Canaccord Genuity Group
Annual Report 2023

Plain-text annual report

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 3 A N N U A L R E P O R T DRIVEN BY PARTNERSHIP F I S C A L 2 0 2 3 A N N U A L R E P O R T D FINANCIAL OVERVIEW Q4 and Fiscal 2023 Selected Financial Information(1)(2)(5) (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)     Acquisition-related costs     Impairment of goodwill and other intangible assets     Fair value adjustment of non-controlling interests       derivative liability     Change in fair value of contingent consideration     Costs associated with redemption of convertible       debentures     Share of loss of an associate   Total expenses Three months ended March 31 Year ended March 31 2023 2022 2021 Q4/23 vs. Q4/22 2023 2022 Year-over- year change 2021 $ 196,774 $ 196,976 $ 214,476 (0.1)% $ 749,114 $ 761,843 $ 735,239 (1.7)% 50,962 104,649 26,921 45,949 5,134 108,801 122,353 305,939 (53.2)% 66,761 (14.5)% 41,960 87,830 (35.8)% 10,264 19,439 7,487 347.7% 24,033 (73.6)% 160,944 364,554 117,238 115,245 3,302 561,725 493,057 158,978 36,028 34,371 761,551 (71.3)% 197,092 (26.1)% 246,801 (26.3)% 26,288 40,717 219.9% (90.4)% 430,389 499,793 706,526 (13.9)% 1,510,397 2,046,002 2,007,688 (26.2)% 276,066 151,535 294,695 108,024 395,638 117,784 (6.3)% 40.3% 936,872 1,248,184 1,227,895 (24.9)% 500,578 395,709 398,693 26.5% — — 11,629 (14,278) — 10 515 — — — — 11 418 (100.0)% — — — 4,354 616 — n.m. n.m. — (9.1)% 5.4% 7,403 102,571 11,629 (14,278) — 55 9,197 — 8,519 — 5,932 192 5,922 (19.5)% — — — n.m. 36.5% n.m. 4,354 (100.0)% 922 (71.4)% 1,544,830 1,667,733 1,637,786 (7.4)% 424,962 403,245 518,810   (Loss) income before income taxes 5,427 96,548 187,716 (94.4)% (34,433) 378,269 369,902 (109.1)%   Net (loss) income   Net (loss) income attributable to:     CGGI shareholders     Non-controlling interests   (Loss) earnings per common share – diluted   Dividends per common share $ $ $ $ $ 3,763 $ 68,995 $ 139,394 (94.5)% $ (54,742) $ 270,565 $ 269,802 (120.2)% (4,326) $ 58,657 $ 137,877 (107.4)% 8,089 $ 10,338 $ 1,517 (21.8)% (0.08) $ 0.53 $ 0.93 (115.1)% 0.085 $ 0.085 $ 0.075 — $ $ $ $ (90,104) $ 246,314 $ 263,786 (136.6)% 35,362 $ 24,251 $ 6,016 45.8% (1.16) $ 0.34 $ 2.16 $ 0.32 $ 2.04 0.25 (153.7)% 6.3%   Total assets   Total liabilities   Non-controlling interests   Total shareholders’ equity   Number of employees Excluding significant items(4)   Total revenue   Total expenses   Income before income taxes   Net income   Net income attributable to:     CGGI shareholders     Non-controlling interests   Net income attributable to common shareholders,     adjusted   Earnings per common share – diluted $ 6,302,400 $ 7,250,245 $ 7,631,801 (13.1)% $ 4,903,763 $ 5,833,476 $ 6,516,517 (15.9)% $ 343,998 $ 238,700 $ 8,190 44.1% $ 1,054,639 $ 1,178,069 $ 1,107,094 (10.5)% 2,829 2,587 2,356 9.4% $ 430,389 $ 490,793 $ 692,326 (12.3)% $ 1,523,348 $ 2,040,602 $ 1,993,488 (25.3)% $ 414,055 $ 396,268 $ 509,087 4.5% $ 1,397,476 $ 1,623,036 $ 1,607,398 (13.9)% $ $ $ $ $ $ 16,334 $ 94,525 $ 183,239 (82.7)% $ 125,872 $ 417,566 $ 386,090 (69.9)% 17,428 $ 66,822 $ 137,128 (73.9)% $ 100,986 $ 305,827 $ 285,887 (67.0)% 9,645 $ 57,069 $ 135,611 (83.1)% 7,783 $ 9,753 $ 1,517 (20.2)% 6,793 $ 54,678 $ 133,260 (87.6)% 0.07 $ 0.52 $ 1.20 (86.5)% $ $ $ $ 71,260 $ 284,069 $ 279,871 (74.9)% 29,726 $ 21,758 $ 6,016 36.6% 60,312 $ 274,585 $ 270,467 (78.0)% 0.59 $ 2.51 $ 2.48 (76.5)% (1) Financial measures are 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 32.7% non-controlling interest has been recognized for the three and 12 months ended March 31, 2023 [15% non-controlling interest has been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022]. The operating results of CGWM UK have been fully consolidated, and a 5.55% non-controlling interest in the outstanding ordinary shares of Canaccord Genuity Wealth Management Holdings (Jersey) Limited has been recognized for the three and 12 months ended March 31, 2023 [three and 12 months ended March 31, 2022 – 1.5%]. (3) Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative, amortization of tangible, intangible and right-of-use assets, and development costs. (4) Net income and earnings per common share excluding significant items reflect tax-effected adjustments related to such items. See Non-IFRS Measures on page 14 and the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. (5) Data includes the operating results of Adam & Company since October 1, 2021; Sawaya, since December 31, 2021; PSW, since May 31, 2022; and Results, since August 17, 2022. n.m.: not meaningful Fiscal 2023 Annual Report    Canaccord Genuity Group Inc.wz 1 While our financial performance for the fiscal year fell below our targets, our multi- year strategy to diversify our business mix and reduce our reliance on underwriting activities contributed to our resilience, protecting our capacity to deliver differentiated services for our wealth management and capital markets clients in all our geographies. 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 Company’s international capital markets division operates in North America, the UK & Europe, Asia and Australia. Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the TSX. CONTENTS Introduction Global Performance Letter from the President & CEO Letter from the Chairman Canaccord Genuity Wealth Management Canaccord Genuity Capital Markets Global Operating Committee MD&A and Financials Shareholder Information 1 2 4 7 8 10 12 13 Inside Back Cover REVENUE (C$ millions, fiscal years ended March 31) 2023(1) 2022(1) 2021(1) 2020 2019 INCOME BEFORE INCOME TAXES(1) (C$ millions, fiscal years ended March 31) 2023 2022 2021 2020 2019 DILUTED EARNINGS PER SHARE(1) (C$, fiscal years ended March 31) 2023 2022 2021 2020 2019 $1,523.3 $2,040.6 $1,993.5 $1,223.9 $1,190.6 $125.9 $417.6 $386.1 $123.1 $135.6 $0.59 $2.51 $2.48 $0.81 $0.80 (1) These figures exclude significant items. Figures excluding significant items are non- IFRS measures. See Non-IFRS Measures on page 14 and a reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures on page 24. Canaccord Genuity Group Inc.    Fiscal 2023 Annual Report2 GLOBAL PERFORMANCE Throughout fiscal 2023, our business performed in line with our expectations, with contributions from wealth management and M&A advisory helping to offset the dramatic reduction in capital raising activity. $1.5 billion fiscal 2023 revenue $0.59 fiscal 2023 diluted earnings per share(1) (1) These figures exclude significant items. Figures excluding significant items are non- IFRS measures. See Non-IFRS Measures on page 14 and a reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures on page 24. Fiscal 2023 Annual Report    Canaccord Genuity Group Inc.3 Strong partnerships between talented professionals in all CG businesses, and the disciplines that support them, are vital to our collective success. Together they leverage resources and capabilities from across verticals and geographies to help our clients achieve their strategic and financial objectives. FISCAL 2023 REVENUE BY OPERATING DIVISION REVENUE BY GEOGRAPHY (Fiscal years ended March 31) 47% 53% 31% 34% 2023 2022 40% 2021 36% 2020 41% 2019 32% 29% 8% 33% 21% 12% 29% 19% 12% 29% 31% 25% 31% 4% 3%  CG Capital Markets   CG Wealth Management  Canada   United States   UK & Europe   Australia INCOME BEFORE INCOME TAXES(1) – CONTRIBUTIONS BY BUSINESS SEGMENT (C$ millions, fiscal years ended March 31) 2023 2022 2021 2020 2019  CG Capital Markets   CG Wealth Management $30.8 | $125.7 $324.6 | $148.5 $324.9 | $135.3 $59.8 | $80.2 $80.4 | $75.4 (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14 and a reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures on page 24. Canaccord Genuity Group Inc.    Fiscal 2023 Annual Report4 LETTER FROM THE PRESIDENT & CEO Over the course of our 2023 fiscal year, an extraordinary confluence of events impacted the global capital markets in ways not experienced in decades. Against a backdrop of significant geopolitical turmoil, high inflation and rapid interest rate increases, the S&P 500, the S&P/TSX and the MSCI World indices posted negative returns of -7.7%, -5.2% and -7.0% respectively over the 12-month period. When confronted with persistent headwinds, the business mix that helped us deliver record performances in prior years performed in line with our expectations, with contributions from wealth management and M&A advisory helping to offset the dramatic reduction in capital raising activity. While our financial performance for the fiscal year fell below our targets, our multi-year strategy to diversify our business mix and reduce our reliance on underwriting activities contributed to our resilience, protecting our capacity to deliver differentiated services for our wealth management and capital markets clients in all our geographies. Firm-wide revenue for the fiscal year amounted to $1.5 billion, a decrease of 26% when compared to the record achieved in the prior fiscal year. Excluding significant items(1), pre-tax net income amounted to $125.9 million, which translated to diluted earnings per share(1) of $0.59. Several factors impacted our profitability over the fiscal year. Shortly after the onset of the global market downturn, we experienced sharp declines in the value of certain inventory and warrant positions earned in respect of our investment banking activities, which primarily impacted first quarter results in our Australian capital markets business, and, to a lesser degree, our Canadian business. Beginning in the third fiscal quarter, our quarterly interest expense increased as we continued our strategic activities, and our cost of financing increased. We also recorded increased provisions and professional fees in our fourth quarter. In prolonged difficult markets, our wealth management division is an important source of earnings power and stability. All CG wealth businesses contributed to our firm-wide profitability, and together contributed adjusted pre-tax net income(1) of $126 million in fiscal 2023. We ended the fiscal year with client assets of $96 billion. Despite the impact of reduced asset values, we continued to experience positive inflows – bolstered by our acquisition and recruiting efforts – and we are attracting a greater share of wallet from our existing clients, reflecting increased demand for advice in challenging markets. We also continued to invest in the growth of all our wealth businesses. Early in the fiscal year, we completed our acquisition of Punter Southall Wealth, which added scale to our financial planning and investment management business in the UK & Crown Dependencies. The impact of our integration efforts is reflected in the record commissions and fees revenue and the substantial increase in interest income in this business. Client assets in our Australian business increased by 2% year over year in connection with our recruiting activities in the region, and subsequent to the end of the fiscal year, we completed our acquisition of Mercer’s Canadian Private Wealth business. (1) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14 and a reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures on page 24. Fiscal 2023 Annual Report    Canaccord Genuity Group Inc. 5 Transaction volumes in our global capital markets businesses continued to be impacted by the challenging backdrop, consistent with industry trends. On a consolidated basis, our capital markets division was modestly profitable in fiscal 2023. Historically, underwriting revenue has represented more than one- third of our total capital markets revenue, whereas it accounted for just 16% of fiscal 2023 revenue in this division. The metals and mining sector was most active throughout the fiscal year, comprising 51% of our new issue investment banking revenue. Notwithstanding the substantially lower transaction volume, we continue to defend our strong market position among the league table leaders in each of our geographies. Industry data shows that CG continues to hold the distinction of being the most active mid-market dealer globally. With an unwavering commitment to supporting key growth sectors, we are differentiated by our ability to get things done in difficult markets, and driven by our commitment to helping entrepreneurs and innovators to advance their strategic and financial objectives. While M&A activity in our core focus sectors remained comfortably above fiscal 2021 levels for the first half of the fiscal year, advisory revenue for the 12-month period declined by 26% when compared to the record achieved in fiscal 2022. The technology and consumer sectors were most active in this segment, reflecting our investments in expanding our US and European capabilities and the benefit of increasing collaboration between these teams. And finally, our sales, trading and specialty desks remained steady, providing liquidity for our clients and supporting increased volumes during bouts of market volatility. Ongoing investments in our technology and infrastructure position us well to scale when volumes return. We remain steadfastly committed to ensuring that Canaccord Genuity continues to exceed our clients’ expectations while we strive to achieve the best possible results for our shareholders. In February, a management-led group including myself and our Chairman, David Kassie, along with officers and employees – together holding approximately 21.3% of the issued and outstanding shares of Canaccord Genuity Group Inc. – formally launched a bid to acquire all outstanding common shares of the Company at a price of $11.25 per share, which represented a substantial premium and certainty of value for our shareholders in a volatile market. We entered this process with a clear understanding of the opportunity, but also of the risks. Unfortunately, certain conditions to the offer, including regulatory approvals for change of control, were not received in time to permit completion of the offer prior to its expiry. With support from our Board of Directors, we continue to explore a range of opportunities to enhance value for our shareholders. I assure you that we will not entertain or commit to any option that would jeopardize the stability or competitive positioning of our business or our workforce. To ensure that our decisions and actions are always in alignment with shareholders, we have long-standing programs in place to increase equity participation at all levels of our business. We estimate that almost 40% of our common shares are held by CG employees. I continue to have great confidence in our future. We have come through an incredibly challenging period with our core strategy intact, and we are more committed to it than ever. Although we are still navigating turbulent markets, our wealth management businesses are performing well, and we’re also seeing modest signs of improving activity levels in several of our key capital markets verticals. Our core business segments are well positioned to benefit from an upturn in investor sentiment and increasing risk tolerance. Capital raising activities remain low, but demand for capital among small and growth-oriented companies remains high, and we expect that our investing clients will inevitably become more active in supporting higher quality new issues in time. A solid pipeline of M&A engagements should support stronger performance in the coming year, provided markets are supportive for completions. Canaccord Genuity Group Inc.    