,891
nil
50,093
2,754
(50,093)
(2,754)
Effect of a
5% appreciation
in foreign
exchange rate
on net income
Effect of a
5% depreciation
in foreign
exchange rate
on net income
Effect of a
5% appreciation
in foreign
exchange rate
on OCI
Effect of a
5% depreciation
in foreign
exchange rate
on OCI
$
(1,023) $
1,023
$
5,526
$
(5,526)
(2,238)
nil
2,238
nil
31,756
4,361
(31,756)
(4,361)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 87
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
deRivative FinanCial instRuments
Derivative financial instruments are financial contracts, the value of which is derived from the value of the underlying assets,
interest rates, indices or currency exchange rates. All derivative financial instruments are expected to be settled within six months
subsequent to fiscal year end.
Foreign exchange forward contracts
The Company uses derivative financial instruments to manage foreign exchange risk on pending security settlements in foreign
currencies. The fair value of these contracts is nominal due to their short term to maturity. realized and unrealized gains and
losses related to these contracts are recognized in the consolidated statements of operations during the reporting period.
forward contracts outstanding at March 31, 2014:
To sell Us dollars
To buy Us dollars
forward contracts outstanding at March 31, 2013:
notional amounts
(millions of usd)
average price
(Cad/usd)
maturity
Fair value
$
13.8 $
5.5
1.11
1.10
april 3, 2014
$
april 1, 2014
11
13
To sell Us dollars
To buy Us dollars
Notional amounts
(millions of UsD)
Average price
(CAD/UsD)
Maturity
fair value
$
14.8 $
3.8
1.02
1.02
April 1, 2013
$
April 1, 2013
(4)
6
The Company’s Canadian operations also have a net buy position for pounds sterling (GBP) of £2.5 million with an average price of
1.84 (CAD/GBP) and a maturity date of April 30, 2014. These contracts were entered into in an attempt to mitigate foreign exchange
risk on cash balances held in foreign currencies. The fair value of these contracts is nominal due to their short term to maturity.
The Company’s Canaccord Genuity Wealth Management segment in the UK and Europe trades foreign exchange forward contracts
on behalf of its clients, and establishes matching contracts with the counterparties. The Company has no significant net exposure,
assuming no counterparty default. The principal currencies of the forward contracts are: the UK pound sterling, the Us dollar, or
the euro. The weighted average term to maturity is 115 days as at March 31, 2014 [March 31, 2013 – 75 days]. The table below
shows the fair value of the forward contract assets and liabilities, and the notional value of these forward contracts as at March 31,
2014. The fair value of the forward contract assets and liabilities is included in the accounts receivable and payable balances.
march 31, 2014
March 31, 2013
assets
liabilities
notional
amount
Assets
Liabilities
Notional
amount
foreign exchange forward contracts $
1,359 $
(1,365) $
327,386 $
4,483
$
(4,483)
$
352,205
seCuRities lending and BoRRowing
The Company employs securities lending and borrowing primarily to facilitate the securities settlement process. These arrangements
are typically short term in nature, with interest being received when cash is delivered and interest being paid when cash is received. These
transactions are fully collateralized and are subject to daily margin calls for any deficiency between the market value of the security given
and the amount of collateral received. These transactions are collateralized by either cash or securities, including government treasury bills
and government bonds, and are reflected within accounts receivable and accounts payable. Interest earned on cash collateral is based on
a floating rate. At March 31, 2014, the floating rates ranged from 0.00% to 0.66% [March 31, 2013 – 0.00% to 0.63%].
march 31, 2014
March 31, 2013
88
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Cash
securities
loaned or
delivered as
collateral
Borrowed or
received as
collateral
loaned or
delivered as
collateral
Borrowed or
received as
collateral
$
158,430
$
41,290
$
41,253
$
190,689
168,371
36,710
36,047
199,956
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
Bank indeBtedness
The Company enters into call loans or overdraft positions primarily to facilitate the securities settlement process for both client
and Company securities transactions. The bank indebtedness is collateralized by unpaid client securities and/or securities
owned by the Company. As at March 31, 2014, the Company had nil bank indebtedness balance outstanding [March 31, 2013 –
$66.1 million].
otheR CRedit FaCilities
subsidiaries of the Company also have other credit facilities with banks in Canada and the UK for an aggregate amount of
$720.8 million. These credit facilities, consisting of call loans, letters of credit and daylight overdraft facilities, are collateralized
by unpaid client securities and/or securities owned by the Company. As of March 31, 2014, there were no balances outstanding
under these other credit facilities.
A subsidiary of the Company has also entered into secured irrevocable standby letters of credit from a financial institution totalling
$0.9 million (Us$0.9 million) as rent guarantees for its leased premises in New York. As of March 31, 2014 and 2013, there were
no outstanding balances under these standby letters of credit.
note 08
interest in other entities
The Company has a 50% interest in Canaccord financial Group (Australia) Pty Ltd. and Canaccord Genuity (Australia) Limited.
Together, these entities operate as Canaccord Genuity Australia and the operation’s principal place of business is in Australia.
As discussed in Note 22, Canaccord Genuity (Australia) Limited is regulated by the Australian securities and Investments
Commission.
During fiscal 2014, Canaccord Genuity Australia reported total net income (loss) of $1.3 million [2013 – $(3.9) million]. As
at March 31, 2014, accumulated non-controlling interest was $14.9 million [March 31, 2013 – $16.2 million]. summarized
financial information including goodwill on acquisition and consolidation adjustments but before inter-company eliminations is
presented below.
summarized statement of profit or loss for the years ended March 31, 2014 and 2013:
for the years ended
revenue
Expenses
Net income (loss) before taxes
Income tax expense (recovery)
net income (loss)
Attributable to:
CGGI shareholders
Non-controlling interests
total comprehensive income (loss)
Attributable to:
CGGI shareholders
Non-controlling interests
Dividends paid to non-controlling interests
Canaccord Genuity Australia
march 31,
2014
March 31,
2013
$
28,138
$
26,160
1,978
690
1,288
644
644
308
154
154
660
15,719
21,012
(5,293)
(1,382)
(3,911)
(1,955)
(1,956)
(3,276)
(1,638)
(1,638)
—
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 89
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
summarized statement of financial position as at March 31, 2014 and 2013:
for the years ended
Current assets
Non-current assets
Current liabilities
Non-current liabilities
summarized cash flow information for the year ended March 31, 2014 and 2013:
for the years ended
Cash provided (used) by operating activities
Cash used by financing activities
Cash used by investing activities
foreign exchange impact on cash balance
net increase (decrease) in cash and cash equivalents
note 09
accounts Receivable and accounts payable and accrued liabilities
aCCounts ReCeivaBle
Brokers and investment dealers
Clients
rrsP cash balances held in trust
Other
aCCounts payaBle and aCCRued liaBilities
Brokers and investment dealers
Clients
Other
Canaccord Genuity Australia
march 31,
2014
March 31,
2013
$
31,897
$
32,008
(10,067)
(155)
25,982
34,500
(3,834)
(2,081)
Canaccord Genuity Australia
march 31,
2014
March 31,
2013
$
7,427
$
(2,800)
(1,217)
(1,550)
(125)
(110)
(250)
375
$
4,535
$
(2,785)
march 31,
2014
March 31,
2013
$ 2,006,183
$ 1,773,043
418,799
259,614
101,302
320,564
327,173
93,178
$ 2,785,898
$ 2,513,958
march 31,
2014
March 31,
2013
$ 1,659,617
$ 1,473,058
965,229
1,016,297
253,087
237,380
$ 2,877,933
$ 2,726,735
Amounts due from and to brokers and investment dealers include balances from resale and repurchase agreements, securities
loaned and borrowed, as well as brokers’ and dealers’ counterparty balances.
Client security purchases are entered into on either a cash or a margin basis. In the case of a margin account, the Company extends
a loan to a client for the purchase of securities, using securities purchased and/or other securities in the client’s account as
collateral. Amounts loaned to any client are limited by the margin regulations of the Investment Industry regulatory Organization of
Canada (IIrOC) and other regulatory authorities and are subject to the Company’s credit review and daily monitoring procedures.
Amounts due from and to clients are due by the settlement date of the trade transaction. Margin loans are due on demand and
are collateralized by the assets in the clients’ accounts. Interest on margin loans and on amounts due to clients is based on a
floating rate [March 31, 2014 – 6.00% to 6.25% and 0.00% to 0.05%, respectively; March 31, 2013 – 6.00% to 6.25% and 0.00%
to 0.05%, respectively].
90
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
As at March 31, 2014, the allowance for doubtful accounts was $13.2 million [March 31, 2013 – $14.0 million]. see below for
the movements in the allowance for doubtful accounts:
At March 31, 2013
Charge for the year
recoveries
Write-offs
foreign exchange
at march 31, 2014
note 10
investments
Available for sale
Total
$
13,986
6,208
(6,022)
(1,860)
844
$
13,156
march 31,
2014
March 31,
2013
$
9,977
$
3,695
The Company holds an investment in Euroclear, one of the principal clearing houses for securities traded in the Euromarket.
During the year ended March 31, 2014, the Company invested $5.0 million in common shares and $0.7 million in debenture and
warrant certificates of Canadian first financial Holdings Limited, a private company that has been established as a Canadian
retail financial services organization.
These investments are carried at fair value, as described in Note 7.
note 11
equipment and leasehold improvements
march 31, 2014
Computer equipment
furniture and equipment
Leasehold improvements
March 31, 2013
Computer equipment
furniture and equipment
Leasehold improvements
Cost
Balance, March 31, 2012
Additions
Transfers
Disposals
foreign exchange
Balance, March 31, 2013
Additions
Disposals
foreign exchange
Balance, march 31, 2014
Cost
accumulated
amortization
net book
value
$
10,628
$
3,941
$
21,494
78,833
14,913
41,126
6,687
6,581
37,707
$
110,955
$
59,980
$
50,975
$
10,231
$
3,821
$
21,073
75,685
15,478
44,711
6,410
5,595
30,974
$
106,989
$
64,010
$
42,979
Computer
equipment
furniture and
equipment
Leasehold
improvements
Total
$
9,840 $
28,506
$
68,322
$
106,668
2,487
1,531
(2,937)
(690)
995
(5,818)
(2,220)
(390)
3,490
4,287
(96)
(318)
6,972
—
(5,253)
(1,398)
$
10,231
$
21,073
$
75,685
$
106,989
2,550
(6,109)
3,956
2,688
(2,771)
504
10,237
(12,706)
5,617
15,475
(21,586)
10,077
$
10,628
$
21,494
$
78,833
$
110,955
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 91
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
accumulated amortization
Balance, March 31, 2012
Additions
Impairment
Transfers
Disposals
foreign exchange
Balance, March 31, 2013
Additions
Disposals
foreign exchange
Computer
equipment
furniture and
equipment
Leasehold
improvements
Total
$
3,855 $
16,813
$
34,916
$
55,584
2,592
—
1,100
(2,921)
(805)
2,592
411
(2,946)
(1,054)
(338)
8,000
—
1,846
—
(51)
$
3,821
$
15,478
$
44,711
$
3,425
(6,037)
2,732
1,674
(2,604)
365
7,104
(11,773)
1,084
13,184
411
—
(3,975)
(1,194)
64,010
12,203
(20,414)
4,181
Balance, march 31, 2014
$
3,941
$
14,913
$
41,126
$
59,980
note 12
Business Combinations
aCQuisition FoR the yeaR ended maRCh 31, 2014
On July 25, 2013, the Company acquired the remaining 50% ownership of Canaccord Genuity (Hong Kong) Limited (CGHKL) for
cash consideration of $0.7 million to now own 100% of CGHKL. The fair value of the net assets acquired approximates the cash
consideration. The Company previously already held a 50% beneficial interest in CGHKL through its ownership of Canaccord
financial Group (Australia) Pty Ltd. CGHKL is licensed with the securities and futures Commission in Hong Kong.
aCQuisitions FoR the yeaR ended maRCh 31, 2013
i.
eden Financial ltd.
On October 1, 2012, the Company acquired 100% of the wealth management business of Eden financial Ltd., an owner-
managed private client investment management business, for purchase consideration of $20.3 million (£12.8 million), of which
$12.2 million (£7.7 million) was paid on closing and an estimated $8.1 million (£5.1 million) was payable after 12 months,
contingent on achieving certain performance targets related to revenue. The fair value of Eden financial Ltd.’s net tangible
assets on acquisition date was $8.0 million. Identifiable intangible assets of $2.9 million were recognized relating to customer
relationships [Note 13]. The goodwill of $9.4 million represents the value of expected synergies arising from the acquisition.
During the year ended March 31, 2014, the Company paid $9.1 million in contingent consideration, of which $8.9 million was
previously accrued.
ii.
kenosis Capital partners
On september 14, 2012, the Company signed an agreement with Kenosis Capital Partners (Kenosis Capital), a merchant bank
and advisory group, to acquire certain assets and liabilities for cash consideration of $1.2 million and additional contingent cash
consideration based upon the achievement of certain performance criteria. The $6.0 million contingent consideration accrual was
reversed during the year ended March 31, 2014 as performance targets were not achieved.
The Company recorded goodwill of $7.2 million related to this acquisition. During the year ended March 31, 2014, $6.3 million of
the goodwill was impaired [Note 13].
92
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
note 13
goodwill and other intangible assets
Identifiable intangible assets
Brand
Non-
names relationships Technology development competition
Customer
software
under
Trading
licences
Total
Goodwill
gross amount
Balance, March 31, 2012
Addition – Kenosis Capital
Addition – Eden financial
foreign exchange
$ 472,510 $ 46,618 $ 85,251 $ 5,975 $
— $ 14,437 $
197 $ 152,478
7,182
9,416
(4,422)
—
—
9
—
2,899
(1,634)
—
—
(204)
—
—
—
—
—
172
—
—
5
—
2,899
(1,652)
Balance, March 31, 2013
484,686
46,627
86,516
5,771
—
14,609
202
153,725
Additions
foreign exchange
—
—
—
—
7,002
36,471
168
10,096
1,128
—
—
(251)
—
7,002
(7)
11,134
Balance, march 31, 2014
521,157
46,795
96,612
6,899
7,002
14,358
195
171,861
accumulated amortization and impairment
Balance, March 31, 2012
Amortization
foreign exchange
Balance, March 31, 2013
Amortization
Impairment
foreign exchange
—
—
—
—
—
(6,250)
(205)
(5,039)
—
(1,471)
(8,340)
(1,978)
(21)
123
55
(1,697)
(13,256)
(1,923)
—
—
(9,023)
(2,469)
—
—
—
(168)
(1,568)
(555)
Balance, march 31, 2014
(6,250)
(1,865)
(23,847)
(4,947)
—
—
—
—
—
—
—
—
(3,427)
(3,083)
(56)
(6,566)
(3,091)
—
105
(9,552)
—
—
—
—
—
—
—
—
(8,671)
(14,872)
101
(23,442)
(14,583)
—
(2,186)
(40,211)
net book value
March 31, 2013
march 31, 2014
484,686
44,930
73,260
514,907
44,930
72,765
3,848
1,952
—
7,002
8,043
4,806
202
130,283
195
131,650
The impairment charge of $6.3 million relates to the goodwill acquired in connection with the acquisition of certain assets and
liabilities of Kenosis Capital Partners [Note 12]. This goodwill was allocated to the Other foreign Locations cash-generating
unit (CGU). In accordance with IAs 36, “Impairment of Assets” (IAs 36), the recoverable amount of the Other foreign Locations
CGU’s net assets is determined using the fVLCs calculations, which are based on cash flow assumptions approved by senior
management. This valuation is categorized as Level 3 in the fair value hierarchy. The impairment charge has been applied against
the reversal of the contingent consideration as discussed in Note 7.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 93
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
impaiRment testing oF goodwill and identiFiaBle intangiBle assets with indeFinite lives
The carrying amounts of goodwill and indefinite life intangible assets acquired through business combinations have been allocated
to the CGUs as follows:
Intangible assets with indefinite lives
Goodwill
Total
march 31, 2014 March 31, 2013 march 31, 2014 March 31, 2013 march 31, 2014 March 31, 2013
Canaccord genuity
Canada
UK and Europe
Us
Other foreign Locations (China)
Other foreign Locations (Australia)
Other foreign Locations (singapore)
Canaccord genuity
wealth management
UK and Europe (Channel Islands)
UK and Europe (Eden financial)
$
44,930 $
44,930 $
242,074 $
242,074
$
287,004
$
287,004
—
—
—
195
—
—
—
—
—
—
202
—
—
—
95,789
7,942
4,764
22,537
31,539
80,136
7,313
10,365
23,309
29,208
95,789
7,942
4,764
22,732
31,539
80,136
7,313
10,365
23,511
29,208
99,322
10,940
83,138
9,143
99,322
10,940
83,138
9,143
$
45,125 $
45,132 $
514,907 $
484,686
$
560,032
$
529,818
Goodwill and intangible assets with indefinite lives are tested for impairment annually at March 31, and when circumstances
indicate the carrying value may potentially be impaired. If any indication of impairment exists, the Company estimates the
recoverable amount of the CGU to which goodwill and indefinite life intangible assets are allocated. Where the carrying amount of
a CGU exceeds its recoverable amount, an impairment loss is recognized. Any impairment loss first reduces the carrying amount
of any goodwill allocated to the CGU and then if any impairment loss remains, the other assets of the unit are reduced on a pro
rata basis. Impairment losses relating to goodwill cannot be reversed in future periods. The Company considers the relationship
between its market capitalization and the book value of its equity, among other factors, when reviewing for indicators of
impairment. Consequently, interim goodwill impairment testing was carried out for all applicable CGUs at June 30, september 30
and December 31, 2013.
