Canaccord Genuity Group Annual Report 2021

Plain-text annual report

FISCAL 2021 ANNUAL REPORT C C a n a c c o r d G e n u i t y G r o u p I n c . F i s c a l 2 0 2 1 A n n u a l R e p o r t With a defensive revenue mix and a relentless drive to be the very best in our areas of focus, we are structured to deliver stability in times of stress, and increased value when markets are active. Dan Daviau President & CEO, Canaccord Genuity Group Inc. Canaccord Genuity Group Inc. Fiscal 2021 Annual Report D Canaccord Genuity Group Inc. Fiscal 2021 Annual Report Financial Overview Selected financial information (1)(2)(8) (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 Compensation expense Other overhead expenses(3) Restructuring costs(4) Acquisition-related costs Loss and other costs in connection with extinguishment of convertible debentures(5) Acceleration of long-term incentive plan expense Share of loss of an associate(6) Total expenses Income before income taxes Net income Net income attributable to CGGI shareholders Non-controlling interests Earnings per common share – basic Earnings per common share – diluted Dividends per common share Dividends per Series A Preferred Share Dividends per Series C Preferred Share Excluding significant items(7) Total revenue Total expenses Income before income taxes Net income Net income attributable to CGGI shareholders Net income attributable to non-controlling interests Earnings 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 2021 2020 2019 2021/2020 change $ 735,239 $ 586,884 $ 556,475 $ 148,355 761,551 197,092 246,801 26,288 40,717 236,962 206,507 108,834 63,690 20,990 294,241 142,228 125,830 51,008 20,785 2,007,688 1,223,867 1,190,567 1,227,895 398,693 — 5,922 4,354 — 922 738,313 383,527 1,921 (124) — — 207 716,625 356,240 13,070 3,064 8,608 — 304 1,637,786 1,123,844 1,097,911 369,902 269,802 263,786 6,016 2.30 2.04 0.25 0.9712 1.2482 $ $ $ $ $ $ $ $ 100,023 86,554 86,490 64 0.78 0.65 0.20 0.9712 1.2482 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 92,656 71,582 70,530 1,052 0.58 0.48 0.20 0.9712 1.2482 $ 1,993,488 $ 1,223,867 $ 1,190,567 $ 1,607,398 $ 1,100,810 $ 1,054,981 $ $ $ $ $ 386,090 285,887 279,871 6,016 2.48 $ $ $ $ $ 123,057 106,323 105,895 428 0.81 $ $ $ $ $ 135,586 107,355 106,303 1,052 0.80 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 524,589 (9,415) 137,967 (37,402) 19,727 783,821 489,582 15,166 (1,921) 6,046 4,354 — 715 513,942 269,879 183,248 177,296 5,952 1.52 1.39 0.05 — — 769,621 506,588 263,033 179,564 173,976 5,588 1.67 $ 7,631,801 $ 5,956,195 $ 4,749,294 $ 1,675,606 6,516,517 5,027,421 3,870,934 1,489,096 8,190 1,107,094 2,356 156 928,618 2,308 1,997 876,363 2,112 8,034 178,476 48 25.3% 221.4% (4.6)% 126.8% (58.7)% 94.0% 64.0% 66.3% 4.0% (100.0)% n.m. n.m. — n.m. 45.7% 269.8% 211.7% 205.0% n.m. 194.9% 213.8% 25.0% — — 62.9% 46.0% 213.7% 168.9% 164.3% n.m. 206.2% 28.1% 29.6% n.m. 19.2% 2.1% (1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. (2) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [March 31, 2020 – 15%]. (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, 2020 were incurred in connection with our UK & Europe wealth management operations, as well as real estate and other integration costs related to the acquisition of Patersons in Australia. Restructuring costs for the year ended March 31, 2019 were incurred in connection with our UK & Europe capital markets operations. (5) On March 18, 2021, the Company announced its intention to redeem the entire $132.7 million principal amount of its 6.25% convertible unsecured senior subordinated debentures. The redemption was completed on April 9, 2021. The Company recorded $4.4 million of loss and other costs in connection with extinguishment of the convertible debentures. (6) Represents the Company’s equity portion of the net loss of its investment in Canaccord Genuity Growth II Corp. for the years ended March 31, 2021 and 2020, the Company’s equity portion of the net loss of its investments in Canaccord Genuity Growth Corp. and Canaccord Genuity Acquisition Corp. for the year ended March 31, 2019. (7) Net income and earnings per common share excluding significant items reflect tax-effected adjustments related to such items. See the Selected Financial Information Excluding Significant Items table on page 21. (8) Data includes the operating results of Hargreave Hale since September 18, 2017, Jitneytrade since June 6, 2018, McCarthy Taylor since January 29, 2019, Petsky Prunier since February 13, 2019, Thomas Miller since May 1, 2019, and Patersons since October 21, 2019. n.m.: not meaningful (percentages over 300% are indicated as n.m.) Fiscal 2021 Annual Report Canaccord Genuity Group Inc. Canaccord Genuity Group Inc. Fiscal 2021 Annual Report 1 For several years, we have focused on driving sustainable profitability and earnings growth and achieving a business mix that can perform in all markets. Our record fiscal 2021 results are a testament to the power of our platform, and the remarkable efforts by our employees across the Company. Revenue (C$ millions, f iscal years ended March 31) Revenue (C$ millions, fiscal years ended March 31) 2021(1) 2020 2019 2018 2017 $1,223.9 $1,190.6 $1,022.9 $879.5 Net Income (Loss)(1) Income before Income Taxes(1) (C$ millions, f iscal years ended March 31) (C$ millions, fiscal years ended March 31) 2021 2020 2019 2018 2017 $123.1 $135.6 $110.6 $61.3 Diluted Earnings (Loss) Per Share(1) Diluted Earnings Per Share(1) (C$, f iscal years ended March 31) (C$, fiscal years ended March 31) 2021 2020 2019 2018 2017 $0.81 $0.80 $0.59 $0.32 $1,993.5 $386.1 $2.48 (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. Contents Introduction Global Performance Letter from the President & CEO Letter from the Chairman Canaccord Genuity Wealth Management Canaccord Genuity Capital Markets MD&A and Financials 1 2 4 7 8 10 13 Shareholder Information Inside Back Cover 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 wealth management offices located in Canada, the UK, Guernsey, Jersey, the Isle of Man and Australia. The international capital markets division operates in North America, the UK & Europe, Asia, Australia and the Middle East. Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the TSX. Fiscal 2021 Annual Report Canaccord Genuity Group Inc.2 Fiscal 2021 Annual Report Canaccord Genuity Group Inc. Global Performance By firmly entrenching our position as a leading independent mid- market investment bank and wealth management firm in each of our geographies, we have significantly increased the value of our Company. $2.0 billion fiscal 2021 revenue $2.48 fiscal 2021 diluted earnings per share(1) 214% year-over-year pre-tax net income(1) growth in fiscal 2021 25% year-over-year increase in common share dividend payout 15%fiscal 2021 reduction in average outstanding common shares (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. Canaccord Genuity Group Inc. Fiscal 2021 Annual ReportFiscal 2021 Annual Report Canaccord Genuity Group Inc. 3 With a balanced business mix, our revenue and net income contributions are broad based, without concentration in any business or geography. Over the year, we have proven our ability to support substantially higher business activity levels over a relatively fixed cost base. Fiscal 2020 EPS(1) Contribution Fiscal 2021 Revenue by Division by Business Segment • 66% CG Capital Markets • 33% CG Wealth Management • 1% Corporate and Other Fiscal 2021 Revenue by Geography Fiscal 2021 Revenue by Geography • 39% Canada • 30% United States • 19% UK & Europe • 12% Australia Income (Loss) before Income Taxes(1) – Income before Income Taxes(1) – Contributions by Business Segment Contributions by Business Segment (C$ millions, fiscal years ended March 31) (C$ millions, f iscal years ended March 31) 2021 $324.9 $135.3 2020 $59.8 $80.2 2019 $80.4 $75.4 2018 $62.5 $57.5 2017 $46.4 $29.5 • CG Capital Markets • CG Wealth Management Non-compensation Expenses as a % of Revenue(1) Non-Compensation Expenses as a Percentage of Revenue(1) (Fiscal years ended March 31) (Fiscal years ended March 31) 2021 2020 2019 2018 2017 19.0% 29.6% 28.4% 28.0% 31.5% Total Expenses as a Percentage of Revenue(1) Total Expenses as a Percentage of Revenue(1) (Fiscal years ended March 31) (Fiscal years ended March 31) 2021 2020 2019 2018 2017 80.6% 89.9% 88.6% 89.2% 93.0% (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. Canaccord Genuity Group Inc. Fiscal 2021 Annual Report4 Letter from the President & CEO Fellow Shareholders, It has been over a year since we were confronted with a global pandemic that introduced new personal and professional challenges for all our employees and clients. While we could never have predicted that we would be working in a remote environment for this long, we were absolutely correct in our prediction that we would emerge as a stronger company. In fiscal 2021, we delivered our strongest financial performance on record, with revenue of $2.0 billion, reflecting record contributions from both our capital markets and wealth management segments. We also reached several important valuation milestones, a testament to our improved market position and the breadth and quality of our earnings. Client assets in our wealth management businesses reached a new record of $89 billion, and our capital markets businesses are among the league table leaders in each of our key geographies. During the year, the market capitalization of our Company surpassed $1 billion, and CF common shares were added to the TSX Composite Index. What is equally impressive is the breadth of the operating performance that was achieved across our Company. Over the fiscal year, we operated at a higher level than in any other period in our history when measured by employee productivity, revenue, net income, profit margins and earnings per share. Excluding significant items(1), we earned firm-wide pre-tax net income of $386 million, an amount that exceeds all prior fiscal year results. This translated to diluted earnings per share of $2.48, our highest on record. Without a doubt, the extraordinary market opportunity that benefited small- and mid-cap industries and investors was an important driver of our revenue and profitability growth over the year, but perhaps more importantly, we continued to capture market share across regions and verticals, further entrenching our position as a leading mid-market investment bank and wealth management firm in each of our key geographies. We set out to make CG the brand that entrepreneurs know will provide the best support at every stage of the business cycle – and we believe we have achieved this. Our global capital markets business earned revenue of $1.3 billion for the fiscal year, half of which was attributable to investment banking activities. The breadth of our equity capital markets capabilities – including mid- market IPOs, follow-ons and SPACs – positioned us to capture a meaningful share of the strong levels of market issuance over the 12-month period. Over the fiscal year, we helped raise proceeds of $86 billion for growth companies, with continued strong activity levels in the life sciences, mining and technology sectors – all historic areas of CG strength, where we are also differentiated by our globally aligned capabilities. Our US, Canadian and Australian capital markets businesses all earned record revenues, with year-over- year increases of 69%, 117% and 376%, respectively. When heightened volatility created difficult business conditions for advisory activities, our trading teams outperformed, helping to offset that weakness. Trading revenue increased by 126% compared to the prior fiscal year, primarily driven by contributions from our US International Equities Desk. The second half of the fiscal year presented an opportunity for us to deliver on a strong pipeline of higher margin advisory activity – most notably in our US and Canadian operations. As a result, firm-wide revenue from this segment for the fiscal year was just 6% lower than the previous year’s record result, notwithstanding the COVID-related impacts in the first half of the year. Fiscal 2021 Annual Report Canaccord Genuity Group Inc.Canaccord Genuity Group Inc. Fiscal 2021 Annual Report5 LETTER FROM THE PRESIDENT & CEO The outstanding performance delivered from across our global capital markets division contributed to a record pre-tax profit margin(1) of 25% for the fiscal year. While margins in this segment will fluctuate with the pace of activities in our core sectors and geographies, we remain focused on generating a greater portion of our long-term earnings from higher margin offerings, as well as developing ancillary products and services that complement our mid-market strengths and support continued market share growth. While fiscal 2021 was undoubtedly an outlier year for capital markets activities, our global wealth management businesses continued to deliver impressive growth. Firm-wide client assets grew to a record $89 billion, a testament to the exemplary drive and capabilities of our teams in all regions. Excluding significant items(1), our combined wealth management businesses contributed pre-tax net income of $135 million, an increase of 69% compared to the prior fiscal year, and the pre-tax profit margin for this segment increased to 20%, reflecting margin growth from all regions. The exceptional backdrop for capital raising activities helped to drive a landmark performance for our Canadian wealth management business. Client assets grew to a record $32 billion and the average book per Investment Advisory Team increased by 75% over the fiscal year. This team also achieved impressive growth in its discretionary assets under management, which grew by 57% compared to last year. The unparalleled advantages and opportunities provided by our platform have been consistently evidenced in the multi-year growth of this business, making CG the most profitable independent wealth management business in the country, and this has supported our recruiting activities. Our wealth management business in the UK & Crown Dependencies has been a steady contributor of growth and profitability through a range of market environments, and fiscal 2021 was no exception. During the year, we were very pleased to announce a significant investment from HPS, which adds a partner to help fund the future growth of this business at the regional level. While 78% of the net income contribution from this business will be allocated to group results going forward, we expect that this development will ultimately drive stronger net income contributions to our overall results. In April, we announced the acquisition of the investment management business of Adam & Company, marking our entry into the Scottish market with a deeply established and strong brand. We look forward to increasing our presence in this market and expanding on the success we have achieved to date. And finally, our Australian wealth management business has been an increasingly positive contributor of revenue and net income since we expanded this business with a transformational acquisition in 2019. Having paid $23 million for this asset, we are very pleased to report annual revenue of $62 million. With CG gaining momentum as a premier brand for small- and mid-cap investors in the region, managed client assets in this business increased by 76% year over year, and this growth is helping to drive compelling recruiting opportunities in key Australian markets. Critical investments to advance our technology offering and infrastructure have been instrumental to our ability to support the growth of our wealth management businesses. We will continue to develop our technology and product offering to meet the increasingly complex needs of our clients, and improve the advisor experience. We will also continue to pursue targeted growth in each of these businesses, and we are optimistic that this segment will generate sustainable margin growth as we increase contributions from stable and recurring revenue sources. (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. Fiscal 2021 Annual Report Canaccord Genuity Group Inc.Canaccord Genuity Group Inc. Fiscal 2021 Annual Report6 LETTER FROM THE PRESIDENT & CEO Our stable global franchise and enhanced profit margins have allowed us to deliver stronger returns for our shareholders. The dynamic nature of the global capital markets requires us to maintain a healthy level of capital flexibility to support our business activities, and this was especially important in a year where we experienced record levels of underwriting and trading activity. Having said that, we have made it a strong priority to deploy capital in ways that will provide increased returns for our shareholders. During the year, we increased our full-year common share dividend payout by 25% compared to the prior fiscal year. We also announced the planned redemption of our unsecured senior subordinated convertible debentures, which were set to mature in 2023, resulting in a 15% year- over-year reduction in our average fully diluted common shares. Factoring in the redemption of our convertible debentures, our fiscal 2021 capital deployment initiatives will result in a return of $192 million to CF shareholders and debenture holders. Our Company has continued to perform exceptionally well, and we are also benefiting from the improved efficiencies, collaboration and other positive changes that have emerged from the environment that the global pandemic imposed upon all of us. While the pandemic is not totally behind us, it is impossible not to get excited about the outlook for our business. With a defensive revenue mix and a relentless drive to be the very best in our areas of focus, we are structured to deliver stability in times of stress, and increased value when markets are active. We expect that certain market tailwinds could moderate in coming quarters, but several factors point towards the continuance of a supportive marketplace for growth and value stocks in our core mid-market sectors. The increasing momentum of global vaccine rollouts has also given business leaders and market participants good reason for optimism. Our strong financial position provides us the flexibility to operate effectively and harness opportunities for growth as we help our clients manage through any new market challenges. Perhaps most importantly, we are very pleased to be entering our new fiscal year with a substantially stronger global wealth management franchise and fewer common shares outstanding on a fully diluted basis, factors that we expect will contribute to enhanced earnings in any market backdrop. The business we have built is clearly demonstrating that we will have higher highs in buoyant markets, and higher lows in softer markets. I am confident that the strategic decisions we have made to transform our business mix and intensify our focus on our core capabilities, coupled with disciplined investments in our growth, will continue to deliver outstanding results for our shareholders. In closing, I would like to thank our Board of Directors for their wise counsel and support as we navigated the unique confluence of challenges and opportunities throughout this historic period. And to my fellow shareholders, thank you for your continued support. In everything we do, we are driven to increase the long-term value of our business and create enduring value for our shareholders. Wishing you continued safety and health, (signed) Dan Daviau President & CEO Canaccord Genuity Group Inc. Fiscal 2021 Annual Report Canaccord Genuity Group Inc.Canaccord Genuity Group Inc. Fiscal 2021 Annual Report7 Letter from the Chairman The exceptional financial results that we delivered in fiscal 2021 reflect the culmination of our long-standing commitment to – and execution of – a consistent strategy for our business, while fostering an enduring culture of partnership and shareholder alignment. We have consistently improved our earnings stability over several years by creating a lower risk business model with growing contributions from wealth management, and by going deeper into our core capital markets strengths, to solidify our mid-market leadership. With this disciplined focus, we have strengthened our operating leverage and maintained ample liquidity and financial flexibility. Underpinning our earnings growth is a strong and properly managed balance sheet, which provides agility to support the entrepreneurial drive that has been strongly evidenced in every area of our business, most notably over the course of fiscal 2021. Our platform has proven that it can support substantially increased business activities over a relatively fixed cost base. As a result, we have established a higher foundation from which to grow our long-term earnings. The Board has made it a strong priority to deploy capital in ways that increase the long-term value of our business and optimize value for our fellow shareholders. The continued growth of our global wealth management businesses has supported steady dividend growth over the past three years, with our most substantial increases in fiscal 2021. We also reduced our average diluted common share count by 15% over the fiscal year. While substantially higher capital markets activities have increased the demands on our capital, we remained active in our share buyback programs and we look forward to continued buybacks over the coming year. We will always be firmly rooted in our core CG values, but we also recognize that our Company has evolved. By committing to investing in our people and strengthening our culture, we have enhanced our operational resilience and made CG an increasingly stronger business. The Board is committed to operating with a greater consciousness of our impact on our people, our communities and the planet. By empowering our businesses and individuals to direct their charitable and volunteer efforts towards the causes and initiatives that will have a meaningful impact in their respective communities, we have seen extraordinary contributions from all regions. We have also made meaningful progress on increasing the diversity of our talent mix across the organization as we work to cultivate a strong pipeline of future leaders, and this initiative has also extended to our external efforts. Following the success of our Canadian launch, we expanded this year’s Canaccord Genuity Advisory Program for Women Entrepreneurs to welcome applicants from all regions where CG operates. This program demonstrates our commitment to supporting global entrepreneurs, while championing women on their path to participation in the capital markets. As our Company has evolved, the Board has continued to prioritize strong governance and diverse perspectives. Beginning in fiscal 2021, Jill Denham assumed the role of Lead Independent Director. In March, we announced the resignation of Eric Rosenfeld, and we thank him for his contributions during his brief tenure as an Independent Director. And lastly, we look forward to nominating Jo-Anne O’Connor as an Independent Director at our upcoming Annual General Meeting. Jo-Anne brings more than 35 years of financial services experience to her role, having held senior positions in Institutional Equity Trading, in addition to serving as Managing Director and Chief Operating Officer of a family office and more recently as President and CEO of a publicly traded investment company. With these changes, our Board of Directors will have 40% female representation, with 50% female representation at the independent level. In closing, I would like to thank Dan and the Global Operating Committee for their exemplary leadership throughout what continues to be a historically significant period for our business and our industry. And on behalf of the Board of Directors, I would also like to thank every member of the CG team for their unwavering commitment to our clients and our shareholders. We are grateful for everything you do. And to my fellow shareholders, thank you for your continued support. (signed) David Kassie Chairman Canaccord Genuity Group Inc. Fiscal 2021 Annual Report Canaccord Genuity Group Inc.Canaccord Genuity Group Inc. Fiscal 2021 Annual Report8 Fiscal 2021 Annual Report Canaccord Genuity Group Inc. Canaccord Genuity Wealth Management The continued growth and success of our wealth management division is fundamental to our long-term strategy, and we have a proven track record of creating substantial value in this segment. Over 10+ years, the Company has invested more than $350 million in acquisitions, recruiting and technology to support the growth of these businesses. Today, our global wealth management businesses are capable of delivering consistent growth and profitability through a range of market environments. $88.8 billion in total client assets Firm-wide client assets have grown steadily and substantially for more than six consecutive years, from $32 billion in fiscal 2016 to $89 billion in fiscal 2021. 20% fiscal 2021 pre-tax profit margin(1) Although the lower interest rate environment continues to reduce profitability associated with our deposit and lending activities, each of our geographies has increased adjusted pre-tax profit margins. A GROWING CONTRIBUTOR TO FIRM-WIDE EARNINGS GROWTH AND STABILITY Over the last five years, our combined wealth management businesses have steadily increased revenue and net income contributions, improving the strength and stability of our earnings. We will continue to invest with discipline in the growth of this segment, and advance our recruiting, client experience and organic growth initiatives to further enhance our long-term earnings potential. Global Wealth Management Revenue(1) Global Wealth Management Revenue(2) (C$ millions, fiscal years ended March 31) (C$ millions, f iscal years ended March 31) Global Wealth Management Income Global Wealth Management Income before Income Taxes(1)(2) before Income Taxes(1)(2) (C$ millions, fiscal years ended March 31) (C$ millions, f iscal years ended March 31) 2021 2020 2019 2018 2017 $663.6 $511.4 $461.8 $370.3 $267.1 $135.3 2021 2020 2019 2018 2017 $29.5 $80.2 $75.4 $57.5 (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. (2) Beginning in Q3/20, amounts include Australia wealth management. Canaccord Genuity Group Inc. Fiscal 2021 Annual ReportFiscal 2021 Annual Report Canaccord Genuity Group Inc. 9 UK & CROWN DEPENDENCIES – BUILDING UPON EXCEPTIONAL GROWTH Fiscal 2021 revenue in this business was $277.3 million, and, excluding significant items(1), the pre-tax profit margin was 23.5%. A significant investment from HPS has added a regional partner to support future growth, and we will expand into Scotland with our acquisition(2) of the investment management business of Adam & Company. UK & Europe Wealth Management Client Assets(1) UK & Crown Dependencies Wealth Management (C$ billions and £ billions, f iscal years ended March 31) Client Assets(3) (C$ billions and £ billions, fiscal years ended March 31) UK & Europe Wealth Management Income UK & Crown Dependencies Wealth Management before Income Taxes(2) Income before Income Taxes(1) (C$ millions, f iscal years ended March 31) (C$ millions, fiscal years ended March 31) 2021 2020 2019 2018 2017 $52.3 | £30.2 $39.9 | £22.7 $44.2 | £25.4 $44.9 | £24.8 $24.5 | £14.7 2021 2020 2019 2018 2017 $65.3 $56.5 $48.5 $37.4 $27.6 CANADA – A LEADING INDEPENDENT WEALTH MANAGER IN THE COUNTRY With a robust environment for new issue activity, fiscal 2021 revenue in this business grew by 55% to $324.0 million, and, excluding significant items(1), the pre-tax profit margin was 19.3%. Our growth in this region has outpaced the broader industry, and we continue to build upon our recruiting and organic growth initiatives. Canada Wealth Management Client Assets(1) (C$ billions, f iscal years ended March 31) Canada Wealth Management Client Assets(3) (C$ billions, fiscal years ended March 31) Australia Wealth Management Client Assets(2) (C$ millions, f iscal years ended March 31) Canada Wealth Management Income before Income Taxes(1) (C$ millions, fiscal years ended March 31) 2021 2020 2019 2018 2017 $18.4 $20.7 $15.6 $13.2 $32.2 2021 2020 2019 2018 2017 $2.0 $22.7 $26.8 $20.2 $62.6 AUSTRALIA – GAINING MOMENTUM AS A PREMIER BRAND FOR SMALL- AND MID-CAP EQUITIES Fiscal 2021 revenue in this business grew to $62.2 million, and, excluding significant items(1), the pre-tax profit margin was 11.9%. We expect to continue growing client assets in this business organically, and through targeted recruiting and tuck-ins. Canada Wealth Management Income (Loss) Australia Wealth Management Revenue(3) Australia Wealth Management Client Assets(3) Australia Wealth Management Income before (C$ millions, f iscal years ended March 31) before Income Taxes(2) Income Taxes(1)(4) (C$ billions, fiscal years ended March 31) (C$ millions, f iscal years ended March 31) (C$ millions, fiscal years ended March 31) $4.2 2021 $7.4 $2.4 2020 $1.0 2021 2020 2019 2018 2017 $0.9 $0.8 $0.9 (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. (2) Closing expected to occur end of Q2 fiscal 2022, subject to regulatory approval and other customary closing conditions. (3) Assets under administration, management and management contract. (4) Australia wealth management revenue was previously recorded as part of Canaccord Genuity Capital Markets Australia. Commencing in Q3/20, it is disclosed as a separate operating segment. Fiscal 2020 income before income taxes reflects results only subsequent to the completion of the Patersons acquisition on October 19, 2019. Canaccord Genuity Group Inc. Fiscal 2021 Annual Report10 Fiscal 2021 Annual Report Canaccord Genuity Group Inc. Canaccord Genuity Capital Markets With a disciplined focus in key growth sectors of the global economy, we are extracting greater value from our existing global capital markets operations and doing more for our clients in our core areas of strength. We have also increased contributions from higher margin advisory activities. As a result, we have been able to achieve substantial revenue and profitability growth in this segment with minimal investments in growth. $86.1 billion in proceeds raised in fiscal 2021 CG offers unparalleled origination and placement capability in key financial markets around the globe. 713transactions in fiscal 2021 We are leaders in facilitating a robust market for small- and mid-size companies in dynamic growth and value sectors. Global Capital Markets Revenue (C$ millions, f iscal years ended March 31) Global Capital Markets Revenue (C$ millions, fiscal years ended March 31) Global Capital Markets Income before Income Taxes(1) (C$ millions, fiscal years ended March 31) 2021 2020 2019 2018 2017 $689.5 $704.3 $637.6 $598.4 $1,312.2 2021 $324.9 2020 $59.8 2019 $80.4 2018 $62.5 2017 $46.4 Fiscal 2021 was a remarkably strong year for CG Capital Markets. Broad market tailwinds supported increased demand for small- and mid-cap equities, and we continued to capture market share across regions and verticals. (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. Canaccord Genuity Group Inc. Fiscal 2021 Annual ReportzFiscal 2021 Annual Report Canaccord Genuity Group Inc. 11 Our global capital markets business earned record revenue of $1.3 billion, an increase of 90% compared to the prior fiscal year. Revenue earned from investment banking and trading activity increased by 232% and 126%, respectively. RECORD FISCAL 2021 INVESTMENT BANKING REVENUE Each of our capital markets businesses in Canada, the US, the UK & Europe and Australia is a strong regional competitor, and we outperform in the areas where we have global capability. Over fiscal 2021, we benefited from continued strong activity levels in the life sciences, technology and mining sectors, all historical areas of CG strength, where we are differentiated by our cross-border capabilities. BUILDING UPON OUR ESTABLISHED MID-MARKET STRENGTHS Excluding significant items(1), the fiscal 2021 pre-tax profit margin in our capital markets division was 24.8%. Our established track record of success in equity capital markets has contributed to complementary growth of our advisory business, an important contributor to margin growth in this segment. Looking forward, we will continue to expand our suite of ancillary products and services and further exploit our strengths in complementary risk capital offerings. CLEAR VALUE PROPOSITION Growing companies and mid-market investors have unique needs and tend to be underserved by large financial institutions and banks – so we’ve made it our mission to exceed their expectations. Every CG client has access to deep global expertise, resources and relationships that our competitors simply cannot match. Independent advice and a globally integrated service model are the hallmarks of what sets us apart and enables us to lead the market in key growth sectors of the global economy. Fiscal 2021 Capital Markets Fiscal 2020 Capital Markets Revenue by Region Revenue by Region • 45.0% United States • 33.8% Canada • 13.9% Australia • 7.3% UK, Europe and Dubai Fiscal 2021 Capital Markets Fiscal 2020 Capital Markets Revenue by Activity Revenue by Activity Investment Banking • 49.1% • 18.7% Trading • 16.2% Commissions and Fees • 14.7% Advisory • 1.3% Interest & Other (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures and a reconciliation of net income under IFRS to net income excluding significant items in our annual MD&A. Canaccord Genuity Group Inc. Fiscal 2021 Annual Reportz12 Fiscal 2021 Annual Report Canaccord Genuity Group Inc. A Culture of Partnership and Accountability The Canaccord Genuity brand is built on the idea that employees across our Company are driven to always do better – for our clients, our shareholders and our colleagues. / We are partners / We are entrepreneurial / We are collegial / We work hard / We operate with integrity / We are earnings focused CG PRINCIPLES OF CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY ESG approaches to supporting the wellbeing of our employees, clients and communities OPERATE WITH INTEGRITY We are committed to conducting our business in accordance with all applicable laws, rules and regulations and the highest ethical standards. RESPECT PEOPLE AND COMMUNITIES We think locally and globally, understanding the impact that our actions and behaviours may have on the success and wellbeing of our colleagues, clients and partners in all the regions where we operate. RESPECT OUR PLANET In our efforts to create enduring value, we take care to reduce the impact of our day-to-day business activities on the environment. More information is available at: www.canaccordgenuity.com/investor-relations/investor-resources/corporate-governance Fiscal 2021 MD&A 13 Financial Review 14 14 15 17 Management’s Discussion and Analysis Non-IFRS Measures Bsiness Overview Core Business Performance Highlights For Fiscal 2021 Market Environment During Fiscal 2021 Fiscal 2022 Outlook Financial Overview Quarterly Financial Information Business Segment Results Financial Condition Off-Balance Sheet Arrangements Bank Indebtedness And Other Credit Facilities Liquidity And Capital Resources Preferred Shares Convertible Debentures Outstanding Share Data 18 19 20 25 29 39 40 40 41 41 42 42 43 45 46 50 50 50 50 51 55 55 55 56 59 102 108 Share-Based Payment Plans Related Party Transactions Critical Accounting Policies And Estimates Financial Instruments Adoption Of New And Revised Standards 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 Auditor’s 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. These include business and economic conditions and the potential continued impacts of the coronavirus (COVID-19) pandemic on our business operations, financial results and financial condition and on the global economy and financial market 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 2022 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 and the potential continued impacts of the coronavirus (COVID-19) pandemic on our business operations, financial results and financial condition and on the global economy and financial market conditions 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 Management’s Discussion and Analysis (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 2022 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. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 14 Management’s Discussion and Analysis Fiscal year 2021 ended March 31, 2021 – this document is dated June 1, 2021. 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, 2021 compared to the preceding fiscal year, with an emphasis on the most recent year. Unless otherwise indicated or the context otherwise requires, the “Company” or “Canaccord Genuity Group” refers to Canaccord Genuity Group Inc. and its direct and indirect subsidiaries. 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, 2021 and 2020, beginning on page 59 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, 2021 and 2020 are prepared in accordance with International Financial Reporting Standards (IFRS). Non-IFRS Measures Certain non-IFRS measures are utilized by the Company as measures of financial performance. Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Non-IFRS measures presented include assets under administration, assets under management, book value per diluted common share, 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 the exercise of options and warrants, issuance of common shares in connection with deferred consideration related to acquisitions, settlement of a promissory note issued as purchase consideration in shares at the Company’s option, and conversion of convertible debentures divided by the number of diluted common shares that would then be outstanding including estimated amounts in respect of share issuance commitments including options, warrants, other share-based payment plan, deferred consideration related to acquisitions, convertible debentures and a promissory note, as applicable, and adjusted for shares purchased or committed to be 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 – Australia and AUM – UK & Europe are the market value of client assets managed and administered by the Company from which the Company earns commissions and 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 – Australia and AUM – UK & Europe may differ from the methods used by other companies and therefore may not be comparable to other companies. Management uses these measures to assess operational performance of the Canaccord Genuity Wealth Management business segment. AUM – Canada is also administered by the Company and is included in AUA – Canada. Financial statement items that exclude significant items are non-IFRS measures. Significant items include restructuring costs, amortization of intangible assets acquired in connection with a business combination, impairment of goodwill and other assets and acquisition-related expense items, which include costs recognized in relation to both prospective and completed acquisitions, gains or losses related to business disposals including recognition of realized translation gains on the disposal of foreign operations, certain accounting charges related to the change in the Company’s long-term incentive plan (LTIP) as recorded with effect on March 31, 2018, certain incentive-based costs related to the acquisitions and growth initiatives in the UK & Europe wealth management business, loss and other costs related to the extinguishment of convertible debentures as recorded for accounting purposes, certain expense items, typically included in development costs, which are considered by management to reflect a singular charge of a non-operating nature, as well as certain fair value adjustments on certain illiquid or restricted marketable securities as recorded for IFRS reporting purposes but which are excluded for management reporting purposes and are not used by management to assess operating performance. See the Selected Financial Information Excluding Significant Items table on page 21. Management believes that these non-IFRS measures allow for a better evaluation of the operating performance of the Company’s business and facilitate meaningful comparison of results in the current period to those in prior periods and future periods. Figures that exclude significant items provide useful information by excluding certain items that may not be indicative of the Company’s core operating results. A limitation of utilizing these figures that exclude significant items is that the IFRS accounting effects of these items do in fact reflect the underlying financial results of the Company’s business; thus, these effects should not be ignored in evaluating and analyzing the Company’s financial results. Therefore, management believes that the Company’s IFRS measures of financial performance and the respective non-IFRS measures should be considered together. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 15 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 wealth management offices located in Canada, the UK, Guernsey, Jersey, the Isle of Man and Australia. The Company’s international capital markets division operates in North America, the UK & Europe, Asia, Australia and the Middle East. 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. Operating results of Jitneytrade Inc., Finlogik Capital Inc. and Finlogik Inc. (collectively referred to as “Jitneytrade”) since the closing date of June 6, 2018 are included as part of Canaccord Genuity Capital Markets Canada. In addition, operating results of Petsky Prunier LLC (“Petsky Prunier”) since the closing date of February 13, 2019 are included as part of Canaccord Genuity Capital Markets US. Included as part of the Canaccord Genuity UK & Europe Wealth Management segment are the operating results of Hargreave Hale Limited (“Hargreave Hale”) since September 18, 2017, the operating results of McCarthy Taylor Limited (renamed as CG McCarthy Taylor Limited) (“McCarthy Taylor”) since the closing date of January 29, 2019, and the operating results of Thomas Miller Wealth Management Limited (renamed as CG Wealth Planning Limited) (“Thomas Miller”) since the closing date of May 1, 2019. Operating results of Patersons Securities Limited (renamed as Canaccord Genuity Financial Limited)(“Patersons”) since the closing date of October 21, 2019, are included as part of the Canaccord Genuity Australia wealth management segment. ABOUT CANACCORD GENUITY GROUP INC.’S OPERATIONS Canaccord Genuity Group Inc.’s operations are divided into two business segments: Canaccord Genuity Capital Markets (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 Capital Markets Canaccord Genuity Capital Markets is the global capital markets division of Canaccord Genuity Group Inc., which offers mid- market institutional and corporate clients idea-driven investment banking, merger and acquisition, research, sales and trading services with capabilities in North America, the UK & Europe, Asia, Australia and the Middle East. We are committed to providing valued services to our clients throughout the entire lifecycle of their business and operating as a gold standard independent investment bank – expansive in resources and reach, but targeted in industry expertise, market focus and individual client attention. 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 has Investment Advisors (IAs) and professionals in Canada, the UK, Jersey, Guernsey, the Isle of Man and Australia. 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 Capital Markets 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. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 16 Management’s Discussion and Analysis Corporate structure US sub-group Canaccord Genuity Group Inc. UK and Europe Wealth Management sub-group UK and Europe Capital Markets sub-group Australia sub-group 80% Jitneytrade Inc. (Canada) Canaccord Genuity Corp. (Canada) Canaccord Genuity Wealth Management (USA) Inc. Canaccord Genuity Petsky Prunier LLC (US) Canaccord Genuity LLC (US) Canaccord Genuity Wealth (International) Limited (Crown Dependencies) Hargreave Hale Limited (UK) CG Wealth Planning Ltd. (formerly Thomas Miller Wealth Management Limited) Canaccord Genuity Wealth Limited (UK) Canaccord Genuity (Dubai) Ltd. Canaccord Genuity Limited (UK) Canaccord Genuity Asia (China and Hong Kong) Canaccord Genuity (Australia) Limited Canaccord Genuity Financial Limited (Australia) The chart shows principal operating companies of Canaccord Genuity Group as of March 31, 2021. At March 31, 2021, the Company owned 80% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd., and through that ownership, an 80% indirect interest in Canaccord Genuity (Australia) Limited and Canaccord Genuity Financial Limited [previously Patersons Securities Limited] [March 31, 2020 – 80%], but for accounting purposes, as of March 31, 2021, the Company is considered to have an 85% interest because of shares held in an employee trust controlled by Canaccord Financial Group (Australia) Pty Ltd. [March 31, 2020 – 85%]. The operations of CG McCarthy Taylor Ltd. are now conducted through CG Wealth Planning Ltd. BUSINESS ACTIVITY Our business is affected by 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 its industry sector coverage and its international scope. To improve recurring revenue streams and offset the inherent volatility of the capital markets business, the Company has taken steps to increase the scale of its global wealth management operations. Historically, the Company’s diversification across major financial centres has allowed us to benefit from strong equity markets in certain regions and improve our capability for identifying and servicing opportunities in regional centres and across our 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 disciplined capital strategy allows the Company to remain competitive in today’s changing financial landscape. During fiscal 2021, the Company’s capital markets activities were focused on the following sectors: Healthcare & Life Sciences (which include cannabis-related companies), Technology, Transportation & Industrials, Financials, Metals & Mining, Energy, Diversified, Consumer & Retail, Real Estate and Sustainability. 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. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 17 Core Business Performance Highlights for Fiscal 2021 CANACCORD GENUITY WEALTH MANAGEMENT Globally, Canaccord Genuity Wealth Management generated revenue of $663.6 million during fiscal 2021 and, excluding significant items, recorded net income before taxes of $135.3 million(1) • Canaccord Genuity Wealth Management (North America) generated $324.0 million in revenue and, after intersegment allocations, recorded net income before taxes of $62.6 million • Wealth management operations in the UK & Europe generated $277.3 million in revenue and, after intersegment allocations and excluding significant items, recorded net income before taxes of $65.3 million in fiscal 2021(1) • Wealth management operations in Australia generated revenue of $62.2 million and, after intersegment allocations and excluding significant items, recorded net income before taxes of $7.4 million in fiscal 2021(1) • Firmwide client assets were $88.8 billion at March 31, 2021 representing an increase of $28.0 billion or 46.2% from $60.7 billion at March 31, 2020.(2) Client assets across the individual business units as at March 31, 2021 were as follows: • $32.2 billion in North America, an increase of $13.8 billion or 74.8% from March 31, 2020(2) • $52.3 billion (£30.2 billion) in the UK & Europe, an increase of $12.4 billion (£7.5 billion) or 31.1% from $39.9 billion (£22.7 billion) at the end of the previous fiscal year.(2) • $4.2 billion in Australia held in our investment management platform, an increase of $1.8 billion or 76.2% from March 31, 2020(2) CANACCORD GENUITY CAPITAL MARKETS Globally, Canaccord Genuity Capital Markets generated revenue of $1.3 billion during fiscal 2021 and, excluding significant items, recorded net income before taxes of $324.9 million.(1) • Canaccord Genuity Capital Markets led 412 transactions globally, each over $1.5 million, to raise total proceeds of $18.1 billion for mid-market companies in our key focus sectors. • Canaccord Genuity Capital Markets participated in a total of 713 investment banking transactions globally, raising total proceeds of $86.1 billion. SUMMARY OF CORPORATE DEVELOPMENTS On August 18, 2020 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 5,390,674 of its common shares during the period from August 21, 2020 to August 20, 2021 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, 2021, there were 845,500 shares purchased and cancelled and an additional 70,000 shares purchased but not yet cancelled as of March 31, 2021. On February 3, 2021 the Company announced that HPS Investment Partners, LLC, on behalf of investment accounts and funds it manages, had agreed to invest in the Company’s wealth management division in the UK and Crown Dependencies. Subject to regulatory approval and other customary closing conditions, HPS will acquire convertible preferred shares in the amount of £125 million (C$216 million) to be issued by Canaccord Genuity Wealth Group Holdings (Jersey) Limited, the parent company of the Company’s wealth management operating subsidiaries in the UK, the Channel Islands and in the Isle of Man. The net proceeds will be distributed by Canaccord Genuity Wealth Group Holdings (Jersey) Limited to the Company and used by the Company for corporate purposes to optimize shareholder value. Completion of the transaction will occur following regulatory approval. On March 18, 2021 the Company announced its intention to redeem the entire $132,690,000 principal amount of its 6.25% convertible unsecured senior subordinated debentures due December 31, 2023 (the “Debentures”). The redemption price of the Debentures was $1,266.95 for each $1,000 principal amount of Debentures, being equal to the aggregate of (i) $1,250 per $1,000 principal amount of Debentures, and (ii) $16.95 of accrued and unpaid interest per $1,000 principal amount up to but excluding April 9, 2021. The redemption was completed on April 9, 2021. The total redemption price of $168.1 million was fully accrued as of March 31, 2021. In order to fund the redemption in part, and pursuant to the terms of a previously announced commitment letter entered into with investment funds and accounts managed or advised by HPS Investment Partners, LLC (“HPS”) on March 18, 2021, the Company entered into a credit agreement with the lenders, Lucid Agency Services Limited as administrative agent and Lucid Trustee Services Limited as security agent, for a senior secured first lien term loan facility in an aggregate principal amount of £69.0 million (C$120.0 million). This facility is intended to be repaid out of the proceeds of the convertible preferred shares to be issued by Canaccord Genuity Wealth Group Holdings (Jersey) Limited to investment funds and accounts managed by HPS on completion of regulatory approval and other customary closing conditions. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. (2) See Non-IFRS Measures on page 14. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 18 Management’s Discussion and Analysis On March 22, 2021 the Company announced that its common shares had been added to the S&P/TSX Composite Index. Subsequent to the end of fiscal 2021, on April 14, 2021 the Company provided an update on its proposed and rejected offer to acquire 100% of the outstanding shares of RF Capital Group Inc (RCG). Despite the Company’s offer to modify the terms of its proposal, including to increase the proposed offer price materially above the original proposal of $2.30 per RCG common share and to provide enhanced escrow releases for investment advisors, RF Capital’s Board of Directors refused to engage in a productive dialogue with respect to this proposed opportunity. The Company has made the decision to withdraw its proposal to acquire RF Capital Group Inc. and will continue to focus on its recruiting strategy and organic growth opportunities. On April 15, 2021, the Company announced that through its wealth management business in the UK, it had entered into an agreement with The Royal Bank of Scotland plc, which is part of the NatWest Group plc, to acquire the private client investment management business of Adam & Company. The acquisition expands the Company’s UK wealth management footprint into Scotland and is expected to increase client assets by approximately £1.7 billion (C$2.9 million). Closing is subject to regulatory approval and is expected to take place at the end of the second quarter of the Company’s 2022 fiscal year. Cash consideration of £54.0 million (C$94.9 million) will be paid on closing. A retention plan will be implemented for key employees based on client assets and continued employment over a four-year period. Market Environment During Fiscal 2021 Economic backdrop The economic backdrop for our 2021 fiscal year was characterized by challenges resulting from persistent waves of COVID-19 infections and new variants, which led to recurrent lockdown measures by government authorities. Government programs to assist households and corporations, and easing financial conditions supported aggregate demand, while supply shortages and production bottlenecks in some sectors constrained economic growth. The global economy rebounded from the initial pandemic-induced shock, underpinning risk assets, and the vaccine rollout has fueled hopes that herd immunity is within reach, which would allow for broader lifting of restrictions and a return to some level of normalcy. The extent to which the Company’s business and financial condition will continue to be affected by the COVID-19 pandemic will depend on future developments including the spread of variants, efficacy of vaccines against new variants, vaccination progress and the impact of related controls and restrictions imposed by government authorities. Over the 12-month period of fiscal 2021, the S&P 500, the S&P/TSX and the MSCI world index returned 56.4%, 44.2% and 53.5% respectively. Commodity prices (+50.2%) and the Canadian dollar (+12.0%) also advanced over the same period. US Treasury bonds declined 8.1% as investors embraced the economic recovery theme despite mounting deficit/debt concerns and rising inflation expectations. Investment banking and advisory The strong performance by commodities, growth, resource and small/mid-cap equities during the second half of fiscal 2021 provided a notably favorable market environment for investment banking and advisory activities in our core focus sectors. Despite growing signs of accelerating inflation, central banks have committed to keeping an accommodative monetary stance, citing uncertainty tied to the pace of the recovery. Additional fiscal spending from governments worldwide, coupled with easy monetary conditions have prompted investors towards alternative assets and cryptocurrencies during the fiscal year. Index Value at End of Fiscal Quarter S&P IFCI Global Small Cap S&P IFCI Global Large Cap 2020-03-31 Q4/20 (Y/Y) 191.9 -26.9% 194.0 -18.6% 2020-06-30 236.0 225.8 Q1/21 (Y/Y) -8.8% -5.6% 2020-09-30 258.3 243.2 Q2/21 (Y/Y) 5.8% 7.0% 2020-12-31 Q3/21 (Y/Y) 304.3 13.9% 291.7 15.3% 2021-03-31 Q4/21 (Y/Y) 320.7 67.1% 296.7 52.9% (Q/Q) 5.4% 1.7% Our capital-raising and advisory activities are primarily focused on small- and mid-capitalization companies in specific growth sectors of the global economy. 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 and restructuring mandates. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 19 Trading Over the course of fiscal 2021, trading volumes increased in our core focus segments when compared to the previous twelve- month period. The rapidly changing economic landscape and shifts in sector leadership from growth to value-oriented groups prompted investors to adjust their asset, sector and company weightings. The outperformance of resource and small- and mid-cap equities in some of the markets in which we operate supported trading activities during the second half of the fiscal year. Looking ahead, we expect that the economy will re-open for service-related sectors, adding more momentum to global growth and value sectors. Additionally, a global re-stocking and capex cycle will continue to support commodity prices and trading activities for resource-centric small/mid-cap stocks. Average Value During Fiscal Quarter/Year Russell 2000 S&P 400 Mid Cap FTSE 100 MSCI EU Mid Cap S&P/TSX Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 31-Mar-20 (Y/Y) 30-Jun-20 (Y/Y) 30-Sep-20 (Y/Y) 31-Dec-20 (Y/Y) 31-Mar-21 (Y/Y) (Q/Q) 31-Mar-21 1508.0 -0.1% 1319.0 -14.9% 1871.8 1.4% 1663.4 -13.2% 1511.1 1871.2 -1.5% -2.7% 1765.8 11.0% 2195.5 45.6% 24.3% 2116.9 6.6% 2498.9 33.5% 18.0% 1695.4 2035.5 FY21 (Y/Y) 9.7% 5.8% 6867.8 -2.7% 5980.8 -18.7% 6057.8 -17.7% 6201.6 -15.4% 6664.3 -3.0% 1095.3 16204.3 6.6% 3.7% 979.6 14814.8 -9.0% -9.5% 1078.8 16231.1 -0.4% -1.5% 1149.8 16850.4 1.0% 0.4% 1257.7 14.8% 18256.2 12.7% 7.5% 9.4% 8.3% 6223.7 -13.9% 1115.9 16531.6 1.6% 0.4% Global wealth management Investors enjoyed strong and broad equity market gains during the twelve-month period, boosting the value of client assets in our wealth management businesses. The steady decline in market volatility during the fiscal year also generated positive equity fund flows for advisors. Total Return (excl. currencies) S&P 500 S&P/TSX MSCI EMERGING MARKETS MSCI WORLD S&P GS COMMODITY INDEX US 10-YEAR T-BONDS CAD/USD CAD/EUR Fiscal 2022 Outlook Q4/20 Change (Q/Q) -19.6% -20.9% -19.0% -21.3% -42.3% 14.3% -7.6% -6.1% Q1/21 Change (Q/Q) 20.5% 17.0% 16.8% 19.4% 10.5% 0.3% 3.6% 1.7% Q2/21 Change (Q/Q) 8.9% 4.7% 8.8% 8.3% 4.6% 0.1% 1.9% -2.3% Q3/21 Change (Q/Q) 12.1% 9.0% 16.1% 14.8% 14.5% -1.9% 4.6% 0.4% Q4/21 Change (Q/Q) 6.2% 8.1% 4.0% 4.7% 13.5% -6.7% 1.4% 5.6% Fiscal 2021 Change (Y/Y) 56.4% 44.2% 53.5% 55.3% 50.2% -8.1% 12.0% 5.3% Looking ahead, we expect that a broadening in the rollout of vaccines should allow several countries to lift restrictions in the second half of calendar 2021. With this, we anticipate a phasing out of several income-support programs for households and companies during our 2022 fiscal year. That said, increased labour income should offset the decline in government transfers. It is our view that strong demand, rising wages, tight capacity and supply-chain bottlenecks will support commodity, manufacturing and service prices. We also expect heightened cost-push inflation during fiscal 2022, as manufacturers, wholesalers, retailers and service providers pass-on price hikes to their customers. With the economy shifting from early to mid-cycle dynamics, it is possible that financial market volatility could increase. This would be particularly likely if growth in corporate earnings becomes challenged by lengthy supply shortages and production bottlenecks. There is also some risk that the ongoing increase in inflation will become less transitory than what central banks have projected. We view commodities and other inflation-sensitive assets as main beneficiaries of the lagged impact of hyper-monetary and fiscal reflation. This will support our agency trading activities, as investors adjust asset mix, sector and company weights against a constantly changing economic landscape. In our wealth management businesses, we anticipate a focus on equities as fixed income alternatives become less popular in an environment of rising inflation. Finally, we anticipate a favorable backdrop for investment banking and advisory activities in our core focus sectors, given continuing accommodative financial conditions, elevated company valuations, firm commodity prices and improved corporate profitability during fiscal 2022. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 20 Management’s Discussion and Analysis FINANCIAL OVERVIEW SELECTED FINANCIAL INFORMATION(1)(2)(8) (C$ thousands, except per share and % amounts, and number of employees) 2021 2020 2019 2021/2020 change For the years ended March 31 Canaccord Genuity Group Inc. (CGGI) Revenue Commissions and fees Investment banking Advisory fees Principal trading Interest Other Total revenue Expenses Compensation expense Other overhead expenses(3) Restructuring costs(4) Acquisition-related costs Loss and other costs in connection with extinguishment of convertible debentures(5) Acceleration of long-term incentive plan expense Share of loss of an associate(6) (5) Total expenses Income before income taxes Net income Net income attributable to CGGI shareholders Non-controlling interests Earnings per common share – basic Earnings per common share – diluted Dividends per common share Dividends per Series A Preferred Share Dividends per Series C Preferred Share Excluding significant items(7) Total revenue Total expenses Income before income taxes Net income Net income attributable to CGGI shareholders Net income attributable to non-controlling interests Earnings per common share – diluted Balance sheet data Total assets Total liabilities Non-controlling interests Total shareholders’ equity Number of employees $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 735,239 $ 761,551 197,092 246,801 26,288 40,717 $ 586,884 236,962 206,507 108,834 63,690 20,990 $ 556,475 294,241 142,228 125,830 51,008 20,785 2,007,688 1,223,867 1,190,567 1,227,895 398,693 — 5,922 4,354 — 922 738,313 383,527 1,921 (124) — — 207 716,625 356,240 13,070 3,064 8,608 — 304 1,637,786 1,123,844 1,097,911 369,902 269,802 $ 263,786 $ 6,016 $ 2.30 $ 2.04 $ 0.25 $ 0.9712 $ 1.2482 $ 100,023 86,554 86,490 64 0.78 0.65 0.20 0.9712 1.2482 $ $ $ $ $ $ $ $ 92,656 71,582 70,530 1,052 0.58 0.48 0.20 0.9712 1.2482 1,993,488 $ 1,223,867 1,607,398 $ 1,100,810 123,057 106,323 105,895 428 0.81 386,090 $ 285,887 $ 279,871 $ 6,016 $ 2.48 $ $ 1,190,567 $ 1,054,981 135,586 $ 107,355 $ 106,303 $ 1,052 $ 0.80 $ 7,631,801 $ 5,956,195 5,027,421 6,516,517 156 8,190 928,618 1,107,094 2,308 2,356 $ 4,749,294 3,870,934 1,997 876,363 2,112 $ $ $ $ $ $ $ $ $ $ $ $ $ 148,355 524,589 (9,415) 137,967 (37,402) 19,727 783,821 489,582 15,166 (1,921) 6,046 4,354 — 715 513,942 269,879 183,248 177,296 5,952 1.52 1.39 0.05 769,621 506,588 263,033 179,564 173,976 5,588 1.67 1,675,606 1,489,096 8,034 178,476 48 25.3% 221.4% (4.6)% 126.8% (58.7)% 94.0% 64.0% 66.3% 4.0% (100.0)% n.m. n.m. — n.m. 45.7% 269.8% 211.7% 205.0% n.m. 194.9% 213.8% 25.0% 62.9% 46.0% 213.7% 168.9% 164.3% n.m. 206.2% 28.1% 29.6% n.m. 19.2% 2.1% (1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14. (2) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [ March 31, 2020 – 15%]. (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, 2020 were incurred in connection with our UK & Europe wealth management operations, as well as real estate and other integration costs related to the acquisition of Patersons in Australia. Restructuring costs for the year ended March 31, 2019 were incurred in connection with our UK & Europe capital markets operations. (5) On March 18, 2021, the Company announced its intention to redeem the entire $132.7 million principal amount of its 6.25% convertible unsecured senior subordinated debentures. The redemption was completed on April 9, 2021. The Company recorded $4.4 million of loss and other costs in connection with extinguishment of the convertible debentures. (6) Represents the Company’s equity portion of the net loss of its investment in Canaccord Genuity Growth II Corp. for the year ended March 31, 2021 and 2020, the Company’s equity portion of the net loss of its investments in Canaccord Genuity Growth Corp. and Canaccord Genuity Acquisition Corp. for the year ended March 31, 2019. (7) Net income and earnings per common share excluding significant items reflect tax-effected adjustments related to such items. See the Selected Financial Information Excluding Significant Items table below. (8) Data includes the operating results of Hargreave Hale since September 18, 2017, Jitneytrade since June 6, 2018, McCarthy Taylor since January 29, 2019, Petsky Prunier since February 13, 2019, Thomas Miller since May 1, 2019, and Patersons since October 21, 2019. n.m.: not meaningful (percentages over 300% are indicated as n.m.) CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 21 Selected financial information excluding significant items(1) (C$ thousands, except per share and % amounts) 2021 2020 2019 2021/2020 change For the years ended March 31 Total revenue per IFRS Total expenses per IFRS $ 2,007,688 $ 1,223,867 $ 1,637,786 $ 1,123,844 $ 1,190,567 $ 1,097,911 $ $ 783,821 513,942 Revenue Significant items recorded in Corporate and Other Fair value adjustment on illiquid or restricted marketable securities Total revenue excluding significant item Expenses Significant items recorded in Canaccord Genuity Capital Markets Amortization of intangible assets Acquisition-related costs Restructuring costs Significant items recorded in Canaccord Genuity Wealth Management Amortization of intangible assets Restructuring costs Acquisition-related costs Development costs Incentive based payments related to acquisitions(2) Significant items recorded in Corporate and Other Loss and other costs in connection with extinguishment of convertible debentures(3) Total significant items – expenses Total expenses excluding significant items Net income before income taxes – adjusted Income tax expense – adjusted Net income – adjusted Net income attributable to common shareholders, adjusted Earnings per common share – basic, adjusted Earnings per common share – diluted, adjusted 14,200 — — 1,993,488 1,223,867 1,190,567 14,200 769,621 2,970 4,644 — 13,087 — 1,278 — 4,055 9,167 1,806 — 13,940 1,921 (1,930) — (1,870) 2,496 1,976 13,070 11,153 — 1,088 245 4,294 4,354 30,388 1,607,398 — 8,608 23,034 1,100,810 42,930 1,054,981 $ $ $ $ 386,090 $ 100,203 285,887 $ 270,467 2.80 $ 2.48 $ 123,057 16,734 106,323 96,491 0.98 0.81 $ $ $ $ 135,586 28,231 107,355 96,899 1.01 0.80 (6,197) 2,838 — (853) (1,921) 3,208 — 5,925 4,354 7,354 506,588 263,033 83,469 179,564 173,976 1.82 1.67 64.0% 45.7% n.m. 62.9% (67.6)% 157.1% — (6.1)% (100.0)% 166.2% — n.m. n.m. 31.9% 46.0% 213.7% n.m. 168.9% 180.3% 185.7% 206.2% (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. (2) (3) On March 18, 2021, the Company announced its intention to redeem the entire $132.7 million principal amount of its 6.25% convertible unsecured senior subordinated debentures. The redemption Incentive-based costs related to the acquisitions and growth initiatives in the UK & Europe wealth management business. was completed on April 9, 2021. The Company recorded $4.4 million of loss and other costs in connection with extinguishment of the convertible debentures. n.m.: not meaningful (percentages over 300% are indicated as n.m.) 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. Fluctuations in foreign exchange contributed to certain changes in revenue and expense items 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 Capital Markets and Canaccord Genuity Wealth Management UK & Europe. GEOGRAPHIES Our Dubai operation is included as part of Canaccord Genuity Capital Markets UK & Europe. For purposes of the discussion provided herein the Canaccord Genuity Capital Markets operations in the UK, Europe and Dubai are referred to as “UK & Europe”. Starting in Q1/20, our Asian based operations, including Singapore, China and Hong Kong, have been combined with our Canadian and Australian capital markets operations to reflect management of these operating units. Also, commencing in Q3/20, our Australian wealth management business, comprised of the operating results of Patersons since October 21, 2019 and the wealth management business of Australia previously included as part of Canaccord Genuity Capital Markets Australia, is disclosed as a separate operating segment in the discussions below. Comparatives have not been restated. GOODWILL 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 and indefinite life intangible assets associated with any of its wealth management business units in the UK & Europe or its goodwill recorded in Canaccord Genuity Capital Markets Canada, US and Australia. Notwithstanding this determination as of March 31, 2021, changes or uncertainty in the economic environment may cause this determination to change. If the business climate changes 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 22 Management’s Discussion and Analysis 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 goodwill recorded in Canaccord Genuity Capital Markets Canada, US and Australia. 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 2021 was $2.0 billion, an increase of 64.0% or $783.8 million from fiscal 2020, due to record revenue generated in both our capital markets and global wealth management segments. Revenue in our Canaccord Genuity Capital Markets segment increased by $622.8 million or 90.3% compared to fiscal 2020. Our US, Canadian and Australian operations all posted record revenue, driven largely by higher investment banking revenue across the different regions. In the US, revenue increased by 68.5% or $240.2 million year over year. Both investment banking and principal trading revenue increased significantly from the prior year, with increases of 135.8% and 108.5%, respectively. In Canada, higher investment banking revenue was the main driver for the $238.8 million or 116.7% increase in overall revenue compared to the prior year. Our Australian operations generated $182.7 million in revenue compared to $38.4 million in fiscal 2020 due to the significant increase in investment banking revenue. In the UK, total revenue amounted to $95.5 million, in-line with the previous fiscal year. Revenue from our global wealth management operations increased by $152.2 million or 29.8% compared to fiscal 2020. Our Canadian wealth management operations generated $324.0 million of revenue in fiscal 2021, representing an increase of $114.5 million or 54.6% over the prior year. Revenue in our wealth management operations in the UK & Europe decreased slightly by $0.6 million or 0.2% compared to the year ended March 31, 2020, due to lower interest revenue partially offset by higher commission and fees revenue during the fiscal year. In addition, $62.2 million of revenue was generated by our Australian wealth management operations, an increase of $38.3 million compared to fiscal 2020, reflecting the increased contributions from the acquisition of Patersons during Q3/20 (In periods prior to Q3/20, wealth management revenue in Australia was recorded under Australia capital markets). Commissions and fees revenue is primarily generated from private client trading activity and institutional sales and trading. Firmwide revenue generated from commissions and fees increased by $148.4 million or 25.3% from fiscal 2020 to $735.2 million in fiscal 2021. The increase was mainly driven by higher commissions and fees revenue generated in our Canadian wealth management operations. There was also an increase of $59.9 million or 39.3% in commissions and fees revenue generated in our capital markets operations compared to fiscal 2020. Revenue generated from firmwide investment banking activities increased by $524.6 million or 221.4% to $761.6 million in fiscal 2021, compared to $237.0 million in fiscal 2020, as a result of significat market activity in the equity capital markets. All of our core operating regions experienced increases in investment banking revenue, with the most significant increases recorded in our Canadian and Australian capital markets operations. The revenue growth in our capital markets operations resulted from increased activity in our focus sectors as well as unrealized gains in certain inventory and warrant positions earned in respect of investment banking activity. In Canada, our wealth management operations also recorded an increase in investment banking revenue of $67.7 million or 171.6% to $107.2 million in fiscal 2021. Advisory fees revenue decreased by $9.4 million or 4.6% compared to the prior year to $197.1 million for fiscal 2021. Our UK operations recorded a decrease of $22.4 million or 42.3% compared to fiscal 2020 due to fewer advisory transactions completed during the current fiscal year. Partially offsetting the decline in the UK were increases in our Canadian and US operations, with revenue growth of $9.9 million or 18.5% and $2.6 million or 2.7%, respectively. Revenue derived from firmwide principal trading activities increased by $138.0 million to $246.8 million for the year ended March 31, 2021, mainly as a result of increased market and trading activity in our US international equities desk as well as our Canadian capital markets operations compared to the same period in the prior year. The active trading environment in terms of volume and volatility created favorable opportunities for trading profits. Interest revenue was $26.3 million in fiscal 2021, a decrease of $37.4 million or 58.7% from the prior year, mainly due to lower revenue earned in our Canadian operations arising from decreased stock loan activity. Other revenue was $40.7 million, an increase of $19.7 million from the prior year. Included in other revenue in our Corporate & Other segment was $14.2 million of fair value adjustments on certain illiquid or restricted marketable securities recorded for IFRS CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 23 reporting purposes. This adjustment is excluded for management reporting purposes as it is not used by management to assess operating performance and is excluded for purposes of determining net income excluding significant items(1). Future changes in the unrealized fair value of the marketable securities as determined under applicable accounting standards may be significant and will be recorded through the consolidated statements of operations. In addition, to a lesser extent, the increase in other revenue was also due to an increase in revenue from our correspondent service business as well as higher foreign exchange gains. EXPENSES Expenses as a percentage of revenue Compensation expense Other overhead expenses(1) Restructuring costs(2)(3) Acquisition-related costs(2) Loss and other costs in connection with extinguishment of convertible debentures(4) Share of loss of an associate(5) Total For the years ended March 31 2021 61.2% 19.9% 0.0% 0.3% 0.2% 0.0% 81.6% 2020 60.3% 31.3% 0.2% 0.0% 0.0% n.m. 91.8% 2021/2020 change 0.9 p.p. (11.4) p.p. (0.2) p.p. 0.3 p.p. 0.2 p.p. n.m. (10.2) 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 21. (3) Restructuring costs for the year ended March 31, 2020 were incurred in connection with our UK & Europe wealth management operations, as well as real estate and other integration costs related to the acquisition of Patersons in Australia. Restructuring costs for the year ended March 31, 2019 were incurred in connection with our UK & Europe capital markets operations. (4) On March 18, 2021, the Company announced its intention to redeem the entire $132.7 million principal amount of its 6.25% convertible unsecured senior subordinated debentures. The redemption was completed on April 9, 2021. The Company recorded $4.4 million of loss and other costs in connection with extinguishment of the convertible debentures. (5) Represents the Company’s equity portion of the net loss of its investment in Canaccord Genuity Growth II Corp. for the year ended March 31, 2021 and 2020. p.p.: percentage points n.m.: not meaningful (percentages over 300% are indicated as n.m.) Total firmwide expenses for fiscal 2021 were $1.6 billion, an increase of $513.9 million or 45.7% compared to the last fiscal year. Excluding significant items(1), total expenses were $1.6 billion, up $506.6 million or 46.0% from fiscal 2020. Total expenses excluding significant items(1) as a percentage of revenue decreased by 9.3 percentage points compared to the year ended March 31, 2020. Compensation expenses Compensation expense was $1.2 billion, an increase of $489.6 million or 66.3% from the prior year, principally in line with the increase in incentive-based revenue. Total compensation expense was 61.2% in fiscal 2021, an increase of 0.9 percentage points from the prior year. The compensation ratio for the current year was affected by an increase in the fair value of performance share units (PSUs) granted in prior periods as a component of the Company’s overall executive compensation program. The fair value of the PSUs is based upon performance against certain pre-determined three-year performance metrics, including share price, as measured at the time of vesting and, accordingly, the value will change with the share price as well as changes in performance against the pre- determined metrics. The PSUs are awarded annually and vest after three years and are paid in cash at the time of vesting in an amount calculated with reference to the share price at the time of vesting. The PSUs were measured initially at fair value as at the end of the fiscal year for the applicable grant. Changes in value of the PSUs at each reporting period are amortized over the remaining vesting period and recorded as a compensation expense in the statement of operations. During fiscal 2021, the PSU plan was amended to include certain employment-related conditions to the vesting of the awards resulting in a change in the periodic expense recorded during the vesting period. The carrying amount of the liability recognized in accounts payable and accrued liabilities relating to PSUs at March 31, 2021 was $85.9 million compared to $22.7 million at March 31, 2020, and $70.7 million as of December 31, 2020. Changes to the fair value of the PSU’s as measured in future periods may increase or decrease from the fair value as recorded at March 31, 2021 and such changes will be recorded through compensation expense. The number of PSUs that ultimately vest is adjusted for dividends paid during the vesting period and is a multiple of the number of PSUs that were originally granted. The multiple will be in a range of 0x to 2x based upon performance against certain pre-determined metrics as measured at the time of vesting. The compensation ratio was also affected by the significant increase in revenue relative to fixed staff costs. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 24 Management’s Discussion and Analysis NON-COMPENSATION EXPENSES (C$ thousands, except % amounts) Trading costs Premises and equipment Communication and technology Interest General and administrative Amortization(1) Amortization of right of use of assets Development costs Total non-compensation expenses For the years ended March 31 2021 $ 122,154 $ 19,948 67,475 28,364 82,310 26,156 25,040 27,246 2020 83,964 18,094 66,666 33,678 113,612 32,594 22,866 12,053 $ 398,693 $ 383,527 2021/2020 change 45.5% 10.2% 1.2% (15.8)% (27.6)% (19.8)% 9.5% 126.1% 4.0% (1) Includes amortization of intangible assets for the years ended March 31, 2021 and March 31, 2020, respectively. See the Selected Financial Information Excluding Significant Items table on page 21. n.m.: not meaningful (percentages over 300% are indicated as n.m.) Non-compensation expenses were $398.7 million or 4.0% higher in fiscal 2021, but as a percentage of revenue were 19.9%, a substantial reduction from 31.3% in fiscal 2020. The most significant increases in non-compensation expenses included trading costs and development costs, partially offset by lower interest expense, general and administrative expenses, and amortization expense. Trading costs increased by $38.2 million or 45.5% to $122.2 million for the year ended March 31, 2021. The increase was mostly due to the significant increase in trading volumes in our US operations. Development costs increased by $15.2 million or 126.1% largely due to an adjustment in certain incentive-based costs in our UK & Europe wealth management operations recorded in fiscal 2020. Partially offsetting the increases in trading and development costs was a decline in interest expense which decreased by $5.3 million or 15.8% compared to the year ended March 31, 2020 mainly due to a reduction in stock borrowing activity and related costs in our Canadian capital markets operations. General and administrative expense, which includes reserves, promotion and travel expense, office expense, professional fees and donations, was down by $31.3 million or 27.6% across our Canadian, US and UK operations compared to fiscal 2020 mainly due to reduced promotion and travel and conference expenses resulting from restrictions imposed in response to the COVID-19 pandemic during the year. Our Australian capital markets operations recorded a slight increase of $0.3 million of general and administrative expense to support the expanded business. Amortization expense decreased by $6.4 million or 19.8% mainly due to certain intangible assets in connection with the acquisition of Petsky Prunier being fully amortized resulting in lower amortization compared to the prior year. On March 18, 2021 the Company announced its intention to redeem the entire $132.7 principal amount of its outstanding Debentures. The total redemption price of $168.1 million was fully accrued as of March 31, 2021. The redemption was completed on April 9, 2021. As a result of the redemption, the Company recorded a loss of $36.2 million on the extinguishment of the Debentures during the year ended March 31, 2021, with $4.1 million recorded through the consolidated statement of operations and $32.1 million recorded directly against shareholders’ equity. There were also $0.3 million of professional fees incurred in relation to the extinguishment of the Debentures during the year ended March 31, 2021. There were acquisition-related costs of $5.5 million recorded for the year ended March 31, 2021 related to re-measurement of the contingent consideration for the acquisitions of Jitneytrade and Thomas Miller. In addition, during the last quarter of fiscal 2021, there were acquisition-related costs of $0.4 million related to the proposed acquisition of Adam & Company announced on April 15, 2021. During fiscal 2020, there were acquisition related costs of $4.1 million related to the acquisitions of Thomas Miller and Patersons as well as other integration costs related to previous acquisitions. There was also a recovery of $4.2 million recorded in fiscal 2020 related to a partial reversal of the contingent consideration in connection with the acquisition of Thomas Miller due to revised estimates. There were no restructuring costs recorded during fiscal 2021. Restructuring costs for the prior year ended March 31, 2020 were incurred in connection with our UK & Europe wealth management operations, as well as real estate and other integration costs related to the acquisition of Patersons in Australia. INCOME TAX The effective tax rate for fiscal 2021 was 27.1% compared to the effective tax rate of 13.5% in the prior year. The effective tax rate in fiscal 2020 was exceptionally low due to recognition of deferred tax assets in our US operations due to historical losses which had not been recognized in prior years. In addition, higher profits in higher tax rate jurisdictions such as the US and Australia in the current fiscal year and the impact of certain non-deductible expenses contributed to the increase in the effective tax rate, when compared to the year ended March 31, 2020. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 25 NET INCOME Net income for fiscal 2021 was $269.8 million compared to net income of $86.6 million in fiscal 2020, an increase of $183.2 million or 211.7%. Net income attributable to common shareholders was $254.4 million for fiscal 2021 compared to $77.1 million for fiscal 2020. Diluted earnings per common share was $2.04 in fiscal 2021 compared to earnings per common share of $0.65 in the prior fiscal year. Excluding significant items(1), net income for fiscal 2021 was $285.9 million and net income attributable to common shareholders was $270.5 million, compared to net income of $106.3 million and net income attributable to common shareholders of $96.5 million in fiscal 2020. Diluted earnings per share excluding significant items(1) was $2.48 for fiscal 2021 compared to $0.81 for the prior year. Quarterly Financial Information(1)(2) The following table provides selected quarterly financial information for the eight most recently completed financial quarters ended March 31, 2021. This information is unaudited but reflects all adjustments of a recurring nature that are, in the opinion of management, necessary to present a fair statement of the results of operations for the periods presented. Quarter-to-quarter comparisons of financial results are not necessarily meaningful and should not be relied upon as an indication of future performance. (C$ thousands, except per share amounts) Revenue Commissions and fees Investment banking Advisory fees Principal trading Interest Other Total revenue Total expenses Net income before income taxes Net income Earnings per share – basic(4) Earnings per share – diluted(4) Excluding significant items(3) Net income Earnings per share – basic(4) Earnings per share – diluted(4) Q4 Q3 Fiscal 2021 Q1 Q2 Q4 Q3 Fiscal 2020 Q1 Q2 $ 214,476 $ 184,186 $ 167,575 $ 169,002 110,568 21,046 65,112 7,005 4,995 131,625 37,281 42,746 6,005 5,125 305,939 66,761 87,830 7,487 24,033 213,419 72,004 51,113 5,791 6,564 706,526 518,810 533,077 433,803 390,357 344,499 377,728 340,674 187,716 $ 139,394 $ 99,274 68,451 $ 45,858 32,993 $ 37,054 28,964 $ $ 1.07 $ 0.67 $ 0.30 $ 0.26 0.93 $ 0.54 $ 0.25 $ 0.22 $ 137,128 $ 1.38 $ $ 1.20 $ $ 78,971 $ 0.78 $ 0.62 $ 36,891 $ 0.34 $ 0.28 $ 32,897 0.30 0.25 $ 165,576 48,619 49,997 35,352 15,222 4,882 319,648 289,430 $ 147,191 51,550 60,691 27,149 16,622 4,811 308,014 285,731 $ 132,325 51,992 42,015 21,260 16,661 6,444 270,697 254,527 $ 141,792 84,801 53,804 25,073 15,185 4,853 325,508 294,156 30,218 26,246 0.25 0.21 21,451 0.20 0.17 $ $ $ $ $ $ 22,283 22,840 0.21 0.17 30,458 0.29 0.23 $ $ $ $ $ $ 16,170 13,178 0.11 0.10 23,760 0.21 0.18 $ $ $ $ $ $ 31,352 24,290 0.22 0.18 30,654 0.28 0.23 $ $ $ $ $ $ (1) Data is in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. (2) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [March 31, 2020 – 15%]. (3) Figures excluding significant items are non-IFRS measures. See the Quarterly Financial Information Excluding Significant Items table below. (4) Due to rounding or calculation of the dilutive impact of share issuance commitments in the quarterly and year to date EPS figures, the sum of the quarterly earnings per common share figures may not equal the fiscal year earnings per share figure. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 26 Management’s Discussion and Analysis QUARTERLY FINNCIAL INFORMATION EXCLUDING SIGNIFICANT ITEMS(1)(2) (C$ thousands, except per share amounts) Total revenue per IFRS Total expenses per IFRS Revenue Significant items recorded in Corporate and Other Fair value adjustment on certain illiquid or restricted marketable securities Total revenue excluding significant item Expenses Significant items recorded in Canaccord Genuity Capital Markets Amortization of intangible assets Acquisition-related costs Significant items recorded in Canaccord Genuity Wealth Management Amortization of intangible assets Restructuring costs Acquisition-related costs Incentive-based payment related to acquisitions(3) Significant items recorded in Corporate and Other Loss and other costs in connection with extinguishment of convertible debentures(4) Total significant items – expenses Total expenses excluding significant items Net income before income Q4 Q1 $ 706,526 $ 533,077 $ 390,357 $ 377,728 $ 319,648 $ 308,014 $ 270,697 $ 325,508 294,156 289,430 254,527 285,731 340,674 518,810 433,803 344,499 Q1 Q3 Q2 Q3 Q4 Q2 Fiscal 2021 Fiscal 2020 14,200 — — — — — — — 692,326 533,077 390,357 377,728 319,648 308,014 270,697 325,508 738 — 741 4,644 743 — 748 — 1,773 — 2,458 — 2,465 1,629 2,471 177 3,260 — 418 3,213 — 860 3,288 — — 3,326 — — 3,924 (427) (4,238) 3,445 1,250 — 3,528 1,098 1,973 3,043 — 335 953 1,842 625 635 (6,305) 1,574 1,709 1,152 4,354 — — — — — — — 9,723 11,300 4,656 4,709 (5,273) 8,727 12,402 7,178 509,087 422,503 339,843 335,965 294,703 277,004 242,125 286,978 taxes – adjusted $ 183,239 $ 110,574 $ 50,514 $ 41,763 $ 24,945 $ 31,010 $ 28,572 $ 38,530 Income tax expense – adjusted Net income – adjusted Net income attributable to common shareholders 46,111 $ 137,128 $ 31,603 78,971 $ 13,623 36,891 $ 8,866 32,897 $ 3,494 21,451 $ 552 30,458 $ 4,812 23,760 $ 7,876 30,654 $ 133,260 $ 75,160 $ 32,982 $ 29,065 $ 19,142 $ 27,619 $ 21,512 $ 28,218 Earnings per share – basic – adjusted(5) $ Earnings per share – diluted – adjusted(5)$ 1.38 $ 0.78 $ 0.34 $ 0.30 $ 0.20 $ 0.29 $ 0.21 $ 0.28 1.20 $ 0.62 $ 0.28 $ 0.25 $ 0.17 $ 0.23 $ 0.18 $ 0.23 (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. (2) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [March 31, 2020 – 15%]. (3) (4) On March 18, 2021, the Company announced its intention to redeem the entire $132.7 million principal amount of its 6.25% convertible unsecured senior subordinated debentures. The redemption Incentive-based costs related to the acquisitions and growth initiatives in the UK & Europe wealth management business. was completed on April 9, 2021. The Company recorded $4.4 million of loss and other costs in connection with extinguishment of the convertible debentures. (5) Due to the change in the number of fully diluted shares count resulting from the Debenture redemption in Q4 fiscal 2021, rounding and the dilutive impact of share issuance commitments in the quarterly and year to date EPS figures, the sum of the quarterly earnings per common share figures may not equal the year to date earnings per share figure. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 27 As a result of the redemption of the Debentures discussed above, the weighted average number of common shares used for purposes of calculating diluted earnings per share no longer includes the dilutive effect of the Debentures and, as such, the number of fully diluted shares for the calculation of diluted EPS for Q4 fiscal 2021 and for the year ended March 31, 2021 was reduced by approximately 13.2 million shares. Due to the change in the number of fully diluted shares, the sum of the quarterly earnings per common share as reported in the first three quarters of our fiscal year added to our fourth quarter earnings per share does not equal the earnings per share figure of $2.04 ($2.48(1) excluding significant items) for the fiscal year. In addition to the change in number of fully diluted shares due to the redemption of the Debentures in Q4/21, due to rounding or the dilutive impact of share issuance commitments in the quarterly and year to date EPS figures, the sum of the quarterly earnings per common share figures does not equal the earnings per share figure for the year. 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 from 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 by activity in our core focus sectors, as well as by changes in the market for growth companies and companies in emerging markets and sectors. 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. With substantially increased capital raising and advisory activity in our core focus areas as well as continued contribution from our global wealth management operations, the Company posted record quarterly revenue of $706.5 million in Q4 fiscal 2021, surpassing the record previously set in Q3 fiscal 2021 by 32.5%. Total revenue for fiscal 2021 was $2.0 billion, an increase of 64.0% over the record revenue previously set in fiscal 2020. Our global capital markets operations generated annual revenue of $1.3 billion, an increase of 90.3% from fiscal 2020. Our Canadian capital markets operations experienced tremendous growth during the current fiscal year, with revenue increasing each quarter, reaching $199.4 million in Q4/21, more than five times the revenue generated in the same quarter in the prior year. Profitability in this business has also increased significantly as a result of the revenue growth. Our pre-tax profit margin excluding significant items(1) in Canadian capital markets was 47.0%, compared to 34.7% in the previous quarter and 1.8% a year ago. The quarterly revenue earned in our US capital markets operations in the past eight quarters has been consistently strong, with revenue reaching a new record of $203.5 million in Q4/21. Our US operations earned record investment banking and principal trading revenue in the fourth quarter of fiscal 2021. Our International Equities Group performed very well in a volatile market, with principal trading revenue reaching a record $75.3 million in the last quarter of fiscal 2021. Our US operations have also been profitable over the last eight consecutive quarters, with pre-tax income excluding significant items(1) reaching $ 47.8 million in Q4/21, an increase of 24.4% compared to the previous quarter and of 222.1% on a year over year basis. Our UK & Europe capital markets operations posted fourth quarter revenue of $36.1 million, an increase of 57.7% over the same period last year, attributable to stronger investment banking and advisory fees revenue. This operation generated $4.2 million of pre-tax income during the three months ended March 31, 2021, a significant improvement over the first three quarters of the current fiscal year. Although mid-market investment banking and advisory activities in this region remained below historical levels across the industry throughout most of fiscal 2021, this business achieved modest profitability for the full fiscal year, with pre-tax net income excluding significant items(1) of $3.2 million. Our Australian capital markets operations performed exceptionally well in fiscal 2021, with revenue surpassing $40.0 million in each of the four fiscal quarters, exceeding the prior full fiscal year revenue of $38.4 million. The average quarterly revenue for fiscal 2021 was almost five times higher than the average quarterly revenue in fiscal 2020. The increase in revenue was largely driven by increased investment banking activity in our focus sectors, including mining and resource companies, and includes unrealized gains on certain inventory and warrant positions earned in respect of investment banking activity. Our Canaccord Genuity Wealth Management North America operations have been positively impacted by improved transaction activity and a growth in managed assets during the fiscal year. Combined revenue for the last two quarters of fiscal 2021 reached almost $200.0 million, a significant improvement compared to the first half of fiscal 2020 and the same period in the prior year. While fee-related revenue in this business has continued to grow, fee-related revenue as a percentage of total revenue of 28.5% was lower given the substantial increase in revenue transactional activities. Assets under management increased in Q4/21 by 57.3% compared to Q4/20 and by 10.1% on a sequential basis to $6.3 billion. Assets under administration, including assets under management, increased by 74.8% from $18.4 billion at the end of fiscal 2020 to $32.2 billion at the end of fiscal 2021 due to increased market value as well as net inflow of new assets. The Canaccord Genuity Wealth Management UK & Europe operations have consistently contributed to our revenue and profitability levels. The quarterly revenue generated in this region increased by 9.6% in Q4/21 compared to the same period in the prior year and by 6.9% compared to the previous quarter. Pre-tax profit margins continued to be strong at 25.6% in Q4/21 excluding significant items(1). At the end of Q4/21, fee-related revenue was at 71.0%, an increase of 2.4 percentage points from Q4/20, Assets under management for this group increased by 31.1% as of the end of Q4/21 compared to Q4/20 due to the increase in market values. In local currency, AUM increased by 33.3% to £30.2 billion at the end of fiscal 2021. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 28 Management’s Discussion and Analysis Our Australian wealth management operations earned revenue of $17.3 million in Q4/21, an increase of 34.3% compared to the same quarter a year ago. With the completion of the acquisition of Patersons in Q3/20, this business has been a positive contributor to pre-tax net income in every quarter of fiscal 2021. AUM at the end of fiscal 2021 was $4.2 billion, an increase of $1.8 billion compared to the previous fiscal year. 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 2021 performance Revenue Revenue for the fourth quarter was $706.5 million, an increase of $386.9 million or 121.0% compared to the same period in the previous year driven by higher investment banking revenue across all our principal operations. Our global capital markets segment recorded an increase of $310.4 million or 175.8% in revenue compared to Q4/20. Revenue in our Canadian operations, mainly resulting from growth in investment banking revenue, increased by $160.2 million compared to Q4/20 to $199.4 million in Q4/21. Our US operations recorded an increase of $97.9 million or 92.7% compared to Q4/20, driven by a 269.5% increase in investment banking and 97.8% increase in principal trading revenue. In Australia, revenue increased by $39.0 million or 439.1% over Q4/20 as a result of increased investment banking activity as well as unrealized gains in certain inventory and warrant positions earned in respect of investment banking activity. An increase of $13.2 million or 57.7% in our UK operations was largely a result of an increase in investment banking and principal trading revenue in that region. Our global wealth management operations generated an increase in revenue of $61.3 million compared to Q4/20, driven by higher commissions and fees and investment banking revenue from our Canadian operations as well as contributions from the acquisition of Patersons completed in Q3/20. On a consolidated basis, commissions and fees revenue increased by $48.9 million or 29.5% to $214.5 million compared to the same period in the previous year, predominantly attributable to our wealth management operations as discussed above. All our core operations posted significant increases in investment banking revenue in Q4/21, which led to an overall increase of $257.3 million or 529.3% compared to the same period in the prior year. Advisory fees revenue increased by $16.8 million or 33.5% to $66.8 million in Q4/21 mainly due to higher revenue generated in Canada. Principal trading revenue increased by $52.5 million during the three months ended March 31, 2021 compared to the same period last year. Our US operations generated the largest increase of $37.2 million or 97.8% due to increased market and trading activity in that region. Our Canadian and UK operations also posted increases of $11.5 million and $3.4 million, respectively. Interest revenue for Q4/21 was $7.5 million, a decrease of $7.7 million or 50.8% compared to Q4/20, mainly attributable to decreased margin loan and stock loan activity in our Canadian capital markets operations. Other revenue for Q4/21 increased by $19.2 million or 392.3% compared to the three months ended March 31, 2020. During the three months ended March 31, 2021, an IFRS fair value adjustment of $14.2 million was recorded on certain illiquid or restricted marketable securities. This adjustment is excluded for management reporting purposes as it is not used by management to assess operating performance and is excluded for purposes of determining net income excluding significant items(1). Future changes in the unrealized fair value of the marketable securities as determined under applicable accounting standards may be significant and will be recorded through the consolidated statements of operations. In addition, to a lesser extent, other revenue increased over the three months ended March 31, 2020 as a result of higher foreign exchange gains as well as increased revenue from our correspondent brokerage services. Expenses Expenses were $518.8 million, up $229.4 million or 79.3% from Q4/20. Total expenses excluding significant items(1) were $509.1 million, an increase of $214.4 million or 72.7% from the same period last year. Total expenses as a percentage of revenue excluding significant items (1) was 73.5%, a decrease of 18.7 percentage points from Q4/20 due to the significant increase in revenue and the non-variable nature of certain overhead costs. Compensation expense increased by $196.7 million or 98.8% compared to the same period in the prior year. Total compensation expense as a percentage of revenue was 56.0% in Q4/21, a decrease of 6.3 percentage points compared to the three months ended March 31, 2020 as a result of an increase in incentive-based revenue relative to fixed staff costs. Excluding significant items(1), non-compensation overhead expenses as a percentage of revenue was 16.4%, a decrease of 13.6 percentage points from Q4/20. The largest increases in non- compensation expenses compared to the same period in the prior year were trading costs and development costs, partially offset by decline in general and administrative expense and amortization expense. Trading costs increased by $16.5 million or 72.0%, mainly driven by higher trading activity in our Canadian and US capital markets operations as well as higher trading activity in our Canadian and UK wealth management operations. Development costs (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14.. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 29 increased by $13.6 million over the same period in the prior year largely due to an adjustment made in the incentive-based costs in our UK & Europe wealth management operations during fiscal 2020. Partially offsetting the increases in trading and development costs was a decline in general and administrative expense of $6.9 million or 22.7% largely due to lower reserves on client margin accounts in our Canadian wealth management business. Amortization decreased by $1.7 million due to reduced intangible assets amortization recorded in our US operations. As discussed above, the Company completed its previously announced redemption of the entire $132.7 million principal amount of its outstanding Debentures in April 2021. As a result of the planned redemption, the Company recorded a loss of $36.2 million on the extinguishment of the Debentures during the year ended March 31, 2021, with $4.1 million recorded through the consolidated statement of operations and $32.1 million recorded directly against shareholders’ equity. There were also $0.3 million of professional fees incurred in relation to the extinguishment of the Debentures during the year ended March 31, 2021. There were acquisition-related costs of $0.4 million recorded during Q4 fiscal 2021 related to the proposed acquisition of Adam & Company in our UK wealth management operation announced on April 15, 2021. During Q4 fiscal 2020, there was a recovery of $4.2 million related to a partial reversal of the contingent consideration in connection with the acquisition of Thomas Miller due to revised estimates. Income tax expense Income tax expense was $48.3 million in Q4/21 compared to $4.0 million for the three months ended March 31, 2020. Excluding significant items(1), the effective tax rate for Q4/21 was 25.2% compared to 14.0% in Q4/20. The increase in the effective tax rate for the current quarter was due to the recognition of deferred tax assets related to previously unrecognized losses in our US operations in the three months ended March 31, 2020, as well as certain non-deductible expenses. Net income Net income for the fourth quarter of fiscal 2021 was $139.4 million compared to net income of $26.2 million in Q4/20. Net income attributable to common shareholders was $135.5 million for Q4/21 compared $23.9 million in Q4/20. Diluted income per common share in the current quarter was $0.93, compared to a diluted income per common share of $0.21 in Q4/20. Excluding significant items(1), net income for Q4/21 was $137.1 million compared to $21.5 million in Q4/20, an increase of $115.7 million or 539.3%, primarily due to the increase in revenue compared to the same period in the prior year. Net income attributable to common shareholders excluding significant items(1) was $133.3 million compared to $19.1 million in the same period of the prior year. Diluted EPS excluding significant items(1) was $1.20 in Q4/21 compared to $0.17 in Q4/20. Business Segment Results(1)(2) (C$ thousands, except number of employees) Revenue Canada UK & Europe US Australia Total revenue Expenses Intersegment allocations Income (loss) before income taxes Excluding significant items(3) Revenue Expenses Intersegment allocations Income (loss) before income taxes Number of employees For the years ended March 31 Canaccord Genuity Capital Markets Canaccord Genuity Wealth Management Corporate and Other 2021 Total Canaccord Genuity Capital Markets Canaccord Genuity Wealth Management Corporate and Other 2020 Total $ 443,444 $ 95,535 590,534 182,715 1,312,228 976,646 18,263 314,529 $ 277,329 9,512 62,249 663,619 529,476 17,288 31,841 $ — — — 31,841 131,664 (35,551) 789,814 $ 372,864 600,046 244,964 2,007,688 1,637,786 — 204,636 $ 96,103 350,379 38,351 689,469 623,663 17,005 206,455 $ 277,953 3,111 23,916 511,435 430,518 12,743 22,963 $ — — — 22,963 69,663 (29,748) 434,054 374,056 353,490 62,267 1,223,867 1,123,844 — $ 317,319 $ 116,855 $ (64,272) $ 369,902 $ 48,801 $ 68,174 $ (16,952) $ 100,023 1,312,228 969,032 18,263 663,619 511,056 17,288 17,641 127,310 (35,551) 1,993,488 1,607,398 — 689,469 612,690 17,005 511,435 418,457 12,743 22,963 69,663 (29,748) 1,223,867 1,100,810 — 324,933 808 135,275 1,186 (74,118) 362 386,090 2,356 59,774 789 80,235 1,180 (16,952) 339 123,057 2,308 (1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14. Detailed financial results for the business segments are shown in Note 24 of the audited consolidated financial statements on page 96. (2) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [March 31, 2020 – 15%]. (3) See the Selected Financial Information Excluding Significant Items table on page 21. Canaccord Genuity Group’s operations are divided into three segments: Canaccord Genuity Capital Markets and Canaccord Genuity Wealth Management are the main operating segments while Corporate and Other is mainly an administrative segment. CANACCORD GENUITY CAPITAL MARKETS Overview Canaccord Genuity Capital Markets 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, Australia, Asia and the Middle East. The Company has capital markets has offices in 19 cities over five continents worldwide. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 30 Management’s Discussion and Analysis Our operating results demonstrate the strength of our global mid-market capabilities and the success of our efforts to diversify our revenue streams and improve alignment across our businesses and regions. For fiscal 2021, 66.2% of total Canaccord Genuity Capital Markets revenue was earned outside of Canada. Canaccord Genuity Capital Markets’ global alignment efforts are helping to firmly entrench the Company as a leading global independent investment bank focused on the mid-market. Outlook Canaccord Genuity Capital Markets continues to advance its market position as a mid-market leader 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 Capital Markets’ integrated global platform and disciplined focus in key growth sectors of the global economy provide a competitive advantage for our business compared to many of the domestically focused firms that 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 Canaccord Genuity Capital Markets provides differentiated expertise and execution capabilities in a segment that is relatively underserviced by other global investment banks. Canaccord Genuity remains committed to operating our capital markets businesses as efficiently as possible in order to protect our capacity to deliver market-leading expertise and execution services during periods of market volatility and/or reduced activity levels in our core focus sectors and geographies. A culture of cost containment continues to be reinforced throughout the Company, and strategies to lower operating costs over the long term continue to be explored. The remote working environment driven by the COVID-19 pandemic has led to productivity enhancements with respect to conferences, deal/ non-deal roadshows and cross- border collaboration, and we expect that certain efficiencies and cost savings will continue longer-term. The Company strives to balance investments in growth with our ability to generate profit in various market environments. The dynamic nature of the operating environment for global mid-market capital markets activities 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 steps that the Company has taken to improve the global presence of Canaccord Genuity Capital Markets and refine its service offering have positioned the business very well for the future. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 31 FINANCIAL PERFORMANCE(1)(2)(6) (C$ thousands, except number of employees) Revenue Expenses Compensation expense Other overhead expenses Development costs Acquisition-related costs 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) Year ended March 31, 2021 Year ended March 31, 2020 Canada 443,444 224,429 50,514 (393) 4,644 279,194 12,449 UK (5) 95,535 63,467 27,874 — — 91,341 1,027 US Australia Total 590,534 182,715 1,312,228 Canada 204,636 UK(5) US 96,103 350,379 Australia 38,351 Total 689,469 335,907 131,890 5,206 — 119,194 12,872 1,042 — 742,997 223,150 5,855 4,644 110,163 63,880 60,830 30,753 205,929 113,916 31 — — — 464 177 25,149 10,742 — 1,629 402,071 219,291 495 1,806 473,003 133,108 976,646 174,074 91,583 320,486 37,520 623,663 4,392 395 18,263 12,241 895 3,010 859 17,005 $ 151,801 $ 3,167 $ 113,139 $ 49,212 $ 317,319 $ 18,321 $ 3,625 $ 26,883 $ (28) $ 48,801 443,444 271,998 12,449 95,535 91,341 1,027 590,534 472,585 4,392 182,715 1,312,228 133,108 969,032 395 18,263 204,636 171,522 12,241 96,103 91,583 895 350,379 313,694 3,010 38,351 35,891 859 689,469 612,690 17,005 $ 158,997 $ 3,167 113,557 $ 49,212 $ 324,933 $ 20,873 $ 3,625 $ 33,675 $ 1,601 $ 59,774 Number of employees 274 131 319 84 808 257 136 313 83 789 (1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14. (2) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [March 31, 2020 – 15%]. (3) Income (loss) before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 38. (4) Refer to the Selected Financial Information Excluding Significant Items table on page 21. (5) Includes our Dubai based operations. (6) Starting in Q1/20, our Asian based operations, including Singapore, China and Hong Kong, have been combined with our Canadian and Australian capital markets operations to reflect management of these operating units. REVENUE REVENUE BY GEOGRAPHY AS A PERCENTAGE OF CANACCORD GENUITY CAPITAL MARKETS REVENUE Revenue generated in: Canada UK & Europe(1) US Australia p.p.: percentage points (1) Includes our Dubai based operations For the years ended March 31 2021 2020 2021/2020 change 33.8% 7.3% 45.0% 13.9% 29.7% 13.9% 50.8% 5.6% 4.1 p.p. (6.6) p.p. (5.8) p.p. 8.3 p.p. 100.0% 100.0% Canaccord Genuity Capital Markets generated revenue of $1.3 billion, an increase of 90.3% or $622.8 million compared to fiscal 2020. Revenue increased in the US and Australia by $240.2 million or 68.5% and by $144.4 million or 376.4%, respectively, compared to the prior year, largely driven by higher investment banking revenue as well as higher principal trading revenue in the US. In Canada, a significant increase in investment banking revenue led to an increase in overall revenue of $238.8 million or 116.7%. Revenue in our UK operations decreased slightly by $0.6 million or 0.6% to $95.5 million in fiscal 2021 as lower advisory fees were partially offset by higher investment banking revenue. Investment banking activity The Company’s focus sector mix in fiscal 2021 showed continued diversity. Revenue from the Metals & Mining sector, a historic area of strength for the Company, reflects contributions from Australia, Canada. Revenue from the Technology and Industrials sectors was led by our US and Canadian capital markets businesses. The Company has also continued to lead in Canadian Special Purpose Acquisition Company (SPAC) issuances, both as a sponsor and an underwriter, which is reflected in our Financials sector activity. Canaccord Genuity Capital Markets’ transactions and revenue by focus sectors are detailed below. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 32 Management’s Discussion and Analysis CANACCORD GENUITY CAPITAL MARKETS – OVERALL Investment banking transactions and revenue by sector Sectors Life Sciences Technology Industrials Metals & Mining Diversified Financials Consumer & Retail Real Estate Others Structured Products & Sustainability Energy Total For the year ended March 31, 2021 as a % of investment banking transactions as a % of investment banking revenue 24.6% 18.8% 5.4% 27.5% 6.2% 4.0% 2.4% 2.3% 1.2% 4.1% 3.5% 29.3% 25.5% 9.6% 19.0% 4.3% 2.3% 3.6% 0.6% 1.5% 1.3% 3.0% 100.0% 100.0% CANACCORD GENUITY CAPITAL MARKETS – BY GEOGRAPHY Investment banking transactions by sector (as a % of the number of investment banking transactions for each geographic region) Sectors Life Sciences Metals & Mining Technology Diversified Structured Products & Sustainability Real Estate Industrials Financials Consumer & Retail Others Energy Total For the year ended March 31, 2021 Canada 24.1% 30.6% 11.4% 10.6% 7.1% 3.8% 0.3% 5.5% 1.6% 1.9% 3.1% US 46.7% 0.0% 38.9% 0.0% 0.0% 0.0% 11.9% 0.4% 2.0% 0.1% 0.0% UK 4.3% 10.0% 20.0% 0.0% 0.0% 0.0% 38.6% 11.4% 0.0% 0.0% 15.7% Australia 4.5% 60.3% 19.0% 0.0% 0.0% 0.6% 2.8% 0.6% 6.7% 0.5% 5.0% 100.0% 100.0% 100.0% 100.0% Investment banking revenue by sector (as a % of investment banking revenue for each geographic region) Sectors Life Sciences Technology Industrials Metals & Mining Diversified Financials Consumer & Retail Real Estate Others Structured Products & Sustainability Energy Total For the year ended March 31, 2021 Canada 34.7% 17.7% 0.7% 21.6% 10.2% 3.0% 1.9% 1.4% 3.5% 3.0% 2.3% US 41.7% 40.4% 15.2% 0.0% 0.0% 0.1% 2.6% 0.0% 0.0% 0.0% 0.0% UK 2.2% 18.4% 52.0% 6.2% 0.0% 13.1% 0.0% 0.0% 0.0% 0.0% 8.1% Australia 2.9% 17.7% 0.9% 57.5% 0.0% 0.0% 11.5% 0.3% 1.0% 0.0% 8.2% 100.0% 100.0% 100.0% 100.0% Note for reference in the tables above: transactions with companies in the cannabis sector in Canada are included under the Life Sciences sector. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 33 EXPENSES Expenses for fiscal 2021 were $976.6 million, an increase of $353.0 million or 56.6% compared to the prior year. Excluding significant items(1), total expenses for fiscal 2021 were $969.0 million, an increase of $356.3 million or 58.2% compared to fiscal 2020. As a percentage of revenue, total expenses decreased by 15.0 percentage points compared to the year ended March 31, 2020. Compensation expense Compensation expense for fiscal 2021 increased by $340.9 million or 84.8% compared to fiscal 2020. Total compensation expense as a percentage of revenue was 1.7 percentage points lower than in fiscal 2020, at 56.6% for the year ended March 31, 2021. In Canada, Australia and the US, total compensation as a percentage of revenue decreased compared to fiscal 2020 due to a significant increase in revenue relative to fixed staff costs. In our UK operations, total compensation expense as a percentage of revenue increased by 3.1 percentage points compared to fiscal 2020 as a result of the decline in revenue relative to fixed staff costs. Canaccord Genuity Capital Markets compensation expense as a percentage of revenue by geography Canada UK & Europe US Australia Canaccord Genuity Capital Markets (total) p.p.: percentage points Other overhead expenses For the years ended March 31 2021 50.6% 66.4% 56.9% 65.2% 56.6% 2020 53.8% 63.3% 58.8% 65.6% 58.3% 2021/2020 change (3.2) p.p. 3.1 p.p. (1.9) p.p. (0.4) p.p. (1.7) p.p. Other overhead expenses were $223.2 million for fiscal 2021 compared to $219.3 million in fiscal 2020, an increase of $3.9 million or 1.8%. The most significant increases in other overhead costs compared to the prior year include trading costs and development costs, partially offset by lower general and administrative, amortization and interest expense. The increase in trading costs resulted from the increased trading activity in our US and Canadian operations. In the US, development costs increased by $4.7 million mainly driven by higher expenditures in support of the significant revenue growth in this segment. Partially offsetting the increase in trading and development costs was a decline in general and administrative expense of $22.3 million or 38.1% compared to fiscal 2020 largely due to a reduction in promotion and travel and conference expenses due to COVID-19 restrictions imposed during the year. Amortization expense decreased by $6.2 million to $6.8 million compared to the prior year mainly due to a reduction in the amortization of intangible assets acquired in connection with the acquisition of Petsky Prunier. Interest expense decreased by $3.9 million or 25.0% compared to fiscal 2020 due to lower stock borrowing activity and related costs in Canada. There were $4.6 million of acquisition-related costs in fiscal 2021 related to the remeasurement of contingent consideration in connection with the acquisition of Jitneytrade. The acquisition-related costs in connection with the acquisitions of Petsky Prunier and Patersons amounted to $1.8 million in fiscal 2020 (Australian wealth management results were included as part of capital markets prior to Q3/20). INCOME BEFORE INCOME TAXES Income before income taxes in fiscal 2021 was $317.3 million, an increase of $268.5 million compared to fiscal 2020. Excluding significant items(1), income before income taxes, including allocated overhead expenses, increased from $59.8 million in fiscal 2020 to $324.9 million in fiscal 2021. The increase in income before income taxes excluding significant items(1) was attributable to higher revenue generated in our Canadian, US, and Australia operating segments. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 34 Management’s Discussion and Analysis 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) in Canada 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 13 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. The business offers services to both domestic (UK) and international and European clients and provides clients with investing options from both third party and proprietary financial products, including investment funds managed by Canaccord Genuity Wealth Management portfolio managers. At March 31, 2021, Canaccord Genuity Wealth Management had 9 offices located across Canada. The Company is focused on actively recruiting established Advisory Teams to accelerate growth in this business. Outlook Our strategic shift to strengthening contributions from our global wealth management segment will continue to be a main focus for the Company. 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 and trading activity. With 72.1% of the division’s revenue derived from recurring, fee-based activities, the revenue stream generated through Canaccord Genuity Wealth Management’s UK & Europe 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 both domestic and international intermediaries. The Company will continue to pursue strategic opportunities to increase the scale of its UK wealth management business. The substantial investment of $219 million by HPS announced in February, 2021 provides a strategic and financial partner to the business on future acquisitions and growth opportunities. Subsequent to the end of the fiscal year, on April 15, 2021 the Company announced its acquisition of the investment management business of Adam & Company. The acquisition represents a unique opportunity for Canaccord Genuity Wealth Management to enter the Scottish market with a deeply established franchise and a strong brand. Closing is expected to occur in the second fiscal quarter of the Company’s 2022 fiscal year. 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 that the benefits of our independent global platform, investments to advance our technology and product offering, and multi-year track record of revenue and profitability growth help drive continued recruiting success as Investment Advisors see opportunities to grow their businesses faster and more sustainably on our platform. We maintain a strong focus on attracting and retaining high quality advisors, investing in technology and 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 expects to continue to build upon the early success of its expanded wealth management operations. Continued expansion is expected to occur through targeted recruiting, and through the build-out of wealth management services and products in this market. The robust market for financing activities for small-cap companies over fiscal 2021 drove increased collaboration with our capital markets group in the region, and we expect this will drive future benefits as we advance our strategic priorities. We will also endeavour to convert additional $15.8 billion held on Patersons’ trading platform to higher revenue- generating assets. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT FINANCIAL PERFORMANCE – NORTH AMERICA(1)(2) (C$ thousands, except AUM and AUA (in C$ millions), number of employees, Advisory Teams and % amounts) Revenue Expenses Compensation expense Other overhead expenses Acceleration of long-term incentive plan expense Total expenses Intersegment allocations(3) Income before income taxes(3) AUM – Canada (discretionary)(4) AUA – Canada(5) Number of Advisory Teams – Canada Number of employees Excluding significant items(6) Total expenses Intersegment allocations(3) Income before income taxes(3) Management’s Discussion and Analysis 35 For the years ended March 31 2021 2020 2021/2020 change $ 324,041 $ 209,566 $ 114,475 54.6% 193,934 51,423 — 245,357 16,065 62,619 $ $ 6,307 32,240 145 454 $ 245,357 $ 16,065 62,619 121,494 53,184 — 174,678 12,229 22,659 4,009 18,440 146 432 174,678 12,229 22,659 $ $ 72,440 (1,761) — 70,679 3,836 39,960 2,298 13,800 (1) 22 70,679 3,836 39,960 59.6% (3.3)% — 40.5% 31.4% 176.4% 57.3% 74.8% (0.7)% 5.1% 40.5% 31.4% 176.4% (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 14. (2) Includes Canaccord Genuity Wealth Management operations in Canada and the US. (3) Income before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 38. (4) AUM represents assets managed on a discretionary basis under our programs generally described as or known as the Complete Canaccord Investment Counselling Program and the Complete Canaccord Private Investment Management Program. (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 21. Revenue from Canaccord Genuity Wealth Management North America was $324.0 million, an increase of $114.5 million or 54.6% from fiscal 2020, driven by higher commissions and fees revenue and investment banking revenue. AUA in Canada increased by 74.8% to $32.2 billion at March 31, 2021 from $18.4 billion at March 31, 2020, as a result of a growth in market values as well as net inflow of new assets. There were 145 Advisory Teams in Canada, a decrease of one from a year ago. The fee-based revenue in our North American operations was 11.7 percentage points lower than in the prior year and accounted for 28.5% of the wealth management revenue earned in Canada during the year ended March 31, 2021 due to the significant increase in transactional revenue. Expenses for fiscal 2021 were $245.4 million, an increase of $70.7 million or 40.5% from fiscal 2020. Total expenses as a percentage of revenue decreased by 7.6 percentage points compared to last year due to higher revenue and the non variable nature of certain overhead expenses. Compensation expense increased by $72.4 million or 59.6% compared to the prior year, in line with the increase in incentive-based revenue. Total compensation expense as a percentage of revenue increased by 1.8 percentage points compared to last year to 59.8% in fiscal 2021. Other overhead expenses as a percentage of revenue decreased by 9.5% compared to fiscal 2020. Trading costs increased by $4.0 million compared to the year ended March 31, 2020 as a result of an increase in commission and fees revenue. General and administrative expense decreased by $7.7 million or 46.9% due to lower conference costs, as well as lower reserves on client account recorded in the current fiscal year. Development costs increased by $1.8 million as a result of the amortization of incentive-based payments to new recruits. Income before income taxes increased by $40.0 million in fiscal 2021 to $62.6 million due to the increase in revenue. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 36 Management’s Discussion and Analysis FINANCIAL PERFORMANCE – UK & EUROPE(1)(5) (C$ thousands, except AUM (in C$ millions), number of employees, investment professionals and fund managers, and % amounts) Revenue Expenses Compensation expense Other overhead expenses Restructuring costs Acquisition-related 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 2021 2020 2021/2020 change $ 277,329 $ 277,953 $ (624) (0.2)% 149,095 78,423 — 1,278 228,796 1,208 $ 47,325 $ 52,298 202 528 $ 210,862 $ 1,208 65,259 151,020 80,881 1,098 (1,930) 231,069 1,149 45,735 39,879 210 548 220,274 1,149 56,530 $ $ (1,925) (2,458) (1,098) 3,208 (2,273) 59 1,590 12,419 (8) (20) (9,412) 59 8,729 (1.3)% (3.0)% (100.0)% 166.2% (1.0)% 5.1% 3.5% 31.1% (3.8)% (3.6)% (4.3)% 5.1% 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 14. (2) Income before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 38. (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 21. (5). Includes the operating results of Thomas Miller since the acquisition date of May 1, 2019. 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 2021 was $277.3 million, a decrease of $0.6 million or 0.2% compared to fiscal 2020. Measured in local currency (GBP), revenue was £160.5 million during fiscal 2021, a decrease of £3.8 million or 2.3% compared to the previous year. AUM in the UK & Europe as of March 31, 2021 was $52.3 billion, an increase of 31.1% compared to $39.9 billion as of March 31, 2020 mainly due to an increase in market values. Measured in local currency (GBP), AUM increased by 33.3% compared to March 31, 2020. The fee-related revenue in our UK & European wealth management operations accounted for 72.1% of total revenue in this geography in fiscal 2021, a slight decrease of 0.8 percentage points compared to last year. Compensation expense was $149.1 million, a $1.9 million decrease from $151.0 million in fiscal 2020. Total compensation expense as a percentage of revenue decreased slightly by 0.5 percentage points from 54.3% in fiscal 2020 to 53.8% in fiscal 2021. Other overhead expenses for the year ended March 31, 2021 decreased by $2.5 million or 3.0% compared to the prior year. General and administrative expense decreased by $3.2 million or 13.8%, largely due to lower promotion and travel expense. Communication and technology expense decreased by $1.8 million or 11.1% compared to fiscal 2020 mainly due to the replacement of certain communication systems. Interest expense decreased by $0.7 million or 17.1% mainly due to a reduction in interest expense paid on the bank loan obtained in connection with the acquisitions of Hargreave Hale and Thomas Miller. Offsetting the decreases in expenses discussed above was an increase in development costs of $4.1 million compared to the prior year as a result of an adjustment recorded in fiscal 2020 in connection to incentive-based costs related to the acquisitions and growth initiatives of the UK wealth management business. There were acquisition-related costs of $1.3 million recorded during fiscal 2021 related to the proposed acquisition of Adam & Company in our UK wealth management operation announced on April 15, 2021. There were no restructuring costs recorded in fiscal 2021. Restructuring costs of $1.1 million were recorded in fiscal 2020 related to the integration costs of the recent acquisitions. During the year ended March 31, 2020, the Company also recorded $2.3 million of acquisition-related costs in connection with the acquisition of Thomas Miller. In addition, there was a recovery of $4.2 million related to a partial reversal of the contingent consideration in relation to the acquisition of Thomas Miller in the prior year. Income before income taxes was $47.3 million compared to $45.7 million in the prior year as a result of reductions in the non- variable compensation and overhead expenses. Excluding significant items(1), income before income taxes was $65.3 million, an increase of $8.7 million or 15.4% from the prior year, reflecting the growth in net contribution from this region. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT FINANCIAL PERFORMANCE – AUSTRALIA(1) (C$ thousands, except AUM (in C$ millions), number of employees, investment professionals and fund managers, and % amounts) Revenue Expenses Compensation expense Other overhead expenses Restructuring costs Total expenses Intersegment allocations(2) Income (loss) before income taxes(2) AUM (3) Number of investment professionals Number of employees Excluding significant items(4) Total expenses Intersegment allocations(2) Income before income taxes(2) Management’s Discussion and Analysis 37 For the years ended March 31 2021 2020 2021/2020 change $ 62,249 $ 23,916 $ 38,333 160.3% 42,084 13,239 — 55,323 15 6,911 $ 4,228 110 204 54,837 $ 15 7,397 15,268 8,680 823 24,771 (635) (220) 2,400 119 200 23,505 (635) 1,046 $ $ 26,816 4,559 (823) 30,552 650 7,131 1,828 (9) 4 31,332 650 6,351 $ $ 175.6% 52.5% (100.0)% 123.3% 102.4% n.m. 76.2% (7.6)% 2.0% 133.3% 102.4% n.m. (1) Data is in accordance with IFRS except for figures excluding significant items, AUM, number of investment professionals, and number of employees. See Non-IFRS Measures on page 14. (2) (3) AUM 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- Income before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 38. discretionary accounts. (4) Refer to the Selected Financial Information Excluding Significant Items table on page 21. n.m.: not meaningful (percentages over 300% are indicated as n.m.) Commencing Q3/20, the Canaccord Genuity Australia wealth management segment includes the operating results of Patersons Securities Limited (renamed as Canaccord Genuity Financial Limited) since the closing date of October 21, 2019, as well as the wealth management business previously included as part of Canaccord Genuity Australia capital markets. Comparatives have not been restated. During the year ended March 31, 2021, Canaccord Genuity Wealth Management Australia generated revenue of $62.2 million compared to $23.9 million from the acquisition date of October 21, 2019 to March 31, 2020. AUM in the Australian wealth management operations was $4.2 billion at March 31, 2021, an increase of $1.8 billion or 76.2% compared to March 31, 2020. Fee- related revenue in our Australian operations as a percentage of total revenue accounted for 26.1% of the wealth management revenue during fiscal 2021, an increase of 3.0 percentage points compared to the prior year. Due to the inclusion of operating results for a full fiscal year in fiscal 2021, total expenses increased by $30.6 million compared to fiscal 2020 to $55.3 million for the year ended March 31, 2021. Compensation expense was $42.1 million in fiscal 2021. Total compensation expense as a percentage of revenue was 67.6% for the year ended March 31, 2021, an increase of 3.8 percentages points compared to the prior year due to certain fixed staff costs. There were no restructuring costs in fiscal 2021. Restructuring costs of $0.8 million recorded in fiscal 2020 were in connection to the integration costs related to the acquisition of Patersons. Income before income taxes was $6.9 million compared to a loss of $0.2 million in the prior year as a result of the inclusion of a full fiscal year of operations in fiscal 2021 . Excluding significant items(1), income before income taxes was $7.4 million, an increase of $6.4 million from the prior year, reflecting the net contribution from our expanded operations. 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 Capital Markets or Canaccord Genuity Wealth Management. 