2017 ANNUAL REPORT
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Strategy at Work
UKUSUAEAUFRIECA
Financial Highlights
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)
Impairment of goodwill and other assets(5)
Total expenses
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 – diluted
Return on common equity (ROE)
Dividends per common share
Dividends per Series A Preferred Share
Dividends per Series C Preferred Share
Book value per diluted common share(6)
Excluding significant items(7)
Total revenue
Total expenses
Income (loss) before income taxes
Net income (loss)
Net income (loss) attributable to CGGI shareholders
Net income attributable to non-controlling interests
Earnings (loss) per common share – diluted
Balance sheet data
Total assets
Total liabilities
Non-controlling interests
Total shareholders’ equity
Number of employees
For the years ended March 31
2017
2016
2017/2016 change
$ 396,741
196,129
130,749
119,040
16,847
20,040
879,546
454,998
85,698
284,966
—
—
825,662
53,884
43,186
38,103
5,083
0.29
0.27
5.0%
0.10
1.173
1.4375
5.08
$
$
$
$
$
$
$
$
$
$ 878,353
$ 817,096
61,257
$
49,196
$
43,903
$
5,293
$
0.32
$
$ 5,203,516
4,426,873
11,858
764,785
1,700
$ 376,817
132,029
160,180
85,559
16,830
16,390
787,805
417,876
92,981
302,530
17,352
321,037
1,151,776
(363,971)
$ (358,567)
$ (358,471)
(96)
$
(4.09)
$
(4.09)
$
(50.4)%
0.10
1.375
1.4375
4.99
$
$
$
$
$ 787,805
$ 793,862
(6,057)
$
(5,995)
$
(6,620)
$
625
$
(0.21)
$
$ 3,424,546
2,665,895
8,722
749,929
1,795
$
19,924
64,100
(29,431)
33,481
17
3,650
91,741
37,122
(7,283)
(17,564)
(17,352)
(321,037)
(326,114)
417,855
$ 401,753
$ 396,574
5,179
$
4.38
$
$
4.36
55.4 p.p.
—
(0.20)
—
0.09
$
$
$
$
$
$
$
$
$
$
$
90,548
23,234
67,314
55,191
50,523
4,668
0.53
$ 1,778,970
1,760,978
3,136
14,856
(95)
5.3%
48.5%
(18.4)%
39.1%
0.1%
22.3%
11.6%
8.9%
(7.8)%
(5.8)%
(100.0)%
(100.0)%
(28.3)%
114.8%
112.0%
110.4%
n.m.
107.1%
106.6%
—
(14.7)%
—
1.8%
11.5%
2.9%
n.m.
n.m.
n.m.
n.m.
252.4%
51.9%
66.1%
36.0%
2.0%
(5.3)%
(1) 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 10 of our
Management’s Discussion and Analysis (MD&A).
(2) The operating results of the Australian operations have been fully consolidated and a 42% non-controlling interest has been recognized for fiscal 2017 [fiscal 2016 – 42%].
(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) Restructuring costs for the year ended March 31, 2016 were related to the staff reductions in our US, Canada and UK capital markets operations and the closure of our Barbados office in Other Foreign
Locations, as well as charges related to staff reductions and certain executive changes in our Corporate and Other segment.
(5) Impairment of goodwill and other assets for the year ended March 31, 2016 was in connection with our capital markets operations in the UK, the US, Canada and Australia, and our Other Foreign Locations –
Singapore operations.
(6) Book value per diluted common share is calculated as total common shareholders’ equity adjusted for assumed proceeds from the exercise of options and warrants and the conversion of convertible
debentures divided by the number of diluted common shares outstanding including estimated amounts in respect of share issuance commitments including options, warrants and convertible debentures, as
applicable, and 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.
(7) Net income (loss) and earnings (loss) 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 20 of our MD&A.
n.m.: not meaningful
p.p.: percentage points
Revenue
(C$ millions, fiscal years)
2017
2016
2015
2014
2013
$879.5
$880.8
$855.2
$787.8
$797.1
Net Income (Loss)
(C$ millions, excluding significant items, fiscal years)
2017
$49.2
2016
($6.0)
2015
2014
2013
$39.3
$68.8
$25.6
Diluted Earnings (Loss) per Share
(C$, excluding significant items, fiscal years)
2017
2016
2015
2014
2013
($0.21)
$0.32
$0.25
$0.54
$0.14
CONTENTS
Introduction
Global Performance
Letter to Shareholders
Letter from the Executive Chairman
Our Culture
MD&A and Financials
Shareholder Information
1
2
4
7
8
9
Strategy at work: aligned, agile and
focused on long term stability. We
have maintained a strong commitment to
positioning our business for performance
in all market cycles as we continue
to build a stable and scalable wealth
management business and a focused
and independent mid-market investment
bank. With a lean and agile team and
a disciplined commitment to driving
efficiencies throughout our business,
we are fortunate to have a culture of
professionals who operate with high
integrity, with a stronger net income
focus and in complete alignment with
our shareholders.
To us there are no foreign markets.™
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 10 countries worldwide,
including wealth management offices located in Canada, Australia,
the UK, Guernsey, Jersey and the Isle of Man. Canaccord Genuity, the
international capital markets division, operates in Canada, the US,
the UK, France, Ireland, Hong Kong, China, Australia and Dubai.
To us there are no foreign markets.™
Inside
Back Cover
Canaccord Genuity Group Inc. is publicly traded under the symbol CF
on the TSX.
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
1
Global Performance
$879.5 million in annual revenue
Fiscal 2017 was a year during which activity levels improved across all of
our businesses and geographies. Our global wealth management operations
delivered record revenues and all of our capital markets businesses achieved
profitability. Our results also reflect the improved earnings power of our global
platform, in connection with our efforts to improve alignment across our
operations and reduce our fixed costs. We also made meaningful progress
in advancing our strategy of growing our global wealth management
operations as we continued to adjust our business mix to deliver greater
consistency of earnings.
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 $38.6 billion in
client assets under administration and management
and operate from 18 offices across Canada,
Australia, the UK, Guernsey, Jersey and the Isle of
Man. Our experts search the globe for investment
opportunities and deliver a broad array of tailored
investment solutions to help them reach their
financial goals.
$272.3 million in global revenue
$38.6 billion in total assets
under administration and
management
2
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
65.6% of fiscal 2017 revenue
generated outside of Canada
Global platform provides opportunities to
benefit from activity in all our geographies
39% of fiscal 2017 net income(1)
generated by wealth management
operations
Important contributor of stable,
recurring revenue growth
(1) After taxes and excluding significant items and corporate
overhead charges.
Global Wealth Management Revenue
(C$ millions, fiscal years)
2017
2016
2015
2014
2013
$272.3
$252.7
$257.2
$228.8
$235.1
Global Assets under Administration
and Management
(C$ billions, fiscal years)
2017
2016
2015
2014
2013
$38.6
$32.7
$33.3
$30.9
$26.8
FRAUIEUSUK Fiscal 2017 Revenue by Division
Geographic Distribution of Revenue(2)
(Percent of total fiscal year revenue)
$489 million in
working capital
Canaccord Genuity(1)
68%
Canaccord Genuity
Wealth Management
30%
Corporate and Other
2%
(1) Includes Australia
Wealth Management.
2017
2016
2015
2014
2013
Canada
Australia
US
UK, Europe & Dubai
Other Foreign Locations
$11.6 million of
annual savings in G&A,
communications and
technology expenses
Sustainably driving down
expenses while activity
levels improve
(2) Commencing in Q3/17, the operating results of our Australian operations are disclosed separately as
Canaccord Genuity – Australia, and the operating results of Canaccord Genuity (Dubai) are included as
Canaccord Genuity UK, Europe & Dubai. In previous quarters, the operating results have been reported
as Other Foreign Locations. Comparatives for all prior periods have been reclassified.
Canaccord Genuity
With operations in 10 countries worldwide and the ability
to list companies on 10 exchanges, Canaccord Genuity is
a leading independent global investment bank focused on
growth companies.
Our unique global perspective and cross-border
capabilities are what differentiate us from our
competitors. Our ability to leverage relationships and deep
expertise across multiple regions allows us to provide a
diverse range of growing companies with access to global
capital markets, at all stages of the business cycle.
Canaccord Genuity Revenue
(C$ millions, fiscal years)
2017
2016
2015
2014
2013
$598.4
$532.3
$613.1
$615.8
$541.0
$598.4 million in global revenue
Fiscal 2017 Revenue by Activity
C$47.1 billion raised for
global growth companies
during fiscal 2017
Canaccord Genuity participated
in 368 transactions(3) across
the globe
(3) Transactions valued above C$1.5 million.
Advisory
22%
Commissions
28%
Investment Banking
28%
Principal Trading
20%
Interest and Other
2%
2
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
3
HKUAECA
LETTER TO SHAREHOLDERS
Fellow shareholders,
Additionally, investments we have
made to strengthen our global wealth
management operations over the
course of the fiscal year have enabled
us to advance our strategy of growing
revenue and net income contributions
from this segment, an important driver
of long term stability for our business.
Approximately 40% of pre-tax income
from our operating businesses was
contributed by our wealth management
operations, providing a stable earnings
foundation which we will continue to
strengthen as we move forward with
our strategy of increasing scale in
this segment.
Delivering on our
commitment to lower
fixed costs sustainably
While our performance in the second
half of the fiscal year – particularly
in our fourth fiscal quarter – reflects
accommodative market conditions, our
result is also attributable to the steady
progress we have made to better
align our businesses and rationalize
our global infrastructure over the last
18 months. I am pleased to report
that we have exceeded many of our
fixed cost reduction objectives, with
an additional benefit from foreign
exchange rates. Excluding significant
items, total expenses as a percentage
of revenue were 7.7 percentage points
lower than last year. While certain
expenses increased in connection with
higher revenue generation, fiscal 2017
general and administrative expenses
were 9.2% lower than in the previous
year, a testament to our commitment to
cost containment, an integral element
of our partnership culture.
Positioned for increased
profitability as we
increase scale in
our global wealth
management operations
In order to increase earnings stability
and our overall profitability, we have
continued to make disciplined
investments in our global wealth
management operations. Throughout
the year, we took steps to grow our
operations in Canada and the UK &
Europe, both organically and through
strategic acquisitions of Advisory
Teams and books of business.
Investments to improve our staffing
and product mix across our operations
have helped to attract new assets
and increase share of wallet from
existing clients.
At the end of fiscal 2017, total
assets under administration and
management reached $38.6 billion,
a year-over-year improvement of 18%.
Globally, Canaccord Genuity Wealth
Management generated $272.3 million
in revenue, a year-over-year increase
of 7.8%.
Our wealth management operation
in the UK & Europe is an excellent
model for the growth and business
mix that we strive to achieve in other
geographies. With almost 70% of
revenue from recurring, fee-based
business, this segment is less
susceptible to market fluctuations
and capable of delivering steady
net income growth and stable profit
margins throughout the cycle. Despite
a currency headwind resulting from
declines in the pound sterling, this
business produced a record net income
result of $27.6 million excluding
significant items and before taxes for
the fiscal year. When measured in local
currency, assets under management
I am pleased to report that
we delivered a significantly
stronger result for our 2017
fiscal year. Canaccord
Genuity Group earned total
revenue of $879.5 million
for the fiscal year.
Excluding significant items,
the Company recorded
annual net income of
$49.2 million and diluted
earnings per common
share of $0.32.
Headwinds due to reduced global
trade, subdued business investments
and policy uncertainty hindered global
economic performance early in the
year, but activity levels in our core
focus sectors began to improve as
investors put more money to work
in the growth sectors of the global
economy. Our capital raising and
advisory activities increased steadily
over the course of the 12-month period
and, while still below historic levels,
the year-over-year rebound has been
dramatic when compared to the trough
in the market cycle one year ago.
4
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
in this business increased by 19.9%
compared to the same period last year.
Our modern and highly scalable
platform has delivered additional
advantages for this business by
enabling our teams to successfully
manage elevated trading volumes
during periods of market volatility, while
also supporting our growth initiatives
through the seamless integration of
new clients and portfolios acquired
throughout the year.
We also continued to advance our
strategy of adding new investment
Advisory Teams in our Canadian
wealth management operations. Our
independent platform provides an
important advantage in attracting
seasoned professionals who want to
continue delivering highly personalized
advice for their clients. The teams
that have joined since we announced
our private placement in October have
contributed new assets of $1.7 billion.
At the end of the fiscal year, total
assets under administration and
management in this business have
grown to $13.2 billion, an improvement
of 43.9% from a year ago.
Importantly, the average book size
per Advisory Team in this business
increased to almost $100 million at
the end of fiscal 2017, a year-over-
year improvement of 42%. While we
have continued to increase revenue
from fee-based activities, revenue
generated from transactional activities
has also strengthened, as clients more
actively accessed the markets through
our leadership in early-stage financing
activities for key growth sectors of
the economy.
Aligning our capital
markets business
for excellence in all
market cycles
We have maintained a strong focus
on positioning our business for
long term success as global growth
visibility improves. Last year, we made
the decision to exit non-performing
operations in our capital markets
business and focus on serving key
growth sectors of the economy. This
disciplined approach allows us to
provide globally integrated services
which foster the development of long
term client partnerships and provide
superior revenue opportunities over
an extended market cycle.
We have also made careful
investments to recruit talented
professionals to enhance our
capabilities across our investment
banking, advisory, and debt finance
and restructuring businesses. Over
the course of the year, we improved
coordination across businesses and
regions and added specialty sales
and trading teams, initiatives which
have helped us to expand client
relationships and extract greater value
from our existing operations. While we
have reduced the size of our global
capital markets workforce by 11% year
over year, I am very pleased to report
a 27.6% improvement in revenue per
employee within this segment.
Our diversification efforts have also
helped to insulate our business from
the impact of a depressed commodity
pricing environment. Over the course of
the fiscal year, 74% of our total capital
markets revenues were generated
outside of Canada. While we are
pleased to see increased activity in
mining and energy and we have strong
teams in place to service growing
demand, our reliance on these sectors
has also been greatly reduced. In fiscal
2017, 74% of total investment banking
and advisory revenues were generated
from non-resource sectors. While the
energy sector remains an important
focus for our firm, when measured
against total firm-wide revenue, our
exposure to the energy sector was
less than 5%.
Achieving dominance
as a focused and
agile independent
investment bank
Our global capital markets division
generated revenue of $598.4 million
in fiscal 2017. Revenue increased
across all our geographies and we were
profitable in each jurisdiction. While
the year started slowly, momentum
in new issue and advisory activity
gradually improved over the course of
the 12-month period, with the most
significant improvement taking place
during our fourth fiscal quarter.
Our Australian capital markets team has
firmly established Canaccord Genuity
as the dominant mid-market competitor
in the region and delivered a record
performance in fiscal 2017, with a year-
over-year revenue increase of 91.7%.
Our US operation also delivered a record
performance, led by our expanded
trading operation which generated a
revenue increase of 21.3% compared
to the previous fiscal year, a new high
for this business. Activity levels in our
Canadian capital markets operations
continued to be softer than historic
levels, but this group achieved a year-
over-year improvement in investment
banking of 131.5%. The collaboration
between our origination group and our
wealth management teams has allowed
us to complete a number of early-stage
financings as we deliver results for
entrepreneurial clients.
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
5
LETTER TO SHAREHOLDERS
Performance in our UK, Europe & Dubai
business was impacted by a scarcity
of equity issuance in the UK – driven
by uncertainty following the Brexit
referendum outcome – which began
to reverse during the second half of
the year. A dramatic improvement in
performance culminated in the fourth
fiscal quarter, primarily attributable to
several significant advisory mandates
led by our teams in the UK and Dubai.
The improving economic backdrop,
coupled with the advancements we
have made in our business, gives
us reason to be optimistic about our
future performance. However, we also
remain prepared for the potential
of increased volatility or a market
downturn. While we have enjoyed
steady gains in our advisory business,
we also recognize that results can be
variable depending on the timing of
transactions closing.
In the UK, the recent outcome of the
general election will undoubtedly lead
to some uncertainty with respect to
capital raising and advisory activity,
but in the event that we experience
increased volatility, we expect that
trading operations in our capital
markets and wealth management
businesses in the region will benefit
from increased trading activity, just as
they did in the months following the
Brexit referendum result. We have also
proactively positioned this business
for MiFID II, by focusing our equity
research investment in key areas where
we can lead by leveraging the benefits
of our unique global perspective and
improving our execution capabilities.
Our proprietary stock screening
and idea generation tool, Quest®,
provides an additional competitive
advantage in the UK and globally,
both as a stand-alone offering and as
a strong complement to our existing
research offering.
Additionally, the reality of slower than
anticipated change in Washington has
brought a return of caution to equity
capital markets in the US. However, we
believe that the combination of higher
earnings levels, an improving global
economic backdrop and relatively
available capital for growth sectors will
support an operating environment that
is constructive for our businesses.
Strategy at work: aligned,
agile and focused on long
term stability
With a lean and agile team and
a disciplined focus on driving
efficiencies throughout our business,
we are fortunate to have a culture
of professionals who operate with
high integrity and a stronger net
income focus.
I have said before that the outcome
of any event is manageable for
our business. While we continue
to anticipate periodic increases in
volatility levels as the markets react
to the specifics of regulatory and
policy changes, we continue to have a
strong balance sheet to execute on our
business plan, and our independence
affords us the ability to harness
opportunities and make adjustments
as market conditions evolve.
Across our capital markets and wealth
management operations, we will
continue to compete on our ability
to offer our clients highly relevant
services and access to deep global
expertise, which gives us a tremendous
opportunity to lead the market in each
of our businesses and geographies.
I would like to thank all of our
employees, partners and directors for
your ongoing efforts in delivering on our
strategy through this transformational
period for our business. While we still
have some work to do, I am confident
that our renewed partnership culture
and our relentless commitment
to improving stability across our
operations will position us to deliver
excellent results in the future.
Kind regards,
DAN DAVIAU
President & CEO
Canaccord Genuity Group Inc.
6
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
LETTER FROM THE EXECUTIVE CHAIRMAN
net earnings attributable to common
shareholders on an annual basis.
Throughout the organization, we have a
robust set of assets to draw upon, as
we reshape our business for stronger
performance in a continuously evolving
market environment. We have a more
integrated business model and an
established track record of delivering
world-class ideas and solutions for
our clients, ample working capital
and a leadership team that is closely
aligned with our shareholders through
direct investment and a stronger net
income focus.
We enter fiscal 2018 with optimism
about our market position and our long
term strategy. As we continue to improve
our business mix, I am confident that
Canaccord Genuity Group is very well
positioned to continually grow our
revenues, achieve above-average market
share and deliver growing long term
returns for our fellow shareholders.
On behalf of the Board of Directors,
I would like to thank the leadership
team and all employees of Canaccord
Genuity Group for their commitment to
building a stronger and more productive
organization. As we continue to execute
on our strategy, we are fortunate to
employ a diverse group of resilient and
hard-working professionals who are
committed to delivering success for
their clients, their colleagues and their
fellow shareholders.
And to my fellow shareholders, I thank
you for your ongoing support as we
continue to advance on our strategy.
We remain committed to producing
value for you in all of our endeavours.
DAVID KASSIE
Executive Chairman
Canaccord Genuity Group Inc.
An explicit element of our longer term
strategy to improve stability across
our organization is to adjust our
business mix toward activities that
contribute to a more stable earnings
foundation and ultimately attract higher
multiples in the market. With this in
mind, we are moving forward with our
strategy to significantly grow our wealth
management operations in Canada,
the UK & Europe and Australia.
Our goal is to significantly increase
contributions from our global wealth
management businesses over the
next several years. This increased
contribution will provide a more stable
earnings threshold that will be further
enhanced by our global capital markets
operations when market conditions
are favourable for mid-market growth
sectors in our key markets.
Our wealth management businesses
are uniquely well positioned to attract
opportunities arising from the industry-
wide migration towards standardized
solutions for clients. By leveraging the
strengths of our deep global expertise,
along with our exceptional product
offering, our Investment Advisory Teams
are able to provide a highly competitive
suite of bespoke services for high net
worth and mass affluent investors in
each of our markets.
We have also continued to place
a strong emphasis on monitoring risk
across our operations and ensuring
that we are appropriately resourced
to manage challenges in the market
and regulatory environments where
we operate. The Board remains
committed to ensuring the firm has
a strong capital position to execute on
opportunities and continue to protect
value for shareholders.
Subsequent to the end of the fiscal
year, we announced a revised dividend
policy that allows us to return a
portion of net earnings to our common
shareholders, while balancing the
inherent variability of our operating
environment. Looking ahead, we expect
to be able to return 25% to 50% of
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
7
As a result of the combined efforts of
our partners and employees, we have
significantly improved alignment across
our operations and strengthened our
capability in the areas where we can
lead, which has helped to strengthen
our market share and better insulate
our business from the impact of factors
beyond our control. The benefits of
these changes were evident in our
performance during the second half
of our fiscal year, and particularly in
our fourth fiscal quarter.
In recent years, our business and our
industry have been confronted with
significant challenges that not only
impacted our financial performance,
but forced an important dialogue across
our organization. While a number of
these challenges were beyond our
control, I believe that the response to
an environment of profound change
was managed admirably across our
organization. Under the leadership of
Dan Daviau and his Global Operating
Committee, employees in all businesses
were encouraged to work as partners,
and to help identify and eliminate any
barriers that were inhibiting us from
leading the market in our key focus
areas. In connection with this initiative,
we also took steps to improve equity
participation, to more closely align
our employees with our shareholders.
This improved partnership culture
has underpinned our ability to deliver
globally coordinated ideas and timely
execution for entrepreneurs and
investors around the world.
A Strong Culture to
Drive Our Success
We Are Partners
How we interact with each other is critical to our culture. As a global investment bank, we differentiate
ourselves every day by providing a truly global perspective, which by its very nature is a product of
extensive collaboration and co-operation across borders and business units. As partners, we share
good ideas and best practices, provide introductions and assistance, and treat each other with dignity
and respect.
We Are Entrepreneurial
We are not a large bank and must strive to be a flat organization, by eliminating bureaucratic thinking
and fostering innovation. We are fortunate to be nimble in our ability to recognize new opportunities
and to take calculated risks, as we aggressively pursue our clients’ interests.
We Are Collegial
We want to be the company where people feel empowered to satisfy their clients’ expectations with
the help of all of their partners. We support our international colleagues in doing their best work, by
encouraging an environment that is friendly, collaborative and open.
We Work Hard
As a mid-market investment bank, we do not have many of the advantages (or disadvantages) of our
larger competition. We work harder and smarter, preparing more for every client meeting, harnessing
opportunities to build our expertise and skills, and we always make the extra effort to create successful
outcomes for our clients and our business.
We Operate with Integrity
From the types of clients we represent to the quality of our research and the people we hire, we must
always operate with strength of character and integrity. We always strive to act ethically and honestly.
We Are Earnings Focused
Many of us are shareholders and we know that the end result of all our efforts must be in a
sustainably stronger share price. Achieving this is a function of higher revenue and, importantly, lower
costs. We all need to make smart decisions about how we use valuable resources and how we can
improve efficiencies across our business. This will support stronger outcomes in challenging times like
these, and help us outperform when markets return to normal.
8
CANACCORD GENUITY GROUP INC. | 2017 ANNUAL REPORT
UKUSUAEAUFRIECA 9
Financial Review
10
10
11
13
16
17
18
19
24
27
38
39
40
40
41
42
Management’s Discussion and Analysis
Non-IFRS Measures
Business Overview
Key Developments During Fiscal 2017
Market Environment During Fiscal 2017
Fiscal 2018 Outlook
Overview of Preceding Years − Fiscal 2016 vs. 2015
Financial Overview
Quarterly Financial Information
Business Segment Results
Financial Condition
Off-Balance Sheet Arrangements
Liquidity and Capital Resources
Preferred Shares
Outstanding Share Data
Share-Based Payment Plans
42
43
44
47
48
48
49
52
52
52
53
54
97
103
International Financial Centre
Related Party Transactions
Critical Accounting Policies and Estimates
Financial Instruments
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
Supplemental Information
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 Genuity Group’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
2018 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 Annual
Information Form (AIF) filed on www.sedar.com as well as the factors discussed in the sections entitled ‘‘Risk Management’’ in this
MD&A and ‘‘Risk Factors’’ in the AIF, which include market, liquidity, credit, operational, legal, cyber 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 2018 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 also 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.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
10
Management’s Discussion and Analysis
Fiscal year 2017 ended March 31, 2017 − this document is dated June 1, 2017.
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, 2017 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 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, 2017 and 2016, beginning on page 54 of this report. The Company’s financial information is expressed in
Canadian dollars unless otherwise specified. The Company’s consolidated financial statements for the years ended March 31,
2017 and 2016 are prepared in accordance with International Financial Reporting Standards (IFRS).
Non-IFRS Measures
Certain non-IFRS measures are utilized by Canaccord Genuity Group Inc. 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.
The Company’s capital is represented by common and preferred 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, which is calculated as total common shareholders’ equity adjusted for assumed proceeds from exercise of
options and warrants and conversion of convertible debentures divided by the number of diluted common shares outstanding
including estimated amounts in respect of share issuance commitments including options, warrants, and convertible debentures,
as applicable, and 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.
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 & Europe, or AUM − Australia, is the market value of client assets
managed and administered by Canaccord Genuity Wealth Management from which the Company 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. The Company’s method of
calculating AUA − Canada, AUM − Canada, AUM − UK & 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 administered by Canaccord
Genuity Wealth Management and is included in AUA − Canada.
Financial statement items that exclude significant items are non-IFRS measures. Significant items for these purposes include
restructuring costs, amortization of intangible assets acquired in connection with a business combination, impairment of goodwill
and other assets, and acquisition-related expense items, which include costs recognized in relation to both prospective and
completed acquisitions, gains or losses related to business disposals including recognition of realized translation gains on the
disposal of foreign operations, as well as certain expense items, typically included in development costs, which are considered by
management to reflect a singular charge of a non-operating nature. See the Selected Financial Information Excluding Significant
Items table on page 20.
Management believes that these non-IFRS measures will allow for a better evaluation of the operating performance of the
Company’s business and facilitate meaningful comparison of results in the current period to those in prior periods and future
periods. Figures that exclude significant items provide useful information by excluding certain items that may not be indicative of
Canaccord Genuity Group’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 Genuity Group’s business; thus,
these effects should not be ignored in evaluating and analyzing the Company’s financial results. Therefore, management believes
that the Company’s IFRS measures of financial performance and the respective non-IFRS measures should be considered
together.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 11
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, 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. Canaccord Genuity Group has offices in 10 countries worldwide, including wealth
management offices located in Canada, Australia, the UK, Guernsey, Jersey, and the Isle of Man. Canaccord Genuity, the
Company’s international capital markets division, has operations in Canada, the US, the UK, France, Ireland, Hong Kong, China,
Australia and Dubai.
Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the TSX. Canaccord Genuity Series A Preferred Shares are
listed on the TSX under the symbol CF.PR.A. Canaccord Genuity Series C Preferred Shares are listed on the TSX under the symbol
CF.PR.C.