In accordance with IAs 36, the recoverable amounts of the CGUs’ net assets have been determined using fVLCs calculations, which
are based on cash flow assumptions approved by senior management. There is a material degree of uncertainty with respect to
the estimates of the recoverable amounts of the CGUs’ net assets given that these estimates involve making key assumptions
about the future. In making such assumptions, management has used its best estimate of future economic and market conditions
within the context of the Company’s capital markets and wealth management activities. These valuations are categorized as
Level 3 in the fair value hierarchy.
The fVLCs calculations are based on assumptions, as described above, made in connection with future cash flows, relief of
royalties with respect to the brand name indefinite life intangible asset, terminal growth rates and discount rates. In order to
estimate the fVLCs for each CGU, cash flows are forecast over a five-year period, a terminal growth rate is applied and then such
cash flows are discounted to their present value. The discount rate is based on the specific circumstances of each CGU and
is derived from the estimated weighted average cost of capital of the Company. The discount rate utilized for each CGU for the
purposes of these calculations was 12.5% in respect of Canada and the UK and Europe [March 31, 2013 – 12.5%], 14.0% in
respect of Australia, singapore and the Us [March 31, 2013 – 14.0%], and 20.0% in respect of China [March 31, 2013 – 20.0%].
Cash flow estimates for each CGU are based on management assumptions as described above and utilize compound annual
revenue growth rates commencing with the forecast for the next fiscal year ranging from 9.0% to 15.0% [March 31, 2013 – 9.0%
to 16.0%] as well as estimates in respect of operating margins. The compound annual revenue growth rates utilized were:
(a) Canaccord Genuity (i) Canada – 10.0%, (ii) UK and Europe – 10.0%, (iii) Us – 10.0%, (iv) Other foreign Locations – 12.7% to
15.0%; and (b) Canaccord Genuity Wealth Management, UK and Europe – 9.0%. Management estimates in respect of increases in
revenue from fiscal 2014 to the next fiscal year, used as the commencement date for the forecasts referred to above, are in the
range of (0.1)% to 23.0% for each CGU except for Other foreign Locations. CGUs in Other foreign Locations are in earlier stages
of development and, as such, with fiscal 2014 revenue at relatively low base levels, revenue estimates for the next fiscal year for
those CGUs range from 1.1 times to 5.0 times revenue recorded in fiscal 2014. The terminal growth rate used for CGUs located
in Canada and the UK and Europe was 3.0% [March 31, 2013, Canada – 3.0%] and for CGUs located in all other locations was
5.0% [March 31, 2013 – 5.0%].
94
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
At March 31, 2014, there is $44.9 million of intangible assets with indefinite lives allocated to the Canaccord Genuity Canada
CGU, which relates to the Genuity brand name. for the March 31, 2014 annual goodwill impairment testing, an estimate of the
annual royalty income is included in the five-year discounted cash flows of the Canaccord Genuity Canada CGU using the relief of
royalty method, with the corresponding expense allocated to each of the other CGUs in the Canaccord Genuity segment over the
same forecast period. The royalty rate has been determined as 2% for all CGUs.
sensitivity testing was conducted as part of the March 31, 2014 annual impairment test of goodwill and indefinite life intangible
assets. The sensitivity testing includes assessing the impact that reasonably possible declines in growth rates and increases in
the discount rate would have on the recoverable amounts of the CGUs, with other assumptions being held constant.
The Company’s impairment testing has determined that the recoverable amounts for certain of the Other foreign Locations CGUs
(singapore and China) exceed their carrying amounts by $9.2 million and $2.0 million, respectively, and consequently, a reasonably
possible decline in the revenue growth rates or increase in the discount rates may result in an impairment charge in respect of
the goodwill and indefinite life intangible assets allocated to either of these CGUs. An increase of 2.2 percentage points in the
discount rate for singapore (from 14.0% to 16.2%), an increase of 4.3 percentage points in the discount rate for China (from 20.0%
to 24.3%), a reduction in the compound annual revenue growth rate of 5.7 percentage points for singapore (from 12.7% to 7.0%),
a reduction in the compound annual revenue growth rate of 9.0 percentage points for China (from 15.0% to 6.0%), or a decrease in
the revenue estimates for fiscal 2015 used as the starting point for the forecast period would result in the recoverable amount being
equal to the carrying value.
note 14
income taxes
The major components of income tax expense are:
Consolidated statements of operations
Current income tax expense
Current income tax expense
Adjustments in respect of prior years
Deferred income tax expense (recovery)
Origination and reversal of temporary differences
Impact of change in tax rates
Benefit arising from a previously unrecognized tax loss
march 31,
2014
March 31,
2013
$
6,518
$
1,752
8,270
4,632
(309)
(62)
4,261
9,668
(1,466)
8,202
(12,313)
(484)
(332)
(13,129)
Income tax expense (recovery) reported in the statements of operations
$
12,531
$
(4,927)
The Company’s income tax expense differs from the amount that would be computed by applying the combined federal and
provincial income tax rates as a result of the following:
Income (loss) before income taxes
Income taxes at the estimated statutory rate of 26.0% (2013: 25.0%)
Difference in tax rates in foreign jurisdictions
Non-deductible items affecting the determination of taxable income
Change in accounting and tax base estimate
Change in deferred tax asset – reversal period of temporary difference
Tax losses and other temporary differences not recognized (utilization of tax losses previously not recognized)
march 31,
2014
March 31,
2013
$
64,588
$
(23,702)
16,793
1,679
2,957
2,328
(2,882)
(8,344)
(5,926)
(4,705)
1,853
(1,737)
(129)
5,717
Income tax expense (recovery) reported in the statements of operations
$
12,531
$
(4,927)
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 95
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
The following were the deferred tax liabilities and assets recognized by the Company and movements thereon during the year:
Consolidated statements
of financial position
Consolidated statements
of operations
march 31,
2014
March 31,
2013
march 31,
2014
March 31,
2013
Unrealized gain on securities owned
$
(1,936) $
(1,676)
$
73
$
Legal provisions
Unpaid remunerations
Unamortized capital cost of equipment and leasehold improvements
over their net book value
Unamortized common share purchase loans
Loss carryforwards
Common and preferred shares issuance costs
Long-term incentive plan
Other intangible assets
Investment in limited partnership
Other
1,675
1,936
2,170
3,792
4,531
1,253
15,431
(24,086)
—
1,941
2,047
11
1,929
6,010
10,456
1,697
13,510
(25,726)
—
1,718
372
(1,615)
(68)
2,217
7,024
444
(1,244)
(2,720)
—
(222)
526
(463)
872
(807)
(2,648)
(886)
557
(4,022)
(4,817)
(675)
(766)
$
6,707 $
9,976
$
4,261
$
(13,129)
Deferred tax assets and liabilities as reflected in the consolidated statements of financial position are as follows:
Deferred tax assets
Deferred tax liabilities
The movement for the year in the net deferred tax position was as follows:
Opening balance as of April 1
march 31,
2014
March 31,
2013
$
$
9,735
$
12,552
(3,028)
(2,576)
6,707
$
9,976
march 31,
2014
March 31,
2013
$
9,976
$
(4,130)
Tax (expense) recovery during the period recognized in the consolidated statements of operations
(4,261)
13,129
Deferred taxes acquired in business combinations
foreign exchange on deferred tax position
Amounts recognized through other comprehensive income (loss)
Tax recovery during the period recognized in equity
Other
—
621
47
—
324
324
(417)
—
1,215
(145)
$
6,707
$
9,976
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current tax liabilities and if the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same
taxation authority on the same taxable entity.
Tax loss carryforwards of $14.6 million [2013 – $35.8 million] in the UK and Europe and $nil million [2013 – $3.3 million] in
Other foreign Locations (Australia) have been recognized as a deferred tax asset. The losses in both jurisdictions can be carried
forward indefinitely. Tax loss carryforwards of $3.1 million [2013 – $2.7 million] in Canada have been recognized as a deferred tax
asset and can be carried forward for 20 years.
At the balance sheet date, the Company has tax loss carryforwards of approximately $29.1 million [2013 – $42.8 million] for
which a deferred tax asset has not been recognized. These losses relate to subsidiaries outside of Canada that have a history
of losses and may also be subject to legislative limitations on use and may not be used to offset taxable income elsewhere in
the consolidated group of companies. The subsidiaries have no taxable temporary differences or any tax planning opportunities
96
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
available that could partly support the recognition of these losses as deferred tax assets, as the likelihood of future economic
benefit is not sufficiently assured. These losses begin expiring in 2029.
Other temporary differences not recognized as deferred tax assets in relation to subsidiaries outside of Canada amount to
$17.3 million at March 31, 2014 [2013 – $19.6 million]. since the subsidiaries outside of Canada have a history of losses and
the deductible temporary differences may not be used to offset taxable income elsewhere in the consolidated group of companies,
no asset has been recognized as the likelihood of future economic benefit is not sufficiently assured.
note 15
subordinated debt
Loan payable, interest payable monthly at prime + 4% per annum, due on demand
$
15,000
$
15,000
The loan payable is subject to a subordination agreement and may only be repaid with the prior approval of IIrOC. As at March 31,
2014 and 2013, the interest rates for the subordinated debt were 7.0% and 7.0%, respectively. The carrying value of subordinated
debt approximates its fair value due to the short term nature of this liability.
march 31,
2014
March 31,
2013
note 16
preferred shares
march 31, 2014
March 31, 2013
amount
number of
shares
Amount
Number of
shares
series A Preferred shares issued and outstanding
$
110,818
4,540,000
$
110,818
4,540,000
series C Preferred shares issued and outstanding
series C Preferred shares held in treasury
97,450
(2,627)
4,000,000
(106,794)
97,450
4,000,000
(2,627)
(106,794)
94,823
3,893,206
94,823
3,893,206
$
205,641
8,433,206
$
205,641
8,433,206
[i] seRies a pReFeRRed shaRes
The Company issued 4,540,000 Cumulative 5-Year rate reset first Preferred shares, series A (series A Preferred shares) at a
purchase price of $25.00 per share for gross proceeds of $113.5 million. The aggregate net amount recognized after deducting
issue costs, net of deferred taxes of $1.0 million, was $110.8 million.
Quarterly cumulative cash dividends, if declared, will be paid at an annual rate of 5.5% for the initial five-year period ending on
september 30, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of
Canada bond yield plus 3.21%.
Holders of series A Preferred shares have the right, at their option, to convert any or all of their shares into an equal number
of Cumulative floating rate first Preferred shares, series B (series B Preferred shares), subject to certain conditions, on
september 30, 2016 and on september 30 every five years thereafter. Holders of the series B Preferred shares will be entitled
to receive floating rate, cumulative, preferential dividends payable quarterly, if declared, at a rate equal to the three-month
Government of Canada Treasury Bill yield plus 3.21%.
The Company has the option to redeem the series A Preferred shares on september 30, 2016 and on september 30 every five
years thereafter, in whole or in part, at $25.00 per share together with all declared and unpaid dividends. The series B Preferred
shares are redeemable at the Company’s option on september 30, 2021 and on september 30 every five years thereafter, in
whole or in part, at $25.00 per share together with all declared and unpaid dividends.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 97
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
[ii] seRies C pReFeRRed shaRes
The Company issued 4,000,000 Cumulative 5-Year rate reset first Preferred shares, series C (series C Preferred shares) at a
purchase price of $25.00 per share for gross proceeds of $100.0 million. The aggregate net amount recognized after deducting
issue costs, net of deferred taxes of $1.0 million, was $97.5 million. Quarterly cumulative cash dividends, if declared, will be paid
at an annual rate of 5.75% for the initial five-year period ending on september 30, 2016. Thereafter, the dividend rate will be reset
every five years at a rate equal to the five-year Government of Canada bond yield plus 4.03%.
Holders of series C Preferred shares have the right, at their option, to convert any or all of their shares into an equal number of
Cumulative floating rate first Preferred shares, series D (series D Preferred shares), subject to certain conditions, on June 30,
2017 and on June 30 every five years thereafter. Holders of the series D Preferred shares will be entitled to receive floating rate,
cumulative, preferential dividends payable quarterly, if declared, at a rate equal to the three-month Government of Canada Treasury
Bill yield plus 4.03%.
The Company has the option to redeem the series C Preferred shares on June 30, 2017 and on June 30 every five years
thereafter, in whole or in part, at $25.00 per share together with all declared and unpaid dividends. The series D Preferred shares
are redeemable at the Company’s option on June 30, 2022 and on June 30 every five years thereafter, in whole or in part, at
$25.00 per share together with all declared and unpaid dividends.
note 17
Common shares
march 31, 2014
March 31, 2013
amount
number of
shares
Amount
Number of
shares
Issued and fully paid
Unvested share purchase loans
$
713,140
101,471,456
$
717,908
102,896,172
(21,275)
(3,576,051)
(34,012)
(4,872,547)
shares repurchased through NCIB for cancellation
(250)
(45,600)
—
—
Held for the LTIP
(38,426)
(4,734,446)
(45,440)
(4,961,829)
$
653,189
93,115,359
$
638,456
93,061,796
[i] authoRized
Unlimited common shares without par value
[ii] issued and Fully paid
Balance, March 31, 2012
shares issued in connection with the LTIP
shares issued in connection with the Corazon Capital Group Limited share Plan
shares issued in connection with retention plan
shares issued in connection with replacement plans
shares cancelled
Balance, March 31, 2013
shares issued in connection with the LTIP [note 19]
shares issued in connection with retention plan [note 19]
shares issued in connection with replacement plans [note 19]
shares cancelled
Balance, march 31, 2014
Number of shares
Amount
101,688,721
$
705,293
844,766
170,562
109,979
198,872
(116,728)
8,996
1,503
1,402
1,528
(814)
102,896,172
$
717,908
1,629,285
160,656
526,483
14,511
2,048
4,816
(3,741,140)
(26,143)
101,471,456
$
713,140
In August 2012, the Company filed a notice for a normal course issuer bid (NCIB) to provide for the ability to purchase, at the
Company’s discretion, up to 3,000,000 of its common shares through the facilities of the TsX from August 13, 2012 to August 12,
2013. The purpose of the purchase of common shares under the NCIB is to enable the Company to acquire shares for cancellation.
The shares that may be repurchased represent 2.93% of the Company’s common shares outstanding at the time of the notice.
There were 924,040 shares purchased through the NCIB between August 13, 2012 and August 12, 2013 and cancelled.
98
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
On August 6, 2013, the Company filed a notice to renew the NCIB to provide the Company with the choice to purchase up to a
maximum of 5,136,948 of its common shares during the period from August 13, 2013 to August 12, 2014 through the facilities
of the TsX and on alternative trading systems, in accordance with the requirements of the TsX. The maximum number of shares
that may be purchased through the NCIB represent 5.0% of the Company’s outstanding common shares at the time of the
notice. There were 2,370,104 shares purchased through the NCIB between August 13, 2013 and March 31, 2014, of which
45,600 shares were held in treasury until subsequently cancelled on April 30, 2014.
[iii] FoRgivaBle Common shaRe puRChase loans
The Company provides forgivable common share purchase loans to employees in order to purchase common shares. The unvested
balance of forgivable common share purchase loans is presented as a deduction from share capital. The forgivable common share
purchase loans are amortized over the vesting period. The difference between the unvested and unamortized values is included in
contributed surplus.
[iv] eaRnings (loss) peR Common shaRe
for the years ended
Basic earnings (loss) per common share
Net earnings (loss) attributable to CGGI shareholders
Preferred shares dividends
Net earnings (loss) attributable to common shareholders
Weighted average number of common shares (number)
Basic earnings (loss) per share
diluted earnings (loss) per common share
Net earnings (loss) attributable to common shareholders
Weighted average number of common shares (number)
Dilutive effect in connection with LTIP (number)
Dilutive effect in connection with other share-based payment plans (number)
Adjusted weighted average number of common shares (number)
march 31,
2014
March 31,
2013
$
51,413
$
(16,819)
(11,762)
39,651
(11,720)
(28,539)
94,124,672
92,217,726
$
0.42
$
(0.31)
39,651
(28,539)
94,124,672
5,260,323
2,607,684
101,992,679
n/a
n/a
n/a
n/a
Diluted earnings (loss) per common share
$
0.39
$
(0.31)
for the year ended March 31, 2014, the instruments that could potentially dilute earnings per share, but are currently anti-dilutive,
are not significant.
for the year ended March 31, 2013, all instruments involving potential common shares were excluded from the calculation of
diluted earnings per share as they were anti-dilutive.