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, (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 38 Management’s Discussion and Analysis and other administrative functions. The Company has 362 employees in the Corporate and Other segment. Most 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) Revenue Expenses Compensation expense Other overhead expenses Loss and other costs in connection with extinguishment of convertible debentures(3) Share of loss of an associate Total expenses Intersegment allocations(2) Loss before income taxes(2) Number of employees Excluding significant items(4) Total revenue Total expenses Intersegment allocations(2) Loss before income taxes(4) For the years ended March 31 2021 31,841 $ 2020 22,963 $ 2021/2020 change $ 8,878 38.7% 99,785 26,603 4,354 922 131,664 (35,551) (64,272) 362 $ 17,641 $ 127,310 (35,551) (74,118) 48,460 20,996 — 207 69,663 (29,748) (16,952) 339 22,963 69,663 (29,748) (16,952) $ 51,325 5,607 4,354 715 62,001 (5,803) (47,320) 23 (5,322) 57,647 (5,803) (57,166) 105.9% 26.7% n.m. n.m. 89.0% (19.5)% (279.1)% 6.8% (23.2)% 82.8% (19.5)% n.m. (1) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14. (2) Loss before income tax recovery includes intersegment allocations. See the Intersegment Allocated Costs section below. (3) On March 18, 2021, the Company announced its intention to redeem the entire $132.7 million principal amount of its 6.25% convertible unsecured senior subordinated debentures. The redemption was completed on April 9, 2021. The Company recorded $4.4 million of loss and other costs in connection with extinguishment of the convertible debentures. (4) Refer to the Selected Financial Information Excluding Significant Items table on page 21. n.m.: not meaningful (percentages over 300% are indicated as n.m.) Revenue for fiscal 2021 was $31.8 million, an increase of $8.9 million or 38.7% from fiscal 2020. During the year ended March 31, 2021, there was $14.2 million of fair value adjustment recorded on certain illiquid or restricted marketable securities. This adjustment is excluded for management reporting purposes as it is not used by management to assess operating performance and is excluded for purposes of determining net income excluding significant items(1). Future changes in the unrealized fair value of the marketable securities as determined under applicable accounting standards may be significant and will be recorded through the consolidated statements of operations. In addition, there has been a decrease in increase in interest revenue resulting from lower interest rates and lower cash balances held during the year. Total expenses were $131.7 million for the year ended March 31, 2021, an increase of $62.0 million or 89.0% compared to the prior year. The largest increase in expenses was compensation costs, which increased by $51.3 million or 105.9%, largely driven by an increase in the fair value adjustment of the PSUs. General and administrative expense increased by $1.2 million or 9.3% mainly due to a reserve recorded in respect of ongoing legal matters during the current fiscal year. Development costs increased by $3.7 million due to accelerated amortization of certain technology intangibles. As discussed above, as a result of the extinguishment of the convertible unsecured senior subordinated debentures, the Company recorded $4.4 million of loss and other costs in connection with the extinguishment of the convertible debentures. Loss before income taxes was $64.3 million for fiscal 2021 compared to a loss before income taxes of $17.0 million for the prior year. Excluding significant items(1), loss before income taxes was $74.1 million for the year ended March 31, 2021 compared to a loss before income taxes of $17.0 million last year. INTERSEGMENT ALLOCATED COSTS Included in the Corporate and Other segment are certain support services, research and other expenses that have been incurred to support the activities within the Canaccord Genuity Capital Markets and Canaccord Genuity Wealth Management segments in Canada. Certain trading, clearing and settlement charges are included as a trading cost in the applicable business units and as a trading cost recovery in Corporate and Other. In addition, certain overhead costs are charged by Canaccord Genuity Capital Markets UK & Europe to Canaccord Genuity Wealth Management UK & Europe and included in intersegment allocated costs for these business units. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 39 Financial Condition Below are selected balance sheet items for the past five years: (C$ 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 Right of use assets Total assets Liabilities and shareholders’ equity Bank indebtedness Securities sold short Accounts payable and accrued liabilities Provisions Income taxes payable Current portion of bank loan Current portion of lease liability Current portion of contingent consideration Deferred consideration Contingent consideration Promissory note Lease liability Other long-term liability Bank loan Deferred tax liabilities Liability portion of convertible debenture Subordinated debt Shareholders’ equity Non-controlling interests Balance sheet summary as at March 31 2021 2020 2019 2018 2017 $ 1,883,292 $ 1,041,583 3,973,442 738 81,229 12,193 23,070 531,038 85,216 997,111 931,467 3,275,841 5,603 39,487 10,105 24,860 565,587 106,134 $ 820,739 690,499 2,656,664 2,502 22,117 6,224 25,792 524,757 — $ 862,838 469,217 2,215,837 1,170 19,941 2,035 30,967 418,731 — $ 677,769 784,230 3,395,736 1,085 15,323 2,829 31,479 295,065 — $ 7,631,801 $ 5,956,195 $ 4,749,294 $ 4,020,736 $ 5,203,516 $ — $ — $ 889,607 5,160,600 10,357 56,285 12,119 24,311 17,706 8,087 11,490 — 70,591 — 66,200 13,552 168,112 7,500 1,107,094 8,190 875,017 3,673,451 6,735 11,721 7,042 23,417 57,859 8,966 47,614 — 88,922 1,760 79,192 9,903 128,322 7,500 928,618 156 9,639 373,419 3,123,765 18,212 5,415 9,294 — — 22,225 108,319 5,832 — 1,741 50,370 7,978 127,225 7,500 876,363 1,997 $ — $ 301,006 2,638,954 8,428 7,851 9,679 — — 9,997 49,844 — — — 61,758 13,715 57,081 7,500 841,352 13,571 25,280 645,742 3,669,883 11,793 10,093 — — — — — — — — — 140 56,442 7,500 764,785 11,858 Total liabilities and shareholders’ equity $ 7,631,801 $ 5,956,195 $ 4,749,294 $ 4,020,736 $ 5,203,516 ASSETS Cash and cash equivalents were $1.9 billion at March 31, 2021 compared to $997.1 million at March 31, 2020. Refer to the Liquidity and Capital Resources section for more details. Securities owned were $1.0 billion at March 31, 2021 compared to $931.5 million at March 31, 2020 mainly due to an increase in corporate and government debt owned. Accounts receivable were $4.0 billion at March 31, 2021 compared to $3.3 billion at March 31, 2020, mainly due to an increase in receivables from brokers and investment dealers. Goodwill was $380.1 million and intangible assets were $150.9 million at March 31, 2021. At March 31, 2020, goodwill was $395.4 million and intangible assets were $170.2 million. These amounts represent the goodwill and intangible assets acquired through the purchases of Genuity Capital Markets, Collins Stewart Hawkpoint plc (CSHP), Eden Financial Ltd., Hargreave Hale, Jitneytrade, McCarthy Taylor, Petsky Prunier and Patersons. Other assets, consisting of income taxes receivable, deferred tax assets, equipment and leasehold improvements, and investments were $117.2 million at March 31, 2021 compared to $80.1 million at March 31, 2020, mainly due to an increase in deferred tax assets, and investments. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 40 Management’s Discussion and Analysis LIABILITIES AND SHAREHOLDERS’ EQUITY Securities sold short were $889.6 million at March 31, 2021 compared to $875.0 million at March 31, 2020, mostly due to an increase in short positions in corporate and government debt. Accounts payable and accrued liabilities, including provisions, were $5.2 billion, an increase from $3.7 billion on March 31, 2020, mainly due to an increase in payables to clients and brokers and investment dealers. Other liabilities, including subordinated debt, income taxes payable, other long-term liability and deferred tax liabilities, were $77.3 million at March 31, 2021 compared to $30.9 million in the prior year. The increase was mostly due to an increase in income tax payable. A subsidiary of the Company entered into a senior credit facility to finance a portion of the cash consideration for its acquisitions of Hargreave Hale and Thomas Miller. The loan is repayable in instalments of principal and interest over a period of 4 years and matures in September 2023. The interest rate on this loan is 2.1288% per annum as at March 31, 2021 [March 31, 2020 – 2.6584% per annum]. Excluding the bank loan in connection with the acquisitions of Hargreave Hale and Thomas Miller as described above, subsidiaries of the Company have other credit facilities with banks in Canada and the UK for an aggregate amount of $637.1 million [March 31, 2020 – $653.7 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, 2021, there was no bank indebtedness outstanding [March 31, 2020 – $nil]. A subsidiary of the Company has also entered into secured irrevocable standby letters of credit from a financial institution totalling $2.9 million (US$2.3 million) [March 31, 2020 – $3.3 million (US$2.3 million)] as rent guarantees for its leased premises in New York. As of March 31, 2021, and March 31, 2020, there were no outstanding balances under these standby letters of credit. There were deferred and contingent considerations of $8.1 million and $29.2 million, respectively, recorded at March 31, 2021 in connection with the acquisitions of Hargreave Hale, McCarthy Taylor and Petsky Prunier. Refer to Notes 7 of the audited consolidated financial statements for the year ended March 31, 2021 for further information. Non-controlling interests were $8.2 million at March 31, 2021 compared to $0.2 million at March 31, 2020, which represents 15% [March 31, 2020 – 15%] of the net assets of our operations in Australia. Off-Balance Sheet Arrangements A subsidiary of the Company has entered into secured irrevocable standby letters of credit from a financial institution totaling $3.3million (US$2.3 million) [March 31, 2020 – $2.7 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, 2021, the Company had no bank indebtedness outstanding [March 31, 2020 – $9.6 million]. In the normal course of business, the Company enters into contracts that give rise to commitments of future minimum payments that affect its liquidity. The following table summarizes Canaccord Genuity Group’s long-term contractual obligations on March 31, 2021: (C$ thousands) Premises and equipment operating leases Bank loan(1) Convertible debentures(2) Total contractual obligations Total Fiscal 2022 154,853 83,280 168,112 406,245 29,642 14,271 168,112 212,025 Fiscal 2023 – Fiscal 2024 52,741 69,009 — 121,750 Fiscal 2025 and fiscal 2026 32,445 — — 32,445 Thereafter 40,025 — — 40,025 (1) Bank loan consists of £40,000,000 credit facility obtained to finance a portion of the cash consideration for the acquisition of Hargreave Hale and £15,000,000 for the acquisition of Thomas Miller. The bank loan bears interest at 2.1288% per annum and is repayable in instalments of principal and interest over four years and matures in September of 2023. The current balance outstanding net of unamortized financing fees is £45.2 million. (2) Convertible debentures consist of the unsecured senior subordinated convertible debentures (the Debentures) issued in Q2/19. On March 18, 2021, the Company announced its intention to redeem the entire $132,690,000 principal amount plus accrued interest. The redemption was completed on April 9, 2021. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 41 Liquidity and Capital Resources The Company has a capital structure comprised of the equity portion of the convertible debentures, preferred shares, common shares, contributed surplus, retained earnings and accumulated other comprehensive income. On March 31, 2021, cash and cash equivalents were $1.9 billion, an increase of $886.2 million from $997.1 million as of March 31, 2020. During the year ended March 31, 2021, financing activities used cash in the amount of $191.2 million, mainly due to purchases of common shares for the LTIP ($37.8 million), cash dividends paid on the preferred and common shares of $33.3 million, payment of deferred and contingent consideration of $73.6 million and lease payments of $30.2 million. Investing activities used cash in the amount of $12.5 million mainly for the acquisition of investments, as well as the purchase of fixed assets and intangibles. Operating activities generated cash of $1.1 billion, which was largely due to changes in non-cash working capital. A decrease in cash of $5.7 million was attributable to the effect of foreign exchange translation on cash balances. 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 two-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 has the option to redeem 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, as declared, were paid at an annual rate of 5.75% for the initial five-year period ended on June 30, 2017. Commencing July 1, 2017 and ending on and including June 30, 2022, quarterly cumulative dividends, if declared, will be paid at an annual rate of 4.993%. 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 had the 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 have the option on June 30 every five years thereafter. The number of shares tendered for conversion by the conversion deadline of June 30, 2017 was below the minimum required to proceed with the conversion and, accordingly, no Series D Preferred Shares were issued. Series D 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 4.03%. The Company had the option to redeem the Series C Preferred Shares on June 30, 2017 and has the option to redeem on June 30 every five years thereafter, in whole or in part, at $25.00 per share together with all declared and unpaid dividends. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 42 Management’s Discussion and Analysis CONVERTIBLE DEBENTURES On March 18, 2021, the Company announced its intention to redeem the entire $132,690,000 principal amount of its outstanding Debentures. The redemption price of the Debentures equal $1,266.95 for each $1,000 principal amount of Debentures, being equal to the aggregate of (i) $1,250 per $1,000 principal amount of Debentures, and (ii) $16.95 of accrued and unpaid interest per $1,000 principal amount up to but excluding April 9, 2021. The total redemption price of $168.1 million was fully accrued as of March 31, 2021. The redemption was completed on April 9, 2021. The Debentures were considered extinguished for accounting purposes under IFRS 9, “Financial Instruments” as of March 31, 2021. As a result, the Company recorded a loss of $36.2 million on the extinguishment of the Debentures during the year ended March 31, 2021, with $4.1 million recorded through the consolidated statement of operations and $32.1 million recorded directly against shareholders’ equity. There were also $0.3 million of professional fees incurred in relation to the extinguishment of the Debentures during the year ended March 31, 2021. 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 2021 2020 4,540,000 4,000,000 4,540,000 4,000,000 95,791,083 108,191,331 112,567,757 96,658,863 108,977,972 93,464,251 107,812,361 130,722,846 98,449,097 128,302,744 (1) Excludes 122,355 outstanding unvested shares related to share purchase loans for recruitment, 11,588,393 unvested shares purchased by the employee benefit trusts for the LTIP and 689,500 shares committed to repurchase under NCIB. (2) Includes 122,355 unvested shares related to share purchase loans for recruitment, 11,588,393 unvested shares purchased by the employee benefit trusts for the LTIP and 689,500 shares committed to repurchase under the NCIB. (3) Includes 4,376,426 of share issuance commitments net of forfeitures. (4) This is the diluted share number used to calculate diluted EPS. On August 18, 2020, 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 5,390,674 of its common shares during the period from August 21, 2020 to August 21, 2021 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, 2021, there were 845,500 shares purchased and cancelled and an additional 70,000 shares purchased but not yet cancelled as of March 31, 2021. 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 21, 2020 and will continue for one year (to August 20, 2021) 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 76,127 common shares of the Company (which is 25% of the average daily trading volume of common shares of the Company on the TSX (ADTV) in the six calendar months from February 2020 to July 2020 (25% of the ADTV of 304,508)) . As of May 31, 2021, the Company has 107,639,231 common shares issued and outstanding. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT ISSUANCE AND CANCELLATION OF COMMON SHARE CAPITAL Balance, March 31, 2020 Shares issued in connection with share-based payment plans Shares issued in connection with acquisition of Petsky Prunier Shares issued in connection with settlement of Jitneytrade contingent consideration Shares issued in connection with exercise of performance share options Shares issued in connection with conversion of convertible debentures Shares purchased and cancelled under the normal course issuer bid Balance, March 31, 2021 Share-Based Payment Plans LONG-TERM INCENTIVE PLAN Management’s Discussion and Analysis 43 107,812,361 1,121 736,850 300,000 182,999 3,500 (845,500) 108,191,331 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 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. No interest is charged in relation to the share purchase loans. REPLACEMENT PLANS As a result of the acquisition of Collins Stewart Hawkpoint plc (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. DEFERRED SHARE UNITS Beginning April 1, 2011, the Company adopted a deferred share unit (DSU) plan for its independent directors. From August 7, 2020, half of the independent directors’ annual fee was paid in the form of DSUs. Directors may elect annually to use more of their directors’ fees for DSUs. When a directors leaves the Board of Directors, outstanding DSUs are paid out in cash with the amount equal to the number of DSUs held multiplied by the volume weighted average price of the Company’s common shares for the ten trading days immediately preceding a date elected in advance by the outgoing director as the valuation date at any time between their ceasing to be a director and December 1 of the following calendar year. 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. PERFORMANCE SHARE UNITS The Company adopted a performance share unit (PSU) plan for certain senior executives. The PSUs are a notional equity-based instrument linked to the value of the Company’s common shares. At the end of a three-year vesting period, the number of PSUs which vest is a multiple of the number of PSUs originally granted ranging from 0x to 2x based upon performance against certain metrics pre-determined for each annual grant. The PSUs cliff-vest on the third anniversary of the date of the grant. The number of PSUs that vest is also adjusted for dividends paid during the vesting period. The PSUs are settled in cash, based on the market price of the Company’s shares at the time of vesting. The PSUs were measured at fair value on the grant date. Changes in value of the PSUs at each reporting period are amortized over the remaining vesting period and recorded as a compensation expense in the statement of operations. During the year ended March 31, 2021, the PSU plan was amended to include certain employment-related conditions to the vesting of the awards resulting in a change in the periodic expense recorded during the vesting period. PERFORMANCE SHARE OPTIONS The Company created a performance share option (PSO) plan for certain senior executives. The PSOs have a term of five years and will time-vest ratably over four years (with one-third vesting on each of the second, third and fourth anniversaries of the date of the grant). The PSOs will also be subject to market (stock price) performance vesting conditions, and have a four times exercise 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 44 Management’s Discussion and Analysis price cap on payout value (i.e., the gain on the exercise of the options is limited to three times the exercise price). During the year ended March 31, 2021, the stock price performance vesting conditions had been met on a total of 6,237,001 outstanding options. A total of 1,923,667 options outstanding had met both stock price performance and time-based vesting conditions and are therefore fully vested and outstanding. OTHER SHARE-BASED PAYMENT PLAN During the year ended March 31, 2019, the Company granted a share-based award to a senior executive. The award was originally scheduled to vest on March 31, 2021 or at the holder’s opinion, extended to March 31, 2022. During the year ended March 31, 2021, the award was modified to a cash-settled award with the settlement value determined based on the measurement period ended December 31, 2020. The carrying amount of the liability recognized in accounts payable and accrued liabilities relating to this other share-based payment plan at March 31, 2021 was $19.3 million. OTHER RETENTION AND INCENTIVE PLANS 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. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 45 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: % equity interest Canaccord Genuity Corp. CG Investments Inc. CG Investments Inc. III CG Investments Inc. IV CG Investments Inc. V CG Investments Inc. VI Jitneytrade Inc. Finlogik Inc. Finlogik Tunisie SARL 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 Hargreave Hale Limited CG McCarthy Taylor Limited CG Wealth Planning Limited Canaccord Genuity Limited Canaccord Genuity Wealth Group Holdings Ltd. Canaccord Genuity LLC Canaccord Genuity Wealth Management (USA) Inc. Canaccord Genuity Wealth & Estate Planning Services Ltd. Canaccord Genuity Petsky Prunier LLC Canaccord Asset Management Inc. Canaccord Adams Financial Group Inc. Collins Stewart Inc. Canaccord Adams BC ULC Canaccord Genuity Finance Corp. Canaccord Adams Finance Company ULC Canaccord Adams Finance Company LLC 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* Canaccord Genuity Financial Limited* The Balloch Group Limited Canaccord Genuity Asia (Hong Kong) Limited Canaccord Genuity (Dubai) Ltd. Canaccord Genuity SG Pte. Ltd. (in liquidation) Canaccord Genuity Wealth Group Holdings (Jersey) Limited Canaccord Genuity Hawkpoint Limited Canaccord Genuity Management Company Limited Country of incorporation Canada Canada Canada Canada Canada Canada Canada Canada Tunisia France Guernsey United Kingdom United Kingdom United Kingdom Guernsey United Kingdom United Kingdom United Kingdom United Kingdom Canada United States United States Canada United States Canada United States United States Canada Canada Canada United States United States United States Canada Canada China (Hong Kong SAR) Australia Australia Australia China British Virgin Islands China (Hong Kong SAR) United Arab Emirates Singapore Jersey United Kingdom Ireland March 31, 2021 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 80% 80% 100% 100% 100% 100% 100% 100% 100% 100% March 31, 2020 100% 100% 100% n/a n/a n/a 100% 100% 75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 80% 80% 100% 100% 100% 100% 100% 100% 100% 100% * The Company owns 80% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd., Canaccord Genuity (Australia) Limited, and Canaccord Genuity Financial Limited, but for accounting purposes, as of March 31, 2021 the Company is considered to have an 85% interest because of the shares held in a trust controlled by Canaccord Financial Group (Australia) Pty Ltd. [March 31, 2020 – 85%] [Note 8]. 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. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 46 Management’s Discussion and Analysis The Company offers various share-based payment plans to its key management personnel, including common share purchase loans, a long-term incentive plan, a PSU plan and a PSO plan. Independent directors have also been granted DSUs. Disclosed in the table below are the amounts recognized as expenses related to individuals who are key management personnel as at March 31, 2021 and March 31, 2020. (in thousands) Short term employee benefits Share-based payments Total compensation paid to key management personnel March 31, 2021 $ $ 10,663 $ 654 11,317 $ March 31, 2020 12,877 1,068 13,945 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, 2021 $ $ 4,686 $ 1,562 $ March 31, 2020 2,328 980 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, 2021. The Company’s consolidated financial statements for the years ended March 31, 2021 and 2020 were also prepared in accordance with IFRS. The preparation of the March 31, 2021 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 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. Amendments may be made to estimates relating to net assets acquired in an acquisition as well as the allocation of identifiable intangible assets between indefinite life and finite lives. Judgments, estimates and assumptions were also utilized in connection with the valuation of goodwill and intangible assets acquired in connection with the acquisitions of Patersons Securities Limited and Thomas Miller Wealth Management and Thomas Miller Investment (Isle of Man) Limited. 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, 2021. CONSOLIDATION The Company owns 80% of the voting shares of Canaccord Genuity (Australia) Limited (CGAL) and Canaccord Genuity Financial Limited as at March 31, 2021. 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, 2021 and 2020. Therefore, the financial position, financial performance and cash flows of CGAL have been consolidated. Although the Company owns 80% of the issued shares of CGAL as at March 31, 2021, for accounting purposes, the Company is considered to have an 85% 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 15% non-controlling interest , which represents the portion of CGAL’s net identifiable assets not owned by the Company. Net income and each component of other comprehensive income 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. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 47 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 either at a point in time when a single performance obligation is satisfied at once or over the period of time when a performance obligation is received and utilized by the customer over that period. The Company assesses its revenue arrangements in order to determine if it is acting as principal or agent. The main types of revenue contracts are as follows: Commissions and fees revenue consist 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 net of commission revenue. Facilitation losses for the year ended March 31, 2021 were $8.4 million [2020 – $8.4 million]. Commissions are recognized at a point in time (trade date) as the performance obligation is satisfied. Investment banking revenue consists of underwriting fees and commissions earned on corporate finance activities. The act of underwriting the securities is the sole performance obligation and revenue is recognized at the point in time when the underwriting transaction is complete. Advisory fees consist of ongoing management and advisory fees that are recognized over the period of time that this performance obligation is delivered. Also included in advisory fees is revenue from mergers and acquisitions activities, which is recognized at 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 48 Management’s Discussion and Analysis the point in time when the underlying transaction is substantially completed under the engagement terms and it is probable that a significant revenue reversal will not occur. Principal trading revenue consists of income earned in connection with principal trading operations and is outside the scope of IFRS 15. Interest revenue consists of interest earned on client margin accounts, interest earned on the Company’s cash, interest earned on cash delivered in support of securities borrowing activity, and dividends earned on securities owned. Interest and dividend revenue is outside the scope of IFRS 15. Other revenue includes foreign exchange gains or losses, revenue earned from correspondent brokerage services and administrative fee revenue. 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) 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). The participating employees are eligible to receive shares that generally vest over three years (the RSUs). This program is referred to as the Long-Term Incentive Plan (the “LTIP” or the “Plan”). Independent directors also receive deferred share units (DSUs) as part of their remuneration, which can only be settled in cash (cash- settled transactions). Certain executives may also receive performance stock options (PSOs) as part of their remuneration, which are equity-settled. In addition, certain senior executives receive performance share units (PSUs) 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. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 49 Equity-settled transactions For equity-settled transactions, the Company measures the fair value of share-based awards as of the grant date. RSUs issued by the Plan continue to vest after termination of employment so long as the employee does not violate certain post- termination restrictions and is not engaged in certain competitive or soliciting activities as provided in the Plan. Because of this change, the Company determined that the awards do not meet the criteria for an in-substance service condition, as defined by IFRS 2. Accordingly, RSUs granted as part of the normal course incentive compensation payment cycle are expensed in the period in which those awards are deemed to be earned with a corresponding increase in contributed surplus, which is generally the fiscal period in which the awards are either made or the immediately preceding fiscal year for those awards made after the end of such fiscal year but were determined and earned in respect of that fiscal year. For certain awards, typically new hire awards or retention awards, vesting is subject to continued employment and therefore these awards are subject to a continuing service requirement. Accordingly, the Company recognizes the cost as an expense on a graded basis over the applicable vesting period with a corresponding increase in contributed surplus. 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. 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. The PSUs were measured at fair value on grant date. Changes in value of the PSUs at each reporting period are amortized over the remaining vesting period and recorded as a compensation expense in the statement of operations as a result of certain employment-related conditions. 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. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 50 Management’s Discussion and Analysis 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 Note 7 of the audited consolidated financial statements for the year ended March 31, 2021. 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, 2021, there were no forward contracts outstanding to sell US dollars, compared to US$2.1 million at March 31, 2020. Forward contracts outstanding to buy US dollars had a notional amount of US$5.9 million, an increase of US$5.1 million from March 31, 2020. 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. At March 31, 2021, the notional amount of the bond futures contracts outstanding was short $1.1 million [March 31, 2020 – long $29.9 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. There were no outstanding US Treasury futures contracts outstanding as at March 31, 2021 and March 31, 2020. 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. Adoption of New and Revised Standards There were no new accounting standards adopted for the period ended March 31, 2021. 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. STANDARDS ISSUED BUT NOT YET EFFECTIVE There were no standards issued, which may reasonably be expected to materially impact the Company’s financial statements, but which were not yet effective as of March 31, 2021. Disclosure Controls and Procedures and Internal Control over Financial Reporting DISCLOSURE CONTROLS AND PROCEDURES As of March 31, 2021, 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, 2021. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 51 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, 2021 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, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 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: 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 Risk Management 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, Information Technology and Legal. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 52 Management’s Discussion and Analysis The Company’s global Cybersecurity Committee exists 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 Cybersecurity Committee is focused on issues such as cybersecurity risk assessment, IT safeguards and controls, risks related to third-party service providers, employee training and awareness and incident response planning. 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 their market risk exposure is prudent within a set of risk limits set by the Risk Management Committee and approved by the Audit Committee. In addition, the Company has established procedures to ensure that risks are measured, closely monitored, controlled and visible to senior levels of management. The Company is exposed to equity price risk, liquidity risk and volatility risk as a result of its principal trading activities in equity and equity options 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, as well as by trading desk. Management regularly reviews and monitors inventory levels and positions, trading results, liquidity profile, position aging and concentration levels. Canaccord Genuity Group also utilizes scenario analysis and a Value-at-Risk (VaR) risk measurement system for its equity and fixed income and derivative inventories. 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 Jitneytrade trade business acquired by the Company in fiscal 2019 (now rebranded as CG Direct) and Canaccord Genuity Wealth Management business segments, including client margin accounts. In order to minimize financial exposure in this area, the Company applies a set of 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 margin-based lending, the Company extends credit for a portion of the market value of the securities in a client’s account, up to certain limits. The margin loans are collateralized by those 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 risk-based 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. Trading strategies involving derivative products, such as exchange traded options and futures carry certain levels of risk to the Company. Due to the non-linear and intrinsically leveraged nature of derivative securities, the speed at which their value changes is exacerbated, thereby potentially triggering margin calls and client-related losses. Although the Company imposes strict limits on clients trading and monitors client exposure on a real-time basis there is no certainty that such procedures will be effective in eliminating or reducing the risk of losses to the Company. 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, loan coverage ratios 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 and principal 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 trading and 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. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 53 OPERATIONAL RISK Operational risk is the risk of loss resulting from inadequate or failed internal processes, 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, credit or other 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 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: • Identify and assess key risks inherent to the business and categorize them based on severity and frequency of occurrence • Rate the effectiveness of the control environment associated with the key risks • Mitigate the risks through the identification of action plans to improve the control environment where appropriate • Provide management with a consistent approach to articulate and communicate the risk profiles of their areas of responsibility • Meet regulatory requirements and industry standards The Company has established a process to determine what the strategic objectives of each group/unit/department are and to 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 in which it operates. 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, use of and safekeeping of client data, credit granting, collection activity, anti-money laundering, insider trading, employee misconduct, 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. The Company and its affiliates provide financial advisory, underwriting and other services to, and trade the securities of issuers that are involved with, new and emerging industries, including the US cannabis industry. Activities within such industries, including the US cannabis industry, typically have not had the benefit of a history of successful operating results. In addition to the economic uncertainties associated with new industries, new activities and new issuers, the laws applicable to such industries or activities, particularly the US cannabis industry and the activities of issuers in that industry, and the effect or enforcement of such laws are undetermined, conflicting and uncertain. With respect to the US cannabis industry, cannabis continues to be a controlled substance under the United States Controlled Substances Act and as such, there is a risk that certain issuers, while in compliance with applicable state law, may be prosecuted under federal law. Accordingly, the Company has adopted policies and procedures reasonably designed to ensure compliance with the United States Currency and Foreign Transactions Reporting Act of 1970 (the Bank Secrecy Act) and the guidance issued by the United States Department of the Treasury Financial Crimes Enforcement Network, FIN-2014-G001 (the FinCEN Guidance) relating to providing financial services to marijuana related businesses in the United States (as that term is used in the FinCEN Guidance). While the Company takes steps to identify the risks associated with emerging industries, including the US cannabis industry, and only provides services to those issuers where it determines that there is no 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 54 Management’s Discussion and Analysis material risk to the Company or where any risk is unlikely to result in a material adverse consequence to the Company, there is a risk that the Company could be the subject of third party proceedings which may have a material adverse effect on the Company business, revenues, operating results and financial condition as well as the Company’s reputation, even if such proceedings were concluded successfully in favour of the Company. The Company has determined that any such proceedings are unlikely and, accordingly, has not recorded a provision in respect of such matters. 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 has implemented a third party risk management framework as part of onboarding new vendors and other third parties as well as vetting existing vendors. The purpose of this mitigant is to ensure all parties interacting with the Company are adhering to high standards as it relates to cybersecurity. The Company devotes considerable effort and resources to defend against and mitigate cybersecurity risk, including increasing awareness throughout the organization by implementing a firm-wide 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, or alleged to have been 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, disparaging traditional or online media coverage, 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, a Business Integrity Line for reporting incidents, and an integrated program of marketing, branding, communications and investor relations to help manage and support the Company’s reputation. Pandemic risk Pandemic risk is the risk of large-scale outbreaks of infectious diseases that can greatly increase morbidity and mortality over a wide geographic area and cause significant social and economic disruption. Such disruptions could have a negative impact on the Company’s operations and could prevent the Company from operating as it would under normal conditions. The global outbreak of COVID-19 and the declaration of a pandemic by the World Health Organization in March 2020 caused a significant disruption in economic activity and resulted in a sharp downturn in global equity markets which impacted the normal operation of the Company’s business. In the early stages of the outbreak, the Company overhauled its Disaster Recovery Plan in preparation for an escalation of the outbreak. This overhaul included the setup of low-latency remote access trading systems for trading desks, updates of technology solutions and the network infrastructure, load testing of remote access systems, and policy and procedural enhancements to reduce the need for manual processes to ensure the smooth operations of the business to account for a remote working environment. As a result, the Company was well prepared and experienced no notable disruptions to its operations as a result of having most employees working from remote locations. Trading desks operated smoothly and effectively to both service clients and to limit the Company’s exposure and risks in managing its own inventory and trading positions. Although the Company’s systems, processes and procedures were effective in limiting the business risk associated with the outbreak of the COVID-19 pandemic there is a risk that such systems, processes and procedures may not be successful in the event of future pandemics or in the event that conditions under the COVID-19 pandemic deteriorate or persist for an extended period of time. The extent to which the Company’s business and financial condition will continue to be affected by the COVID-19 pandemic will depend on future developments including the spread of variants, efficacy of vaccines against new variants, the achievement of mass vaccinations and the impact of related controls and restrictions imposed by government authorities. Control risk As of March 31, 2021, senior officers and directors of the Company collectively owned approximately 12.6% of the issued and outstanding (21.3% 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. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Management’s Discussion and Analysis 55 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. 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. 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 considers to be of particular relevance. Other risk factors may apply. Further discussion regarding risks can be found in our Annual Information Form. 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, 2021, the Board of Directors approved a dividend of $0.075 per common share, payable on June 30, 2021, with a record date of June 18, 2021. On June 1, 2021, the Board approved a cash dividend of $0.24281 per Series A Preferred Share payable on June 30, 2021 to Series A Preferred shareholders of record as at June 18, 2021. On June 1, 2021, the Board approved a cash dividend of $0.31206 per Series C Preferred Share payable on June 30, 2021 to Series C Preferred shareholders of record as at June 18, 2021. 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. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 56 Independent Auditor’s Report To the Shareholders of Canaccord Genuity Group Inc. Opinion We have audited the consolidated financial statements of Canaccord Genuity Group Inc. and its subsidiaries (the Group), which comprise the consolidated statements of financial position as at March 31, 2021 and 2020, and the consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs). Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements. Key Audit Matter How our Audit Addressed the Key Audit Matter Revenue Recognition on Corporate Finance and M&A Transactions As at March 31, 2021, the Company recorded $197.1 million of advisory revenue related to corporate finance and M&A transactions. The Company recognizes advisory fee revenue when the performance obligation for the underlying transaction is complete under the terms of the agreement. As individual advisory fee transactions are often substantial in size and the number and timing of transactions can vary significantly from period to period depending on market activity, this audit area is considered a key audit risk. Where significant transactions close near the reporting date, an evaluation must be completed to determine in which period the Company completed delivery of its performance obligations and recognize revenue accordingly. The details of the Company’s accounting policies for revenue recognition are disclosed in note 5, “Summary of Significant Accounting Policies”. To test the revenue recognized related to advisory fees, our audit procedures included, among others: • We selected a sample of advisory fee transactions and reviewed executed contracts to assess whether the performance obligation was satisfied over time or at a point in time; • We tested a sample of open advisory transactions at the reporting date and evaluated if performance obligations associated advisory services provided over a period of time were recognized in accordance with IFRS 15 by obtaining evidence of delivery of services and comparing to the period of revenue being recognized; • We reviewed source documents, including the executed agreements and cash receipts to obtain evidence of completion of performance obligations for all advisory transactions that closed immediately before and after year-end and assessed whether revenue was recognized in the correct period; • We evaluated the Company’s critical accounting policies and related disclosures in the consolidated financial statements to determine if they appropriately describe these transactions and whether they are in accordance with IFRS 15. Impairment of Goodwill and Indefinite-lived Intangible Assets As at March 31, 2021, the Company has $425.0 million of goodwill and indefinite life intangible assets. Management assesses at least To test the estimated FVLCS of the CGU (or group of CGUs), our audit procedures included among others: CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT 57 Key Audit Matter How our Audit Addressed the Key Audit Matter annually, or when indicators of impairment exist, whether there has been an impairment loss in the carrying value of these assets. When testing goodwill and indefinite lived intangible assets for impairment, Management compares the carrying amount of a cash generating unit (“CGU”) to its recoverable amount which is determined using the higher of value in use or fair value less costs to sell (“FVLCS”). The impairment testing of CGUs relies on estimates of recoverable amounts based on 5-year forecasts and a terminal value for the period thereafter. Given the subjective nature of the significant inputs to the impairment model, including the volatility of revenue, incentive compensation costs, discount rate and terminal growth rate, the results of the model are sensitive to inputs where management applies judgement. The Company acquired a Brand Name indefinite lived intangible asset and applies the relief of royalty method to calculate the recoverable amount of this asset. This method utilized a discounted cash flow calculation based on several assumptions, including the royalty rates as a percentage of revenues applied to the CGUs utilizing the Brand Name and the impact of maintenance costs to the recoverable amount. Due to the subjectivity involved in forecasting and discounting future cash flows and the significance of the Company’s recognized goodwill $380.1 million and indefinite-lived intangible assets $44.9 million as at March 31, 2021, this audit area is considered a key audit risk. The details of the Company’s accounting policies for goodwill and indefinite-lived intangible assets are disclosed in note 5, “Summary of Significant Accounting Policies”. Fair value measurement of level 3 marketable securities The Company has level 3 investments consisting of $46.6 million, recorded at fair value. These financial instruments are complex and illiquid and require valuation techniques that may include complex models and non-observable inputs, requiring management’s estimation and judgment. Auditing the valuation of these financial instruments required the application of significant auditor judgement and involvement of valuation specialists in assessing the complex models and non-observable inputs used, including any significant valuation adjustments. Given the subjectivity involved, this audit area is considered a key audit risk. The Company describes its significant accounting judgements, estimates, and assumptions in relation to the fair value measurement of financial instruments in note 5, “Summary of Significant Accounting Policies”, and in note 7, “Financial Instruments”. Other Information • With the assistance of our valuation specialists, we evaluated the appropriateness and mathematical accuracy of the impairment models for the CGUs which contained goodwill. As part of this evaluation, we compared the carrying values used in models for each CGU to the financial records of the Company and compared the CGUs identified by the Company to the lowest level of operations monitored by management and others in the organization. • With the assistance of our valuation specialists, we evaluated the assumptions and inputs into the Company’s calculation of the recoverable amount for each CGU containing goodwill, including the revenue, incentive compensation costs, discount rate and terminal growth rate, by comparing those assumptions to historical results and benchmark data. • With the assistance of our valuation specialists, we evaluated the assumptions and inputs into the Company’s calculation of the relief of royalty model for the brand name intangible, including the royalty rates and revenues applied to the CGUs for consistency with the historical results and expenses in the goodwill models associated with those CGUs. • We performed sensitivity analysis on significant assumptions, including revenue growth rates, expense growth rates, and forecast cash flows, to evaluate changes in the recoverable amount of the CGU (or group of CGUs) that would result from changes in the assumptions. • We assessed the Company’s disclosures included in note 13 of the accompanying financial statements in relation to this matter. To test the fair value of level 3 marketable securities, our audit procedures included, among others • With the assistance of our valuation specialists, we assessed the appropriateness and mechanical accuracy of models used in the valuation of these financial instruments. • With the assistance of our valuation specialists, we performed an independent valuation for a sample of warrants and illiquid securities to assess the modelling assumptions and significant inputs used to estimate the fair value. • We independently verified significant inputs using internal and external sources and performed a sensitivity analysis on any significant non-observable inputs to evaluate the overall reasonability of the fair value of the portfolio. • We evaluated the Company’s disclosures of the warrants and illiquid securities held by the Company and determined they were in accordance with IFRS 7 and IFRS 9. Management is responsible for the other information. The other information comprises: • Management’s Discussion and Analysis • The information, other than the consolidated financial statements and our auditor’s report thereon, in the Annual Report Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. We obtained Management’s Discussion & Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard. The Annual Report is expected to be made available to us after the date of the auditor’s report. If based on the work we will perform on this other information, we conclude there is a material misstatement of other information, we are required to report that fact to those charged with governance. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 58 Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, 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. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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 Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Andre de Haan. Chartered Professional Accountants Licensed Public Accountants Toronto, Canada June 1, 2021 CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Canaccord Genuity Group Inc. Consolidated Statements of Financial Position 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 Right of use assets Total assets LIABILITIES AND EQUITY Current Securities sold short Accounts payable and accrued liabilities Provisions Income taxes payable Subordinated debt Current portion of bank loan Current portion of lease liabilities Current portion of contingent consideration Convertible debentures Total current liabilities Deferred tax liabilities Convertible debentures Deferred consideration Contingent consideration Other long-term liability Bank loan Lease liabilities Total liabilities Equity Preferred shares Common shares Equity portion of convertible debentures Contributed surplus Deferred consideration Retained earnings (deficit) Accumulated other comprehensive income Total shareholders’ equity Non-controlling interests Total equity Total liabilities and shareholders’ equity See accompanying notes On behalf of the Board: “Daniel Daviau” “Terrence A. Lyons” DANIEL DAVIAU Director TERRENCE A. LYONS Director 59 March 31, 2021 $ March 31, 2020 $ $ $ 1,883,292 $ 1,041,583 3,973,442 738 6,899,055 81,229 12,193 23,070 150,923 380,115 85,216 7,631,801 $ 889,607 5,160,600 10,357 56,285 7,500 12,119 24,311 17,706 168,112 6,346,597 13,552 — 8,087 11,490 — 66,200 70,591 6,516,517 205,641 662,366 — 62,402 — 73,220 103,465 1,107,094 8,190 1,115,284 7,631,801 $ 997,111 931,467 3,275,841 5,603 5,210,022 39,487 10,105 24,860 170,170 395,417 106,134 5,956,195 875,017 3,673,451 6,735 11,721 7,500 7,042 23,417 57,859 — 4,662,742 9,903 128,322 8,966 47,614 1,760 79,192 88,922 5,027,421 205,641 663,553 5,156 101,501 6,545 (193,131) 139,353 928,618 156 928,774 5,956,195 8 $ Notes 6, 7 9, 23 14 10 11 13 13 12 6, 7 9, 23 27 15 16 17 7 18 14 18 7 7 22 16 17 19 20 18 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 60 Canaccord Genuity Group Inc. Consolidated Statements of Operations For the years ended (in thousands of Canadian dollars, except per share amounts) March 31, 2021 $ March 31, 2020 $ Notes 735,239 761,551 197,092 246,801 26,288 40,717 586,884 236,962 206,507 108,834 63,690 20,990 2,007,688 1,223,867 1,227,895 122,154 19,948 67,475 28,364 82,310 26,156 25,040 27,246 — 5,922 4,354 922 738,313 83,964 18,094 66,666 33,678 113,612 32,594 22,866 12,053 1,921 (124) — 207 1,637,786 1,123,844 369,902 100,023 133,252 (33,152) 100,100 269,802 29,344 (15,875) 13,469 86,554 263,786 $ 6,016 $ 86,490 64 96,659 108,978 98,449 128,303 11, 13 12 27 18 14 8 20 20 20 $ 20 $ 21 $ 21 $ 21 $ 2.30 $ 2.04 $ 0.97 $ 1.25 $ 0.25 $ 0.78 0.65 0.97 1.25 0.20 REVENUE Commissions and fees Investment banking Advisory fees Principal trading Interest Other EXPENSES Compensation expense Trading costs Premises and equipment Communication and technology Interest General and administrative Amortization Amortization of right of use assets Development costs Restructuring costs Acquisition-related costs Loss and other costs in connection with extinguishment of convertible debentures Share of loss of an associate Income before income taxes Income tax expense (recovery) Current Deferred Net income for the year Net income attributable to: CGGI shareholders Non-controlling interests Weighted average number of common shares outstanding (thousands) Basic Diluted Income per common share Basic Diluted Dividend per Series A Preferred Share Dividend per Series C Preferred Share Dividend per common share See accompanying notes CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT 61 Canaccord Genuity Group Inc. Consolidated Statements of Comprehensive Income For the years ended (in thousands of Canadian dollars) Net income for the year Other comprehensive income Net change in unrealized (losses) gains on translation of foreign operations, net of tax Comprehensive income for the year Comprehensive income attributable to: CGGI shareholders Non-controlling interests See accompanying notes March 31, 2021 $ 269,802 $ March 31, 2020 $ 86,554 (31,439) 238,363 $ 36,745 123,299 $ $ 231,989 $ 6,374 $ 122,088 1,211 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 62 Canaccord Genuity Group Inc. 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) Release of vested common shares from employee benefit trusts Private placement warrants exercise Shares purchased under substantial issuer bid Shares committed to purchase under the normal course issuer bid Conversion of convertible debentures Shares issued in connection with settlement of JItneytrade contingent consideration Shares issued in connection with acquisition of Petsky Prunier Shares issued in connection with exercise of performance stock options (PSOs) Shares cancelled Net unvested share purchase loans Common shares, closing Warrants, opening Reclassification to liability Warrants, closing Convertible debentures – equity, opening Reclassification to retained earnings upon redemption of convertible debentures Convertible debentures – equity, closing Contributed surplus, opening Share-based payments, net Shares cancelled Equity portion of redemption of convertible debentures Unvested share purchase loans Change in deferred tax asset relating to share-based payments Contributed surplus, closing Retained deficit, opening Net income attributable to CGGI shareholders Reclassification of realized gains on disposal of financial instruments measure at fair value through other comprehensive income Common share dividends Preferred share dividends Reclassification of equity portion of convertible debentures Retained earnings (deficit), closing Deferred consideration, opening Petsky Prunier Deferred consideration, closing Accumulated other comprehensive income, opening Reclassification of realized gains on disposal of financial instruments measure at fair value through other comprehensive income Other comprehensive (loss) 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 Non-controlling interests, closing Total equity See accompanying notes CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes 19 20 18 21 21 18 March 31, 2021 $ 205,641 663,553 10 (37,822) 40,766 — — (8,181) 22 2,000 6,545 1,232 (5,585) (174) 662,366 — — — 5,156 (5,156) — 101,501 15,882 (3,274) (58,747) 174 6,866 62,402 (193,131) 263,786 4,091 (23,924) (9,404) 31,802 73,220 6,545 (6,545) — 139,353 March 31, 2020 $ 205,641 672,896 489 (39,846) 69,903 732 (40,000) — — — 7,094 — (10,136) 2,421 663,553 1,975 (1,975) — 5,156 — 5,156 124,710 (23,490) 2,935 — (2,421) (233) 101,501 (237,770) 86,490 — (32,447) (9,404) — (193,131) — 6,545 6,545 103,755 (4,091) (31,797) 103,465 — 35,598 139,353 1,107,094 $ 928,618 1,997 (1,542) 1,211 (1,510) 156 928,774 156 1,660 6,374 — 8,190 1,115,284 Canaccord Genuity Group Inc. Consolidated Statements of Cash Flows For the years ended (in thousands of Canadian dollars) OPERATING ACTIVITIES Net income for the year Items not affecting cash Amortization Amortization of right-of-use assets Deferred income tax recovery Share-based compensation expense Loss and other costs in connection with extinguishment of convertible debentures Non-cash portion of acquisition- related costs Share of loss of associate Impairment of investments Interest expense in connection with lease liabilities Changes in non-cash working capital Increase in securities owned Increase in accounts receivable Increase in income taxes payable, net Increase in securities sold short Increase in accounts payable, accrued liabilities and provisions Cash provided by operating activities FINANCING ACTIVITIES Decrease in bank indebtedness Purchase of shares for cancellation under normal course issuer bid Purchase of shares under substantial issuer bid Acquisition of common shares for long-term incentive plan Proceeds from bank loan Proceeds from exercise of performance share options Payment of bank loan Payment of long-term liability Payment of deferred and contingent consideration Cash dividends paid on common shares Cash dividends paid on preferred shares Lease payments Cash used in financing activities INVESTING ACTIVITIES Purchase of equipment and leasehold improvements Purchase of intangibles Acquisition of Thomas Miller, net of cash acquired Acquisition of Patersons Securities Limited, net of cash acquired Investment in associate Purchase of investments 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 63 March 31, 2021 $ March 31, 2020 $ Notes $ 269,802 $ 86,554 11, 13 12 22 18 26,156 25,040 (33,152) 146,408 4,354 2,000 922 2,370 6,765 (110,116) (699,172) 52,329 14,590 1,387,386 1,095,682 — (8,859) — (37,822) — 1,232 (6,925) (1,721) (73,596) (23,924) (9,404) (30,212) (191,231) (4,857) (2,260) — — (2,414) (3,000) (12,531) (5,739) 886,181 997,111 1,883,292 32,594 22,866 (15,875) 42,820 — — 207 — 7,193 (240,968) (618,636) 4,173 501,598 546,142 368,668 (9,639) (7,201) (40,000) (39,846) 26,318 — (3,421) — — (32,447) (9,404) (31,699) (147,339) (6,353) — (27,634) (11,433) (4,000) (498) (49,918) 4,961 176,372 820,739 997,111 $ $ $ 25,423 $ 27,418 $ 83,886 $ 63,439 32,055 27,685 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 64 Notes to Consolidated Financial Statements As at March 31, 2021 and March 31, 2020 and for the years ended March 31, 2021 and 2020 (in thousands of Canadian dollars, except per share amounts) NOTE 1. Corporate Information Through its principal subsidiaries, Canaccord Genuity Group Inc. (the Company or CGGI) is a leading independent, full-service financial services firm with capital markets operations in North America, the UK & Europe, Asia, Australia and the Middle East. The Company also has wealth management operations in Canada, the UK, Guernsey, Jersey, the Isle of Man 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 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 2. 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). These audited consolidated financial statements have been prepared on a historical cost basis except for investments, securities owned, securities sold short, deferred and contingent consideration. All of these have been measured at fair value as set out in the relevant accounting policies except for certain investments which have been accounted for under the equity method. These 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, 2021. 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. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 65 USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS The preparation of these 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 global pandemic related to an outbreak of COVID-19 has cast additional uncertainty on the assumptions used by management in making its judgements and estimates. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its operating subsidiaries in future periods. Given that the full extent of the impact that COVID-19, including government and/or regulatory responses to the outbreak, will have on the global economy and the Company’s business is highly uncertain and difficult to predict at this time, there is a higher level of uncertainty with respect to management’s judgements and estimates. The extent to which the Company’s business and financial condition will continue to be affected by the COVID-19 pandemic will depend on future developments including the spread of variants, efficacy of vaccines against new variants, the achievement of mass vaccinations and the impact of related controls and restrictions imposed by government authorities. The significant judgments, estimates and assumptions include consolidation, revenue recognition, share-based payments, income 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. Amendments may be made to estimates relating to net assets acquired in an acquisition as well as the allocation of identifiable intangible assets between indefinite life and finite lives. Judgments, estimates and assumptions were also utilized in connection with the purchase price allocation, including the valuation of goodwill and intangible assets acquired in connection with the acquisitions of Thomas Miller Wealth Management Limited and Patersons Securities Limited. In the discussions below, unless otherwise noted, Hargreave Hale Limited is referred to as “Hargreave Hale”, Petsky Prunier LLC is referred to as “Petsky Prunier”, McCarthy Taylor Limited (renamed as CG McCarthy Taylor Limited) is referred to as “McCarthy Taylor”, Thomas Miller Wealth Management Limited and the private client business of Thomas Miller Investment (Isle of Man) Limited (renamed as CG Wealth Planning Limited) is referred to as “Thomas Miller”, Patersons Securities Limited (renamed as Canaccord Genuity Financial Limited) is referred to as “Patersons”, and Jitneytrade Inc., Finlogik Capital Inc. and Finlogik Inc. are collectively referred to as “Jitneytrade”. Consolidation The Company owns 80% of the voting shares of Canaccord Genuity (Australia) Limited (CGAL) and Canaccord Genuity Financial Limited (CGF) as at March 31, 2020. The Company also completed an evaluation of its contractual arrangements with the other shareholders of CGAL and CGF and the control it has over the financial and operating policies of the two subsidiaries and determined it should consolidate under IFRS 10, “Consolidated Financial Statements” (IFRS 10), as at March 31, 2020 and 2019. Therefore, the financial position, financial performance and cash flows of CGAL and CGF have been consolidated. Although the Company owns 80% of the issued shares of CGAL and CGF as at March 31, 2020, for accounting purposes, the Company is considered to have an 85% 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 15% non-controlling interest, which represents the portion of net identifiable assets of CGAL and CGF not owned by the Company. Net income and each component of other comprehensive income 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 22], 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 Company has an enforceable right to payment for performance completed to date and that a transaction price 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 performance obligations 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 22. 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 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 66 Notes to Consolidated Financial Statements 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 13. 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 based on a forward-looking, expected credit loss (ECL) approach. The Company establishes an allowance for credit losses in accordance with management’s valuation policy based on its historical credit loss experience adjusted for forward-looking factors or other considerations as appropriate. 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 a number of its financial instruments at fair value as discussed in Note 7. Fair value is determined based on 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 3. Adoption of New and Revised Standards There were no new accounting standards adopted for the period ended March 31, 2021. NOTE 4. Future Changes in Accounting Policies Standards issued but not yet effective There were no standards issued, which may reasonably be expected to materially impact the Company’s financial statements, but which were not yet effective as of March 31, 2021. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 67 NOTE 5. 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. Identifiable intangible assets purchased through the acquisitions of Genuity Capital Markets (Genuity), the 80% interest in Canaccord Genuity (Australia) Limited and Patersons Securities Limited, Collins Stewart Hawkpoint plc (CSHP), Eden Financial Ltd., Hargreave Hale, McCarthy Taylor and Petsky Prunier are customer relationships, non-competition agreements, trading licences, fund management contracts 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 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. Brand names with definite lives are amortized over three years. Customer relationships are amortized over five to 24 years. Internally developed or acquired software is amortized over 10 years. Internally developed or acquired software 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 in accordance with IAS 38, “Intangible Assets”. 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 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 68 Notes to Consolidated Financial Statements 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 an 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 or when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. Intangible assets Intangible assets with indefinite useful lives are tested for impairment annually, as at March 31, at the CGU level and when circumstances indicate that the carrying value may be impaired. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on deposit, commercial paper and bankers’ acceptances with a term to maturity of less than three months from the date of purchase, 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 On initial recognition, financial assets are classified as instruments measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. The classification is based on two criteria: the Company’s business approach for managing the financial assets; and whether the instruments’ contractual cash flows result in cash flows that are solely payments of principal and interest on the principal amount outstanding (the SPPI criteria). The business approach considers whether the Company’s objective is to receive cash flows from holding the financial assets, from selling the assets or a combination of both. Classification and subsequent measurement Financial assets classified as fair value through profit or loss (FVTPL) Financial assets are classified as FVTPL when they either fail the contractual cash flow test or are held in a business model in which the aim is to realize the asset’s value through a short-term sale. Financial assets at FVTPL are stated at fair value, with any resulting gain or loss recognized in the statement of operations. The net gain or loss recognized in the statement of operations includes any unpaid dividend or interest earned on the financial asset. Financial assets measured at FVTPL consist of marketable securities owned and sold short. The Company periodically evaluates the classification of its financial assets classified as FVTPL based on whether the intent to sell the financial assets in the near term is still appropriate. In rare circumstances, if the Company is unable to trade these financial CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 69 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. Financial assets classified as fair value through other comprehensive income (FVOCI) A financial asset is classified as FVOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset result in cash flows that meet the SPPI criteria. Included in the FVOCI category was our investment in Euroclear which was disposed during the year ended March 31, 2021. There are no other financial assets classified as FVOCI. Financial assets classified as amortized costs A financial asset is measured at amortized cost if it is held within a business model that has an objective to hold financial assets to collect contractual cash flows and the contractual terms of the financial asset result in cash flows that meet the SPPI criteria. Items included in this category include cash and cash equivalents and accounts receivable. The Company reclassifies financial assets only when its business approach for managing those assets changes. Impairment of financial assets The Company’s accounts receivables are classified as financial assets measured at amortized cost and are subject to the ECL model. Accounts receivable includes trade receivables from clients and brokers and dealers. All our corporate finance and client receivables have a maturity of less than 12 months from initial recognition; therefore, the allowance is limited to 12-month ECLs. The Company established a valuation policy that is based on its historical credit loss experience, adjusted for forward-looking factors or other considerations as appropriate. The impact of the allowance is not considered to have a significant impact on our audited consolidated financial statements for the year ended March 31, 2021. A financial asset or group of financial assets was deemed to be impaired if there was objective evidence of impairment as a result of one or more events that occurred since the initial recognition of the asset. 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 All financial liabilities are recognized initially at fair value and classified as either FVTPL or other financial liabilities. Classification and subsequent measurement Financial liabilities classified as fair value through profit or loss Financial liabilities classified as FVTPL 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 FVTPL that would not otherwise meet the definition of FVTPL upon initial recognition. Bank indebtedness; securities sold short, including derivative financial instruments; and contingent and deferred considerations are classified as held for trading and recognized at fair value. Financial liabilities classified as amortized costs After initial recognition, financial liabilities classified as other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the statements of operations. Financial liabilities classified as amortized costs include accounts payable and accrued liabilities, bank loans, convertible debentures and subordinated debt. The carrying value of other financial liabilities 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. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 70 Notes to Consolidated Financial Statements Realized and unrealized gains and losses related to these contracts are recognized in the consolidated statements of operations during the reporting period. The Company trades in futures contracts, which are agreements to buy or sell standardized amounts of a financial instrument at a predetermined future date and price, in accordance with terms specified by a regulated futures exchange, and subject to daily cash margining. The Company trades in futures in an attempt to mitigate interest rate risk, yield curve risk and liquidity risk. The Company also trades in forward contracts, which are non-standardized contracts to buy or sell a financial instrument at a specified price on a future date. The Company trades in forward contracts in an attempt to mitigate foreign exchange risk on pending security settlements in foreign currencies. FAIR VALUE MEASUREMENT The Company measures financial instruments at fair value at each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. When available, quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs, are used to determine fair value. For financial instruments not traded in an active market, the fair value is determined using appropriate and reliable valuation techniques. Such techniques may include recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models. Valuation techniques may require the use of estimates or management assumptions if observable market data is not available. When the fair value cannot be reliably measured using a valuation technique, then the financial instrument is measured at cost. The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s 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. 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. The value of collaterals for 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. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 71 REVENUE RECOGNITION Revenue is recognized either at a point in time when a single performance obligation is satisfied at once or over the period of time when a performance obligation is received and utilized by the customer over that period. The Company assesses its revenue arrangements in order to determine if it is acting as principal or agent. The main types of revenue contracts are as follows: 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 net of commission revenue. Facilitation losses for the year ended March 31, 2021 were $8.4 million [2020 – $14.8 million]. Commissions are recognized at a point in time (trade date) as the performance obligation is satisfied. Investment banking revenue consists of underwriting fees and commissions earned on corporate finance activities. The act of underwriting the securities is the sole performance obligation, and revenue is recognized at the point in time when the underwriting transaction is complete. Advisory fees consist of ongoing management and advisory fees that are recognized over the period of time that this performance obligation is delivered. Also included in advisory fees is revenue from mergers and acquisitions activities, which is recognized at the point in time when the underlying transaction is substantially completed under the engagement terms and it is probable that a significant revenue reversal will not occur. Principal trading revenue consists of income earned in connection with principal trading operations and is outside the scope of IFRS 15. Interest revenue consists of interest earned on client margin accounts, interest earned on the Company’s cash, interest earned on cash delivered in support of securities borrowing activity, and dividends earned on securities owned. Interest and dividend revenue is outside the scope of IFRS 15. Other revenue includes foreign exchange gains or losses, revenue earned from correspondent brokerage services and administrative fee revenue. 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 Straight-line over useful life Straight-line over useful life 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. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 72 Notes to Consolidated Financial Statements Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and carryforward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses, can be utilized. The carrying amounts of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. No deferred tax liability has been recognized for taxable temporary differences associated with investments in subsidiaries from undistributed profits and foreign exchange translation differences as the Company is able to control the timing of the reversal of these temporary differences. The Company has no plans or intention to perform any actions that will cause the temporary differences to reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is charged or credited in the statements of operations except where it relates to items that may be credited directly to equity, in which case the deferred tax is recognized directly against equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity. Sales tax Revenues, expenses and assets are recognized net of the amount of sales tax, except where the amount of sales tax incurred is not recoverable from the tax authority. In these circumstances, sales tax is recognized as part of the cost of acquisition of the asset or as part of an item of the expense. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of accounts receivable or accounts payable in the consolidated statements of financial position. 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 benefit 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 PER COMMON SHARE Basic earnings 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 per common share reflects the dilutive effect in connection with the LTIP, warrants, other share-based payment plans and 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) 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). The participating employees are eligible to receive shares that generally vest over three years (the RSUs). This program is referred to as the long-term incentive plan (the LTIP or the Plan). Independent directors also receive deferred share units (DSUs) as part of their remuneration, which can only be settled in cash (cash- settled transactions). Certain executives may also receive performance stock options (PSOs) as part of their remuneration which are equity-settled.). In addition, certain senior executives receive performance share units (PSUs) 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. RSUs issued by the Plan continue to vest after termination of employment so long as the employee does not violate certain post- termination restrictions and is not engaged in certain competitive or soliciting activities as provided in the Plan. Because of this change, the Company determined that the awards do not meet the criteria for an in-substance service condition, as defined by IFRS 2. Accordingly, RSUs granted as part of the normal course incentive compensation payment cycle are expensed in the period in which those awards are deemed to be earned, with a corresponding increase in contributed surplus, which is generally either CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 73 the fiscal period in which the awards are made or the immediately preceding fiscal year for those awards made after the end of such fiscal year but determined and earned in respect of that fiscal year. For certain awards, typically new hire awards or retention awards, vesting is subject to continued employment, and therefore these awards are subject to a continuing service requirement. Accordingly, the Company recognizes the cost of such awards as an expense on a graded basis over the applicable vesting period, with a corresponding increase in contributed surplus. 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 22]. 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. The PSUs were measured at fair value on grant date. Changes in value of the PSUs at each reporting period are amortized over the remaining vesting period and recorded as a compensation expense in the statement of operations as a result of certain employment-related conditions. 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 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 At the commencement of a lease, the liability to make lease payments and an asset representing the right to use the underlying asset during the lease term is recognized. The interest expense on the lease liability and the amortization expense on the right-of- use assets are charged to the statement of operations and separately recognized. CLIENT MONEY The Company’s UK & 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 26. SEGMENT REPORTING The Company’s segment reporting is based on the following operating segments: Canaccord Genuity Capital Markets, Canaccord Genuity Wealth Management and Corporate and Other. The Company’s business operations are grouped into the following geographic regions: Canada, the UK, Europe and Dubai, Australia, the US, and Other Foreign Locations, which is comprised of our Asian operations. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 74 Notes to Consolidated Financial Statements NOTE 6. Securities Owned and Securities Sold Short Corporate and government debt Equities and convertible debentures March 31, 2021 March 31, 2020 Securities owned $ $ $ 770,455 $ 271,128 1,041,583 $ Securities sold short $ 777,996 111,611 889,607 $ $ Securities owned $ 724,444 207,023 $ 931,467 $ Securities sold short $ 688,400 186,617 875,017 As at March 31, 2021, corporate and government debt maturities range from 2021 to 2080 [March 31, 2020 – 2020 to 2098] and bear interest ranging from 0.00% to 31.50% [March 31, 2020 – 0.00% to 14.00%]. NOTE 7. Financial Instruments CATEGORIES OF FINANCIAL INSTRUMENTS The categories of financial instruments, other than cash and cash equivalents and bank indebtedness, as well as investment accounted for under the equity method, held by the Company at March 31, 2021 and 2020 are as follows: Fair value through profit or loss Fair value through other comprehensive income Amortized cost Total March 31, 2021 $ March 31, 2020 $ March 31, 2021 $ March 31, 2020 $ March 31, 2021 $ March 31, 2020 $ March 31, 2021 $ March 31, 2020 $ $ 1,041,583 $ 924,594 $ — $ 6,873 $ — $ — $ 1,041,583 $ 931,467 — — — — — — — — 6,882 6,287 — — — — — — 2,434,162 2,036,876 2,434,162 2,036,876 — — — — 848,549 494,476 196,255 — 696,644 388,376 153,945 — 848,549 494,476 196,255 6,882 696,644 388,376 153,945 6,287 $ 1,048,465 $ 930,881 $ — $ 6,873 $ 3,973,442 $ 3,275,841 $ 5,021,907 $ 4,213,595 $ 889,607 $ 875,017 $ — $ — $ — $ — $ 889,607 $ 875,017 — — — — — — — — — — 8,087 29,196 8,966 105,473 — — — — — — — — — — — — — — 1,845,236 1,618,004 1,845,236 1,618,004 — 2,559,721 1,703,574 2,559,721 1,703,574 — — — — — — — 755,643 351,873 755,643 351,873 7,500 7,500 7,500 7,500 168,112 128,322 168,112 128,322 — — — 78,319 — — 1,760 86,234 8,087 29,196 — 78,319 8,966 105,473 1,760 86,234 $ 926,890 $ 989,456 $ — $ — $ 5,414,531 $ 3,897,267 $ 6,341,421 $ 4,886,723 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 Deferred consideration Contingent consideration Other long-term liability Bank loan 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. / 2021 ANNUAL REPORT As at March 31, 2021 and 2020, the Company held the following classes of financial instruments measured at fair value: Notes to Consolidated Financial Statements 75 Securities owned Corporate debt Government debt Corporate and government debt Equities Convertible debentures Equities and convertible debentures Investments Securities sold short Corporate debt Government debt Corporate and government debt Equities Convertible debentures Equities and convertible debentures Deferred considerations Contingent consideration Securities owned Corporate debt Government debt Corporate and government debt Equities Convertible debentures Equities and convertible debentures Investments Securities sold short Corporate debt Government debt Corporate and government debt Equities Convertible debentures Equities and convertible debentures Deferred considerations Contingent consideration March 31, 2021 $ Estimated fair value March 31, 2021 Level 2 $ Level 1 $ $ 20,419 $ — $ 20,419 $ 750,036 770,455 267,148 3,980 271,128 1,041,583 6,882 1,048,465 (10,834) (767,162) (777,996) (111,611) (111,611) (889,607) (8,087) (29,196) (926,890) 336,494 336,494 157,535 — 157,535 494,029 — 494,029 — (345,224) (345,224) (98,141) — (98,141) (443,365) — — (443,365) 413,542 433,961 69,861 3,980 73,841 507,802 — 507,802 (10,834) (421,938) (432,772) (13,470) — (13,470) (446,242) — — (446,242) Estimated fair value March 31, 2020 March 31, 2020 $ Level 1 $ $ 26,428 $ — $ 698,016 724,444 206,043 980 207,023 931,467 6,287 937,754 (1,800) (686,600) (688,400) (186,617) — (186,617) (875,017) (8,966) (105,473) (989,456) 244,526 244,526 139,916 — 139,916 384,442 — 384,442 — (277,653) (277,653) (168,826) — (168,826) (446,479) — — (446,479) $ Level 2 $ 26,428 453,490 479,918 63,130 980 64,110 544,028 — 544,028 (1,800) (408,947) (410,747) (17,791) — (17,791) (428,538) — — (428,538) Level 3 $ — — — 39,752 — 39,752 39,752 6,882 46,634 — — — — — — — (8,087) (29,196) (37,283) Level 3 $ — — — 2,997 — 2,997 2,997 6,287 9,284 — — — — — — — (8,966) (105,473) (114,439) 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 76 Notes to Consolidated Financial Statements Movement in net Level 3 financial liabilities Balance, March 31, 2020 Payment of deferred and contingent consideration in connection with acquisition of Jitneytrade Payment of contingent consideration in connection with acquisition of Thomas Miller Payment of contingent consideration in connection with acquisition of Petsky Prunier Payment of contingent consideration in connection with acquisition of Hargreave Hale Investments in Katipult Movement in fair value of level 3 securities owned during the year Impairment charge of level 3 investments Foreign exchange revaluation Balance, March 31, 2021 Fair value estimation i. Level 2 financial instruments $ $ (105,155) 4,586 6,013 26,336 34,408 3,000 36,659 (2,370) 5,874 9,351 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. The Company disposed of its investment in Euroclear, previously classified as a Level 2 investment, during the year ended March 31, 2021. [March 31, 2020 – $6.9 million (€4.4 million)]. Accordingly, the cumulative realized gains on Euroclear of $4.1 million was reclassified from accumulated other comprehensive income to retained earnings. ii. Level 3 financial instruments 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 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 Level 3 held for trading investments as at March 31, 2021 was $39.8 million [March 31, 2020 – $3.0 million]. As at March 31, 2021, the Company, through a wholly owned subsidiary, held investments of $3.9 million in Capital Markets Gateway, which has been classified as Level 3 financial instrument given the investment does not have any observable inputs or market indicators. During the year ended March 31, 2021, the Company recorded an impairment charge of $2.4 million in connection with its investments in Family Office Network and Castle Ridge Asset Management Ltd. due to a decline in the fair values of these investments. In addition, during the year ended March 31, 2021, the Company also invested $3.0 million in unsecured subordinated convertible debentures of Katipult Technology Corp. (“Katipult”) which has been classified as Level 3 financial instrument [Note 10]. Level 3 financial liabilities also include the deferred and contingent considerations included as part of the total purchase consideration for the acquisitions of Hargreave Hale, McCarthy Taylor, Petsky Prunier and Thomas Miller. During the year ended March 31, 2021, the Company settled the deferred and contingent consideration related to the acquisition of Jitneytrade by way of cash settlement of $6.6 million and share issuance of $2.0 million. The excess of the settlement amount over the deferred and contingent considerations included as part of the purchase consideration of $4.6 million was recorded as acquisition-related costs in the statement of operations for the year ended March 31, 2021. In addition, there was a remeasurement of the contingent consideration related to the acquisition of Thomas Miller resulting in $0.9 million of acquisition-related costs for the year ended March 31, 2021. 