ABOUT CANACCORD GENUITY GROUP INC.’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 the Company’s institutional,
corporate and private clients. The Company’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, Hong Kong, Australia and Dubai.
Canaccord Genuity Wealth Management
Canaccord Genuity 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 its markets. The Company’s wealth management division now has Investment Advisors (IAs) and professionals in
Canada, Australia, the UK, the Channel Islands and the Isle of Man.
Corporate and Other
Canaccord Genuity Group’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 the Company’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 of
Canaccord Genuity Group Inc.
Corporate structure
Canaccord Genuity
Group Inc.
US
sub-group
UK and Europe
Wealth Management
sub-group
UK and Europe
Capital Markets
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
(Dubai) Ltd.
Canaccord
Genuity
Limited
(UK)
Canaccord
Genuity Asia
(China and
Hong Kong)
Canaccord
Genuity
(Australia)
Limited
The chart shows principal operating companies of the Canaccord Genuity Group.
The Company owns 50% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd and Canaccord Genuity (Australia) Limited, but for accounting purposes, as of March 31, 2017, the
Company is considered to have a 58% interest because of the shares held in a trust controlled by Canaccord Financial Group (Australia) Pty Ltd [March 31, 2016 − 58%].
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
12 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 the Company’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 for the recognition of such transactions in our capital markets business.
The Company 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. To improve recurring revenue streams and offset the inherent
volatility of the capital markets business, the Company plans to increase the scale of its global wealth management operations.
Historically, the Company’s diversification across major financial centres has allowed it to benefit from strong equity markets in
certain regions and improve its appetite for regional investments in core focus sectors.
IMPACT OF CHANGES IN CAPITAL MARKETS ACTIVITY
As a brokerage firm, the Company 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 Genuity Group’s
long term international business development initiatives over the past several years have laid a solid foundation for revenue
diversification. A conservative capital strategy allows the Company to remain competitive in today’s changing financial landscape.
During fiscal 2017, the Company’s capital markets activities were focused on the following sectors: Metals & Mining, Energy,
Technology, Real Estate, Sustainability, Healthcare & Life Sciences, Consumer & Retail, Agriculture & Fertilizers, Infrastructure,
Aerospace & Defense, Financials and Private Equity. 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. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 13
Key Developments During Fiscal 2017
CORPORATE
(cid:129) On June 6, 2016, Canaccord Genuity Group Inc. announced a non-brokered private placement (‘‘Private Placement’’) to
employees of the Company at a purchase price of C$4.17 per Unit, with each Unit consisting of one common share of the
Company and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one
common share of the Company at an exercise price of $4.99 for a period of six months following the third anniversary of
closing. Proceeds of the Private Placement were used to fund the Company’s employee benefits trusts, established under its
long term incentive plan, which purchased common shares in the market to cover grants of restricted share units to those
employees who participated in the Private Placement. The Company issued an aggregate of 6,876,824 Units at a price of
C$4.17 per Unit in connection with the Private Placement.
(cid:129) On June 30, 2016, the Company completed its sale of Canaccord Genuity Singapore Pte Ltd. to SAC Capital Private Limited.
(cid:129) On August 11, 2016, Canaccord Genuity Group Inc. announced the filing of a normal course issuer bid (NCIB) to purchase up to
a maximum of 5,587,378 of its common shares in accordance with the requirements of the TSX through the facilities of the
TSX and on alternative trading systems during the period from August 15, 2016 to August 14, 2017. The purpose of any
purchase under this program is to enable the Company to acquire shares for cancellation. The maximum number of shares that
may be purchased represented 5.0% of the Company’s outstanding common shares at the time of filing the NCIB. A total of
99,800 shares have been purchased and cancelled under the terms of the NCIB during the year ended March 31, 2017.
(cid:129) On September 1, 2016, Canaccord Genuity Group Inc. announced that the dividend rate on its Cumulative 5-year Rate Reset
First Preferred Shares, Series A (the ‘‘Series A Preferred Shares’’) for the period from October 1, 2016 to September 30, 2021
would be 3.885%
(cid:129) On October 27, 2016, the Company closed a private placement of convertible unsecured senior subordinated debentures in the
aggregate principal amount of $60 million. The Company intends to use the net proceeds to finance growth in its wealth
management business in Canada through the recruitment of Investment Advisors and for general corporate purposes. The
debentures bear interest at a rate of 6.50% per annum, payable semi-annually on the last day of June and December each year
commencing December 31, 2016. The debentures are convertible at the holders’ option into the Company’s common shares at
a conversion price of $6.50 per share. The debentures will mature on December 31, 2021 and may be redeemed by the
Company, in certain circumstances, on or after December 31, 2019.
(cid:129) On February 9, 2017, Canaccord Genuity Group Inc. announced the appointment of Don MacFayden to the position of Executive
Vice President and Chief Financial Officer and the appointment of Adrian Pelosi to the position of Executive Vice President,
Chief Risk Officer and Treasurer, with immediate effect
(cid:129) On March 3, 2017, Canaccord Genuity Wealth Management in the UK & Europe acquired client portfolios from Duncan Lawrie
Private Banking in the Isle of Man
(cid:129) On March 24, 2017, Canaccord Genuity Wealth Management in the UK & Europe acquired the UK-based investment dealing and
custody business from C. Hoare & Co.
CANACCORD GENUITY
(cid:129) Canaccord Genuity generated revenue of $598.4 million in fiscal 2017
(cid:129) Net income before taxes excluding significant items(1) was $46.4 million, an increase of $56.6 million compared to the prior
year
(cid:129) Canaccord Genuity led 134 transactions globally, each over C$1.5 million, to raise total proceeds of C$6.7 billion during fiscal
2017. Of this:
(cid:129) Canada led 53 transactions, which raised C$1.7 billion
(cid:129) The UK led 24 transactions, which raised C$2.8 billion
(cid:129) The US led 20 transactions, which raised C $1.2 billion
(cid:129) Asia and Australia operations led 37 transactions, which raised C$1.0 billion
(cid:129) During fiscal 2017, Canaccord Genuity participated in a total of 368 transactions globally, each over C$1.5 million, to raise
gross proceeds of C$47.1 billion. Of this:
(cid:129) Canada participated in 232 transactions, which raised C$26.9 billion
(cid:129) The UK participated in 25 transactions, which raised C$3.0 billion
(cid:129) The US participated in 69 transactions, which raised C$15.7 billion
(cid:129) Asia and Australia operations participated in 42 transaction, which raised C$1.5 billion
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
14 Management’s Discussion and Analysis
(cid:129) Significant investment banking transactions for Canaccord Genuity during fiscal 2017 include:
(cid:129) £113.4 million for HICL Infrastructure Company Limited on the LSE
(cid:129) £260.0 million for HICL Infrastructure Company Limited on the LSE
(cid:129) £329.0 million block trade for Playtech plc on the LSE
(cid:129) £40.0 million for Vernalis Plc on the LSE
(cid:129) £62.6 million for The Renewables Infrastructure Group on the LSE
(cid:129) AUD$100.6 million for Metals X Limited on the ASX
(cid:129) AUD$151.2 million for Cooper Energy Limited on the ASX
(cid:129) AUD$50.0 million for NetComm Wireless Limited on the ASX
(cid:129) AUD$60.5 million for TFS Corporation Limited on the ASX
(cid:129) AUD$80.0 million for Sundance Energy Australia Limited on the ASX
(cid:129) C$150.0 million for NYX Gaming Group on the TSXV
(cid:129) C$160.0 million for Acasta Enterprises Inc. on the TSX
(cid:129) C$186.0 million block trade for a holder of Great Canadian Gaming Corporation on the TSX
(cid:129) C$400.00 million IPO for Aritzia Inc. on the TSX
(cid:129) C$60.0 million IPO for CanniMed Therapeutics Inc. on the TSX
(cid:129) C$65.0 million for DHX Media Ltd. on the TSX
(cid:129) C$65.7 million for Belo Sun Mining Corp. on the TSX
(cid:129) C$66.5 million for InPlayOil Corp on the TSX
(cid:129) C$82.2 million for Osisko Mining Inc. on the TSX
(cid:129) US$123.0 million IPO for iRhythm Technologies, Inc. on NASDAQ
(cid:129) US$125.0 million for Synergy Pharmaceuticals, Inc. on NASDAQ
(cid:129) US$126.5 million IPO for Xencor, Inc. on NASDAQ
(cid:129) US$134.6 million IPO for AquaVenture Holdings Limited on the NYSE
(cid:129) US$151.5 million for Exact Sciences Corporation on NASDAQ
(cid:129) US$152.0 million for Renewable Energy Group, Inc. on NASDAQ
(cid:129) US$172.5 million for Advanced Accelerator Applications S.A. on NASDAQ
(cid:129) US$172.5 million Initial Public Offering for Twilio, Inc. on NYSE
(cid:129) US$201 million Follow-on Offering for Sage Therapeutics on NASDAQ
(cid:129) US$275 million for Kenmare Resources plc on the LSE and ISE
(cid:129) US$322.0 million for Twilio Inc. on the NYSE
(cid:129) US$329.9 million Follow-on Offering for Shopify, Inc. on NYSE & TSX
(cid:129) In Canada, Canaccord Genuity participated in raising $955.0 million for government and corporate bond issuances during fiscal
2017
(cid:129) During fiscal 2017, significant M&A and advisory transactions included:
(cid:129) DP World on its US$3.7 billion Investment Vehicle in partnership with Caisse de dépôt et placement du Québec
(cid:129) ThinkSmart Limited on its admission to AIM
(cid:129) Learning Technologies Group plc on its successful offer for AIM listed NetDimensions
(cid:129) Sirius Real Estate Limited on its move from AIM to the Main Market
(cid:129) Kier Group plc on the £75 million sale of its infrastructure engineering and environmental consultancy business to WSP
Global Inc.
(cid:129) Catapult Environmental Inc. on its private equity sponsorship by ARC Financial Corp.
(cid:129) TransGlobe Energy Corporation on its C$80 million Canadian Asset Acquisition
(cid:129) General Mining Corporation Limited on its merger with Galaxy Resources Limited
(cid:129) Stride Gaming on its £70.2 million acquisition of select Tarco assets, Netboost Media Limited, and 8Ball Games Limited
(cid:129) Areva SA on the sale of Canberra to Mirion Technologies
(cid:129) NYX in connection with its acquisition of OpenBet for £270 million
(cid:129) Tahoe Resources Inc. on its C$945.0 million acquisition of Lake Shore Gold Corp.
(cid:129) Reservoir Minerals on its merger with Nevsun Resources for total consideration of US$440.0 million, and exercise of its
rights of first offer related to Reservoir’s Timok Copper Project for total consideration of US$262.5 million.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 15
WEALTH MANAGEMENT (GLOBAL)
(cid:129) Globally, Canaccord Genuity Wealth Management generated $272.3 million in revenue during fiscal 2017
(cid:129) Total assets under administration in Canada and assets under management in the UK & Europe and Australia were
$38.6 billion at March 31, 2017(2), an increase of $5.9 billion or 18.0% compared to at the end of fiscal 2016
WEALTH MANAGEMENT (NORTH AMERICA)
(cid:129) Canaccord Genuity Wealth Management (North America) generated $132.3 million in revenue during fiscal 2017 and, after
intersegment allocations and before taxes, recorded a net income of $2.0 million
(cid:129) Assets under administration were $13.2 billion as of March 31, 2017, an increase of 43.9% from $9.2 billion at the end of
fiscal 2016(2)
(cid:129) Assets under management were $2.6 billion as of March 31, 2017, an increase from $1.4 billion at the end of fiscal 2016(2)
(cid:129) At March 31, 2017, Canaccord Genuity Wealth Management had 141 Advisory Teams in Canada(3), an increase of two Advisory
Teams from March 31, 2016
WEALTH MANAGEMENT (UK & EUROPE)
(cid:129) Canaccord Genuity Wealth Management (UK & Europe) generated $134.8 million in revenue and, excluding significant items,
recorded net income of $27.6 million before taxes in fiscal 2017(1)
(cid:129) Assets under management (discretionary and non-discretionary) were $24.5 billion (£14.7 billion), an increase of 7.6% from
$22.8 billion (£12.2 billion) at the end of fiscal 2016(2). Measured in local currency (GBP), assets under management at
March 31, 2017 increased by 19.9% compared to fiscal 2016
(cid:129) At March 31, 2017, Canaccord Genuity Wealth Management had 118 investment professionals and fund managers in the
UK & Europe, unchanged from March 31, 2016
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
(2) See Non-IFRS Measures on page 10.
(3) 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.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
16 Management’s Discussion and Analysis
Market Environment During Fiscal 2017:
ECONOMIC BACKDROP:
During the first half of fiscal 2017, the global economy showed positive signs of a reacceleration following the growth slowdown
that took place at the end of our previous fiscal year. While stagnant global trade, subdued business investments and policy
uncertainty hindered global economic performance during the first half of fiscal 2017, an improvement in personal consumption
expenditures, strengthening labour markets and a pro-growth agenda by the incoming U.S. administration helped to lift global
business and consumer confidence toward the end of our 2017 fiscal year.
Despite slower than expected global economic growth during fiscal 2017, the S&P 500 (+14.7%), the S&P/TSX (+15.2%),
European equities (+12.9%) and Emerging Markets (EM) equities (+14.5%) all posted positive returns over the twelve month
period.
INVESTMENT BANKING AND ADVISORY
Our capital raising and advisory activities are primarily focused on small and mid-capitalization companies in specific growth
sectors of the global economy, as outlined on page 14. These sectors may experience growth or downturns independent of
broader economic and market conditions, and government regulation can also have a more profound impact on capital formation
for smaller companies. Volatility in the business environment for these industries or in the market for securities of companies
within these industries in the regions where we operate could adversely affect our financial results and ultimately, the market
value of our shares. Advisory revenues are primarily dependent on the successful completion of merger, acquisition or
restructuring mandates. Weak economic and global financial market conditions can result in a challenging business environment
for small and mid-market M&A activity, but may provide opportunities for our restructuring business.
While activity began to improve in our fourth fiscal quarter, overall capital raising activities for fiscal 2017 remained below
historical levels in most of our major markets.
TOTAL FINANCING VALUE BY EXCHANGE
TSX and TSX Venture (C$ billions)
AIM (£ billions)
NASDAQ (US$ billions)
ASX (AUD$ billions)
LSE (£ billions)
Q1/17
Q2/17
Q3/17
Q4/17
Fiscal 2017
Fiscal 2016
20.4
1.2
16.3
15.6
3.3
13.1
1.3
19.1
18.3
3
15.8
1.5
21.1
18.5
7
13.4
0.9
17.7
6.6
4.3
62.7
4.9
74.2
59.0
17.6
53.5
5.4
75.7
101.7
24.8
Fiscal 2017/
2016 change
17.2%
-9.3%
-2.0%
-42.0%
-29.0%
Source: TSX Statistics, LSE Statistics, LSE AIM Statistics, ASX Statistics, Dealogic and Placement Tracker
The recovery in natural resources helped to drive strong investment banking activity in our Australian operation. In the U.S., the
results of the federal election in November sent a positive shockwave throughout financial markets, which helped to increase
financing activities in the region.
Although signs of stability began to return to the UK market, following the Brexit-related disruption to equity and currency markets
early in the fiscal year, an uncertain environment for capital raising activities prevailed in the region throughout the 12-month
period. In anticipation of the changes related to MiFID II and volatile new issue activity, we moved forward with our strategy to
strengthen this business for long-term performance.
Our global advisory businesses have benefitted from the increase in cross-border M&A, as growing numbers of businesses seek
diversification.
TRADING
At the start of fiscal 2017, trading volumes in our key markets were lower than the same period one year earlier. The recovery in
the mining and energy sectors in combination with our efforts to enhance our trading-related businesses and capture a growing
share of less-cyclical business helped us to increase regional and cross-border trading revenues during this period. A period of
heightened volatility following the news of the Brexit referendum outcome in late June, 2016 led to increased trading volumes in
the region. Outside of the UK & Europe, the year-over-year increase in trading activity for global small and mid-cap equities for the
balance of the fiscal year reflects improved investor appetite for growth stocks, as global economic conditions became more
supportive of higher equity and commodity prices. In addition, an increasing trend toward lower trading commissions and a
continuation of electronic trading growth means that increased trading volumes do not directly correlate with increased trading
commissions.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 17
GLOBAL SMALL AND MID-CAPITALIZATION TRADING VOLUMES (50-DAY MOVING AVERAGE)
Q1/17
2,828.0
1,342.5
6,190.4
139.5
13,934.8
Q1 change
(y/y)
-9.3%
-10.1%
-10.3%
-5.6%
-7.3%
Q2/17
3,065.8
1,474.0
6,806.0
155.7
14,644.1
Q2 change
(y/y)
4.8%
-3.5%
7.6%
12.6%
5.9%
Q3/17
3,227.7
1,553.3
6,901.6
159.9
15,004.4
Q3 change
(y/y)
11.6%
7.8%
10.3%
15.7%
12.4%
Q4/17
3,422.1
1,603.7
7,280.1
171.5
15,565.4
Q4 change
(y/y)
32.5%
12.0%
21.2%
27.8%
20.6%
Russell 2000
S&P Midcap
FTSE 100
MSCI EU MidCap
ETF
TSX Composite
Source: FactSet
GLOBAL WEALTH MANAGEMENT
Over the fiscal year, market values have benefitted from broad equity performance inside and outside North America and market
values of assets in our wealth management operations increased on stronger equity valuations of small and mid-cap global
equities.
GLOBAL ASSET CLASS PERFORMANCE
Total Return (excl. currencies)
S&P 500
S&P/TSX
MSCI EAFE
MSCI EMERGING MARKETS
S&P GS COMMODITY INDEX
US 10-YEAR T-BONDS
CAD/USD
CAD/EUR
Source: Thomson Reuters Datastream
Q1 Change
(Q/Q)
Q2 Change
(Q/Q)
Q3 Change
(Q/Q)
Q4 Change
(Q/Q)
2017 Change
(Y/Y)
2016 Change
(Y/Y)
2.5%
5.1%
-1.2%
0.8%
12.7%
3.3%
0.6%
3.1%
3.9%
5.5%
6.5%
7.7%
-4.2%
-0.8%
-1.6%
-2.7%
3.8%
4.5%
-0.7%
-1.4%
5.8%
-6.0%
-2.3%
4.5%
6.1%
2.4%
7.4%
7.8%
-5.1%
0.8%
0.9%
-0.4%
17.2%
18.6%
12.2%
15.5%
8.4%
-3.0%
-2.3%
4.4%
1.8%
-6.6%
-7.9%
-7.4%
-28.7%
3.1%
-2.4%
-8.0%
Increasing regulatory burdens and rising costs have dramatically changed the competitive environment for the wealth management
industry. Many smaller firms have been forced to consolidate or exit the business, which has helped to drive asset-gathering
opportunities for our business, with the scale and resources available to meet these changes. As retail investors increasingly
demand access to the same asset classes and investment strategies as institutional investors, Canaccord Genuity Wealth
Management advisory teams have been able to deliver differentiated and highly personalized advice and services to the high net
worth and mass affluent demographic in all geographies where we have wealth management operations.
Fiscal 2018 Outlook
According to the IMF World Economic Outlook, global economic growth is expected to improve in calendar 2017 to 3.4% (up from
3.1% in calendar 2016). Given the inverse relationship between the US dollar and commodity prices, a flat or weak US dollar could
reverberate globally, stimulating commodity CapEx. Combined with our view of global growth reacceleration, we expect that
resource equities in the energy and material sectors will enjoy another phase of outperformance during fiscal 2018.
With regard to equity markets, elevated valuation multiples in Canada and in the US give us reason to expect that earnings
growth — rather than expanding valuations — will drive equity market performance. We expect that the upturn in earnings
growth should extend into fiscal 2018, but caution that history shows that equity market correction risks increase when markets
become earnings driven rather than P/E driven. Overall, while we expect increased market volatility in fiscal 2018 compared to
fiscal 2017, we expect that equity markets will deliver positive returns for investors.
With regards to capital market activities, we believe that global growth reacceleration has the potential to translate into stronger
contributions from the various geographical platforms across our operations. We expect that abundant liquidity and favourable
financing conditions should support mid-market M&A and advisory activities through the year ahead. Elevated market valuations
are also supportive of an improving outlook for IPO activity in the global growth sectors where we are focused. In a
commodity-friendly environment, equity issuance is expected to remain strong, as many resource companies have the potential to
seek financing to resume capital expenditures and/or acquire inexpensive assets. We are optimistic that our agency trading
activities will benefit from higher equity and commodity prices and increased market volatility. Lastly, we are optimistic that
positive asset returns support continued growth for our global wealth management operations.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
18 Management’s Discussion and Analysis
Overview of Preceding Years − Fiscal 2016 vs. 2015
Total revenue for the year ended March 31, 2016 (fiscal 2016) was $787.8 million, a decrease of $93.0 million or 10.6%
compared to the year ended March 31, 2015 mainly as a result of weakened market conditions across all our operating regions.
Canaccord Genuity Group recorded a net loss of $358.6 million during fiscal 2016, compared to net loss of $11.3 million in fiscal
2015 primarily attributable to certain significant items which included goodwill and other assets impairment charges and
restructuring costs. Excluding significant items(1), net loss for fiscal 2016 was $6.0 million compared to net income of
$53.3 million for fiscal 2015.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Financial Overview
SELECTED FINANCIAL INFORMATION(1)(2)
(C$ 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)
Impairment of goodwill and other assets(5)
Total expenses
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) earnings per common share − diluted
Return on common equity (ROE)
Dividends per common share
Dividends per Series A Preferred Share
Dividends per Series B Preferred Share
Book value per diluted common share(6)
Excluding significant items(7)
Total revenue
Total expenses
Income (loss) before income taxes
Net income (loss)
Net income (loss) attributable to CGGI shareholders
Net income attributable to non-controlling interests
Earnings (loss) per common share − diluted
Balance sheet data
Total assets
Total liabilities
Non-controlling interests
Total shareholders’ equity
Number of employees
Management’s Discussion and Analysis 19
For the years ended March 31
2017
2016
2015
2017/2016
change
$
396,741
$ 376,817
$ 374,058
$
19,924
196,129
130,749
119,040
16,847
20,040
132,029
160,180
85,559
16,830
16,390
236,551
153,302
75,217
22,212
19,423
879,546
787,805
880,763
454,998
85,698
284,966
—
—
417,876
92,981
302,530
17,352
321,037
455,480
85,770
305,822
24,813
14,535
825,662
1,151,776
886,420
64,100
(29,431)
33,481
17
3,650
91,741
37,122
(7,283)
(17,564)
(17,352)
(321,037)
(326,114)
53,884
(363,971)
(5,657)
417,855
(11,318)
$ 401,753
(13,184)
$ 396,574
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
43,186
$ (358,567)
38,103
$ (358,471)
5,083
0.29
0.27
5.0%
0.10
1.173
1.4375
5.08
$
$
$
$
$
$
$
(96)
(4.09)
(4.09)
(50.4)%
0.10
1.375
1.4375
4.99
$
$
$
$
$
$
$
$
$
1,866
(0.27)
(0.27)
(2.9)%
0.25
1.375
1.4375
8.71
878,353
$ 787,805
$ 880,763
817,096
$ 793,862
$ 827,458
61,257
49,196
43,903
5,293
0.32
$
$
$
$
$
(6,057)
(5,995)
(6,620)
625
(0.21)
$
$
$
$
$
53,305
39,330
36,448
2,882
0.25
$
$
$
$
$
$
$
$
$
$
$
$
$
$
5,179
4.38
4.36
55.4 p.p.
—
(0.20)
—
0.09
90,548
23,234
67,314
55,191
50,523
4,668
0.53
$ 5,203,516
$ 3,424,546
$ 4,369,905
$ 1,778,970
4,426,873
2,665,895
3,242,088
1,760,978
11,858
764,785
1,700
8,722
10,275
749,929
1,117,542
1,795
1,928
3,136
14,856
(95)
5.3%
48.5%
(18.4)%
39.1%
0.1%
22.3%
11.6%
8.9%
(7.8)%
(5.8)%
(100.0)%
(100.0)%
(28.3)%
114.8%
112.0%
110.6%
n.m.
107.1%
106.6%
0.0%
(14.7)%
—
1.9%
11.5%
2.9%
n.m.
n.m.
n.m.
n.m.
252.4%
51.9%
66.1%
36.0%
2.0%
(5.3)%
(1) 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 10.
(2) The operating results of the Australian operations have been fully consolidated and a 42% non-controlling interest has been recognized for fiscal 2017 [fiscal 2016 − 42% and fiscal 2015 − 40%].
(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) Restructuring costs for the year ended March 31, 2016 were related to the staff reductions in our US, Canada and UK capital markets operations and the closure of our Barbados office in Other
Foreign Locations, as well as charges related to staff reductions and certain executive changes in our Corporate and Other segment. Fiscal 2015 restructuring costs were in connection with certain
executive changes in our Corporate and Other segment, the closure of the Geneva office in our UK & European wealth management operations, certain real estate and office closure costs, as well
as the reorganization of our Canadian, UK & Europe and US capital markets operations.
Impairment of goodwill and other assets for the year ended March 31, 2016 was in connection with our capital markets operations in the UK, US, Canada and Australia, and our Other Foreign
Locations − Singapore operations. Impairment of goodwill for the year ended March 31, 2015 is in connection with our Singapore and China-based operations.
(5)
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
20 Management’s Discussion and Analysis
(6) Book value per diluted common share is calculated as total common shareholders’ equity adjusted for assumed proceeds from the exercise of options and warrants and the conversion of
convertible debentures divided by the number of diluted common shares outstanding including estimated amounts in respect of share issuance commitments including options, warrants, and
convertible debentures, as applicable, and 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.
(7) Net income (loss) and earnings (loss) 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
SELECTED FINANCIAL INFORMATION EXCLUDING SIGNIFICANT ITEMS(1)
(C$ thousands, except per share and % amounts)
2017
2016
2015
2017/2016 change
For the years ended March 31
Total revenue per IFRS
Total expenses per IFRS
Revenue
Significant items recorded in Canaccord Genuity
$
879,546
$ 787,805
$ 880,763
$
91,741
825,662
1,151,776
886,420
(326,114)
11.6%
(28.3)%
Realized translation gains on disposal of Singapore
1,193
—
—
Total revenue excluding significant items
878,353
787,805
880,763
1,193
90,548
n.m.