Fiscal 2023 Annual Report6 “To ensure that our decisions and actions are always in alignment with shareholders, we have long-standing programs in place to increase equity participation at all levels of our business.” A strong culture of cost control has been integral to our long-term strategy, but in a lower revenue environment we incurred higher non-compensation expenses in connection with our ongoing development efforts and targeted investments in business development and talent retention efforts following two years of pandemic- related restrictions. Our fiscal 2023 compensation ratio was 62%, reflecting the softer revenue environment and the impact of a higher share price on our stock- based compensation. Looking forward, and absent a particularly poor performance in any of our businesses, we expect to be able to manage within our overall historical consolidated compensation ratios and achieve our firm-wide expense targets. We have proven that we can be incredibly agile and productive in a broad range of challenging environments, and this one is no exception. Each of our businesses, and all the disciplines that support them, have navigated persistently difficult markets in a much more constructive and positive way than in past downturns. Our strategy is supported by more than 2,800 CG colleagues spanning four continents who live up to our shared values in every interaction. I am grateful to all of them for their relentless hard work and commitment throughout this truly memorable year. (signed) Dan Daviau President & CEO Canaccord Genuity Group Inc. Fiscal 2023 Annual Report    Canaccord Genuity Group Inc.7 LETTER FROM THE CHAIRMAN Despite the many headwinds that impacted our industry throughout our 2023 fiscal year, we did not waver from our commitment to supporting the best interests of our employees, clients, and fellow shareholders. Our business is focused on serving the unique needs of small and mid-cap companies and investors throughout market cycles. We are acutely aware that prolonged market downturns can have a more profound impact on activity levels for many of these smaller market participants, so we have carefully structured our business for long-term stability. Our strategy to grow our wealth management business has helped to raise the floor of our returns in challenging markets, and, as we have seen in recent years, our capital markets business can provide significant upside when markets are accommodative. These businesses work incredibly well together, leveraging resources and expertise from across CG disciplines and geographies to help our clients achieve their strategic and financial objectives. Throughout the fiscal year, we continued to develop our talent and leadership across the organization, while fostering a strong culture of partnership and inclusion. We expanded our Global Operating Committee to encompass a broader set of focus areas, and more diverse representation from across our global operations. We also took steps to evaluate and improve employee engagement. Through employee feedback surveys, we learned that our firm-wide engagement levels are well above the average for our peer group. Many employees highlighted that CG excels in offering tools for success and a strong collective vision for our future. We have also taken steps to ensure strong corporate governance to represent the best interests of our Company and our fellow shareholders. It has been a long-standing priority to identify a pipeline of experienced and capable candidates who are well-suited to serve as independent directors as our business evolves. When several directors made the decision to step down in connection with our privatization efforts, our preparedness enabled us to reconstitute our Board in a timely manner while ensuring majority independence, diverse representation, and a strong complement to our existing skills matrix. In March, we announced that Terry Lyons has rejoined our Board of Directors and will serve as Lead Director and Chair of the Audit and Risk Committee. Terry has an exemplary governance track record and previously served on our Board for 18 years. We also welcomed two additional independent directors. Amy Freedman is a Partner at a Canadian boutique investment firm and brings extensive experience in both capital markets and shareholder advisory matters, and Rod Phillips brings a wealth of knowledge in both the public and private sector, having previously served as the Ontario Minister of Finance and as Chairman of one of Canada’s largest news media companies. I’d like to thank Charles Bralver, Gillian Denham, Dipesh Shah, Francesca Shaw and Sally Tennant for their contributions during their respective months and years of service. With support from our Board of Directors, a robust risk management program has been at the core of our strategy for many years. We have a diversified business with minimal concentration risk and ample liquidity coverage. This ensures that we maintain flexibility to operate effectively within a range of market environments. Our business is in good financial health and we undertake due diligence to ensure that the clients and counterparties that we choose to work with meet financial strength requirements. We prudently monitor and manage all client activity to ensure compliance with best practices and regulatory requirements. Despite the challenges in our operating environment, we continue to incorporate our Principles of Corporate Social Responsibility and Sustainability into all aspects of our business activities. The impacts of slowing economic growth, rapid interest rate increases and higher inflation were felt across our industry, but also had profound implications for households and charities in the communities where we operate. Throughout the fiscal year, our employees undertook initiatives to support several important causes, including food banks across North America, children’s cardiac and cancer care in Australia, and mental health awareness efforts in the UK. As an organization, we have also committed resources and expertise in all regions to foster leadership development for women and diverse youth. The market outlook for the year ahead remains uncertain, and we know there will be challenges along the way. Having said that, I have every confidence that Dan and our Global Operating Committee will effectively guide our Company through any new obstacles while continuing to deliver outstanding experiences for our clients and employees in an increasingly complex world. Thank you for your continued support. (signed) David Kassie Chairman Canaccord Genuity Group Inc. Canaccord Genuity Group Inc.    Fiscal 2023 Annual Report8 CANACCORD GENUITY WEALTH MANAGEMENT During prolonged difficult markets, our wealth management businesses are an important source of earnings power and stability. Throughout a challenging year, CG investment professionals in all regions maintained an unwavering focus on helping our clients navigate uncertainty, while supporting their long-term goals. $96.2 billion in total client assets Although below their peak, assets in our global wealth management businesses remained resilient in light of the significant reversal in global markets. We experienced positive inflows in all our businesses, bolstered by our targeted recruiting and acquisition activities. ALL CG WEALTH MANAGEMENT BUSINESSES CONTRIBUTED TO OUR FISCAL 2023 PROFITABILITY GLOBAL WEALTH MANAGEMENT CLIENT ASSETS (C$ billions, fiscal years ended March 31) We have continued to invest in the development of all our wealth businesses with a strong focus on supporting long-term profitable growth in this important segment. 2023 2022 2021 2020 2019 GLOBAL WEALTH MANAGEMENT REVENUE(1) (C$ millions, fiscal years ended March 31) GLOBAL WEALTH MANAGEMENT INCOME BEFORE INCOME TAXES(2) (C$ millions, fiscal years ended March 31) 2023 2022 2021 2020 2019 $708.3 $720.4 $663.6 $511.4 $461.8 2023 2022 2021 2020 2019 $96.2 $96.1 $88.8 $60.7 $65.7 $125.7 $148.5 $135.3 $80.2 $75.4 (1) Beginning in Q3/20, amounts include Australia wealth management. (2) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14 and a reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures on page 24. Fiscal 2023 Annual Report    Canaccord Genuity Group Inc.9 UK & CROWN DEPENDENCIES With a higher concentration of fee-based revenue, this business was our strongest contributor of revenue and net income in this segment for fiscal 2023. We have focused on integrating recent acquisitions and driving organic growth strategies across the UK & Crown Dependencies, and we are beginning to see positive impacts from improved synergies and our expanded financial planning capability. UK & CROWN DEPENDENCIES WEALTH MANAGEMENT CLIENT ASSETS(1) (C$ billions and £ billions, fiscal years ended March 31) UK & CROWN DEPENDENCIES WEALTH MANAGEMENT INCOME BEFORE INCOME TAXES(2) (C$ millions, fiscal years ended March 31) 2023 2022 2021 2020 2019 CANADA $55.1 | £33.0 $52.8 | £32.1 $52.3 | £30.2 $39.9 | £22.7 $44.2 | £25.4 2023 2022 2021 2020 2019 $86.1 $84.8 $65.3 $56.5 $48.5 Increased interest revenue of $46.2 million helped to offset the impact of reduced underwriting activity in this business during fiscal 2023. Subsequent to the end of the year, we welcomed Mercer’s Canadian Private Wealth business, and we are looking forward to making a positive impact for these advisors and their clients in the coming months and years. CANADA WEALTH MANAGEMENT CLIENT ASSETS(1) (C$ billions, fiscal years ended March 31) CANADA WEALTH MANAGEMENT INCOME BEFORE INCOME TAXES(2) (C$ millions, fiscal years ended March 31) 2023 2022 2021 2020 2019 AUSTRALIA $35.7 $37.9 $32.2 $18.4 $20.7 2023 2022 2021 2020 2019 $39.5 $56.3 $62.6 $22.7 $26.8 This business was also impacted by the abrupt decline in underwriting activity throughout the fiscal year, which led to a 40% year-over-year reduction in investment banking revenue. Client assets increased modestly compared to last year, largely in connection with our recruiting initiatives in the region. AUSTRALIA WEALTH MANAGEMENT CLIENT ASSETS(1) (C$ billions and A$ billions, fiscal years ended March 31) AUSTRALIA WEALTH MANAGEMENT INCOME BEFORE INCOME TAXES(2)(3) (C$ millions, fiscal years ended March 31) 2023 2022 2021 2020 2019 $5.4 | A$6.0 $5.4 | A$5.7 $4.2 | A$4.4 $2.4 | A$2.7 $0.9 | A$0.9 2023 2022 2021 2020 $0.1 $7.3 $7.4 $1.0 (1) Assets under administration, management and management contract. (2) These figures exclude significant items. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14 and a reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures on page 24. (3) Australia wealth management contributions were previously recorded as part of Canaccord Genuity Capital Markets Australia. Commencing in Q3/20, they are disclosed as a separate operating segment. Fiscal 2020 income before income taxes reflects results only subsequent to the completion of the Patersons acquisition on October 19, 2019. Canaccord Genuity Group Inc.    Fiscal 2023 Annual Report 10 CANACCORD GENUITY CAPITAL MARKETS CG Capital Markets is differentiated by our ability to get things done in difficult markets. We are steadfastly committed to supporting key growth sectors of the global economy, and driven to help entrepreneurs and innovators to advance their strategic and financial objectives. GLOBAL CAPITAL MARKETS REVENUE (C$ millions, fiscal years ended March 31) 2023 2022 2021 2020 2019 $792.9 $1,303.1 $1,312.2 $689.5 $704.4 The reduced revenue contribution from our global capital markets division reflects the challenging backdrop that persisted through the 12-month period and led to reduced activity levels in our core sectors and verticals, consistent with broader industry trends. Fiscal 2023 was a challenging year across our industry, and the small-cap and growth-oriented sectors and investors that we serve were particularly impacted. CAPITAL MARKETS REVENUE BY GEOGRAPHY (Fiscal years ended March 31) CAPITAL MARKETS REVENUE BY ACTIVITY (Fiscal years ended March 31) 19% 61% 12% 8% 2023 2022 2021 2020 26% 34% 30% 37% 2019(1) 51% 45% 51% 9% 14% 7% 14% 14% 5% 43% 15% 5% 46% 38% 16% 15% 20% 3% 36% 12% 13% 1% 15% 49% 19% 16% 1% 2023 2022 2021 30% 2020 20% 2019 28% 16% 22% 35% 18% 25% 4% 2%  Canada   United States   UK & Europe   Australia  Advisory   Investment Banking   Principal Trading   Commissions and Fees   Interest and Other (1) 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 2023 Annual Report    Canaccord Genuity Group Inc.When confronted with one of the most challenging market environments in decades, CG Capital Markets teams demonstrated remarkable drive and creativity supporting companies and investors through persistent headwinds. $17.5 billion proceeds raised in fiscal 2023 Rising financing costs, heightened volatility in financial markets and broader economic uncertainties contributed to a decline in initial public and secondary offerings during fiscal 2023. 359 transactions in fiscal 2023 Notwithstanding the dramatic reduction in transaction activity that persisted throughout the fiscal year, we continued to defend and build upon our strong market position among the league table leaders in each of our geographies. 11 The broad market decline in new issue activity that had been widely anticipated following two years of unprecedented highs was the primary driver of the 73% year-over-year reduction in fiscal 2023 investment banking revenue. The diversification away from higher-risk growth assets negatively impacted demand for new issues in several of our core sectors. Unsurprisingly, the metals and mining sector was strongest for our underwriting activities, accounting for 51% of our investment banking revenues, primarily within our Australian, Canadian and UK businesses. M&A activities remained robust throughout most of the fiscal year and helped offset the impact of subdued new issue and agency trading activity. While advisory activity in our core sectors remained strong in the first half of the fiscal year, we experienced a more difficult environment for completions in the second half. Full-year advisory revenue declined by 26% when compared to the record set in the previous year. The technology and consumer sectors were most active in this segment, reflecting our investments in expanding our US and European capabilities in these sectors, and the benefit of increasing collaboration between these teams. Despite the dramatic reduction in industry-wide activity levels, we did not retrench from our commitment to fully supporting growth companies and investors. CG trading and specialty desks remained steady, supporting liquidity and seamlessly supporting clients in all our geographies through bouts of increased volatility. Our sales and research teams mobilized to create thousands of touchpoints for our clients through conferences, corporate access roadshows, and timely and informative market analysis and updates. Although several transactions continue to be delayed as companies await a more stable environment, our clients remain highly engaged. In an environment of rising interest rates, supply chain pressures and inflation, the demand for capital among small and growth-oriented companies remains high. We are cautiously optimistic that our investing clients will become more active in supporting higher quality new issues in time. And finally, while we are not expecting the IPO market to reopen quickly, history tells us that there can be a strong bounce-back when it does, and CG is very well positioned to recapture our historic leadership in this segment. Canaccord Genuity Group Inc.    Fiscal 2023 Annual Report12 GLOBAL OPERATING COMMITTEE Our Global Operating Committee is comprised of CG’s most seasoned leaders, with diverse representation from each of our core operating businesses and geographies, and those responsible for global oversight of our financial, legal, technology, and regulatory functions. This group collaborates closely on all issues and opportunities facing our business, and ensures that everything we do is in alignment with the best interests of our valued employees, clients and shareholders. Dan Daviau Jeffrey Barlow David Esfandi Marcus Freeman Fera Jeraj President & Chief Executive Officer, Canaccord Genuity Group Inc. Chief Executive Officer, Canaccord Genuity LLC (US) Chief Executive Officer, Canaccord Genuity Wealth Management (UK & Europe) Chief Executive Officer, Canaccord Genuity Group (Asia-Pacific) Chief Technology Officer Don MacFayden Jason Melbourne Jen Pardi Adrian Pelosi Stuart Raftus Executive Vice President & Chief Financial Officer Head of CG Capital Markets – Canada & Global Head of Distribution Global Head of Equity Capital Markets Executive Vice President, Chief Risk Officer & Treasurer Chief Executive Officer, Canaccord Genuity Corp. (Canada) Nick Russell Andrew F. Viles Mark Whaling Chief Executive Officer, Capital Markets, Canaccord Genuity Limited (UK & Europe) Executive Vice President & Chief Legal Officer Global Head of Securities Fiscal 2023 Annual Report    Canaccord Genuity Group Inc.Fiscal 2023 MD&A 13 Contents 14 18 20 23 26 Management’s Discussion and Analysis Market Environment Core Business Performance Highlights Financial Overview Fourth Quarter and Fiscal 2023 vs. Fourth Quarter and Fiscal 2022 Business Segment Results – Q4 and Year Ended March 31, 2023 Compared with Q4 and Year Ended March 31, 2022 Canaccord Genuity Capital Markets Canaccord Genuity Wealth Management Corporate and Other Segment Quarterly Financial Information – Seven Fiscal Quarters Prior to Q4/23 Outstanding Preferred and Common Share Data Share-Based Payment Plans Related Party Transactions 48 52 52 52 53 53 57 57 57 58 61 107 113 116 118 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 Corporate Governance Board of Directors 29 29 34 38 39 44 46 47 CAUTION REGARDING FORWARD-LOOKING STATEMENTS This document contains “forward-looking statements” (as defined under applicable Canadian 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. Forward looking statements include, but are not limited to, statements about the Company’s objectives, strategies, business prospects and opportunities; the execution of management’s plans and potential outcomes; the impacts of global events and economic conditions on the Company’s operations and business; and the outlook for the Company’s business and for the global economy. 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 titled “Fiscal 2024 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 dynamic nature of the financial services industry; inflationary pressures; credit, market, liquidity, strategic, insurance, operational, reputation, conduct and legal, regulatory and environmental risk; currency value and interest rate fluctuations, including as a result of market and oil price volatility; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate; climate change and other ESG related risks; and the impact of the war in Ukraine and the resulting humanitarian crisis on the global economy, in particular, its effect on global oil, commodity and agricultural markets. Additional risks and factors that could cause actual results to differ materially from expectations are described in the Company’s unaudited interim condensed and audited annual consolidated financial statements and the Company’s Annual Report and Annual Information Form (AIF) filed on www.sedar.com as well as the factors discussed in the sections titled “Risk Management” in this Management’s Discussion and Analysis (MD&A) and “Risk Factors” in the AIF, which include market, liquidity, credit, operational, legal, cybersecurity 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 2024 Outlook section in this MD&A and those discussed from time to time in the Company’s unaudited interim condensed and audited annual consolidated financial statements and its Annual report and AIF filed on www.sedar.com. Readers are cautioned that the preceding lists of material factors and assumptions are 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 MD&A may be considered a “financial outlook” for the purposes of applicable Canadian securities laws. The financial outlook may not be appropriate for purposes other than this MD&A. 