There have been no other transactions involving common shares or potential common shares between the reporting date and the
date of authorization of these financial statements which would have a significant impact on earnings per share.
note 18
dividends
Common shaRes dividends
The Company declared the following common shares dividends during the year ended March 31, 2014:
record date
May 31, 2013
August 30, 2013
November 22, 2013
february 21, 2014
Payment date
June 10, 2013
september 10, 2013
December 10, 2013
March 10, 2014
Cash dividend per
common share
Total common
dividend amount
$
$
$
$
0.05
0.05
0.05
0.05
$
$
$
$
5,177
5,132
5,130
4,988
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 99
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
On June 3, 2014, the Board of Directors approved a cash dividend of $0.05 per common share payable on July 2, 2014 to
common shareholders of record as at June 20, 2014 [Note 26].
pReFeRRed shaRes dividends
record date
June 21, 2013
september 13, 2013
December 20, 2013
March 14, 2014
Payment date
July 2, 2013
september 30, 2013
December 31, 2013
March 31, 2014
Cash dividend per
series A
Preferred share
Cash dividend per
series C
Preferred share
Total preferred
dividend amount
$
$
$
$
0.34375
0.34375
0.34375
0.34375
$ 0.359375
$ 0.359375
$ 0.359375
$ 0.359375
$
$
$
$
2,998
2,998
2,998
2,998
On June 3, 2014, the Board also approved a cash dividend of $0.34375 per series A Preferred share payable on June 30, 2014
to series A Preferred shareholders of record as at June 13, 2014 [Note 26].
On June 3, 2014, the Board also approved a cash dividend of $0.359375 per series C Preferred share payable on June 30, 2014
to series C Preferred shareholders of record as at June 13, 2014 [Note 26].
note 19
share-Based payment plans
[i] long-teRm inCentive plan
Under the LTIP, eligible participants are awarded restricted share units (rsUs), which generally vest over three years. for employees
in Canada, an employee benefit trust (the Trust) has been established and either (a) the Company will fund the Trust with cash,
which will be used by the trustee to purchase on the open market common shares of the Company that will be held in trust by
the trustee until the rsUs vest or (b) the Company will issue common shares from treasury to participants following vesting of
the rsUs. for employees in the Us and the UK, the Company will allot common shares at the time of each rsU award, and these
shares will be issued from treasury at the time they vest for each participant.
There were 5,870,844 rsUs [year ended March 31, 2013 – 5,396,103 rsUs] granted in lieu of cash compensation to employees
during the year ended March 31, 2014. The Trust purchased 1,797,069 common shares [year ended March 31, 2013 –
2,408,168 common shares] for the year ended March 31, 2014.
The fair value of the rsUs at the measurement date is based on the volume weighted average price at the grant date and is
amortized on a graded basis over the vesting period of three years. The weighted average fair value of rsUs granted during the
year ended March 31, 2014 was $6.18 [year ended March 31, 2013 – $6.20].
Awards outstanding, March 31, 2013
Grants
Vested
forfeited
awards outstanding, march 31, 2014
Common shares held by the Trust, March 31, 2013
Acquired
released on vesting
Common shares held by the trust, march 31, 2014
Number
9,128,169
5,870,844
(3,666,660)
(749,110)
10,583,243
Number
4,961,829
1,797,069
(2,024,452)
4,734,446
[ii] FoRgivaBle Common shaRe puRChase loans
The Company provides loans to certain employees for the purpose of partially funding the purchase of shares of the Company
and increasing share ownership by the employees. These loans are equity-settled transactions that are generally forgiven over a
three- to five-year period from the initial advance of the loan or at the end of that three- to five-year period [Note 17 [iii]]. Certain
forgivable common share purchase loans vest based on performance conditions.
100 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
[iii] ReplaCement plans
As a result of the acquisition of CsHP, the following share-based payment plans were introduced to replace the share-based
payment plans that existed at CsHP at the acquisition date:
Canaccord genuity group inc. Collins stewart hawkpoint Replacement annual Bonus equity deferral (aBed) plan
On March 21, 2012, the Company introduced the replacement ABED Plan, which replaced the ABED plans that existed at CsHP
as of the acquisition date. Eligible employees who participated in the CsHP ABED plans were granted awards under the replacement
ABED Plan. The shares granted vest between one and three years from the acquisition date of CsHP. In accordance with Ifrs 3,
“Business Combinations” (Ifrs 3), a portion of the awards granted was included as part of the purchase consideration for the
acquisition of CsHP and a portion is being deferred and amortized to incentive compensation expense over the vesting period.
Awards outstanding, March 31, 2013
Vested
forfeited
awards outstanding, march 31, 2014
Number
466,645
(349,200)
(18,214)
99,231
Canaccord genuity group inc. Collins stewart hawkpoint Replacement long-term incentive plan award
On March 21, 2012, the Company introduced the replacement LTIP, which replaced the existing LTIPs at CsHP on the acquisition
date. Eligible employees who participated in the CsHP LTIPs were granted awards under the replacement LTIP. The shares granted
vest annually on a graded basis over a three-year period. In accordance with Ifrs 3, a portion of awards granted was included
as part of the purchase consideration for the acquisition of CsHP and a portion is being deferred and amortized to incentive
compensation expense over the vesting period.
Awards outstanding, March 31, 2013
Vested
forfeited
awards outstanding, march 31, 2014
Corazon Capital group limited share plan
Number
711,700
(177,283)
(37,421)
496,996
In connection with the acquisition of CsHP, the Company assumed the outstanding obligation under the Corazon Capital Group
Limited share Plan (the Corazon share Plan). The Corazon share Plan was entered into by CsHP in relation to its acquisition of
Corazon Capital Group Limited, an independent, Guernsey-based investment management firm.
The obligation was paid by the issuance of 170,562 Canaccord common shares, which vested in March 2013, and cash
consideration of $2.2 million (£1.4 million). In accordance with Ifrs 3, a portion of the awards granted was included as part of
the purchase consideration for the acquisition of CsHP and a portion is being deferred and amortized to incentive compensation
expense over the vesting period. As the awards vested in March 2013, the entire award not accounted for as purchase consideration
has been expensed. The cash consideration was included as part of the determination of the fair value of CsHP’s net assets
when calculating the purchase price allocation.
[iv] Csh induCement plan
In connection with the acquisition of CsHP, the Company agreed to establish a retention plan for key CsHP staff. In september 2012,
the Company finalized the terms of this plan and communicated the plan arrangements to the relevant employees. During the
year ended March 31, 2013, the Company awarded 2,418,861 rsUs, which vest over a five-year period. In accordance with
the plan, one-third of the total rsUs (806,302 rsUs) will vest on the third anniversary under the terms of the existing LTIP. The
remaining two-thirds of the total rsUs (1,612,559 rsUs) will vest under the terms of the new CsH Inducement Plan, with one-half
of the 1,612,559 rsUs vesting on the fourth anniversary and the remaining half on the fifth anniversary. During the year ended
March 31, 2014, 106,535 rsUs were forfeited [March 31, 2013 – 24,686]. The total number of shares outstanding under the
CsH Inducement Plan at March 31, 2014 was 2,175,737 [March 31, 2013 – 2,323,859], of which 725,257 [March 31, 2013 –
774,633] are included in the existing LTIP disclosed above.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 101
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
On each vesting date, the rsUs entitle the awardee to receive cash or common shares of the Company. If at the vesting date the
share price is less than $8.50 per share, then the Company, at its election, will either (a) pay cash to the employee equal to $8.50
multiplied by the number of rsUs vesting on such date, or (b) pay cash to the employee equal to the difference between $8.50 and
the vesting date share price, multiplied by the number of rsUs vesting on that date plus that number of shares equal to the number
of rsUs vesting on such date. If the share price is greater than $8.50, then the Company will settle the rsUs in common shares.
The awards under this plan require either full or partial cash settlement if the share price at vesting is less than $8.50 per share.
To the extent that it is considered probable that cash settlement will be required, a portion of these awards is treated as cash
settled, and recorded on the statements of financial position as a liability. The carrying amount of the liability at March 31, 2014
was $0.3 million [March 31, 2013 – $0.7 million].
The fair value of the rsUs at the grant date was $8.50, for a total plan value of $20.2 million, which is being amortized on a
graded basis.
[v] shaRe options
The Company grants share options to purchase common shares of the Company to directors and senior management. share options
to independent directors vest over a four-year period and expire seven years after the grant date or 30 days after the participant
ceases to be a director. share options to senior management vest over a five-year period and expire on the earliest of: (a) seven
years from the grant date; (b) three years after death or any other event of termination of employment; (c) after any unvested optioned
shares held by the optionee are cancelled for any reason (other than early retirement but including resignation without entering into a
formal exit agreement and termination for cause); and (d) in the case of early retirement, after a determination that the optionee has
competed with the Company or violated any non-competition, non-solicitation or non-disclosure obligations. The exercise price is based
on the fair market value of the common shares at grant date.
The following is a summary of the Company’s share options as at March 31, 2014 and changes during the period then ended:
Balance, March 31, 2013
Granted
Expired
forfeited
Balance, march 31, 2014
Number of options
Weighted average
exercise price
2,384,910
$
—
(115,642)
(309,636)
1,959,632
$
9.84
—
23.13
9.47
9.23
The following table summarizes the share options outstanding as at March 31, 2014:
range of exercise price
$7.21–$9.48
Options outstanding
Options exercisable
Number of
common shares
Weighted average
remaining
contractual life
Weighted
average exercise
price
Number of
options
exercisable
Weighted
average exercise
price
1,959,632
2.39
$
9.23
1,959,632
$
9.23
Option pricing models require the input of highly subjective assumptions including the expected price volatility. Volatility is based
on the historical trend of the share prices of the Company. Changes in the subjective assumptions can materially affect the fair
value estimate, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the
Company’s share options.
102 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
[vi] deFeRRed shaRe units
Beginning April 1, 2011, the Company adopted a DsU plan for its independent directors. Independent directors must elect annually
as to how they wish their directors’ fees to be paid and can specify the allocation of their directors’ fees between DsUs and cash.
When a director leaves the Board of Directors, outstanding DsUs are paid out in cash, with the amount equal to the number of
DsUs granted multiplied by the closing share price as of the end of the fiscal quarter immediately following such terminations.
Under the plan, the directors are not entitled to receive any common shares in the Company, and under no circumstances will
DsUs confer on any participant any of the rights or privileges of a holder of common shares.
During the year ended March 31, 2014, the Company granted 54,332 DsUs [2013 – 50,839 DsUs]. The carrying amount of the
liability relating to DsUs at March 31, 2014 was $1.1 million [2013 – $0.5 million].
[vii] shaRe-Based Compensation expense
for the years ended
Long-term incentive plan
forgivable common share purchase loans
replacement plans
CsH Inducement Plan
share options
Deferred share units
Other
Accelerated share-based payment expense included as restructuring expense
march 31,
2014
March 31,
2013
$
28,806
$
10,249
3,483
5,719
750
187
1,712
1,457
31,820
14,286
6,978
2,893
1,345
(4)
1,107
1,934
Total share-based compensation expense
$
52,363
$
60,359
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 103
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
note 20
Related party transactions
[i] Consolidated suBsidiaRies
The financial statements include the financial statements of the Company and the Company’s principal trading subsidiaries and
principal intermediate holding companies listed in the following table:
% equity interest
Country of
incorporation
March 31,
2014
March 31,
2013
Canaccord Genuity Corp.
Canaccord Genuity sAs
Canaccord Genuity Wealth (International) Limited
Canada
france
Guernsey
Canaccord Genuity financial Planning Limited (formerly Canaccord Genuity 360 Limited)
United Kingdom
Canaccord Genuity Investment Management Limited
Canaccord Genuity Wealth Limited
Canaccord Genuity financial Advisors Limited
Canaccord Genuity Wealth Group Limited
Canaccord Genuity Limited
Canaccord Genuity Inc.
Canaccord Genuity Wealth Management (UsA) Inc.
Canaccord Estate Planning services Ltd.
Canaccord Asset Management Inc.
Canaccord Adams financial Group Inc.
Collins stewart Inc.
Canaccord Adams (Delaware) Inc.
Canaccord Adams financial Group ULC
Canaccord Genuity securities LLC
stockwave Equities Ltd.
CLD financial Opportunities Limited
Canaccord Genuity singapore Pte Ltd.
Canaccord Genuity (Hong Kong) Limited
Canaccord financial Group (Australia) Pty Ltd.
Canaccord Genuity (Australia) Limited
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United states
United states
Canada
Canada
United states
United states
United states
Canada
United states
Canada
Canada
singapore
China (Hong Kong sAr)
Australia
Australia
加通贝祥（北京）投资顾问有限公司 (the English name “Canaccord Genuity Asia Limited”
is used but it has no legal effect in the People’s republic of China; the English name
formerly used was Beijing Parkview Balloch Investment Advisory Co., Limited)
(to be renamed Canaccord Genuity Asia (Beijing) Limited)
The Balloch Group Limited
Canaccord Genuity Asia (Hong Kong) Limited
China
British Virgin Islands
China (Hong Kong sAr)
Canaccord Genuity (Barbados) Ltd. (formerly Canaccord International Ltd.)
Barbados
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
n/a
n/a
n/a
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
100%
100%
100%
100%
[ii] Compensation oF key management peRsonnel oF the Company
Disclosed in the table below are the amounts recognized as expenses related to individuals who are key management personnel
as at March 31, 2014 and 2013:
short term employee benefits
share-based payments
total compensation paid to key management personnel
104 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
march 31,
2014
March 31,
2013
$
16,790
$
2,001
5,922
1,823
$
18,791
$
7,745
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
[iii] otheR tRansaCtions with key management peRsonnel
Accounts payable and accrued liabilities include the following balances with key management personnel:
Accounts payable and accrued liabilities
march 31,
2014
March 31,
2013
$
4,769
$
1,206
[iv] teRms and Conditions oF tRansaCtions with Related paRties
security trades executed by the Company for officers and directors are transacted in accordance with the terms and conditions
applicable to all clients. Commission income on such transactions in the aggregate is not material in relation to the overall
operations of the Company.
note 21
segmented information
The Company operates in two industry segments as follows:
Canaccord Genuity – includes investment banking, research and trading activities on behalf of corporate, institutional and
government clients as well as principal trading activities in Canada, the UK and Europe, and the Us. Operations located in Other
foreign Locations under Canaccord Genuity (Barbados) Ltd. (formerly Canaccord International Ltd.), Canaccord Genuity Asia and
the 50% interest in Canaccord Genuity Australia are also included in Canaccord Genuity.
Canaccord Genuity Wealth Management – provides brokerage services and investment advice to retail or institutional clients in
Canada, the Us, and the UK and Europe.
Corporate and Other includes correspondent brokerage services, interest and foreign exchange revenue and expenses not
specifically allocable to Canaccord Genuity or Canaccord Genuity Wealth Management.
The Company’s industry segments are managed separately because each business offers different services and requires different
personnel and marketing strategies. The Company evaluates the performance of each business based on operating results,
without regard to non-controlling interests.