11.5%
Expenses
Significant items recorded in Canaccord Genuity
Amortization of intangible assets
Impairment of goodwill and other assets
Restructuring costs
Development costs
Significant items recorded in Canaccord Genuity Wealth
Management
Amortization of intangible assets
Restructuring costs
Significant items recorded in Corporate and Other
Restructuring costs
Development costs
Total significant items
Total expenses excluding significant items
Net income (loss) before income taxes − adjusted
Income tax expense (recovery) − adjusted
Net income (loss) − adjusted
Earnings (loss) per common share − basic, adjusted
Earnings (loss) per common share − diluted, adjusted
3,304
—
—
—
5,262
—
—
—
8,566
817,096
61,257
12,061
49,196
0.36
0.32
$
$
$
$
5,409
321,037
11,305
1,157
6,823
14,535
20,997
—
(2,105)
(321,037)
(11,305)
(1,157)
6,055
165
7,591
783
(793)
(165)
5,882
6,904
357,914
793,862
3,033
5,200
58,962
827,458
$
$
$
$
(6,057)
$
53,305
(62)
(5,995)
(0.21)
(0.21)
$
$
$
13,975
39,330
0.27
0.25
$
$
(5,882)
(6,904)
(349,348)
23,234
67,314
12,123
55,191
0.57
0.53
(38.9)%
(100.0)%
(100.0)%
(100.0)%
(13.1)%
(100.0)%
(100.0)%
(100.0)%
(97.6)%
2.9%
n.m.
n.m.
n.m.
271.4%
252.4%
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
n.m.: not meaningful
FOREIGN EXCHANGE
Revenues and expenses from our foreign operations are initially recorded in their respective functional currencies and translated
into Canadian dollars at exchange rates prevailing during the period. The pound sterling depreciated by 13.2% against the
Canadian dollar, while the US dollar appreciated slightly by 0.04% against the Canadian dollar in fiscal 2017 when compared to
fiscal 2016. This change in foreign exchange rates contributed to certain changes in revenue and expense items measured in
Canadian dollars when compared to the applicable prior periods and should be considered when reviewing the following
discussion in respect of our consolidated results as well as the discussion in respect of Canaccord Genuity and Canaccord
Genuity Wealth Management UK & Europe.
GEOGRAPHIES
Commencing in Q3/17, the operating results of our Australian operations are disclosed as a separate geography. Prior to Q3/17
Australia was included as part of Other Foreign Locations. Also, commencing in Q3/17, our Dubai operation, which was previously
included in Other Foreign Locations, is now included as part of Canaccord Genuity UK & Europe. The Other Foreign Locations
geographic segment is now comprised of our Asian based operations, including China and Hong Kong and prior to their sale or
closure also included Singapore and Barbados. These reclassifications reflect the growing contribution from Australia and the
working association between the UK and Dubai. For purposes of the discussion provided herein the Canaccord Genuity operations
in the UK, Europe and Dubai are referred to as the ‘‘UK’’.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 21
GOODWILL
The Company has recorded on its balance sheet as at March 31, 2017 goodwill in the amount of $192.3 million and included in
intangible assets is an intangible asset with an indefinite life in the amount of $44.9 million. In determining whether to perform an
impairment test in respect of these assets, the Company considers factors such as its market capitalization, market conditions
generally and overall economic conditions as well as market conditions in the key sectors in which the Company operates and the
impact that such conditions are expected to have on the Company’s operations.
Utilizing management’s estimates for revenue and operating performance, growth rates and other assumptions typically required in
connection with discounted cash flow models, the Company determined that there was no impairment in the goodwill associated
with any of its wealth management business units in the UK & Europe, its remaining goodwill recorded in Canaccord Genuity
Canada or in the value of the indefinite life intangible asset related to the Genuity brand name. Notwithstanding this determination
as of March 31, 2017, the continuing uncertainty in the economic environment may cause this determination to change. If the
business climate remains uncertain and the Company is unable to achieve its internal forecasts the Company may determine that
there has been impairment and the Company may be required to record a goodwill impairment charge in future periods in respect
of the Canaccord Genuity Wealth Management business units in the UK & Europe or in respect of the remaining goodwill recorded
in Canaccord Genuity Canada. Adverse changes in the key assumptions utilized for purposes of impairment testing for goodwill
and indefinite life intangible assets may result in the estimated recoverable amount of some or all of the applicable
business units declining below the carrying value with the result that impairment charges may be required. The amount of any
impairment charge would affect some or all of the amounts recorded for goodwill and indefinite life intangible assets. Any such
impairment charges would be determined after incorporating the effect of any changes in key assumptions including any
consequential effects of such changes on estimated operating income and on other factors. In addition, notwithstanding that
there may be no change in the performance estimates used by the Company for purposes of determining whether there has been
any impairment in its indefinite life intangible asset related to the Genuity brand name, in the event that the Company changes the
way in which it uses that asset the Company may be required to record an impairment charge.
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 2017 was $879.5 million, an increase of 11.6% or $91.7 million from fiscal 2016 mainly driven by an increase
in investment banking revenue in Canada and Australia, as well as an increase in our principal trading revenue in the US and the
UK. Our capital markets operations experienced an increase of $66.1 million or 12.4% compared to the prior year. Revenue in our
wealth management operations in Canada increased by $24.1 million or 22.3% in fiscal 2017 compared to fiscal 2016. Our
Corporate and Other segment contributed $5.1 million to the overall increase in total revenue. Revenue in our wealth management
operations in the UK & Europe decreased by $3.5 million or 2.6% compared to the year ended March 31, 2016 as a result of the
depreciation of the pound sterling against the Canadian dollar. Measured in local currency (GBP), revenue increased by
£8.7 million or 12.4%.
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 $19.9 million or 5.3% from fiscal 2016 to $396.7 million in fiscal
2017. Commissions and fees revenue increased in all regions except for the UK & Europe wealth management operations, where
it decreased as a result of depreciation of the pound sterling against the Canadian dollar.
As a result of improved market conditions, revenue generated from investment banking activities increased by $64.1 million to
$196.1 million in fiscal 2017, compared to $132.0 million in fiscal 2016, most notably in our Canadian and Australian capital
markets operations. Offsetting these increases was a decrease of $13.9 million in investment banking revenue in our UK capital
markets operations year over year.
Advisory fees revenue of $130.7 million represented a decrease of 18.4%, or $29.4 million compared to the prior year. This was
primarily due to reduced activity in our capital markets operations in Canada and the US. The largest decrease was in our
Canadian capital markets operations, which experienced a decline of $21.1 million, mostly as a result of reduced corporate
activity. Inclusion of our operations in Dubai in the UK segment in fiscal 2017 with advisory revenue of $12.9 million offset a
decline in advisory revenue of approximately $13.2 million in our local UK operations in fiscal 2017 compared to fiscal 2016.
Revenue derived from principal trading increased by $33.5 million to $119.0 million for the year ended March 31, 2017 due to
higher revenue earned across all regions. Most notably, our US and UK capital markets operations saw increases of $15.5 million
and $12.2 million, respectively, compared to last year. The increase in principal trading revenue resulted from our continued
strategy of developing our specialty trading desks which operate in niche sectors in the market, principally international equities
and investment companies.
Interest revenue remained the same in fiscal 2017 compared to last year. Other revenue of $20.0 million was $3.7 million or
22.3% higher than in the year ended March 31, 2016, mostly due to an increase in foreign exchange gains as well as the realized
translation gain on the disposal of our Singapore operations.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
22 Management’s Discussion and Analysis
EXPENSES
Expenses as a percentage of revenue
Incentive compensation
Salaries and benefits
Other overhead expenses(1)
Restructuring costs(2)(3)
Impairment of goodwill and other assets(4)
Total
For the years ended March 31
2017
51.7%
9.8%
32.4%
—
—
2016
53.0%
11.8%
38.4%
2.2%
40.8%
2017/2016
change
(1.3) p.p.
(2.0) p.p.
(6.0) p.p.
n.m.
n.m.
93.9%
146.2%
(52.3) p.p.
(1) Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative, amortization of tangible and intangible assets and development costs.
(2) Refer to the Selected Financial Information Excluding Significant Items table on page 20.
(3) Restructuring costs for the year ended March 31, 2016 were related to staff reductions in our US, Canada and UK capital markets operations and the closure of our Barbados office in Other Foreign
(4)
Locations, as well as charges related to staff reductions and certain executive changes in our Corporate and Other segment.
Impairment of goodwill and other assets for the year ended March 31, 2016 is in connection with our capital markets operations in the UK, US, Canada, Australia and and Other Foreign
Locations − Singapore.
p.p.: percentage points
n.m.: not meaningful
Expenses for fiscal 2017 were $825.7 million, a decrease of 28.3% or $326.1 million compared to the last fiscal year. Excluding
significant items(1), total expenses were $817.1 million, up $23.2 million or 2.9% from fiscal 2016. The decrease in expenses
was mainly due to the impairment charges related to goodwill and other assets in certain of our capital markets operations
recorded in fiscal 2016. No impairment charges were recorded in fiscal 2017. As a result of the increase in revenue during the
year and the non-variable nature of certain infrastructure and overhead costs, total expenses excluding significant items(1) as
a percentage of revenue decreased by 7.7 percentage points compared to the year ended March 31, 2016. Total overhead
expenses excluding compensation expense were down 6.0% compared to fiscal 2016, largely due to our cost cutting efforts.
Compensation expenses
Incentive compensation expense was $455.0 million, an increase of $37.1 million or 8.9% from the prior year, partially as a result
of the increases in incentive-based revenue. Incentive compensation as a percentage of total revenue decreased by
1.3 percentage points to 51.7% in fiscal 2017 compared to fiscal 2016. With a reduced headcount the salaries and benefits
expense of $85.7 million for the year ended March 31, 2017 was $7.3 million or 7.8% lower than in the prior fiscal year, because
of reduced headcount. Total compensation (incentive compensation plus salaries and benefits) expense as a percentage of total
revenue was 61.5%, down 3.3 percentage points compared to 64.8% in fiscal 2016.
OTHER OVERHEAD EXPENSES
(C$ 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
2017
2016
$
65,211
$
56,998
42,286
52,381
12,744
79,011
21,124
12,209
40,863
55,975
10,222
87,004
25,339
26,129
$
284,966
$ 302,530
2017/2016
change
14.4%
3.5%
(6.4)%
24.7%
(9.2)%
(16.6)%
(53.3)%
(5.8)%
(1)
Includes amortization of intangible assets for the years ended March 31, 2017 and March 31, 2016, respectively. See the Selected Financial Information Excluding Significant Items table on
page 20.
Other overhead expenses were $17.6 million or 5.8% lower in fiscal 2017, which as a percentage of revenue represented a
decrease of 6.0 percentage points compared to fiscal 2016. The overall decrease in other overhead expenses was driven by lower
general and administrative expense, amortization, communication and technology expense and development costs, offset by
increases in trading costs, premises and equipment and interest expense.
General and administrative expense, which includes reserves, promotion and travel expense, office expense, professional fees
and donations, was down $8.0 million, due to reduced expenditures across most operating segments in accordance with cost
saving initiatives including initiatives implemented in connection with the restructuring that took place at the end of fiscal 2016.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 23
Amortization expense decreased by $4.2 million or 16.6% compared to the prior fiscal year, partially due to a decrease in
amortization of intangible assets in our capital markets operations. Interest expense increased by $2.5 million compared to the
year ended March 31, 2016, primarily as a result of higher expenses in our US capital markets operations and Corporate and
Other segment.
Development costs decreased by $13.9 million compared to the year ended March 31, 2016 mainly due to a non-cash accounting
charge which resulted from the surrender of a long-term incentive award granted to our CEO in conjunction with his appointment
during fiscal 2016. Also contributing to this decrease was a charge of $2.3 million recorded in fiscal 2016 in connection with
costs associated with the termination of a software development project that were previously capitalized and expensed as
development costs in the prior year.
Costs associated with rationalization of our office space in Toronto led to an increase of $1.4 million in premises and equipment
expense recorded in our Corporate and Other segment. Without this charge, premises and equipment expense would have
declined by approximately $1.4 million.
Higher trading activity in our US operation was the primary reason for the $8.2 million increase in trading costs in fiscal 2017
compared to the year ended March 31, 2016. Communication and technology expense decreased by $3.6 million, primarily as a
result of decreases recorded in the UK capital markets and wealth management operations.
During fiscal 2016, the Canaccord Genuity segment recorded restructuring costs of $17.4 million related to staff reductions in our
US, UK and Canadian capital markets operations and the closure of our office in Barbados, as well as staff reductions and certain
executive changes in our Corporate and Other operating segment. In addition, the Company recorded impairment charges related
to goodwill and other assets in connection with our capital markets operations in Canada, the US, the UK, Australia and Other
Foreign Locations − Singapore of $321.0 million. There were no restructuring or impairment charges recorded during fiscal 2017.
NET INCOME (LOSS)
Net income for fiscal 2017 was $43.2 million compared to a net loss of $358.6 million in fiscal 2016, an increase of
$401.8 million, largely due to the non-recurring nature of the impairment charges and restructuring costs recorded in fiscal 2016.
Diluted earnings per common share was $0.27 in fiscal 2017 compared to a loss per common share of $4.09 in the prior fiscal
year. Excluding significant items(1), net income for fiscal 2017 was $49.2 million compared to net loss of $6.0 million in fiscal
2016, and diluted earnings per share was $0.32 compared to a loss per common share of $0.21 in fiscal 2016.
Income tax expense was $10.7 million for fiscal 2017, reflecting an effective tax rate of 19.9% compared to an effective tax
rate of 1.5% in the prior year. The change in the effective tax rate was mainly due to lower non-deductible items affecting
the determination of taxable income and higher deferred tax assets in our foreign operations which were not recognized in fiscal
2016. A further discussion of our taxes is provided in the Critical Accounting Policies and Estimates section of the MD&A on
page 44.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
24 Management’s Discussion and Analysis
Quarterly Financial Information(1)(2)
The following table provides selected quarterly financial information for the eight most recently completed financial quarters ended
March 31, 2017. This information is unaudited, but reflects all adjustments of a recurring nature that are, in the opinion of
management, necessary to present a fair statement of the results of operations for the periods presented. Quarter-to-quarter
comparisons of financial results are not necessarily meaningful and should not be relied upon as an indication of future
performance.
(C$ thousands,
except per share amounts)
Revenue
Q4
Q3
Q2
Fiscal 2017
Q1
Q4
Q3
Q2
Fiscal 2016
Q1
Commissions and fees
$ 105,890
$ 102,637
$ 95,342
$ 92,872
$ 97,915
$ 95,014
$ 89,182
$
94,706
Investment banking
Advisory fees
Principal trading
Interest
Other
Total revenue
Total expenses
Net income (loss) before
income taxes
Net income (loss)
Earnings (loss) per
share − basic
Earnings (loss) per
share − diluted
Excluding significant items(3)
Net income (loss)
Earnings (loss) per
share − basic
Earnings (loss) per
share − diluted
71,595
52,474
31,066
5,217
5,414
271,656
234,251
37,405
$ 30,987
$
$
0.29
0.26
$ 32,740
$
$
0.31
0.27
46,508
17,127
33,569
4,017
4,250
208,108
202,397
40,901
21,554
26,859
4,005
4,941
193,602
192,845
37,125
39,594
27,546
3,608
5,435
16,557
54,957
25,199
3,441
2,843
19,261
38,954
20,202
3,981
4,425
31,147
44,255
17,592
4,334
4,092
206,180
196,169
200,912
228,210
181,837
532,456
190,602
189,103
5,711
4,544
0.01
0.01
6,309
0.03
0.03
$
$
$
$
$
$
757
200
(0.05)
(0.05)
2,008
(0.03)
(0.03)
$
$
$
$
$
$
$
$
$
$
$
$
10,011
(27,298)
(350,619)
7,455
$ (22,709)
$(346,388)
0.04
0.04
$
$
(0.29)
(0.29)
$
$
(3.91)
(3.91)
8,139
$
(2,113)
$ (19,144)
0.05
0.05
$
$
(0.06)
(0.06)
$
$
(0.25)
(0.25)
1,499
(431)
(0.03)
(0.03)
1,943
(0.01)
(0.01)
$
$
$
$
$
$
$
$
$
$
$
$
65,064
22,014
22,566
5,074
5,030
214,454
202,007
12,447
10,961
0.08
0.08
13,319
0.10
0.10
(1) Data is in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 10.
(2) The operating results of our Australian operations have been fully consolidated and a 42% non-controlling interest has been recognized during fiscal 2017 [fiscal 2016 − 42%].
(3) Figures excluding significant items are non-IFRS measures. See the Quarterly Financial Information Excluding Significant Items table on the next page.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 25
QUARTERLY FINANCIAL INFORMATION EXCLUDING SIGNIFICANT ITEMS(1)(2)
(C$ thousands,
except per share amounts)
Q4
Q3
Q2
Fiscal 2017
Q1
Q4
Q3
Q2
Fiscal 2016
Q1
Total revenue per IFRS
$ 271,656
$ 208,108
$ 193,602
$ 206,180
$ 200,912
$ 181,837
$ 190,602
$ 214,454
Total expenses per IFRS
234,251
202,397
192,845
196,169
228,210
532,456
189,103
202,007
Revenue
Significant items recorded in
Canaccord Genuity
Realized translation gains
on disposal of
Singapore
Total revenue excluding
significant items
Expenses
Significant items recorded in
Canaccord Genuity
Amortization of intangible
—
—
—
1,193
—
—
—
—
271,656
208,108
193,602
204,987
200,912
181,837
190,602
214,454
assets
830
829
827
818
1,346
1,333
1,320
1,410
Impairment of goodwill
and other assets
Restructuring costs
Development costs
Significant items recorded in
Canaccord Genuity Wealth
Management
Amortization of intangible
assets
Restructuring costs
Significant items recorded in
Corporate and Other
Restructuring costs
Development costs
—
—
—
—
—
—
—
—
—
—
—
—
—
321,037
8,328
1,157
2,977
—
—
—
—
—
—
—
1,260
—
1,274
—
1,323
—
1,405
—
1,471
165
1,560
—
1,557
—
1,467
—
—
—
—
—
—
—
—
—
4,582
6,904
1,300
—
—
—
—
—
Total significant items
2,090
2,103
2,150
2,223
23,953
328,207
2,877
2,877
Total expenses excluding
significant items
232,161
200,294
190,695
193,946
204,257
204,249
186,226
199,130
Net income (loss) before
income taxes − adjusted
39,495
7,814
2,907
11,041
(3,345)
(22,412)
4,376
15,324
Income tax expense
(recovery) − adjusted
6,755
Net income (loss) − adjusted
$ 32,740
Earnings (loss) per
share − basic − adjusted
Earnings (loss) per
share − diluted − adjusted
$
$
0.31
0.27
1,505
6,309
0.03
0.03
$
$
$
899
2,008
(0.03)
(0.03)
$
$
$
$
$
$
2,902
8,139
(1,232)
(3,268)
$
(2,113)
$ (19,144)
0.05
0.05
$
$
(0.06)
(0.06)
$
$
(0.25)
(0.25)
2,433
1,943
(0.01)
(0.01)
$
$
$
$
$
$
2,005
13,319
0.10
0.10
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
(2) The operating results of our Australian operations have been fully consolidated and a 42% non-controlling interest has been recognized during fiscal 2017 [fiscal 2016 − 42%].
Quarterly trends and risks
Our quarterly results are generally not significantly affected by seasonal factors. However, the Company’s revenue and income can
experience considerable variations from quarter to quarter and year to year due to factors beyond the Company’s control. The
business is affected by the overall condition of the global capital markets and activity in our core focus sectors as well as growth
company activity. The Company’s revenue from an underwriting transaction is recorded only when a transaction has been
substantially completed or closed. Consequently, the timing of revenue recognition can materially affect Canaccord Genuity Group
Inc.’s quarterly results.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
26 Management’s Discussion and Analysis
Overall, consolidated revenue has generally increased over recent quarters, leading to higher pre-tax operating profits. Compared
to Q3/17, consolidated revenue increased by 30.5% in Q4/17, and by 35.2% compared to the same quarter last year. The
Canaccord Genuity division, which had been negatively affected by the general decline in market conditions throughout fiscal 2016
and the first half of fiscal 2017, generated $330.8 million of revenue in the second half of fiscal 2017, an increase of 23.6%
compared to the first half of the fiscal year. Revenue in our Canadian capital markets operations increased by 44.5% in Q4/17
compared to the previous quarter and by 18.3% compared to Q4/16, mostly driven by higher investment banking revenue. The UK
capital markets revenue in Q4/17 increased by 94.3% compared to Q3/17 and by 91.0% compared to the same quarter in the
last fiscal year, due to higher advisory fee revenue generated in the UK as well as contributions from our Dubai operations. Income
before income taxes were $17.1 million in Q4/17, making it the second consecutive and most profitable quarter for this operating
segment since Q4/15.
Revenue in our US capital markets operations increased by 17.1% compared to Q4/16, the highest revenue in this operating
segment over the past eight quarters. As a result of higher revenue and cost reduction efforts, income before income taxes for
Q4/17 was $2.8 million, the highest achieved in this operating segment since Q2/16.
Our Australian operations have continued to perform well in recent quarters, with revenue reaching $20.3 million at the end of
Q4/17, an increase of 63.9% over Q3/17 and of 109.2% over Q4/16.
Our Canaccord Genuity Wealth Management North America operations have been positively impacted by stabilizing market
conditions and improved transaction activity, with an increase of 57.8% in revenue during Q4/17 compared to the same period a
year ago and an increase of 22.7% compared to Q3/17. Revenue attributable to investment banking activity in this segment
increased by $2.6 million in Q4/17 compared to Q3/17 and revenue from commissions and fees increased by $4.3 million.
Assets under management also grew in Q4/17, increasing by 109.8% compared to Q4/16 to $2.6 billion as a result of new
assets from the hiring of new investment advisors as well as higher market values. Our fee related revenue continued to grow, but
fee related revenue as a percentage of total revenue decreased primarily as a result of an increase in transactional activity
through the year.
The Canaccord Genuity Wealth Management UK & Europe operations continued to generate steady operating profits during fiscal
2017. At the end of Q4/17, fee-related revenue was at 70.5%, a 0.3 percentage point decrease from Q4/16. Assets under
management for this group increased by $1.7 billion reaching $24.5 billion as of the end of Q4/17, compared to $22.8 billion at
the end of Q4/16 despite the weakening of the pound sterling. The movement in revenue in the Corporate and Other segment was
mainly due to foreign exchange gains or losses resulting from fluctuations in the Canadian dollar.
Fourth quarter 2017 performance
Revenue for the fourth quarter was $271.7 million, an increase of $70.7 million or 35.2% compared to the same period in the
previous year, mainly due to an increase in investment banking revenue. The increase in investment banking revenue of
$55.0 million compared to Q4/16 was attributable to higher activity across all of our operations. Advisory fees revenue decreased
by $2.5 million from Q4/16 due to the $16.7 million and $2.6 million decreases, in our Canadian and US capital markets
operations, respectively. These decreases were offset by our UK capital markets operations, which saw an increase of
$17.9 million compared to Q4/16. Of this increase, $12.6 million was attributable to our Dubai operation which is now included in
our UK capital markets segment.
Commissions and fees revenue increased by $8.0 million, predominantly attributable to our Canadian wealth management
operations. Principal trading revenue increased by $5.9 million during the three months ended March 31, 2017 compared to the
same period last year, mostly due to higher trading revenue generated in our US and UK operations.
Interest revenue for Q4/17 was $5.2 million, an increase of $1.8 million over Q4/16, mainly attributable to our Canadian capital
markets operations. Other revenue increased by $2.6 million compared to the same period in the prior year, partially due to higher
foreign exchange gains recorded in our Corporate and Other segment.
Expenses were $234.3 million, up $6.0 million or 2.6% from Q4/16. Total expenses excluding significant items(1) were
$232.2 million, an increase of $27.9 million or 13.7% from the same period last year.
Incentive compensation expense increased by $23.5 million compared to the same period last year, in line with the increase in
incentive-based revenue. Salaries and benefits expense was $2.3 million lower compared to the same period in the prior year due
to reduced headcount. Total compensation expense as a percentage of revenue decreased by 9.9% in Q4/17 compared to Q4/16.
All of the non-compensation expenses decreased compared to Q4/16 except for trading costs, interest and general and
administrative expense, which increased as a result of the increased activity of the operations. The largest decrease in
non-compensation expenses was development costs, which decreased by $7.0 million, primarily as a result of a non-cash
accounting charge related to the surrender of a long-term incentive award granted to the President & CEO that was recorded
in Q4/16.
During the fourth quarter of fiscal 2016, the Company recognized $13.1 million of restructuring costs related to staff reductions
in our capital markets and Corporate and Other segments. There were no restructuring costs incurred during Q4/17.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 27
Net income for the fourth quarter of fiscal 2017 was $31.0 million, compared to a net loss of $22.7 million in Q4/16. Diluted
earnings per share in the current quarter was $0.26, compared to a loss per common share of $0.29 in Q4/16.
Excluding significant items(1), net income for Q4/17 was $32.7 million, compared to a net loss of $2.1 million in Q4/16, and
diluted earnings per common share was $0.27 in Q4/17, compared to a loss per common share of $0.06 in Q4/16.
Business Segment Results(1)(2)
(C$ thousands,
except number of employees)
Canaccord
Genuity
Canaccord
Genuity
Wealth
Management
Corporate
and Other
Total
Canaccord
Genuity
Canaccord
Genuity
Wealth
Management
Corporate
and Other
For the years ended March 31
2017
2016
Total
Revenue
Canada
UK & Europe
US
Australia
Other Foreign Locations
Total revenue
Expenses
Intersegment allocations
Income (loss) before income
$ 155,411
$ 129,361
$ 14,044
$ 298,816
$ 131,399
$ 106,654
$
8,968
$ 247,021
146,812
234,211
59,693
2,264
598,391
535,913
18,210
134,819
2,931
—
—
—
—
—
—
267,111
226,048
14,044
63,701
281,631
237,142
59,693
2,264
879,546
825,662
145,478
217,411
31,138
6,844
532,270
864,293
138,359
1,554
—
—
—
—
—
—
283,837
218,965
31,138
6,844
246,567
214,542
8,968
787,805
72,941
1,151,776
16,796
(35,006)
—
17,087
21,854
(38,941)
—
taxes (recovery)
$ 44,268
$ 24,267
$ (14,651)
$ 53,884
$(349,110)
$ 10,171
$ (25,032) $ (363,971)
Excluding significant items(3)
Revenue
Expenses
Intersegment allocations
Income (loss) before income
597,198
532,609
18,210
267,111
220,786
16,796
14,044
63,701
(35,006)
878,353
817,096
—
532,270
525,385
17,087
246,567
208,322
8,968
60,155
21,854
(38,941)
787,805
793,862
—
taxes (recovery)
$ 46,379
$ 29,529
$ (14,651)
$ 61,257
$ (10,202)
$ 16,391
$ (12,246) $
(6,057)
Number of employees
749
672
279
1,700
841
666
288
1,795
(1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 10. Detailed financial results for the business segments
are shown in Note 22 of the Audited Consolidated Financial Statements on page 92.
(2) The operating results of Canaccord Genuity (Australia) Limited have been consolidated and a 42% non-controlling interest has been recognized and included in the Canaccord Genuity business
segment in fiscal 2017 [fiscal 2016 − 42%].
(3) See the Selected Financial Information Excluding Significant Items table on page 20.
Canaccord Genuity Group’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, advisory, equity 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 & Europe and the
Asia-Pacific region. Canaccord Genuity has offices in 19 cities in 9 countries worldwide.
Our operating results demonstrate the strength of our global business and the success of our efforts to diversify our revenue
streams and improve alignment across our businesses and regions. For fiscal 2017, 74.0% of total Canaccord Genuity revenue
was earned outside of Canada.