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 14 Management’s Discussion and Analysis Fourth quarter fiscal year 2023 for the three months and fiscal year ended March 31, 2023 – this document is dated June 16, 2023 The following discussion of the financial condition and results of operations for Canaccord Genuity Group Inc. is provided to enable the reader to assess material changes in our financial condition and to assess results for the three months and fiscal year ended March 31, 2023 compared to the corresponding periods in the preceding fiscal year. The three-month period ended March 31, 2023 is also referred to as fourth quarter fiscal 2023 and Q4/23. Unless otherwise indicated or the context otherwise requires, the “Company” refers to Canaccord Genuity Group Inc. and “Canaccord Genuity Group or CG” refers to the Company 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, 2023 and March 31, 2022 beginning on page 61 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, 2023 and March 31, 2022 are prepared in accordance with International Financial Reporting Standards (IFRS). Non-IFRS Measures Certain non-IFRS measures, non-IFRS ratios and supplementary financial measures are utilized by the Company as measures of financial performance. Non-IFRS measures, non-IFRS ratios and supplementary financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Management believes that these non-IFRS measures, non-IFRS ratios and supplementary financial measures allow for a better evaluation of the operating performance of the Company’s business and facilitate a meaningful comparison of results in the current period to those in prior periods and future periods. Non-IFRS measures presented in this MD&A include certain figures from our Statement of Operations that are adjusted to exclude significant items. Although 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. Accordingly, 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. Non-IFRS Measures (Adjusted Figures) Figures that exclude significant items provide useful information by excluding certain items that may not be indicative of the Company’s core operating results. Financial statement items that exclude significant items are non-IFRS measures. To calculate these non-IFRS financial statement items, we exclude certain items from our financial results prepared in accordance with IFRS. The items which have been excluded are referred to herein as significant items. The following is a description of the composition of the non-IFRS measures used in this MD&A (note that some significant items excluded may not be applicable to the calculation of the non-IFRS measure for each comparative period): (i) revenue excluding significant items, which is composed of revenue per IFRS excluding any applicable fair value adjustments on certain illiquid or restricted marketable securities, warrants and options as recorded for IFRS reporting purposes but which are excluded for management reporting purposes and are not used by management to assess operating performance; (ii) expenses excluding significant items, which is composed of expenses per IFRS less any applicable amortization of intangible assets acquired in connection with a business combination, acquisition-related expense items, which includes costs recognized in relation to both prospective and completed acquisitions, certain incentive-based costs related to the acquisitions and growth initiatives of CGWM UK and the US and UK capital markets divisions, certain costs included in Corporate & Other development costs related to the expired management-led takeover bid for the common shares of the Company, impairment of goodwill and intangible assets in our Canadian capital markets operations, costs associated with the redemption of convertible debentures, costs associated with the reorganization of CGWM UK, fair value adjustment of certain contingent consideration in connection with prior acquisitions, and fair value adjustments to the derivative liability component of non-controlling interests in CGWM UK; (iii) overhead expenses excluding significant items, which are calculated as expenses excluding significant items less compensation expense; (iv) net income before taxes after intersegment allocations and excluding significant items, which is composed of revenue excluding significant items less expenses excluding significant items; (v) income taxes (adjusted), which is composed of income taxes per IFRS adjusted to reflect the associated tax effect of the excluded significant items; (vi) net income excluding significant items, which is net income before income taxes excluding significant items less income taxes (adjusted); (vii) non-controlling interests (adjusted), which is composed of the non-controlling interests per IFRS less the amortization of the equity component of the non-controlling interests in CGWM UK; and (viii) net income attributable to common shareholders excluding significant items, which is net income excluding significant items less non-controlling interests (adjusted) and preferred share dividends paid on the Series A and Series C Preferred Shares. Other items which have been excluded as significant items in prior periods for purposes of determining expenses, net income before taxes, net income and net income attributable to common shareholders all excluding significant items include impairment of goodwill and other assets, gains or losses related to business disposals including recognition of realized translation gains on the disposal of foreign operations, restructuring costs, certain accounting charges related to the change in the Company’s long-term incentive plan (LTIP) as recorded with effect on March 31, 2018, and loss related to the extinguishment of convertible debentures as recorded for accounting purposes. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 15 A reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures from the audited consolidated financial statements for fiscal 2023 can be found in the table titled “Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items”, on page 24. Non-IFRS Ratios Non-IFRS ratios are calculated using the non-IFRS measures defined above. For the periods presented herein, we use the following non-IFRS ratios: (i) total expenses excluding significant items as a percentage of revenue, which is calculated by dividing expenses excluding significant items by revenue excluding significant items; (ii) earnings per common share excluding significant items, which is calculated by dividing net income attributable to common shareholders excluding significant items by the weighted average number of common shares outstanding (basic); (iii) diluted earnings per common share excluding significant items, which is calculated by dividing net income attributable to common shareholders excluding significant items by the weighted average number of common shares outstanding (diluted); and (iv) pre-tax profit margin, which is calculated by dividing net income before taxes excluding significant items by revenue excluding significant items. Supplementary Financial Measures Client assets are supplementary financial measures that do not have any definitions prescribed under IFRS and do not meet the definition of a non-IFRS measure or non-IFRS ratio. Client assets, which include both Assets under Management (AUM) and Assets under Administration (AUA), is a measure that is common to the wealth management business. Client assets is the market value of client assets managed and administered by the Company from which the Company earns interest, commissions and fees. This measure includes funds held in client accounts as well as the aggregate market value of long and short security positions. The Company’s method of calculating client assets may differ from the methods used by other companies and therefore these measures may not be comparable to other companies. Management uses these measures to assess operational performance of the Canaccord Genuity Wealth Management business segment. 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, advisory and investment banking services. Canaccord Genuity Group has wealth management offices located in Canada, the UK, Guernsey, Jersey, the Isle of Man and Australia. Canaccord Genuity Capital Markets, the Company’s international capital markets division, operates in North America, the UK & Europe, Asia and Australia. Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the Toronto Stock Exchange (TSX). Canaccord Genuity Series A Preferred Shares are listed on the TSX under the symbol CF.PR.A. Canaccord Genuity Series C Preferred Shares are listed on the TSX under the symbol CF.PR.C. ABOUT CANACCORD GENUITY GROUP INC.’S OPERATIONS Canaccord Genuity Group Inc.’s operations are divided into two business segments: Canaccord Genuity Capital Markets and Canaccord Genuity Wealth Management. Together, these operations offer a wide range of complementary advisory and 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. (TSX: CF), offering institutional and corporate clients idea-driven investment banking, mergers and acquisitions (M&A), research, sales and trading services with capabilities in North America, the UK & Europe, Asia and Australia. 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 and financial planning 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. Guernsey, Jersey and the Isle of Man are together referred to as the “Crown Dependencies”. Our wealth management operations in the UK and in the Crown Dependencies are together referred to as CGWM UK. 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, and activities not specifically allocable to either the 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 16 Management’s Discussion and Analysis Canaccord Genuity Capital Markets or Canaccord Genuity Wealth Management divisions. Also included in this segment are the Company’s operations and support services in Canada, which are responsible for front- and back-office information technology (IT) systems, compliance and risk management, operations, legal, finance and other administrative functions of Canaccord Genuity Group Inc. 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 of the recognition of such transactions in our capital markets business. The Company is diversified across industry sectors and geographies. To add to its recurring revenue base and to offset the inherent volatility of the capital markets business, the Company has increased the scale of its global wealth management operations. Historically, the Company’s diversification across major financial centres has allowed it to benefit from strong equity markets in certain regions and improve its capability for identifying and servicing opportunities in regional centres and across the Company’s focus sectors. The following charts depict firm-wide revenue contributions by geography for Q4 2023 and the year ended March 31, 2023: Firmwide revenue by geography Q4 fiscal 2023 Australia 7% Firmwide revenue by geography Year ended March 31, 2023 Australia 9% UK, Europe & Crown Dependencies 31% UK, Europe & Crown Dependencies 29% Canada 35% US 27% Canada 30% US 32% IMPACT OF CHANGES IN CAPITAL MARKETS ACTIVITY As a brokerage firm, the Company derives its revenue primarily from sales commissions, underwriting, 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 but also to some degree in 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. The Company’s capital markets activities are primarily focused in the following sectors: Healthcare & Life Sciences (which includes cannabis-related companies), Technology, Metals & Mining, Consumer & Retail, and Other. Coverage of these sectors includes investment banking, M&A and advisory services, and institutional equity activities such as sales, trading and research. The value of client assets in the Company’s wealth management businesses can be impacted by changes in market values during reporting periods. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT BUSINESS SEGMENTS Management’s Discussion and Analysis 17 Canaccord Genuity Group Inc. (TSX: CF, CF.PR.A, CF.PR.C) CANACCORD GENUITY CAPITAL MARKETS CANACCORD GENUITY WEALTH MANAGEMENT CORPORATE & OTHER Canaccord Genuity Capital Markets (Canada) Canaccord Genuity Wealth Management (North America) Corporate & Other Canaccord Genuity Capital Markets (US) Canaccord Genuity Capital Markets (UK & Europe) Canaccord Genuity Wealth Management (UK & Crown Dependencies) Canaccord Genuity Capital Markets (Australia) Canaccord Genuity Wealth Management (Australia) The principal operating entities included in the business units described above are: Canaccord Genuity Capital Markets (Canada) Canaccord Genuity Corp. (capital markets division) Jitneytrade Inc. Canaccord Genuity Asia (Beijing) Limited Canaccord Genuity (Hong Kong) Limited(1) Canaccord Genuity Emerging Markets Ltd. Canaccord Genuity Wealth Management (North America) Canaccord Genuity Corp. (wealth management division) Canaccord Genuity Wealth Management (USA) Inc. Canaccord Genuity Wealth & Estate Planning Services Ltd. Corporate and Other Canaccord Genuity Corp. (corporate & other division) Canaccord Genuity Group Inc. Finlogik Inc. Canaccord Genuity Capital Markets (US) Canaccord Genuity LLC Canaccord Genuity Petsky Prunier LLC CG Sawaya, LLC Canaccord Genuity Capital Markets (UK & Europe) Canaccord Genuity Limited Canaccord Genuity Dubai Ltd.(2) Canaccord Genuity SAS Canaccord Genuity Wealth Management (UK & Crown Dependencies) Canaccord Genuity Wealth Limited CG Wealth Planning Ltd. Canaccord Genuity Financial Planning Limited Adam & Company Investment Management Limited(3) Canaccord Genuity Asset Management Limited (previously “Hargreave Hale Limited”) Canaccord Genuity Wealth (International) Limited Canaccord Genuity Wealth Group Holdings (Jersey) Limited Punter Southall Wealth Limited(3) Canaccord Genuity Capital Markets (Australia) Canaccord Genuity (Australia) Limited Canaccord Genuity (Hong Kong) Limited (1) Canaccord Genuity Wealth Management (Australia) Canaccord Genuity Financial Limited (1) Canaccord Genuity (Hong Kong) Limited is a shared resource for both Canaccord Genuity Capital Markets (Canada) and Canaccord Genuity Capital Markets (Australia). (2) The Company sold its interest in Canaccord Genuity Dubai Ltd. subsequent to March 31, 2023. (3) The Company was wound up into an affiliate(s) as part of an internal restructuring subsequent to March 31, 2023. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 18 Management’s Discussion and Analysis In May 2022, HPS Investment Partners, LLC, on behalf of certain investment accounts and funds it manages (collectively, “HPS”), completed the purchase of a new series of Convertible Preferred Shares issued by Canaccord Genuity Wealth Group Holdings (Jersey) Limited, a subsidiary of the Company and the parent of all operating companies included in CGWM UK. This purchase was in connection with the acquisition by CGWM UK of Punter Southall Wealth (“PSW”). The new series of Convertible Preferred Shares bear the same terms as the Convertible Preferred Shares issued in fiscal 2022, except for the conversion ratio. Neither series of Convertible Preferred Shares contains an obligation for the Company to deliver cash or other financial assets to the holders of the Convertible Preferred Shares. Judgment was used to conclude that the Convertible Preferred Shares are a compound instrument comprised of an equity component representing discretionary dividends and a liquidation preference, and a liability component that reflects a derivative to settle the instrument, if applicable, by delivering the economic equivalent of a variable number of common shares of Canaccord Genuity Wealth Group Holdings (Jersey) Limited. On an as converted basis and subject to the liquidation preference associated with the Convertible Preferred Shares and Preference Shares, the Company holds an approximate 66.9% equity equivalent interest in Canaccord Genuity Wealth Group Holdings (Jersey) Limited. The operating results of Jitneytrade 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 and Corporate and Other, respectively. In addition, the operating results of Petsky Prunier LLC (“Petsky Prunier”) since the closing date of February 13, 2019 and operating results of CG Sawaya, LLC (“Sawaya”) since the closing date of December 31, 2021 are included as part of Canaccord Genuity Capital Markets US. Included as part of CGWM UK are the operating results of McCarthy Taylor Limited (“McCarthy Taylor”) (renamed as CG McCarthy Taylor Limited), whose operations were subsequently transferred to CG Wealth Planning Limited since the closing date of January 29, 2019; the operating results of Thomas Miller Wealth Management Limited (“Thomas Miller”) (renamed as CG Wealth Planning Limited) since the closing date of May 1, 2019; the private client investment management business of Adam & Company (including the acquisition of the entire issued capital of Adam & Company Investment Management Limited) since the closing date of October 1, 2021; and Punter Southall Wealth Limited (“PSW”) as of May 31, 2022. Operating results for the business of Results International Group LLP (“Results”) since the closing date of August 17, 2022 are included as part of Canaccord Genuity Capital Markets (UK & Europe). Market Environment Economic backdrop Throughout fiscal 2023, the world economy benefitted from the reopening of several economic regions with the gradual lifting of pandemic lockdowns. The lagged impact of government spending, accumulated household savings, and the consumer spending transition from goods to services also supported economic growth. The war in Ukraine and lingering supply chain bottlenecks caused commodity prices to increase. In the US, the growing demand for labour and a shrinking labour pool caused the unemployment rate to fall and inflation on wages and goods and services accelerated. Inflation peaked in the second quarter of fiscal 2023 but remained well above target rates of 2% at the end of the fiscal year. Against this backdrop, equities and bonds sold off against the rapid pace of rate hikes through the first half of the year. Over the 12-month period the S&P 500, S&P/TSX and the MSCI world indices posted negative returns of -7.7%, -5.2% and -7.0% respectively and US Treasury bond prices declined 6.9%. Investment banking and advisory Fiscal 2023 was a challenging year for capital-raising activities across our industry, and small cap and growth-oriented sectors were particularly impacted. We attribute most of the decline in initial public and secondary offerings in our core sectors to rising financing costs, heightened volatility in financial markets and broader economic uncertainties. M&A activities remained robust throughout most of the fiscal year and helped offset the impact of subdued new issues and agency trading activity. Index Value at End of Fiscal Quarter S&P IFCI Global Small Cap S&P IFCI Global Large Cap (Y/Y) 2022-06-30 2022-03-31 311.7 -2.8% 254.9 -14.1% 266.7 -24.9% 223.7 -27.3% Q4/22 Q1/23 Q2/23 Q3/23 (Y/Y) 2022-09-30 (Y/Y) 2022-12-30 (Y/Y) 2023-03-31 242.7 -28.6% 196.9 -29.5% 264.2 -22.3% 213.7 -22.2% Q4/23 (Y/Y) 274.4 -12.0% 221.0 -13.3% (Q/Q) 3.9% 3.4% Source: Refinitiv Datastream, Canaccord Genuity estimates 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. Government regulation can also have a 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 M&A and restructuring mandates. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 19 Trading Higher interest rates, heightened recession fears and a rapid deceleration in corporate earnings year-over-year led to heightened volatility in financial markets. As a result, trading volumes during the fourth quarter and fiscal 2023 have moderated from year- ago levels. Average Value During Fiscal Quarter/Year Russell 2000 S&P 400 Mid Cap FTSE 100 MSCI EU Mid Cap S&P/TSX Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 FY23 31-Mar-22 (Y/Y) 30-Jun-22 (Y/Y) 30-Sep-22 (Y/Y) 30-Dec-22 (Y/Y) 31-Mar-23 (Y/Y) (Q/Q) 31-Mar-23 (Y/Y) 2056.8 -6.3% 1856.6 -18.0% 2670.8 6.9% 2474.5 -8.5% 7443.0 11.7% 7435.2 6.1% 1314.8 4.5% 1217.0 -9.4% 1833.3 -17.9% 2418.1 -10.3% 7297.3 3.0% 1136.3 -19.2% 1835.1 -16.9% 2468.3 -9.1% 7440.4 3.4% 1179.5 -13.6% 5.0% 19328.7 -5.2% 19512.7 -7.3% 20184.0 -5.3% 3.4% 19894.9 -3.3% 1856.9 -9.7% 3.5% 2555.4 -4.3% 5.3% 7755.5 4.2% 6.6% 1239.3 -5.7% 10.0% 1793.7 -21.2% 2426.1 -13.1% 7275.8 0.5% 1126.1 -19.5% 21308.0 16.7% 20563.0 Source: Refinitiv Datastream, Canaccord Genuity estimates Global wealth management Although equity prices generally improved in Q4/23, prices were lower on a year-over-year basis. Q4/22 Change (Q/Q) -4.6% 3.8% -6.1% -5.3% 33.1% -7.0% 1.1% 3.8% Q1/23 Change (Q/Q) -16.1% -13.2% -8.0% -15.5% 2.0% -5.5% -2.9% 2.5% Q2/23 Change (Q/Q) -4.9% -1.4% -8.0% -6.7% -10.3% -5.8% -6.9% -0.4% Q3/23 Change (Q/Q) 7.6% 6.0% 6.7% 9.9% 3.4% 0.3% 2.0% -6.6% Q4/23 Change (Q/Q) 7.5% 4.6% 3.8% 7.4% -4.9% 4.3% 0.3% -1.0% Fiscal 2023 Change (Y/Y) -7.7% -5.2% -6.2% -7.0% -10.0% -6.9% -7.5% -5.6% Total Return (excl. currencies) S&P 500 S&P/TSX MSCI EM ERGING MARKETS MSCI WORLD S&P GS COMMODITY INDEX US 10-YEAR T-BONDS CAD/USD CAD/EUR Source: Refinitiv Datastream, Canaccord Genuity estimates Fiscal 2024 Outlook It takes time for rate hikes by world central banks to filter through the economy. We expect that continued levels of elevated inflation, notably for services, may prevent central banks from delivering rate cuts in the short-term. Additionally, the US banking crisis that took place in our fourth quarter could prompt further deposit flight toward higher-yielding alternatives, which could cause banks to keep lending standards tighter for a longer period. Our overall economic outlook for fiscal 2024 calls for a mild economic recession with pressure on corporate earnings. We believe financial markets will transition from inflation fears to growth concerns, which would lead to bouts of heightened market volatility, particularly in core Canaccord Genuity growth sectors. We anticipate that most world central banks will complete their monetary tightening cycle by the end of the first half of fiscal 2024, and some may cut rates. Initial public offerings (IPOs), new issues and agency trading activities showed early signs of recovery at the start of fiscal 2024 but remain hindered by financial conditions, economic uncertainties and low risk appetite from investors. M&A advisory activities have remained robust, although are showing signs of slowing down and several completions have been extended due to market uncertainty. While we do not expect a rapid rebound in activity levels in fiscal 2024, our core business segments are well positioned to benefit as market sentiment and the economic outlook turns more positive. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 20 Management’s Discussion and Analysis Core Business Performance Highlights-Fourth Quarter and Fiscal Year Ended March 31, 2023 The following charts depict revenue, pre-tax net income(1)(2) and earnings per share(1)(2) contributions from our primary business segments for the fiscal year ended March 31, 2023: Revenue by business segment Year ended March 31, 2023 Pre-tax net income contribution by business segment Year ended March 31, 2023 Diluted earnings per share contribution by business segment Year ended March 31, 2023 Wealth Management 47% Capital Markets 20% EPS $0.59 Capital Markets ($0.01) Capital Markets 53% Wealth Management 80% Wealth Management $0.60 (1) Figures exclude significant items. See Non-IFRS Measures on page 14. (2) Figures reflect an allocation of net losses in Corporate and Other to the capital markets and wealth management divisions. CANACCORD GENUITY WEALTH MANAGEMENT Globally, Canaccord Genuity Wealth Management earned revenue of $197.1 million during the fourth fiscal quarter and $708.3 million for fiscal 2023, a year-over-year increase of 13.1% and a decrease of 1.7%, respectively. The decrease in annual revenue is primarily attributable to the impact of lower investment banking revenue resulting from a decline in new issue activity, which was partially offset by higher interest revenue. Excluding significant items, this division contributed net income before taxes of $36.9 million(1) for the fourth quarter and $125.7 million(1) for the full year, an increase of 26.1% and a decrease of 15.3%, respectively. • Canaccord Genuity Wealth Management (North America) generated $78.4 million in revenue and, after intersegment allocations, recorded net income before taxes of $10.9 million in Q4/23. Fiscal 2023 revenue in this business amounted to $302.2 million, and net income before taxes and after intersegment allocations amounted to $39.5 million • Wealth management operations in the UK & Crown Dependencies generated $103.7 million in revenue and, after intersegment allocations and excluding significant items, recorded net income before taxes of $26.4 million(1) in the fourth quarter of fiscal 2023. Fiscal 2023 revenue in this business amounted to $343.7 million and net income before taxes and after intersegment allocations and excluding significant items amounted to $86.1 million(1). • Wealth management operations in Australia generated revenue of $15.0 million and, after intersegment allocations and excluding significant items, recorded a loss before taxes of $0.4 million in the fourth quarter of fiscal 2023(1). Fiscal 2023 revenue in this business amounted to $62.4 million and income before taxes and after intersegment allocations amounted to $0.1 million. Firm-wide client assets were $96.2 billion at March 31, 2023, representing an increase of $0.2 billion or 0.2% from $96.1 billion at March 31, 2022(2). Client assets across the individual businesses as at March 31, 2023 were as follows. • $35.7 billion in North America, a decrease of $2.2 billion or 5.8% from March 31, 2022(2) • $55.1 billion (£33.0 billion) in the UK & Crown Dependencies, an increase of $2.3 billion or 4.3% from $52.8 billion (£32.1 billion) at the end of the fourth quarter of the previous fiscal year(2) • $5.4 billion (AUD$ 6.0 billion) in Australia held through our investment management platform, an increase of $0.1 billion or 1.5% from March 31, 2022(2) CANACCORD GENUITY CAPITAL MARKETS Globally, Canaccord Genuity Capital Markets earned revenue of $226.1 million for the fourth fiscal quarter and $792.9 million in fiscal 2023, representing year-over-year decreases of 27.5% and 39.2%, respectively. The decreases primarily reflected substantially lower investment banking revenues in all geographies in connection with the significant decline in industry-wide new issue volumes. Excluding significant items, this division recorded a loss before income taxes of $5.5 million(1) for the fourth quarter and income before income taxes of $30.8 million(1) for the full fiscal year. In addition to the challenging backdrop which led to reduced activity levels in our core sectors and verticals, fiscal 2023 results in this division were impacted by declines in the market value of certain inventory and warrant positions earned in respect of our investment banking activities subsequent to March 31, 2022 and mostly recorded during Q1/23. These valuation changes primarily (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. (2) See Non-IFRS Measures on page 14. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 21 impacted our Australian capital markets business and, to a lesser degree, our Canadian business. Market value adjustments also had a negative impact on our facilitation trading activity in Canada during Q1/23. • Canaccord Genuity Capital Markets participated in a total of 83 investment banking transactions globally, raising total proceeds of $3.1 billion in Q4/23 • Canaccord Genuity Capital Markets participated in a total of 359 investment banking transactions globally, raising total proceeds of $17.5 billion in fiscal 2023 Revenue by activity as a percentage of Canaccord Genuity Capital Markets revenue: Commissions and fees Investment banking Advisory fees Principal trading Interest Other For three months ended March 31 2023 19.4% 18.1% 45.9% 11.8% 4.5% 0.3% 2023 15.6% 30.5% 39.0% 13.4% 0.8% 0.7% Quarter-over- quarter change 3.8 p.p. (12.4) p.p. 6.9 p.p. (1.6) p.p. 3.7 p.p. (0.4) p.p. Year ended March 31 2023 19.7% 16.0% 45.7% 14.7% 3.2% 0.7% 2022 13.4% 35.5% 37.5% 12.1% 0.8% 0.7% Year-over- year change 6.3 p.p. (19.5) p.p. 8.2 p.p. 2.6 p.p. 2.4 p.p. (0.0) p.p. Canaccord Genuity Capital Markets (total) 100.0% 100.0% 100.0% 100.0% p.p.: percentage points Further detail is provided in the Business Segment Results beginning on page 29. SUMMARY OF CORPORATE DEVELOPMENTS On May 31, 2022 the Company, through CGWM UK, completed its acquisition of the private client investment management business of PSW for a total purchase price on closing of £168.0 million ($267.8 million). In connection with the completion of the acquisition, CGWM UK modified its existing banking arrangements and increased its bank loan by an additional £100 million ($159.4 million as of the acquisition date of May 31, 2022). In addition, certain institutional investors made an additional investment in CGWM UK through the purchase of a new series of Convertible Preferred Shares in the amount of £65.3 million ($104.1 million as of the acquisition date of May 31, 2022). With the issuance of the additional Convertible Preferred Shares and ordinary shares by CGWM UK in connection with the transaction, the Company’s equity equivalent interest in CGWM UK on an as- converted basis now stands at 66.9%. On June 1, 2022, the Company announced the reset of the dividend rate on its Cumulative 5-Year Rate Reset First Preferred Shares, Series C (the “Series C Preferred Shares”). Quarterly cumulative cash dividends, as declared, were paid at an annual rate of 4.993% for the five years ended June 30, 2022. Commencing July 1, 2022 and ending on and including June 30, 2027, quarterly cumulative dividends, if declared, will be paid at an annual rate of 6.837%. The dividend rate will be reset every five years at a rate equal to the five-year Government of Canada yield plus 4.03%. The Company did not exercise its right to redeem all or any part of the outstanding Series C Preferred Shares on June 30, 2022. On August 5, 2022, at the Fiscal 2022 Annual General Meeting of Shareholders, Michael Auerbach was elected to the Company’s Board of Directors. Mr. Auerbach is an entrepreneur, investor, business consultant and private diplomat with deep experience in financial services, strategic intelligence, advisory and risk management. On August 17, 2022, the Company completed its previously announced asset purchase agreement to acquire the business of Results International Group LLP (“Results”). Results is an independent advisory firm headquartered in London, UK that is focused in the Technology and Healthcare sectors. This transaction complements recent investments by the Company to expand its global Advisory business with the acquisitions of Petsky Prunier (2019) and Sawaya Partners (2021) and expands its European domain expertise in the Healthcare and Technology sectors. On August 18, 2022, 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 4,959,281 of its common shares during the period from August 21, 2022 to August 20, 2023, 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. On January 9, 2023, 1373313 B.C. Ltd (the “Offeror”), on behalf of itself and a management-led group consisting of officers and employees of the Company and its subsidiaries (collectively, the “CG Employee Group” or the “Management Group”), announced an intention to commence a take-over bid (the “Management Offer”) to acquire all of the issued and outstanding common shares of the Company (other than certain common shares beneficially owned by the CG Employee Group) at a price of $11.25 per common share. A take-over bid circular was issued on January 29, 2023. Subsequently, a Special Committee of independent directors of the Company issued a circular in response to the take-over bid circular (the “Special Committee”). 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 22 Management’s Discussion and Analysis On March 13, 2023, the Company announced that Gillian Denham, Dipesh Shah, Charles Bralver and Sally Tennant (the “Former Special Committee Directors”) and Francesca Shaw provided the Company with notice of their resignations from the Board of Directors (the “Board”) of the Company. As a result of the resignations, the Board appointed Terrence Lyons as a new director and appointed Michael Auerbach as Chair of the Special Committee and Terrence Lyons as a member. The Board also appointed Mr. Lyons as its new Lead Director. Mr. Lyons is the former Lead Independent Director and Chair of the Audit and Risk Committee of the Company, having served as a director of the Company from 2004 to 2022. On March 20, 2023, the Company announced that the Board of Directors had appointed Amy Freedman and Rod Phillips as independent directors. With these changes the Board is now comprised of seven (7) directors, of which five (5) are independent. The independent members of the Board also appointed Amy Freedman and Rod Phillips as additional members of the Special Committee. On March 22, 2023, the Special Committee provided an update to shareholders with respect to its evaluation and consideration of the Management Offer, and announced that Greenhill & Co. Canada had been appointed as financial advisor. On April 6, 2023, the Company announced that it had filed and mailed a Directors’ Circular in response to the Management Offer and the take-over bid circular dated February 27, 2023. At this time, the Board did not make a recommendation to shareholders and stated that the newly formed Special Committee required additional time to make an informed recommendation to the Board. On April 11, 2023 the Company announced that it had received exemptive relief sought from the British Columbia Securities Commission and the Ontario Securities Commission to extend the period within which the Company was required to prepare and send a Directors’ Circular responding to the Management Offer. The Directors’ Circular was mailed and filed on April 6, 2023, in accordance with the exemptive relief. On May 8, 2023, the Company announced that it had been advised by certain of its applicable regulatory authorities that, due to an ongoing regulatory matter involving one of the Company’s foreign subsidiaries, regulatory approval for the change in control contemplated by the Management Offer would not be granted on an expedited basis, and that based on continuing discussions with the regulatory authorities, the Company has determined that regulatory approvals will likely not be received in a timely enough manner to permit completion of the Management Offer prior to the expiry date of June 13, 2023, and may not be received prior to expiration of the financing commitments for the Management Offer on August 9, 2023. The receipt of regulatory approvals is a condition of the Management Offer. On May 29, 2023, the Company announced that, through its Canadian wealth management business, it had completed its acquisition of Mercer’s Canadian private wealth business. On June 5, 2023, the Board recommended that shareholders of the Company reject the Management Offer and issued a supplement to the directors’ circular dated April 6,2023. As described in the supplement, the reason for rejecting the Management Offer was that there exists a regulatory condition which was expected to remain unsatisfied at the expiry of the bid on June 13, 2023 and the waiver of which would directly contravene the express requirements of a regulatory authority. On June 14, 2023, the Company announced the expiration of the Management Offer as certain substantive conditions to the Offer, including conditions related to the receipts of required regulatory approvals, were not satisfied as of the expiry time and the Management Group determined not to extend the Management Offer. The Company entered into an agreement with the Management Group with respect to certain matters relating to the Offer, including a two-year standstill with voting support commitments from certain members of the Management Group in favour of Board-supported director nominees, reimbursement of certain reasonable expenses of the Management Group (subject to clawback in certain circumstances), and continuation of an ad hoc independent committee, if required, although the Board is not actively considering the sale of any division and considers that all business units are important to the development of the long term value of the Company. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 23 FINANCIAL OVERVIEW Q4 AND FISCAL 2023 SELECTED FINANCIAL INFORMATION(1)(2)(5) (C$ thousands, except per share and % amounts, and number of employees) 2023 2022 2021 Q4/23 vs Q4/22 2023 2022 2021 Year over year change Three months ended March 31 Year 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) Acquisition-related costs Impairment of goodwill and other intangible assets Fair value adjustment of non-controlling interests derivative liability Change in fair value of contingent consideration Costs associated with redemption of convertible debentures Share of loss of an associate $ 196,774 $ 196,976 $ 214,476 (0.1)% $ 749,114 $ 761,843 $ 735,239 50,962 108,801 305,939 104,649 122,353 26,921 45,949 5,134 41,960 10,264 19,439 66,761 87,830 7,487 24,033 (53.2)% (14.5)% (35.8)% 347.7% (73.6)% 160,944 561,725 761,551 364,554 493,057 197,092 117,238 158,978 246,801 115,245 3,302 36,028 34,371 26,288 40,717 430,389 499,793 706,526 (13.9)% 1,510,397 2,046,002 2,007,688 (1.7)% (71.3)% (26.1)% (26.3)% 219.9% (90.4)% (26.2)% 276,066 294,695 395,638 151,535 108,024 117,784 (6.3)% 40.3% 936,872 1,248,184 1,227,895 (24.9)% 500,578 395,709 398,693 26.5% 515 418 (100.0)% 7,403 9,197 5,922 (19.5)% — — 11,629 (14,278) — 10 — — — — 11 — — — — 102,571 — n.m. n.m. 11,629 (14,278) — — — n.m. 36.5% n.m. 4,354 (100.0)% 922 (71.4)% 8,519 — 5,932 192 4,354 616 — (9.1)% — 55 Total expenses 424,962 403,245 518,810 5.4% 1,544,830 1,667,733 1,637,786 (7.4)% (Loss) income before income taxes 5,427 96,548 187,716 (94.4)% (34,433) 378,269 369,902 (109.1)% Net (loss) income Net (loss) income attributable to: CGGI shareholders Non-controlling interests (Loss) earnings per common share – diluted Dividends per common share $ $ $ $ $ 3,763 $ 68,995 $ 139,394 (94.5)% $ (54,742) $ 270,565 $ 269,802 (120.2)% (4,326) $ 58,657 $ 137,877 (107.4)% $ (90,104) $ 246,314 $ 263,786 (136.6)% 8,089 $ 10,338 $ 1,517 (21.8)% $ 35,362 $ 24,251 $ 6,016 45.8% (0.08) $ 0.085 $ 0.53 $ 0.93 (115.1)% $ (1.16) $ 0.085 $ 0.075 — $ 0.34 $ 2.16 $ 0.32 $ 2.04 0.25 (153.7)% 6.3% Total assets Total liabilities Non-controlling interests Total shareholders’ equity Number of employees Excluding significant items(4) Total revenue Total expenses Income before income taxes Net income Net income attributable to: CGGI shareholders Non-controlling interests $ 6,302,400 $ 7,250,245 $ 7,631,801 $ 4,903,763 $ 5,833,476 $ 6,516,517 $ 343,998 $ 238,700 $ 8,190 (13.1)% (15.9)% 44.1% $ 1,054,639 $ 1,178,069 $ 1,107,094 (10.5)% 2,829 2,587 2,356 9.4% $ 430,389 $ 490,793 $ 692,326 (12.3)% $ 1,523,348 $ 2,040,602 $ 1,993,488 $ 414,055 $ 396,268 $ 509,087 4.5% $ 1,397,476 $ 1,623,036 $ 1,607,398 16,334 $ 94,525 $ 183,239 (82.7)% $ 125,872 $ 417,566 $ 386,090 17,428 $ 66,822 $ 137,128 (73.9)% $ 100,986 $ 305,827 $ 285,887 $ $ $ $ (25.3)% (13.9)% (69.9)% (67.0)% 36.6% (78.0)% (76.5)% Net income attributable to common shareholders, adjusted $ 6,793 $ 54,678 $ 133,260 (87.6)% $ 60,312 $ 274,585 $ 270,467 Earnings per common share – diluted $ 0.07 $ 0.52 $ 1.20 (86.5)% $ 0.59 $ 2.51 $ 2.48 9,645 $ 57,069 $ 135,611 (83.1)% $ 71,260 $ 284,069 $ 279,871 (74.9)% 7,783 $ 9,753 $ 1,517 (20.2)% $ 29,726 $ 21,758 $ 6,016 (1) Financial measures are 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 32.7% non-controlling interest has been recognized for the three months and fiscal 2023 [15% non-controlling interest has been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022]. The operating results of CGWM UK have been fully consolidated, and a 5.55% non-controlling interest in the outstanding ordinary shares of Canaccord Genuity Wealth Management Holdings (Jersey) Limited has been recognized for the three and 12 months ended March 31, 2023 [three and 12 months ended March 31, 2022 – 1.5%]. (3) Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative, amortization of tangible, intangible and right-of-use assets, and development costs. (4) Net income and earnings per common share excluding significant items reflect tax-effected adjustments related to such items. See Non-IFRS Measures on page 14 and the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. (5) Data includes the operating results of Adam & Company since October 1, 2021; Sawaya, since December 31, 2021; PSW, since May 31, 2022; and Results, since August 17, 2022. n.m.: not meaningful 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 24 Management’s Discussion and Analysis Q4 AND FISCAL 2023 SELECTED FINANCIAL INFORMATION EXCLUDING SIGNIFICANT ITEMS(1) (C$ thousands, except per share and % amounts) 2023 2022 Three months ended March 31 Quarter- over- quarter change Year ended March 31 2023 2022 Year- over- year change Revenue Revenue per IFRS Significant items recorded in Corporate and Other Fair value adjustments on certain illiquid and $ 430,389 $ 499,793 (13.9)% $ 1,510,397 $ 2,046,002 (26.2)% restricted marketable securities — $ 9,000 (100.0)% $ (12,951) $ 5,400 430,389 $ 490,793 (12.3)% $ 1,523,348 $ 2,040,602 n.m. (25.3)% Total revenue excluding significant items Expenses Expenses per IFRS Significant items recorded in Canaccord Genuity Capital Markets Amortization of intangible assets Incentive based costs related to acquisitions(2) $ $ $ $ 424,962 $ 403,245 5.4% $ 1,544,830 $ 1,667,733 (7.4)% 214 $ 1,283 (83.3)% $ 4,656 $ 1,843 152.6% Impairment of goodwill and other intangible assets Acquisition-related costs Change in fair value of contingent consideration $ — — (14,278) Significant items recorded in Canaccord Genuity — — — — $ — $ n.m. $ 102,571 1,477 (14,278) 648 $ 364 78.0% $ 1,975 $ 364 — 537 — n.m. n.m. 175.0% n.m. Wealth Management Amortization of intangible assets Acquisition-related costs Incentive based costs related to acquisitions(2) Costs associated with reorganization of UK & Crown Dependencies Significant items recorded in Corporate and Other Fair value adjustment of non-controlling interests derivative liability Costs associated with redemption of convertible debentures Development costs Total significant items Total expenses excluding significant items Net income before taxes – adjusted Income taxes (recovery) – adjusted Net income – adjusted Significant items impacting net income attributable to common shareholders Non-controlling interests – IFRS Amortization of equity component of the non-controlling interests in CGWM UK and other adjustment Non-controlling interests (adjusted)(1) Net income attributable to common shareholders excluding significant items(1) Earnings per common share excluding significant items(1) – basic Diluted earnings per common share excluding significant items(1) – diluted $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 6,314 $ — $ 4,190 515 50.7% $ (100.0)% $ 22,400 $ 5,926 $ 14,629 8,660 53.1% (31.6)% 1,477 $ 625 136.3% $ 3,977 $ 3,419 16.3% — 11,629 — 4,903 10,907 $ 414,055 $ 16,334 $ (1,094) $ 17,428 $ — — — — 6,977 396,268 94,525 27,703 66,822 — — $ 794 (100.0)% n.m. $ 11,629 $ 8,519 36.5% — n.m. $ — $ 7,021 5,932 — 56.3% $ 44,697 147,354 $ 4.5% $ 1,397,476 $ 1,623,036 (82.7)% $ (103.9)% $ (73.9)% $ 125,872 $ 24,886 $ 100,986 $ 417,566 111,739 305,827 (100.0)% n.m. 229.7% (13.9)% (69.9)% (77.7)% (67.0)% 8,089 $ 10,338 (21.8)% $ 35,362 $ 24,251 45.8% 306 $ 7,783 $ 585 9,753 (47.7)% $ (20.2)% $ 5,636 $ 29,726 $ 2,493 21,758 126.1% 36.6% 6,793 $ 54,678 (87.6)% $ 60,312 $ 274,585 (78.0)% 0.10 $ 0.62 (83.9)% $ 0.72 $ 2.92 (75.3)% 0.07 $ 0.52 (86.5)% $ 0.59 $ 2.51 (76.5)% (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. (2) n.m.: not meaningful Incentive-based costs related to the acquisitions and growth initiatives in the UK & Europe wealth management business and in the US and UK capital markets. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 25 Impact of Convertible Preferred Shares on EPS Diluted earnings per common share (“diluted EPS”) is computed using the treasury stock method, giving effect to the exercise of all dilutive elements. The Convertible Preferred Shares issued by Canaccord Genuity Wealth Management Holdings (Jersey) Limited are factored into the diluted EPS by adjusting net income attributable to common shareholders of the Company to reflect our proportionate share of CGWM UK’s earnings on an as converted basis if the calculation is dilutive. For the quarter and fiscal year ended March 31, 2023, the effect of reflecting our proportionate share of CGWM UK’s earnings is anti-dilutive for diluted EPS purposes under IFRS, but dilutive for the purpose of determining diluted EPS excluding significant items(1). As such, the diluted EPS under IFRS is computed based on net income attributable to common shareholders less accrued dividends on the Convertible Preferred Shares issued by CGWM UK. Net income attributable to common shareholders excluding significant items(1) reflects the Company’s proportionate share of CGWM UK’s net income excluding significant items(1) on an as converted basis. 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. Geographies Our Dubai operation is included as part of Canaccord Genuity Capital Markets UK & Europe. Subsequent to year-end, the Company ceased its operations in Dubai. 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”. Our Asian-based operations, comprising China and Hong Kong, have been combined with our Canadian and Australian capital markets operations to reflect the management of these operating units. Goodwill Due to the effect of weak equity market conditions globally and particularly in Canada, our Canadian capital markets operation experienced substantial declines in business activity and revenue, and incurred material losses over the fiscal year. With these adverse changes in the business environment, continued weakness in commodity prices and a challenging outlook as negative economic conditions persist, it was determined that the carrying value of our Canadian capital markets cash generating unit (CGU) exceeded its fair value as of December 31, 2022. As a result, the Company recorded an impairment charge in respect of goodwill of $101.8 million in Q3/23. In addition, the Company recorded an impairment charge related to the unamortized intangible assets of $0.8 million allocated to the Canadian capital markets CGU. Utilizing management’s estimates for revenue and operating performance, growth rates and other assumptions typically required in connection with discounted cash flow models the Company determined that there was no impairment in the goodwill associated with any of its wealth management business units in the UK & Crown Dependencies and Australia or its indefinite life intangible assets recorded in Canaccord Genuity Capital Markets Canada, or goodwill in Canaccord Genuity Capital Markets US and Canaccord Genuity Capital Markets UK & Europe. Notwithstanding this determination as of March 31, 2023, changes or uncertainty in the economic environment may cause this determination to change. If the business climate changes 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 the future. 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. (1) See Non-IFRS Measures on page 14 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 26 Management’s Discussion and Analysis FOURTH QUARTER AND FISCAL 2023 VS. FOURTH QUARTER AND FISCAL 2022 REVENUE On a consolidated basis, revenue is generated through six primary activities: commissions and fees associated with agency trading and private client wealth management activity, investment banking, advisory fees, principal trading, interest and other. REVENUE BY ACTIVITY AS A PERCENTAGE OF FIRMWIDE REVENUE Commissions and fees Investment banking Advisory fees Principal trading Interest Other For three months ended March 31 2023 45.7% 11.8% 24.3% 6.3% 10.7% 1.2% 2022 39.4% 21.8% 24.5% 8.4% 2.1% 3.8% Quarter-over- quarter change 6.3 p.p. (10.0) p.p. (0.2) p.p. (2.1) p.p. 8.6 p.p. (2.6) p.p. Year ended March 31 2023 49.6% 10.7% 24.1% 7.8% 7.6% 0.2% 2022 37.2% 27.5% 24.1% 7.8% 1.8% 1.6% Year-over- year change 12.4 p.p. (16.8) p.p. 0.0 p.p. (0.0) p.p. 5.8 p.p. (1.4) p.p. Canaccord Genuity Group Inc. (total) 100.0% 100.0% 100.0% 100.0% p.p.: percentage points Firm-wide revenue for the three months ended March 31, 2023 was $430.4 million, a decrease of 13.9% or $69.4 million compared to the same period a year ago. The decrease was primarily driven by the broad market downturn beginning at the start of our current fiscal year, which has resulted in a significant decline in new issue activity compared to the same period a year ago. This decline was partially offset by higher firm-wide interest revenue during the three-month period, which increased by 347.7% year- over-year to $45.9 million. Firm-wide revenue for fiscal 2023 was $1.5 billion, a decrease of 26.2% year-over-year. The most notable decrease was in investment banking, which decreased by $400.8 million or 71.3% year-over-year. Commissions and fees revenue is primarily generated from private client investment management trading activity and institutional sales and trading. Firm-wide revenue generated from commissions and fees decreased slightly, by $0.2 million or 0.1% to $196.8 million in Q4/23 compared to Q4/22. Fiscal 2023 commissions and fees revenue were $749.1 million, a decrease of 1.7% or $12.7 million compared to the prior year. The decrease in the 12-month period primarily reflected lower contributions from our Canadian capital markets business, which was impacted by facilitation losses and market value adjustments in the first quarter of fiscal 2023. Firm-wide investment banking revenue for the fourth fiscal quarter decreased by $57.8 million or 53.2% year-over-year, to $51.0 million, reflecting the continued broad-market reduction in new issue activity which impacted revenue across all business units. When compared to the previous quarter, investment banking revenue increased by 7.3%. Further contributing to the overall decrease in consolidated investment banking revenue was a decrease of $3.7 million or 27.0% in our Canaccord Genuity Wealth Management segment compared to Q4/22, reflecting the impact of reduced new issue activity in our Canadian and Australian wealth management businesses during the three-month period. Investment banking revenue for the year ended March 31, 2023 amounted to $160.9 million, a year-over-year decrease of $400.8 million or 71.3%, due to the significant reduction in new issue activity across all our core operations as discussed above. Firm-wide advisory fee revenue in Q4/23 decreased by $17.7 million or 14.5% from the same quarter a year ago, to $104.6 million. Our US operations contributed $59.7 million of advisory revenue, representing a decrease of $5.2 million or 8.0% compared to the same period in the prior year. This reduction reflects the more challenging environment for completions and lower valuations, consistent with industry trends. Firm-wide advisory revenue for fiscal 2023 amounted to $364.6 million, a year-over-year decrease of 26.1% or $128.5 million, largely driven by a reduction in activity in our US and Canadian capital markets operations. Firm-wide principal trading revenue was $26.9 million in Q4/23, representing a decrease of $15.0 million or 35.8% decrease compared to Q4/22. For the year ended March 31, 2023, firm-wide trading revenue was $117.2 million, a decrease of $41.7 million or 26.3% as a result of reduced market-wide trading activity when compared to the prior year. Firm-wide interest revenue was $45.9 million for the three months ended March 31, 2023, representing an increase of $35.7 million or 347.7% from Q4/22; this is largely attributable to our Canadian wealth management and capital markets operations, which contributed interest revenue of $13.8 million and $8.6 million, respectively, for the three-month period. Interest revenue for fiscal 2023 was $115.2 million, an increase of $79.2 million or 219.9%, also mainly attributable to our Canadian wealth management and capital markets operations. The increase in interest revenue in both the three and 12-month periods is attributable to the increase in market rates compared to the same periods in fiscal 2022. Other revenue was $5.1 million for Q4/23, a decrease of $14.3 million or 73.6% from the same period a year ago. In fiscal 2023, a fair value adjustment on certain warrants, illiquid or restricted marketable securities resulted in a reduction in revenue of $13.0 million, $11.4 million of which was incurred in the first fiscal quarter, reflecting the sharp declines in the market value of certain inventory and warrant positions related to our investment banking activities in Australia and Canada. The fair value adjustment is excluded for management reporting purposes as it is not used by management to assess operating performance and is CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 27 excluded for purposes of determining net income excluding significant items(1). Future changes in the fair value of certain marketable securities as determined under applicable accounting standards may be significant and will be recorded through the consolidated statements of operations. Partially offsetting the fair value adjustment was an increase in interest income resulting from higher interest rates during the current fiscal year. EXPENSES Firm-wide expenses for the three months ended March 31, 2023 were $425.0 million, an increase of 5.4% or $21.7 million from Q4/22. Total expenses excluding significant items(1) as a percentage of