The Company does not allocate total assets, liabilities or equipment and leasehold improvements to the segments. Amortization
of tangible assets is allocated to the segments based on the square footage occupied. Amortization of identifiable intangible
assets is allocated to the Canaccord Genuity segment, as it relates to the acquisitions of Genuity and the 50% interest in
Canaccord Genuity Australia. Amortization of the identifiable intangible assets acquired through the purchase of CsHP is allocated
to Canaccord Genuity and Canaccord Genuity Wealth Management segments in the UK and Europe (Channel Islands). Amortization
of identifiable intangible assets acquired through the acquisition of Eden financial Ltd. is allocated to Canaccord Genuity Wealth
Management segments in the UK and Europe (Eden financial Ltd.). Income taxes are managed on a Company basis and are not
allocated to operating segments. All revenue and operating profit is derived from external customers. The Company also does not
allocate cash flows by reportable segments.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 105
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
for the years ended
march 31, 2014
March 31, 2013
Canaccord
genuity
wealth
genuity management
Canaccord
Corporate
and other
total
Canaccord
Genuity
Wealth
Genuity Management
Canaccord
Corporate
and Other
Total
revenues, excluding
interest revenue
$ 606,150
$ 214,143
$ 10,402
$ 830,695
$ 531,051
$ 219,510
$ 17,362
$ 767,923
Interest revenue
Expenses, excluding
undernoted
Amortization
Development costs
Interest expense
Acquisition-related costs
restructuring costs
Income (loss) before
income taxes and
9,640
9,893
5,016
24,549
9,982
12,102
7,115
29,199
488,670
185,978
46,008
720,656
475,988
187,919
54,974
718,881
14,858
9,682
14,166
—
5,486
10,146
10,080
502
—
—
1,782
1,607
1,691
—
—
26,786
21,369
21,074
7,945
16,359
13,200
—
388
10,735
9,593
296
1,331
5,486
15,232
15,485
1,970
1,988
33,779
19,526
1,806
15,302
—
900
1,719
31,617
intersegment allocations
82,928
17,330
(35,670)
64,588
7,206
6,253
(37,161)
(23,702)
Less: Intersegment
allocations
Income (loss) before
8,537
24,719
(33,256)
—
3,566
42,231
(45,797)
—
income taxes
$ 74,391
$
(7,389) $
(2,414) $ 64,588
$
3,640
$ (35,978) $
8,636
$
(23,702)
for geographic reporting purposes, the Company’s business operations are grouped into Canada, the UK and Europe, the United
states, and Other foreign Locations. The following table presents the revenue of the Company by geographic location:
for the years ended
Canada
United Kingdom and Europe
United states
Other foreign Locations
march 31,
2014
March 31,
2013
$
273,276
$
366,439
325,353
218,131
38,484
249,811
155,585
25,287
$
855,244
$
797,122
The following table presents selected figures pertaining to the financial position of each geographic location:
Canada
UK and
Europe
United
states
Other foreign
Locations
Total
as at march 31, 2014
Equipment and leasehold improvements
$
20,435
$
18,240
$
9,500
$
2,800
$
50,975
Goodwill
Intangible assets
Non-current assets
as at march 31, 2013
Equipment and leasehold improvements
Goodwill
Intangible assets
Non-current assets
242,074
62,763
325,272
21,172
242,074
66,483
329,729
206,051
60,165
284,456
9,757
172,417
51,473
233,647
7,942
78
17,520
9,751
7,313
47
17,111
58,840
8,644
70,284
2,299
62,882
12,280
77,461
514,907
131,650
697,532
42,979
484,686
130,283
657,948
106 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
note 22
Capital management
The Company’s business requires capital for operating and regulatory purposes, including funding current and future operations.
The Company’s capital structure is underpinned by shareholders’ equity, which is comprised of preferred shares, common shares,
contributed surplus, retained earnings and accumulated other comprehensive income (loss), and is further complemented by the
subordinated debt. The following table summarizes our capital as at March 31, 2014 and 2013:
Type of capital
Preferred shares
Common shares
Contributed surplus
retained earnings
Accumulated other comprehensive income (loss)
shareholders’ equity
subordinated debt
march 31,
2014
March 31,
2013
$
205,641
$
205,641
653,189
74,037
144,799
91,014
638,456
85,981
126,203
(7,118)
1,168,680
1,049,163
15,000
15,000
$ 1,183,680
$ 1,064,163
The Company’s capital management framework is designed to maintain the level of capital that will:
• Meet the Company’s regulated subsidiaries’ target ratios as set out by the respective regulators
• Fund current and future operations
• Ensure that the Company is able to meet its financial obligations as they become due
• Support the creation of shareholder value
The following subsidiaries are subject to regulatory capital requirements in the respective jurisdictions by the listed regulators:
• Canaccord Genuity Corp. is subject to regulation in Canada primarily by IIROC
• Canaccord Genuity Limited, Canaccord Genuity Wealth Limited, and Canaccord Genuity Financial Planning Limited are
regulated in the UK by the financial Conduct Authority
• Canaccord Genuity Wealth (International) Limited is licensed and regulated by the Guernsey Financial Services Commission,
the Isle of Man financial supervision Commission and the Jersey financial services Commission
• Canaccord Genuity Singapore Pte Ltd. is subject to regulation by the Monetary Authority of Singapore
• Canaccord Genuity (Australia) Limited is regulated by the Australian Securities and Investments Commission
• Canaccord Genuity (Hong Kong) Limited is regulated in Hong Kong by the Securities and Futures Commission
• Canaccord Genuity Inc. is registered as a broker dealer in the US and is subject to regulation primarily by the Financial
Industry regulatory Authority, Inc.
• Canaccord Genuity Wealth Management (USA) Inc. is registered as a broker dealer in the US and is subject to regulation
primarily by the financial Industry regulatory Authority, Inc.
• Canaccord Asset Management Inc. is subject to regulation in Canada by the Ontario Securities Commission
Margin requirements in respect of outstanding trades, underwriting deal requirements and/or working capital requirements cause
regulatory capital requirements to fluctuate on a daily basis. Compliance with these requirements may require the Company to
keep sufficient cash and other liquid assets on hand to maintain regulatory capital requirements rather than using these liquid
assets in connection with its business or paying them out in the form of cash disbursements. some of the subsidiaries are also
subject to regulations relating to withdrawal of capital, including payment of dividends to the Company. There were no significant
changes in the Company’s capital management policy during the current year. The Company’s subsidiaries were in compliance with
all of the minimum regulatory capital requirements during the year ended March 31, 2014.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 107
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
note 23
Client money
At March 31, 2014, the UK and Europe operations held client money in segregated accounts of $1,707.5 million (£926.7 million)
[2013 – $1,606.2 million; £1,042.0 million]. This is comprised of $10.1 million (£5.5 million) [2013 – $2.3 million; £1.5 million]
of balances held on behalf of clients to settle outstanding trades and $1,697.4 million (£921.2 million) [2013 – $1,603.9 million;
£1,040.5 million] of segregated deposits, held on behalf of clients, which are not reflected on the consolidated statements of
financial position. Movement in settlement balances is reflected in operating cash flows.
note 24
provisions and Contingencies
pRovisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, when it
is probable that an outflow of resources will be required to settle the obligation and when a reliable estimate of the amount can
be made. At each reporting date, the Company assesses the adequacy of its pre-existing provisions and adjusts the amounts as
necessary. The following is a summary of the changes during the years ended March 31, 2014 and 2013:
Legal
provisions
restructuring
provisions
Total
provisions
Balance, March 31, 2012
$
12,943
$
26,723
$
Additions
Utilized
recoveries
Balance, March 31, 2013
Additions
Utilized
recoveries
Balance, march 31, 2014
5,356
(5,515)
(2,605)
31,617
(48,464)
—
39,666
36,973
(53,979)
(2,605)
$
10,179
$
9,876
$
20,055
3,314
(5,891)
(190)
5,486
(12,440)
—
8,800
(18,331)
(190)
$
7,412
$
2,922
$
10,334
During the year ended March 31, 2014, the Company incurred $5.5 million in restructuring costs in connection with the
reorganization of the sales and trading operations in Canada and the UK and Europe as well as certain office closure costs. The
restructuring provisions at March 31, 2014 relate primarily to termination benefits, onerous leases and related asset impairments
incurred as part of the Company’s reorganization. It is expected that the restructuring provisions at March 31, 2014 will be mostly
utilized during the year ended March 31, 2015.
Commitments, litigation proceedings and contingent liabilities
In the normal course of business as an investment dealer, the Company is involved in litigation, and as of March 31, 2014, it
was a defendant in various legal actions. The Company has established provisions for matters where payments are probable and
can be reasonably estimated. While the outcome of these actions is subject to future resolution, management’s evaluation and
analysis of these actions indicate that, individually and in the aggregate, the probable ultimate resolution of these actions will not
have a material effect on the financial position of the Company. The amounts claimed in respect of two actions are material and,
accordingly, these actions are described below.
In 2002, two actions were commenced in the Superior Court of Québec against Canaccord Genuity Corp. and other defendants
including another investment dealer. Both are class action proceedings in which the plaintiffs make allegations of certain wrongful
trading and disclosure practices by the Company and another defendant and that the Company was negligent in respect of a
private placement in 2000. These actions are set for trial starting in september 2014. Canaccord intends to vigorously defend
itself against these claims. The outcome of these actions cannot be predicted with certainty. An adverse outcome in respect of
these actions could have a material adverse effect on the Company’s financial position.
The Company is also subject to asserted and unasserted claims arising in the normal course of business which, as of March 31,
2014, have not resulted in the commencement of legal actions. The Company cannot determine the effect of all asserted and
unasserted claims on its financial position; however, to the extent possible, where losses arising from asserted and unasserted
claims are considered probable and where such losses can be reasonably estimated, the Company has recorded a provision.
108 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
NOTEs TO CONsOLIDATED fINANCIAL sTATEMENTs
Certain claims have been asserted against the Company in respect of the sale of certain conventional wealth management
products in the UK which could be material if the Company’s assumptions used to evaluate the matter as neither probable nor
estimable change in future periods. In that event, the Company may be required to record a provision for an adverse outcome
which could have a material adverse effect on the Company’s financial position.
note 25
Commitments
subsidiaries of the Company are committed to approximate minimum lease payments for premises and equipment over the next
five years and thereafter as follows:
2015
2016
2017
2018
2019
Thereafter
$
33,896
31,595
26,825
23,363
18,307
65,965
$
199,951
some leases include extension options and provide for stepped rents, which mainly relate to lease of office space.
Certain subsidiaries of the Company have agreed to sublease agreements, and the approximate minimum lease receipts for
premises and equipment over the next five years and thereafter are as follows:
2015
2016
2017
2018
2019
Thereafter
note 26
subsequent event
dividends
$
3,461
2,646
1,107
1,107
829
4,254
$
13,404
On June 3, 2014, the Board of Directors approved the following cash dividends: $0.05 per common share payable on July 2, 2014
to common shareholders with a record date of June 20, 2014; $0.34375 per series A Preferred share payable on June 30, 2014
with a record date of June 13, 2014; and $0.359375 per series C Preferred share payable on June 30, 2014 with a record date
of June 13, 2014.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 109
supplemental information
Advisory note: This supplemental information is not audited and should be read in conjunction with the audited financial statements contained herein.
The Company adopted Ifrs beginning April 1, 2011. figures for the period ended March 31, 2010 are in accordance with CGAAP.
Financial highlights(1)
(C$ thousands, except for AUM, AUA, common and preferred
share information, financial measures and percentages)
Financial results
revenue
Expenses
Income taxes
Net income (loss)
Net income (loss) attributable to CGGI shareholders
Net income (loss) attributable to common
shareholders
Business segment
Income (loss) before income taxes
Canaccord Genuity(2)
Canaccord Genuity Wealth Management
Corporate and Other
geographic segment
Income (loss) before income taxes
Canada(3)
UK and Europe(4)
Us(5)
Other foreign Locations(6)
Client assets information ($ millions)
AUM – Canada (discretionary)
AUA – Canada
AUM – UK and Europe
AUM – Australia
Total
Common share information
Per common share ($)
Basic earnings (loss)
Diluted earnings (loss)
Book value per diluted common share(7)
Common share price ($)
High
Low
Close
Common shares outstanding (thousands)
Issued shares excluding unvested shares
Issued and outstanding
Diluted shares
Average basic
Average diluted
Market capitalization (thousands)
preferred share information (thousands)
shares issued and outstanding
Financial measures
Dividends per common share
Common dividend yield (closing common share price)
Common dividend payout ratio
Total shareholder return(8)
rOE(9)
Price to earnings multiple(10)
Price to book ratio(11)
$
$
$
$
$
$
$
2014
iFRs
855,244
790,656
12,531
52,057
51,413
$
for the years ended and as at March 31
2013
Ifrs
797,122
820,824
(4,927)
(18,775)
(16,819)
$
2012
Ifrs
604,864
620,983
5,227
(21,346)
(20,307)
$
2011
Ifrs
803,631
661,159
42,729
99,743
99,743
$
2010
CGAAP
577,537
525,896
13,144
38,497
38,497
39,651
(28,539)
(25,122)
99,743
38,497
$
74,391
(7,389)
(2,414)
$
3,640
(35,978)
8,636
(13,534)
(912)
(1,673)
$
$
$
$
$
136,659
12,132
(6,319)
111,905
14,129
16,755
(317)
546
16,985
—
—
16,985
1.37
1.22
8.79
16.41
7.95
14.00
$
$
$
$
39,439
(41,202)
(7,533)
(6,823)
677
14,828
13,087
—
27,915
(0.33)
(0.33)
8.26
15.31
6.94
8.30
94,026
101,689
106,883
76,715
n/a
887,131
75,404
82,810
85,655
72,990
81,717
1,199,170
4,206
(9,709)
(8,881)
(9,318)
835
10,429
15,936
451
26,816
(0.31)
(0.31)
7.68
8.30
4.03
6.82
93,062
102,896
109,880
92,218
n/a
749,380
8,540
4,540
$
0.20
2.9%
(71.8)%
(15.4)%
(3.3)%
(22.0)
0.9
$
0.40
4.8%
(139.9)%
(37.9)%
(3.1)%
(24.4)
1.0
—
0.275
2.0%
22.8%
28.6%
14.2%
11.8
1.6
$
$
$
$
$
$
61,389
(7,999)
(1,749)
30,036
9,533
8,631
3,441
445
12,922
—
—
12,922
0.79
0.69
6.96
11.87
5.30
11.10
48,868
55,571
57,767
48,698
55,662
640,259
—
0.15
0.3%
22.4%
108.3%
9.8%
16.1
1.6
$
$
$
$
$
(8,572)
47,431
27,320
(1,591)
1,204
10,160
20,156
555
30,871
0.42
0.39
9.05
8.45
5.05
8.20
93,115
101,471
107,937
94,125
101,993
885,087
8,540
0.20
2.4%
51.6%
23.2%
4.4%
21.0
0.9
(1)
(2)
(3)
(4)
Certain non-Ifrs measures are utilized by the Company as measures of financial performance. Non-Ifrs measures do not have any standardized meaning prescribed by Ifrs and are therefore
unlikely to be comparable to similar measures presented by other companies. Non-Ifrs measures included are: return on average common equity (rOE), book value per diluted common share,
common dividend yield, common dividend payout ratio, total shareholder return, price to earnings multiple (P/E), price to book ratio (P/B), assets under management (AUM) and assets under
administration (AUA).
Includes the capital markets division in Canada, the UK and Europe, the Us, Australia, China, Barbados and singapore.
Canaccord’s Canada geographic segment includes operations for Canaccord Genuity, Canaccord Genuity Wealth Management and Corporate and Other business segments.
Canaccord’s UK and Europe geographic segment engages in capital markets and wealth management activities. results of former CsHP entities located in the UK and Europe since March 22, 2012
and the wealth management operations of Eden financial Ltd. since October 1, 2012 are also included.
(5) Canaccord’s Us geographic segment includes Us capital markets and wealth management operations. results of former CsHP entities located in the Us are included since March 22, 2012.
(6)
revenue derived from capital markets activity outside of Canada, the Us and the UK and Europe is reported as Other foreign Locations, which includes operations in Australia, China, Barbados and
singapore. results of Australian operations are included since November 1, 2011, and singaporean operations are included since March 22, 2012.
Book value per diluted common share, a non-Ifrs measure, is calculated as total 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.
Total shareholder return is calculated as the change in share price plus dividends paid to common shares and special distributions paid in the current period as a percentage of the prior period’s
closing common share price, assuming reinvestment of all dividends.
rOE is calculated by dividing the annual net income attributable to common shareholders over the average common shareholders’ equity.
(7)
(8)
(9)
(10) The price to earnings multiple is calculated based on the end of period share price and 12-month trailing diluted EPs.
(11)
The price to book ratio is calculated based on the end of period common share price and book value per diluted common share.