Canaccord Genuity’s global alignment efforts are helping to firmly position the Company as a leading global independent
investment bank focused on the mid-market.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
28 Management’s Discussion and Analysis
During fiscal 2017, Canaccord Genuity participated in 368 transactions to raise gross proceeds of $47.1 billion(1). Of these,
Canaccord Genuity led 134 transactions globally, raising total proceeds of $6.7 billion. Sector diversification remains a core
component of the Company’s strategy. Resource-related revenue accounted for 30.5% of Canaccord Genuity’s total investment
banking revenue in fiscal 2017, versus 10% in fiscal 2016, largely due to increased contributions from our Australian operations.
Resource-related transactions comprised 29.3% of the total number of Canaccord Genuity’s investment banking transactions in
fiscal 2017, up from 15.0% in fiscal 2016.
While overall reliance on activity in the natural resource sector has decreased, our business has benefitted from improving activity
levels in this sector, where we have traditionally been a leader.
Outlook
Canaccord Genuity continues to be very well positioned in many of the Company’s key markets. In the fiscal year ahead,
management intends to focus on capturing operating efficiencies and improving profitability through further integration of its global
capital markets platform and encouraging further cross-border coordination among our global offices.
We believe Canaccord Genuity’s integrated global platform provides a competitive advantage for our business compared to many
of the domestically focused firms we compete with. Smaller regional or local investment dealers are increasingly under pressure
to diversify, and larger international competitors dedicate limited resources to servicing growth companies. We believe this
competitive landscape provides a significant opportunity for Canaccord Genuity in the global mid-market, as this space is currently
relatively underserviced by other global investment banks. Canaccord Genuity’s mid-market strategy and focus on key growth
sectors differentiate 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, Aequitas, Pure, CSE (Canadian Stock Exchange), Omega, Lynx, Triact). The
Company has also developed a strong presence in the US with its American Depositary Receipts (ADR) and foreign equity trading
capabilities from its International Equities Group. The Company continues to actively monitor shifts and trends 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.
While we are optimistic about our prospects for the future, the Company has made the prudent decision to balance investments in
growth with our ability to generate profit in the current market environment. The dynamic nature of our operating environment
requires us to maintain a level of agility in our business mix that allows us to stay competitive and meet the evolving needs of our
clients. For this reason, the Company will continue to make disciplined investments with the addition of small teams in specific
sector verticals or key service offerings to further strengthen our operations in areas where we believe we can capture additional
market share.
The management team believes the investments that the Company has made to improve Canaccord Genuity’s global presence and
refine its service offering have positioned the business very well for the future.
(1) Transactions over C$1.5 million
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 29
FINANCIAL PERFORMANCE(1)(2)
For the years ended March 31
2017
2016
(C$ thousands,
except number of
employees)
Revenue
Expenses
Incentive compensation
Salaries and benefits
Other overhead
expenses
Restructuring costs
Impairment of goodwill
and other assets
Total expenses
Intersegment allocations(3)
Income (loss)
before income
taxes (recovery)(3)
Excluding significant
items(4)
Total revenue
Total expenses
Intersegment allocations(3)
Income (loss)
before income
taxes (recovery)(3)
Number of employees
Canada
Australia
$155,411 $146,812 $234,211 $59,693
US
UK(5)
Other
Foreign
Locations
Total
$ 2,264 $598,391 $ 131,399 $ 145,478 $217,411 $ 31,138 $ 6,844 $ 532,270
Other
Foreign
Locations
Australia
Canada
Total
UK
US
80,029
5,381
90,538 126,968
12,551
5,520
31,685
1,649
1,092 330,312
26,098
997
35,721
—
43,165
—
89,811
—
9,232
—
1,574 179,503
—
—
68,316
5,982
38,313
3,427
93,617 121,448
11,669
7,223
19,578
1,940
4,529
1,711
307,488
28,525
54,935
3,344
88,089
2,039
11,167
—
3,434
2,495
195,938
11,305
—
—
—
121,131 139,223 229,330
2,993
12,271
2,946
—
42,566
—
—
3,663 535,913
— 18,210
— 150,000
266,038
12,074
106,858
15,957
265,977 239,202
3,001
2,012
22,342
55,027
—
25,880
38,049
—
321,037
864,293
17,087
$ 22,009 $ 4,643 $ 1,888 $17,127
$ (1,399) $ 44,268 $(146,713)$(122,511)$ (24,792) $(23,889) $(31,205) $(349,110)
155,411 146,812 234,211
118,818 139,223 229,328
2,993
12,271
2,946
59,693
41,577
—
1,071 597,198
3,663 532,609
— 18,210
131,399
109,052
12,074
145,478 217,411
155,775 221,204
3,001
2,012
31,138
29,887
—
6,844
9,467
—
532,270
525,385
17,087
$ 24,322 $ 4,643 $ 1,890 $18,116
69
275
178
225
$ (2,592) $ 46,379 $ 10,273 $ (12,309)$ (6,794) $ 1,251 $ (2,623) $ (10,202)
841
291
180
282
749
65
23
2
(1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 10.
(2) The operating results of Canaccord Genuity (Australia) Limited have been consolidated and a 42% non-controlling interest has been recognized and included in the Canaccord Genuity segment during
fiscal 2017 [fiscal 2016 − 42%].
Income (loss) before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 37.
(3)
(4) Refer to the Selected Financial Information Excluding Significant Items table on page 20.
(5)
Includes our Dubai based operations
REVENUE
REVENUE BY GEOGRAPHY AS A PERCENTAGE OF CANACCORD GENUITY REVENUE
Revenue generated in:
Canada
UK & Europe(1)
US
Australia
Other Foreign Locations
p.p.: percentage points
(1)
Includes our Dubai based operations
For the years ended March 31
2017
2016
26.0%
24.5%
39.1%
10.0%
0.4%
24.7%
27.3%
40.8%
5.9%
1.3%
100.0%
100.0%
2017/2016
change
1.3 p.p.
(2.8) p.p.
(1.7) p.p.
4.1 p.p.
(0.9) p.p.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
30 Management’s Discussion and Analysis
Canaccord Genuity generated revenue of $598.4 million, an increase of 12.4% or $66.1 million compared to fiscal 2016 as a
result of improved market activity. Revenue increased across most of our geographies, most notably in Canada and Australia,
where revenue increased by $24.0 million or 18.3%, and by $28.6 million or 91.7%, respectively, compared to the prior year.
Revenue in our UK operations remained consistent with the prior fiscal year, with a slight increase of 0.9% or $1.3 million. Our
US operations generated revenue of $234.2 million, which represents an increase of $16.8 million or 7.7% from fiscal 2016. In
our Other Foreign Locations, now comprised of only our Asian-based operations, revenue decreased by 66.9% or $4.6 million
compared to the year ended March 31, 2016. Operating results for fiscal 2016 included contributions from our Singapore
operations which were disposed of during Q1/17.
Investment banking activity
The Company’s focus sector mix in fiscal 2017 showed increasing diversity, with 70.7% of total transactions occurring in sectors
outside of Metals & Mining and Energy, which have traditionally been a higher component of the Company’s revenue.
Canaccord Genuity’s transactions and revenue by focus sectors are detailed below.
CANACCORD GENUITY − OVERALL
Investment banking transactions and revenue by sector
For the year ended March 31, 2017
as a % of
investment
banking
transactions
6.7%
11.0%
18.8%
14.5%
1.3%
10.5%
21.7%
4.3%
3.8%
0.5%
0.5%
0.3%
0.3%
2.1%
3.7%
as a % of
investment
banking
revenue
11.2%
25.6%
21.1%
8.4%
4.1%
9.4%
6.0%
4.7%
4.7%
1.2%
0.0%
0.0%
2.7%
0.4%
0.5%
100.0%
100.0%
Sectors
Technology
Healthcare & Life Sciences
Metals & Mining
Real Estate & Hospitality
Sustainability
Energy
Financials
Consumer & Retail
Infrastructure
Media & Telecommunications
Support Services
Forestry
Aerospace & Defense
Ag & Fertilizers
Other
Total
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Sectors
Technology
Healthcare & Life Sciences
Metals & Mining
Real Estate & Hospitality
Sustainability
Energy
Financials
Consumer & Retail
Infrastructure
Media & Telecommunications
Support Services
Forestry
Aerospace & Defense
Ag & Fertilizers
Other
Total
Sectors
Technology
Healthcare & Life Sciences
Metals & Mining
Real Estate & Hospitality
Sustainability
Energy
Financials
Consumer & Retail
Infrastructure
Media & Telecommunications
Support Services
Forestry
Aerospace & Defense
Ag & Fertilizers
Other
Total
Management’s Discussion and Analysis 31
CANACCORD GENUITY − BY GEOGRAPHY
Investment banking transactions by sector (as a % of the number of investment banking transactions for each geographic region)
For the year ended March 31, 2017
Australia
Other Foreign
Locations
100.0%
100.0%
100.0%
100.0%
Investment banking revenue by sector (as a % of investment banking revenue for each geographic region)
For the year ended March 31, 2017
Australia
Other Foreign
Locations
Canada
3.1%
3.8%
22.2%
15.3%
0.0%
8.8%
29.5%
3.8%
3.8%
0.4%
0.8%
0.0%
0.0%
3.1%
5.4%
UK
6.7%
13.3%
6.7%
6.7%
0.0%
0.0%
26.6%
20.0%
20.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
US
16.2%
39.7%
0.0%
17.6%
5.9%
17.6%
0.0%
1.5%
0.0%
0.0%
0.0%
0.0%
1.5%
0.0%
0.0%
Canada
6.3%
27.1%
14.4%
17.4%
0.0%
11.5%
14.6%
3.5%
0.9%
2.4%
0.0%
0.0%
0.0%
1.3%
0.6%
UK
23.5%
3.1%
0.6%
11.5%
13.9%
3.2%
10.8%
0.0%
33.4%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
US
18.6%
47.9%
0.7%
5.7%
5.2%
9.5%
0.3%
2.0%
0.0%
0.2%
0.0%
0.0%
9.9%
0.0%
0.0%
17.2%
7.0%
38.0%
3.4%
3.4%
13.8%
0.0%
7.0%
3.4%
3.4%
0.0%
3.4%
0.0%
0.0%
0.0%
4.1%
13.4%
56.0%
0.0%
3.1%
9.6%
0.1%
10.6%
0.6%
1.5%
0.0%
0.0%
0.0%
0.0%
1.0%
100.0%
100.0%
100.0%
100.0%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
32 Management’s Discussion and Analysis
EXPENSES
Expenses for fiscal 2017 were $535.9 million, a decrease of 38.0% or $328.4 million year over year. Excluding significant
items(1), total expenses for fiscal 2017 were $532.6 million, an increase of 1.4% or $7.2 million compared to fiscal 2016.
Incentive compensation and salaries and benefits
Incentive compensation expense for fiscal 2017 increased by $22.8 million or 7.4% compared to fiscal 2016. Incentive
compensation expense as a percentage of revenue was 55.2%, a decrease of 2.6 percentage points from fiscal 2016. Salaries
and benefits expense for fiscal 2017 decreased by $2.4 million or 8.5% compared to fiscal 2016. Total compensation expense as
a percentage of revenue was 3.5 percentage points lower, at 59.6% for the year ended March 31, 2017.
Overall total compensation as a percentage of revenue decreased in all geographies. In fiscal 2016, as a result of weaker market
conditions, certain incentive compensation pools as recorded under our normal methodology were determined to be lower than
would be required to provide for necessary compensation to selective key production staff and, as a result of adjustments to
these pools our compensation expense as a percentage of revenue was substantially higher in fiscal 2016 compared to fiscal
2017. In Canada, total compensation as a percentage of revenue decreased by 1.5 percentage points compared to fiscal 2016,
to 55.0% in fiscal 2017 as a result of increased revenue. Our US operations experienced a decrease of 1.6 percentage points in
the total compensation ratio as a result of higher revenue as well as certain adjustments to the compensation pool as discussed
above in the prior year. In our UK operations, total compensation as a percentage of revenue decreased by 3.9 percentage points
as a result of the fiscal 2016 adjustments discussed above. In addition, fixed compensation for our UK operations decreased as a
result of headcount reduction. Total compensation expense as a percentage of revenue in our Australian operations was 55.8% in
fiscal 2017, a decrease of 13.3 percentage points due to the significant increase in revenue. There was also a reduction in fixed
staff costs in our Asian-based operations now comprised solely of Beijing and Hong Kong due to the sale of our operations in
Singapore in the first quarter of fiscal 2017.
Canaccord Genuity total compensation expense (incentive compensation plus salaries and benefits) expense as a percentage of
revenue by geography
Canada
UK & Europe
US
Australia
Other Foreign Locations
Canaccord Genuity (total)
p.p.: percentage points
For the years ended March 31
2017
55.0%
65.4%
59.6%
55.8%
92.3%
59.6%
2016
56.5%
69.3%
61.2%
69.1%
91.2%
63.1%
2017/2016
change
(1.5) p.p.
(3.9) p.p.
(1.6) p.p.
(13.3) p.p.
1.1 p.p.
(3.5) p.p.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 33
TOTAL COMPENSATION AS A % OF
CANACCORD GENUITY REVENUE – OVERALL
TOTAL COMPENSATION AS A % OF
CANACCORD GENUITY REVENUE – CANADA
2017
2016
2015
2014
2013
2017
2016
2015
2014
2013
4.4%
55.2%
5.3%
57.8%
4.2%
54.7%
5.7%
49.8%
6.5%
54.1%
Salaries and benefits
Incentive compensation
3.5%
51.5%
4.5%
52.0%
2.5%
48.6%
3.3%
48.5%
3.3%
49.5%
Salaries and benefits
Incentive compensation
59.6%
63.1%
58.9%
55.5%
60.6%
Total
55.0%
56.5%
51.1%
51.8%
52.8%
Total
TOTAL COMPENSATION AS A % OF
CANACCORD GENUITY REVENUE – UK
TOTAL COMPENSATION AS A % OF
CANACCORD GENUITY REVENUE – US
2017
2016
2015
2014
2013
2017
2016
2015
2014
2013
3.2%
3.8%
58.5%
4.2%
4.9%
60.2%
3.9%
4.5%
60.4%
2.7%
7.8%
47.4%
2.8%
9.9%
56.4%
National Insurance Tax
Salaries and benefits
Incentive compensation
65.4%
69.3%
68.8%
57.9%
69.0%
Total
TOTAL COMPENSATION AS A % OF
CANACCORD GENUITY REVENUE – AUSTRALIA
5.3%
54.3%
5.4%
55.9%
4.9%
53.1%
4.6%
49.5%
6.6%
53.7%
Salaries and benefits
Incentive compensation
59.6%
61.2%
58.0%
54.1%
60.3%
Total
TOTAL COMPENSATION AS A % OF CANACCORD GENUITY
REVENUE – OTHER FOREIGN LOCATIONS
2017
2016
2015
2014
2013
2.7%
53.1%
6.2%
62.9%
4.0%
52.3%
5.7%
49.4%
9.2%
64.4%
Salaries and benefits
Incentive compensation
55.8%
69.1%
56.3%
55.1%
73.6%
Total
Other overhead expenses
2017
2016
2015
2014
2013
43.9%
48.2%
25.0%
66.2%
21.9%
79.5%
17.0%
69.4%
13.8%
57.8%
Salaries and benefits
Incentive compensation
92.3%
91.2%
101.4%
86.4%
71.6%
Total
Other overhead expenses excluding significant items(1) were $176.2 million for fiscal 2017, a decrease of $13.2 million or 7.0%
from the prior year. As a percentage of revenue, other overhead expenses excluding significant items(1) was 6.1 percentage points
lower compared to fiscal 2016. Overhead expenses decreased in all categories except for trading costs and interest expense.
The largest decreases in other overhead expenses were general and administrative expense, premise and equipment expense,
amortization expense, communication and technology expense, and development costs, partially offset by an increase in
trading costs.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
34 Management’s Discussion and Analysis
General and administrative expense decreased by $9.6 million compared to fiscal 2017, mainly due to lower promotion and travel
expenses in our US and UK operations.
Amortization expense decreased by $3.3 million to $10.7 million compared to the prior year due to a decrease in amortization of
intangible assets in our Australian operations.
Communication and technology expense decreased by $2.0 million to $35.8 million for the year ended March 31, 2017, primarily
attributable to our UK operations.
Development costs decreased by $5.3 million from last year to $2.6 million in fiscal 2017, partially due to lower hiring incentives
in our US and UK operations.
The increase in trading costs is mainly due to higher execution and settlement charges in connection with increased international
trading activity by our US operations.
INCOME (LOSS) BEFORE INCOME TAXES
Net income before income taxes in fiscal 2017 was $44.3 million compared to a loss before income taxes of $349.1 million in
fiscal 2016. Excluding significant items(1), income before income taxes was $46.4 million compared to a loss before incomes
taxes of $10.2 million in fiscal 2016. The increase in net income excluding significant items(1) was mainly attributable to higher
revenue generated in our main operating segments combined with expense reductions.
CANACCORD GENUITY WEALTH MANAGEMENT
Overview
Canaccord Genuity Group’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
operations 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 Investment Advisors (IAs) from investment banking and venture
capital transactions. The Company has wealth management operations in Canada, the UK & Europe, and Australia.
In the UK & Europe, Canaccord Genuity Wealth Management has four locations, with offices in the UK, Guernsey, Jersey and the
Isle of Man. Revenue earned by this business is largely generated through fee-based accounts and portfolio management
activities. With 69.2% of its fiscal 2017 revenue generated from recurring fee-based activity, this geography has a significantly
higher proportion of fee-based revenue than the Company’s Canadian wealth management businesses. 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 11 funds managed by Canaccord Genuity Wealth Management portfolio managers.
At March 31, 2017 Canaccord Genuity Wealth Management had 12 offices located across Canada, including four Independent
Wealth Management (IWM) locations. During fiscal 2017, the Company secured a $60 million private placement of senior
unsecured subordinated debentures primarily to support its recruiting strategy. The Company is focused on actively recruiting
established Advisory Teams to accelerate growth in this business.
Outlook
Management’s priorities for Canaccord Genuity Wealth Management will be focused on growing assets under administration and
management, and increasing the proportion of fee-based revenue as a percentage of total revenue. By increasing recurring
revenue streams, we expect to meaningfully reduce our reliance on transaction-based revenue over the coming years, making our
business less sensitive to changes in market conditions.
With 69.2% of the division’s revenue derived from recurring, fee-based activities, the revenue stream generated through Canaccord
Genuity Wealth Management’s UK & European wealth management business helps to improve the stability of its overall
performance. Client holdings in our in-house investment management products exceed $1 billion and are attracting growing
interest from domestic intermediaries and international fund companies. The Company will continue to pursue strategic
opportunities to increase the scale of its UK wealth management business.
In Canada, the Company continues to focus on enhancing margins, managing costs, and growing the business through targeted
recruitment and training. While the recruiting environment remains competitive, we expect the benefits of our independent global
platform to help drive continued recruiting success in select markets. The Company also intends to invest further in training
programs for new and existing Investment Advisors to continue developing the skills of our Advisory Teams and to support the
growth of fee-based services offered through the Canadian business. We maintain a strong focus on attracting and retaining high
quality advisors, investing in training programs and building a comprehensive suite of premium products targeted at attracting high
net worth investors and helping advisors grow their businesses.
In Australia, the Company still has a relatively small wealth management operation; however, expansion is expected to occur
through targeted recruiting, and through the build-out of wealth management services and products in this market.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
FINANCIAL PERFORMANCE − NORTH AMERICA(1)(2)
(C$ 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)
Income (loss) before income taxes (recovery)(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)
Income (loss) before income taxes (recovery)(3)
Management’s Discussion and Analysis 35
For the years ended March 31
2017
2016
2017/2016 change
$
132,292
$
108,208
$
24,084
22.3%
66,733
11,335
36,756
—
114,824
15,504
1,964
2,637
13,228
141
359
$
51,707
11,652
32,675
165
96,199
19,664
$
(7,655)
$
1,257
9,192
139
354
15,026
(317)
4,081
(165)
18,625
(4,160)
9,619
1,380
4,036
2
5
$
114,824
$
96,034
$
18,790
15,504
1,964
19,664
(7,490)
(4,160)
9,454
29.1%
(2.7)%
12.5%
n.m.
19.4%
(21.2)%
125.7%
109.8%
43.9%
1.4%
1.4%
19.6%
(21.2)%
126.2%
(1) 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 10.
(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
Includes Canaccord Genuity Wealth Management operations in Canada and the US.
Income (loss) before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 37.
Canaccord Private Investment Management Program.
(5) AUA is the market value of client assets administered by the Company, for which the Company earns commissions or fees. AUA includes AUM.
(6) Refer to the Selected Financial Information Excluding Significant Items table on page 20.
n.m. not meaningful
Revenue from Canaccord Genuity Wealth Management North America was $132.3 million, an increase of $24.1 million from fiscal
2016, as a result of stabilizing market conditions and improved client and corporate finance activities. We continue to focus on
growth in our fee-based and proprietary asset management offerings. As a key distribution channel for our capital markets
business increased investment banking activity contributed to the overall increases in revenue in fiscal 2017 compared to fiscal
2016 in our Canadian wealth management business.
AUA in Canada increased by 43.9% to $13.2 billion at March 31, 2017 from $9.2 billion at March 31, 2016, reflecting higher
market values over the year and an increased number of investment advisory teams. AUM in Canada also increased by 109.8%
compared to fiscal 2016. There were 141 Advisory Teams in Canada, an increase of two from a year ago. The fee-based revenue
in our North American operations was 9.2 percentage points lower than in the prior year and accounted for 34.7% of the wealth
management revenue earned in Canada during the year ended March 31, 2017. The decrease in fee-based revenue as a
percentage of revenue was primarily a result of the 22.3% increase in revenue from fiscal 2016 to fiscal 2017 which was led by a
$15.6 million increase in investment banking revenue.
Expenses for fiscal 2017 were $114.8 million, an increase of $18.6 million or 19.4% from fiscal 2016. As a result of the revenue
increase in the current fiscal year compared to fiscal 2016 and the relatively fixed nature of expenses other than incentive
compensation, total expenses as a percentage of revenue decreased by 2.1 percentage points compared to last year. Incentive
compensation expense increased by $15.0 million compared to fiscal 2016, consistent with the increase in incentive-based
revenue. Total compensation expense as a percentage of revenue increased slightly by 0.5 percentage points compared to last
year.
Non-compensation expenses for the year ended March 31, 2017 increased by $4.2 million compared to fiscal 2016. Trading costs
increased by $2.3 million as a result of increased activity levels, and development costs increased by $0.9 million compared to
fiscal 2016 due to an increase in hiring incentives. The increases in trading costs, premises and equipment expense and
development costs were offset by a decline in communication and technology expense as well as a decrease in intersegment
allocated costs from our Corporate and Other segment.
Income before income taxes for fiscal 2017 was $2.0 million compared to a loss before income taxes of $7.7 million for fiscal
2016, an increase of $9.6 million reflecting the revenue growth and continued expense containment efforts in this operating
segment.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
36 Management’s Discussion and Analysis
FINANCIAL PERFORMANCE − UK & EUROPE(1)
(C$ 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
Total expenses
Intersegment allocations(2)
Income before income taxes(2)
AUM − UK & Europe(3)
Number of investment professionals and fund managers − UK & Europe
Number of employees
Excluding significant items(4)
Total expenses
Intersegment allocations(2)
Income before income taxes(2)
For the years ended March 31
2017
2016
2017/2016 change
$
134,819
$ 138,359
$
(3,540)
(2.6)%
47,639
21,711
41,874
—
50,146
23,454
44,743
—
111,224
118,343
1,292
2,190
$
22,303
$
17,826
$
24,526
22,791
118
313
118
312
(2,507)
(1,743)
(2,869)
—
(7,119)
(898)
4,477
1,735
—
1
$
105,962
$ 112,288
$
(6,326)
1,292
27,565
2,190
23,881
(898)
3,684
(5.0)%
(7.4)%
(6.4)%
—
(6.0)%
(41.0)%
25.1%
7.6%
—
0.3%
(5.6)%
(41.0)%
15.4%
(1) 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 10.
Income before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 37.
(2)
(3) AUM in the UK & Europe is the market value of client assets managed and administered by the Company, for which the Company earns commissions or fees. This measure includes both
discretionary and non-discretionary accounts.
(4) Refer to the Selected Financial Information Excluding Significant Items table on page 20.
Revenue generated by our UK & 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 2017 was $134.8 million, a
decrease of 2.6% compared to fiscal 2016 as a result of the depreciation of the pound sterling against the Canadian dollar.
Measured in local currency (GBP), revenue was £79.1 million during fiscal 2017, an increase of £8.7 million or 12.4% compared
to the previous year. The Company continues to focus on increasing scale in this business, a key strategic asset for our firm.
While the environment for acquisitions in this segment is highly competitive, during fiscal 2017 the Company was able to add new
assets through its recruiting efforts, including the acquisition of client portfolios from a private bank in its Isle of Man business
and the acquisition of a UK-based investment dealing and custody business.
AUM in the UK & Europe as of March 31, 2017 was $24.5 billion, a $1.7 billion increase from $22.8 billion at March 31, 2016.
Measured in local currency (GBP), AUM increased by 19.9% when compared to March 31, 2016. Fee-based revenue in our UK &
European operations accounted for 69.2% of total revenue in this geography, consistent with the prior year. This business has a
higher proportion of fee-based revenue and managed accounts compared to our Canadian wealth management business.
Incentive compensation expense was $47.6 million, a $2.5 million or 5.0% decrease from fiscal 2016. Salaries and benefits
decreased by $1.7 million, to $21.7 million as of March 31, 2017. Total compensation expense (incentive compensation plus
salaries and benefits) as a percentage of revenue decreased by 1.8 percentage points to 51.4% for the year ended
March 31, 2017.
Other overhead expenses decreased by $2.9 million from the prior year. Communication and technology expense and development
costs decreased compared to fiscal 2016 as a result of cost reduction efforts. Amortization expense decreased by $1.1 million
compared to the prior year as a result of lower intangible assets amortization expense. Offsetting the expense reductions is a
$1.4 million increase to trading costs resulting from higher trading activity. General and administrative expense remained
consistent with the prior year.
Income before income taxes was $22.3 million compared to $17.8 million in the prior year, mainly as a result of reduced
expenses. Excluding significant items(1), income before income taxes was $27.6 million, an increase of 15.4% from the prior year.
CORPORATE AND OTHER SEGMENT
Overview
The Corporate and Other segment includes Pinnacle Correspondent Services, interest, foreign exchange revenue, and expenses
not specifically allocable to Canaccord Genuity or Canaccord Genuity Wealth Management.
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 37
Pinnacle Correspondent Services provides trade execution, clearing, settlement, custody, and other middle- and back-office
services to other introducing brokerage firms, portfolio managers and other financial intermediaries. This business unit was
developed as an extension and application of the Company’s substantial investment in its information technology and operating
infrastructure.