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 Company’s audited consolidated financial statements as at March 31, 2021 and 2020. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 77 The primary source of credit risk to the Company is in connection with trading activity by private clients and in 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 6.8 million as at March 31, 2021 [March 31, 2020 – $8.9 million] [Note 9]. The Company is also exposed to the risk that counterparties to transactions will not fulfill their obligations. Counterparties primarily include investment dealers, clearing agencies, banks and other financial institutions. The Company does not rely entirely on ratings assigned by credit rating agencies in evaluating counterparty risk. The Company mitigates credit risk by performing its own due diligence assessments on the counterparties, obtaining and analyzing information regarding the structure of the financial instruments, and keeping current with new innovations in the market. The Company also manages this risk by conducting regular credit reviews to assess creditworthiness, reviewing security and loan concentrations, holding and marking to market collateral on certain transactions and conducting business through clearing organizations with performance guarantees. As at March 31, 2021 and 2020, 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 two-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 25. The following table presents the contractual terms to maturity of the financial liabilities owed by the Company as at March 31, 2021 and March 31, 2020, respectively: Financial liability Securities sold short Subordinated debt(1) Accounts payable and accrued liabilities Current portion of bank loan Current portion of contingent consideration Long term portion of bank loan Long term portion of contingent consideration Deferred consideration Other long-term liability Convertible debentures Carrying amount $ Contractual term to maturity March 31, 2021 889,607 7,500 5,160,600 12,119 17,706 66,200 11,490 8,087 — 168,112 March 31, 2020 875,017 7,500 3,673,451 7,042 57,859 79,192 47,614 8,966 1,760 128,322 Due on demand Due on demand(1) Due within one year Due within one year Due within one year Fiscal 2023 Fiscal 2023 Fiscal 2023 n/a Due within one year (1) Subject to Investment Industry Regulatory Organization of Canada’s approval. (2) Redemption of the convertible debentures completed on April 9, 2021. 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 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 78 Notes to Consolidated Financial Statements the securities the Company holds as collateral for client margin accounts. The Company mitigates its fair value risk exposure through controls to limit concentration levels and capital usage within its inventory trading accounts, as well as through monitoring procedures of the margin accounts. The following table summarizes the effect on earnings as a result of a fair value change in financial instruments as at March 31, 2021 and March 31, 2020, respectively. 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 March 31, 2021 March 31, 2020 Carrying value Asset (Liability) Effect of a 10% increase in fair value on net income Effect of a 10% decrease in fair value on net income Carrying value Asset (Liability) Effect of a 10% increase in fair value on net income Effect of a 10% decrease in fair value on net income Equities and convertible debentures owned $ 271,128 $ 10,000 $ (10,000) $ 200,150 $ 8,576 $ (8,576) Equities and convertible debentures sold short (111,611) $ (4,000) $ 4,000 (186,617) (7,997) 7,997 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 fair value through other comprehensive income. 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, 2021 Effect of a 10% decrease in fair value on OCI $ Effect of a 10% increase in fair value on OCI $ March 31, 2020 Effect of a 10% decrease in fair value on OCI $ Carrying value $ Equities held within securities owned — — — 6,873 0.3 (0.3) 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 and bank loan. 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 following table provides the effect on net income for the years ended March 31, 2021 and 2020 if interest rates had increased or decreased by 100 basis points applied to balances as of March 31, 2021 and March 31, 2020, respectively. 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. Net income effect of a 100 bps increase in interest rates $ March 31, 2021 Net income effect of a 100 bps decreases in interest rates(1) $ Carrying value Asset (Liability) $ Net income effect of a 100 bps increase in interest rates $ March 31, 2020 Net income effect of a 100 bps decreases in interest rates(1) $ Carrying value Asset (Liability) $ Cash and cash equivalents, net of bank indebtedness $ 1,883,292 $ 13,842 $ (13,842) $ 997,111 $ 8,545 $ (8,545) 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 Bank loan (1) Subject to a floor of zero. Foreign exchange risk 151,976 (1,711,172) 494,476 588,926 (7,500) (78,319) 1,117 (12,577) 3,634 4,329 (55) (576) (1,117) 12,577 (3,634) (4,329) 55 576 56,450 (1,006,930) 388,376 418,872 (7,500) (86,234) 484 (8,629) 3,328 3,590 (64) (739) (484) 8,629 (3,328) (3,590) 64 739 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 & Europe subsidiaries. These CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 79 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, 2021: Currency US dollar Pound sterling Australian dollar As at March 31, 2020: Currency US dollar Pound sterling Australian dollar DERIVATIVE FINANCIAL INSTRUMENTS Effect of a 5% appreciation in foreign exchange rate on net income $ Effect of a 5% depreciation in foreign exchange rate on net income $ Effect of a 5% appreciation in foreign exchange rate on OCI $ Effect of a 5% depreciation in foreign exchange rate on OCI $ $ (1,067) (172) (263) 1,067 $ 172 263 12,701 $ 25,041 4,638 (12,701) (25,041) (4,638) 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 $ $ (1,261) (509) (104) $ 1,261 509 104 $ 13,100 27,998 2,918 Effect of a 5% depreciation in foreign exchange rate on OCI $ (13,100) (27,998) (2,918) $ $ 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, 2021: To sell US dollars To buy US dollars Notional amount (millions) USD$ USD$ nil 5.9 Average price — $1.26(CAD/USD) Maturity Fair value — $ April, 1, 2021 $ — (0.01) 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 80 Notes to Consolidated Financial Statements Forward contracts outstanding at March 31, 2020: To sell US dollars To buy US dollars Notional amount (millions) USD$ USD$ 2.1 0.8 Average price $1.42 (CAD/USD) $1.42(CAD/USD) Maturity Fair value April 1, 2020 $ April 1, 2020 0.1 $(0.1) 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. 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 54 days as at March 31, 2021 [March 31, 2020 – 60 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, 2021 and March 31, 2020, respectively. The fair value of the forward contract assets and liabilities is included in the accounts receivable and payable balances. Foreign exchange forward contracts $ 113 $ 100 $ 19,014 $ 587 $ 560 $ Assets Liabilities Notional amount Assets Liabilities Notional amount 25,461 March 31, 2021 March 31, 2020 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, 2021, the notional amount of the bond futures contracts outstanding was short $1.1 million [March 31, 2020 – long $29.9 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. There were no outstanding US Treasury futures contracts outstanding as at March 31, 2021 and March 31, 2020. The fair value of all of the above futures contracts is nominal due to their short term to maturity and is included in accounts receivable and accounts payable and accrued liabilities. 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, 2021, the floating rates ranged from 0% to 0% [March 31, 2020 – 0.00% to 0.19%]. March 31, 2021 March 31, 2020 BANK INDEBTEDNESS Cash Securities Loaned or delivered as collateral $ Borrowed or received as collateral $ Loaned or delivered as collateral $ $ $ 232,558 191,244 $ $ 39,404 119,070 $ $ 63,536 136,163 $ $ Borrowed or received as collateral $ 232,126 195,673 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, 2021, the Company had nil balance outstanding [March 31, 2020 – $nil (£ nil)]. BANK LOAN A subsidiary of the Company entered into a senior credit facility to finance a portion of the cash consideration for its acquisitions of Hargreave Hale and Thomas Miller. The loan is repayable in instalments of principal and interest over a period of 4 years and matures in September 2023. The interest rate on this loan is 2.1288% per annum as at March 31, 2021 [March 31, 2020 – 2.6584% per annum]. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 81 OTHER CREDIT FACILITIES Excluding the bank loan in connection with the acquisitions of Hargreave Hale and Thomas Miller as described above, subsidiaries of the Company have other credit facilities with banks in Canada and the UK for an aggregate amount of $637.1 million [March 31, 2020 – $653.7 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, 2021, there was no bank indebtedness outstanding [March 31, 2020 – $nil]. A subsidiary of the Company has also entered into secured irrevocable standby letters of credit from a financial institution totalling $2.9 million (US$2.3 million) [March 31, 2020 – $3.3 million (US$2.3 million)] as rent guarantees for its leased premises in New York. As of March 31, 2021, and March 31, 2020, there were no outstanding balances under these standby letters of credit. NOTE 8. Interest in Other Entities The Company owns 80% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd., and through that ownership an 80% indirect interest in Canaccord Genuity (Australia) Limited and Canaccord Genuity Financial Limited as of March 31, 2021 [March 31, 2020 – 80%]. Canaccord Genuity (Australia) Limited (CGAL) operates in the capital markets segment, while the wealth management business is carried out by Canaccord Genuity Financial Limited (CGFL). As discussed in Note 25, CGAL and CGFL are both regulated by the Australian Securities and Investments Commission. CGAL and CGFL reported total net income of $39.8 million in fiscal 2020 [March 31, 2020 – net income of $0.4 million]. As at March 31, 2021, accumulated non-controlling interest was $8.2 million [March 31, 2020 – $0.2 million]. Summarized financial information for the consolidated Australian group, 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, 2021 and 2020: Revenue Expenses Net income before taxes Income tax (recovery) expense Net income Attributable to: CGGI shareholders Non-controlling interests Total comprehensive income Attributable to: CGGI shareholders Non-controlling interests Dividends paid to non-controlling interests Summarized statement of financial position as at March 31, 2021 and 2020: Current assets Non-current assets Current liabilities Non-current liabilities For the years ended March 31, 2021 $ March 31, 2020 $ 244,964 188,090 56,874 17,104 39,770 33,754 6,016 42,157 35,783 6,374 — 62,332 62,084 248 (135) 383 319 64 8,070 6,859 1,211 1,510 March 31, 2021 $ March 31, 2020 $ 178,147 27,006 113,879 7,493 59,399 29,223 36,730 9,628 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 82 Notes to Consolidated Financial Statements Summarized cash flow information for the years ended March 31, 2021 and 2020: Cash provided by operating activities Cash used by financing activities Cash used by investing activities Foreign exchange impact on cash balance Net increase in cash and cash equivalents NOTE 9. 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, 2021 $ March 31, 2020 $ 83,324 (3,546) (426) 2,739 82,091 28,508 (11,433) (2,714) (3,118) 11,243 March 31, 2021 $ March 31, 2020 $ 2,434,162 848,549 494,476 196,255 3,973,442 2,036,876 696,644 388,376 153,945 3,275,841 March 31, 2021 $ March 31, 2020 $ 1,845,236 2,559,721 755,643 5,160,600 1,618,004 1,703,574 351,873 3,673,451 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, 2021 – 5.45% to 6.25% and 0% to 0.05%, respectively; March 31, 2020 – 5.45% to 6.25% and 0.00% to 0.05%, respectively]. As at March 31, 2021, the allowance for doubtful accounts was $6.8 million [March 31, 2020 – $8.9 million]. See below for the movements in the allowance for doubtful accounts: Balance, March 31, 2019 Charge for the year Recoveries Write-offs Foreign exchange Balance, March 31, 2020 Charge for the year Recoveries Foreign exchange Balance, March 31, 2021 CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT $ 4,158 8,676 (1,833) (2,104) (36) $ 8,861 6,947 (8,985) 18 $ 6,841 NOTE 10. Investments Investment accounted for under the equity method Investments held as fair value through profit or loss Notes to Consolidated Financial Statements 83 March 31, 2021 $ March 31, 2020 $ 5,311 6,882 12,193 3,818 6,287 10,105 The Company, through a wholly owned subsidiary, invested $4.0 million for 1,334,001 Class B Units, at $3.00 per unit, in Canaccord Genuity Growth II Corp (CGGIIC). CGGIIC is a special purpose acquisition corporation formed to effect an acquisition of one or more businesses. Each Class B Unit consists of one Class B Share and one warrant. The Company holds a 23.5% interest in CGGIIC and is considered to exert significant influence over the operations of CGGIIC. Accordingly, the investment in CGGIIC is accounted for using the equity method. The Company’s equity portion of the net loss of CGGIIC for the year ended March 31, 2021 was $0.3 million. The qualifying transaction closed in April 2021. The Company, through a wholly owned subsidiary, invested $1.8 million for 15,179 proportionate voting units and 141,375 Class B units in the capital of Subversive Real Estate Acquisition REIT LP (Subversive). The Company does not exert significant influence over the operations of Subversive, and the investment is accounted for under financial assets measured at FVTPL as of March 31, 2021. During the year ended March 31, 2021, the Company, through a wholly owned subsidiary, invested $0.01 million to purchase 6,468,750 common shares of Sustainable Climate Opportunities Acquisition Corp. (Sustainable), at $0.0001 par value per share. In addition, the Company, through a wholly owned subsidiary, invested $0.01 million in 600,000 private placement warrants at $0.01 per warrant and 1,552,500 Class B Founder shares at $0.0001 par value of Environmental Impact Acquisition Corp. The company does not exert significant influence of over Environmental Impact Acquisition Corp. inclusive of all warrants, and the investment is accounted for under financial assets measured at FVTPL as of March 31, 2021. The Company, through a wholly owned subsidiary, also purchased 500,000 Class Y units in Velocity Sponsor LLC for $0.6 million (USD 0.5 million), which is the sponsor company of Velocity Acquisition Corp during the year ended March 31, 2021. The Company currently owns 7.5% interest in Velocity Sponsor LLC and therefore does not exert significant influence. Accordingly, the investment is classified as financial asset measured at FVTPL as of March 31, 2021. During the year ended March 31, 2021, the Company recorded an impairment charge of $2.4 million in connection with its investment in Family Office Networks (FON) and Castle Ridge Asset Management Limited (CRAML) due to a decline in the fair values of these investments. As of March 31, 2021, the carrying value of the Company’s investment in FON and CRAML were $nil [March 31, 2020 – US$1.0 million ($1.4 million), $0.5 million, respectively]. In addition, the Company, through a wholly owned subsidiary, held an investment in Capital Markets Gateway Inc. (CMG) for US$3.1 million ($3.9 million) [March 31, 2020 – US$3.1 million ($4.4 million)]. The Company is not considered to exert significant influence over the operations of CMG. Accordingly, the investments in CMG are accounted for as financial assets measured at FVTPL and included as investments on the consolidated statement of financial position as at March 31, 2021. In addition, the Company made an investment of $3.0 million during the year ended March 31, 2021 in convertible unsecured subordinated debentures of Katipult Technology Corp (Katipult). As part of the debenture financing, Katipult also granted the Company warrants to acquire 12.0 million common shares which are excerisable at any time prior to the maturity of the debentures. Under IAS 28 the Company is considered to exert significant influence over Katipult factoring in the potential voting rights that may arise from convertible debentures and warrants. Given the Company does not currently have any entitlement to a share of Katipult’s net assets, the investment is measured at FVTPL as of March 31, 2021. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 84 Notes to Consolidated Financial Statements NOTE 11. Equipment and Leasehold Improvements March 31, 2021 Computer equipment Furniture and equipment Leasehold improvements March 31, 2020 Computer equipment Furniture and equipment Leasehold improvements Cost Balance, March 31, 2019 Acquired upon acquisition Additions Disposals Foreign exchange Balance, March 31, 2020 Additions Disposals Foreign exchange Balance, March 31, 2021 Accumulated amortization and impairment Balance, March 31, 2019 Acquired upon acquisition Amortization Disposals Foreign exchange Balance, March 31, 2020 Amortization Disposals Foreign exchange Balance, March 31, 2021 Accumulated amortization $ Net book value $ Cost $ 24,024 29,751 90,871 21,906 26,810 72,860 144,646 121,576 24,072 29,672 89,897 21,730 26,256 70,795 143,641 118,781 2,118 2,941 18,011 23,070 2,342 3,416 19,102 24,860 Computer equipment $ Furniture and equipment $ Leasehold improvements $ Total $ 19,068 4,700 986 (1,628) 946 24,072 438 (4) (482) 24,024 26,918 2,009 724 (19) 40 29,672 198 (2) (117) 29,751 86,492 1,141 4,643 132,478 7,850 6,353 — (1,647) (1,393) (2,379) 89,897 4,221 (2,540) (707) 143,641 4,857 (2,546) (1,306) 90,871 144,646 Computer equipment $ Furniture and equipment $ Leasehold improvements $ Total $ 15,789 4,241 2,314 (930) 316 21,730 620 (4) (440) 21,906 21,407 1,865 1,413 (19) 1,590 26,256 567 (1) (12) 26,810 69,490 1,118 3,187 — (3,000) 106,686 7,224 6,914 (949) (1,094) 70,795 118,781 5,948 (2,545) (608) 4,761 (2,540) (156) 72,860 121,576 The carrying value of any temporarily idle property, plant and equipment is not considered material as at March 31, 2021 and March 31, 2020. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT NOTE 12. Right-of-Use Assets Cost Balance recognized on adoption of IFRS 16 Additions Acquisition Foreign exchange Balance, March 31, 2020 Additions Reclassification Foreign exchange As at March 31, 2021 Amortization Balance recognized on adoption of IFRS 16 Charge for the year Balance, March 31, 2020 Charge for the year As at March 31, 2021 Net book value as at March 31, 2020 Net book value as at March 31, 2021 Notes to Consolidated Financial Statements 85 112,744 4,927 8,329 3,000 129,000 9,101 (1,601) (3,378) 133,122 — 22,866 22,866 25,040 47,906 $106,134 $ 85,216 NOTE 13. Goodwill and Other Intangible Assets Brand names (indefinite life) $ Goodwill $ Brand names $ Customer relationships $ Technology $ Trading licences $ Fund management $ Contract book Favourable lease Total $ Gross amount Balance, March 31, 2019 Additions Foreign exchange Other Balance, March 31, 2020 Additions Foreign exchange Other Balance, March 31, 2021 Accumulated amortization and impairment Balance, March 31, 2019 Amortization Foreign exchange Balance, March 31, 2020 Amortization Foreign exchange Reclassification Balance, March 31, 2021 Net book value March 31, 2020 March 31, 2021 19,026 8,580 (2,425) 578 692,868 44,930 — — 36 — — — 614 718,049 44,930 — — — (70) — (15,302) 125,303 38,762 875 — 164,940 — (1,394) 35,298 2,250 345 — 37,893 2,260 (521) 196 404 (16) — 584 — 41 38,985 — 442 — 39,427 — (646) 6,252 252 380 — 6,884 — (734) 561 252,103 — 41,668 2,095 33 — — 295,866 594 2,260 — (3,392) (68) 702,747 44,930 544 163,546 39,632 625 38,781 6,150 526 294,734 (322,632) — — (322,632) — — — (322,632) — — (223) — (15) — (238) — (190) 32 — — 32 — (364) — (72,587) (13,861) (1,562) (88,010) (11,980) 814 2,931 (96,245) (20,688) (2,791) (308) (23,787) (3,739) 332 — (27,194) (196) — — (196) (427) (2) — (625) (4,111) (2,130) (134) (6,375) (3,650) 145 (2,931) (12,811) — (6,452) (400) (6,852) — 734 (32) (6,150) — (97,582) (25,680) (2,434) (125,696) (20,208) 2,093 — (143,811) (223) (15) (238) (222) 38 — (422) 395,417 44,930 380,115 44,930 376 180 76,930 67,301 14,106 12,438 388 — 33,052 25,970 32 — 356 104 170,170 150,923 Identifiable intangible assets purchased through the acquisitions of Genuity Capital Markets (Genuity), the 80% interest in Canaccord Genuity (Australia) Limited (Canaccord Genuity Australia), Collins Stewart Hawkpoint plc (CSHP), Eden Financial Ltd., Hargreave Hale, Jitneytrade, Petsky Prunier, McCarthy Taylor, Thomas Miller and Patersons are customer relationships, non- competition agreements, trading licences, fund management contracts, technology and brand names acquired through the acquisition 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 86 Notes to Consolidated Financial Statements of Petsky Prunier, 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 considered to have an indefinite life as the Company has no plans to cease its use in the future. IMPAIRMENT TESTING OF GOODWILL AND OTHER ASSETS The carrying amounts of goodwill and indefinite life intangible assets acquired through business combinations are as follows: Canaccord Genuity Capital Markets CGUs Canada US (Petsky Prunier) Canaccord Genuity Wealth Management CGUs UK & Europe (Channel Islands) UK & Europe (UK Wealth) Australia Intangible assets with indefinite lives Goodwill Total March 31, 2021 $ March 31, 2020 $ March 31, 2021 $ March 31, 2020 $ March 31, 2021 $ March 31, 2020 $ 44,930 — 44,930 — 101,732 97,441 101,732 110,031 146,662 97,441 146,662 110,031 — — — — — — 93,374 84,651 2,917 94,944 86,073 2,637 93,374 84,651 2,917 94,944 86,073 2,637 44,930 44,930 380,115 395,417 425,045 440,347 The Canaccord Genuity Wealth Management CGU for the purpose of goodwill impairment testing consists of the goodwill acquired in connection with the acquisitions of Eden Financial Ltd., Hargreave Hale, McCarthy Taylor and Thomas Miller given managements views its UK & Europe wealth management business as one operating unit. 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, or 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. 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 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, 2020 were Canaccord Genuity Capital Markets Canada, Canaccord Genuity Capital Markets US (Petsky Prunier), Canaccord Genuity Wealth Management UK & Europe (Channel Islands), Canaccord Genuity Wealth Management UK & Europe (UK) and Canaccord Genuity Wealth Management (Australia). The discount rate is based on the specific circumstances of each CGU and is derived from the estimated weighted average cost of capital of the Company. The discount rate utilized for each of these CGUs for the purposes of these calculations was 12.5% [March 31, 2020 – 12.5%]. Cash flow estimates for each of these CGUs were based on management assumptions as described above and utilized a compound annual revenue growth rate of 5.0% over the forecast period except for Canaccord Genuity Capital Markets Canada and Canaccord Genuity Capital Markets US which utilized a compound annual growth rate of 0.0% [March 31, 2020 – 5.0% for Canaccord Genuity Capital Markets Canada and 2.5% for Canaccord Genuity Captial Markets US] as well as estimates in respect of operating margins. The terminal growth rate used for each of Canaccord Genuity Capital Markets Canada, Canaccord Genuity Capital Markets US (Petsky Prunier), Canaccord Genuity Wealth Management UK & Europe (Channel Islands), Canaccord Genuity Wealth Management UK & Europe (UK), and Canaccord Genuity Wealth Management (Australia) was 2.5% [March 31, 2020 – 2.5%]. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT 14. Income Taxes The major components of income tax expense are: Consolidated statements of operations Current income tax expense Current income tax expense Adjustments in respect of prior years Deferred income tax recovery Origination and reversal of temporary differences Impact of change in tax rates Benefit arising from a previously unrecognized tax loss Income tax expense reported in the statements of operations Notes to Consolidated Financial Statements 87 March 31, 2021 $ March 31, 2020 $ 133,283 (31) 133,252 27,097 2,247 29,344 (30,284) 12 (2,880) (16,139) 264 — (33,152) (15,875) 100,100 13,469 The Company’s income tax expense differs from the amount that would be computed by applying the combined federal and provincial income tax rates as a result of the following: Net income before income taxes Income tax expense at the statutory rate of 27% (2020 – 27.0%) Difference in tax rates in foreign jurisdictions Non-deductible items affecting the determination of taxable income Change in accounting and tax base estimate Recognition of loss carry forwards and other deductible temporary differences previously not recognized Utilization of tax losses and other temporary differences not recognized Share-based payments Other March 31, 2021 $ $ 369,902 $ 99,874 (1,810) 5,266 2,193 — (2,615) (4,456) 1,648 Income tax expense reported in the statements of operations $ 100,100 $ March 31, 2020 $ 100,023 26,996 (3,895) 3,651 797 (11,640) (3,182) 2,470 (1,728) 13,469 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 Long-term incentive plan Other intangible assets Other Consolidated statements of financial position Consolidated statements of operations March 31, 2021 $ (18,024) $ 1,771 24,634 3,637 29,179 10,445 41,837 (29,243) 3,441 March 31, 2020 $ March 31, 2021 $ March 31, 2020 $ (783) $ 1,248 7,671 17,240 $ (522) (17,004) 5,771 8,049 12,473 21,927 (29,538) 2,766 2,134 (21,131) 2,028 (19,910) 400 3,613 (6,333) (331) (3,296) (2,337) (5,100) (5,287) 4,081 3,485 (757) $ 67,677 $ 29,584 $ (33,152) $ (15,875) 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 88 Notes to Consolidated Financial Statements 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 Tax recovery recognized in the consolidated statements of operations Deferred taxes acquired in business combination Tax benefit recognized in equity Foreign exchange Ending balance as of March 31 March 31, 2021 $ 81,229 (13,552) 67,677 March 31, 2021 $ 29,584 33,152 — 6,866 (1,925) 67,677 $ $ $ $ March 31, 2020 $ 39,487 (9,903) 29,584 March 31, 2020 $ 14,139 15,875 (662) (233) 465 29,584 $ $ $ $ Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and if the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity. Tax loss carryforwards of $4.8 million [2020 – $5.0 million] in the UK and Europe, $7.3 million [2020 – $9.1 million] in the US and $0.3 million [2020 – $8.7 million] in Australia have been recognized as deferred tax assets. The losses in these jurisdictions can be carried forward indefinitely. Tax loss carryforwards of $29.4 million [2020 – $26.1 million] in Canada have been recognized as a deferred tax asset and can be carried forward 20 years. At the balance sheet date, the Company has tax loss carryforwards of approximately $22.8 million [2020 – $35.5 million] and other temporary differences of $nil [2020 – $nil] for which a deferred tax asset has not been recognized. These 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 deferred tax assets, as the likelihood of future economic benefit is not sufficiently assured. These losses begin expiring in 2029. NOTE 15. Subordinated Debt Loan payable, interest payable monthly at prime + 4% per annum, due on demand March 31, 2021 $ 7,500 March 31, 2020 $ 7,500 The loan payable is subject to a subordination agreement and may only be repaid with the prior approval of the Investment Industry Regulatory Organization of Canada (IIROC). As at March 31, 2021 and 2020, the interest rates for the subordinated debt were 6.45% and 6.45%, respectively. The carrying value of subordinated debt approximates its fair value due to the short-term nature of this liability. NOTE 16. Bank Loan Loan Less: Unamortized financing fees Current portion Long-term portion $ $ March 31, 2021 $ 79,051 (732) 78,319 12,119 66,200 March 31, 2020 87,421 (1,187) 86,234 7,042 79,192 A subsidiary of the Company entered into a senior credit facility to finance a portion of the cash consideration for its acquisitions of Hargreave Hale and Thomas Miller. The loan is repayable in instalments of principal and interest over a period of 4 years and matures in September 2023. The interest rate on this loan is 2.1288% per annum as at March 31, 2021 [March 31, 2020 – 2.6584% per annum]. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT NOTE 17. Lease Liabilities Year one Year two Year three Year four Year five and thereafter Effect of discounting Present value of minimum lease payments Less: current portion Non-current portion of lease liabilities NOTE 18. Convertible Debentures Notes to Consolidated Financial Statements 89 March 31, 2021 $ 29,642 24,587 21,550 16,456 19,751 111,986 (17,084) 94,902 (24,311) 70,591 March 31, 2020 $ 29,899 27,215 22,627 20,107 35,046 134,894 (22,555) 112,339 (23,417) 88,922 Convertible debentures March 31, 2021 March 31, 2020 Liability Equity Liability $ 168,112 — $ 128,322 $ Equity 5,156 On March 18, 2021, the Company announced its intention to redeem the entire $132,690,000 principal amount of its 6.25% convertible unsecured senior subordinated debentures due on December 31, 2023 (the “Debentures”). The redemption price of the Debentures was $1,266.95 for each $1,000 principal amount of Debentures, being equal to the aggregate of (i) $1,250 per $1,000 principal amount of Debentures, and (ii) $16.95 of accrued and unpaid interest per $1,000 principal amount up to but excluding April 9, 2021. The total redemption price of $168.1 million was fully accrued as of March 31, 2021. The redemption was completed on April 9, 2021 [Note 28]. The Debentures were considered extinguished for accounting purposes under IFRS 9, “Financial Instruments” as of March 31, 2021. As a result, the Company recorded a loss of $36.2 million on the extinguishment of the Debentures during the year ended March 31, 2021, with $4.1 million recorded through the consolidated statement of operations and $32.1 million recorded directly against shareholders’ equity. There were also $0.3 million of professional fees incurred in relation to the extinguishment of the Debentures during the year ended March 31, 2021. NOTE 19. Preferred Shares Series A Preferred Shares issued and outstanding Series C Preferred Shares issued and outstanding Series C Preferred Shares held in treasury [i] SERIES A PREFERRED SHARES March 31, 2021 March 31, 2020 Amount $ 110,818 97,450 (2,627) 94,823 205,641 Number of shares 4,540,000 4,000,000 (106,794) 3,893,206 8,433,206 Amount $ 110,818 97,450 (2,627) 94,823 205,641 Number of shares 4,540,000 4,000,000 (106,794) 3,893,206 8,433,206 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 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 90 Notes to Consolidated Financial Statements 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 has the option to redeem 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, as declared, were paid at an annual rate of 5.75% for the initial five-year period ending on June 30, 2017. Commencing July 1, 2017 and ending on and including June 30, 2022, quarterly cumulative dividends, if declared, will be paid at an annual rate of 4.993%. 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 had the 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 have the option on June 30 every five years thereafter. The number of shares tendered for conversion by the conversion deadline of June 30, 2017 was below the minimum required to proceed with the conversion and, accordingly, no Series D Preferred Shares were issued. Series D 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 4.03%. The Company had the option to redeem the Series C Preferred Shares on June 30, 2017, and has the option to redeem 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 20. Common Shares Issued and fully paid Shares committed to repurchase under the normal course issuer bid Held for share-based payment plans Held for the LTIP [i] AUTHORIZED Unlimited common shares without par value. [ii] ISSUED AND FULLY PAID March 31, 2021 March 31, 2020 Amount $ 749,500 (8,181) (1,401) (77,552) 662,366 Number of shares 108,191,331 (689,500) (122,355) (11,588,393) $ 95,791,083 $ Amount $ 745,275 — (1,226) (80,496) 663,553 Number of shares 107,812,361 — (284,645) (14,063,465) 93,464,251 Balance, March 31, 2019 Shares issued in connection with share-based payment plans [Note 22] Shares issued in connection with acquisition of Petsky Prunier Shares issued in connection with exercise of private placement warrants Shares purchased and cancelled under the substantial issuer bid Shares purchased and cancelled under the normal course issuer bid Balance, March 31, 2020 Shares issued in connection with share-based payment plans [Note 22] Shares issued in connection with settlement of Petsky Prunier deferred consideration Shares issued in connection with settlement of Jitneytrade contingent consideration Shares issued in connection with exercise of PSO Shares issued in connection with conversion of convertible debentures Shares purchased and cancelled under the normal course issuer bid Balance, March 31, 2021 Number of shares 115,616,744 54,236 736,850 144,914 (7,272,727) (1,467,656) 107,812,361 1,121 736,850 300,000 182,999 3,500 (845,500) 108,191,331 $ Amount $ 787,096 489 7,094 732 (40,000) (10,136) 745,275 10 6,545 2,000 1,232 23 (5,585) 749,500 On August 18, 2020, 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 5,390,674 of its common shares during the period from August 21, 2020 to August 21, CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 91 2021 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, 2021, there were 845,500 shares purchased and cancelled and an additional 70,000 shares purchased but not yet cancelled as of March 31, 2021. [iii] EARNINGS PER COMMON SHARE Earnings per common share Net income attributable to CGGI shareholders Preferred share dividends Equity portion of loss on extinguishment of convertible debentures Net income attributable to common shareholders Weighted average number of common shares (number) Basic earnings per share Diluted earnings per common share Net income attributable to common shareholders Interest on convertible debentures, net of tax Adjusted net earnings available to common shareholders Weighted average number of common shares (number) Dilutive effect in connection with LTIP (number) Dilutive effect in connection with PSOs (number) Dilutive effect in connection with other share-based payment plans (number) Dilutive effect in connection with convertible debentures (number) Dilutive effect in connection with acquisition of Petsky Prunier (number) Adjusted weighted average number of common shares (number) Diluted earnings per common share NOTE 21. Dividends COMMON SHARE DIVIDENDS For the years ended March 31, 2021 $ March 31, 2020 $ $ $ 263,786 (9,404) (32,100) 222,282 86,490 (9,404) — 77,086 96,658,863 2.30 $ 98,449,097 0.78 $ 222,282 — 222,282 96,658,863 11,212,531 1,106,578 — — — 77,086 6,856 83,942 98,449,097 12,296,639 — 2,810,808 13,272,500 1,473,700 108,977,972 128,302,744 $ 2.04 $ 0.65 The Company declared the following common share dividends during the year ended March 31, 2021: Record date June 19, 2020 August 28, 2020 November 27, 2020 February 26, 2021 Payment date Cash dividend per common share Total common dividend amount June 30, 2020 $ September 10, 2020 $ December 10, 2020 $ March 10, 2021 $ 0.05 0.055 0.055 0.065 $ $ $ $ 5,390 5,930 5,918 7,072 On June 1, 2021, the Board of Directors approved a dividend of $0.075 per common share, payable on June 30 2021, with a record date of June 18, 2021. [Note 28]. PREFERRED SHARE DIVIDENDS Record date June 19, 2020 September 18, 2020 December 18, 2020 March 19, 2021 Payment date Cash dividend per Series A Preferred Share Cash dividend per Series C Preferred Share Total preferred dividend amount June 30, 2020 $ September 30, 2020 $ December 31, 2020 $ March 31, 2021 $ 0.24281 0.24281 0.24281 0.24281 $ $ $ $ 0.31206 0.31206 0.31206 0.31206 $ $ $ $ 2,351 2,351 2,351 2,351 On June 1, 2021, the Board approved a cash dividend of $0.24281 per Series A Preferred Share payable on June 30, 2021 to Series A Preferred shareholders of record as at June 18, 2021 [Note 28]. On June 1, 2021, the Board approved a cash dividend of $0.31206 per Series C Preferred Share payable on June 30, 2021 to Series C Preferred shareholders of record as at June 18, 2021 [Note 28]. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 92 Notes to Consolidated Financial Statements NOTE 22. Share-Based Payment Plans [i] LONG-TERM INCENTIVE PLAN Under the long-term incentive plan (LTIP or the Plan), eligible participants are awarded restricted share units (RSUs), which generally vest over three years. All awards under the LTIP are settled by transfer of shares from employee benefit trusts (Trusts) which are funded by the Company, or certain of its subsidiaries, as the case may be, 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. No further shares may be issued from treasury under the LTIP. For RSUs granted as part of the normal course incentive compensation payment cycle, vesting will continue after termination of employment so long as the employee does not violate certain post-termination restrictions and is not engaged in certain competitive or soliciting activities as provided in the Plan. These RSUs are expensed in the period in which those awards are deemed to be earned with, a corresponding increase in contributed surplus, which is generally either the fiscal period in which the awards are made or the immediately preceding fiscal year for those awards made after the end of such fiscal year but determined and earned in respect of that fiscal year. For certain awards, typically new hire awards or retention awards, vesting is subject to continued employment, and therefore these awards are subject to a continuing service requirement. Accordingly, the Company recognizes the cost of such awards as an expense on a graded basis over the applicable vesting period, with a corresponding increase in contributed surplus. There were 5,872,783 RSUs [year ended March 31, 2020 – 6,262,102 RSUs] granted in lieu of cash compensation to employees during the year ended March 31, 2021. The Trusts purchased 4,694,369 common shares [year ended March 31, 2020 – 7,052,033 common shares] during the year ended March 31, 2021. The fair value of the RSUs at the measurement date is based on the fair value on the grant date. The weighted average fair value of RSUs granted during the year ended March 31, 2021 was $5.92 [March 31, 2020 – $5.42]. Awards outstanding, March 31, 2019 Grants Vested Forfeited Awards outstanding, March 31, 2020 Grants Vested Forfeited Awards outstanding, March 31, 2021 Common shares held by the Trusts, March 31, 2019 Acquired Released on vesting Common shares held by the Trusts, March 31, 2020 Acquired Released on vesting Common shares held by the Trusts, March 31, 2021 [ii] FORGIVABLE COMMON SHARE PURCHASE LOANS Number 18,364,934 6,262,102 (11,474,622) (47,439) 13,104,975 5,872,783 (7,156,597) (157,352) 11,663,809 Number 18,036,064 7,502,033 (11,474,632) 14,063,465 4,694,369 (7,169,441) 11,588,393 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. [iii] REPLACEMENT PLANS As a result of the acquisition of Collins Stewart Hawkpoint plc (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 CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 93 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, 2019 Exercised Balance, March 31, 2020 Exercised Expired Balance, March 31, 2021 Number 15,256 (4,339) 10,917 (1,121) (9,796) — 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 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. Balance, March 31, 2019 Exercised Expired Balance, March 31, 2020 Exercised Expired Balance, March 31, 2021 [iv] DEFERRED SHARE UNITS Number 87,976 (49,897) (38,079) — — — — Beginning April 1, 2011, the Company adopted a deferred share unit (DSU) plan for its independent directors. From August 7, 2020, half of the independent directors’ annual fee was paid in the form of DSUs. Directors may elect annually to use more of their directors’ fees for DSUs. When a directors leaves the Board of Directors, outstanding DSUs are paid out in cash with the amount equal to the number of DSUs held multiplied by the volume weighted average price of the Company’s common shares for the ten trading days immediately preceding a date elected in advance by the outgoing director as the valuation date at any time between their ceasing to be a director and December 1 of the following calender year. During the year ended March 31, 2021, the Company granted 91,603 DSUs [2020 – 125,134 DSUs]. The carrying amount of the liability relating to DSUs at March 31, 2021 was $6.4 million [2020 – $2.3 million]. [v] PERFORMANCE SHARE UNITS The Company adopted a performance share unit (PSU) plan for certain senior executives. The PSUs are a notional equity-based instrument linked to the value of the Company’s common shares. At the end of a three-year vesting period, the number of PSUs which vest is a multiple of the number of PSUs originally granted ranging from 0x to 2x based upon performance against certain metrics pre-determined for each annual grant. The PSUs cliff-vest on the third anniversary of the date of the grant. The number of PSUs that vest is also adjusted for dividends paid during the vesting period. The PSUs are settled in cash, based on the market price of the Company’s shares at the time of vesting. The PSUs were measured at fair value on the grant date. Changes in value of the PSUs at each reporting period are amortized over the remaining vesting period and recorded as a compensation expense in the statement of operations. During the year ended March 31, 2021, the PSU plan was amended to include certain employment-related conditions to the vesting of the awards resulting in a change in the periodic expense recorded during the vesting period. The carrying amount of the liability recognized in accounts payable and accrued liabilities relating to PSUs at March 31, 2021 was $85.9 million [March 31, 2020 – $22.7 million]. [vi] PERFORMANCE STOCK OPTIONS The Company adopted a performance share option (PSO) plan for certain senior executives. The PSOs have a term of five years and will time-vest ratably over four years (with one-third vesting on each of the second, third and fourth anniversaries of the date of the grant). The PSOs will also be subject to market (stock price) performance vesting conditions, and have a four times exercise price cap on payout value (i.e., the gain on the exercise of the options is limited to three times the exercise price). During the year ended March 31, 2021, the stock price performance vesting conditions had been met on a total of 6,237,001 outstanding options. A total of 1,923,667 options outstanding had met both stock price performance and time-based vesting conditions and are therefore fully vested and outstanding. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 94 Notes to Consolidated Financial Statements The following is a summary of the Company’s PSOs as at March 31, 2021: Balance, March 31, 2020 Granted Exercised Balance, March 31, 2021 Number of PSOs Weighted average exercise price ($) 6,320,000 100,000 (182,999) $ $ $ 6,237,001 $ 6.76 8.3055 6.73 6.78 Under IFRS 2, “Share-Based Payments”, the impact of market conditions, such as a target share price upon which vesting is conditioned, should be considered when estimating the fair value of the PSOs. A Monte Carlo simulation is used to simulate a range of possible future stock prices for the Company over the period from the grant date to the expiry date of the PSOs. The purpose of this modelling is to use a probabilistic approach for estimating the fair value of the PSOs under IFRS 2. The following assumptions were used in the Monte Carlo model for grants made in the year ended March 31, 2021: Dividend yield Expected volatility Risk-free interest rate Expected life 2.16% 40.92% 2.24% 4 years The weighted average fair value of the PSOs awarded is $1.93 per option. Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s PSOs. [vii] OTHER SHARE-BASED PAYMENT PLAN During the year ended March 31, 2019, the Company granted a share-based award to a senior executive. The award was originally scheduled to vest on March 31, 2021. During the year ended March 31, 2021, the award was modified to a cash-settled award with the settlement value determined based on the measurement period ended December 31, 2020. The carrying amount of the liability recognized in accounts payable and accrued liabilities relating to this other share-based payment plan at March 31, 2021 was $19.3 million. [viii] SHARE-BASED COMPENSATION EXPENSE Long-term incentive plan Deferred share units (cash-settled) PSO PSU (cash-settled) Other share-based payment plan Total share-based compensation expense For the years ended March 31, 2021 $ $ 72,654 $ 3,327 2,766 64,287 3,374 146,408 $ March 31, 2020 $ 41,438 (650) 3,896 (4,576) 2,712 42,820 CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 95 NOTE 23. 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: Canaccord Genuity Corp. CG Investments Inc. CG Investments Inc. III CG Investments Inc. IV CG Investments Inc. V CG Investments. Inc. VI Jitneytrade Inc. Finlogik Inc. Finlogik Tunisie SARL 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 Hargreave Hale Limited CG McCarthy Taylor Limited CG Wealth Planning Limited Canaccord Genuity Limited Canaccord Genuity Wealth Group Holdings Ltd. Canaccord Genuity LLC Canaccord Genuity Wealth Management (USA) Inc. Canaccord Genuity Wealth & Estate Planning Services Ltd. Canaccord Genuity Petsky Prunier LLC Canaccord Asset Management Inc. Canaccord Adams Financial Group Inc. Collins Stewart Inc. Canaccord Adams BC ULC Canaccord Genuity Finance Corp. Canaccord Adams Finance Company ULC Canaccord Adams Finance Company LLC 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* Canaccord Genuity Financial Limited* Canaccord Genuity Asia (Beijing) Limited The Balloch Group Limited Canaccord Genuity Asia (Hong Kong) Limited Canaccord Genuity (Dubai) Ltd. Canaccord Genuity SG Pte. Ltd. (in liquidation) Canaccord Genuity Wealth Group Holdings (Jersey) Limited Canaccord Genuity Hawkpoint Limited Canaccord Genuity Management Company Limited % equity interest Country of incorporation Canada Canada Canada Canada Canada Canada Canada Canada Tunisia France Guernsey United Kingdom United Kingdom United Kingdom Guernsey United Kingdom United Kingdom United Kingdom United Kingdom Canada United States United States Canada United States Canada United States United States Canada Canada Canada United States United States United States Canada Canada China (Hong Kong SAR) Australia Australia Australia China British Virgin Islands China (Hong Kong SAR) United Arab Emirates Singapore Jersey United Kingdom Ireland March 31, 2021 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 80% 80% 100% 100% 100% 100% 100% 100% 100% 100% March 31, 2020 100% 100% 100% n/a n/a n/a 100% 100% 75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 80% 80% 100% 100% 100% 100% 100% 100% 100% 100% * The Company owns 80% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd., Canaccord Genuity (Australia) Limited, and Canaccord Genuity Financial Limited, but for accounting purposes, as of March 31, 2021 the Company is considered to have an 85% interest because of the shares held in a trust controlled by Canaccord Financial Group (Australia) Pty Ltd. [March 31, 2020 – 85%] [Note 8]. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 96 Notes to Consolidated Financial Statements [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, 2021 and 2020: Short-term employee benefits Share-based payments Total compensation paid to key management personnel [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, 2021 $ 10,663 654 11,317 March 31, 2020 $ 12,877 1,068 13,945 March 31, 2021 $ 4,686 1,562 March 31, 2020 $ 2,328 980 [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 24. Segmented Information The Company operates in two industry segments as follows: Canaccord Genuity Capital Markets – 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 (including Dubai), Australia and the US. Commencing in the fiscal year starting April 1, 2019, the Other Foreign Locations (OFL), comprised of our operations in Singapore, China and Hong Kong, have been combined with our Canadian and Australian capital markets operations. Canaccord Genuity Wealth Management – provides brokerage services and investment advice to retail or institutional clients in Canada, the US, Australia and the UK & Europe. Corporate and Other includes correspondent brokerage services, interest and foreign exchange revenue and expenses not specifically allocable to Canaccord Genuity Capital Markets or Canaccord Genuity Wealth Management. The Company’s industry segments are managed separately because each business offers different services and requires different personnel and marketing strategies. The Company evaluates the performance of each business based on operating results, without regard to non-controlling interests. The Company does not allocate total assets, liabilities or equipment and leasehold improvements to the segments. Amortization of tangible assets is allocated to the segments based on the square footage occupied. Amortization of identifiable intangible assets is allocated to the Canaccord Genuity Capital Markets Canada segment, as it relates to the acquisitions of Genuity and Jitneytrade. Amortization of the identifiable intangible assets acquired through the purchase of Collins Stewart Hawkpoint plc (CSHP) is allocated to the Canaccord Genuity Capital Markets and Canaccord Genuity Wealth Management segments in the UK & Europe (Channel Islands). Amortization of identifiable intangible assets acquired through the acquisitions of Eden Financial Ltd., Hargreave Hale, McCarthy Taylor and Thomas Miller is allocated to the Canaccord Genuity Wealth Management UK & Europe (UK Wealth) segment. Amortization of identifiable intangible assets acquired through the acquisition of Petsky Prunier is allocated to the Canaccord Genuity Capital Markets US segment. Amortization of identifiable intangible assets acquired through the acquisition of Patersons is allocated to Canaccord Genuity Wealth Management Australia. There are no significant intersegment revenues. Income taxes are managed on a Company basis and are not allocated to operating segments. All revenue and operating profit is derived from external customers. The Company also does not allocate cash flows by reportable segments. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 97 For the years ended March 31, 2021 Canaccord Genuity Capital Markets $ Canaccord Genuity Wealth Management $ Corporate and Other $ Canaccord Genuity Capital Markets $ Total $ $ 212,431 $ 522,638 $ 644,089 193,464 245,662 6,605 9,977 117,462 3,572 1,139 13,808 5,000 170 $ 735,239 $ 152,482 194,013 205,614 108,788 24,584 3,988 761,551 197,092 246,801 26,288 40,717 — 56 — 5,875 25,740 Canaccord Genuity Wealth Management $ $ 434,402 42,949 893 46 28,857 4,288 March 31, 2020 Corporate and Other $ Total $ $ — $ 586,884 236,962 — 206,507 — 108,834 — 63,690 10,249 20,990 12,714 933,076 6,796 478,995 18,890 107,711 470 1,519,782 26,156 579,505 12,975 386,940 19,154 54,204 465 1,020,649 32,594 14,536 5,855 11,739 — 4,644 — — 7,626 17,465 5,222 — 1,278 — — 2,878 3,926 11,403 — — 25,040 27,246 28,364 — 5,922 4,354 4,354 922 922 13,228 495 15,654 — 1,806 — — 6,304 11,364 6,765 1,921 (1,930) — — 3,334 194 11,259 — — — 207 22,866 12,053 33,678 1,921 (124) — 207 335,582 18,263 134,143 17,288 (99,823) (35,551) 369,902 — 65,806 17,005 80,917 12,743 (46,700) (29,748) 100,023 — Commissions and fees Investment banking Advisory fees Principal trading Interest Other Expenses, excluding undernoted Amortization Amortization of right of use assets Development costs Interest expense Restructuring costs Acquisition-related costs Loss on extinguishment of convertible debentures Share of loss of an associate Income (loss) before intersegment allocations and income taxes Intersegment allocations Income (loss) before income taxes $ 317,319 $ 116,855 $ (64,272) $ 369,902 $ 48,801 $ 68,174 $ (16,952) $ 100,023 For geographic reporting purposes, the Company’s business operations are grouped into Canada, the US, the UK & Europe (including Dubai), Australia and Other Foreign Locations (OFL), which is comprised of our Asian operations. Commencing in the fiscal year starting April 1, 2019, the OFL geography is allocated to our Canadian and Australian capital markets operations. The comparatives have not been restated. The following table presents the revenue of the Company by geographic location (revenue is attributed to geographic areas on the basis of location of the underlying corporate operating results): Canada UK & Europe United States Australia For the years ended $ March 31, 2021 $ 789,814 372,864 600,046 244,964 March 31, 2020 $ $ 434,054 374,056 353,490 62,267 $ 2,007,688 $1,223,867 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 98 Notes to Consolidated Financial Statements The following table presents selected figures pertaining to the financial position of each geographic location: Equipment and leasehold improvements Goodwill Intangible assets Non-current assets As at March 31, 2020 Equipment and leasehold improvements Goodwill Intangible assets Non-current assets NOTE 25. Capital Management Canada $ UK & Europe $ United States $ 6,197 $ 6,873 $ 6,165 $ 101,729 48,184 178,026 96,357 97,443 376 Australia $ 3,835 $ 2,917 6,006 156,110 $ 281,256 $ 103,984 $ 12,758 $ $ 7,064 101,729 49,775 $ 8,626 181,021 113,014 $ 6,009 110,030 867 $ 3,161 2,637 6,514 158,568 $ 302,661 $ 116,906 $ 12,312 $ $ $ $ $ Total $ 23,070 380,115 150,923 554,108 24,860 395,417 170,170 590,447 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 deficit and accumulated other comprehensive income (loss), and is further complemented by the subordinated debt, bank loans and convertible debentures. The following table summarizes our capital as at March 31, 2021 and 2020: Type of capital Preferred shares Common shares Convertible debentures – equity portion Deferred consideration Contributed surplus Retained earnings (deficit) Accumulated other comprehensive income Shareholders’ equity Convertible debentures Subordinated debt Bank loan $ March 31, 2021 $ 205,641 662,366 — — 62,402 73,220 103,465 1,107,094 168,112 7,500 78,319 March 31, 2020 $ $ 205,641 663,553 5,156 6,545 101,501 (193,131) 139,353 928,618 128,322 7,500 86,234 $ 1,361,025 $1,150,674 The Company’s capital management framework is designed to maintain the level of capital that will: • Meet the Company’s regulated subsidiaries’ target ratios as set out by the respective regulators • Fund current and future operations • Ensure that the Company is able to meet its financial obligations as they become due • Support the creation of shareholder value The following subsidiaries are subject to regulatory capital requirements in the respective jurisdictions by the listed regulators: • Canaccord Genuity Corp. and Jitneytrade Inc. are subject to regulation in Canada primarily by the Investment Industry Regulatory Organization of Canada (IIROC) • Canaccord Genuity Limited, Canaccord Genuity Wealth Limited, Canaccord Genuity Financial Planning Limited, CG McCarthy Taylor Limited, CG Wealth Planning Limited and Hargreave Hale Limited are regulated in the UK by the Financial Conduct Authority (FCA) • Canaccord Genuity Wealth (International) Limited is licensed and regulated by the Guernsey Financial Services Commission, the Isle of Man Financial Supervision Commission and the Jersey Financial Services Commission • Canaccord Genuity (Australia) Limited and Canaccord Genuity Financial Limited are regulated by the Australian Securities and Investments Commission • Canaccord Genuity (Hong Kong) Limited is regulated in Hong Kong by the Securities and Futures Commission • Canaccord Genuity LLC is registered as a broker dealer in the US and is subject to regulation primarily by the Financial Industry Regulatory Authority, Inc. (FINRA) • Canaccord Genuity Wealth Management (USA) Inc. is registered as a broker dealer in the US and is subject to regulation primarily by FINRA CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 99 • Canaccord Asset Management Inc. is subject to regulation in Canada by the Ontario Securities Commission • 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, 2021. NOTE 26. Client Money At March 31, 2021, the UK & Europe operations held client money in segregated accounts of $2.770 billion (£1.600 billion) [2020 – $3.451 billion (£1.960 billion)]. This is comprised of $7.278 million (£4.204 million) [2020 – $11.1 million (£6.3 million)] of balances held on behalf of clients to settle outstanding trades and $2.756 million (£1.592 million) [2020 – $3.440 million (£1.954 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 27. 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, 2021 and 2020: Balance, March 31, 2019 Additions Utilized Balance, March 31, 2020 Additions Utilized Balance, March 31, 2021 Legal provisions $ 5,671 2,899 (4,025) Restructuring provisions $ 12,541 1,921 (12,272) $ 4,545 $ 6,711 (2,705) 8,551 $ 2,190 $ — (384) 1,806 $ Total provisions $ 18,212 4,820 (16,297) 6,735 6,711 (3,089) 10,357 Commitments, litigation proceedings and contingent liabilities In the normal course of business, the Company is involved in litigation, and as of March 31, 2021, 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, 2021, 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. Litigation matters and asserted and unasserted claims against the Company may be in respect of certain subsidiaries of CGGI, CGGI directly or both CGGI and certain of its subsidiaries. Proceedings have been brought against the Company in respect of the recommendation by a predecessor of certain wealth management tax advantaged film partnership products in the UK which could be material if such claims are successful, additional claims are made or the Company’s assumptions used to evaluate the matter as neither probable nor estimable change in future periods. The Company is either vigorously defending such proceedings or intends to in respect of any further claims that may be advanced. Notwithstanding that the Company considers that all such claims are, and would be, without merit, 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 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 100 Notes to Consolidated Financial Statements aggregate investment by the Company’s clients who have standstill agreements in place in respect of these products, and for whom such information is available, is estimated to be approximately $10.0 million (£6.0 million). The aggregate initial tax deferral amount realized by the Company’s clients who have standstill agreements in respect of these products when they were purchased during the period from 2006 to 2009, is estimated to be less than $15.6 million (£9.0 million). Enforcement by HMRC (the U.K. taxation authority), the outcome of litigation in respect of the taxation of other similar products sold by other financial advisors, and settlements reached with HMRC by some investors may result in tax liabilities to the purchasers of these products in excess of the initial tax deferral amount. As at the date of these audited annual consolidated financial statements, civil claims have been issued by current and former clients. All the claims (or potential claims) notified to the Company have been defended or denied. The potential tax liability for those clients engaged in pre-action correspondence and the issued civil claims, which is in addition to the initial tax deferral amount, is estimated to be less than $18.7 million (£10.8 million), plus other potential costs (such as interest). For those clients not currently engaged in the issued civil claims and pre-action correspondence that could assert a tax liability against the Company the potential tax liability, which is in addition to the initial tax deferral amount, is estimated to be approximately $5.2 million (£3.0 million). The claims are currently proceeding with a trial scheduled for 2023 that will address certain key issues by way of a limited number of sample claimants. Further steps with regard to the wider group of claims will depend on the outcome of that hearing. The probable outcome of the enforcement actions by HMRC in respect of this matter and the likelihood of a loss to, or the amount of any such loss suffered by, the Company in connection with any such claims made or asserted of the type set out above, or which may be further asserted are not determinable at the date of these audited annual 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. The Company provides financial advisory, underwriting and other services to, and trades the securities of issuers that are involved with new and emerging industries, including the US cannabis industry. Activities within such industries, including the US cannabis industry, typically have not had the benefit of a history of successful operating results. In addition to the economic uncertainties associated with new industries, new activities and new issuers, the laws applicable to such industries or activities, particularly the US cannabis industry and the activities of issuers in that industry, and the effect or enforcement of such laws are undetermined, conflicting and uncertain. With respect to the US cannabis industry, cannabis continues to be a controlled substance under the United States Controlled Substances Act and as such, there is a risk that certain issuers, while in compliance with applicable state law, may be prosecuted under federal law. Accordingly, the Company has adopted policies and procedures reasonably designed to ensure compliance with the United States Currency and Foreign Transactions Reporting Act of 1970 (the Bank Secrecy Act) and the guidance issued by the United States Department of the Treasury Financial Crimes Enforcement Network, FIN-2014-G001 (the FinCEN Guidance) relating to providing financial services to marijuana related businesses in the United States (as that term is used in the FinCEN Guidance). While the Company takes steps to identify the risks associated with emerging industries, including the US cannabis industry, and only provides services to those issuers where it determines that there is no material risk to the Company or where any risk is unlikely to result in a material adverse consequence to the Company, there is a risk that the Company could be the subject of third party proceedings which may have a material adverse effect on the Company’s business, revenues, operating results and financial condition as well as the Company’s reputation, even if such proceedings were concluded successfully in favour of the Company. Notwithstanding these procedures, the Company is currently a party to securities class action proceedings in Canada and the US relating to underwriting services provided to certain issuers in the cannabis and e-cigarette and vaping industries. Although the Company believes that these claims are without merit and intends to vigorously defend itself, the probable outcome of these class action proceedings cannot be predicted with certainty and a reliable estimate of the amount of losses, if any, in the event of adverse outcomes is not determinable as at the date of these financial statements and, accordingly, the Company has not recorded a provision in respect of these claims. The risk of any further actions against the Company is not known. As at the date of these audited consolidated financial statements, the Company has not recorded a provision in respect of any other such matters. Risks associated with emerging industries such as the cannabis and e-cigarette and vaping industries also include the risk of the insolvency of issuers and the consequent inability of such issuers to satisfy their indemnification obligations to the Company. Accordingly, in the event of a loss to the Company, the ability of the Company to recover amounts in respect of any indemnity claims also cannot be predicted with certainty. The Company has entered into leases for which the asset is still under construction, and therefore the right-of-use of assets and the lease liabilities related to these leases are not recorded, as atMarch 31, 2021, since the lease has not yet commenced, The Company’s undiscounted lease commitments were as follows, as at: CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Notes to Consolidated Financial Statements 101 March 31, 2021 $ — 5,562 37,306 $42,868 Less than 1 year From 1 to 3 years Thereafter NOTE 28. Subsequent Events REDEMPTION OF CONVERTIBLE DEBENTURES On April 9, 2021, the Company redeemed the entire $132,690,000 principal amount of its outstanding Debentures due December 31, 2023. The total redemption price including accrued interest was $168,111,596 which was fully accrued at March 31, 2021. In order to fund the redemption in part, and pursuant to the terms of a previously announced commitment letter entered into with investment funds and accounts managed or advised by HPS Investment Partners, LLC (“HPS”) on March 18, 2021, the Company entered into a credit agreement with the lenders, Lucid Agency Services Limited as administrative agent and Lucid Trustee Services Limited as security agent, for a senior secured first lien term loan facility in an aggregate principal amount of £69.0 million (C$120.0 million). This facility is intended to be repaid out of the proceeds of the convertible preferred shares to be issued by Canaccord Genuity Wealth Group Holdings (Jersey) Limited to investment funds and accounts managed by HPS on completion of regulatory approvals and other customary closing conditions. BUSINESS COMBINATION On April 15, 2021, the Company announced that through its wealth management business in the UK, it has entered into an agreement with The Royal Bank of Scotland plc, which is part of the NatWest Group plc, to acquire the private client investment management business of Adam & Company. Closing is subject to regulatory approval and is expected to take place at the end of the second quarter of the Company’s fiscal 2022 fiscal year. Cash consideration of £54.0 million (C$94.9 million) will be paid on closing. A retention plan will be implemented for key employees based on client assets and continued employment over a four year period. DIVIDENDS On June 1, 2021, the Board of Directors approved a dividend of $0.075 per common share, payable on June 30, 2021, with a record date of June 18, 2021 [Note 21]. On June 1, 2021, the Board approved a cash dividend of $0.24281 per Series A Preferred Share payable on June 30, 2021 to Series A Preferred shareholders of record as at June 18, 2021 [Note 21]. On June 1, 2021, the Board approved a cash dividend of $0.31206 per Series C Preferred Share payable on June 30, 2021 to Series C Preferred shareholders of record as at June 18, 2021 [Note 21]. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 102 SUPPLEMENTAL INFORMATION Advisory note: This supplemental information is not audited and should be read in conjunction with the audited financial statements contained herein. FINANCIAL HIGHLIGHTS(1)(2)(3)(4) (C$ thousands, except for AUM, AUA, common and preferred share information, financial measures and percentages) Financial results Revenue Expenses Income taxes expense Net income Net income attributable to CGGI shareholders Net income attributable to common shareholders Business segment Income (loss) before income taxes Canaccord Genuity Capital Markets Canaccord Genuity Wealth Management Corporate and Other Client assets information ($ millions) AUM – Canada (discretionary) AUA – Canada AUM – UK & Europe AUM – Australia Total Common share information Per common share ($) Basic earnings Diluted earnings Common share price ($) High Low Close Common shares outstanding (thousands) Issued shares excluding unvested shares Issued and outstanding Diluted shares Average basic Average diluted Market capitalization (thousands) Preferred share information (thousands) Shares issued and outstanding Financial measures For the years ended and as at March 31 2021 2020 2019 2018 2017 2,007,688 1,637,786 100,100 269,802 263,786 254,382 1,223,867 1,123,844 13,469 86,554 86,490 77,086 1,190,567 1,097,911 21,074 71,582 70,530 61,126 1,022,877 987,131 18,669 17,077 13,024 3,431 317,319 116,855 (64,272) 6,307 32,240 52,298 4,228 88,766 2.30 2.04 13.25 3.93 11.50 95,791 108,191 112,568 96,659 108,978 1,294,532 48,801 68,174 (16,952) 4,009 18,440 39,879 2,400 60,719 0.78 0.65 6.00 3.29 4.33 93,464 107,812 130,723 98,449 128,303 566,031 62,877 58,603 (28,824) 4,221 20,674 44,195 854 65,723 0.58 0.48 7.47 5.54 5.84 97,580 115,617 140,241 96,260 130,944 819,007 13,126 33,999 (11,379) 2,815 15,567 44,877 830 61,274 0.04 0.03 7.49 4.08 6.93 93,054 113,523 124,294 92,587 110,862 861,357 879,546 825,662 10,698 43,186 38,103 27,025 44,268 24,267 (14,651) 2,637 13,228 24,526 862 38,616 0.29 0.27 5.70 3.53 5.09 92,780 113,511 124,479 91,657 101,149 633,598 8,540 8,540 8,540 8,540 8,540 Dividends per common share Common dividend yield (closing common share price) 0.25 2.2% 0.20 4.6% 0.20 3.4% 0.15 2.2% 0.10 2.0% (1) (2) (3) (4) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14. The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [ March 31, 2020 – 15%]. Data includes the operating results of Hargreave Hale since September 18, 2017, Jitneytrade since June 6, 2018, McCarthy Taylor since January 29, 2019, Petsky Prunier since February 13, 2019, Thomas Miller since May 1, 2019, and Patersons since October 21, 2019. Commencing Q1/20, our Asian based operations, including Singapore, China and Hong Kong, have been combined with our Canadian and Australian capital markets operations to reflect management of these operating units. Also, commencing in Q3/20, our Australian wealth management business, comprised of the operating results of Patersons since October 21, 2019 and the wealth management business of Australia previously included as part of Canaccord Genuity Capital Markets Australia, is disclosed as a separate operating segment in the discussions below. Comparatives have not been restated. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Condensed Consolidated Statements of Operations and Retained Earnings(1)(2)(3)(4) Supplemental Information 103 (C$ thousands, except per share amounts and percentages) Revenue Commissions and fees Investment banking Advisory fees Principal trading Interest Other Expenses Compensation expense Trading costs Premises and equipment Communication and technology Interest General and administrative Amortization Development costs Amortization of right-of-use assets Restructuring costs Acceleration of long-term incentive plan expense Share of loss from associate Loss on extinguishment of convertible debentures Acquisition-related costs Income before income taxes Income tax expense Net income for the year Non-controlling interests Net income attributable to CGGI shareholders Retained deficit, beginning of year Common shares dividends Preferred shares dividends Reclassification of realized gains on disposal of financial instruments measure at fair value through other comprehensive income Reclassification of equity portion of convertible debentures Equity portion of loss on extinguishment of convertible debentures Retained earnings (deficit), end of year Total compensation expenses as a % of revenue Non-compensation expenses as a % of revenue Total expenses as a % of revenue Pre-tax profit margin Effective tax rate Net profit margin Basic earnings per share Diluted earnings per share (1) 2021 735,239 761,551 197,092 246,801 26,288 40,717 2,007,688 1,227,895 122,154 19,948 67,475 28,364 82,310 26,156 27,246 25,040 — — 922 4,354 5,922 1,637,786 369,902 100,100 269,802 6,016 263,786 (193,131) (23,924) (9,404) 4,091 31,802 — 73,220 61.2% 20.4% 81.6% 18.4% 27.1% 13.4% 2.30 2.04 For the years ended March 31 2020 2019 2018 2017 586,884 236,962 206,507 108,834 63,690 20,990 1,223,867 738,313 83,964 18,094 66,666 33,678 113,612 32,594 12,053 22,866 1,921 — 207 — (124) 1,123,844 100,023 13,469 86,554 64 86,490 (237,770) (32,447) (9,404) — — — (193,131) 60.3% 31.5% 91.8% 8.2% 13.5% 7.1% 0.78 0.65 556,475 294,241 142,228 125,830 51,008 20,785 1,190,567 716,625 83,577 41,719 64,930 25,453 100,768 24,280 15,513 — 13,070 — 304 8,608 3,064 1,097,911 92,656 21,074 71,582 1,052 70,530 (277,472) (16,534) (9,402) — — (4,892) (237,770) 60.2% 32.0% 92.2% 7.8% 22.7% 6.0% 0.58 0.48 461,937 282,195 122,372 113,921 27,875 14,577 1,022,877 625,853 68,209 39,605 56,346 18,437 83,982 24,007 7,664 — 7,643 48,355 298 — 6,732 987,131 35,746 18,669 17,077 4,053 13,024 (267,559) (13,344) (9,593) — — — (277,742) 61.2% 30.6% 96.5% 3.5% 52.2% 1.7% 0.04 0.03 396,741 196,129 130,749 119,040 16,847 20,040 879,546 540,696 65,211 42,286 52,381 12,744 79,011 21,124 12,209 — — — — — — 825,662 53,884 10,698 43,186 5,083 38,103 (294,586) — (11,076) — — — (267,559) 61.5% 32.4% 93.9% 6.1% 19.9% 4.9% 0.29 0.27 Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14]. (2) (3) (4) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [ March 31, 2020 — 15%]. Data includes the operating results of Hargreave Hale since September 18, 2017, Jitneytrade since June 6, 2018, McCarthy Taylor since January 29, 2019, Petsky Prunier since February 13, 2019, Thomas Miller since May 1, 2019, and Patersons since October 21, 2019. Q1/20, our Asian based operations, including Singapore, China and Hong Kong, have been combined with our Canadian and Australian capital markets operations to reflect management of these operating units. Also, commencing in Q3/20, our Australian wealth management business, comprised of the operating results of Patersons since October 21, 2019 and the wealth management business of Australia previously included as part of Canaccord Genuity Capital Markets Australia, is disclosed as a separate operating segment in the discussions below. Comparatives have not been restated. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 104 Supplemental Information Condensed Consolidated Statements of Financial Position As at March 31 (C$ thousands) Assets Cash and cash equivalents Securities owned, at market Accounts receivable Income taxes recoverable Deferred tax assets Investments Equipment and leasehold improvements Goodwill and other intangibles Right-of-use assets Liabilities and shareholders’ equity Bank indebtedness Securities sold short Accounts payable, accrued liabilities and other Income taxes payable Current portion of bank loan Current portion of lease liabilities Current portion of contingent consideration Deferred consideration Contingent consideration Promissory note Lease liability Other long-term liabilities Bank loan Deferred tax liabilities Subordinated debt Convertible debentures Non-controlling interests Shareholders’ equity Miscellaneous Operational Statistics(1) As at March 31 Number of employees in Canada Number in Canaccord Genuity Capital Markets Number in Canaccord Genuity Wealth Management Number in Corporate and Other Total Canada Number of employees in the UK & Europe Number in Canaccord Genuity Capital Markets Number in Canaccord Genuity Wealth Management Number of employees in the US Number in Canaccord Genuity Capital Markets Number of employees in Australia Number in Canaccord Genuity Capital Markets Number in Canaccord Genuity Wealth Management Number of employees in Other Foreign Locations Number in Canaccord Genuity Capital Markets Number of employees company-wide Number of Advisory Teams in Canada (2) Number of licensed professionals in Canada Number of investment professionals and fund managers in the UK & Europe (3) Number of Advisors — Australia AUM — Canada (discretionary) (C$ millions) AUA — Canada (C$ millions) AUM — UK & Europe (C$ millions) AUM — Australia (C$ millions) Total (C$ millions) 2021 2020 2019 2018 2017 1,883,292 1,041,583 3,973,442 738 81,229 12,193 23,070 531,038 85,216 7,631,801 — 889,607 5,170,957 56,285 12,119 24,311 17,706 8,087 11,490 — 70,591 — 66,200 13,552 7,500 168,112 8,190 1,107,094 7,631,801 2021 274 454 362 1,090 131 528 319 84 204 0 2,356 145 451 202 110 6,307 32,240 52,298 4,228 88,766 997,111 931,467 3,275,841 5,603 39,487 10,105 24,860 565,587 106,134 5,956,195 — 875,017 3,680,186 11,721 7,042 23,417 57,859 8,966 47,614 — 88,922 1,760 79,192 9,903 7,500 128,322 156 928,618 5,956,195 2020 257 432 339 1,028 136 548 313 83 200 0 2,308 146 435 210 119 4,009 18,440 39,879 2,400 60,719 820,739 690,499 2,656,664 2,502 22,117 6,224 25,792 524,757 — 4,749,294 9,639 373,419 3,141,977 5,415 9,294 — — 22,225 108,319 5,832 — 1,741 50,370 7,978 7,500 127,225 1,997 876,363 4,749,294 862,838 469,217 2,215,837 1,170 19,941 2,035 30,967 418,731 — 4,020,736 — 301,006 2,647,382 7,851 9,679 — — 9,997 49,844 — — — 61,758 13,715 7,500 57,081 13,571 841,352 4,020,736 677,769 784,230 3,395,736 1,085 15,323 2,829 31,479 295,065 — 5,203,516 25,280 645,742 3,681,676 10,093 — — — — — — — — — 140 7,500 56,442 11,858 764,785 5,203,516 2019 2018 2017 255 430 308 993 197 542 308 58 10 4 2,112 155 420 190 6 4,221 20,674 44,195 854 65,723 189 379 288 856 214 559 256 57 11 3 1,956 142 374 188 7 2,815 15,567 44,877 830 61,274 178 359 279 816 225 313 275 58 11 2 1,700 141 367 118 8 2,637 13,228 24,526 862 38,616 (1) (2) (3) These miscellaneous operational statistics are non-IFRS measures. Advisory Teams in Canada are normally comprised of one or more Investment Advisors (IAs) and their assistants and associates, who together manage a shared set of client accounts. Advisory Teams that are led by, or only include, an IA who has been licensed for less than three years are not included in our Advisory Team count, as it typically takes a new IA approximately three years to build an average-sized book. Investment professionals include all staff with direct sales responsibilities, which includes brokers and assistants with direct client contacts. Fund managers include all staff who manage client assets. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Quarterly Financial Highlights(1)(2)(3) (C$ thousands, except for AUM, AUA, common and preferred share information, financial measures Financial results Revenue Expenses Income taxes expense (recovery) Net income Net income attributable to CGGI shareholders Net income attributable to common shareholders Business segment Income (loss) before income taxes Canaccord Genuity Canaccord Genuity Wealth Management Corporate and Other Client assets ($ millions) AUM — Canada (discretionary) AUA — Canada AUM — UK & Europe AUM — Australia Total Common share information Per common share ($) Basic earnings Diluted earnings Common share price ($) High Low Close Common shares outstanding (thousands) Issued shares excluding unvested shares Issued and outstanding Diluted shares Average basic Average diluted Preferred shares outstanding (thousands) Shares issued and outstanding Financial measures Dividends per common share Supplemental Information 105 Fiscal 2021 Fiscal 2020 and percentages) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 706,526 533,077 390,357 377,728 518,810 433,803 344,499 340,674 8,090 28,964 27,483 25,132 48,322 139,394 137,877 135,526 30,823 68,451 66,991 64,640 12,865 32,993 31,435 29,084 319,648 308,014 270,697 325,508 289,430 285,731 254,527 294,156 7,062 24,290 24,205 21,854 (557) 22,840 22,509 20,158 3,972 26,246 26,288 23,937 2,992 13,178 13,488 11,137 154,382 40,298 (6,964) 87,102 33,243 (21,071) 42,189 22,964 (19,295) 33,646 20,350 (16,942) 12,765 23,652 (6,199) 13,553 12,351 (3,621) 4,706 13,412 (1,948) 17,777 18,759 (5,184) 6,307 32,240 52,298 4,228 88,766 5,728 29,270 51,762 4,174 85,206 4,941 24,648 45,380 3,366 73,394 4,551 22,243 43,566 3,064 68,873 4,009 18,440 39,879 2,400 60,719 4,584 20,989 48,110 3,691 72,790 4,423 20,408 44,183 858 65,449 4,346 21,223 45,574 774 67,571 1.07 0.93 13.25 11.01 11.50 0.67 0.54 11.44 6.46 11.21 0.30 0.25 8.15 6.37 6.79 0.26 0.22 6.94 3.93 6.91 0.25 0.21 5.75 3.29 4.33 0.21 0.17 5.63 4.63 4.84 0.11 0.10 5.89 4.90 5.22 0.22 0.18 6.00 4.98 6.00 96,873 96,382 95,791 98,479 108,191 107,996 107,784 107,813 112,568 127,801 129,632 129,988 95,370 110,899 123,760 125,254 122,715 96,867 96,719 97,669 93,464 94,415 98,308 106,540 107,812 107,292 108,492 115,748 130,723 129,040 132,682 132,759 96,861 102,503 100,085 124,064 125,698 131,613 129,910 94,291 8,540 8,540 8,540 8,540 8,540 8,540 8,540 8,540 0.075 0.065 0.055 0.055 0.05 0.05 0.05 0.05 (1) (2) (3) Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14. The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [ March 31, 2020 — 15%]. Data includes the operating results of Hargreave Hale since September 18, 2017, Jitneytrade since June 6, 2018, McCarthy Taylor since January 29, 2019, Petsky Prunier since February 13, 2019, Thomas Miller since May 1, 2019, and Patersons since October 21, 2019. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 106 Supplemental Information Condensed Consolidated Statements of Operations(1)(2)(3)(4) (C$ thousands, except per share amounts and percentages) Revenue Commissions and fees Investment banking Advisory fees Principal trading Interest Other Expenses Compensation expense Trading costs Premises and equipment Communication and technology Interest General and administrative Amortization Amortization of right-of-use of assets Development costs Restructuring costs Acquisition-related costs Share of loss from associate Loss on extinguishment of convertible debentures Income before income taxes Income tax expense Net income for the period Non-controlling interests Net income attributable to CGGI shareholders Total compensation expenses as a % of revenue Non-compensation expenses as a % of revenue Total expenses as a % of revenue Pre-tax profit margin Effective tax rate Net profit margin Basic earnings per share Diluted earnings per share (1) Fiscal 2021 Fiscal 2020 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 214,476 305,939 66,761 87,830 7,487 24,033 706,526 395,638 39,420 5,638 17,423 8,239 23,521 6,518 6,176 10,849 — 418 616 4,354 518,810 187,716 48,322 139,394 1,517 137,877 56.0% 17.4% 73.4% 26.6% 25.7% 19.7% 1.07 0.93 184,186 213,419 72,004 51,113 5,791 6,564 533,077 328,647 27,982 4,948 16,020 6,724 22,690 6,145 6,053 8,815 — 5,504 275 — 433,803 99,274 30,823 68,451 1,460 66,991 61.7% 19.7% 81.4% 18.6% 31.0% 12.8% 0.67 0.54 167,575 131,625 37,281 42,746 6,005 5,125 390,357 250,796 27,783 4,984 17,284 6,671 20,181 6,941 6,078 3,767 — — 14 — 344,499 45,858 12,865 32,993 1,558 31,435 64.2% 24.0% 88.3% 11.7% 28.1% 8.5% 0.30 0.25 169,002 110,568 21,046 65,112 7,005 4,995 377,728 252,814 26,969 4,378 16,748 6,730 15,918 6,552 6,733 3,815 — — 17 — 340,674 37,054 8,090 28,964 1,481 27,483 66.9% 23.3% 90.2% 9.8% 21.8% 7.7% 0.26 0.22 165,576 48,619 49,997 35,352 15,222 4,882 319,648 198,976 22,925 4,585 17,378 8,764 30,437 8,194 5,513 (2,710) (427) (4,238) 33 — 289,430 30,218 3,972 26,246 (42) 26,288 62.2% 28.3% 90.5% 9.5% 13.1% 8.2% 0.25 0.21 147,191 51,550 60,691 27,149 16,622 4,811 308,014 186,649 19,836 4,501 17,739 8,490 26,519 8,415 5,832 6,560 1,250 — (60) — 285,731 22,283 (557) 22,840 331 22,509 60.6% 32.2% 92.8% 7.2% (2.5)% 7.4% 0.21 0.17 132,325 51,992 42,015 21,260 16,661 6,444 270,697 157,780 21,083 4,224 15,191 8,313 26,289 8,049 5,939 2,994 1,098 3,602 (35) — 254,527 16,170 2,992 13,178 (310) 13,488 58.3% 35.7% 94.0% 6.0% 18.5% 4.9% 0.11 0.10 141,792 84,801 53,804 25,073 15,185 4,853 325,508 194,908 20,120 4,784 16,358 8,111 30,367 7,936 5,582 5,209 — 512 269 — 294,156 31,352 7,062 24,290 85 24,205 59.9% 30.5% 90.4% 9.6% 22.5% 7.5% 0.22 0.18 Data is in accordance with IFRS except for figures excluding significant items and number of employees. See Non-IFRS Measures on page 14. (2) (3) (4) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 15% has been recognized for the year ended March 31, 2021 [ March 31, 2020 — 15%]. Data includes the operating results of Hargreave Hale since September 18, 2017, Jitneytrade since June 6, 2018, McCarthy Taylor since January 29, 2019, Petsky Prunier since February 13, 2019, Thomas Miller since May 1, 2019, and Patersons since October 21, 2019. Q1/20, our Asian based operations, including Singapore, China and Hong Kong, have been combined with our Canadian and Australian capital markets operations to reflect management of these operating units. Also, commencing in Q3/20, our Australian wealth management business, comprised of the operating results of Patersons since October 21, 2019 and the wealth management business of Australia previously included as part of Canaccord Genuity Capital Markets Australia, is disclosed as a separate operating segment in the discussions below. Comparatives have not been restated. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Condensed Consolidated Statements of Financial Position Supplemental Information 107 (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 intangibles Right-of-use assets Liabilities and shareholders’ equity Fiscal 2021 Fiscal 2020 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 904,598 903,416 782,300 830,932 997,111 931,467 459,158 585,502 1,883,292 1,253,263 1,041,583 1,062,946 758,130 1,416,525 3,973,442 3,069,771 3,130,499 2,647,206 3,275,841 2,246,922 2,688,154 2,636,928 7,473 17,838 8,170 24,685 551,288 110,087 7,631,801 6,085,307 5,651,721 4,981,475 5,956,195 4,453,741 4,612,600 5,358,496 5,603 39,487 10,105 24,860 565,587 106,134 14,877 16,043 8,249 23,754 539,118 105,117 12,793 23,266 8,225 24,555 560,164 105,687 282 44,923 7,348 22,843 537,648 86,283 738 81,229 12,193 23,070 531,038 85,216 10,859 36,325 9,837 23,389 543,389 97,238 3,710 40,599 10,396 23,569 543,576 91,358 548,674 923,455 — 631,662 — 700,909 — 889,607 — 753,312 — 569,012 — 875,017 4,379 543,035 — Bank indebtedness Securities sold short 540,668 Accounts payable, accrued liabilities and other 5,170,957 3,968,036 3,619,631 2,997,985 3,680,186 2,560,810 2,758,400 3,490,204 5,492 Income taxes payable 56,285 3,324 Current portion of bank loan 12,119 22,326 Current portion of lease liabilities 24,311 29,729 Current portion of contingent consideration 17,706 9,653 Deferred consideration 8,087 83,139 Contingent consideration 11,490 5,516 Promissory note — 97,675 Lease liability 70,591 1,662 Other long-term liabilities — 81,070 Bank loan 66,200 11,063 Deferred tax liabilities 13,552 7,500 Subordinated debt 7,500 127,492 Convertible debentures 168,112 2,296 Non-controlling interests 8,190 1,107,094 839,687 Shareholders’ equity 7,631,801 6,085,307 5,651,721 4,981,475 5,956,195 4,453,741 4,612,600 5,358,496 3,753 6,510 20,893 29,301 8,344 81,104 5,363 92,759 1,628 76,200 7,723 7,500 127,763 1,733 836,212 11,721 7,042 23,417 57,859 8,966 47,614 — 88,922 1,760 79,192 9,903 7,500 128,322 156 928,618 7,360 6,843 23,055 23,426 8,733 82,274 5,457 90,825 1,725 76,844 8,260 7,500 128,040 2,343 851,234 8,287 8,416 22,936 51,373 7,862 31,079 — 83,201 1,683 70,775 8,647 7,500 128,609 3,469 917,991 19,664 12,195 22,490 18,769 8,138 24,261 — 72,503 — 66,513 8,083 7,500 129,200 6,844 967,799 6,192 8,605 22,465 17,286 8,039 30,515 — 77,871 1,721 72,475 8,489 7,500 128,902 5,439 935,682 Miscellaneous Operational Statistics(1) Number of employees in Canada Number in Canaccord Genuity Number in Canaccord Genuity Wealth Management Number in Corporate and Other Total Canada Number of employees in the UK & Europe Number in Canaccord Genuity Number in Canaccord Genuity Wealth Management Number of employees in the US Number in Canaccord Genuity Number of employees in Australia Number in Canaccord Genuity Number in Canaccord Genuity Wealth Management Number of employees company-wide Number of Advisory Teams in Canada (2) Number of licensed professionals in Canada Number of investment professionals and fund managers in the UK & Europe (3) Number of Advisors — Australia AUM — Canada (discretionary) (C$ millions) AUA — Canada (C$ millions) AUM — UK & Europe (C$ millions) AUM — Australia (C$ millions) Total (C$ millions) (1) (2) Q4 274 454 362 1,090 131 528 319 84 204 2,356 145 451 202 110 6,307 32,240 52,298 4,228 88,766 Fiscal 2021 Q3 Q2 261 259 433 359 1,053 438 345 1,042 133 525 311 80 194 2,296 144 438 205 106 5,728 29,270 51,762 4,174 85,206 133 530 308 74 198 2,285 145 433 208 115 4,941 24,648 45,380 3,366 73,394 Q1 251 426 342 1,019 133 537 304 82 197 2,272 144 431 209 117 4,551 22,243 43,566 3,064 68,873 Q4 257 432 339 1,028 136 548 313 83 200 2,308 146 435 210 119 4,009 18,440 39,879 2,400 60,719 Fiscal 2020 Q3 Q2 260 257 425 337 1,022 430 328 1,015 137 557 322 77 201 2,316 147 429 214 115 4,584 20,989 48,110 3,691 72,790 141 572 322 58 15 2,123 151 426 215 11 4,423 20,408 44,183 858 65,449 Q1 258 427 315 1,000 154 593 306 60 15 2,128 153 421 218 11 4,346 21,223 45,574 774 67,571 These miscellaneous operational statistics are non-IFRS measures. Advisory Teams are normally comprised of one or more Investment Advisors (IAs) and their assistants and associates, who together manage a shared set of client accounts. Advisory Teams that are led by, or only include, an IA who has been licensed for less than three years are not included in our Advisory Team count, as it typically takes a new IA approximately three years to build an average- sized book. Investment professionals include all staff with direct sales responsibilities, which includes brokers and assistants with direct client contacts. Fund managers include all staff who manage client assets. (3) 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 108 Glossary Acquisition-related expense items These expenses are mainly comprised of professional and employment costs in connection with acquisitions. Acquisition- related expense items also include costs incurred for prospective acquisitions not pursued. Figures that exclude acquisition-related items are considered non-IFRS measures. Advisory fees Revenue related to the fees the Company charges for corporate advisory, mergers and acquisitions or corporate restructuring services is recorded as Advisory fees. Advisory Teams (IA Teams) Advisory Teams are normally comprised of one or more Investment Advisors (IAs) and their assistants and associates, who together manage a shared set of client accounts. Advisory Teams that are led by, or only include, an IA who has been licensed for less than three years are not included in our Advisory Team count, as it typically takes a new IA approximately three years to build an average-sized book of business. Assets under administration (AUA) Canada AUA is the market value of client assets administered by the Company, for 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. Management uses this measure to assess operational performance of the Canaccord Genuity Wealth Management business segment. This measure is non-IFRS. Assets under management (AUM) Canada AUM consists of assets that are beneficially owned by clients and discretionarily managed by the Company as part of the Complete Canaccord Investment Counselling Program and Complete Canaccord Private Investment Management. Services provided include the selection of investments and the provision of investment advice. AUM is also administered by the Company and is therefore included in AUA. This measure is non-IFRS. Assets under management (AUM) UK and Europe AUM is the market value of client assets managed and administered by the Company, for which the Company earns commissions or fees. This measure includes both discretionary and non-discretionary accounts. This measure is non-IFRS. Canaccord Genuity Capital Markets Canaccord Genuity Capital Markets is the global capital markets division of Canaccord Genuity Group Inc., offering institutional and corporate clients idea-driven investment banking, merger and acquisition, research, sales and trading services with capabilities in North America, the UK & Europe, Asia, Australia and the Middle East. We are committed to providing valued services to our clients throughout the entire lifecycle of their business and operating as a gold standard independent investment bank — expansive in resources and reach, but targeted in industry expertise, market focus and individual client attention. Canaccord Genuity Wealth Management (CGWM) 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 CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT needs of clients in each of its markets. The Company’s wealth management division now has Investment Advisors (IAs) and professionals in Canada, the UK, Jersey, Guernsey, the Isle of Man and Australia. 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 Capital Markets 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. Commissions and fees Commission and fees revenue consist of revenue generated through commission-based brokerage services and the sale of fee- based products and services. Correspondent brokerage services The provision of secure administrative, trade execution and research services to other brokerage firms through the Company’s existing technology and operations infrastructure (Pinnacle Correspondent Services). Earnings per share (EPS) Basic earnings per common share is computed by dividing the net income attributable to common shareholders for the period by the weighted average number of common shares outstanding. Diluted earnings per common share reflects the dilutive effect in connection with the LTIP, warrants, 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. Fair value adjustment An estimate of the fair value of an asset (or liability) for which a market price cannot be determined, usually because there is no established market for the asset. Fixed income trading Trading in new issues, government and corporate bonds, treasury bills, commercial paper, strip bonds, high-yield debt and convertible debentures. Incentive-based revenue A percentage of incentive-based revenue earned is directly paid out as incentive compensation expense, including commission, investment banking, advisory fees, and principal trading revenue. Institutional sales and trading A capital markets business segment providing market information and research, advice and trade execution to institutional clients. Glossary 109 International Equities Group (IEG) The International Equities Group is a premium, low cost, order routing destination for both US listed securities and foreign listed ordinary shares for local market execution in the US operations. Investment banking Assisting public and private businesses and governments to obtain financing in the capital markets through the issuance of debt, equity and derivative securities on either an underwritten or an agency basis. Investment professionals and fund managers Investment professionals include all staff with direct sales responsibilities, which include brokers and assistants with direct contacts. Fund managers include all staff who manage client assets. Liquidity The total of cash and cash equivalents available to the Company as capital for operating and regulatory purposes. Long-term incentive plan (LTIP) Employees (including senior executives) 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). The participating employees are eligible to receive shares that generally vest over three years (the “RSUs”). This program is referred to as the Long-Term Incentive Plan (the “LTIP” or the “Plan”). National Insurance (NI) tax Payroll tax applicable to UK employees based on a percentage of incentive compensation payout. Non-cash charges Charges booked by a company that do not impact its cash balance or working capital. Non-IFRS Measures Non-IFRS Measures do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS) and are therefore unlikely to be comparable to similar measured presented by other companies. Performance stock options The performance share options (PSO) have a term of five years and will time-vest ratably over four years (with one third vesting on each of the second, third and fourth anniversaries of the date of the grant). The PSOs will also be subject to market (stock price) performance vesting conditions, as well as have a four times exercise price cap on payout value (i.e., the gain on the exercise of the options is limited to three times the exercise price). The PSOs will expire on June 14, 2023. Performance share units The Company adopted a performance share unit (PSU) plan for certain senior executives. The PSUs are a notional equity- based instrument linked to the value of the Company’s common shares. At the end of a three-year vesting period, the number of PSUs which vest is a multiple of the number of PSUs originally granted ranging from 0x to 2x based upon performance against certain metrics pre-determined for each annual grant. The PSUs cliff-vest on the third anniversary of the date of the grant. The number of PSUs that vest is also adjusted for dividends paid during the vesting period. The PSUs are settled in cash, based on the market price of the Company’s shares at the time of vesting. The PSUs were measured at fair value on the grant date. Changes in value of the PSUs at each reporting period are amortized over the remaining vesting period and recorded as a compensation expense in the statement of operations. During the year ended March 31, 2021, the PSU plan was amended to include certain employment-related conditions to the vesting of the awards resulting in a change in the periodic expense recorded during the vesting period. Preferred shares A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred shares generally do not have voting rights; however, preferred shareholders receive a dividend that must be paid out before dividends are paid to common stockholders. Principal trading Trading in equity securities in principal and inventory accounts. Revenue is generated through inventory trading gains and losses. Risk Financial institutions face a number of risks that may expose them to losses, including market, credit, operational, regulatory and legal risk. Separately managed accounts (SMAs) Investment portfolios available to clients that are managed by a senior portfolio manager. In SMAs, clients own the individual securities within the portfolio, rather than a portion of a pooled fund. Significant items Significant items include restructuring costs, amortization of intangible assets acquired in connection with a business combination, impairment of goodwill and other assets and acquisition-related expense items, which include costs recognized in relation to both prospective and completed acquisitions, gains or losses related to business disposals including recognition of realized translation gains on the disposal of foreign operations, certain accounting charges related to the change in the Company’s long-term incentive plan (LTIP) as recorded with effect on March 31, 2018, certain incentive-based costs related to the acquisitions and growth initiatives in the UK & Europe wealth management business, loss and other costs related to the extinguishment of convertible debentures as recorded for accounting purposes, certain expense items, typically included in development costs, which are considered by management to reflect a singular charge of a non-operating nature, as well as certain fair value adjustments on certain illiquid or restricted marketable securities as recorded for IFRS reporting purposes, but which are excluded for management reporting purposes and are not used by management to assess operating performance. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 110 CORPORATE GOVERNANCE The Board of Directors (Board) assumes responsibility for the stewardship of the Company, acting as a whole and through its committees, and has approved a formal Board Governance Manual (Mandate) including terms of reference for the Board and setting forth the Board’s stewardship responsibilities and other specific duties and responsibilities. The Board’s responsibilities are also governed by: • The Business Corporations Act (British Columbia) • The Company’s articles • The charters of its committees • Other corporate policies and applicable laws Communication with Independent Members of the board Gillian (Jill) Denham has been appointed by the Board of Directors of Canaccord Genuity Group Inc. as its Lead Director. One of her responsibilities is to receive and determine appropriate action on any communications from interested parties that are addressed to the independent directors of the Board. Such communications may be sent to Ms. Gillian in writing by mail care of the Corporate Secretary of Canaccord Genuity Group Inc. It is recommended that such communications be addressed as “Jill Denham, Lead Director, Canaccord Genuity Group Inc., c/o Corporate Secretary, 3000-161 Bay Street, Toronto, M5J 2S1, TO BE OPENED BY ADDRESSEE ONLY.” Such communications will be forwarded, unopened, to Ms. Denham. Strategic Planning Process The Board’s Mandate provides that the Board is responsible for ensuring that the Company has an effective strategic planning process. As such, the Board reviews, approves, monitors and provides guidance on the Company’s strategic plan. Identification and Management of Risks The Board’s Mandate includes: • Assisting management to identify the principal business risks of the Company • Taking reasonable steps to ensure the implementation of appropriate systems to manage and monitor those risks • Reviewing plans for evaluating and testing the Company’s internal financial controls • Overseeing the external auditors, including the approval of the external auditors’ terms of reference Succession Planning and Evaluation The Board’s Mandate includes keeping in place adequate and effective succession plans for the Chief Executive Officer (CEO) and senior management. • The Corporate Governance and Compensation Committee (CGCC) receives periodic updates on the Company’s succession plan at the senior officer level and monitors the succession planning process • The succession plan is reviewed, at least annually, by the CGCC • On the recommendation of the Chairman & CEO, the Board appoints the senior officers of the Company Communications and Public Disclosure The Company’s Disclosure Controls Policy (DCP) addresses the accurate and timely communication of all important information relating to the Company and its interaction with shareholders, investment analysts, other stakeholders and the public generally. • The DCP is reviewed annually by the Board • The DCP, public securities regulatory filings, press releases and investor presentations are posted on the Company’s website • The Board reviews all quarterly and annual consolidated financial statements and related management discussion and analysis, the Company’s earnings releases, management information circulars, annual information forms (AIFs) and financing documents Internal Controls The Board requires management to maintain effective internal controls and information systems. The Board, with the assistance of the Audit Committee, oversees the integrity of the Company’s internal control and information systems. CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT CORPORATE GOVERNANCE 111 • The Audit Committee meets no less than four times a year with the Company’s Chief Financial Officer (CFO) and senior finance staff to review internal controls over financial reporting and related information systems • External auditors provide recommendations to the Audit Committee on an annual basis in relation to the Company’s internal controls and information systems As of March 31, 2021 an evaluation was carried out, under the supervision of and with the participation of management, including the President & CEO and the Executive Vice President & CFO, of the effectiveness of our disclosure controls and procedures as defined under National Instrument 52-109. Based on that evaluation, the President & CEO and the Executive Vice President & CFO concluded that the design and operation of these disclosure controls and procedures were effective as of March 31, 2021. Governance The Board is currently composed of nine directors, seven of whom are independent of management as determined under applicable securities legislation. In order to facilitate the exercise of independent judgment by the Board of Directors, the Board has appointed a lead director and holds regular meetings without management directors present. • The CGCC is responsible for periodically reviewing the composition of the Board and its committees • A formal annual assessment process has been established to include feedback by all the directors to the full Board, including the completion of a confidential survey • New directors are provided with substantial reference material on the Company’s strategic focus, financial and operating history, corporate governance practices and corporate vision Summary of charters and committees The Board has delegated certain of its responsibilities to two committees, each of which has specific roles and responsibilities as defined by the Board. Both of these Board committees are made up of independent directors. AUDIT COMMITTEE The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities by monitoring the Company’s financial reporting practices and financial disclosure. It comprises four independent directors. All members of the Audit Committee are financially literate; that is, they are able to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. The current members of the Audit Committee are Terry Lyons (Chair), Charles Bralver, Gillian Denham, Merri Jones and Dipesh Shah. The Audit Committee has adopted a charter which specifically defines the roles and responsibilities of the Audit Committee. The Audit Committee Charter can be found in the Company’s AIF filed on SEDAR. The Audit Committee has direct communication channels with the external auditors and CFO and senior finance staff and discusses and reviews issues with each of them on a regular basis. The Audit Committee is responsible for ensuring management has designed and implemented an effective system of internal control. The external auditor is hired by and report directly to the Audit Committee. After consultation with management, the Audit Committee is responsible for setting the external auditors’ compensation. The external auditor attends each meeting of the Audit Committee, and a portion of each meeting is held without the presence of management. The Audit Committee annually reviews and approves the external auditor’s audit plan and must approve any audit and non-audit work performed by the external auditor. The CFO and senior finance staff attend each meeting of the Audit Committee other than the portion of the meeting which is held without management present to allow more open discussion. The Audit Committee annually reviews and approves the internal audit plan. CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE The Corporate Governance and Compensation Committee is responsible for developing the Company’s approach to governance issues, reviewing the Company’s overall governance principles and recommending changes to those principles from time to time. It comprises four independent directors: Michael Harris (Chair), Charles Bralver, Terrence Lyons and Sally Tennant. The committee has full access to staff and resources. At all regular committee meetings during the year, a portion of each meeting is held without management present to allow more open discussion. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 112 Board of Directors Charles N. Bralver ICD.D Audit Committee Corporate Governance and Compensation Committee Charles N. Bralver, ICD.D, age 69, is a financial services executive with over 30 years of capital markets experience. For more than 23 years — from 1984 to 2007 — Mr. Bralver was a founder and Vice Chairman of management consultancy Oliver, Wyman & Co. where he specialized in strategy, risk and operational work for leading investment banks, asset managers, exchanges and other market utilities. He also served as Senior Associate Dean for International Business and Finance at the Fletcher School of Law and Diplomacy from 2007 to 2010, and from 2007 to 2009 as a strategic advisor to Warburg Pincus LLC. Mr. Bralver serves as a director of the Company, and insurance risk exchange AkinovA Ltd., on the Leadership Council of AI solution developer r4, and on the Board of Visitors of the Fletcher School. Mr. Bralver started his career at Booz Allen Hamilton. He is a U.S. citizen and a graduate of the Fletcher School and Dartmouth College. Mr. Bralver is not currently a director of any other public companies. Daniel Daviau Dan Daviau, age 56, was appointed President and Chief Executive Officer and a director of the Company and Chief Executive Officer of Canaccord Genuity Corp. effective on October 1, 2015. Mr. Daviau served as President of Canaccord Genuity’s North American capital markets business from February 2015. From 2012 to 2015, he was President of the firm’s US capital markets business, where he helped to structure the firm’s investment banking, research, sales and trading operations in the region and improve cross- border capabilities. From 2010 to 2012, Mr. Daviau was Head of Investment Banking for Canaccord Genuity. Before the Canaccord/ Genuity merger that was announced in 2010, Mr. Daviau was a Principal and Founder of Genuity Capital Markets, where he held a variety of senior roles since 2005. Before 2005, Mr. Daviau was Co-Head of Investment Banking at CIBC World Markets, a firm he joined in 1991. While at CIBC World Markets, Mr. Daviau also served as the Head of the Media and Telecommunications Group since 2000 and Head of the Technology Investment Banking Group in Canada since 1997. Having started his career as a securities lawyer with Goodman & Co., Mr. Daviau has extensive experience in a broad range of financing transactions and M&A assignments. Mr. Daviau is based in Toronto, Canada. He holds an MBA from York University, an LL.B. from Osgoode Hall/York University and a B.A. (Math and Statistics) from the University of Western Ontario. Mr. Daviau is not currently a director of any other public companies. Gillian (Jill) Denham Audit Committee Gillian (Jill) Denham, age 60, is President of Authentum Partners Ltd. that invests in technology and related businesses and provides advisory services. Ms Denham currently serves on the board of directors of Canadian Pacific Railway Limited and Kinaxis Inc. and chairs the board of directors of LifeWorks Inc. (formerly Morneau Shepell Inc.). Ms Denham spent her career at Wood Gundy and CIBC. She has held senior positions in investment banking, was President of Merchant Banking/Private Equity and had regional responsibility for CIBC in Europe. She was also head of the Retail Bank for CIBC. She holds an Honours Business Administration (HBA) degree from the Ivey Business School, Western University, and an MBA from Harvard Business School. Michael D. Harris, O.Ont., D.Litt. (Hon.), ICD.D Corporate Governance and Compensation Committee CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Michael Harris, ICD.D, age 76, is a Senior Business Advisor in the Corporate/Commercial and Government Relations & Ethics Groups at Fasken Martineau. From 1981 — 2002, Mr. Harris served as Member of Provincial Parliament for the riding of Nipissing. From 1995 — 2002 he served as Ontario’s twenty-second Premier, following a landslide election victory in 1995. He was re-elected again for a second term in 1999, making him the first Ontario Premier in more than 30 years to form a second consecutive majority government. He is known for his advice on governance issues and government relations matters and brings extensive experience in public policy and government decision-making. After leaving public office in 2002, Mr. Harris formed his own consulting firm. As President of Steane Consulting Ltd., he is an advisor to numerous Canadian companies. He serves as director on several private and public boards, including Chartwell Retirement Residences, Route1 Inc. and Voxtur Analytics Corp. His past board responsibilities included Chair of Magna International, where he led the restructuring to a one share-one vote corporation; Element Financial; and Enmax Corp. in Calgary. Mr. Harris also sits on the advisory boards of several private equity funds including EnerTech and Beringer Capital. He received his ICD.D certification from the Institute of Corporate Directors in 2005. Mr. Harris’ passion for the community is shown through his involvement with various organisations and institutions. He serves on the board of the New Haven Learning Centre, a charitable, non- profit organization committed to being a Centre of Excellence in the treatment and education of children with autism. He has served on the board of the Tim Horton Children’s Foundation. He has also served as Honorary Chairman of fundraising initiatives for Nipissing University, Canadore College and the North Bay Regional Health Centre. Mr. Harris is also a Senior Fellow with The Fraser Institute, a leading Canadian economic, social research and education organization. In addition to Canaccord Genuity Group Inc., Mr. Harris is a director of the following public companies: Chartwell Retirement Residences (Chair), Route1 Inc. (Chair), and Voxtur Analytics Corp. Merri Jones ICD.D. Audit Committee Merri Jones, ICD.D, age 70, is a corporate director and advisor. She has over 40 years’ experience within financial services with expertise across sales and marketing, finance, strategy and human resources. She was the first female to lead a Schedule II Bank in Canada. She was the Executive Vice President, Private Wealth, at Fiera Capital from 2010 to 2015; President of GBC Asset Management in 2008 and 2009; President and Chief Executive Officer of AGF Private Wealth Management from 2003 to 2007; President, Chief Operating Officer and Director of TAL Private Management from 1996 to 2003; and President and Chief Executive Officer of CIBC Trust in 1995 and 1996. Before joining CIBC in 1995, Ms. Jones had been President and Chief Executive Officer of First Interstate Bancorp from 1986 to 1990 and had worked at Chemical Bank and the Royal Bank of Canada, where she began her career. Ms. Jones was educated at the University of Western Ontario, the Wharton School of Business and the University of Toronto. She has received her ICD.D certification from the Institute of Corporate Directors. Ms. Jones is a director of the following public company: Data Communications Management Corp. She is also the chair of the Investment Review Committee of the Starlight Group of Funds. David Kassie David Kassie, age 65, became Group Chairman and a director of the Company on the closing of the acquisition of Genuity Capital Markets, a Canadian investment bank, on April 23, 2010, and became Chairman on April 1, 2012. He was the Principal, Chairman and Chief Executive Officer of Genuity Capital Markets from 2004 until May 9, 2010, when the integration of the businesses of Genuity Capital Markets and Canaccord Financial Ltd. was completed under the name Canaccord Genuity. Before 2004, he was Chairman and Chief Executive Officer of CIBC World Markets and the Vice Chairman of CIBC. On the death of Paul Reynolds on April 1, 2015, Mr. Kassie was appointed as the Chief Executive Officer of the Company and held that office until the appointment of Mr. Daviau as Chief Executive Officer. Mr. Kassie is now the fulltime Chairman of the Board. Mr. Kassie has extensive experience as an advisor, underwriter and principal. He sits on a number of corporate boards. Mr. Kassie is actively involved in community and charitable organizations and is a director and former Chairman of the Board of Baycrest Health Sciences and was formerly on the boards of the Richard Ivey School of Business, the Toronto International Film Festival Group and the Hospital for Sick Children. Mr. Kassie holds a B.Comm. (Honours) in Economics from McGill University (1977) and an MBA from the University of Western Ontario (1979). In addition to Canaccord Genuity Group Inc., Mr. Kassie is a director of the following public company: Reitmans (Canada) Limited. Terry Lyons, ICD.D Audit Committee Corporate Governance and Compensation Committee Terrence (Terry) Lyons, ICD.D, age 71, is a corporate director and a member of the Institute of Corporate Directors. He is also a director of several public and private corporations including Three Valley Copper Corp.(formerly SRHI Inc.) (Chairman) and Martinrea International Inc. Mr. Lyons is a retired Managing Partner of Brookfield Asset Management and former President and Managing Partner of B.C. Pacific Capital Corporation, past Chairman of Polaris Materials Corporation which was recently acquired by U.S. Concrete, of Northgate Minerals Corporation which was acquired by AuRico Gold Inc. (now Alamos Gold Inc.) and of Eacom Timber Corporation which was sold to a private equity firm. He was previously a director of the B.C. Pavilion Corporation (Pavco), Chairman of Westmin Mining and Vice-Chairman of Battle Mountain Gold. Mr. Lyons has been active in Junior Achievement, the United Way, Special Olympics and other charitable and sports organizations. He is past Chairman of the Mining Association of B.C., past Co-Chairman of the B.C. Business Hall of Fame, a past Governor and Member of the Executive Committee of the B.C. Business Council, a past Governor of the Olympic Foundation of Canada, former Chairman of Sport B.C., a past President of Shaughnessy Golf and Country Club and a past member of the B.C. Board of the Institute of Corporate Directors and is currently a member of the Advisory Board of the Richard Ivey School of Business at Western University. In 2007, Mr. Lyons was awarded the Inco Medal by the Canadian Institute of Mining and Metallurgy for distinguished service to the mining industry. Mr. Lyons is a Civil Engineer (UBC) with an MBA from Western University (1974). In addition to Canaccord Genuity Group Inc., Mr. Lyons is a director of the following public companies: Martinrea International Inc., Mineral Mountain Resources Ltd. and Three Valley Copper Corp. (formerly SRHI Inc.) 113 Dipesh Shah, OBE, FRSA Audit Committee Dipesh Shah, OBE, FRSA, age 68, is the Chairman of Highways England and a Director and Chairman of the Investment Committee of the 2020 European Fund for Energy, Climate Change and Infrastructure and also of the EU Marguerite Fund. He is a Trustee of the British Youth Opera and a Governor of Merchant Taylors’ School. Mr. Shah was formerly the Chief Executive of the UK Atomic Energy Authority and of various large businesses in BP Plc, where he was a member of the Group Leadership for more than a decade and latterly also the Global Head of Acquisitions and Divestitures. Mr. Shah was Chairman, inter alia, of Notting Hill Genesis and Genesis Housing Association, Viridian Group plc, HgCapital Renewable Power Partners LLP and the European Photovoltaic Industry Association. He was the Senior Independent Director and Chair of the Remuneration Committee of JKX Oil & Gas Plc from 2008 to 2015, the Senior Independent Director and Chair of the Nominations Committee of Equus Petroleum Plc from 2013 to 2016 and a Director of The Crown Estate from 2011 to 2018, Thames Water from 2007 to August 2017 and of Cavendish Fluor Partnership from 2014 to August 2017. In addition, he has been a Director of several major organizations, including Babcock International Group Plc and Lloyd’s of London, the insurance market. He was also a member of the UK Government’s Renewable Energy Advisory Committee from 1994 to 2002. Earlier, Mr. Shah was the Chief Economist for BP Oil UK. Born in India, and brought up in Uganda, Mr. Shah is a graduate of the University of London, the University of Warwick and the Harvard Business School management program. He was appointed an Officer of the Order of the British Empire (OBE) in the 2007 New Year Honours and is a Life Fellow of the Royal Society of Arts (FRSA). Mr. Shah is not currently a director of any other public companies. Sally Tennant, OBE Corporate Governance and Compensation Committee Sally Tennant, OBE, age 65, is the founding partner of Acorn Capital Advisers, an independent wealth adviser, and has been CEO of three banks: Kleinwort Benson (2011-2014), Schroders Private Banking (2002-2006) and Lombard Odier (UK) Ltd. (2007- 2010) and the Chair of a fourth, Duncan Lawrie Ltd. She additionally has extensive experience of asset and wealth management as a former main board director of Gartmore plc, where she successfully built the global institutional division. She has a total of 20 years running money at Gartmore, Morgan Grenfell and SG Warburg / Mercury Asset Management. Ms. Tennant also co-launched a hedge fund, Beaumont Capital, and has deep experience of dealing with multigenerational families and family businesses in a wide range of ways, from sitting on the board of a large family holding company, Waypoint Capital, to working for a multigenerational family owned bank, Lombard Odier; and advising numerous ultra high new worth families. She has extensive chair, non-executive and remuneration chair experience in the unquoted and private equity space. Ms. Tennant is a director of Hargreaves Property Holdings Ltd. Ms. Tennant was born and grew up in Switzerland. She has international experience in the Channel Islands, U.S., the Middle East and Continental and Eastern Europe. She holds a degree in politics from Durham University. She is a patron of Tommy’s the Baby Charity and a trustee of Guy’s & St. Thomas’ Foundation. She was appointed an Officer of the Order of the British Empire (OBE) in the Queen’s 2018 Birthday Honours. Ms. Tennant is not currently a director of any other public companies. 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 114 Locations Capital Markets CANACCORD GENUITY CAPITAL MARKETS Canada Toronto Brookfield Place 161 Bay Street, Suite 3000 P.O. Box 516 Toronto, ON Canada M5J 2S1 Telephone: 416.869.7368 Toll free (Canada): 1.800.382.9280 Vancouver Pacific Centre 609 Granville Street, Suite 2200 P.O. Box 10337 Vancouver, BC Canada V7Y 1H2 Telephone: 604.643.7300 Toll free (Canada): 1.800.663.1899 Calgary Centennial Place – East Tower Suite 2400, 520 3rd Ave. SW Calgary, AB Canada T2P 0R3 Telephone: 403.508.3800 Montréal 1250 René-Lévesque Boulevard West Suite 2930 Montréal, QC Canada H3B 4W8 Telephone: 514.844.5443 United States New York 535 Madison Avenue New York, NY USA 10022 Telephone: 212.389.8000 Boston 99 High Street, Suite 1200 Boston, MA USA 02110 Telephone: 617.371.3900 Toll free: 1.800.225.6201 San Francisco 44 Montgomery Street, Suite 1600 San Francisco, CA USA 94104 Telephone: 415.392.8844 Toll free:1.800.229.7171 Nashville 1033 Demonbreun Street, Suite 620 Nashville, TN USA 37203 Telephone: 615.490.8500 Minneapolis 45 South 7th Street, Suite 2640 Minneapolis, MN USA 55402 Telephone: 612.332.2208 Washington 1200 G Street, NW Suite 725 Washington, DC 20036 USA Telephone: 301.657.4600 New York 33 Whitehall Street, 27th Floor New York, NY USA 10004 Telephone: 212.842.6020 UK & Europe London 88 Wood Street London, UK EC2V 7QR Telephone: 44.20.7523.8000 Dublin 38 Fitzwilliam Street Upper Grand Canal Dock Dublin 2 D02 KV05 Ireland Telephone: 353.1.635.0210 Paris Washington Plaza 29 rue de Berri 75008 Paris France Telephone: 33.1.56.69.66.66 Dubai Gate Village Building 4 Suite 402, DIFC PO Box 507023 Dubai United Arab Emirates Telephone: 971.4.454.1204 Asia-Pacific Beijing Unit 1421-22, South Tower, Beijing Kerry Centre, 1 Guanghua Road, Chaoyang District Beijing 100020 China Telephone: 8610.5929 8650 Hong Kong 1505, 15/F, ICBC Tower, Three Garden Road, Central, Hong Kong Telephone: 852.3919.2500 Melbourne Level 15, 333 Collins Street Melbourne, VIC, 3000, Australia Telephone: 61.3.8688.9100 Perth Level 23, Exchange Tower 2 The Esplanade Perth, WA, 6000 Australia Telephone: 61.8.9263.1111 Sydney Level 62, MLC Centre 19 Martin Place Sydney NSW 2000, Australia Telephone: 61.2.9263.2700 CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT Wealth Management CANACCORD GENUITY WEALTH MANAGEMENT Canada British Columbia Vancouver Pacific Centre 609 Granville Street, Suite 2200 P.O. Box 10337 Vancouver, BC Canada V7Y 1H2 Telephone: 604.643.7300 Toll free (Canada):1.800.663.1899 Kelowna Landmark 5, 320 – 1620 Dickson Avenue Kelowna, BC Canada V1Y 9Y2 Telephone: 250.712.1100 Toll free: 1.888.389.3331 Ontario Toronto Brookfield Place, Suite 3100 P.O. Box 516 161 Bay Street Toronto, ON Canada M5J 2S1 Telephone: 416.869.7368 Toll free (Canada): 1.800.382.9280 Waterloo 80 King Street South, Suite 101 Waterloo, ON Canada N2J 1P5 Telephone: 519.886.1060 Toll free: 1.800.495.8071 Alberta Calgary Centennial Place – East Tower 520 3rd Avenue SW, Suite 2400 Calgary, AB Canada T2P 0R3 Telephone: 403.508.3800 Toll free: 1.800.818.4119 Edmonton Manulife Place 10180 – 101st Street, Suite 570 Edmonton, AB Canada T5J 3S4 Telephone: 780.408.1500 Toll free: 1.877.313.3035 Manitoba Winnipeg 1010-201 Portage Avenue Winnipeg, MB Canada R3B 3K6 Telephone: 204.259.2850 Toll free: 1.877.259.2888 Locations 115 Québec Montréal 1250 René-Lévesque Boulevard West, Suite 2930 Montreal, QC Canada H3B 4W8 Telephone: 514.844.5443 Toll free: 1.800.361.4805 Nova Scotia Halifax Purdy’s Wharf Tower II 1969 Upper Water Street Suite 2004 Halifax, NS Canada B3J 3R7 Telephone: 902.442.3162 Toll free: 1.866.371.2262 Canaccord Genuity Wealth Management (USA), Inc. Vancouver Pacific Centre 609 Granville Street, Suite 2200 P.O. Box 10337 Vancouver, BC Canada V7Y 1H2 Telephone: 604.684.5992 UK & Europe London 41 Lothbury London, UK EC2R 7AE Telephone: 44.20.7523.4500 Jersey 37 The Esplanade St Helier Jersey JE4 0XQ Telephone: 44.1534.708090 Guernsey Trafalgar Court, Admiral Park, St. Peter Port Guernsey GY1 2JA Telephone : 44.1481.733900 Isle of Man 55 Athol Street Douglas Isle of Man IM1 1LA Telephone: 44.1624.690100 Blackpool Talisman House Boardmans Way Blackpool FY4 5FY Telephone: 44.1253.621575 Lancaster 2 Waterview Lancaster LA1 4XQ Telephone: 44.1524.541560 Norwich 13-15 St Georges Street Norwich Norfolk NR3 1AB Telephone: 44.1603.567120 Llandudno Anson House 1 Cae’r Llynen Llandudno Junction Conwy LL31 9LS Telephone: 44.1492.558359 Nottingham The Point Loughborough Road West Bridgford, Nottingham NG2 7QW Telephone: 44.1158.965840 Worcester Slip House Princes Drive Worcester WR1 2AB Telephone: 44.1905.953600 York 23 High Petergate York YO1 7HS Telephone: 44.1904.232780 Southampton Ocean Village Innovation Centre Ocean Way Southampton SO14 3JZ Telephone: 44.2380.381670 Australia Melbourne Level 15, 333 Collins Street Melbourne, VIC, 3000, Australia Telephone: 61.3.9242.4000 Sydney Level 62, MLC Centre 19 Martin Place Sydney NSW 2000 Telephone: 61.2.8238.6200 Perth Level 23, Exchange Tower 2 The Esplanade Perth, Western Australia, 6000 Telephone: 61.8.9263.1111 Albany Level 2, Middleton Centre 184 Aberdeen Street 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 116 Locations Albany, Western Australia, 6330 Telephone: 61.8.9842.4700 Busselton Suite 1 72 Duchess Street Busselton, Western Australia, 6280 Telephone: 61.8.9754.0700 Gold Coast Suite 2, Ground Level 128 Bundall Road Gold Coast, Queensland, 4217 Telephone: 61.7.5631.2300 Adelaide 21/25 Grenfell Street Adelaide, South Australia, 5000 Telephone: 61.8.8407.5700 OTHER LOCATIONS Pinnacle Correspondent Services Vancouver Pacific Centre 609 Granville Street, Suite 2200 P.O. Box 10337 Vancouver, BC Canada V7Y 1H2 Telephone: 604.643.7300 Toronto Brookfield Place 161 Bay Street, Suite 3000 P.O. Box 516 Toronto, ON Canada M5J 2S1 Telephone: 416.869.7368 CANACCORD GENUITY GROUP INC. / 2021 ANNUAL REPORT 117 Media Relations and Inquiries from Institutional Investors and Analysts Christina Marinoff Vice President, Investor Relations and Com- munications Phone: 416-687-5507 Email: cmarinoff@cgf.com The Canaccord Genuity Group Inc. 2021 Annual Report is available on our website at www.canaccordgenuitygroup- .com. For a printed copy, please contact the Investor Relations department. Shareholder Information Corporate Headquarters Corporate Website STREET ADDRESS Canaccord Genuity Group Inc. 609 Granville Street, Suite 2200 Vancouver, BC, Canada MAILING ADDRESS Pacific Centre 609 Granville Street, Suite 2200 P.O. Box 10337 Vancouver, BC V7Y 1H2, Canada Stock Exchange Listing Common shares: TSX: CF www.canaccordgenuity.com General Shareholder Inquiries and Information INVESTOR RELATIONS 161 Bay Street, Suite 3000 Toronto, ON, Canada Telephone: 416.869.7293 Fax: 416.947.8343 Email: investor.relations@cgf.com Preferred shares: Series A (TSX): CF.PR.A. Series C (TSX): CF.PR.C. Fiscal 2022 Expected Dividend(1) and Earnings Release Dates Expected earnings release date Preferred dividend record date Preferred dividend payment date Common dividend record date Common dividend payment date Q1/22 Q2/22 Q3/22 Q4/22 August 3, 2021 November 8, 2021 February 9, 2022 June 1, 2022 September 17, 2021 December 17, 2021 March 18, 2022 June 17, 2022 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 August 27, 2021 November 26, 2021 February 25, 2022 June 17, 2022 September 10, 2021 December 10, 2021 March 10, 2022 June 30, 2022 (1) Dividends are subject to Board of Directors approval. All dividend payments will depend on general business conditions and the Company’s financial conditions, results of operations, capital requirements and such other factors as the Board determines to be relevant. Shareholder Administration For information about stock transfers, ad- dress changes, dividends, lost stock certifi- cates, tax forms and estate transfers, con- tact: COMPUTERSHARE INVESTOR SERVICES INC. 100 University Avenue, 9th Floor Toronto, ON M5J 2Y1 Telephone toll free (North America): 1.800.564.6253 International: 514.982.7555 Fax: 1.866.249.7775 Toll free fax (North America) or International fax: 416.263.9524 Email: service@computershare.com Website: www.computershare.com Offers enrolment for self-service account management for registered shareholders through the Investor Centre. Financial Information For present and archived financial informa- tion, please visit www.canaccordgenuity- group.com Auditor Ernst & Young LLP Chartered Professional Accountants Vancouver, BC 2021 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. This page intentionally left blank. Shareholder Information STOCK EXCHANGE LISTINGS TSX: CF, CF.PR.A, CF.PR.C 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 provide lower levels of taxation for Canadian individuals who receive eligible dividends. All of the common share dividends paid by Canaccord Genuity Group Inc. since 2006 are eligible, as are common share dividends paid hereafter, unless otherwise indicated. WEBSITE AND FINANCIAL INFORMATION For TSX required corporate governance disclosures and current financial information, please visit www.cgf.com/investor-relations. FISCAL YEAR END March 31 REGULATORY FILINGS To view Canaccord Genuity Group Inc.’s regulatory filings on SEDAR, please visit www.sedar.com. INSTITUTIONAL INVESTORS, ANALYSTS AND MEDIA CONTACT Christina Marinoff Vice President, Investor Relations & Communications Telephone: 416.687.5507 Email: cmarinoff@cgf.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@cgf.com 13 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 INDEPENDENT AUDITOR Ernst & Young LLP Chartered Professional Accountants Vancouver, BC For information about fees paid to shareholders’ auditors, refer to our Fiscal 2021 Annual Information Form. QUALIFIED FOREIGN CORPORATION Canaccord Genuity Group Inc. is a “qualified foreign corporation” for US tax purposes under the Jobs & Growth Tax Reconciliation Act of 2003. ANNUAL GENERAL MEETING Thursday, August 5, 2021 at 10:00 a.m. (Eastern time) Shareholders and duly appointed proxyholders can attend the virtual meeting online by going to https://web.lumiagm.com/42111602 EDITORIAL AND DESIGN SERVICES The Works Design Communications Ltd. Canaccord Genuity Group Inc. Fiscal 2021 Annual ReportA C a n a c c o r d G e n u i t y G r o u p I n c . F i s c a l 2 0 2 1 A n n u a l R e p o r t NORTH AMERICA UK & EUROPE AUSTRALIA ASIA MIDDLE EAST Boston Calgary Edmonton Halifax Kelowna Miami Minneapolis Montréal Nashville New York San Francisco Toronto Vancouver Waterloo Winnipeg Blackpool Dublin Guernsey Isle of Man Jersey Lancaster Llandudno London Norwich Nottingham Paris Southampton Worcester York Adelaide Albany Busselton Gold Coast Melbourne Perth Sydney Beijing Hong Kong Dubai Tel Aviv WEALTH MANAGEMENT OFFICES CAPITAL MARKETS OFFICES Des exemplaires en français du présent rapport et des documents d’information connexes pour l’exercice 2021 peuvent être obtenus à l’adresse : www.canaccordgenuity.com/fr/relations-investisseurs/relations-investisseurs/rapports-financiers www.cgf.com Canaccord Genuity Group Inc. Fiscal 2021 Annual Report

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