110 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
sUPPLEMENTAL INfOrMATION
Condensed Consolidated statements of operations and Retained earnings(1)
(C$ thousands, except
per share amounts and percentages)
Revenue
Commissions and fees
Investment banking
Advisory fees
Principal trading
Interest
Other
expenses
Incentive compensation(2)
salaries and benefits
Trading costs
Premises and equipment
Communication and technology
Interest
General and administrative
Amortization
Development costs
restructuring costs
Acquisition-related costs
Income (loss) before income taxes
Income taxes
net income (loss) for the year
Non-controlling interests
Net income (loss) attributable to CGGI shareholders
retained earnings, beginning of year
Opening Ifrs adjustments
Common shares dividends
Preferred shares dividends
$
$
for the years ended March 31
2014
iFRs
361,647
221,410
139,142
91,313
24,549
17,183
855,244
413,289
91,135
47,872
38,461
46,065
16,359
83,834
26,786
21,369
5,486
—
790,656
64,588
12,531
52,057
644
51,413
126,203
—
(21,055)
(11,762)
$
$
2013
Ifrs
353,125
145,772
179,690
66,406
29,199
22,930
797,122
406,724
88,522
43,892
41,124
49,115
15,302
89,504
33,779
19,526
31,617
1,719
820,824
(23,702)
(4,927)
(18,775)
(1,956)
(16,819)
180,748
—
(26,006)
(11,720)
$
$
$
$
2012
Ifrs
252,877
175,225
107,370
10,647
31,799
26,946
604,864
304,908
63,924
30,313
27,546
28,343
9,816
69,523
14,108
21,193
35,253
16,056
620,983
(16,119)
5,227
(21,346)
(1,039)
(20,307)
238,647
—
(32,778)
(4,814)
2011
Ifrs
294,650
327,499
84,914
43,644
24,040
28,884
803,631
389,046
64,420
31,507
27,158
25,466
7,811
67,882
12,742
22,387
—
12,740
661,159
142,472
42,729
99,743
—
99,743
194,007
(35,869)
(19,234)
—
$
$
2010
CGAAP
235,606
215,237
39,200
45,982
12,965
28,547
577,537
299,084
59,415
28,884
24,402
21,868
2,581
52,153
7,609
24,900
—
5,000
525,896
51,641
13,144
38,497
—
38,497
160,868
—
(5,358)
—
Retained earnings, end of year
$
144,799
$
126,203
$
180,748
$
238,647
$
194,007
Incentive compensation expenses as a % of revenue
Total compensation expenses as a % of revenue(3)
Non-compensation expenses as a % of revenue
Total expenses as a % of revenue
Pre-tax profit margin
Effective tax rate
Net profit margin
Basic earnings (loss) per share
Diluted earnings (loss) per share
Book value per diluted common share(4)
supplemental segmented revenue information
Canaccord Genuity
Canaccord Genuity Wealth Management
Corporate and Other
48.3%
59.0%
33.6%
92.4%
7.6%
19.4%
6.1%
0.42
0.39
9.05
615,790
224,036
15,418
51.0%
62.1%
40.8%
103.0%
(3.0)%
20.8%
(2.4)%
(0.31)
(0.31)
7.68
541,033
231,612
24,477
$
$
$
$
50.4%
61.0%
41.7%
102.7%
(2.7)%
(32.4)%
(3.5)%
(0.33)
(0.33)
8.26
373,477
201,290
30,097
$
$
$
$
48.4%
56.4%
25.8%
82.3%
17.7%
30.0%
12.4%
1.37
1.22
8.79
538,644
233,049
31,938
51.8%
62.1%
29.0%
91.1%
8.9%
25.5%
6.7%
0.79
0.69
6.96
363,558
187,046
26,933
$
$
$
$
$
$
$
$
$
$
$
$
$
855,244
$
797,122
$
604,864
$
803,631
$
577,537
(1)
(2)
(3)
(4)
Certain non-Ifrs measures are utilized by the Company as measures of financial performance. Non-Ifrs measures do not have any standardized meaning prescribed by Ifrs and are therefore
unlikely to be comparable to similar measures presented by other companies. Non-Ifrs measures included are: incentive compensation expenses as a % of revenue, total compensation expenses
as a % of revenue, non-compensation expenses as a % of revenue, total expenses as a % of revenue, and book value per diluted common share.
Incentive compensation expenses include the National Insurance Tax applicable to the UK.
Total compensation expenses include incentive compensation and salaries and benefits, but exclude hiring incentives, which are included in development costs. Beginning in fiscal 2011,
development group salaries and benefits have been included as compensation expense, whereas they were classified as development costs prior to fiscal 2011.
Book value per diluted common share, a non-Ifrs measure, is calculated as total 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.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 111
sUPPLEMENTAL INfOrMATION
Condensed Consolidated statements of Financial position
2013
As at March 31 (C$ thousands)
2014
assets
Cash and cash equivalents
securities owned, at market
Accounts receivable
Income taxes recoverable
Deferred tax assets
Investments
Equipment and leasehold improvements
Goodwill and other intangibles
liabilities and shareholders’ equity
Bank indebtedness
short term credit facility
securities sold short, at market
Accounts payable and accrued liabilities
Income taxes payable
Contingent consideration
Deferred tax liabilities
subordinated debt
Non-controlling interests
shareholders’ equity
iFRs
Ifrs
$
364,296
1,143,201
2,785,898
3,983
9,735
9,977
50,975
646,557
$ 5,014,622
$
491,012
924,337
2,513,958
—
12,552
3,695
42,979
614,969
$ 4,603,502
$
—
—
913,913
2,888,267
10,822
—
3,028
15,000
14,912
1,168,680
$ 5,014,622
$
66,138
—
689,020
2,746,790
4,428
14,218
2,576
15,000
16,169
1,049,163
$ 4,603,502
2012
Ifrs
2011
Ifrs
2010
CGAAP
$
814,238
1,171,988
3,081,640
8,301
3,959
9,493
51,084
622,020
$ 5,762,723
$
75,141
150,000
914,649
3,590,266
—
—
8,088
15,000
17,454
992,125
$ 5,762,723
$
954,068
947,185
2,828,812
—
1,503
5,934
40,818
319,180
$ 5,097,500
$
13,580
—
722,613
3,557,275
23,977
—
8,163
15,000
—
756,892
$ 5,097,500
$
731,852
362,755
1,972,924
—
13,190
5,000
38,127
—
$ 3,123,848
$
29,435
—
364,137
2,308,146
5,385
—
—
15,000
—
401,745
$ 3,123,848
miscellaneous operational statistics(1)
As at March 31
number of employees in Canada
Number in Canaccord Genuity
Number in Canaccord Genuity Wealth Management
Number in Corporate and Other
Total Canada
number of employees in the uk and europe
Number in Canaccord Genuity
Number in Canaccord Genuity Wealth Management
number of employees in the us
Number in Canaccord Genuity
number of employees in other Foreign locations
Number in Canaccord Genuity
Number in Canaccord Genuity Wealth Management
number of employees company-wide
Number of Advisory Teams in Canada(2)
Number of licensed professionals in Canada
Number of investment professionals and
fund managers in the UK and Europe(3)
Number of Advisors – Australia
AUM – Canada (discretionary) (C$ millions)
AUA – Canada (C$ millions)
AUM – UK and Europe (C$ millions)
AUM – Australia (C$ millions)
Total (C$ millions)
number of companies with Canaccord genuity
limited as broker
London stock Exchange (LsE)
Alternative Investment Market (AIM)
Total broker
number of companies with Canaccord genuity
limited as nomad(4)
LsE
AIM
Total Nomad
$
$
$
$
$
2014
2013
2012
2011
215
420
316
951
372
294
286
89
12
2,004
160
436
118
9
1,204
10,160
20,156
555
30,871
52
43
95
—
33
33
$
$
$
$
$
222
461
332
1,015
400
294
253
84
14
2,060
178
494
122
12
835
10,429
15,936
451
26,816
55
56
111
—
45
45
$
$
$
$
$
247
684
378
1,309
461
276
302
80
—
2,428
280
604
106
—
677
14,828
13,087
—
27,915
52
77
129
—
62
62
$
$
$
$
$
268
684
373
1,325
143
—
175
41
—
1,684
271
645
—
—
546
16,985
—
—
16,985
26
39
65
1
30
31
$
$
$
$
$
2010
203
680
364
1,247
138
—
163
1
—
1,549
303
718
—
—
445
12,922
—
—
12,922
23
43
66
1
35
36
(1) These miscellaneous operational statistics are non-Ifrs measures.
(2) Advisory Teams in Canada are normally comprised of one or more Investment Advisors (IAs) and their assistants and associates, who together manage a shared set of client accounts. Advisory
Teams that are led by, or only include, an IA who has been licensed for less than three years are not included in our Advisory Team count, as it typically takes a new IA approximately three years to
build an average-sized book.
Investment professionals include all staff with direct sales responsibilities, which includes brokers and assistants with direct client contacts. fund managers include all staff who manage client assets.
A company listed on AIM is required to retain a Nominated Adviser (commonly referred to as a Nomad) during the company’s life on the market. Among other duties, Nomads are responsible for
warranting that a company is appropriate for joining AIM. A Nomad is similar to a financial Advisor on the LsE, but is specific to AIM.
(3)
(4)
112 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
sUPPLEMENTAL INfOrMATION
Quarterly Financial highlights(1)
(C$ thousands, except for AUM, AUA,
common and preferred share information,
financial measures and percentages)
Q4
Fiscal 2014
Q3
Q2
Q1
Q4
Q3
Q2
Q1
fiscal 2013
Financial results
revenue
Expenses
Income taxes (recovery)
Net income (loss)
Net income (loss) attributable to
CGGI shareholders
Net income (loss) attributable to
common shareholders
Business segment
Income (loss) before income taxes
Canaccord Genuity(2)
Canaccord Genuity Wealth
Management
Corporate and Other
geographic segment
(Loss) income before income taxes
Canada(3)
UK and Europe(4)
Us(5)
Other foreign Locations(6)
Client assets ($ millions)
AUM – Canada (discretionary)
AUA – Canada
AUM – UK and Europe
AUM – Australia
Total
Common share information
Per common share ($)
Basic earnings (loss)
Diluted earnings (loss)
Book value per diluted common share(7)
Common share price ($)
High
Low
Close
Common shares outstanding (thousands)
Issued shares excluding
unvested shares
Issued and outstanding
Diluted shares
Average basic
Average diluted
Market capitalization (thousands)
Preferred shares outstanding (thousands)
shares issued and outstanding
Financial measures
Dividends per common share
Common dividend yield (closing
share price)
Common dividend payout ratio
Total shareholder return(8)
Annualized rOE(9)
Price to earnings multiple(10)
Price to book ratio(11)
$ 253,748 $ 230,959 $ 183,306 $ 187,231 $ 217,971 $ 230,003 $ 186,599 $ 162,549
187,048
221,737
6,091
(3,877)
(20,622)
25,920
206,539 184,262 178,118 211,984
216,882
2,857
10,264
(3,470)
(14,841)
6,086
18,334
1,230
7,883
(876)
(80)
204,910
(437)
6,424
25,734
17,321
(383)
8,741
6,830
10,880
(14,562)
(19,967)
22,774
14,400
(3,304)
5,781
3,943
7,882
(17,560)
(22,804)
$ 34,617 $ 27,908 $
(26) $ 11,892 $ 11,967 $ 19,578 $
(6,477) $ (21,428)
963
(3,569)
(3,101)
(387)
(3,338)
2,408
(1,913)
(866)
(3,785)
(2,195)
(5,283)
(1,174)
(20,518)
8,684
(6,392)
3,321
$
(456) $
37 $
17,863
14,905
(301)
17,625
2,887
3,872
(6,399) $
3,024
3,147
(728)
(1,746) $
8,919
6,374
(4,435)
4,207 $ 17,968 $ (15,245) $
354
4,245
(2,819)
(1,267)
(998)
(2,585)
928
(2,661)
(1,333)
(3,043)
(9,729)
(9,148)
(2,581)
$
1,204 $
10,160
20,156
555
30,871
1,070 $
9,536
18,984
463
28,983
935 $
880 $
835 $
791 $
784 $
9,427
17,655
411
27,493
9,325
16,125
360
25,810
10,429
15,936
451
26,816
11,403
15,228
408
27,039
13,344
13,122
354
26,820
709
13,137
12,583
305
26,025
$
$
0.24 $
0.22
9.05
8.45 $
6.54
8.20
0.15 $
0.14
8.43
7.00 $
5.84
6.95
(0.03) $
(0.03)
8.00
7.06 $
5.37
6.63
0.06 $
0.06
7.87
6.94 $
5.05
5.71
0.04 $
0.04
7.68
7.93 $
6.44
6.82
0.09 $
0.08
7.62
(0.19) $
(0.19)
7.61
(0.24)
(0.24)
7.90
6.77 $
4.70
6.70
6.45 $
4.03
5.68
8.30
4.91
5.50
93,115
101,471
107,945
92,930
102,218
885,151
92,912
101,819
108,409
93,369
102,667
753,446
93,951
102,520
109,604
94,486
n/a
726,672
94,936
103,570
109,667
94,524
102,770
626,201
93,062
102,896
109,882
92,663
103,045
749,399
92,522
102,513
110,969
92,268
102,454
743,492
93,991
102,381
108,789
93,716
n/a
617,922
93,566
102,031
107,854
94,145
n/a
593,196
8,540
8,540
8,540
8,540
8,540
8,540
8,540
8,540
$
0.05 $
0.05 $
0.05 $
0.05 $
0.05 $
0.05 $
0.05 $
0.05
2.4%
22.3%
18.7%
9.8%
21.0
0.9
2.9%
35.4%
5.6%
6.4%
33.1
0.8
3.0%
(155.1)%
17.0%
(1.5)%
44.2
0.8
3.5%
89.6%
(15.5)%
2.7%
(571.0)
0.7
2.9%
130.5%
2.5%
1.9%
(22.0)
0.9
3.0%
65.0%
18.8%
3.7%
(8.7)
0.9
3.5%
(29.2)%
4.2%
(8.3)%
(6.8)
0.7
3.6%
(22.4)%
(33.1)%
(10.6)%
(7.4)
0.7
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Certain non-Ifrs measures are utilized by the Company as measures of financial performance. Non-Ifrs measures do not have any standardized meaning prescribed by Ifrs and are therefore unlikely
to be comparable to similar measures presented by other companies. Non-Ifrs measures included are: return on average common equity (rOE), book value per diluted common share, common dividend
yield, common dividend payout ratio, total shareholder return, price to earnings multiple (P/E), price to book ratio (P/B), assets under management (AUM) and assets under administration (AUA).
Includes the global capital markets division in Canada, the UK and Europe, the Us, Australia, China, Barbados and singapore.
Canaccord’s Canada geographic segment includes operations for Canaccord Genuity, Canaccord Genuity Wealth Management and Corporate and Other business segments.
Canaccord’s UK and Europe geographic segment engages in capital markets and wealth management activities. results of former CsHP entities located in the UK and Europe since March 22, 2012
and the wealth management operations of Eden financial Ltd. since October 1, 2012 are also included.
Canaccord’s Us geographic segment includes Us capital markets and wealth management operations. results of former CsHP entities located in the Us are included since March 22, 2012.
revenue derived from capital markets activity outside of Canada, the Us and the UK and Europe is reported as Other foreign Locations, which includes operations in Australia, China, Barbados and
singapore. results of Australian operations are included since November 1, 2011, and singaporean operations are included since March 22, 2012.
Book value per diluted common share, a non-Ifrs measure, is calculated as total 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.
Total shareholder return is calculated as the change in share price plus dividends paid to common shares and special distributions paid in the current period as a percentage of the prior period’s
closing common share price, assuming reinvestment of all dividends.
rOE is presented on an annualized basis. Quarterly annualized rOE is calculated by dividing the annualized net income attributable to common shareholders for the three-month period over the
average common shareholders’ equity.
(10) The price to earnings multiple is calculated based on the end of period share price and 12-month trailing diluted EPs.
(11)
The price to book ratio is calculated based on the end of period common share price and book value per diluted common share.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 113
sUPPLEMENTAL INfOrMATION
Condensed Consolidated statements of operations(1)
(C$ thousands, except per share
amounts and percentages)
Q4
Fiscal 2014
Q3
Q2
Q1
Q4
Q3
Q2
Q1
fiscal 2013
Revenue
Commissions and fees
Investment banking
Advisory fees
Principal trading
Interest
Other
expenses
Incentive compensation(2)
salaries and benefits
Trading costs
Premises and equipment
Communication and technology
Interest
General and administrative
Amortization
Development costs
restructuring costs
Acquisition-related costs
Income (loss) before income taxes
Income taxes (recovery)
net income (loss) for the period
$ 102,199 $ 87,581 $ 81,832 $ 90,035 $ 87,438 $ 89,415 $ 87,525 $ 88,747
28,661
25,626
7,847
8,392
3,276
162,549
78,453
33,585
31,027
5,908
2,576
253,748
70,841
39,758
21,863
5,704
5,212
230,959
31,833
35,905
19,540
6,805
3,113
187,231
40,283
29,894
18,883
6,132
6,282
183,306
37,961
28,571
17,109
6,758
8,675
186,599
40,609
69,348
18,670
7,291
4,670
230,003
38,541
56,145
22,780
6,758
6,309
217,971
124,576
25,169
14,199
9,211
11,790
3,778
20,494
7,455
5,065
—
—
221,737
32,011
6,091
114,877
21,350
11,370
10,092
12,345
3,875
22,077
6,750
3,803
—
—
206,539
24,420
6,086
87,511
21,506
10,336
9,823
11,406
4,063
20,440
6,020
7,671
5,486
—
184,262
(956)
(876)
$ 25,920 $ 18,334 $
(80) $
86,325
23,110
11,967
9,335
10,524
4,643
20,823
6,561
4,830
—
—
178,118
9,113
1,230
7,883 $
113,297
22,825
10,697
9,924
11,390
3,479
20,722
9,490
3,715
6,445
—
211,984
5,987
(437)
84,776
23,198
12,587
10,854
14,305
4,551
24,016
8,136
4,625
—
—
187,048
(24,499)
(3,877)
6,424 $ 10,264 $ (14,841) $ (20,622)
94,514
21,417
10,189
10,842
11,280
3,291
20,957
7,755
4,515
18,862
1,288
204,910
(18,311)
(3,470)
114,137
21,082
10,419
9,504
12,140
3,981
23,809
8,398
6,671
6,310
431
216,882
13,121
2,857
Non-controlling interests
net income (loss) attributable
to Cggi shareholders
Incentive compensation expenses
as a % of revenue
Total compensation expenses
as a % of revenue(3)
Non-compensation expenses
as a % of revenue
Total expenses as a % of revenue
Pre-tax profit margin
Effective tax rate
Net profit margin
$
Basic earnings (loss) per share
Diluted earnings (loss) per share
$
Book value per diluted common share(4) $
186
1,013
303
(858)
(406)
(616)
(279)
(655)
25,734
17,321
(383)
8,741
6,830
10,880
(14,562)
(19,967)
49.1%
49.7%
47.7%
46.1%
52.0%
49.6%
50.7%
52.2%
59.0%
59.0%
59.5%
58.4%
62.4%
58.8%
62.2%
66.5%
28.5%
87.4%
12.6%
19.0%
10.2%
0.24 $
0.22 $
9.05 $
30.4%
89.4%
10.6%
24.9%
7.9%
0.15 $
0.14 $
8.43 $
41.1%
100.5%
(0.5)%
91.6%
—
(0.03) $
(0.03) $
8.00 $
36.7%
95.1%
4.9%
13.5%
4.2%
0.06 $
0.06 $
7.87 $
34.9%
97.3%
2.7%
(7.3)%
2.9%
0.04 $
0.04 $
7.68 $
35.5%
94.3%
5.7%
21.8%
4.5%
0.09 $
0.08 $
7.62 $
47.7%
109.8%
(9.8)%
19.0%
(8.0)%
(0.19) $
(0.19) $
7.61 $
48.6%
115.1%
(15.1)%
15.8%
(12.7)%
(0.24)
(0.24)
7.90
supplemental segmented revenue
information
Canaccord Genuity
Canaccord Genuity
Wealth Management
Corporate and Other
$ 186,659 $ 171,234 $ 126,691 $ 131,206 $ 153,997 $ 165,625 $ 120,110 $ 101,301
65,236
1,853
56,354
4,894
$ 253,748 $ 230,959 $ 183,306 $ 187,231 $ 217,971 $ 230,003 $ 186,599 $ 162,549
58,929
5,045
56,486
10,003
59,843
4,535
53,820
2,205
50,243
6,372
54,737
4,988
(1)
(2)
(3)
(4)
Certain non-Ifrs measures are utilized by the Company as measures of financial performance. Non-Ifrs measures do not have any standardized meaning prescribed by Ifrs and are therefore
unlikely to be comparable to similar measures presented by other companies. Non-Ifrs measures included are: incentive compensation expenses as a % of revenue, total compensation expenses
as a % of revenue, non-compensation expenses as a % of revenue, total expenses as a % of revenue, and book value per diluted common share.