Also included in this segment are the Company’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. The Company has 279 employees in the Corporate and Other segment. The majority
of the Company’s corporate support functions are based in Vancouver and Toronto, Canada.
Our operations group is responsible for 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. The Company’s risk management
and compliance activities include procedures to identify, control, measure and monitor the Company’s risk exposure at all times.
FINANCIAL PERFORMANCE(1)
(C$ thousands, except number of employees and % amounts)
2017
2016
2017/2016 change
For the years ended March 31
Revenue
Expenses
Incentive compensation
Salaries and benefits
Other overhead expenses
Restructuring costs
Total expenses
Intersegment allocations(2)
Loss before income tax recovery(2)
Number of employees
Excluding significant items(3)
Total expenses
Intersegment allocations(2)
Loss before income taxes (recovery)(2)
$
14,044
$
8,968
$
5,076
56.6%
10,314
26,554
26,833
—
63,701
(35,006)
8,535
29,350
29,174
5,882
72,941
(38,941)
1,779
(2,796)
(2,341)
(5,882)
(9,240)
3,935
$
(14,651)
$
(25,032)
10,381
279
288
(9)
$
63,701
$
60,155
$
(35,006)
(14,651)
(38,941)
(12,246)
3,546
3,935
(2,405)
20.8%
(9.5)%
(8.0)%
(100)%
(12.7)%
10.1%
41.5%
(3.1)%
5.9%
10.1%
(19.6)%
(1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 10.
(2) Loss before income tax recovery includes intersegment allocations. See the Intersegment Allocated Costs section below.
(3) Refer to the Selected Financial Information Excluding Significant Items table on page 20.
Revenue for fiscal 2017 was $14.0 million, an increase of $5.1 million or 56.6% from fiscal 2016 primarily related to the
$4.0 million impairment charge in connection with our investment in a private company recorded in fiscal 2016, as well as an
increase in foreign exchange gains.
Total expenses were $63.7 million for the year ended March 31, 2017, a decrease of $9.2 million or 12.7% compared to the prior
year. Incentive compensation expense increased by $1.8 million compared to fiscal 2016 as a result of charges in connection with
the acceleration of certain stock-based awards and contractual compensation payments. Salaries and benefits expense
decreased by $2.8 million as a result of reduced headcount. Development costs decreased by $8.3 million compared to the year
ended March 31, 2016, mainly due to the non-recurring nature of fiscal 2016’s software development charge of $2.3 million
related to the termination of a software development project, as well as a non-cash accounting charge related to the surrender of
a long-term incentive award granted to our CEO in connection with his appointment in fiscal 2016. Premises and equipment
expense increased by $2.3 million compared to the year ended March 31, 2016 as a result of costs associated with the
rationalization of our office space in Toronto. General and administrative expense increased by $1.4 million as a result of costs
incurred to support the growth of the business.
Loss before income taxes was $14.7 million for fiscal 2017 compared to a loss before income taxes of $25.0 million for the prior
year. Excluding significant items(1), loss before income taxes was $14.7 million for the year ended March 31, 2017 compared to a
loss before income taxes of $12.2 million last year.
INTERSEGMENT ALLOCATED COSTS
Included in the Corporate and Other segment are certain support services, research and other expenses that have been incurred
to support the activities within the Canaccord Genuity and Canaccord Genuity Wealth Management segments in Canada. Certain
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 10.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
38 Management’s Discussion and Analysis
trading, clearing and settlement charges are included as a trading cost in the applicable business units and as a trading cost
recovery in Corporate and Other. In addition, certain overhead costs are charged by Canaccord Genuity UK & Europe to Canaccord
Genuity Wealth Management UK & Europe and included in intersegment allocated costs for these business units.
Financial Condition
Below are selected balance sheet items for the past five years:
(C$ thousands)
Assets
Cash and cash equivalents
Securities owned
Accounts receivable
Income taxes recoverable
Deferred tax assets
Investments
Equipment and leasehold improvements
Goodwill and other intangible assets
Total assets
Liabilities and shareholders’ equity
Bank indebtedness
Short term credit facility
Securities sold short
Balance sheet summary as at March 31
2017
2016
2015
2014
2013
$
677,769
$ 428,329
$ 322,324
$ 364,296
$
491,012
784,230
564,746
848,128
1,143,201
924,337
3,395,736
2,041,150
2,491,488
2,785,898
2,513,958
1,085
15,323
2,829
31,479
12,537
11,221
5,578
37,049
5,295
10,148
8,693
43,373
295,065
323,936
640,456
3,983
9,735
9,977
50,975
646,557
—
12,552
3,695
42,979
614,969
$ 5,203,516
$ 3,424,546
$ 4,369,905
$ 5,014,622
$ 4,603,502
$
25,280
$
14,910
$
20,264
$
— $
66,138
—
—
—
—
—
645,742
427,435
654,639
913,913
689,020
Accounts payable and accrued liabilities
3,669,883
2,185,047
2,527,636
2,877,933
2,726,735
Provisions
Income taxes payable
Contingent consideration
Deferred tax liabilities
Liability portion of Convertible Debenture
Subordinated debt
Shareholders’ equity
Non-controlling interests
11,793
10,093
—
140
56,442
7,500
764,785
11,858
18,811
4,242
—
450
—
14,320
8,172
—
2,057
—
10,334
10,822
—
3,028
—
15,000
15,000
15,000
20,055
4,428
14,218
2,576
—
15,000
749,929
1,117,542
1,168,680
1,049,163
8,722
10,275
14,912
16,169
Total liabilities and shareholders’ equity
$ 5,203,516
$ 3,424,546
$ 4,369,905
$ 5,014,622
$ 4,603,502
ASSETS
Cash and cash equivalents were $677.8 million at March 31, 2017 compared to $428.3 million at March 31, 2016. Refer to the
Liquidity and Capital Resources section for more details.
Securities owned were $784.2 million at March 31, 2017 compared to $564.7 million at March 31, 2016 mainly due to an
increase in corporate and government debt owned.
Accounts receivable were $3.4 billion at March 31, 2017 compared to $2.0 billion at March 31, 2016, mainly due to an increase
in receivables from brokers and investment dealers.
Goodwill was $192.3 million and intangible assets were $103.0 million at March 31, 2017. At March 31, 2016, goodwill was
$203.7 million and intangible assets were $120.2 million, representing goodwill and intangible assets acquired through the
purchases of Genuity Capital Markets, Collins Stewart Hawkpoint plc (CSHP), and the wealth management business of Eden
Financial Ltd.
Other assets, consisting of income taxes receivable, deferred tax assets, equipment and leasehold improvements, and
investments, were $50.7 million at March 31, 2017 compared to $66.4 million at March 31, 2016, mainly due to a decrease in
income taxes receivable.
LIABILITIES AND SHAREHOLDERS’ EQUITY
Bank overdrafts and call loan facilities utilized by the Company may vary significantly on a day-to-day basis and depend on
securities trading activity. On March 31, 2017, Canaccord Genuity Group had available credit facilities with banks in Canada and
the UK & Europe in the aggregate amount of $602.6 million [March 31, 2016 − $697.3 million]. These credit facilities, consisting
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 39
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, 2017, there was bank indebtedness of $25.3 million, compared to $14.9 million on March 31,
2016.
Accounts payable and accrued liabilities, including provisions, were $3.7 billion, an increase from $2.2 billion on March 31, 2016,
mainly due to an increase in payables to clients and brokers and investment dealers.
Securities sold short were $645.7 million at March 31, 2017 compared to $427.4 million at March 31, 2016, mostly due to an
increase in short positions in corporate and government debt.
Other liabilities, including subordinated debt, income taxes payable and deferred tax liabilities, were $17.7 million at March 31,
2017, a decrease from $19.7 million in the prior year. The decrease was mostly due to repayment of $7.5 million of subordinated
debt during the year.
Non-controlling interests were $11.9 million at March 31, 2017 compared to $8.7 million at March 31, 2016, which represents
42% of the net assets of our operations in Australia.
The Company issued convertible unsecured senior subordinated debentures (‘‘Debentures’’) in the aggregate principal amount of
$60.0 million. The balance recorded as a liability, net of unamortized discount and issuance costs was $56.4 million [March 31,
2016 − $nil].
Off-Balance Sheet Arrangements
A subsidiary of the Company has entered into secured irrevocable standby letters of credit from a financial institution totaling
$2.7 million (US$2.0 million) [March 31, 2016 − $2.6 million (US$2.0 million)] as rent guarantees for its leased premises in
New York.
Bank Indebtedness and Other Credit Facilities
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 of March 31, 2017, the Company had $25.3 million of bank indebtedness outstanding [March 31,
2016 − $14.9 million].
Subsidiaries of Canaccord Genuity Group Inc. have credit facilities with banks in Canada and the UK for an aggregate amount of
$602.6 million [March 31, 2016 − $697.3 million]. These credit facilities, consisting of call loans, letters of credits and daylight
overdraft facilities, are collateralized by unpaid client securities and/or securities owned by the Company. As of March 31, 2017
and 2016, there were no balances outstanding under these other credit facilities.
The following table summarizes Canaccord Genuity Group’s long term contractual obligations on March 31, 2017:
(C$ thousands)
Premises and equipment operating leases
Other Obligations(1)
Total contractual obligations
Contractual obligations payments due by period
Total
Fiscal 2018
Fiscal 2019 −
Fiscal 2020
Fiscal 2021 −
Fiscal 2022
173,892
79,500
253,392
31,452
3,900
35,352
57,505
7,800
65,305
43,420
67,800
111,220
Thereafter
41,515
—
41,515
(1) Other obligations consist of the unsecured senior subordinated convertible debentures (the ‘‘Debentures’) issued in June 2016. The Debentures bear interest at a rate of 6.50% per annum and
mature on December 31, 2021. The Company, under certain circumstances, may redeem the Debentures on or after December 31, 2019.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
40 Management’s Discussion and Analysis
Liquidity and Capital Resources
The Company has a capital structure comprised of preferred shares, common shares, contributed surplus, convertible debentures,
warrants, retained earnings and accumulated other comprehensive income. On March 31, 2017, cash and cash equivalents were
$677.8 million, an increase of $249.4 million from $428.3 million as of March 31, 2016. During the year ended March 31, 2017,
financing activities generated cash in the amount of $30.8 million, mainly due to the proceeds from the issuance of the
Debentures and the sale of common shares and warrants pursuant to the Private Placement, offset by cash used in the
acquisition of common shares for the Company’s long-term incentive plan and payment of preferred share dividends. Investing
activities used cash in the amount of $5.6 million mainly for the purchase of equipment and leasehold improvements. Operating
activities generated cash of $236.9 million, which was largely due to changes in non-cash working capital. A decrease in cash of
$12.6 million was attributable to the effect of foreign exchange translation on cash balances.
Compared to the year ended March 31, 2016, cash generated by financing activities increased by $116.9 million, primarily due to
proceeds from the Private Placement in Q1/17 and the issuance of the Debentures in Q3/17. Cash used in investing activities
decreased by $9.1 million during the year ended March 31, 2017 compared to fiscal 2016, mainly due to lower additions of
equipment and leasehold improvements and intangible assets. Changes in working capital led to an increase in cash generated by
operating activities of $31.3 million. Overall, cash and cash equivalents increased by $249.4 million from $428.3 million at
March 31, 2016 to $677.8 million at March 31, 2017.
The Company’s business requires capital for operating and regulatory purposes. The majority of current assets reflected on the
Company’s audited consolidated 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. Securities sold short are highly liquid securities. 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 collectability. 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.
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, as declared, were paid at an annual rate of 5.5% for the initial five-year period ended on
September 30, 2016. Commencing October 1, 2016 and ending on and including September 30, 2021, quarterly cumulative
dividends, if declared, will be paid at an annual rate of 3.885%. 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 had the 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 have the option on September 30 every five years thereafter. The number of shares tendered for conversion by the conversion
deadline of September 15, 2016 was below the minimum required to proceed with the conversion and, accordingly, no Series B
Preferred Shares were issued. Series B Preferred Shares would entitle any holders thereof 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 had the option to redeem the Series A Preferred Shares on September 30, 2016, and have the option 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 $100.0 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
June 30, 2017. 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,
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 41
2017 and on June 30 every five years thereafter. Holders of Series D Preferred Shares would 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. If issued the Series D
Preferred Shares would be 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.
CONVERTIBLE DEBNTURES
The Company issued convertible unsecured senior subordinated debentures (‘‘Debentures’’) in the aggregate principal amount of
$60.0 million. The Debentures bear interest at a rate of 6.50% per annum. The Debentures are convertible at the holder’s option
into common shares of the Company at a conversion price of $6.50 per share. The Debentures will mature on December 31,
2021 and may be redeemed by the Company, in certain circumstances, on or after December 31, 2019.
Outstanding Share Data
Preferred shares
Series A − issued shares outstanding
Series C − issued shares outstanding
Common shares
Issued shares excluding unvested shares(1)
Issued shares outstanding(2)
Issued shares outstanding − diluted(3)
Average shares outstanding − basic
Average shares outstanding − diluted(4)
Outstanding shares as of March 31
2017
2016
4,540,000
4,000,000
4,540,000
4,000,000
92,779,817
89,083,622
113,511,468
103,812,814
124,479,390
109,072,060
91,656,708
90,552,860
101,149,072
n/a
(1) Excludes 1,590,146 unvested shares related to share purchase loans and 19,141,505 unvested shares purchased by the employee benefit trusts for the LTIP.
Includes 1,590,146 unvested shares related to share purchase loans and 19,141,505 unvested shares purchased by the employee benefit trusts for the LTIP.
(2)
Includes 10,967,922 of share issuance commitments net of forfeitures.
(3)
(4) This is the diluted share number used to calculate diluted EPS. For years with net losses attributable to common shareholders, all instruments involving potential common shares were excluded
from the calculation of diluted earnings per share as they were anti-dilutive.
Under the normal course issuer bid (NCIB), which commenced on August 13, 2015, and ended on August 12, 2016, a total of
482,367 common shares were purchased at a weighted average price per share of $5.3523. All these shares have been
cancelled. On August 11, 2016, the Company filed a notice to renew the NCIB to provide the Company with the choice to purchase
up to a maximum of 5,587,378 of its common shares during the period from August 15, 2016 to August 14, 2017 through the
facilities of the TSX and on alternative trading systems in accordance with the requirements of the TSX. Shareholders may obtain
a copy of the notice, without charge, by contacting the Company. The purpose of the purchase of common shares under the NCIB
is to enable the Company to acquire shares for cancellation. The maximum number of shares that may be purchased under the
current NCIB represents 5.0% of the Company’s outstanding common shares at the time of the notice. During the year ended
March 31 2017, a total of 99,800 shares were purchased under the terms of the NCIB at a weighted average price per share of
$3.5913; all these shares have been cancelled.
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.
The ability to make purchases under the current NCIB commenced on August 15, 2016, and will continue for one year (to
August 14, 2017) 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, the daily purchases are limited to 90,132 common shares
of the Company (which is 25% of the average daily trading volume of common shares of the Company on the TSX in the six
calendar months from February 2016 to July 2016.)
As of May 31, 2017, the Company has 113,511,468 common shares issued and outstanding.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
42 Management’s Discussion and Analysis
ISSUANCE AND CANCELLATION OF COMMON SHARE CAPITAL
Total common shares issued and outstanding as of March 31, 2016
Shares issued in connection with share-based payment plans
Shares issued in connection with replacement plans
Shares issued in connection with other stock based awards
Shares issued in connection with private placement
Shares cancelled
Total common shares issued and outstanding as of March 31, 2017
Share-Based Payment Plans
LONG-TERM INCENTIVE PLAN
Fiscal 2017
103,812,814
2,433,285
76,088
507,051
6,876,824
(194,594)
113,511,468
Under the long-term incentive plan (LTIP), eligible participants are awarded restricted share units (RSUs), which generally vest over
three years. For employees in Canada, the United States, Channel Islands, Australia and the United Kingdom, employee benefit
trusts (the Trusts) have been established. The Company or certain of its subsidiaries, as the case may be, fund the Trusts with
cash which is used by the trustees to purchase common shares on the open market that will be held in the Trusts until the RSUs
vest.
FORGIVABLE COMMON SHARE PURCHASE LOANS
The Company may provide forgivable common share purchase loans to certain employees (other than directors or executive
officers) in order to purchase common shares. When made these loans are forgiven over a vesting period. No interest is charged
related to the share purchase loans.
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, 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. On each vesting
date, the RSUs entitled the awardee to receive cash or common shares of the Company. All the RSUs under the CSH Inducement
Plan vested as of March 31, 2017.
SHARE OPTIONS
The Company previously granted share options to purchase common shares of the Company to independent directors and senior
management. As at March 31, 2017, all share options have expired.
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.
OTHER RETENTION AND INCENTIVE PLANS
During the year ended March 31, 2017, the company issued 507,051 common shares in consideration for $2.4 million in
connection with a stock-based award made during the year in accordance with the rules of the Toronto Stock Exchange for
securities based compensation arrangements. 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 the aggregate.
International Financial Centre
Canaccord Genuity Group 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
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 43
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, the Company’s overall income tax rate is less than the rate that would
otherwise be applicable.
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.
The Company’s trading subsidiaries and intermediate holding companies are listed in the following table:
Canaccord Genuity Corp.
Canaccord Genuity SAS
Canaccord Genuity Wealth (International) Limited
Canaccord Genuity Financial Planning Limited
Canaccord Genuity Wealth Limited
Canaccord Genuity Wealth Group Limited
Canaccord Genuity Wealth (International) Holdings Limited
Canaccord Genuity Limited
Canaccord Genuity Wealth Group Holdings Ltd.
Canaccord Genuity Inc.
Canaccord Genuity Wealth Management (USA) Inc.
Canaccord Genuity Wealth & Estate Planning Services Ltd.
Canaccord Asset Management Inc.
Canaccord Adams Financial Group Inc.
Collins Stewart Inc.
Canaccord Adams BC ULC
Canaccord Adams (Delaware) Inc.
Canaccord Genuity Securities LLC
Stockwave Equities Ltd.
CLD Financial Opportunities Limited
Canaccord Genuity (Hong Kong) Limited
Canaccord Financial Group (Australia) Pty Ltd*
Canaccord Genuity (Australia) Limited*
(Beijing) Limited)
The Balloch Group Limited
Canaccord Genuity Asia (Hong Kong) Limited
Canaccord Genuity (Dubai) Ltd.
(Canaccord Genuity Asia
% equity interest
Country of
incorporation
March 31,
2017
March 31,
2016
Canada
France
Guernsey
United Kingdom
United Kingdom
United Kingdom
Guernsey
United Kingdom
Canada
United States
United States
Canada
Canada
United States
United States
Canada
United States
United States
Canada
Canada
China (Hong Kong SAR)
Australia
Australia
China
British Virgin Islands
China (Hong Kong SAR)
United Arab Emirates
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%
100%
100%
100%
n/a
100%
100%
100%
100%
100%
100%
n/a
100%
100%
100%
100%
100%
50%
50%
100%
100%
100%
100%
*
The Company owns 50% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd and Canaccord Genuity (Australia) Limited, but for accounting purposes, as of March 31, 2017 the
Company is considered to have a 58% interest because of the shares held in a trust controlled by Canaccord Financial Group (Australia) Pty Ltd [March 31, 2016 − 58%].
Security trades executed for employees, officers and directors of Canaccord Genuity Group Inc. 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 Genuity Group Inc.
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.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
44 Management’s Discussion and Analysis
Disclosed in the table below are the amounts recognized as expenses related to individuals who are key management personnel
as at March 31, 2017 and March 31, 2016.
(in thousands)
Short term employee benefits
Post termination benefits
Share-based payments
Total compensation paid to key management personnel
March 31,
2017
March 31,
2016
$
$
$
7,053
1,989
3,979
13,021
$
4,668
—
2,526
7,194
As part of the total compensation arrangement with regards to his appointment as Chief Executive Officer effective October 1,
2015, the Chief Executive Officer received a grant of 1.5 million restricted share units. He surrendered this award effective
March 31, 2016, and the amount of the award is not included in the table above.
Accounts payable and accrued liabilities include the following balances with key management personnel:
(in thousands)
Accounts receivable
Accounts payable and accrued liabilities
Critical Accounting Policies and Estimates
March 31,
2017
$
$
211
219
$
$
March 31,
2016
61
4,035
The following is a summary of Canaccord Genuity Group’s critical accounting estimates. The Company’s significant 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, 2017. The Company’s consolidated financial statements for the years ended March 31, 2017 and 2016 were
also prepared in accordance with IFRS.
The preparation of the March 31, 2017 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 judgments, estimates and assumptions include consolidation, revenue recognition, share-based
payments, income taxes, tax losses available for carryforward, impairment of goodwill and other assets, indefinite life intangible
assets and other long-lived assets, allowance for credit losses, fair value of financial instruments, capitalization of software costs
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, 2017.
CONSOLIDATION
The Company owns 50% of the voting shares of Canaccord Genuity (Australia) Limited (CGAL) as at March 31, 2017. The Company
also completed an evaluation of its contractual arrangement with the other shareholders and the control it has over the financial
and operating policies of CGAL and determined it should consolidate under IFRS 10, ‘‘Consolidated Financial Statements’’
(IFRS 10) as at March 31, 2017 and 2016. Therefore, the financial position, financial performance, and cash flows of CGAL have
been consolidated. Although the Company owns 50% of the issued shares of CGAL, for accounting purposes, as of March 31,
2017, the Company is considered to have a 58% interest because of the shares held in a trust controlled by Canaccord Financial
Group (Australia) Pty Ltd. and therefore has recognized a 42% non-controlling interest (March 31, 2016 − 42%), which represents
the portion of CGAL’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 employee benefit trusts, which are considered special purpose entities (SPEs), to fulfill obligations
to employees arising from the Company’s share-based payment plans. The employee benefit trusts have been consolidated in
accordance with IFRS 10 since their activities are conducted on behalf of the Company, and the Company retains the majority of
the benefits and risks of the employee benefit trusts.
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
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 45
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 the impairment is
recognized in the consolidated statements of operations.
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 consolidated statement of operations 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.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
46 Management’s Discussion and Analysis
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.
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.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 47
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
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.
Financial Instruments
A significant portion of the Company’s assets and liabilities are composed of financial instruments. The Company uses financial
instruments for both trading and non-trading activities. The Company engages in trading activities which include the purchase and
sale of securities in the course of facilitating client trades and taking principal trading positions with the objective of earning a
profit.
The use of financial instruments may either introduce or mitigate exposures to market, credit and/or liquidity risks. See Risk
Management in this MD&A for details on how these risks are managed. For significant assumptions made in determining the
valuation of financial and other instruments, refer to Critical Accounting Policies and Estimates in this MD&A. For additional
information regarding the Company’s financial instruments, refer to Note 7 of the Audited Consolidated Financial Statements for
the year ended March 31, 2017.
FOREIGN EXCHANGE
The Company 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, 2017, forward
contracts outstanding to sell US dollars had a notional amount of US$22.1 million, an increase of US$19.5 million compared to
March 31, 2016. Forward contracts outstanding to buy US dollars had a notional amount of US$2.9 million, an increase of
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
48 Management’s Discussion and Analysis
US$1.0 million from March 31, 2016. The fair value of these contracts was nominal. Some of the Company’s operations in the
US, the UK & 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.
These contracts were entered into in an attempt to mitigate 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.
The Company’s Canaccord Genuity Wealth Management segment in the UK & 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.
FUTURES
The Company’s Canadian operations are involved in trading various futures contracts, in an attempt to mitigate market risk,
interest rate risk, yield curve risk and liquidity risk. Futures contracts are agreements to buy or sell a standardized amount of an
underlying asset, at a predetermined future date and price, in accordance with terms specified by a regulated futures exchange,
and are subject to daily cash margining. The Company’s Canadian operations have traditionally engaged in the trading of Canadian
and US government bond futures contracts to mitigate its risk. In Q1/17, the Company’s Canadian operations began trading other
types of futures contracts, including but not limited to, index futures and commodity futures.
At March 31, 2017, the notional amount of the Canadian bond futures contracts outstanding was long $0.5 million [March 31,
2016 − long $10.9 million], and the notional amount of US Treasury futures contracts outstanding held in a short position was
$nil [March 31, 2016 − $12.3 million (US$9.5 million)].
The fair value of all of the above futures contracts is nominal due to their short term to maturity. Realized and unrealized gains
and losses related to these contracts are recognized in net income (loss) during the reporting period.
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, 2017 for further information.
Disclosure Controls and Procedures and Internal Control over Financial Reporting
DISCLOSURE CONTROLS AND PROCEDURES
As of March 31, 2017, an evaluation was carried out, under the supervision of and with the participation of management,
including the President & CEO and the Executive Vice President, Chief Financial Officer, 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, Chief Financial Officer concluded that the design and operation of these disclosure controls and
procedures were effective as of and during the fiscal year ended March 31, 2017.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Management, including the President & CEO and the Executive Vice President, Chief Financial Officer, 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, Chief Financial Officer concluded that the Company’s
internal control over financial reporting was designed and operating effectively as of and during the year ended March 31, 2017
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, 2017 that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 49
Risk Management
OVERVIEW
Uncertainty and risk are inherent when conducting operations within financial markets. As an active participant in the Canadian
and international capital markets, the Company is exposed to risks that could result in financial losses. The Company 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 the Company’s financial stability and profitability.
Therefore, an effective risk management framework is integral to the success of Canaccord Genuity Group Inc.
RISK MANAGEMENT STRUCTURE AND GOVERNANCE
the Company’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, procedures and reports that enable the Company to assess
and control its risks. These policies and procedures are subject to ongoing review and modification as activities, markets and
circumstances change.
As part of the Company’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 the Company’s risk exposure is
conducted through a variety of separate, but complementary, financial, credit, operational, compliance and legal reporting systems.
The Company’s governance structure includes the following elements:
Audit Committee
Board of Directors
Canaccord
Genuity Group Inc.
Corporate Governance &
Compensation Committee
Risk Management
Committee
Cyber Security
Committee
Canaccord Genuity Global
Operating 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. See the company’s current Annual Information Form (AIF) for details of
the Audit Committee’s mandate as it relates to risk management.
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.
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
firm’s Chief Risk Officer and committee members include the CEO, the CFO and senior management representation from the key
revenue-producing businesses and functional areas of the Company. The Committee identifies, measures and monitors the
principal risks facing the business through review and approval of the Company’s risk appetite, policies, procedures, and
limits/thresholds.
The segregation of duties and management oversight are important aspects of the Company’s risk management framework. The
Company 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 Audit, Treasury, Finance and Legal.
In Fiscal 2017, the Company formed a global Cyber Security Committee to help identify, monitor and manage risks specific to the
company’s information networks, data and internal systems. This committee is chaired by the firm’s Chief Risk Officer and
committee members include senior IT management from across the firm, as well as representation from Legal, Compliance,
Internal Audit and Operations. The Cyber Security Committee is focused on issues such as cyber security risk assessment, IT
safeguards and controls, risks related to third-party service provides, employee training and awareness and incident response
plans.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
50 Management’s Discussion and Analysis
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 exposure is prudent. In addition, the Company has established
procedures to ensure that risks are measured, closely monitored, controlled and visible to senior levels of management.
Canaccord Genuity Group is exposed to equity price risk, liquidity risk and volatility risk as a result of its principal trading activities
in equity securities. The Company 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 Genuity Group mitigates its risk exposure through a variety of limits to control concentration, capital allocation and
usage, as well as through trading policies and guidelines. The Company 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
Genuity Group utilizes 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, liquidity profile,
position aging and concentration levels. Consequently, the Company 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.
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 Genuity Group 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, the
Company applies certain credit standards and conducts financial reviews with respect to clients and new accounts.
The Company provides financing to clients by way of margin lending. In a margin-based transaction, the Company 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, the Company 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 the Company is unable to
recover sufficient value from the collateral held. For margin lending purposes, the Company has established limits that are
generally more restrictive than those required by applicable regulatory policies. In addition, the Company has established limits to
how much it will lend against an individual security or group of securities in a single sector so as to limit credit concentration risk.
The extension of credit via margin lending is overseen by the firm’s Credit Committee. The Committee meets regularly to review
and discuss the firm’s credit risks, including large individual loans, collateral quality and concentration risk. The Committee will
also meet, as required, to discuss any new loan arrangements proposed by senior management.
The Company 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. The Company 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.
The Company 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, the Company may be exposed to risk. The risk of default depends on the
creditworthiness of the counterparty and/or the issuer of the instrument. The Company 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.
The Company 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.
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 the Company’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.
The Company operates in different markets and relies on its employees and systems to process a high number of transactions. In
order to mitigate this risk, the Company 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,
the Company has implemented an operational risk program that helps Canaccord Genuity Group measure, manage, report and
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
Management’s Discussion and Analysis 51
monitor operational risk issues (see RCSA below). The Company also has disaster recovery procedures, business continuity plans
and built-in redundancies in place in the event of a systems or technological failure. In addition, the Company utilizes third party
service agreements and security audits where appropriate.
Risk and Control Self-Assessment (RCSA)
The purpose of RCSAs is to:
(cid:129) Identify and assess key risks inherent to the business and categorize them based on severity and frequency of occurrence
(cid:129) Rate the effectiveness of the control environment associated with the key risks
(cid:129) Mitigate the risks through the identification of action plans to improve the control environment where appropriate
(cid:129) Provide management with a consistent approach to articulate and communicate the risk profiles of their areas of
responsibility
(cid:129) Meet regulatory requirements and industry standards
The Company 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 operations 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 impact 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. The
Company 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 the Company that could materially affect the
Company’s business, operations or financial condition. The Company 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 the Company’s interests in
various legal actions.
Losses or costs associated with routine regulatory and legal matters are included in general and administrative expense in the
Company’s Audited Consolidated Financial Statements.
Cybersecurity risk
Cybersecurity risk is the risk that the Company’s information networks, data or internal systems will be damaged, disrupted,
misappropriated, stolen, accessed without permission or otherwise attacked. This risk exists due to the interconnected nature of
the Company’s business with its clients, suppliers, vendors, partners and the public via the internet and other networks. As a
result of this interconnectivity, third parties with which the Company does business with or that facilitate the Company’s business
may also be a source of cybersecurity risk to the firm. The Company devotes considerable effort and resources to defend against
and mitigate cybersecurity risk, including increasing awareness throughout the organization by implementing a firmwide
cybersecurity training program for all employees. The Company’s management of cybersecurity risk, as well as any reported
incidents, is regularly presented to both senior management via the Cybersecurity Committee and the Audit Committee of the
Board of Directors.
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 revenue, 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. The Company could face reputational risk through its association with past or present corporate finance
clients who are the subject of regulatory and/or legal scrutiny. 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,
the Company 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 the Company’s reputation.
RISK FACTORS
For a detailed list of the risk factors that are relevant to the Company’s business and the industry in which it operates, see the
Risk Factors section in the Company’s current AIF. Risks include, but are not necessarily limited to, those listed in the AIF.
ANNUAL REPORT FISCAL 2017 / CANACCORD GENUITY GROUP INC.
52 Management’s Discussion and Analysis
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 the Company’s considers
to be of particular relevance. Other risk factors may apply.
CONTROL RISK
As of March 31, 2017, senior officers and directors of the Company collectively owned approximately 8.5% of the issued and
outstanding (13.2% fully diluted) 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 Genuity Group 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.
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 the Company’s business.
Restrictions on ownership and transfer of common shares
Restrictions on ownership and transfer of common shares in the articles of Canaccord Genuity Group Inc. 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, the Company’s financial
condition, results of operations, capital requirements and such other factors as the Board determines to be relevant.
Dividend Declaration
On June 1, 2017 the Board of Directors established a revised dividend policy, and in accordance with that policy, approved a
dividend of $0.10 per common share, payable on July 3, 2017 with a record date of June 16, 2017. This dividend is comprised of
a $0.01 base quarterly dividend and a $0.09 variable supplemental dividend as outlined below.
The revised dividend policy reflects the Company’s commitment to return a portion of earnings to shareholders, in balance with the
inherent variability of its business, which is impacted by the overall condition of debt and equity markets, and the market for
securities in specific growth sectors. In the context of this revised policy, the Company expects to return 25% to 50% of net
earnings attributable to common shareholders on an annual basis. The policy is anchored by a quarterly dividend of $0.01 per
common share, which will be declared and paid quarterly, commencing with the fourth quarter of fiscal 2017. Following the end of
each fiscal year, the Board will review the capital position of the business in the context of the market environment in combination
with capital allocation requirements for its strategic priorities, and determine whether a supplemental dividend should be paid.
Supplemental dividends, if declared, may be highly variable from year to year, given the nature of the Company’s operating
environment and the potential need to conserve cash and for certain corporate growth opportunities. Although dividends are
expected to be declared and paid on an ongoing basis, the Board of Directors, in its sole discretion, will determine the amount
and timing of any dividends. All dividend payments will depend on general business conditions, the Company’s financial condition,
results of operations, capital requirements and such other factors as the Board determines to be relevant.
On June 1, 2017, the Board of Directors approved the following cash dividends: $0.24281 per Series A Preferred Share payable
on June 30, 2017 with a record date of June 16, 2017; and $0.359375 per Series C Preferred Share payable on June 30, 2017
with a record date of June 16, 2017.
Additional Information
Additional information relating to Canaccord Genuity Group Inc., including our Annual Information Form, is available on our website
at www.canaccordgenuitygroup.com/EN/IR/FinReports/Pages/default.aspx and on SEDAR at www.sedar.com.
CANACCORD GENUITY GROUP INC. / ANNUAL REPORT FISCAL 2017
53
Independent Auditors’ Report
To the Shareholders of
Canaccord Genuity Group Inc.
We have audited the accompanying consolidated financial statements of Canaccord Genuity Group Inc., which comprise the
consolidated statements of financial position as at March 31, 2017 and 2016, and the consolidated statements of operations,
comprehensive income (loss), changes in equity and cash flows for the years then ended, 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. as at March 31, 2017 and 2016, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards.
Toronto, Canada
June 1, 2017
Chartered Professional Accountants
Licensed Public Accountants
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
54
Consolidated Statements of Financial Position
Notes
March 31,
2017
March 31,
2016
6
9
14
10
11
12
12
7
6
9, 21
25
15
14
16
17
18
16
18
$
677,769
$
784,230
3,395,736
1,085
4,858,820
15,323
2,829
31,479
102,799
192,266
428,329
564,746
2,041,150
12,537
3,046,762
11,221
5,578
37,049
120,204
203,732
$
5,203,516
$
3,424,546
$
25,280
$
645,742
3,669,883
11,793
10,093
7,500
14,910
427,435
2,185,047
18,811
4,242
15,000
4,370,291
2,665,445
140
56,442
450
—
4,426,873
2,665,895
205,641
641,449
2,604
1,975
85,405
(267,559)
95,270
764,785
11,858
776,643
205,641
617,756
—
—
86,235
(294,586)
134,883
749,929
8,722
758,651
$
5,203,516
$
3,424,546
‘‘Terrence A. Lyons’’
TERRENCE A. LYONS
Director
As at (in thousands of Canadian dollars)
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
Accounts payable and accrued liabilities
Provisions
Income taxes payable
Subordinated debt
Total current liabilities
Deferred tax liabilities
Convertible debentures
Equity
Preferred shares
Common shares
Equity portion of Convertible Debentures
Warrants
Contributed surplus
Retained earnings (deficit)
Accumulated other comprehensive income
Total shareholders’ equity
Non-controlling interests
Total equity
See accompanying notes
On behalf of the Board:
‘‘Daniel Daviau’’
DANIEL DAVIAU
Director
CANACCORD GENUITY GROUP INC. / 2017 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
Impairment of goodwill and other assets
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
55
March 31,
2016
376,817
132,029
160,180
85,559
16,830
16,390
787,805
March 31,
2017
$
396,741
$
196,129
130,749
119,040
16,847
20,040
879,546
454,998
417,876
85,698
65,211
42,286
52,381
12,744
79,011
21,124
12,209
—
—
92,981
56,998
40,863
55,975
10,222
87,004
25,339
26,129
17,352
321,037
$
825,662
$
1,151,776
53,884
(363,971)
16,322
(5,624)
10,698
43,186
38,103
5,083
91,657
101,149
0.29
0.27
1.173
1.4375
0.10
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(3,190)
(2,214)
(5,404)
(358,567)
(358,471)
(96)
90,553
n/a
(4.09)
(4.09)
1.375
1.4375
0.10
11, 12
25
12
14
18
18
18
18
19
19
19
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
56
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)
Realized translation gains related to foreign operations disposed of during the year
Reversal of unrealized gains on disposal of available for sale investment
Net change in unrealized gains on translation of foreign operations, net of tax
Comprehensive income (loss) for the year
Comprehensive income (loss) attributable to:
CGGI shareholders
Non-controlling interests
See accompanying notes
March 31,
2017
March 31,
2016
$
43,186
$
(358,567)
(1,560)
—
(37,889)
3,737
(1,510)
5,247
$
$
$
—
(747)
23,471
(335,843)
(336,219)
376
$
$
$
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Consolidated Statements of Changes in Equity
As at and for the years ended (in thousands of Canadian dollars)
Preferred shares, opening and closing
Common shares, opening
Shares issued in connection with share-based payments
Acquisition of common shares for long-term incentive plan (LTIP)
Shares issued in connection with private placement
Release of vested common shares from employee benefit trusts
Shares cancelled
Net unvested share purchase loans
Common shares, closing
Warrants, opening
Warrants issued in connection with private placement
Warrants, closing
Convertible debentures − equity, opening
Equity portion of convertible debentures, net of tax
Convertible debentures − equity, closing
Contributed surplus, opening
Share-based payments
Shares cancelled
Sale of non-controlling interests
Unvested share purchase loans
Contributed surplus, closing
Retained earnings (deficit), opening
Net income (loss) attributable to CGGI shareholders
Common shares dividends
Preferred shares dividends
Retained earnings (deficit), closing
Accumulated other comprehensive income, opening
Other comprehensive income attributable to CGGI shareholders
Accumulated other comprehensive income, closing
Total shareholders’ equity
Non-controlling interests, opening
Foreign exchange on non-controlling interests
Comprehensive income attributable to non-controlling interests
Dividends paid to non-controlling interests
Sale of non-controlling interests
Non-controlling interests, closing
Total equity
See accompanying notes
57
March 31,
2016
205,641
620,858
11,772
(46,616)
—
25,768
(4,779)
10,753
617,756
—
—
—
—
—
—
85,597
5,084
1,340
1,517
(7,303)
86,235
92,815
(358,471)
(16,938)
(11,992)
(294,586)
112,631
22,252
134,883
749,929
10,275
605
376
(2,952)
418
8,722
Notes
March 31,
2017
17
$
205,641
$
617,756
17,898
(47,061)
26,601
21,878
(1,356)
5,733
18
641,449
—
1,975
1,975
—
2,604
2,604
86,235
3,139
324
—
(4,293)
85,405
(294,586)
38,103
—
(11,076)
(267,559)
134,883
(39,613)
95,270
764,785
8,722
409
5,247
(2,520)
—
11,858
19
19
$
776,643
$
758,651
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
58
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 recovery
Share-based compensation expense
Impairment of goodwill and other assets
Impairment of investment in private company
Impairment of investment in Canadian First Financial Group Inc.
Write-off of intangible assets
Changes in non-cash working capital
(Increase) decrease in securities owned
(Increase) decrease in accounts receivable
Decrease (increase) in income taxes receivable, net
Increase (decrease) in securities sold short
Increase (decrease) in accounts payable, accrued liabilities, and provisions
Cash provided by operating activities
FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness
Purchase of shares for cancellation
Acquisition of common shares for long-term incentive plan
Proceeds from Private Placement
Repayment of subordinated debt
Proceeds from Convertible Debentures
Cash dividends paid on common shares
Cash dividends paid on preferred shares
Cash paid related to CSH Inducement Plan
Cash provided by (used in) financing activities
INVESTING ACTIVITIES
Purchase of equipment and leasehold improvements
Purchase of intangible assets
Cash used in investing activities
Effect of foreign exchange on cash balances
Increase 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
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes
March 31,
2017
March 31,
2016
$
43,186
$
(358,567)
11, 12
20
12
7
7
21,124
(5,624)
40,322
—
2,390
—
—
(219,496)
(1,394,913)
18,514
218,307
1,513,070
236,880
10,370
(360)
(47,061)
28,321
(7,500)
60,000
—
(11,076)
(1,905)
30,789
(5,202)
(440)
(5,642)
(12,587)
249,440
428,329
677,769
$
$
$
12,571
11,009
10,385
$
$
$
25,339
(2,214)
51,900
321,037
—
4,000
2,350
286,128
410,704
(10,667)
(227,758)
(296,632)
205,620
(4,529)
(3,439)
(46,616)
—
—
—
(16,839)
(11,992)
(2,700)
(86,115)
(10,565)
(4,170)
(14,735)
1,235
106,005
322,324
428,329
16,892
8,524
10,572
59
Notes to Consolidated Financial Statements
As at March 31, 2017 and March 31, 2016
and for the years ended March 31, 2017 and 2016
(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), Europe, and Dubai, the United States of
America (US), Australia, and China. The Company also has wealth management operations in Canada, the US, 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.
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 400-725 Granville Street, Vancouver,
British Columbia, V7Y 1G5.
The Company’s common shares are publicly traded under the symbol CF on the Toronto Stock Exchange (TSX). 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 (loss) 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 audited consolidated financial statements have been prepared on a historical cost basis except for investments, securities
owned, securities sold short and certain impaired non-current assets, which have been measured at fair value as set out in the
relevant accounting policies.
The audited 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 1, 2017.
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 SPE are consolidated if the Company acquires control. Control is achieved when
an entity has power over the investee, 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 inter-company 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.
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 revenues, expenses, assets and liabilities, accompanying note disclosures, and the disclosure
of contingent liabilities at the reporting date. Therefore, actual results may differ from those estimates and assumptions. The
significant judgments, estimates and assumptions include consolidation, revenue recognition, share-based payments, income
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
60 Notes to Consolidated Financial Statements
taxes and valuation of deferred tax assets, impairment of goodwill, intangible assets and other long-lived assets, allowance for
credit losses, fair value of financial instruments, capitalization of intangible assets related to software costs, and provisions.
Consolidation
The Company owns 50% of the voting shares of Canaccord Genuity (Australia) Limited (CGAL) as at March 31, 2017. The Company
also completed an evaluation of its contractual arrangements with the other shareholders of CGAL and the control it has over the
financial and operating policies of CGAL and determined it should consolidate under IFRS 10, ‘‘Consolidated Financial
Statements’’ (IFRS 10) as at March 31, 2017 and 2016. Therefore, the financial position, financial performance, and cash flows of
CGAL have been consolidated. Although the Company owns 50% of the issued shares of CGAL as at March 31, 2017, for
accounting purposes, the Company is considered to have a 58% interest because of the shares held in a trust controlled by
Canaccord Financial Group (Australia) Pty Ltd. Accordingly, the Company has consolidated the entity and recognized a 42%
non-controlling interest as at March 31, 2017 (March 31, 2016 − 42%), which represents the portion of CGAL’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 employee benefit trusts, which are considered SPEs [Note 20], to fulfill obligations to employees arising from
the Company’s share-based payment plans. The employee benefit trusts have been consolidated in accordance with IFRS 10 since
their activities are conducted on behalf of the Company, and the Company retains the majority of the benefits and risks of the
employee benefit trusts.
Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company and the revenue can be
reliably measured. Estimation may be required to determine the amount of revenue that can be recognized and also the timing of
the substantial completion of the underlying investment banking or advisory transactions.
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 20.
Income taxes and valuation of deferred 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 (CGU) 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 12.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 61
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 recoverable amount of the asset or the CGU
containing the asset 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.
Fair value of financial instruments
The Company measures its financial instruments at fair value. 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 as they apply to restructuring costs are fulfilled.
NOTE 03
Adoption of New and Revised Standards
There were no new or revised standards adopted by the Company during the fiscal year.
NOTE 04
Future Changes in Accounting Policies
Standards issued but not yet effective
Standards issued, which may be reasonably expected to impact upon the Company’s financial statements, but which are not yet
effective are listed below.
IFRS 9, ‘‘Financial Instruments’’
In July 2014, the IASB issued the final version of IFRS 9, ‘‘Financial Instruments’’ which reflects all phases of the financial
instruments project and replaces IAS 39, ‘‘Financial Instruments: Recognition and Measurement’’, and all previous versions of
IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9
is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is
required, but comparative information is not compulsory. The Company is still in the process of assessing the impact of the
adoption of IFRS 9.
IFRS 15, ‘‘Revenue from Contracts with Customers’’
IFRS 15 will be effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The
Company is still in the process of assessing the impact of the adoption of IFRS 15.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
62 Notes to Consolidated Financial Statements
IFRS 16, ‘‘Leases’’
During January 2016, the IASB issued the new standard, which requires lessees to recognize asset and liabilities for most leases.
The new standard will be effective for annual periods beginning on or after January 1, 2019. Early application is permitted,
provided the new revenue standard, IFRS 15, has been applied, or is applied at the same date as IFRS 16. The Company has not
yet determined the impact of the adoption of IFRS 16 on the Company’s financial statements.
NOTE 05
Summary of Significant Accounting Policies
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.
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.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 63
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
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. Branding acquired through the acquisition of Genuity is also considered to
have an indefinite life, as it will provide benefit to the Company over a continuous period. Software under development or acquired
is amortized over its useful life once the asset is available for use. The estimated amortization periods of these amortizable
intangible assets are as follows:
Brand names
Customer relationships
Non-competition agreements
Technology
Internally developed or acquired software
Acquired in business combinations
Canaccord Genuity
Australia
n/a
CSHP
n/a
5 years
8 to 24 years
4.5 years
n/a
n/a
3 years
Genuity
indefinite
11 years
5 years
n/a
Internally
developed or acquired
Eden
Financial
n/a
8 years
n/a
n/a
Software
n/a
n/a
n/a
10 years
Expenditures towards the development or acquisition of projects are recognized as intangible assets when the Company can
demonstrate that the technical feasibility of the assets for use has been established. The assets are carried at cost less any
accumulated amortization and accumulated impairment losses. Capitalized costs are expenditures directly attributable to the
software development, such as employment, consulting or professional fees. Amortization of the assets begins when development
is complete and the assets are available for use. The assets are 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 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 the impairment is 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.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
64 Notes to Consolidated Financial Statements
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, which are subject to an insignificant risk of changes in value.
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.
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 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 (EIR) method, less impairment. Amortized cost is calculated by taking into account discounts or premiums on
acquisition and fees or costs that are an integral part of the EIR method. 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, 2017 and 2016.
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 a significant or prolonged impact on the estimated future cash flows of the asset that can be reliably estimated. The
determination of what is significant or prolonged requires judgment. In making this judgment, the Company evaluates, among
other factors, the duration or extent to which the fair value of an investment is less than its cost.
In the case of debt instruments classified as available for sale, the impairment is assessed based on the same criteria as
financial assets carried at amortized cost. However, the amount recorded for impairment is the cumulative loss measured as the
difference between the amortized cost and the current fair value, less any impairment loss on that investment previously
recognized in the statement of operations.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 65
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 or 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 and securities
sold short, including derivative financial instruments, are classified as held for trading and recognized at fair value.
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
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
66 Notes to Consolidated Financial Statements
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 valuation 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 [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.
The convertible unsecured senior subordinated debentures are classified as compound financial instruments. On initial
recognition, the fair value of the liability is calculated based on the present value of future cash flows under the instruments,
discounted at 8%, being equal to the rate of interest applied by the market at the time of issue to instruments of comparable
credit status and future cash flows, without the conversion feature. The residual amount is recorded as a component of
shareholders’ equity.
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.
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.
SECURITIES PURCHASED UNDER REVERSE REPURCHASE AGREEMENTS AND OBLIGATIONS RELATED TO SECURITIES SOLD
UNDER REPURCHASE AGREEMENTS
The Company recognizes these transactions on the trade date at amortized cost using the effective interest rate method.
Securities sold and purchased under repurchase agreements remain on the consolidated statement of financial position. Reverse
repurchase agreements and repurchase agreements are treated as collateralized lending and borrowing transactions.
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. Facilitation losses for the year ended March 31, 2017 were $12.8 million [March 31,
2016 − $14.3 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 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.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 67
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.
The assets’ residual values, useful lives and methods 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 Company’s 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.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
68 Notes to Consolidated Financial Statements
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.
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 the employee benefits trusts and unvested share purchase loans and preferred shares held in treasury.
No gain or loss is recognized in the statements of operations on 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 (LOSS) PER COMMON SHARE
Basic earnings (loss) per common share is computed by dividing the net income (loss) attributable to common shareholders for
the period by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share reflects the
dilutive effect in connection with the LTIP and other share-based payment plans as well as the convertible debentures 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 (loss) 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 20]. 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.
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 matters and when they can be reasonably estimated.
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
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 69
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 their 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 24.
SEGMENT REPORTING
The Company’s segment reporting is based on the following operating segments: Canaccord Genuity, Canaccord Genuity Wealth
Management and Corporate and Other. Commencing in the third quarter of the year ended March 31, 2017, the operating results
of our Australian operations are disclosed as a separate geography. In prior years Australia was included as part of Other Foreign
Locations. Also, commencing this fiscal year, our Dubai operation, which was previously included in Other Foreign Locations, is now
included as part of Canaccord Genuity UK & Europe. The Other Foreign Locations geographic segment is now comprised of our
Asian based operations, including China and Hong Kong and prior to their sale or closure Singapore and Barbados. These
reclassifications reflect the growing contributions from Australia and the working associations between the UK and Dubai.
NOTE 06
Securities Owned and Securities Sold Short
Corporate and government debt
Equities and convertible debentures
Securities
owned
571,066
213,164
784,230
$
$
March 31, 2017
Securities sold
short
$
$
541,827
103,915
645,742
$
$
Securities
owned
402,779
161,967
564,746
March 31, 2016
Securities sold
short
$
$
341,264
86,171
427,435
As at March 31, 2017, corporate and government debt maturities range from 2017 to 2098 [March 31, 2016 − 2016 to 2097]
and bear interest ranging from 0.00% to 14.00% [March 31, 2016 − 0.00% to 15.00%].
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
70 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, 2017 and 2016 are as follows:
Held for
trading
Available
for sale
Loans and
receivables
Loans and
borrowings
Total
March 31,
2017
March 31,
2016
March 31,
2017
March 31,
2016
March 31,
2017
March 31,
2016
March 31,
2017
March 31,
2016
March 31,
2017
March 31,
2016
$ 784,230 $ 564,746 $
— $
— $
$
— $
— $
— $ 784,230 $
564,746
—
—
—
—
—
—
—
—
—
—
$ 784,230 $ 564,746 $
—
—
—
— 2,625,939
1,303,222
—
—
373,300
365,272
302,532
298,839
—
2,829
2,829 $
93,965
—
5,578
—
5,578 $ 3,395,736 $2,041,150 $
73,817
—
—
—
—
—
—
— $
— 2,625,939
1,303,222
—
—
373,300
365,272
302,532
298,839
93,965
2,829
73,817
—
—
5,578
— $ 4,182,795 $ 2,611,474
$ 645,742 $ 427,435 $
— $
— $
— $
— $
— $
— $ 645,742 $
427,435
—
—
—
—
—
—
—
—
—
—
$ 645,742 $ 427,435 $
—
—
—
—
—
— $
—
—
—
—
—
— $
—
—
—
—
—
— $
— 1,913,177
986,993
1,913,177
986,993
— 1,468,410
992,661
1,468,410
992,661
288,296
7,500
56,442
205,393
205,393
—
15,000
15,000
—
—
—
—
— $ 3,733,825 $2,200,047 $ 4,379,567 $ 2,627,482
288,296
7,500
56,442
Financial assets
Securities owned
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
Convertible debentures
Total financial liabilities
The Company has not designated any financial instruments as fair value through profit or loss upon initial recognition using the
fair value option.
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)
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.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
As at March 31, 2017 and 2016, the Company held the following classes of financial instruments measured at fair value:
Notes to Consolidated Financial Statements 71
Securities owned
Corporate debt
Government debt
Corporate and government debt
Equities
Convertible debentures
Equities and convertible debentures
Available for sale investments
Securities sold short
Corporate debt
Government debt
Corporate and government debt
Equities
Securities owned
Corporate debt
Government debt
Corporate and government debt
Equities
Convertible debentures
Equities and convertible debentures
Available for sale investments
Securities sold short
Corporate debt
Government debt
Corporate and government debt
Equities
March 31, 2017
Level 1
Estimated fair value
March 31, 2017
Level 2
Level 3
$
15,071
$
— $
15,071
$
555,995
571,066
207,050
6,114
213,164
2,829
787,059
(11,524)
(530,303)
(541,827)
(103,915)
(645,742)
277,121
277,121
165,292
—
165,292
—
278,874
293,945
41,616
6,114
47,730
2,829
442,413
344,504
—
(313,077)
(313,077)
(77,562)
(390,639)
(11,524)
(217,226)
(228,750)
(26,353)
(255,103)
—
—
—
142
—
142
—
142
—
—
—
—
—
March 31, 2016
Level 1
Level 2
Level 3
Estimated fair value
March 31, 2016
$
39,392
$
— $
39,392
$
363,387
402,779
160,177
1,790
161,967
5,578
570,324
(14,498)
(326,766)
(341,264)
(86,171)
(427,435)
186,126
186,126
130,758
—
130,758
—
177,261
216,653
29,266
1,790
31,056
3,138
316,884
250,847
—
(200,324)
(200,324)
(67,923)
(268,247)
(14,498)
(126,442)
(140,940)
(18,248)
(159,188)
—
—
—
153
—
153
2,440
2,593
—
—
—
—
—
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
72 Notes to Consolidated Financial Statements
Movement in net Level 3 financial assets
Balance, March 31, 2015
Purchase of Level 3 assets
Redemption of debentures
Net unrealized loss during the year
Other
Balance, March 31, 2016
Net unrealized loss during the year
Other
Balance, March 31, 2017
$
$
$
5,825
2,890
(1,107)
(4,872)
(143)
2,593
(2,390)
(61)
142
During the year ended March 31, 2017, the Company recorded an unrealized loss of $2.4 million related to the impairment of an
investment in a private company.