Incentive compensation expenses include the National Insurance Tax applicable to the UK.
Total compensation expenses include incentive compensation and salaries and benefits, but exclude hiring incentives, which are included in development costs.
Book value per diluted common share, a non-Ifrs measure, is calculated as total 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.
114 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Condensed Consolidated statements of Financial position
sUPPLEMENTAL INfOrMATION
(C$ thousands)
assets
Cash and cash equivalents
securities owned, at market
Accounts receivable
Income taxes recoverable
Deferred tax assets
Investments
Equipment and leasehold
improvements
Goodwill and other intangibles
liabilities and shareholders’ equity
Bank indebtedness
securities sold short, at market
Accounts payable and
accrued liabilities
Income taxes payable
Contingent consideration
Deferred tax liabilities
subordinated debt
Non-controlling interests
shareholders’ equity
Q4
Fiscal 2014
Q3
Q2
Q1
Q4
Q3
Q2
Q1
fiscal 2013
$ 364,296 $ 357,713 $ 360,172 $ 380,869 $ 491,012 $ 555,960 $ 575,367 $ 644,027
1,143,201 1,143,898
924,337 1,453,470 1,087,334 1,214,424
2,785,898 1,912,423 2,268,642 2,843,247 2,513,958 2,280,064 2,750,879 2,548,117
15,866
6,735
9,488
3,405
10,877
9,267
15,120
6,077
3,247
—
12,552
3,695
929,247 1,426,328
3,983
9,735
9,977
1,755
9,322
9,491
3,276
9,938
4,113
—
8,550
3,276
50,975
646,557
49,678
617,503
$ 5,014,622 $ 4,122,920 $ 4,245,682 $ 5,327,433 $ 4,603,502 $ 4,977,201 $ 5,102,481 $ 5,105,838
42,293
617,369
41,306
622,766
50,390
637,928
42,979
614,969
46,613
629,268
48,013
616,444
$
— $ 85,080 $ 83,430 $ 84,185 $ 66,138 $
913,913
816,037
718,815 1,215,685
689,020 1,193,043
— $ 29,475 $ 84,536
847,665 1,036,535
10,822
—
3,028
15,000
14,912
2,888,267 2,064,779 2,317,668 2,915,765 2,746,790 2,681,775 3,150,580 2,887,434
—
—
7,482
15,000
16,882
1,168,680 1,119,396 1,082,613 1,068,625 1,049,163 1,051,183 1,033,842 1,057,969
$ 5,014,622 $ 4,122,920 $ 4,245,682 $ 5,327,433 $ 4,603,502 $ 4,977,201 $ 5,102,481 $ 5,105,838
—
5,988
4,530
15,000
12,110
—
14,218
1,711
15,000
12,244
—
14,288
1,493
15,000
12,375
4,428
14,218
2,576
15,000
16,169
2,494
14,218
3,575
15,000
15,913
—
6,000
3,872
15,000
16,047
miscellaneous operational statistics(1)
number of employees in Canada
Number in Canaccord Genuity
Number in Canaccord Genuity
Wealth Management
Number in Corporate and Other
Total Canada
number of employees in the
uk and europe
Number in Canaccord Genuity
Number in Canaccord Genuity
Wealth Management
number of employees in the us
Number in Canaccord Genuity
number of employees in
other Foreign locations
Number in Canaccord Genuity
Number in Canaccord Genuity
Wealth Management
number of employees company-wide
Number of Advisory Teams in Canada(2)
Number of licensed professionals
in Canada
Number of investment professionals and
fund managers in the UK and Europe(3)
Number of Advisors – Australia
AUM – Canada (discretionary)
(C$ millions)
AUA – Canada (C$ millions)
AUM – UK and Europe (C$ millions)
AUM – Australia (C$ millions)
Total (C$ millions)
number of companies with Canaccord
genuity limited as broker
London stock Exchange (LsE)
Alternative Investment Market (AIM)
Total broker
number of companies with Canaccord
genuity limited as nomad(4)
LsE
AIM
Total Nomad
Fiscal 2014
fiscal 2013
Q4
Q3
Q2
Q1
Q4
Q3
Q2
215
420
316
951
372
294
286
214
425
319
958
361
294
279
215
430
320
965
385
287
275
221
448
323
992
388
289
264
222
224
225
461
332
1,015
493
332
1,049
617
343
1,185
400
294
253
424
298
259
420
262
252
Q1
239
662
376
1,277
427
267
304
89
90
90
88
84
85
81
82
12
2,004
160
436
118
9
12
1,994
163
441
119
9
10
2,012
163
446
115
8
10
2,031
173
472
119
7
14
2,060
178
494
122
12
14
2,129
184
483
119
11
15
2,215
231
553
96
11
11
2,368
269
604
98
10
1,070 $
9,536 $
709
1,204 $
$
$ 10,160 $
9,325 $ 10,429 $ 11,403 $ 13,344 $ 13,137
$ 20,156 $ 18,984 $ 17,655 $ 16,125 $ 15,936 $ 15,228 $ 13,122 $ 12,583
$
305
360 $
$ 30,871 $ 28,983 $ 27,493 $ 25,810 $ 26,816 $ 27,039 $ 26,820 $ 26,025
935 $
9,427 $
784 $
835 $
791 $
451 $
354 $
408 $
880 $
555 $
411 $
463 $
52
43
95
—
33
33
53
46
99
—
36
36
55
50
105
—
40
40
57
51
108
—
43
43
55
56
111
—
45
45
61
62
123
—
50
50
71
65
136
—
52
52
75
68
143
—
53
53
(1)
(2)
These miscellaneous operational statistics are non-Ifrs measures.
Advisory Teams are normally comprised of one or more Investment Advisors (IAs) and their assistants and associates, who together manage a shared set of client accounts. Advisory Teams that are
led by, or only include, an IA who has been licensed for less than three years are not included in our Advisory Team count, as it typically takes a new IA approximately three years to build an average-
sized book.
(3) Investment professionals include all staff with direct sales responsibilities, which includes brokers and assistants with direct client contacts. fund managers include all staff who manage client assets.
A company listed on AIM is required to retain a Nominated Adviser (commonly referred to as a Nomad) during the company’s life on the market. Among other duties, Nomads are responsible for
(4)
warranting that a company is appropriate for joining AIM. A Nomad is similar to a financial Advisor on the LsE, but is specific to AIM.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 115
glossary
acquisition-related expense items
Acquisition-related expense items include costs incurred to
acquire Genuity Capital Markets, The Balloch Group Limited,
50% interest in BGf Capital Pty Ltd., Collins stewart Hawkpoint
plc, certain assets and liabilities of Kenosis Capital Partners,
and the wealth management business of Eden financial Ltd.,
as well as the amortization of intangible assets related
to these acquisitions. Acquisition-related expense items
also include costs incurred for prospective acquisitions not
pursued. figures that exclude acquisition-related items are
considered non-Ifrs measures.
commissions or fees. This measure includes both discretionary
and non-discretionary accounts. This measure is non-Ifrs.
Book value per diluted common share
A measure of common equity per share calculated by
subtracting liabilities from assets and dividing by the number
of diluted 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.
This measure is non-Ifrs.
advantageBC international Business Centre society
Membership provides certain tax and financial benefits,
reducing the overall corporate tax rate, pursuant to British
Columbia legislation.
advisory fees
revenue related to the fees Canaccord charges for corporate
advisory, mergers and acquisitions or corporate restructuring
services is recorded as advisory fees.
advisory teams (ia teams)
Advisory Teams are normally comprised of one or more IAs
and their assistants and associates, who together manage
a shared set of client accounts. Advisory Teams that are led
by, or only include, an IA who has been licensed for less than
three years are not included in our Advisory Team count, as
it typically takes a new IA approximately three years to build
an average-sized book. As Independent Wealth Management
branches are led by one advisor (with a team), each IWM
branch is counted as a single Advisory Team.
alternative investment market (aim)
The junior arm of the London stock Exchange (LsE), AIM
provides a global market for smaller, growing companies.
assets under administration (aua) Canada
AUA is the market value of client assets administered by
Canaccord, for which Canaccord earns commissions or
fees. This measure includes funds held in client accounts,
as well as the aggregate market value of long and short
security positions. Management uses this measure to assess
operational performance of the Canaccord Genuity Wealth
Management business segment. This measure is non-Ifrs.
assets under management (aum) Canada
AUM consists of assets that are beneficially owned by clients
and discretionarily managed by Canaccord as part of the Complete
Canaccord Investment Counselling Program and the Complete
Canaccord Private Investment Management Program. services
provided include the selection of investments and the provision
of investment advice. AUM is also administered by Canaccord
and is therefore included in AUA. This measure is non-Ifrs.
assets under management (aum) uk and europe
AUM is the market value of client assets managed and
administered by Canaccord, for which Canaccord earns
116 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Canaccord BgF
Canaccord BGf was the brand used for Canaccord Genuity’s
operations in Australia and Hong Kong. These operations
have been rebranded to reflect our global capital markets and
wealth management branding.
Canaccord genuity
Canaccord’s capital markets division was rebranded from
Canaccord Adams to Canaccord Genuity in May 2010,
following the acquisition of Genuity Capital Markets.
Canaccord Genuity refers to the Company’s global capital
markets division.
Canaccord genuity asia
Canaccord Genuity Asia was the brand used for Canaccord
Genuity’s operations in the Asia-Pacific region. These
operations have been rebranded to reflect our global capital
markets branding.
Canaccord genuity hawkpoint
Canaccord Genuity Hawkpoint was the brand used to represent
part of Canaccord Genuity’s global corporate advisory
operations based in the UK and Europe. This division has
been rebranded to reflect our global capital markets branding.
Canaccord genuity wealth management (Cgwm)
Canaccord’s wealth management businesses were rebranded
Canaccord Genuity Wealth Management on May 1, 2013 to
reflect Canaccord’s global wealth management presence.
CGWM has operations in Canada, the UK, Europe, and Australia.
Collins stewart hawkpoint plc (Cshp)
Canaccord acquired Collins stewart Hawkpoint plc (CsHP) on
March 21, 2012. CsHP was a leading independent financial
advisory group with operations in the UK, the Us, Europe
and singapore. subsequent to the acquisition, CsHP was
rebranded Canaccord Genuity.
Collins stewart wealth management (Cswm)
Collins stewart Wealth Management was the private client
division of the former CsHP, servicing over 10,000 clients
from offices in the UK, the Channel Islands, the Isle of Man
and switzerland. CsWM was rebranded Canaccord Genuity
Wealth Management on May 1, 2013.
GLOssArY
Common equity
Also referred to as common shares, which are, as the name
implies, the most usual and commonly held form of stock
in a corporation. Dividends paid to the stockholders must
be paid to preferred shares before being paid to common
stock shareholders.
Correspondent brokerage services
The provision of secure administrative, trade execution
and research services to other brokerage firms through the
Company’s existing technology and operations infrastructure
(Pinnacle Correspondent services).
Csh inducement plan
A retention plan for key CsHP staff in connection with the
acquisition of CsHP.
dilution
The change in earnings and book value per share resulting
from the exercise of all warrants and options and conversion
of convertible securities.
dividend yield
A financial ratio that shows how much a company pays out in
dividends each year relative to its share price. It is calculated
as total annual dividends per share divided by the company
share price.
earnings (loss) per share (eps), diluted
Net income (loss) divided by the weighted average number of
shares outstanding adjusted for the dilutive effects of stock
options and other share-based compensation.
genuity Capital markets
Canaccord acquired Genuity Capital Markets and certain of
its affiliates (also referred to as “Genuity”) on April 23, 2010.
Genuity was an independent Canadian investment bank with
strong mergers and acquisitions and advisory practices.
subsequent to the acquisition, Canaccord renamed its capital
markets division Canaccord Genuity.
incentive-based revenue
A percentage of incentive-based revenue earned is directly
paid out as incentive compensation expense. At Canaccord,
this includes commission, investment banking, advisory fees,
and principal trading revenue.
independent wealth management (iwm)
An independent operating platform of Canaccord Genuity
Wealth Management, under which Investment Advisors operate
as independent agents of the Company. Each IWM branch is
classified as one Advisory Team, which is comprised of one or
more Investment Advisors and their assistants and associates,
who together manage a shared set of client accounts.
institutional sales and trading
A capital markets business segment providing market
information and research, advice and trade execution to
institutional clients.
international equity group (ieg)
The International Equity Group is a premium, low cost, order
routing destination for both Us listed securities and foreign
listed ordinary shares for local market execution in the
Us operations.
efficiency ratio
A financial ratio to measure efficiency calculated by dividing
total expense over total revenue.
international trading
Executing trades in Canadian securities on behalf of Us
brokerage firms.
employee stock purchase plan (espp)
Voluntary plan that provides eligible employees with the
ability to purchase shares in the Company through payroll
deductions, with an additional contribution by the Company.
escrowed securities
Common shares in the Company that are subject to specific
terms of release.
Fair value adjustment
An estimate of the fair value of an asset (or liability) for which
a market price cannot be determined, usually because there is
no established market for the asset.
Fixed income trading
Trading in new issues, government and corporate bonds,
treasury bills, commercial paper, strip bonds, high-yield debt
and convertible debentures.
investment banking
Assisting public and private businesses and governments to
obtain financing in the capital markets through the issuance of
debt, equity and derivative securities on either an underwritten
or an agency basis.
investment professionals and fund managers
Investment professionals include all staff with direct sales
responsibilities, which include brokers and assistants with
direct contacts. fund managers include all staff who manage
client assets.
liquidity
The total of cash and cash equivalents available to the
Company as capital for operating and regulatory purposes.
london stock exchange (lse)
One of the world’s largest stock exchanges, the LsE has been
in existence for more than 300 years and has over 3,000 listed
companies. The exchange has four main sectors: the Main
Market; the AIM Market; the Professional securities Market;
and the specialist fund Market.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 117
GLOssArY
long-term incentive plan (ltip)
A reward system designed to align employee and external
shareholder interests. Under Canaccord’s LTIP, a portion of
an eligible employee’s annual compensation is held back to
purchase restricted share units (rsUs) of the Company. The
rsUs are topped up by the firm and vest over three years.
montréal international Financial Centre
Membership provides certain tax and financial benefits, reducing
the overall corporate tax rate, pursuant to Québec legislation.
national insurance (ni) tax
Payroll tax applicable to UK employees based on a percentage
of incentive compensation payout.
nominated adviser (nomad)
A company approved by the LsE to act as an adviser for
companies who wish to be admitted to AIM. A Nomad warrants
to the LsE that the company is appropriate for admission
and assists the listed company on an ongoing basis with
disclosure and other market-related matters.
non-cash charges
Charges booked by a company that do not impact its cash
balance or working capital.
non-iFRs measures
Non-Ifrs measures do not have any standardized meaning
prescribed by International financial reporting standards
(Ifrs) and are therefore unlikely to be comparable to similar
measures presented by other companies. see page 21 of this
annual report.
Replacement plans
share-based payment plans introduced to replace the share-
based payment plans that existed at CsHP at the date
of acquisition.
Return on average common equity (Roe)
Net income expressed as a percentage of average common
equity. This measure is non-Ifrs.
Risk
financial institutions face a number of risks that may
expose them to losses, including market, credit, operational,
regulatory and legal risk.
separately managed accounts (smas)
Investment portfolios available to clients that are managed by
a senior portfolio manager. In sMAs, clients own the individual
securities within the portfolio, rather than a portion of a
pooled fund.
significant items
Charges not considered to be recurring or indicative of
operating earnings. for Canaccord this includes acquisition-
related expense items, impairment of goodwill and intangibles,
restructuring costs, ABCP fair value adjustments and accrual
for the Company’s client relief program. figures excluding
significant items are considered to be non-Ifrs measures.
syndicate participation
A group of investment banking firms coordinating the
marketing, distribution, pricing and stabilization of equity
financing transactions.
offshore operations
for Canaccord’s purposes, offshore operations refer to wealth
management offices in the Channel Islands and the Isle of Man.
These offices were rebranded Canaccord Genuity Wealth
Management on May 1, 2013.
the Balloch group (tBg)
The Balloch Group was a leading boutique investment
bank in China that Canaccord acquired in January 2011.
Canaccord’s operations in China were subsequently rebranded
Canaccord Genuity.
preferred shares
A class of ownership in a corporation that has a higher claim
on the assets and earnings than common stock. Preferred
shares generally do not have voting rights; however, preferred
shareholders receive a dividend that must be paid out before
dividends are paid to common stockholders.
principal trading
Trading in equity securities in principal and inventory accounts.
revenue is generated through inventory trading gains and losses.
Registered trading
Trading in equity securities in principal and inventory accounts
by registered traders who operate by taking positions, trading
and making markets in equity securities including securities of
companies with small to medium-sized market capitalizations.
revenue is generated through inventory trading gains and losses.
trading services
Quotation services, trade reconciliation, execution
management, order book management and trade reporting.
underwriter – investment banking
Purchases securities or other instruments from a corporate
issuer for resale to investors.
value-at-Risk (vaR)
Var is a generally accepted risk measurement concept that
is defined as the predicted minimum loss in market value of
a portfolio at a specific confidence level (e.g., 95%) over a
certain period of time (e.g., daily).
wrap accounts
A type of brokerage account in which a single or flat fee
covers all administrative, research, advisory and management
expenses.
118 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Corporate governance
The Board of Directors (Board) assumes responsibility for the stewardship of the Company, acting as a whole and through its
committees, and has approved a formal Board Governance Manual (Mandate) including terms of reference for the Board and
setting forth the Board’s stewardship responsibilities and other specific duties and responsibilities. The Board’s responsibilities
are also governed by:
• The Business Corporations Act (British Columbia)
• The Company’s articles
• The charters of its committees
• Other corporate policies and applicable laws
Communication with independent members of the Board
Terrence Lyons has been appointed by the Board of Directors of Canaccord Genuity Group Inc. as its Lead Director. One
of his responsibilities is to receive and determine appropriate action on any communications from interested parties that are
addressed to the independent directors of the Board. such communications can be sent to Mr. Lyons in writing by mail to
2039 West 35th Avenue, Vancouver, BC, Canada, V6M 1J1.
strategic planning process
The Board’s Mandate provides that the Board is responsible for ensuring that the Company has an effective strategic planning
process. As such, the Board reviews, approves, monitors and provides guidance on the Company’s strategic plan.
identification and management of Risks
The Board’s Mandate includes:
• Assisting management to identify the principal business risks of the Company
• Taking reasonable steps to ensure the implementation of appropriate systems to manage and monitor those risks
• Reviewing plans for evaluating and testing the Company’s internal financial controls
• Overseeing the external auditors, including the approval of the external auditors’ terms of reference
succession planning and evaluation
The Board’s Mandate includes keeping in place adequate and effective succession plans for the Chief Executive Officer (CEO) and
senior management.
• The Corporate Governance and Compensation Committee (CGCC) receives periodic updates on the Company’s succession
plan at the senior officer level and monitors the succession planning process
• The succession plan is reviewed, at least annually, by the CGCC
• On the recommendation of the President & CEO, the Board appoints the senior officers of the Company
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 119
COrPOrATE GOVErNANCE
Communications and public disclosure
The Company’s Disclosure Controls Policy (DCP) addresses the accurate and timely communication of all important information
relating to the Company and its interaction with shareholders, investment analysts, other stakeholders and the public generally.
• The DCP is reviewed annually by the Board
• The DCP, public securities regulatory filings, press releases and investor presentations are posted on the Company’s website
• The Board reviews all quarterly and annual consolidated financial statements and related management discussion
and analysis, the Company’s earnings releases, management information circulars, annual information forms (AIfs) and
financing documents
internal Controls
The Board requires management to maintain effective internal controls and information systems. The Board, with the assistance
of the Audit Committee, oversees the integrity of the Company’s internal control and information systems.
• The Audit Committee meets no less than four times a year with the Company’s Chief Financial Officer (CFO) and senior
finance staff to review internal controls over financial reporting and related information systems
• External auditors provide recommendations to the Audit Committee on an annual basis in relation to the Company’s internal
controls and information systems
As of March 31, 2014, an evaluation was carried out, under the supervision of and with the participation of management, including
the President & CEO and the Executive Vice President & CfO, of the effectiveness of our disclosure controls and procedures as
defined under Multilateral Instrument 52-109. Based on that evaluation, the President & CEO and the Executive Vice President &
CfO concluded that the design and operation of these disclosure controls and procedures were effective as of March 31, 2014.
governance
The Board is currently composed of nine directors, six of whom are independent of management as determined under applicable
securities legislation. In order to facilitate the exercise of independent judgment by the Board of Directors, the Board has
appointed a lead director and holds regular meetings without management directors present.
• The CGCC is responsible for periodically reviewing the composition of the Board and its committees
• A formal annual assessment process has been established to include feedback by all the directors to the full Board, including
the completion of a confidential survey
• New directors are provided with substantial reference material on the Company’s strategic focus, financial and operating
history, corporate governance practices and corporate vision
120 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
COrPOrATE GOVErNANCE
summary of Charters and Committees
The Board has delegated certain of its responsibilities to two committees, each of which has specific roles and responsibilities as
defined by the Board. Both of these Board committees are made up of independent directors.
audit Committee
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities by monitoring the Company’s financial
reporting practices and financial disclosure. It comprises three unrelated directors. All members of the Audit Committee are
financially literate; that is, they are able to read and understand a set of financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably
be expected to be raised by the Company’s financial statements. The current members of the Audit Committee are Messrs. Lyons
(Chair), Eeuwes and Carello.
The Audit Committee has adopted a charter which specifically defines the roles and responsibilities of the Audit Committee. The
Audit Committee Charter can be found in the Company’s AIf filed on sEDAr. The Audit Committee has direct communication
channels with the external auditors and CfO and senior finance staff and discusses and reviews issues with each of them on a
regular basis. The Audit Committee’s mandate was updated in fiscal 2013 to better reflect the Audit Committee’s oversight of the
Company’s risk management function.
The Audit Committee is responsible for ensuring management has designed and implemented an effective system of internal
control. The external auditors are hired by and report directly to the Audit Committee. After consultation with management, the
Audit Committee is responsible for setting the external auditors’ compensation. The external auditors attend each meeting of
the Audit Committee, and a portion of each meeting is held without the presence of management. The Audit Committee annually
reviews and approves the external auditors’ audit plan and must approve any audit and non-audit work performed by the external
auditors. The CfO and senior finance staff attend each meeting of the Audit Committee other than the portion of the meeting
which is held without management present to allow more open discussion. The Audit Committee annually reviews and approves
the internal audit plan.
CoRpoRate goveRnanCe and Compensation Committee
The Corporate Governance and Compensation Committee is responsible for developing the Company’s approach to governance
issues, reviewing the Company’s overall governance principles and recommending changes to those principles from time to time.
It comprises three unrelated directors: Messrs. Harris (Chair), Eeuwes and Lyons. The committee has full access to staff and
resources. At all regular committee meetings during the year, a portion of each meeting is held without management present to
allow more open discussion.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 121
Board of directors
Charles n. Bralver (2010)
Charles N. Bralver is a financial services executive with
over 30 years of capital markets experience. for more
than 23 years – from 1984 to 2007 – Mr. Bralver was a
founder and Vice Chairman of management consultancy
Oliver, Wyman & Co. where he specialized in strategy, risk
and operational work for leading investment banks, asset
managers, exchanges and other market utilities. He continues
to serve as a member of the senior advisory board of Oliver
Wyman. Mr. Bralver served as senior Associate Dean for
International Business and finance at the fletcher school of
Law and Diplomacy from 2007 to 2010, from 2007 to 2009
as a strategic advisor to Warburg Pincus LLC and from 2011
to 2012 as a Managing Director of Massif Partners LLC.
Mr. Bralver serves as a director of the Company, as a director
and member of the risk committee of Newstar financial, Inc.
and on the Board of Visitors of the fletcher school. Mr. Bralver
started his career at Booz Allen Hamilton. He is a Us citizen
and a graduate of the fletcher school of Law and Diplomacy
and Dartmouth College.
massimo Carello (2008)
Audit Committee
Mr. Carello is a corporate director and a private investor in
public companies. Mr. Carello was the Chairman and Chief
Executive Officer of Diners Club UK Ltd. from 2001 to 2004
and was the Chairman and Chief Executive Officer of fiat UK
Ltd. from 1990 to 2001. Mr. Carello served as a member
of the Confederation of British Industry (CBI) President’s
Committee from 1998 to 2003 and was a member of the
CBI European Committee. He was Vice President of the Italian
Chamber of Commerce in the UK from 1998 to 2005.
In addition to Canaccord Genuity Group Inc., Mr. Carello is
a director and a member of the Audit Committees of the
following public companies: Canadian Overseas Petroleum
Limited and Orsu Metals Corporation. Until December 2010,
he was also a director and a member of the Audit Committee
of Uranium One Inc.
william j. eeuwes (2002)
Audit Committee
Corporate Governance and Compensation Committee
Mr. Eeuwes is senior Vice President & Global Head, Private
Equity, Manulife financial. He has executive responsibility for
regional Power Inc., NAL resource Limited (oil and gas) and
two private equity teams; Manulife Capital in Canada and
Hancock Capital Management in the Us.
Before joining Manulife in 1999, Mr. Eeuwes was a career
banker with 25 years of experience in underwriting and
the management of a broad range of financing including
LBOs, corporate lending and project finance. Mr. Eeuwes
is a graduate of the richard Ivey school of Business at
the University of Western Ontario. In addition to Canaccord
Genuity Group Inc., Mr. Eeuwes is a director of several private
companies in Canada, and is a member of the Institute of
Corporate Directors.
michael d. harris, iCd.d (2004)
Corporate Governance and Compensation Committee
Michael Harris, ICD.D, is a senior business advisor with
the law firm of fasken Martineau DuMoulin LLP in Toronto,
and the President of his own consulting firm, steane
Consulting Ltd., and, in this capacity, acts as a consultant to
various Canadian companies. Before joining fasken Martineau
in september 2013, he was a senior business advisor with
the law firm of Cassels Brock & Blackwell in Toronto from
March 2010 and before that a senior business advisor with
the law firm of Goodmans LLP in Toronto.
Mr. Harris was born in Toronto in 1945 and was raised in
Callander and North Bay, Ontario. Before his election to the
Ontario Legislature in 1981, Mike Harris was a schoolteacher,
a school board trustee and chair and an entrepreneur in
the Nipissing area. On June 8, 1995, Mr. Harris became the
22nd Premier of Ontario following a landslide election victory.
In 1999, he was re-elected – making him the first Ontario
Premier in over 30 years to form a second consecutive
majority government.
In addition to sitting on several boards of Canadian
corporations, he also serves as a director of the Tim Horton
Children’s foundation, the Luminato festival and the Manning
Centre for Building Democracy. He is the Honorary Chair of the
North Bay District Hospital Capital Campaign and the Nipissing
University and Canadore College Capital Campaign. Mr. Harris
is also a senior fellow of the fraser Institute. He has received
his ICD.D certification from the Institute of Corporate Directors.
In addition to Canaccord Genuity Group Inc., Mr. Harris
is a director of the following public companies: Chartwell
retirement residences (Chair), firstservice Corporation,
routel Inc. (Chair), and Element financial Corporation.
122 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
david kassie (2010)
David Kassie became Group Chairman and a director of
Canaccord Genuity Group Inc. on the closing of the acquisition
of Genuity Capital Markets, a Canadian investment bank, on
April 23, 2010, and became Chairman on April 1, 2012. He
was the Principal, Chairman and Chief Executive Officer of
Genuity Capital Markets from 2004 until May 9, 2010, when
the integration of the businesses of Genuity Capital Markets
and Canaccord financial Ltd. was completed under the name
Canaccord Genuity. Before 2004, he was Chairman and
Chief Executive Officer of CIBC World Markets and the Vice
Chairman of CIBC.
Mr. Kassie has extensive experience as an advisor, underwriter
and principal. He sits on a number of corporate boards.
Mr. Kassie is actively involved in community and charitable
organizations and is on the boards of the richard Ivey school
of Business, the Toronto International film festival Group and
was formerly on the Board of the Hospital for sick Children.
Mr. Kassie holds a B.Comm. (Honours) in Economics from
McGill University (1977), and an MBA from the University of
Western Ontario (1979).
In addition to Canaccord Genuity Group Inc., Mr. Kassie
is a director of the following public company: reitmans
(Canada) Limited.
terrence a. lyons, iCd.d (2004)
Audit Committee
Corporate Governance and Compensation Committee
Terry Lyons is past Chairman of Northgate Minerals Corporation,
which was acquired by Aurico Gold Inc. in late 2011, creating
a new mid-cap gold company with a value of over $3 billion.
Mr. Lyons is a Civil Engineer (UBC) with an MBA from the
University of Western Ontario. He sits on the Advisory
Board of the richard Ivey school of Business and is active
in sports and charitable activities, is a past Governor of
the Olympic foundation of Canada, past Chairman of the
Mining Association of BC and in 2007 was awarded the INCO
Medal by the Canadian Institute of Mining and Metallurgy for
distinguished service to the mining industry. He has received
his ICD.D certification from the Institute of Corporate Directors.
Mr. Lyons is a director of the following public and private
companies: Martinrea International Inc., sprott resource
Corp., Polaris Minerals Corporation and VeroLube Inc., and he
currently serves as the Lead Director and Chairman of the Audit
Committee of Canaccord Genuity Group Inc.
BOArD Of DIrECTOrs
paul d. Reynolds (2005)
Paul reynolds was named President of Canaccord Genuity
Group Inc. in August 2006 and Chief Executive Officer of the
Company in August 2007, and leads the firm from Canaccord
Genuity’s Toronto office. Between 1999 and 2007, he
managed the Group’s London, England, office as President
and Chief Operating Officer of European operations and was
named Global Head of Canaccord Genuity’s capital markets
division in April 2005.
Mr. reynolds has over 30 years of experience in the securities
industry beginning as an equities trader. In 1985, he joined
Canaccord Genuity, working as an Investment Advisor before
moving into a senior role in institutional sales. In the late
1990s, Mr. reynolds assumed a leadership role in investment
banking where he specialized in financing emerging and
developing companies in the resource, technology and
biotechnology sectors.
Mr. reynolds also serves on the boards of the International
Crisis Group and the Hospital for sick Children in Toronto.
dipesh shah (2012)
Dipesh shah is a director on the boards of Thames Water
and the Kemble Water Group of companies, Equus Petroleum
plc (where he is senior Independent Director and Chairman
of the Nominations Committee), JKX Oil & Gas plc (where
he is senior Independent Director and Chairman of the
remuneration Committee), The Crown Estate, and the 2020
European fund for Energy, Climate Change and Infrastructure
(the “EU Marguerite fund”, where he is Chairman of the
Investment Committee). He is also a Trustee of the British
Youth Opera and a Governor of Merchant Taylors’ school.
Mr. shah was formerly the Chief Executive of the UK Atomic
Energy Authority and of various large businesses in the BP
Group, where he was a member of the Group Leadership
for more than a decade. Mr. shah was Chairman, inter alia,
of Viridian Group plc, HgCapital renewable Power Partners
LLP and the European Photovoltaic Industry Association. In
addition, he has been a Director of several major organizations,
including Babcock International Group Plc and Lloyd’s of
London. He was also a member of the UK Government’s
renewable Energy Advisory Committee from 1994 to 2002.
Earlier, Mr. shah was the Chief Economist for BP Oil UK.