Fair value estimation
i.
Level 2 financial instruments
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.
Level 2 financial instruments also include the Company’s equity investment in Euroclear, which has an estimated fair value of
$2.8 million as at March 31, 2017 [March 31, 2016 − $3.1 million]. The current fair value is determined using a market-based
approach based on recent share buyback transactions.
ii.
a.
Level 3 financial instruments
Available for sale investments
Available for sale investments include the Company’s investment of $nil [March 31, 2016 − $2.4 million] in a private company.
The investment was measured at historical cost basis in the absence of any market indicators. During the year ended March 31,
2017, the Company recorded an impairment charge of $2.4 million as a result of changes in market indicators.
b.
Held for Trading
The fair value for level 3 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 held for trading 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 held for trading investments as at March 31, 2017 was $0.1 million [March 31, 2016 − $0.2 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.
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, 2017 and 2016.
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 collectability 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 $4.9 million as at March 31, 2017 [March 31,
2016 − $10.8 million] [Note 9].
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 73
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, 2017 and 2016, 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 collectability. 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 23.
The following table presents the contractual terms to maturity of the financial liabilities owed by the Company as at March 31,
2017:
Financial liability
Carrying amount
Contractual term to maturity
Bank indebtedness
Accounts payable and accrued liabilities
Securities sold short
Subordinated debt
Convertible debentures
March 31, 2017
March 31, 2016
$
25,280
$
14,910
3,669,883
645,742
7,500
56,442
2,185,047
427,435
15,000
Due on demand
Due within one year
Due within one year
Due on demand(1)
—
Due in December 2021
(1) Subject to Investment Industry Regulatory Organization of Canada’s approval.
The fair values for cash, accounts receivable and accounts payable and accrued liabilities approximate their carrying values and
will be paid within 12 months.
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.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
74 Notes to Consolidated Financial Statements
The following table summarizes the effect on earnings as a result of a fair value change in financial instruments as at March 31,
2017. This analysis assumes all other variables remain constant. The methodology used to calculate the fair value sensitivity is
consistent with the prior year.
Financial instrument
Equities and convertible
debentures owned
Equities and convertible
debentures sold short
Effect of a
10% increase
in fair value on
net income
March 31, 2017
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
March 31, 2016
Effect of a
10% decrease
in fair value on
net income
Carrying value
Asset (Liability)
213,164
8,793
(8,793)
161,967
6,681
(6,681)
(103,915)
(4,286)
4,286
(86,171)
(3,555)
3,555
The following table summarizes the effect on other comprehensive income (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
Effect of a
10% increase
in fair value
on OCI
March 31, 2017
Effect of a
10% decrease
in fair value
on OCI
Carrying value
Effect of a
10% increase
in fair value
on OCI
March 31, 2016
Effect of a
10% decrease
in fair value
on OCI
Investments
$
2,829
$
283
$
(283)
$
5,578
$
558
$
(558)
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, fixed income portion of securities owned and securities sold short, net clients’ balances, RRSP cash balances held
in trust 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 4.0%, payable monthly. The bank indebtedness
bears interest at 2.25%.
The following table provides the effect on net income for the years ended March 31, 2017 and 2016 if interest rates had
increased or decreased by 100 basis points applied to balances as of March 31, 2017 and 2016. Fluctuations in interest rates
do not have an effect on OCI. This sensitivity analysis assumes all other variables remain constant. The methodology used to
calculate the interest rate sensitivity is consistent with the prior year.
Cash and cash equivalents, net of
Carrying value
Asset (Liability)
Net income
effect of a
100 bps
increase in
interest rates
March 31, 2017
Net income
effect of a
100 bps
decrease in
interest rates(1)
Carrying value
Asset (Liability)
Net income
effect of a
100 bps
increase
in interest
rates
March 31, 2016
Net income
effect of a
100 bps
decrease
in interest
rates(1)
bank indebtedness
$
652,489
$
4,894
$
(4,894)
$
413,419
$
3,101
$
(3,101)
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
(1) Subject to a floor of zero
138,488
(1,095,110)
302,532
712,762
7,500
(359)
(8,215)
2,269
(8,117)
(56)
225
(2,249)
(2,269)
406
56
137,311
(627,389)
298,839
316,229
15,000
(2,142)
(4,705)
2,241
(20)
(113)
2,337
(2,367)
(2,241)
1
113
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 75
Foreign exchange risk
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 in the statement of operations.
The following table summarizes the estimated effects on net income (loss) and OCI as a result of a 5% 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, 2017:
Currency
US dollar
Pound sterling
Australian dollar
As at March 31, 2016:
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
$
(395)
$
(560)
nil
395
560
nil
$
11,120
$
27,578
1,407
(11,120)
(27,578)
(1,407)
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
$
(319)
$
(618)
nil
319
618
nil
$
7,388
$
42,023
1,190
(7,388)
(42,023)
(1,190)
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, 2017:
To sell US dollars
To buy US dollars
Forward contracts outstanding at March 31, 2016:
Notional amount
(millions)
USD $
USD $
22.1
2.9
To sell US dollars
To buy US dollars
Notional amount
(millions)
USD $
USD $
2.6
1.9
Average price
Maturity
$1.29 (CAD/USD)
April 1, 2016
$1.29 (CAD/USD)
April 1, 2016
Average price
Maturity
Fair value
$1.33 (CAD/USD)
April 3, 2017
$1.33 (CAD/USD)
April 3, 2017
$
$
$
$
71
(2)
Fair value
(3)
3
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
76 Notes to Consolidated Financial Statements
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 61 days as at March 31, 2017 [March 31, 2016 − 69 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, 2017. The fair value of the forward contract assets and liabilities is included in the accounts receivable and payable
balances.
Assets
Liabilities
March 31, 2017
Notional
amount
March 31, 2016
Assets
Liabilities
Notional amount
Foreign exchange forward contracts
$
1,806
$
1,640
$
177,384
$
5,682
$
5,441
$
294,162
FUTURES
The Company’s Canadian operations are involved in trading bond futures contracts, which are agreements to buy or sell a
standardized amount of an underlying Government of Canada bond, at a predetermined future date and price, in accordance with
terms specified by a regulated futures exchange, and are subject to daily cash margining. The Company’s Canadian operations
trade in bond futures in an attempt to mitigate interest rate risk, yield curve risk and liquidity risk. At March 31, 2017, the notional
amount of the bond futures contracts outstanding was long $0.5 million [March 31, 2016 − $10.9 million].
The Company’s Canadian operations are also involved in trading US Treasury futures in an attempt to mitigate interest rate risk,
yield curve risk and liquidity risk. At March 31, 2017, the notional amount of US Treasury futures contracts outstanding held in a
short position was $nil (US$nil) [March 31, 2016 − $12.3 million (US$9.5 million)].
The fair value of all of the above futures contracts is nominal due to their short term to maturity and are included in accounts
receivable and accounts payable and accrued liabilites. Realized and unrealized gains and losses related to these contracts are
recognized in the statement of operations during the reporting period.
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, 2017, the floating rates ranged from 0.00%
to 0.25% [March 31, 2016 − 0.00% to 0. 25%].
March 31, 2017
March 31, 2016
BANK INDEBTEDNESS
Cash
Securities
Loaned or
delivered as
collateral
Borrowed or
received as
collateral
Loaned or
delivered as
collateral
$
182,474
$
41,098
$
43,252
$
118,897
26,586
27,347
Borrowed or
received as
collateral
233,811
159,616
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, 2017 the Company had $25.3 million of bank indebtedness outstanding [March 31,
2016 − $14.9 million].
OTHER CREDIT FACILITIES
Subsidiaries of the Company have credit facilities with banks in Canada and the UK for an aggregate amount of $602.6 million
[March 31, 2016 − $697.3 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, 2017 and 2016,
there were no balances outstanding under these other credit facilities.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 77
A subsidiary of the Company has also entered into secured irrevocable standby letters of credit from a financial institution totalling
$2.7 million (US$2.0 million) [March 31, 2016 − $2.6 million (US$2.0 million)] as rent guarantees for its leased premises in
New York. As of March 31, 2017 and 2016, there were no outstanding balances under these standby letters of credit.
NOTE 08
Interest in Other Entities
The Company has a 58% controlling interest for accounting purposes in Canaccord Financial Group (Australia) Pty Ltd. and
Canaccord Genuity (Australia) Limited as of March 31, 2017 [March 31, 2016 − 58%]. Together, these entities operate as
Canaccord Genuity Australia and the operation’s principal place of business is in Australia. As discussed in Note 23, Canaccord
Genuity (Australia) Limited is regulated by the Australian Securities and Investments Commission.
Canaccord Genuity Australia reported total net income of $12.5 million in fiscal 2017 [2016: net loss of $22.6 million]. As at
March 31, 2017, accumulated non-controlling interest was $11.9 million [March 31, 2016 − $8.7 million]. Summarized financial
information including goodwill on acquisition and consolidation adjustments before inter-company eliminations is presented.
Summarized statement of profit or loss for the years ended March 31, 2017 and 2016:
For the years ended
Revenue
Expenses
Impairment of goodwill
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
Summarized statement of financial position as at March 31, 2017 and 2016:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Summarized cash flow information for the years ended March 31, 2017 and 2016:
Cash provided 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
Canaccord Genuity Australia
March 31,
2017
March 31,
2016
$
59,693
$
(42,088)
—
17,605
5,153
12,452
7,369
5,083
12,844
7,597
5,247
2,520
31,229
(32,296)
(22,342)
(23,409)
(825)
(22,584)
(22,488)
(96)
(21,401)
(21,777)
376
2,952
Canaccord Genuity Australia
March 31,
2017
$
51,817
$
5,460
25,189
—
March 31,
2016
26,241
4,202
7,470
—
Canaccord Genuity Australia
March 31,
2017
$
11,623
$
(3,679)
(201)
276
March 31,
2016
715
(5,667)
(370)
(480)
$
8,019
$
(5,802)
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
78 Notes to Consolidated Financial Statements
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
March 31,
2017
March 31,
2016
$
2,625,939
$
1,303,222
373,300
302,532
93,965
365,272
298,839
73,817
$
3,395,736
$
2,041,150
March 31,
2017
$
1,913,177
$
1,468,410
288,296
March 31,
2016
986,993
992,661
205,393
$
3,669,883
$
2,185,047
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, 2017 − 5.70% to 6.75% and 0.00% to 0.05%, respectively; March 31, 2016 − 5.70% to 6.50% and
0.00% to 0.05%, respectively].
As at March 31, 2017, the allowance for doubtful accounts was $4.9 million [March 31, 2016 − $10.8 million]. See below for the
movements in the allowance for doubtful accounts:
Balance, March 31, 2015
Charge for the year
Recoveries
Write-offs
Foreign exchange
Balance, March 31, 2016
Charge for the year
Recoveries
Write-offs
Foreign exchange
Balance, March 31, 2017
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
$
$
$
11,985
4,808
(2,395)
(3,681)
46
10,763
4,153
(4,601)
(5,317)
(56)
4,942
NOTE 10
Investments
Available for sale
Notes to Consolidated Financial Statements 79
March 31,
2017
$
2,829
$
March 31,
2016
5,578
The Company holds an investment in Euroclear, one of the principal clearing houses for securities traded in the Euromarket.
As a result of changes in market indicators, the Company recorded an impairment charge of $2.4 million related to an investment
in a private company during the year ended March 31, 2017.
These investments are carried at fair value, as described in Note 7.
NOTE 11
Equipment and Leasehold Improvements
March 31, 2017
Computer equipment
Furniture and equipment
Leasehold improvements
March 31, 2016
Computer equipment
Furniture and equipment
Leasehold improvements
Cost
Balance, March 31, 2015
Additions
Disposals
Impairment
Foreign exchange
Balance, March 31, 2016
Additions
Disposals
Foreign exchange
Balance, March 31, 2017
Cost
Accumulated
amortization
Net book
value
$
9,999
$
4,476
$
21,953
83,513
115,465
10,825
21,446
82,734
115,005
17,764
61,746
83,986
3,603
16,555
57,798
77,956
Computer
equipment
Furniture and
equipment
Leasehold
improvements
5,523
4,189
21,767
31,479
7,222
4,891
24,936
37,049
Total
$
10,320
$
21,080
$
87,883
$
119,283
3,277
(2,973)
—
201
1,351
(72)
(691)
(222)
5,937
(1,465)
(10,184)
563
10,565
(4,510)
(10,875)
542
$
10,825
$
21,446
$
82,734
$
115,005
1,358
(1,525)
(659)
915
(131)
(277)
2,929
(929)
(1,221)
5,202
(2,585)
(2,157)
$
9,999
$
21,953
$
83,513
$
115,465
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
80 Notes to Consolidated Financial Statements
Accumulated amortization and impairment
Balance, March 31, 2015
Amortization
Disposals
Impairment
Foreign exchange
Balance, March 31, 2016
Amortization
Disposals
Foreign exchange
Balance, March 31, 2017
Computer
equipment
Furniture and
equipment
Leasehold
improvements
$
3,694
$
15,499
$
56,717
$
2,807
(2,957)
—
59
2,201
(64)
(268)
(813)
5,758
(624)
(4,607)
554
$
$
3,603
$
16,555
$
57,798
$
2,474
(1,130)
(471)
1,537
(130)
(198)
5,314
(918)
(448)
4,476
$
17,764
$
61,746
$
Total
75,910
10,766
(3,645)
(4,875)
(200)
77,956
9,325
(2,178)
(1,117)
83,986
The carrying value of any temporarily idle property, plant and equipment is not considered material as at March 31, 2017 and
March 31, 2016.
NOTE 12
Goodwill and Other Intangible Assets
Goodwill
Brand
names
Customer
relationships
Technology
Software
under
development
Non-
competition
Trading
licenses
Total
Identifiable intangible assets
Gross amount
Balance, March 31, 2015
$ 526,364 $
44,930 $
97,578 $
26,595 $
4,491 $
13,945 $
184 $
187,723
Additions
Transfer between categories
Other
Foreign exchange
—
—
—
—
—
—
—
—
—
—
(152)
1,444
2,691
—
(218)
2,726
(2,691)
—
(20)
—
—
—
208
—
—
—
12
4,170
—
—
(170)
Balance, March 31, 2016
526,364
44,930
97,426
30,512
4,506
14,153
196
191,723
Additions
Transfer between categories
Foreign exchange
—
—
(11,466)
—
—
—
—
—
440
1,382
(6,303)
(3,132)
—
(1,382)
(79)
—
—
—
—
—
—
440
—
(9,514)
Balance, March 31, 2017
514,898
44,930
91,123
29,202
3,045
14,153
196
182,649
Accumulated amortization and
impairment
Balance, March 31, 2015
Amortization
Impairment
Foreign exchange
Balance, March 31, 2016
Amortization
Foreign exchange
(20,785)
—
(301,847)
—
(322,632)
—
—
Balance, March 31, 2017
(322,632)
—
—
—
—
—
—
—
—
(33,197)
(9,799)
(1,564)
294
(7,352)
(3,470)
—
268
—
—
(12,297)
(1,645)
(2,350)
—
—
(211)
(44,266)
(10,554)
(2,350)
(14,153)
(8,617)
2,351
(3,182)
1,117
—
—
—
—
—
(196)
—
(196)
—
—
(52,846)
(14,914)
(4,110)
351
(71,519)
(11,799)
3,468
(50,532)
(12,619)
(2,350)
(14,153)
(196)
(79,850)
Net book value
March 31, 2016
March 31, 2017
203,732
192,266
44,930
44,930
53,160
40,591
19,958
16,583
2,156
695
—
—
—
—
120,204
102,799
During the year ended March 31, 2017, there were $1.4 million of intangible assets transferred from software under development
to technology. These intangible assets relate to a back-office accounting software that became available for use during the year
ended March 31, 2017 and is being amortized over the estimated useful life of 10 years.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 81
IMPAIRMENT TESTING OF GOODWILL AND OTHER ASSETS
The carrying amounts of goodwill and indefinite life intangible assets acquired through business combinations are as follows:
Intangible assets with indefinite lives
March 31, 2016
March 31, 2017
Goodwill
Total
March 31, 2017
March 31, 2016
March 31, 2017
March 31, 2016
$
44,930
$
44,930
$
92,074
$
92,074
$
137,004
$
137,004
Canaccord Genuity CGUs
Canada
Canaccord Genuity Wealth
Management CGUs
UK and Europe (Channel Islands)
—
—
UK and Europe (Eden Financial)
90,257
9,935
100,585
11,073
90,257
9,935
100,585
11,073
$
44,930
$
44,930
$
192,266
$
203,732
$
237,196
$
248,662
The Genuity brand name is considered to have an indefinite life as the Company has no plans to cease its use in the future.
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 CGUs 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 and other assets impairment testing was carried out for all applicable CGUs at
June 30, September 30 and December 31, 2016.
In accordance with IAS 36, ‘‘Impairment of Assets’’ (IAS 36), the recoverable amounts of the CGUs’ net assets have been
determined using fair value less costs to sell (FVLCS) calculations, which are based on future cash flow assumptions which are
considered to be appropriate for the purposes of such calculations. In accordance with IFRS 13 fair value represents an estimate
of the price at which an orderly transaction to sell an asset or transfer a liability would take place between market participants as
at the end of the reporting period under market conditions as at that date (an exit price as at the measurement date). 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 CGUs which recorded goodwill in their carrying
value as of March 31, 2017 were Canaccord Genuity, Canada and Canaccord Genuity Wealth Management UK & Europe (Channel
Islands) and UK. The discount rate utilized for each of these CGUs for the purposes of these calculations was 12.5% [March 31,
2016 − 12.5%]. Cash flow estimates for each of these CGUs were based on management assumptions as described above and
utilize five year compound annual revenue growth rates was 5.0% [March 31, 2016 − 4.8% to 5.0%] as well as estimates in
respect of operating margins. The terminal growth rate used for each of Canaccord Genuity, Canada and Canaccord Genuity Wealth
Management UK & Europe (Channel Islands) and UK was 2.5% [March 31, 2016 − 2.5%].
Sensitivity testing was conducted as part of the annual impairment test of goodwill and indefinite life intangible assets for the
Canaccord Genuity − Canada CGU. The sensitivity testing includes assessing the impact that reasonably possible declines in
revenue estimates for the 12-month period ending on March 31, 2018 and declines in growth rates after that period and
increases in the discount rates would have on the recoverable amounts of the CGUs, with other assumptions being held constant.
An increase in the discount rate of 5.0 percentage points, a decrease in the estimated revenue for the year ending March 31,
2018 of $27.0 million or a decrease in the five year compound annual growth rate of 12.2 percentage points would result in the
estimate of the recoverable amount declining below the carrying value with the result that an impairment charge would be
required. Any such impairment charge would be determined after incorporating the effect of any changes in key assumptions
including any consequential effects of such changes on estimated operating income and on other factors.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
82 Notes to Consolidated Financial Statements
NOTE 13
Business Disposition
The Company sold 100% of the ordinary shares of Canaccord Genuity Singapore Pte, Ltd. to SAC Capital Private Limited. The sale
was completed on June 30, 2016. The Company received upfront cash consideration on closing of $0.1 million and may receive
further payments based on the value of net tangible assets at the completion date and deferred consideration calculated with
reference to future profits arising from the existing business over the next two years.
For the year ended March 31, 2017, the Company recorded net income of $0.01 million attributable to the Singapore operation
prior to its disposal.
The Company recognized a loss of $0.4 million on the disposal, as well as realized translation gain of $1.6 million which was
previously included in accumulated other comprehensive income. The net gain of $1.2 million is included in other revenue in the
statement of operations for the year ended March 31, 2017.
NOTE 14
Income Taxes
The major components of income tax expense (recovery) are:
Consolidated statements of operations
Current income tax expense (recovery)
Current income tax expense (recovery)
Adjustments in respect of prior years
Deferred income tax recovery
Origination and reversal of temporary differences
Impact of change in tax rates
Income tax expense (recovery) reported in the statements of operations
March 31,
2017
March 31,
2016
$
$
16,286
36
16,322
(5,667)
43
(5,624)
10,698
$
$
(2,584)
(606)
(3,190)
(2,127)
(87)
(2,214)
(5,404)
The Company’s income tax expense (recovery) differs from the amount that would be computed by applying the combined federal
and provincial income tax rates as a result of the following:
Net income (loss) before income taxes
Income tax expense (recovery) at the statutory rate of 26.0% (2016: 26.0%)
Difference in tax rates in foreign jurisdictions
Non-deductible items affecting the determination of taxable income
Impairment of goodwill and other assets
Change in accounting and tax base estimate
Change in deferred tax asset − reversal period of temporary difference and other
Tax losses and other temporary differences not recognized
Share based payments
Income tax expense (recovery) reported in the statements of operations
March 31,
2017
53,884
13,999
(4,096)
3,051
—
(1,143)
(2,292)
1,208
(29)
10,698
$
$
$
$
March 31,
2016
(363,971)
(94,632)
(3,663)
3,241
81,913
923
(2,033)
3,827
5,020
(5,404)
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 83
The following were the deferred tax assets and liabilities recognized by the Company and movements thereon during the year:
Unrealized gain on securities owned
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
Other
Consolidated statements
of financial position
Consolidated statements
of operations
March 31,
2017
(114)
1,195
4,971
2,974
1,792
6,491
(247)
14,398
(17,523)
1,246
15,183
$
$
March 31,
2016
(1,106)
356
2,258
2,687
1,252
8,636
138
13,858
(19,770)
2,462
10,771
March 31,
2017
(992)
(839)
(2,713)
(287)
(541)
2,145
385
(541)
(2,296)
55
(5,624)
$
$
$
$
$
$
March 31,
2016
(479)
246
(80)
23
2,197
(2,573)
603
(1,960)
(1,987)
1,796
(2,214)
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
Tax recovery recognized in the consolidated statements of operations
Foreign exchange on deferred tax position
Deferred tax liability on convertible debentures
Other
Ending balance as of March 31
March 31,
2017
$
$
15,323
(140)
15,183
$
$
March 31,
2016
11,221
(450)
10,771
March 31,
2017
March 31,
2016
$
10,771
$
5,624
(810)
(990)
588
8,091
2,214
134
—
332
$
15,183
$
10,771
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.
The Company has recognized deferred tax assets of $4.0 million [2016 − $4.8 million] on tax loss carryforwards of $15.4 million
[2016 − $20.6 million] in the UK and Europe. Subject to certain limitations, these losses can be carried forward indefinitely. The
Company has also recognized deferred tax assets of $2.5 million [2016 − $3.9 million] on tax loss carryforwards of $9.5 million
[2016 − $14.7 million] in Canada. These losses can be carried forward for 20 years from the year in which the losses were
incurred.
At the balance sheet date, the Company has tax loss carryforwards of approximately $37.9 million [2016 − $42.2 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
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
$33.7 million at March 31, 2017 [2016 − $26.3 million]. Since the subsidiaries outside of Canada have a history of losses and
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
84 Notes to Consolidated Financial Statements
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
$
7,500
$
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,
2017 and 2016, the interest rates for the subordinated debt were 6.7% and 6.85%, respectively. The carrying value of
subordinated debt approximates its fair value due to the short term nature of this liability.
During the year ended March 31, 2017, the Company repaid $7.5 million of the subordinated debt.
March 31,
2017
March 31,
2016
NOTE 16
Convertible Debentures
On October 27, 2016, the Company closed a private placement of convertible unsecured senior subordinated debentures (the
‘‘Debentures’’) in the aggregate principal amount of $60.0 million. The net amount recognized after deducting issue costs net of
deferred tax liability was $58.9 million. The Debentures were placed with funds managed by a large Canadian asset manager.
The Debentures bear interest at a rate of 6.50% per annum, payable semi-annually on the last day of June and December each
year commencing December 31, 2016. The Debentures are convertible at the holder’s option into common shares of the Company
at a conversion price of $6.50 per share. The Debentures will mature on December 31, 2021 and may be redeemed by the
Company, in certain circumstances, on or after December 31, 2019.
The Debentures are classified as compound financial instruments. On initial recognition, the fair value of the liability is calculated
based on the present value of future cash flows under the instruments, discounted at 8%, being equal to the rate of interest
applied by the market at the time of issue to instruments of comparable credit status and future cash flows, without the
conversion feature. The residual amount is recorded as a component of shareholders’ equity.
Convertible debentures
NOTE 17
Preferred Shares
Liability
$56,442
March 31, 2017
Equity
$2,604
Liability
—
March 31, 2016
Equity
—
Series A Preferred Shares issued and outstanding
$
110,818
4,540,000
$
110,818
Amount
Number of
shares
Amount
Series C Preferred Shares issued and outstanding
Series C Preferred Shares held in treasury
97,450
(2,627)
94,823
4,000,000
(106,794)
3,893,206
97,450
(2,627)
94,823
$
205,641
8,433,206
$
205,641
Number of
shares
4,540,000
4,000,000
(106,794)
3,893,206
8,433,206
March 31, 2017
March 31, 2016
[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, as declared, were paid at an annual rate of 5.5% for the initial five-year period ended on
September 30, 2016. Commencing October 1, 2016 and ending on and including September 30, 2021, quarterly cumulative
dividends, if declared, will be paid at an annual rate of 3.885%. 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 had the 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 have the option on September 30 every five years thereafter. The number of shares tendered for conversion by the conversion
deadline of September 15, 2016 was below the minimum required to proceed with the conversion and, accordingly, no Series B
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 85
Preferred Shares were issued. Series B Preferred Shares would entitle any holders thereof 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 had the option to redeem the Series A Preferred Shares on September 30, 2016, and have the option 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.
[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
June 30, 2017. 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 18
Common Shares
Issued and fully paid
Unvested share purchase loans
Held for the LTIP
Warrants
Warrants issued in connection with Private Placement
[i] AUTHORIZED
Unlimited common shares without par value.
March 31, 2017
March 31, 2016
Amount
Number of
shares
Amount
Number of
shares
$
772,645
113,511,468
$
729,502
103,812,814
(9,366)
(1,590,146)
(121,830)
(19,141,505)
(15,099)
(96,647)
(2,557,568)
(12,171,624)
$
641,449
92,779,817
$
617,756
89,083,622
March 31, 2017
Number of
warrants
3,438,412
Amount
$1,975
March 31, 2016
Number of
warrants
—
Amount
—
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
86 Notes to Consolidated Financial Statements
[ii] ISSUED AND FULLY PAID
Balance, March 31, 2015
Shares issued in connection with share-based payment plans [Note 20]
Shares issued in connection with replacement plans [Note 20]
Shares cancelled
Balance, March 31, 2016
Shares issued in connection with share-based payment plans [Note 20]
Shares issued in connection with replacement plans [Note 20]
Shares issued for other stock-based awards
Shares issued in connection with private placement
Shares cancelled
Balance, March 31, 2017
Number of shares
102,607,705
$
1,806,115
77,830
(678,836)
103,812,814
2,433,285
76,088
507,051
6,876,824
(194,594)
Amount
722,509
10,023
1,749
(4,779)
729,502
14,840
685
2,373
26,601
(1,356)
113,511,468
$
772,645
On August 11, 2016, the Company filed a notice to renew the normal course issuer bid (NCIB) to provide the Company with the
choice to purchase up to a maximum of 5,587,378 of its common shares during the period from August 15, 2016 to August 14,
2017 through the facilities of the TSX and on alternative trading systems in accordance with the requirements of the TSX. The
purpose of the purchase of common shares under the NCIB is to enable the Company to acquire shares for cancellation. The
maximum number of shares that may be purchased under the current NCIB represents 5.0% of the Company’s outstanding
common shares at the time of the notice. During the year ended March 31, 2017, a total of 99,800 shares were purchased under
the terms of the NCIB at a weighted average price per share of $3.5913; all these shares have been cancelled.