Born in India, and brought up in Uganda, Mr. shah is a
graduate of the University of London, the University of Warwick,
and the Harvard Business school management program. He
was appointed an Officer of the Order of the British Empire
(OBE) in the 2007 New Year Honours List and is a Life fellow
of the royal society of Arts.
In addition to Canaccord Genuity Group Inc., Mr. shah is a
director of the following public companies: Equus Petroleum
plc and JKX Oil & Gas plc.
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 123
locations
Capital markets
CanaCCoRd genuity
Canada
united states
uk and europe
London
88 Wood street
London, UK
EC2V 7Qr
Telephone: 44.20.7523.8000
Dublin
first floor, south Dock House
Hanover Quay
Dublin 2
Ireland
Telephone: 353.1.635.0210
Frankfurt
OpernTurm
Bockenheimer Landstrasse 2-4
60306 frankfurt am Main
Germany
Telephone: 49.69.67.776.5000
Paris
Washington Plaza
29 rue de Berri
75008 Paris
france
Telephone: 33.1.56.69.66.66
Toronto
Brookfield Place
161 Bay street, suite 3000
P.O. Box 516
Toronto, ON
Canada M5J 2s1
Telephone: 416.869.7368
Toll free (Canada): 1.800.382.9280
Toll free (Us): 1.800.896.1058
Vancouver
Pacific Centre
609 Granville street, suite 2200
P.O. Box 10337
Vancouver, BC
Canada V7Y 1H2
Telephone: 604.643.7300
Toll free (Canada): 1.800.663.1899
Toll free (Us): 1.800.663.8061
Calgary
TransCanada Tower
450 – 1st street sW, suite 2200
Calgary, AB
Canada T2P 5P8
Telephone: 403.508.3800
Toll free: 1.800.818.4119
Montréal
1250 René-Lévesque Boulevard West
suite 2930
Montréal, QC
Canada H3B 4W8
Telephone: 514.844.5443
Toll free: 1.800.361.4805
Barbados
The Business Centre
Upton
st. Michael, Barbados BB 11103
Telephone: 246.434.2035
New York
350 Madison Avenue
New York, NY
UsA 10017
Telephone: 212.389.8000
Toll free: 1.800.538.7003
Boston
99 High street, suite 1200
Boston, MA
UsA 02110
Telephone: 617.371.3900
Toll free: 1.800.225.6104
San Francisco
101 Montgomery street, suite 2000
san francisco, CA
UsA 94104
Telephone: 415.229.7171
Toll free: 1.800.225.6104
Houston
Wells fargo Plaza
1000 Louisiana street, 71st floor
Houston, TX
UsA 77002
Telephone: 713.331.9901
Chicago
1880 Oak Avenue, suite 135
Evanston, IL
UsA 60201
Telephone: 847.864.1137
Minneapolis
45 7th street south, suite 2640
Minneapolis, MN
UsA 55402
Telephone: 612.332.2208
124 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
LOCATIONs
Hong Kong
5th floor, 8 Queen’s road Central
Central Hong Kong
Telephone: 852.3919.2505
fax: 852.3919.2599
Melbourne
Level 4, 60 Collins street
Melbourne, VIC, 3000, Australia
Telephone: 61.3.8688.9100
Sydney
Level 26, 9 Castlereagh street
sydney, NsW, 2000, Australia
Telephone: 61.2.9263.2700
Waterloo
80 King street south, suite 101
Waterloo, ON
Canada N2J 1P5
Telephone: 519.886.1060
Toll free: 1.800.495.8071
Alberta
Calgary
TransCanada Tower, suite 2200
450 – 1st street sW
Calgary, AB
Canada T2P 5P8
Telephone: 403.508.3800
Toll free: 1.800.818.4119
Edmonton
Manulife Place
10180 – 101st street, suite 2700
Edmonton, AB
Canada T5J 3s4
Telephone: 780.408.1500
Toll free: 1.877.313.3035
Québec
Montréal
1250 René-Lévesque Boulevard West
suite 2930
Montréal, QC
Canada H3B 4W8
Telephone: 514.844.5443
Toll free: 1.800.361.4805
Nova Scotia
Halifax
Purdy’s Wharf Tower II
suite 2004
1969 Upper Water street
Halifax, Ns
Canada B3J 3r7
Telephone: 902.442.3162
Toll free: 1.866.371.2262
asia-pacific
Beijing
suite C700, 50 Liangmaqiao rd.
Beijing 100125
China
Telephone: 8610.8451.5559
fax: 8610.8454.0489
Singapore
77 robinson road
#21-02
singapore 068896
Telephone: 65.6854.6150
wealth management
CanaCCoRd genuity wealth
management
Canada
British Columbia
Vancouver
Pacific Centre
609 Granville street, suite 2200
P.O. Box 10337
Vancouver, BC
Canada V7Y 1H2
Telephone: 604.643.7300
Toll free (Canada): 1.800.663.1899
Toll free (Us): 1.800.663.8061
Kelowna
1708 Dolphin Avenue, suite 602
Kelowna, BC
Canada V1Y 9s4
Telephone: 250.712.1100
Toll free: 1.888.389.3331
Ontario
Toronto
Brookfield Place, suite 2900
P.O. Box 516
161 Bay street
Toronto, ON
Canada M5J 2s1
Telephone: 416.869.7368
Toll free (Canada): 1.800.382.9280
Toll free (Us): 1.800.896.1058
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 125
otheR loCations
pinnacle Correspondent services
Vancouver
Pacific Centre
609 Granville street, suite 2200
P.O. Box 10337
Vancouver, BC
Canada V7Y 1H2
Telephone: 604.643.7300
Toronto
Brookfield Place
161 Bay street, suite 3000
P.O. Box 516
Toronto, ON
Canada M5J 2s1
Telephone: 416.869.7368
Calgary
1409 – 2nd street sW
Calgary, AB
Canada T2r 0W7
Telephone: 403.263.7999
Toll free: 1.877.263.7999
Québec
Gatineau
12, rue sainte Marie
Gatineau, QC
Canada J8Y 2A3
Telephone: 819.772.4737
Toll free: 1.877.496.1685
UK and Europe
London
41 Lothbury
London, UK
EC2r 7AE
Telephone: 44.20.7665.4500
Jersey
37 The Esplanade
st Helier
Jersey JE4 0XQ
Telephone: 44.1534.708090
Guernsey
2 Grange Place
The Grange
st Peter Port
Guernsey GY1 4AX
Telephone: 44.1481.712889
Guernsey
Landes du Marche Chambers
P.O. Box 328
Vale
Guernsey GY1 3TY
Telephone: 44.1481.251515
Isle of Man
Anglo International House
Bank Hill
Douglas
Isle of Man IM1 4LN
Telephone: 44.1624.690100
LOCATIONs
Canaccord genuity wealth management
(usa), inc.
Pacific Centre, suite 2200
P.O. Box 10337
609 Granville street
Vancouver, BC
Canada V7Y 1H2
Telephone: 604.684.5992
independent wealth management
Branches
Ontario
Burlington
5500 North service road, suite 805
Burlington, ON
Canada L7L 6W6
Telephone: 905.335.5223
Toll free: 1.855.392.5626
Ottawa
2 Gurdwara road, suite 510
Ottawa, ON
Canada K2E 1A2
Telephone: 613.274.2662
Toll free: 1.877.721.1189
Kitchener
4281 King street East, Unit E
Kitchener, ON
Canada N2P 2E9
Telephone: 519.219.6611
Toll free: 1.866.232.1894
British Columbia
Prince George
1840 Third Avenue, suite 101
Prince George, BC
Canada V2M 1G4
Telephone: 250.614.0888
Toll free: 1.866.614.0888
Trail
1277 Cedar Avenue
Trail, BC
Canada V1r 4B9
Telephone: 250.368.3838
Toll free: 1.855.368.3838
Alberta
Calgary
322 – 11th Avenue sW, suite 207
Calgary, AB
Canada T2r 0C5
Telephone: 403.531.2444
Toll free: 1.866.531.2444
126 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
shareholder information
Corporate headquarters
Corporate website
stReet addRess
Canaccord Genuity Group Inc.
609 Granville street, suite 2200
Vancouver, BC, Canada
mailing addRess
Pacific Centre
609 Granville street, suite 2200
P.O. Box 10337
Vancouver, BC V7Y 1H2, Canada
stock exchange listing
TsX: Cf
LsE: Cf.
www.canaccordgenuity.com
general shareholder
inquiries and information
investoR Relations
161 Bay street, suite 3000
Toronto, ON, Canada
Telephone: 416.869.7293
fax: 416.947.8343
Email: investor.relations@
canaccordgenuitygroup.com
media Relations and
inquiries from institutional
investors and analysts
scott davidson
Executive Vice President, Global Head
of Corporate Development and strategy
Telephone: 416.869.3875
Email: scott.davidson@canaccord.com
This Canaccord Genuity Group Inc.
2014 Annual report is available on our
website at www.canaccordgenuitygroup.
com. for a printed copy, please contact
the Investor relations department.
Common share trading information (Fiscal 2014)
stock exchange
Toronto TsX
London LsE
Diluted shares
outstanding at
Year-end price
Ticker March 31, 2014 March 31, 2014
Cf
Cf.
107,937,492 $
107,937,492 £
8.20 $
4.45 £
High
8.45
4.58
$
£
Low
5.05
3.30
Total volume
of shares traded
50,479,820
1,724,364
Fiscal 2014 preferred dividend dates and amounts
Quarter end date
June 30, 2013
september 30, 2013
December 31, 2013
March 31, 2014
Preferred
dividend
record date
Preferred
dividend
payment date
september 13, 2013
september 30, 2013
December 20, 2013
December 31, 2013
March 14, 2014
March 31, 2014
June 13, 2014
June 30, 2014
series A
preferred
dividend
0.34375
0.34375
0.34375
0.34375
1.375
$
$
$
$
$
series C
preferred
dividend
0.359375
0.359375
0.359375
0.359375
1.4375
$
$
$
$
$
Fiscal 2014 Common dividend dates and amounts
Quarter end date
June 30, 2013
september 30, 2013
December 31, 2013
March 31, 2014
Common dividend
record date
Common dividend
payment date
August 30, 2013
september 10, 2013
November 22, 2013
December 10, 2013
february 21, 2014
March 10, 2014
June 20, 2014
July 2, 2014
Total
preferred
dividend
0.703125
0.703125
0.703125
0.703125
2.8125
Common
dividend
0.05
0.05
0.05
0.05
0.20
$
$
$
$
$
$
$
$
$
$
CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT 127
sHArEHOLDEr INfOrMATION
Fiscal 2015 expected dividend(1) and earnings Release dates
Q1/15
Q2/15
Q3/15
Q4/15
Expected earnings
release date
Preferred dividend
record date
Preferred dividend
payment date
Common dividend
record date
Common dividend
payment date
August 5, 2014 september 19, 2014 september 30, 2014
August 29, 2014 september 10, 2014
November 5, 2014
December 19, 2014
December 31, 2014
November 21, 2014
December 10, 2014
february 4, 2015
March 20, 2015
March 31, 2015
february 27, 2015
March 10, 2015
June 1, 2015
June 19, 2015
June 30, 2015
June 19, 2015
July 2, 2015
(1)
Dividends are subject to Board of Directors approval. All dividend payments will depend on general business conditions and the Company’s financial conditions, results of operations, capital
requirements and such other factors as the Board determines to be relevant.
annual general meeting
Financial information
The Annual General Meeting
of shareholders will be held on
Wednesday, August 6, 2014 at
10:00 am (Eastern Time)
at the TMX Broadcast Centre
The Exchange Tower
130 King street West
Toronto, ON, Canada
A live Internet webcast will also be
available for shareholders to view.
Please visit the webcast events page
at www.canaccordgenuitygroup.com for
more information and a direct link.
To view Canaccord’s regulatory filings
on sEDAr, please visit www.sedar.com.
for present and archived
financial information, please visit
www.canaccordgenuitygroup.com
auditor
Ernst & Young LLP
Chartered Accountants
Vancouver, BC
Fees paid to
shareholders’ auditors
for fees paid to shareholders’ auditors,
see the fiscal 2014 Annual Information
form.
Qualified Foreign
Corporation
CGGI is a “qualified foreign corporation”
for Us tax purposes under the Jobs &
Growth Tax Reconciliation Act of 2003.
editorial and design
services
The Works Design Communications Ltd.
eligible dividend designation:
Income Tax Act (Canada)
In Canada, the Federal Income Tax
Act, and most provincial income tax
legislation, provides lower levels of
taxation for Canadian individuals
who receive eligible dividends. All of
the common share dividends paid by
Canaccord Genuity Group Inc. (or its
predecessor Canaccord Capital Inc.)
since 2006 are eligible, as are common
share dividends paid hereafter unless
otherwise indicated.
shareholder administration
for information about stock transfers,
address changes, dividends, lost stock
certificates, tax forms and estate
transfers, contact:
ComputeRshaRe
investoR seRviCes inC.
100 University Avenue, 9th floor
Toronto, ON M5J 2Y1
Telephone toll free (North America):
1.800.564.6253
International: 514.982.7555
fax: 1.866.249.7775
Toll free fax (North America): or
International fax: 416.263.9524
Email: service@computershare.com
Website: www.computershare.com
Offers enrolment for self-service
account management for
registered shareholders through
the Investor Centre.
128 CANACCOrD GENUITY GrOUP INC. 2014 ANNUAL rEPOrT
Shareholder Information
CORPORATE HEADQUARTERS
SHAREHOLDER ADMINISTRATION
ANNUAL GENERAL MEETING
For information about stock transfers,
address changes, dividends, lost stock
certificates, tax forms and estate
transfers, contact:
COMPUTERSHARE
INVESTOR SERVICES INC.
100 University Avenue, 9th Floor
Toronto, ON M5J 2Y1
Telephone toll free (North America):
1.800.564.6253
International: 514.982.7555
Fax: 1.866.249.7775
Toll free fax (North America): or
International fax: 416.263.9524
Email: service@computershare.com
Website: www.computershare.com
Offers enrolment for self-service account
management for registered shareholders
through the Investor Centre.
ELIGIBLE DIVIDEND DESIGNATION:
INCOME TAX ACT (CANADA)
In Canada, the Federal Income Tax Act,
and most provincial income tax
legislation, provides lower levels of
taxation for Canadian individuals who
receive eligible dividends. All of the
common share dividends paid by
Canaccord Genuity Group Inc. (or its
predecessor Canaccord Financial Inc.)
since 2006 are eligible, as are common
share dividends paid hereafter unless
otherwise indicated.
STREET ADDRESS
Canaccord Genuity Group Inc.
609 Granville Street, Suite 2200
Vancouver, BC, Canada
MAILING ADDRESS
Pacific Centre
609 Granville Street, Suite 2200
P.O. Box 10337
Vancouver, BC V7Y 1H2, Canada
WEBSITE
www.canaccordgenuity.com
GENERAL SHAREHOLDER
INQUIRIES AND INFORMATION
INVESTOR RELATIONS
161 Bay Street, Suite 3000
Toronto, ON, Canada
Telephone: 416.869.7293
Fax: 416.947.8343
Email: investor.relations@
canaccordgenuitygroup.com
MEDIA RELATIONS AND
INQUIRIES FROM INSTITUTIONAL
INVESTORS AND ANALYSTS
Scott Davidson
Executive Vice President, Global Head
of Corporate Development and Strategy
Telephone: 416.869.3875
Email: scott.davidson@canaccord.com
This Canaccord Genuity 2014 Annual
Report is available on our website at
www.canaccordgenuitygroup.com. For a
printed copy, please contact the Investor
Relations department.
STOCK EXCHANGE LISTING
TSX: CF
LSE: CF.
The Annual General Meeting
of shareholders will be held on
Wednesday, August 6, 2014 at
10:00 a.m. (Eastern time)
at the TMX Broadcast Centre
The Exchange Tower
130 King Street West
Toronto, ON, Canada
A live Internet webcast will also be
available for shareholders to view.
Please visit the webcast events page at
www.canaccordgenuitygroup.com for more
information and a direct link.
To view Canaccord’s regulatory filings on
SEDAR, please visit www.sedar.com.
FINANCIAL INFORMATION
For present and archived financial
information, please visit
www.canaccordgenuitygroup.com
AUDITOR
Ernst & Young LLP
Chartered Accountants
Vancouver, BC
FEES PAID TO
SHAREHOLDERS’ AUDITORS
For fees paid to shareholders’
auditors, see the fiscal 2014
Annual Information Form.
QUALIFIED FOREIGN
CORPORATION
CGGI is a “qualified foreign corporation”
for US tax purposes under the Jobs &
Growth Tax Reconciliation Act of 2003.
EDITORIAL AND DESIGN
SERVICES
The Works Design Communications Ltd.
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.
More information about Canaccord Genuity Group Inc., including
the Company’s 2014 online Annual Report, can be found at
canaccordgenuitygroup.com.
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
2
CANACCORD GENUITY GROUP INC. 2014 ANNUAL REPORT