During the year ended March 31, 2017, the Company completed the closings of a non-brokered private placement (Private
Placement) to employees of the Company. In aggregate, the Company issued 6,876,824 Units at a price of $4.17 per unit for
aggregate proceeds to the Company of $28.3 million. Each Unit consists of one common share (‘‘Common Share’’) of the
Company and one-half of one Common Share purchase warrant (‘‘Warrant’’). Each whole Warrant will entitle the holder to acquire
one Common Share at an exercise price of $4.99 for the period from June 17, 2019 to December 17, 2019. Warrants are not
listed and are not transferable.
The common shares issued under the Private Placement are subject to a hold period, with one-third of the common shares issued
to each purchaser becoming freely tradeable on each anniversary of the closing date of the Private Placement.
The Warrants are classified as equity instruments. The fair value of the Warrants, calculated using an option pricing model, was
determined to be $1.975 million. 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 Warrants.
During the year ended March 31, 2017, the Company issued 507,051 common shares in consideration for $2.4 million in
connection with a stock-based award made during the year in accordance with the rules of the Toronto Stock Exchange for
securities based compensation arrangements.
[iii] FORGIVABLE COMMON SHARE PURCHASE LOANS
The Company provides forgivable common share purchase loans to certain employees (other than directors or executive officers)
in order to purchase common shares. The Company has provided such loans to executive officers in the past but has now adopted
a policy not to make any further such loans to directors or executive officers. 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.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
[IV] EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share
Net income (loss) attributable to CGGI shareholders
Preferred shares dividends
Net income (loss) attributable to common shareholders
Weighted average number of common shares (number)
Basic earnings (loss) per share
Diluted earnings (loss) per common share
Net income (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)
Notes to Consolidated Financial Statements 87
For the years ended
March 31,
2017
March 31,
2016
$
38,103
$
(358,471)
(11,076)
27,027
(11,992)
(370,463)
91,656,708
90,552,860
$
0.29
$
(4.09)
27,027
(370,463)
91,656,708
8,248,790
1,243,573
101,149,072
n/a
n/a
n/a
n/a
Diluted earnings (loss) per common share
$
0.27
$
(4.09)
For the year ended March 31, 2016, the instruments involving potential common shares were excluded from the calculation of
diluted loss per share as they were anti-dilutive.
The convertible shares were excluded from the diluted earnings per share calculation for the year ended March 31, 2017 as they
were anti-dilutive.
There have been no other transactions involving common shares or potential common shares between the reporting period and
the date of authorization of these financial statements which would have a significant impact on earnings (loss) per common
share.
NOTE 19
Dividends
COMMON SHARE DIVIDENDS
On June 1, 2017 the Board of Directors established a revised dividend policy, and in accordance with that policy, approved a
dividend of $0.10 per common share, payable on July 3, 2017 with a record date of June 16, 2017. This dividend is comprised of
a $0.01 base quarterly dividend and a $0.09 variable supplemental dividend. [Note 27]
PREFERRED SHARE DIVIDENDS
Record date
March 17, 2017
December 23, 2016
September 16, 2016
June 17, 2016
Payment date
March 31, 2017
January 3, 2017
September 30, 2016
June 30, 2016
Cash dividend per
Series A
Preferred Share
Cash dividend per
Series C
Preferred Share
Total preferred
dividend amount
$
$
$
$
0.24281
0.24281
0.34375
0.34375
$
$
$
$
0.359375
0.359375
0.359375
0.359375
$
$
$
$
2,540
2,540
2,998
2,998
On June 1, 2017, the Board approved a cash dividend of $0.24281 per Series A Preferred Share payable on June 30, 2017 to
Series A Preferred shareholders of record as at June 16, 2017 [Note 27].
On June 1, 2017, the Board approved a cash dividend of $0.359375 per Series C Preferred Share payable on June 30, 2017 to
Series C Preferred shareholders of record as at June 16, 2017 [Note 27].
NOTE 20
Share-Based Payment Plans
[i] LONG-TERM INCENTIVE PLAN
Under the long-term incentive plan (LTIP), eligible participants are awarded restricted share units (RSUs), which generally vest over
three years. For employees in Canada, the United States, Channel Islands, Australia and the United Kingdom, employee benefit
trusts have been established. The Company or certain of its subsidiaries, as the case may be, fund the employee benefit trusts
(the Trusts) with cash which is used by the trustees to purchase common shares on the open market that will be held in the Trusts
until the RSUs vest.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
88 Notes to Consolidated Financial Statements
There were 11,895,720 RSUs [year ended March 31, 2016 − 8,130,645 RSUs] granted in lieu of cash compensation to
employees during the year ended March 31, 2017. The Trusts purchased 9,848,638 common shares [year ended March 31,
2016 − 7,554,788 common shares] during the year ended March 31, 2017.
The fair value of the RSUs at the measurement date is based on the fair value on grant date and is amortized on a graded basis
over the vesting period of generally three years. The weighted average fair value of RSUs granted during the year ended March 31,
2017 was $4.75 [March 31, 2016 − $6.34].
Awards outstanding, March 31, 2015
Grants
Vested
Cancellations
Forfeited
Awards outstanding, March 31, 2016
Grants
Vested
Forfeited
Awards outstanding, March 31, 2017
Common shares held by the Trusts, March 31, 2015
Acquired
Released on vesting
Common shares held by the Trusts, March 31, 2016
Acquired
Released on vesting
Common shares held by the Trusts, March 31, 2017
[ii] FORGIVABLE COMMON SHARE PURCHASE LOANS
Number
10,746,218
8,130,645
(3,951,322)
(1,815,790)
(1,146,896)
11,962,855
11,895,720
(4,598,904)
(1,079,926)
18,179,745
Number
7,388,489
7,554,788
(2,771,653)
12,171,624
9,838,528
(2,868,647)
19,141,505
The Company provides loans to certain employees (other than directors or executive officers) for the purpose of partially funding
the purchase of shares of the Company and increasing share ownership by the employees. The Company has provided such loans
to executive officers in the past but has now adopted a policy not to make any further such loans to directors or executive officers.
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 18 [iii]].
[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 options to purchase
common shares of the Company under the Replacement ABED Plan. The exercise price of these options was $nil. The options,
which are now vested, vested 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 was deferred and amortized to incentive compensation expense over the vesting period. The
awards were fully amortized as of March 31, 2015.
Balance, March 31, 2015
Exercised
Balance, March 31, 2016
Exercised
Balance, March 31, 2017
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Number
32,893
(7,256)
25,637
(7,155)
18,482
Notes to Consolidated Financial Statements 89
The following table summarizes the share options outstanding as at March 31, 2017:
Range of exercise price
$nil
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
18,482
5.01
nil
18,482
$
nil
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 options to purchase shares of the Company awards
under the Replacement LTIP. The exercise price of these options was $nil. The options, which are now vested, vested 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 was deferred and amortized to incentive compensation expense
over the vesting period. The awards were fully amortized as of March 31, 2015.
Awards outstanding, March 31, 2015
Exercised
Balance, March 31, 2016
Exercised
Balance, March 31, 2017
The following table summarizes the share options outstanding as at March 31, 2017:
Number
281,974
(70,754)
211,400
(68,933)
142,467
Range of exercise price
$nil
[iv] CSH INDUCEMENT PLAN
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
142,467
5.01
$
nil
142,467
$
nil
In connection with the acquisition of CSHP, the Company agreed to establish a retention plan for key CSHP staff. During the year
ended March 31, 2013, the Company awarded 2,418,861 RSUs, which vested over a five-year period which ended on March 31,
2017. In accordance with the plan, one-third of the total RSUs (806,302 RSUs) vested on the third anniversary of the date of the
grant under the terms of the existing LTIP. The remaining two-thirds of the total RSUs (1,612,559 RSUs) vested under the terms of
the new CSH Inducement Plan. The awards were fully vested as of March 31, 2017.
Balance, March 31, 2015
Vested
Forfeited
Balance, March 31, 2016
Vested
Forfeited
Balance, March 31, 2017
Total
RSUs awarded
(Number)
1,333,067
(626,446)
(55,545)
651,076
(573,932)
(77,144)
—
On each vesting date, the RSUs entitled the awardee to receive cash or common shares of the Company. During the five year
vesting period, the Company, at its election, either (a) paid cash to the employee equal to $8.50 multiplied by the number of RSUs
vesting on such date, or (b) paid 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.
The awards under this plan require either full or partial cash settlement if the share price at vesting was less than $8.50 per
share. To the extent that it was considered probable that cash settlement will be required, a portion of these awards was treated
as cash settled, and recorded on the statements of financial position as a liability. The carrying amount of the liability at
March 31, 2017 was $nil [March 31, 2016 − $2.1 million].
The fair value of the RSUs at the grant date was $8.50, for a total plan value of $20.2 million, which was amortized on a graded
basis. The awards were fully amortized as of March 31, 2017.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
90 Notes to Consolidated Financial Statements
[v] SHARE OPTIONS
The Company has previously granted share options to purchase common shares of the Company to directors and senior
management. Share options to independent directors vested over a four-year period and expired seven years after the grant date
or 30 days after the participant ceases to be a director. Share options to senior management vested over a five-year period and
expired 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 was based on the fair market value of the common shares at
grant date. All the outstanding share options have expired as of March 31, 2017.
The following is a summary of the Company’s share options as at March 31, 2017 and changes during the period then ended:
Balance, March 31, 2015
Exercised
Expired
Balance, March 31, 2016
Exercised
Expired
Balance, March 31, 2017
[vi] DEFERRED SHARE UNITS
Number of
options
Weighted average
exercise price
1,609,354
$
—
(100,000)
1,509,354
$
—
(1,509,354)
$
—
9.25
—
7.21
9.38
—
9.38
—
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, 2017, the Company granted 84,990 DSUs [2016 − 92,461 DSUs]. The carrying amount of the
liability relating to DSUs at March 31, 2017 was $1.1 million [2016 − $1.0 million].
[vii] SHARE-BASED COMPENSATION EXPENSE
For the years ended
March 31,
2017
March 31,
2016
$
37,537
$
42,348
1,699
1,609
(762)
239
—
5,552
3,148
(489)
(19)
1,360
51,900
Long-term incentive plan
Forgivable common share purchase loans
CSH Inducement Plan
Deferred share units (cash-settled)
Other
Accelerated share-based payment expense included as restructuring expense
Total share-based compensation expense
$
40,322
$
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 91
NOTE 21
Related Party Transactions
[i] CONSOLIDATED SUBSIDIARIES
The consolidated financial statements include the financial statements of the Company and the Company’s operating subsidiaries
and intermediate holding companies listed in the following table:
% equity interest
Country of
incorporation
March 31,
2017
March 31,
2016
Canaccord Genuity Corp.
Canaccord Genuity SAS
Canaccord Genuity Wealth (International) Limited
Canaccord Genuity Financial Planning Limited
Canaccord Genuity Wealth Limited
Canaccord Genuity Wealth Group Limited
Canaccord Genuity Wealth (International) Holdings Limited
Canaccord Genuity Limited
Canaccord Genuity Wealth Group Holdings Ltd.
Canaccord Genuity Inc.
Canaccord Genuity Wealth Management (USA) Inc.
Canaccord Genuity Wealth & Estate Planning Services Ltd.
Canaccord Asset Management Inc.
Canaccord Adams Financial Group Inc.
Collins Stewart Inc.
Canaccord Adams BC ULC
Canaccord Adams (Delaware) Inc.
Canaccord Genuity Securities LLC
Stockwave Equities Ltd.
CLD Financial Opportunities Limited
Canaccord Genuity (Hong Kong) Limited
Canaccord Financial Group (Australia) Pty Ltd*
Canaccord Genuity (Australia) Limited*
(Beijing) Limited)
The Balloch Group Limited
Canaccord Genuity Asia (Hong Kong) Limited
Canaccord Genuity (Dubai) Ltd.
(Canaccord Genuity Asia
Canada
France
Guernsey
United Kingdom
United Kingdom
United Kingdom
Guernsey
United Kingdom
Canada
United States
United States
Canada
Canada
United States
United States
Canada
United States
United States
Canada
Canada
China (Hong Kong SAR)
Australia
Australia
China
British Virgin Islands
China (Hong Kong SAR)
United Arab Emirates
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%
100%
100%
100%
n/a
100%
100%
100%
100%
100%
100%
n/a
100%
100%
100%
100%
100%
50%
50%
100%
100%
100%
100%
*
The Company owns 50% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd and Canaccord Genuity (Australia) Limited, but for accounting purposes, as of March 31, 2017 the
Company is considered to have a 58% interest because of the shares held in a trust controlled by Canaccord Financial Group (Australia) Pty Ltd [March 31, 2016 − 58%] [Note 8]
[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, 2017 and 2016:
Short term employee benefits
Post termination benefits
Share-based payments
Total compensation paid to key management personnel
March 31,
2017
March 31,
2016
$
$
$
7,053
1,989
3,979
13,021
$
4,668
—
2,526
7,194
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
92 Notes to Consolidated Financial Statements
As part of the total compensation arrangement with regards to his appointment as Chief Executive Officer effective October 1,
2015, the Chief Executive Officer received a grant of 1.5 million restricted share units. He surrendered this award effective
March 31, 2016, and the amount of the award is not included in the table above.
[iii] OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Accounts payable and accrued liabilities include the following balances with key management personnel:
Accounts receivable
Accounts payable and accrued liabilities
March 31,
2017
$
$
211
219
March 31,
2016
61
4,035
[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 22
Segmented Information
The Company operates in two industry segments as follows:
Canaccord Genuity − includes investment banking, advisory, research and trading activities on behalf of corporate, institutional
and government clients as well as principal trading activities in Canada, the UK, Europe and Dubai, Australia and the US.
Operations located in Other Foreign Locations under Canaccord Genuity Asia 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.
For the years ended
March 31, 2017
Canaccord
Genuity
Wealth
Management
Canaccord
Genuity
Corporate
and Other
Total
Canaccord
Genuity
Canaccord
Genuity
Wealth
Management
March 31, 2016
Corporate
and Other
Total
Revenues, excluding interest
revenue
$ 593,447
$ 258,230
$ 11,022
$ 862,699
$ 528,999
$ 236,663
$
5,313
$ 770,975
Interest revenue
Expenses, excluding
undernoted
Amortization
Development costs
Interest expense
Restructuring costs
Impairment of goodwill
Income (loss) before income
taxes and intersegment
allocations
Less: Intersegment
allocations
Income (loss) before
income taxes
4,944
8,881
3,022
16,847
3,271
9,904
3,655
16,830
512,933
210,226
56,426
779,585
501,625
196,961
10,651
2,616
9,713
—
—
9,102
6,585
135
—
—
1,371
3,008
2,896
—
—
21,124
12,209
12,744
—
—
13,915
7,869
8,542
11,305
321,037
10,264
6,911
241
165
—
53,111
1,160
11,349
1,439
5,882
751,697
25,339
26,129
10,222
17,352
—
321,037
62,478
41,063
(49,657)
53,884
(332,023)
32,025
(63,973)
(363,971)
18,210
16,796
(35,006)
—
17,087
21,854
(38,941)
—
$ 44,268
$ 24,267
$ (14,651)
$ 53,884
$(349,110)
$ 10,171
$ (25,032)
$ (363,971)
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.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 93
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 controlling interest in
Canaccord Genuity Australia. Amortization of 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 income (loss) before taxes and intersegment allocations is derived from external
customers. The Company also does not allocate cash flows by reportable segments.
For geographic reporting purposes, the Company’s business operations are grouped into Canada, the UK, Europe and Dubai, the
United States, Australia, and Other Foreign Locations which is comprised of our Asian operations. The following table presents the
revenue of the Company by geographic location (revenue is attributed to geographic areas on the basis of the location of the
underlying corporate operating results):
Canada
UK, Europe and Dubai
United States
Australia
Other Foreign Locations
For the years ended
March 31,
2017
$
298,816
$
281,631
237,142
59,693
2,264
March 31,
2016
247,021
283,837
218,965
31,138
6,844
$
879,546
$
787,805
The following table presents selected figures pertaining to the financial position of each geographic location:
Canada
UK, Europe
and Dubai
United
States
Other Foreign
Locations
Australia
Total
As at March 31, 2017
Equipment and leasehold improvements
$
11,080
$
9,884
$
8,757
$
Goodwill
Intangible assets
Non-current assets
As at March 31, 2016
Equipment and leasehold improvements
Goodwill
Intangible assets
Non-current assets
92,074
55,630
158,784
12,452
92,074
58,025
100,192
47,074
157,150
12,751
111,658
61,088
—
95
8,852
9,798
—
92
$
162,551
$
185,497
$
9,890
$
31
—
—
31
66
—
—
66
$
1,727
$
—
—
1,727
1,982
—
999
31,479
192,266
102,799
326,544
37,049
203,732
120,204
$
2,981
$
360,985
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
94 Notes to Consolidated Financial Statements
NOTE 23
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, warrants, retained earnings and accumulated other comprehensive income (loss), and is further
complemented by the subordinated debt and convertible debentures. The following table summarizes our capital as at March 31,
2017 and 2016:
Type of capital
Preferred shares
Common shares
Convertible debentures − equity portion
Warrants
Contributed surplus
Retained earnings (deficit)
Accumulated other comprehensive income
Shareholders’ equity
Convertible debentures
Subordinated debt
March 31,
2017
$
205,641
$
641,449
2,604
1,975
85,405
(267,559)
95,270
764,785
56,442
7,500
March 31,
2016
205,641
617,756
—
—
86,235
(294,586)
134,883
749,929
—
15,000
$
828,727
$
764,929
The Company’s capital management framework is designed to maintain the level of capital that will:
(cid:129) Meet the Company’s regulated subsidiaries’ target ratios as set out by the respective regulators
(cid:129) Fund current and future operations
(cid:129) Ensure that the Company is able to meet its financial obligations as they become due
(cid:129) Support the creation of shareholder value
The following subsidiaries are subject to regulatory capital requirements in the respective jurisdictions by the listed regulators:
(cid:129) Canaccord Genuity Corp. is subject to regulation in Canada primarily by the Investment Industry Regulatory Organization of
Canada (IIROC)
(cid:129) Canaccord Genuity Limited, Canaccord Genuity Wealth Limited and Canaccord Genuity Financial Planning Limited are
regulated in the UK by the Financial Conduct Authority (FCA)
(cid:129) 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
(cid:129) Canaccord Genuity (Australia) Limited is regulated by the Australian Securities and Investments Commission
(cid:129) Canaccord Genuity (Hong Kong) Limited is regulated in Hong Kong by the Securities and Futures Commission
(cid:129) 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. (FINRA)
(cid:129) Canaccord Genuity Wealth Management (USA) Inc. is registered as a broker dealer in the US and is subject to regulation
primarily by FINRA
(cid:129) Canaccord Asset Management Inc. is subject to regulation in Canada by the Ontario Securities Commission
(cid:129) Canaccord Genuity (Dubai) Ltd is subject to regulation in the United Arab Emirates by the Dubai Financial Services
Authority (DFSA)
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 as at and during the year ended March 31, 2017.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Notes to Consolidated Financial Statements 95
NOTE 24
Client Money
At March 31, 2017, the UK and Europe operations held client money in segregated accounts of $2.120 million (£1.267 million)
[2016 − $2,179 million; £1,168.0 million]. This is comprised of $11.2 million (£6.7 million) [2016 − $6.2 million; £3.3 million] of
balances held on behalf of clients to settle outstanding trades and $2.109 million (£1.260 million) [2016 − $2,173 million;
£1,165 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 25
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, 2017 and 2016:
Balance, March 31, 2015
Additions
Utilized
Balance, March 31, 2016
Additions
Utilized
Balance, March 31, 2017
Legal
provisions
Restructuring
provisions
2,846
$
11,474
$
2,518
(1,764)
3,600
5,870
(2,530)
17,352
(13,615)
$
15,211
$
—
(10,358)
6,940
$
4,853
$
$
$
$
Total
provisions
14,320
19,870
(15,379)
18,811
5,870
(12,888)
11,793
The restructuring provisions at March 31, 2017 relate primarily to termination benefits incurred as part of the Company’s
reorganization during the year ended March 31, 2016.
Commitments, litigation proceedings and contingent liabilities
In the normal course of business, the Company is involved in litigation, and as of March 31, 2017, 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 Company is also subject to asserted and unasserted claims arising in the normal course of business which, as of March 31,
2017, 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, 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.
Management’s evaluation and analysis of these claims indicate that the amounts reasonably claimed in respect of certain claims
are material and, accordingly, these claims are described below.
Certain claims have been asserted against the Company in respect of the sale of certain conventional wealth management tax
advantaged film partnership products in the UK by a predecessor which could be material if such claims are advanced, additional
claims are made and 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. The aggregate investment by the Company’s clients in respect of these
products is estimated to be $9.6 million (£5.8 million). The aggregate initial tax deferral realized by the Company’s clients in
respect of these products when they were purchased by those clients during the period from 2006 to 2009 is estimated to be
$13.2 million (£8.0 million). Enforcement in accordance with announcements from the UK taxation authority, the outcome of
certain litigation proceedings in respect of the taxation of other similar products sold by other financial advisors and certain
settlements reached with the UK taxation authority by some investors will likely result in tax liabilities to the purchasers of those
products in excess of the initial tax deferral amount. The potential tax liability for the Company’s clients that is in excess of the
initial tax deferral amount is estimated to be $13.7 million (£8.3 million). The probable outcome of the enforcement actions by
the UK taxation authority in respect of this matter and the likelihood of a loss or the amount of any such loss to the Company in
connection with any claims asserted against the Company, or which may be asserted against the Company, are not determinable
at the date of these audited consolidated financial statements.
2017 ANNUAL REPORT / CANACCORD GENUITY GROUP INC.
96 Notes to Consolidated Financial Statements
An action has been commenced in Alberta by a former client and others claiming the return of losses in certain accounts, return of
administration fees, interest and costs. The claim alleges breach of contract and negligence in the administration of the accounts.
The damages claimed in this action are in excess of $14 million. Although the Company has denied the allegations and intends to
vigorously defend itself, the probable outcome of this action and a reliable estimate of the amount of damages in the event of an
adverse outcome are not determinable at the date of these audited consolidated financial statements.
NOTE 26
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:
2018
2019
2020
2021
2022
Thereafter
$
31,452
30,605
26,900
22,599
20,821
41,515
$
173,892
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 as follows:
2018
2019
2020
2021
2022
Thereafter
The Company is committed to principal and interest payments under the Debentures as follows:
2018
2019
2020
2021
2022
NOTE 27
Subsequent Events
(i) DIVIDENDS
$
$
$
$
957
786
786
763
718
299
4,309
3,900
3,900
3,900
3,900
63,900
79,500
On June 1, 2017 the Board of Directors established a revised dividend policy, and in accordance with that policy, approved a
dividend of $0.10 per common share, payable on July 3, 2017 with a record date of June 16, 2017. This dividend is comprised of
a $0.01 base quarterly dividend and a $0.09 variable supplemental dividend.
On June 1, 2017 the Board of Directors approved the following cash dividends: $0.24281 per Series A Preferred Share payable on
June 30, 2017 with a record date of June 16, 2017; and $0.359375 per Series C Preferred Share payable on June 30, 2017 with
a record date of June 16, 2017.
CANACCORD GENUITY GROUP INC. / 2017 ANNUAL REPORT
Auditor
Ernst & Young LLP
Chartered Professional Accountants
Vancouver, BC
For information about fees paid to
shareholders’ auditors, refer to our
fiscal 2017 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.
Annual General Meeting
Thursday, August 3, 2017,
at 10:00 a.m. (Eastern time)
Goodmans LLP
Bay Adelaide Centre
333 Bay Street
34th Floor
Toronto, ON, Canada
Editorial and
Design Services
The Works Design Communications
SHAREHOLDER INFORMATION
Stock Exchange Listing
TSX: CF
Website
www.canaccordgenuity.com
Fiscal Year End
March 31
Media Relations
and Inquiries from
Institutional Investors
and Analysts
Christina Marinoff
Vice President, Investor Relations &
Communications
Telephone: 416.687.5507
Email: christina.marinoff@canaccord.com
General Shareholder
Inquiries
For all general shareholder info, or
to request a copy of this report.
INVESTOR RELATIONS
161 Bay Street, Suite 3000
Toronto, ON, Canada
Telephone: 416.869.7293
Fax: 416.947.8343
Email: investor.relations@
canaccordgenuitygroup.com
Financial Information
For present and archived financial
information, please visit
www.canaccordgenuitygroup.com.
Regulatory Filings
To view Canaccord Genuity Group’s
regulatory filings on SEDAR, please visit
www.sedar.com.
Transfer Agent and
Registrar
For information about stock transfers,
address changes, dividends, lost stock
certificates, tax forms and estate
transfers, contact:
COMPUTERSHARE INVESTOR
SERVICES INC.
100 University Avenue, 8th 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
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.
Corporate Headquarters
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
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 the Company’s institutional, corporate
and private clients. Canaccord Genuity Group Inc. is publicly traded
under the symbol CF on the TSX.
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, Hong Kong, Australia and Dubai.
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 clients in
each of its markets. Canaccord Genuity Wealth Management has
Investment Advisors (IAs) and professionals in Canada, the UK,
Jersey, Guernsey, the Isle of Man and Australia. It is a division
of Canaccord Genuity Group and operates in the UK & Europe as
Canaccord Genuity Wealth Limited and Canaccord Genuity Wealth
International Limited.
Pinnacle Correspondent Services provides trade execution,
clearing, settlement, custody, and other middle- and back-
office services to introducing brokerage firms, portfolio
managers and other financial intermediaries. The business
unit was developed as an extension and application of
Canaccord Genuity Group’s substantial investment in its
information technology and operating infrastructure.
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Beijing
Boston
Calgary
Chicago
Dubai
Dublin
Edmonton
Guernsey
Halifax
Hong Kong
Isle of Man
Minneapolis
Penticton
Trail
Jersey
Kelowna
Kitchener
London
Melbourne
Montréal
Nashville
New York
Paris
Perth
Vancouver
Prince George
Washington
San Francisco
Waterloo
Sydney
Toronto
More information about Canaccord Genuity Group Inc., including the Company’s
Fiscal 2017 online Annual Report, can be found at canaccordgenuitygroup.com.
UKUSUAEAUFRIECA