revenue amounted to 96.2%, an increase 15.5 percentage points compared to the three months ended March 31, 2022. For the year ended March 31, 2023, expenses were $1.5 billion compared to $1.7 billion for the same period in the prior year, a decrease of 7.4%. Total expenses excluding significant items(1) as a percentage of revenue increased by 12.2 percentage points compared to fiscal 2022. EXPENSES AS A PERCENTAGE OF REVENUE Compensation expense Other overhead expenses(1) Acquisition-related costs Fair value adjustment of non-controlling interests derivative liability Change in fair value of contingent consideration Costs associated with redemption of convertible debentures Impairment of goodwill and other intangible assets Total Three months ended March 31 2023 64.1% 35.2% 0.0% 2022 59.0% 21.6% 0.1% Quarter-over- quarter change 5.1 p.p. 13.6 p.p. (0.1) p.p. Year ended March 31 2023 62.0% 33.1% 0.5% 2022 61.0% 19.4% 0.4% Year-over- year change 1.0 p.p. 13.7 p.p. 0.1 p.p. 2.7% 0.0% (2.7) p.p. 0.8% 0.4% 0.4 p.p. (3.3)% 0.0% (3.3) p.p. (0.9)% 0.0% (0.9) p.p. 0.0% 0.0% 0.0 p.p. 0.0% 0.3% (0.3) p.p. 0.0% 98.7% 0.0% 80.7% 0.0 p.p. 18.0 p.p. 6.8% 102.3% 0.0% 81.5% 6.8 p.p. 20.8 p.p. (1) Consists of trading costs, premises and equipment, communication and technology, interest, general and administrative, amortization and development costs. p.p.: percentage points COMPENSATION EXPENSE Firm-wide compensation expense in Q4/23 was $276.1 million, a decrease of $18.6 million or 6.3% compared to Q4/22. Total compensation expense as a percentage of revenue increased from 59.0% in Q4/22 to 64.1% in Q4/23, an increase of 5.2 percentage points. The increase in compensation ratio was partially due to changes in the value of stock-based compensation awards as well as shortfall coverage in certain discretionary compensation pools arising from lower revenue levels. Compensation expense for fiscal 2023 was $936.9 million, a decrease of $311.3 million or 24.9% compared to the same period in the prior year. Compensation expense as a percentage of revenue increased by 1.0 percentage point to 62.0% for fiscal 2023, reflecting the softer revenue environment. OTHER OVERHEAD EXPENSES (C$ thousands, except % amounts) Trading costs Premises and equipment Communication and technology Interest General and administrative Amortization(1) Amortization of right of use assets Development costs $ Three months ended March 31 2023 23,417 $ 6,904 23,239 23,915 43,344 10,838 6,552 13,326 2022 23,588 5,327 20,336 7,483 29,434 8,945 6,697 6,214 Quarter-over- quarter change (0.7)% $ 29.6% 14.3% 219.6% 47.3% 21.2% (2.2)% 114.5% Year ended March 31 2023 96,083 $ 21,986 85,482 54,539 138,461 41,634 26,335 36,058 2022 102,824 20,074 73,873 23,598 101,431 27,593 23,894 22,422 395,709 Year-over- year change (6.6)% 9.5% 15.7% 131.1% 36.5% 50.9% 10.2% 60.8% 26.5% Total other overhead expenses $ 151,535 $ 108,024 40.3% $ 500,578 $ (1) Includes amortization of intangible assets. See the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. Other overhead expenses were $151.5 million, an increase of 40.3% in Q4/23 compared to Q4/22. As a percentage of revenue, other overhead expenses were 35.2% in Q4/23 compared to 21.6% in Q4/22, an increase of 13.6 percentage points. General and administrative expense increased by $13.9 million or 47.3% for the quarter ended March 31, 2023, compared to the same period in the prior year; this was due to higher promotion and travel expenses, as activity levels in connection with conferences, client meetings and events increased following the end of COVID-19 restrictions. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 28 Management’s Discussion and Analysis Interest expense also increased by $16.4 million or 219.6% compared to Q4/22, primarily as a result of higher interest expense in our CGWM UK operations associated with additional bank loans obtained in connection with the acquisition of PSW completed on May 31, 2022 and increases in market rates. Interest expense in our Canadian capital markets operations increased by $4.0 million due to increased stock borrowing activity and higher interest rates. Amortization expense increased by $1.9 million or 21.2% compared to Q4 fiscal 2022 largely as a result of the amortization of intangible assets acquired in connection with PSW and Results. Other overhead expenses for fiscal 2023 increased by $104.9 million to $500.6 million, an increase of 26.5% from the prior year. As a percentage of revenue, other overhead expenses increased by 13.8 percentage points compared to fiscal 2022. The most significant increases in overhead expenses included general and administrative, interest, and amortization expenses for the reasons discussed above. For fiscal 2023, development costs were $36.1 million, compared to $22.4 million for the same period in the prior year; this change was due to an increase in incentive-based costs related to the acquisition of Sawaya and other growth initiatives in our US capital markets operations, recruiting and incentive-based costs in our Canadian and Australian wealth management operations, as well as costs in our Corporate & Other segment related to the expired management take-over bid. Acquisition-related costs of $7.4 million recorded in fiscal 2023 related to the acquisitions of PSW and Results. Due to the effect of weak equity market conditions globally and particularly in Canada, our Canadian capital markets operation experienced substantial declines in business activity and revenue and incurred material losses over the fiscal year. With these adverse changes in the business environment, continued weakness in commodity prices, and a challenging outlook as negative economic conditions persist, it was determined that the carrying value of our Canadian capital markets CGU exceeded its fair value as of December 31, 2022. As a result, the Company recorded an impairment charge in respect of goodwill of $101.8 million during Q3/23. In addition, the Company recorded an impairment charge related to the unamortized intangible assets of $0.8 million allocated to the Canadian capital markets. CGU. During the years ended March 31, 2023 and March 31, 2022, the Company recorded fair value adjustments of $11.6 million and $8.5 million, respectively, related to the derivative liability component of the non-controlling interests related to the Convertible Preferred Shares issued by CGWM UK. In addition, the Company recorded a fair value adjustment of $14.3 million related to the reduction in the contingent consideration liability in connection with the acquisition of Sawaya. INCOME TAX Income tax expense for the three months ended March 31, 2023 was $1.7 million on income before income taxes of $5.4 million compared to tax expense of $27.6 million on income before income taxes of $96.5 million in Q4/22. The change in effective tax rate was largely due to tax recoveries recorded in higher tax jurisdictions and the remeasurement of deferred tax assets related to unvested awards in connection with share-based payment plans, and changes in the value of stock-based awards compared to the previous quarter. For the year ended March 31, 2023, income tax expense was $20.3 million on a loss before income taxes of $34.4 million, compared to income tax expense of $107.7 million on income before income taxes of $378.3 million for the same period in the prior year. The change in the effective tax rate was mainly due to the non-deductibility of the impairment of goodwill and intangible assets for tax purposes. In addition, the remeasurement of deferred tax assets related to unvested awards in connection with share- based payment plans also impacted the effective tax rate as the value of stock-based awards decreased compared to March 31, 2022. NET INCOME (LOSS) Net income for Q4/23 was $3.8 million compared to net income of $69.0 million in the same period a year ago. Net loss attributable to common shareholders was $7.2 million compared to net income attributable to common shareholders of $56.3 million for the three months ended March 31, 2022. Diluted loss per common share was $0.08 in Q4/23 compared to diluted earnings per common share of $0.53 in Q4/22. Net loss for fiscal 2023 was $54.7 million compared to net income of $270.6 million in the prior year. Net loss attributable to common shareholders was $101.1 million compared to net income attributable to common shareholders of $236.8 million for fiscal 2022. Diluted loss per common share was $1.16 in the current year compared to diluted earnings per common share of $2.16 in fiscal 2022. Excluding significant items(1), net income for Q4/23 was $17.4 million compared to net income of $66.8 million in Q4/22. Net income attributable to common shareholders excluding significant items(1) was $6.8 million compared to $54.7 million for the same period in the prior year. Diluted earnings per common share excluding significant items(1) was $0.07 in Q4/23 compared to diluted earnings per common share excluding significant items(1) of $0.52 in Q4/22. Excluding significant items(1) and before non-controlling interests and preferred share dividends, net income for fiscal 2023 was $101.0 million compared to net income of $305.8 million for fiscal 2022. Diluted earnings per common share, excluding significant items(1), were $0.59 for the 12-month period compared to diluted earnings per common share excluding significant items(1) of $2.51 for the prior year. (1) See Non-IFRS Measures on page 14 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 29 Business Segment Results – Q4 and Year Ended March 31, 2023 Compared with Q4 and Year Ended March 31, 2022(1)(2) (C$ thousands, except number of employees) Revenue Canada UK & Europe US Australia Total revenue Expenses Intersegment allocations (Loss) income 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 2023 Total Canaccord Genuity Capital Markets Canaccord Genuity Wealth Management Corporate and Other 2022 Total $ 148,356 $ 96,275 482,750 65,472 792,853 836,819 21,651 297,145 $ 343,728 5,019 62,412 708,304 591,589 23,293 9,240 $ — — — 9,240 116,422 (44,944) 454,741 $ 440,003 487,769 127,884 1,510,397 1,544,830 — 341,453 $ 120,355 667,176 174,090 1,303,074 961,236 20,007 328,458 $ 310,495 6,821 74,633 720,407 576,728 22,670 22,521 $ — — — 22,521 129,769 (42,677) 692,432 430,850 673,997 248,723 2,046,002 1,667,733 — $ (65,617) $ 93,422 $ (62,238) $ (34,433) $ 321,831 $ 121,009 $ (64,571) $ 378,269 792,853 740,418 21,651 708,304 559,286 23,293 22,191 97,772 (44,944) 1,523,348 1,397,476 — 1,303,074 958,492 20,007 720,407 549,226 22,670 17,121 115,318 (42,677) 2,040,602 1,623,036 — 30,784 935 125,725 1,467 (30,637) 427 125,872 2,829 324,575 890 148,511 1,292 (55,520) 405 417,566 2,587 (1) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. Detailed financial results for the business segments are shown in Note 25 of the audited consolidated financial statements. (2) The operating results of the Australian operations have been fully consolidated and a non-controlling interest of 32.7% has been recognized for fiscal 2023. A 15% non-controlling interest has been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022. (3) See the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. 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 a full range of investment banking, advisory, equity research, and sales and trading services to corporate, institutional and government clients, and it also conducts principal trading activities. The Company has offices and employees in more than 20 locations in Canada, the US, the UK & Europe, Australia and Asia. Our capital markets division has over 900 employees who are organized into product, industry, geographic and support groups. Our industry coverage groups are focused in key growth sectors of the global economy and are primarily focused in the Technology, Healthcare & Life Sciences (which includes cannabis), Metals & Mining, and Consumer & Retail sectors, with additional exposure to the Diversified, Transportation & Industrials, Energy, and Structured Products & Sustainability sectors. Our capabilities include private placements, equity and debt underwriting, IPOs, follow-on offerings, at-the-market offerings, debt finance and restructuring, advisory (which includes M&A and private capital/financial sponsor advisory services), principal trading, block trades and market making. A disciplined mid-market focus with global alignment efforts has firmly entrenched Canaccord Genuity Capital Markets as a leading global independent investment bank that specializes in its core focus sectors and geographies. Canaccord Genuity Capital Markets’ integrated global platform and disciplined focus in key growth sectors of the global economy provides a competitive advantage. Canaccord Genuity Capital Markets is focused on providing execution capabilities and specialized knowledge across geographies, thereby providing a differentiated service when compared to other global investment banks. Outlook Canaccord Genuity Capital Markets continues to take steps to advance its market position as a mid-market leader in many of the Company’s key markets. Management intends to focus on capturing operating efficiencies and strengthening the global platform through further integration of our global capabilities and by further enhancing cross-border coordination among our global offices. The Company expects continued benefits from its investments to grow contributions from higher-margin advisory activities. During fiscal 2023, the Company, through its UK & Europe capital markets business, completed the acquisition of the business of Results, a UK-based advisory business focused in the Technology and Healthcare sectors. This transaction complements recent investments by the Company to expand its global advisory business with the acquisitions of Petsky Prunier (2019) and Sawaya (2021) in the US, as it adds expertise in the Healthcare and Technology sectors to its platform in the UK. 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 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 30 Management’s Discussion and Analysis Company will continue to make disciplined investments, as appropriate, to further strengthen our operations in areas where we believe we can capture additional market share. The Company 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 throughout all market cycles. A culture of cost containment continues to be reinforced throughout the Company, and strategies by which to lower operating costs in this division over the long term continue to be explored. FINANCIAL PERFORMANCE(1)(2) (C$ thousands, except number of employees) Revenue Expenses Canada 70,141 Three months ended March 31, 2023 Three months ended March 31, 2022 UK(5) US Australia Total Canada UK(5) US Australia Total 28,168 114,292 13,539 226,140 74,481 29,237 146,532 61,796 312,046 Compensation expense Other overhead expenses 44,732 17,829 16,338 9,691 80,237 42,607 12,074 153,381 3,712 73,839 36,921 13,921 19,330 7,679 77,981 33,648 39,276 173,508 3,830 59,078 Change in fair value of contingent consideration Total expenses Intersegment allocations(3) Income (loss) before income taxes(3) Non-controlling interests(2) Excluding significant items(4) Total revenue Total expenses Intersegment allocations(3) Income (loss) before income taxes(3) — — (14,278) — (14,278) — — — — — 62,561 26,029 108,566 15,786 212,942 50,842 27,009 111,629 43,106 232,586 3,787 372 914 200 5,273 5,469 770 998 480 7,717 $ 3,793 $ 1,767 $ 4,812 $ (2,447) $ 7,925 $ 18,170 $ 1,458 $ 33,905 $ 18,210 $ 71,743 — — — (576) (576) — — — 3,185 3,185 70,141 62,561 3,787 28,168 114,292 13,539 226,140 25,615 122,396 15,786 226,358 372 914 200 5,273 74,481 50,782 5,469 29,237 146,532 61,796 312,046 27,009 110,042 43,106 230,939 770 998 480 7,717 $ 3,793 $ 2,181 $ (9,018) $ (2,447) $ (5,491) $ 18,230 $ 1,458 $ 35,492 $ 18,210 $ 73,390 Number of employees 275 180 394 86 935 278 143 378 91 890 (C$ thousands, except number of employees) Revenue Expenses Year ended March 31, 2023 Year ended March 31, 2022 Canada UK(5) US Australia Total Canada UK(5) US Australia Total 148,356 96,275 482,750 65,472 792,853 341,453 120,355 667,176 174,090 1,303,074 Compensation expense Other overhead expenses 96,256 64,583 57,917 296,074 38,576 488,823 168,942 78,963 385,975 107,906 741,786 30,142 145,431 18,070 258,226 53,735 28,205 122,094 14,879 218,913 Impairment of goodwill and other assets Change in fair value of contingent consideration Acquisition-related costs Total expenses Intersegment allocations(3) Income (loss) before income taxes(3) Non-controlling interests(2) Excluding significant items(4) Total revenue Total expenses Intersegment allocations(3) Income (loss) before income taxes(3) 102,571 — — — 102,571 — — — (14,278) 1,477 — — (14,278) — 1,477 — — — — — — — — 537 — — — — — 537 263,410 89,536 427,227 56,646 836,819 222,677 107,168 508,606 122,785 961,236 15,717 1,495 3,467 972 21,651 14,526 1,484 3,248 749 20,007 $ (130,771) $ 5,244 $ 52,056 $ 7,854 $ (65,617) $ 104,250 $ 11,703 $ 155,322 $ 50,556 $ 321,831 — — — 2,688 2,688 — — — 6,581 6,581 148,356 160,659 15,717 96,275 482,750 65,472 792,853 341,453 120,355 667,176 174,090 1,303,074 86,887 436,226 56,646 740,418 222,301 107,168 506,238 122,785 958,492 1,495 3,467 972 21,651 14,526 1,484 3,248 749 20,007 $ (28,020) $ 7,893 $ 43,057 $ 7,854 $ 30,784 $ 104,626 $ 11,703 $ 157,690 $ 50,556 $ 324,575 Number of employees 275 180 394 86 935 278 143 378 91 890 (1) Financial measures are 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 32.7% has been recognized for fiscal 2023. A 15% non-controlling interest had been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022. Income before income taxes includes intersegment allocations and excludes non-controlling interests. See the Intersegment Allocated Costs section on page 39. (3) (4) Refer to the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. (5) Includes our Dubai-based operations. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 31 REVENUE – CANACCORD GENUITY CAPITAL MARKETS Revenue from Canaccord Genuity Capital Markets is generated from commissions and fees earned in connection with investment banking and advisory transactions and institutional sales and trading activity, as well as trading gains and losses from Canaccord Genuity Capital Markets’ principal trading activity, including its international trading operations. In Australia and Canada, revenue is also earned through inventory positions, which are included as part of investment banking revenue. The value of these positions can fluctuate with changes in the market environment. REVENUE BY GEOGRAPHY AS A PERCENTAGE OF CANACCORD GENUITY CAPITAL MARKETS REVENUE Revenue generated in: Canada UK & Europe US Australia Canaccord Genuity Capital Markets (total) p.p.: percentage points Three months ended March 31 2023 2022 Quarter-over- quarter change Year ended March 31 2023 2022 Year-over-year change 31.0% 12.5% 50.5% 6.0% 100% 23.8% 9.4% 47.0% 19.8% 100% 7.2 p.p 3.1 p.p 3.5 p.p (13.8) p.p 18.7% 12.1% 60.9% 8.3% 100% 26.2% 9.2% 51.2% 13.4% 100% (7.5) p.p 2.9 p.p 9.7 p.p (5.1) p.p Canaccord Genuity Capital Markets generated $226.1 million in revenue for the three months ended March 31, 2023, a decrease of 27.5% or $85.9 million from the same quarter a year ago. Our US capital markets business was the largest contributor of revenue for the three-month period, which amounted to $114.3 million, or 50.5% of total capital markets revenue. The largest decrease was recorded in our Australian capital markets business, where Q4/23 revenue decreased by $48.3 million or 78.1% year- over-year to $13.5 million. For the 12 months ended March 31, 2023, revenue for our global capital markets operations was $792.9 million, a decrease of $510.2 million or 39.2% compared to the prior year. Declines in the three- and 12-month periods were attributable to a market-wide reduction in activity levels, primarily in investment banking. In addition to the more challenging environment, sharp declines in the market value of certain inventory and warrant positions earned in respect of our investment banking activities had a negative impact on year-to-date revenues earned by our Australian capital markets business and, to a lesser degree, our Canadian capital markets business. Investment banking The substantial reduction in market-wide underwriting activities persisted through fiscal 2023, and this especially impacted smaller issuers in several of our key growth sectors. Revenue from the Metals & Mining sector, a historic area of strength for the Company, reflects contributions from Australia, Canada and the UK. Revenue from the Healthcare sector was led by our US and Canadian capital markets businesses and includes transactions with companies in the Cannabis sector. Revenue in the Other segment was led by our UK and Canadian businesses and included transactions with companies in the Energy sector. Investment banking revenue for the three months ended March 31, 2023 was $40.9 million, a decrease of $54.1 million or 56.9% compared to Q4/22. When compared to Q3/23, investment banking revenue increased modestly, by 8.6%. Investment banking revenue for fiscal 2023 was $126.6 million, a significant decrease of $336.5 million or 72.7% compared to fiscal 2022, reflecting the challenging backdrop for capital raising activities across our industry that impacted several of our core focus sectors. As discussed above, investment banking revenue was impacted by the sharp decline in the market value of certain inventory and warrant positions related to our investment banking activities in Canada and Australia as well as certain market value adjustments related to our facilitation activity in Canada, which primarily impacted our first fiscal quarter results. Canaccord Genuity Capital Markets’ transactions and revenue by focus sectors are detailed below. INVESTMENT BANKING REVENUE BY SECTOR (AS A % OF INVESTMENT BANKING REVENUE FOR EACH GEOGRAPHIC REGION) Sectors Healthcare Technology Metals & Mining Consumer & Retail Other Total Fiscal 2023 Global Canada US UK & Dubai Australia 16% 6% 51% 4% 23% 15% 5% 42% 1% 37% 67% 16% 2% 14% 1% 0% 8% 12% 0% 80% 3% 3% 78% 4% 12% 100.0% 100.0% 100.0% 100.0% 100.0% Note in reference to the tables above: Transactions with companies in the Cannabis sector in Canada are included under the Healthcare sector. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 32 Management’s Discussion and Analysis Advisory Increasing contributions from higher-margin advisory activities helps to offset the inherent volatility of our capital raising activities and continues to be an important strategic priority for the Company. Our specialized expertise in key sectors of the economy and our track record of success in equity capital markets activities position us well to unlock opportunities for our clients as they grow. We lead a wide variety of sell-side and buy-side strategic advisory mandates both domestically and cross border, and we have established leadership in alternative financing vehicles. Meanwhile, our advisory activities outpaced the broader market in the first half of fiscal 2023, M&A completions in the second half were down from the yearly and quarterly comparison periods. Advisory revenue earned in Q4/23 was $103.8 million, a decrease of $17.8 million or 14.6% when compared to the same period last year, and an increase of 38.0% when compared to Q3/23. Revenue in fiscal 2023 earned through capital markets advisory decreased by 25.8% year-over-year to $362.5 million, which reflects the more challenging environment for completions and lower valuations. Our US business was the largest contributor in this segment, with fiscal 2023 advisory revenue of $250.9 million, or 69.2% of global capital markets advisory revenue, which was primarily earned in the Technology, Consumer & Retail and Healthcare sectors; this reflects our investments in the growth of our capabilities. ADVISORY FEES REVENUE BY SECTOR (AS A % OF ADVISORY FEES REVENUE FOR EACH GEOGRAPHIC REGION) Sectors Healthcare Technology Metals & Mining Consumer & Retail Other Total Principal trading Fiscal 2023 Global Canada 10% 54% 9% 16% 11% 10% 3% 67% 9% 11% US 12% 73% 0% 13% 2% UK & Dubai 3% 12% 3% 34% 48% 100.0% 100.0% 100.0% 100.0% Principal trading revenue for the three months ended March 31, 2023 was $26.6 million, a decrease of $15.1 million or 36.2% compared to Q4/22. For the year ended March 31, 2023, revenue earned from principal trading activity amounted to $116.9 million, a decrease of $41.3 million or 26.1% compared to the prior fiscal year, primarily a reflection of lower market volatility that reduced market activity and revenue opportunities when compared to the record levels set in the prior year. Our US business contributed $104.2 million of trading revenues for the 12-month period, largely attributable to the International Equities Group. Commissions and fees Commissions and fees revenue was $43.8 million and $156.2 million for the three and 12-month periods ended March 31, 2023, with year-over-year decreases of 10.2% and 10.7%, respectively; these numbers reflect lower client trading activity and reduced new issue activity. Commissions and fees revenue in our US operations for fiscal 2023 increased by $4.9 million or 5.2% year-over-year, offset by a decrease of $20.6 million or 44.9% in our Canadian operations due to facilitation losses largely recorded in Q1/23. EXPENSES – CANACCORD GENUITY CAPITAL MARKETS Expenses in our Canaccord Genuity Capital Markets division for the three months ended March 31, 2023 were $212.9 million, a decrease of 8.4% or $19.6 million compared to the same period a year ago. For fiscal 2023, expenses decreased by $124.4 million or 12.9% to $836.8 million. As a percentage of revenue, total expenses excluding significant items(1) in this division increased by 26.1 percentage points and 19.8 percentage points for the three and 12-month period ended March 31, 2023, respectively, compared to the same period in the prior year, due to the fixed nature of certain overhead expenses. Compensation expense Partly reflecting the reduction in incentive-based revenue, compensation expense in our capital markets division for the three months and year ended March 31, 2023 decreased by $20.1 million or 11.6% and $253.0 million or 34.1%, respectively, compared to the same period in the prior year. Total compensation expense as a percentage of revenue for the three months ended March 31, 2023 was 67.8%, an increase of 12.2 percentage points compared to Q4/22. The compensation ratio for Q4/23 for all regions was negatively impacted by changes in the value of certain share-based compensation payments granted in prior periods and shortfall coverage in certain discretionary compensation pools. The total compensation ratio was 61.7% for the year ended March 31, 2023, an increase of 4.8 percentage points from the prior year. In Canada, total compensation expense as a percentage revenue increased by 14.2 percentage points and 15.4 percentage points compared to the three and 12 months ended March 31, 2022, respectively, as a result of fixed staff costs relative to the decrease in revenue during the current period and the related pressure on discretionary compensation pools. In the US, the increases in compensation ratio for Q4/23 and fiscal 2023 were impacted by changes in the composition of revenue and the associated variable compensation associated with the different revenue streams, as well as an increase in share-based payment expense as discussed above. In Australia, a change in the relative levels of fixed and variable compensation and a significant (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 33 decline in revenue during the fourth quarter of fiscal 2023 contributed to a 25.6 percentage point increase in total compensation ratio. Total compensation expense as a percentage of revenue decreased by 8.1 and 5.5 percentage points for the quarter and year ended March 31, 2023, respectively, for our UK & Europe operations. CANACCORD GENUITY CAPITAL MARKETS TOTAL 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 Three months ended March 31 2023 63.8% 58.0% 70.2% 89.2% 67.8% 2022 49.6% 66.1% 53.2% 63.6% 55.6% Quarter-over- quarter change 14.2 p.p (8.1) p.p 17.0 p.p 25.6 p.p 12.2 p.p Year ended March 31 2023 64.9% 60.2% 61.3% 58.9% 61.7% 2022 49.5% 65.6% 57.9% 62.0% 56.9% Year-over-year change 15.4 p.p (5.4) p.p 3.4 p.p (3.1) p.p 4.8 p.p Other overhead expenses in our global capital markets increased by 25.0% and 18.0% compared to the three and 12-month period of fiscal 2022, respectively. On a quarterly and year-over-year basis, interest expense increased by $2.1 million or 52.0% and $5.8 million or 44.2%, respectively, largely driven by stock borrowing activity in our Canadian capital markets operations. Increased spending in promotion and travel as well as conference costs in our Canadian and US capital markets operations were the primary drivers of higher general and administrative expenses, which increased by 84.6% and 55.6% compared to the three and 12-month period of fiscal 2022, respectively. These activities were targeted investments in our business development and talent retention efforts, which were concentrated in a short period following two years of COVID-19 restrictions. More normalized levels are expected going forward. Partially offsetting the overall increase in overhead expenses for the three months and fiscal year ended March 31, 2023 was a decrease in trading costs of $0.8 million or 4.1% and $6.7 million or 8.1%, respectively, compared to the same period in the prior year; this was mainly due to lower trading costs in our US operations in connection with reduced trading activity during the periods. Amortization expense decreased by 37.2% or $1.2 million in Q4/23 but increased by 51.9% or $3.5 million for fiscal 2023 when compared to the same periods of the prior year, largely due to the amortization of intangibles acquired in connection with the acquisitions of Sawaya, which closed on December 31, 2021, and Results, which was completed on August 17, 2022. Acquisition-related costs of $1.5 million recorded during fiscal 2023 related to the acquisition of Results, which was completed on August 17, 2022. In addition, the Company recorded a fair value adjustment of $14.3 million related to fair value changes in the contingent consideration liability in connection with the acquisition of Sawaya. Due to the effect of weak equity market conditions globally, our Canadian capital markets operation experienced declines in business activity and revenue and incurred material losses over the fiscal year. With these adverse changes in the business environment, continued weakness in commodity prices, and a challenging outlook as negative economic conditions persist, it was determined that the carrying value of our Canadian capital markets CGU exceeded its fair value as of December 31, 2022. As a result, the Company recorded an impairment charge in respect of goodwill of $101.8 million in Q3/23. In addition, the Company recorded an impairment charge related to the unamortized intangible assets of $0.8 million allocated to the Canadian capital markets CGU. Income before income taxes Income before income taxes including allocated overhead expenses for the three months ended March 31, 2023 was $7.9 million for our combined capital markets business, compared to net income of $71.7 million in the same period a year ago. Excluding significant items(1) loss before taxes was $5.5 million in Q4/23 compared to income before income taxes of $73.4 million in the same period of fiscal 2022. For fiscal 2023, loss before income taxes including allocated overhead expenses was $65.6 million compared to net income before income taxes of $321.8 million for fiscal 2022. Excluding significant items(1) net income before taxes declined by $293.8 million or 90.5% to $30.8 million. The decline in our quarterly and fiscal year income before taxes in our global capital markets business was largely attributable to the significant decline in revenue across our core operations as a result of the global market downturn, in addition to the impact of markdowns certain inventory and warrant positions earned in respect of our investment banking activities and mostly recorded during Q1/23. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 34 Management’s Discussion and Analysis CANACCORD GENUITY WEALTH MANAGEMENT Overview The Company has wealth management operations in Canada, the UK & Crown Dependencies and Australia. 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; and client-related interest. Additionally, IAs in Canada and Australia earn fees and commissions revenue from investment banking and venture capital transactions. In the UK & Crown Dependencies, Canaccord Genuity Wealth Management had 16 offices in the UK, Guernsey, Jersey and the Isle of Man on March 31, 2023. Revenue earned by this business is largely generated through fee-based accounts, portfolio management, interest and financial planning activities. Fee-related revenue as a percentage of total revenue in this business was 80.2% for the year ended March 31, 2023. The business offers services to domestic (UK) and international clients and provides investing options from both third party and proprietary financial products, including investment funds managed by Canaccord Genuity Wealth Management portfolio managers. This business had 252 Investment Professionals on March 31, 2023. On March 31, 2023, Canaccord Genuity Wealth Management had nine offices located across Canada, including IAs who are registered in the US. Fee-related revenue as a percentage of total revenue in this business was 46.2% for fiscal 2023 ended March 31, 2023. This business had 145 Advisor teams on March 31, 2023. In Australia, Canaccord Genuity Wealth Management had nine offices on March 31, 2023. This business had 119 Advisor teams on March 31, 2023. Outlook Our strategic shift to strengthening contributions from our global wealth management segment continues to be a major focus for the Company. Management’s priorities for Canaccord Genuity Wealth Management will be focused on growing AUA and AUM and increasing the proportion of fee-based revenue as a percentage of total revenue. By increasing recurring revenue streams, we expect to meaningfully make our business less sensitive to trading activity associated with transaction-based revenue. We continue to explore a range of opportunities for profitable growth in our global wealth management segment. Alongside investments in talent and acquisitions, we are actively building our specialist network in technology, sustainability and other growth areas, to keep pace as investors continue to reshape their investment needs. The Company will continue to pursue strategic opportunities to increase the scale of its wealth management business in the UK & Crown Dependencies. We are increasingly improving synergies as we integrate the businesses that we have acquired in the last 12 months. In connection with the acquisition of PSW which was completed on May 31, 2022, CGWM UK added £100 million ($159.4 million as of May 31, 2022) to its existing bank facility. In addition, HPS on behalf of investment accounts and funds it manages made an additional investment in CGWM UK on closing of the acquisition through the purchase of a new series of Convertible Preferred Shares of Canaccord Genuity Wealth Management Holdings (Jersey) Limited in the amount of £65.3 million ($104.1 million as of May 31, 2022). With this investment, and with the small equity component issued in connection with the acquisition, the Company’s effective as-converted interest in CGWM UK is approximately 66.9%, subject to the liquidation preference associated with the Convertible Preferred Shares and the Preference Shares. In Canada, the Company continues to pursue opportunities for profitable growth with a focus on enhancing margins, managing costs, and growing the business through targeted recruitment and other initiatives aimed at increasing client assets. An important focus is the recruiting and retention of IAs. While the recruiting environment remains competitive, our ability to attract and retain high quality advisors is based on the benefits of our independent platform, which provides access to global resources and expertise, supported by investments to advance our technology and product offering, and a multi-year track record of revenue growth and profitability. We maintain a strong focus on investing in technology and training programs and building a comprehensive suite of products targeted at attracting high net worth investors and providing resources to advisors to help them grow their businesses. Subsequent to the end of the third fiscal quarter, on February 1, 2023, the Company announced that it has entered into a definitive agreement with Mercer Global Investments Canada Limited to acquire Mercer’s Canadian Private Wealth Business. The transaction closed on May 29, 2023. In Australia, the Company intends to continue to build upon the success of its expanded wealth management operations. Continued expansion is expected to occur through targeted recruiting and the build-out of wealth management services and products, in addition to the leveraging of the benefits provided by its connection to Canaccord Genuity’s capital markets business in the region. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT FINANCIAL PERFORMANCE – CANACCORD GENUITY WEALTH MANAGEMENT NORTH AMERICA(1)(2) Management’s Discussion and Analysis 35 (C$ thousands, except AUM and AUA (in C$ millions), number of employees, Advisory Teams and % amounts) Revenue Expenses Compensation expense Other overhead expenses Total expenses Intersegment allocations(2) Income before income taxes(2) AUM (discretionary)(3) AUA(4) Number of Advisory Teams Number of employees Excluding significant items(5) Total expenses Intersegment allocations(2) Income before income taxes(2) Three months ended March 31 2023 2022 Quarter-over- quarter change Year ended March 31 2023 2022 $ 78,410 $ 76,165 2.9% $ 302,164 $ 335,279 43,453 19,256 62,709 $ 4,837 10,864 $ 8,834 35,694 145 499 47,426 17,083 64,509 6,555 5,101 8,482 37,881 146 489 (8.4)% 12.7% 168,001 73,763 198,197 60,079 (2.8)% $ 241,764 $ 258,276 20,659 20,926 56,344 39,474 $ (26.2)% 113.0% $ 4.1% (5.8)% (0.7)% 2.0% Year-over- year change (9.9)% (15.2)% 22.8% (6.4)% 1.3% (29.9)% 62,709 $ 4,837 64,509 6,555 (2.8)% $ 241,764 $ 258,276 20,659 20,926 (26.2)% 10,864 $ 5,101 113.0% $ 39,474 $ 56,344 (6.4)% 1.3% (29.9)% $ $ $ $ (1) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. (2) Income before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 39. (3) AUM in Canada include all assets managed on a discretionary basis under programs that include CGWM’s Managed Solutions Programs as well as its Private Investment Management Program. Services provided include the selection of investments and the provision of investment advice. See Non-IFRS Measures on page 14. (4) AUA in Canada is the market value of client assets administered by the Company, from which the Company earns commissions and fees and includes AUM. See Non-IFRS Measures on page 14. (5) Refer to Non-IFRS Measures on page 14 and the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. Revenue from Canaccord Genuity Wealth Management North America was $78.4 million, an increase of $2.2 million or 2.9% compared to the three months ended March 31, 2022. For the year ended March 31, 2023, revenue was $302.2 million, a reduction of $33.1 million or 9.9%. Investment banking revenue in this business segment decreased by 30.3% and 70.6% year-over-year for the three- and 12-month periods ended March 31, 2023, due to lower new issue activity, which was partially offset by higher interest revenue. The higher interest rate environment has benefited interest income associated with our deposit and lending activities in this business. Interest income was up 162.8% to $13.8 million for the three-month period and 144.0% to $46.2 million for the fiscal year. AUA(1) in Canada decreased by 5.8% to $35.7 billion at March 31, 2023, compared to $37.9 billion at March 31, 2022, reflecting the reduction in market values which were partially offset by a net inflow of new client assets. As of March 31, 2023 there were 145 Advisory Teams in Canada, a decrease of one from a year ago. Fee-related revenue in our North American operations as a percentage of total revenue increased by 6.8 percentage points compared to fiscal 2022 and accounted for 46.2% of the wealth management revenue in Canada during fiscal 2023. Total expenses in this business for the three months ended March 31, 2023 were $62.7 million, a decrease of $1.8 million or 2.8% compared to the same period a year ago. For the year ended March 31, 2023, total expenses were $241.8 million, a reduction of $16.5 million or 6.4% compared to the previous year. Compensation costs were down by $4.0 million or 8.4% for Q4/23 and by $30.2 million or 15.2% for fiscal 2023. Compensation expense as a percentage of revenue was 55.4% for Q4 fiscal 2023 and 55.6% for the fiscal year, representing decreases of 6.8 percentage points and 3.5 percentage points, respectively. Other overhead costs increased by $2.2 million or 12.7% and $13.7 million or 22.8% compared to the three and 12 months ended March 31, 2022. The increase in expenses for the three- and 12 months ended March 31, 2023 was driven by higher premises and equipment, communication and technology, and general and administrative expenses. General and administrative expenses increased by $0.7 million or 18.7% compared to Q4/22 and by $5.5 million or 45.7% for the fiscal year due to higher conference costs. Premises and equipment expense was up $0.7 million or 102.6% on a three-month basis and $1.7 million or 67.9% for the full year due to additional allocations from the Corporate and Other segment. Development costs also increased by $2.2 million or 16.7% for the year ended March 31, 2023 as a result of the amortization of incentive-based payments to new recruits. Income before taxes for the three months ended March 31, 2023 was $10.9 million, an increase of $5.8 million or 113.0% compared to Q4/22. On a fiscal year basis, income before income taxes was $39.5 million, a reduction of $16.9 million or 29.9% compared to the prior year. (1) See Non-IFRS Measures on page 14 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 36 Management’s Discussion and Analysis FINANCIAL PERFORMANCE – CANACCORD GENUITY WEALTH MANAGEMENT UK & CROWN DEPENDENCIES(1)(5) Three months ended March 31 Year ended March 31 2023 2022 Quarter- over- quarter change 2023 2022 $ 103,730 $ 80,316 29.2% $ 343,728 $ 310,495 (C$ thousands, except AUM (in C$ millions), number of employees, investment professionals and fund managers, and % amounts) Revenue Expenses Compensation expense Other overhead expenses Acquisition-related cost Total expenses Intersegment allocations(2) Income before income taxes(2) Non-controlling interest(6) AUM(3) Number of investment professionals and fund managers Number of employees Excluding significant items(4) Total expenses Intersegment allocations(2) Income before income taxes(2) Non-controlling interest(6) 42,527 41,922 — 84,449 558 18,723 8,798 55,101 252 737 $ 76,776 $ 558 26,396 8,492 38,202 22,345 515 61,062 927 18,327 7,064 52,830 220 581 55,849 927 23,540 6,479 Year- over- year change 10.7% 0.6% 47.7% (31.6)% 14.5% 27.2% (6.1)% 93.4% 163,634 117,628 5,926 287,188 2,236 54,304 32,651 162,618 79,645 8,660 250,923 1,758 57,814 16,879 11.3% 87.6% (100.0)% 38.3% (39.8)% 2.2% 24.5% 4.3% 14.5% 26.9% 37.5% $ (39.8)% 12.1% 31.1% 255,348 $ 2,236 86,144 27,015 223,895 1,758 84,842 14,386 14.0% 27.2% 1.5% 87.8% (1) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. (2) (3) AUM in the UK & Crown Dependencies is the market value of client assets managed and administered by the Company, from which the Company earns commissions and fees. This measure Income before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 39. includes both discretionary and non-discretionary accounts. See Non-IFRS Measures on page 14. (4) Refer to Non-IFRS Measures on page 14 and the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. (5) (6) The non-controlling interest is the portion of the net income after income taxes of CGWM UK not attributable to the Company. Includes the operating results of Adam & Company since the acquisition date of October 1, 2021 and PSW as of May 31, 2022. Revenue from our UK & Crown Dependencies wealth management business is largely generated through fee-related accounts and portfolio management activities and, as such, is less sensitive to changes in levels of trading activity, although more sensitive to changes in market values. Revenue for Q4/23 was $103.7 million, an increase of $23.4 million or 29.2% from Q4/22, and the highest quarterly revenue on record for this operation. Revenue for fiscal 2023 also reached a new record of $343.7 million, an increase of $33.2 million or 10.7% from the prior year. The higher interest rate environment has also positively impacted interest income in this business, which has increased by $27.7 million to $30.3 million for fiscal 2023. Measured in local currency (GBP), revenue was £63.1 million in the three months ended March 31, 2023 compared to £47.3 million for the three months ended March 31, 2022, an increase of 33.3%. For the year ended March 31, 2023, revenue was £215.2 million compared to £181.4 million for the year ended March 31, 2022, an increase of 18.6%. AUM(1) in the UK & Crown Dependencies as of March 31, 2023 reached a new record of $55.1 billion, an increase of 4.3% compared to $52.8 billion as of March 31, 2022, driven by increases in client assets as well as new assets added to our platform following the completion of the acquisition of PSW on May 31, 2022. Measured in local currency (GBP), AUM(1) increased by 2.8% from £32.1 billion at March 31, 2022 to £33.0 billion at March 31, 2023. Fee-related revenue in our UK & Crown Dependencies wealth management operations accounted for 80.2% of total revenue in the year ended March 31, 2023, an increase of 1.6 percentage points from the prior year. Total compensation expense increased by $4.3 million or 11.3% in Q4/23 and $1.0 million or 0.6% for fiscal 2023 compared to the prior year. Total compensation expense as a percentage of revenue decreased by 6.6 percentage points from 47.6% to 41.0% and by 4.8 percentage points from 52.4% to 47.6% for fiscal 2023, respectively. Other overhead expenses in this business were $41.9 million for the three months ended March 31, 2023 compared to $22.3 million in the same period in the prior year, an increase of $19.6 million or 87.6% year-over-year. The most significant increase related to interest expense, which increased by $14.0 million compared to Q4/22 due to additional bank loans obtained in connection with the acquisitions of Adam & Co and PSW. Amortization expense increased by $2.2 million or 43.4% compared to the three months ended March 31, 2022, mainly as a result of the amortization of intangibles acquired in connection with the acquisition of PSW completed on May 31, 2022. Communication and technology expense increased by $1.3 million or 41.9% to support the increased headcount in this operation. Other overhead expenses of $117.6 million for fiscal 2023 were up by $38.0 million or 47.7% from the prior year, with the most significant increases in communication and technology, interest expense and amortization expense for the same reasons as discussed (1) See Non-IFRS Measures on page 14 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 37 above. In addition, general and administrative expense increased by $2.1 million or 10.9% year-over-year, due to higher promotion and travel costs as well as higher costs to support the expanded operations. Acquisition-related costs of $5.9 million for the year ended March 31, 2023 related to the acquisition of PSW. Fourth quarter fiscal 2023 income before income taxes was $18.7 million compared to $18.3 million for Q4/22, and net income before taxes excluding significant items(1) was $26.4 million compared to $23.5 million for Q4/22. For the year ended March 31, 2023 net income before income taxes was $54.3 million compared to $57.8 million in fiscal 2022, and net income before taxes excluding significant items(1) was $86.1 million compared to $84.8 million for the prior fiscal year. FINANCIAL PERFORMANCE – CANACCORD GENUITY WEALTH MANAGEMENT AUSTRALIA(1) (C$ thousands, except AUM (in C$ millions), number of employees, investment professionals and fund managers, and % amounts) Revenue Expenses Compensation expense Other overhead expenses Total expenses Intersegment allocations(2) Income before income taxes(2) Non-controlling interest(6) AUM(4) Number of investment professionals and fund managers Number of employees Excluding significant items(5) Total expenses Intersegment allocations(3) Income before income taxes(3) Non-controlling interest(6) Three months ended March 31 Year ended March 31 2023 2022 Quarter- over- quarter change 2023 2022 $ 14,969 $ 17,793 (15.9)% $ 62,412 $ 74,633 11,105 4,314 15,419 54 (504) (133) 5,432 119 231 $ 15,301 $ 54 (386) (133) 13,245 3,804 17,049 253 491 89 5,352 115 222 16,932 253 608 89 44,492 18,145 62,637 131 (356) 23 51,505 16,024 67,529 253 6,851 791 (16.2)% 13.4% (9.6)% (78.7)% (202.6)% (249.4)% 1.5% 3.5% 4.1% (9.6)% $ (78.7)% (163.5)% (249.4)% 62,174 $ 131 107 23 67,055 253 7,325 791 (7.3)% (48.2)% (98.5)% (97.1)% Year- over- year change (16.4)% (13.6)% 13.2% (7.2)% (48.2)% (105.2)% (97.1)% (1) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. (2) Income before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 39. (3) AUM is the market value of client assets managed and administered by the Company. See Non-IFRS Measures on page 14. (4) Refer to Non-IFRS Measures on page 14 and the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. (5) The non-controlling interest is the portion of the net income after income taxes of Canaccord Genuity Wealth Management Australia not attributable to the Company. n.m.: not meaningful During the three months ended March 31, 2023, Canaccord Genuity Wealth Management Australia generated revenue of $15.0 million, a decrease of $2.8 million or 15.9% compared to the same period a year ago. For the year ended March 31, 2023, revenue was $62.4 million, a reduction of $12.2 million or 16.4% compared to fiscal 2022. Investment banking revenue for the fiscal year declined by 39.1% or $6.6 million due to lower new issue activity. AUM(1) in our Australian wealth management operations was $5.4 billion as of March 31, 2023, an increase of 1.5% from Q4/22 largely due to an increase in net new assets in connection with our recruiting initiatives. In addition, client assets(1) totalling $14.6 billion are also held on record in other less active accounts on our Australian wealth management platforms compared to $17.5 billion as of March 31, 2022. Fee-related revenue in our Australian operations as a percentage of total revenue accounted for 34.7% of the wealth management revenue during the year ended March 31, 2023, an increase of 7.6 percentage points from fiscal 2022. Total compensation expense decreased by $2.1 million or 16.2% and by $7.0 million and 13.6% for the three months and fiscal year ended March 31, 2023, respectively, compared to the same periods in the prior year. As a percentage of revenue, total compensation expense for Q4/23 and fiscal 2023 was 74.2% and 71.3%, respectively, reflecting a decrease of 0.3 percentage points and an increase of 2.3 percentage points from the prior period comparatives, respectively. Other overhead expenses of $4.3 million were $0.5 million or 13.4% higher compared to Q4/22 mainly due to an increase in the amortization of right-of-use assets as a result of a reallocation of expenses between the Australian wealth and capital markets operations. For the year ended March 31, 2023, other overhead expenses increased by $2.1 million or 13.2% compared to the prior year, principally driven by an increase in development and communication and technology costs of $1.6 million and $0.5 million, respectively, as a result of the operation’s active recruitment efforts in fiscal 2023. Fourth quarter fiscal 2023 loss before income taxes was $0.5 million compared to net income before taxes of $0.5 million for Q4/22. For the three months ended March 31, 2023, loss before taxes excluding significant items(1) was $0.4 million compared to net income before income taxes of $0.6 million for Q4/22. Loss before income taxes for fiscal 2023 was $0.4 million compared (1) See Non-IFRS Measures on page 14 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 38 Management’s Discussion and Analysis to income before income taxes of $6.9 million for the prior period. For the year ended March 31, 2023, net income before taxes excluding significant items(1) was $0.1 million compared to $7.3 million for fiscal 2022. CORPORATE AND OTHER SEGMENT(1) FINANCIAL PERFORMANCE – CORPORATE AND OTHER SEGMENT (C$ thousands, except number of employees and % amounts) 2023 2022 Quarter- over- quarter change 2023 2022 Three months ended March 31 Year ended March 31 Revenue Expenses Compensation expense Other overhead expenses Fair value adjustment of non-controlling interests derivative liability Costs associated with redemption of convertible debentures Share of loss of an associate Total expenses Intersegment allocations(2) (Loss) income before income taxes(2) Number of employees Excluding significant items(3) Revenue Total expenses Intersegment allocations(2) Loss before income taxes(2) $ 7,140 $ 13,473 (47.0)% $ 9,240 $ 22,521 25,600 12,204 22,314 5,714 14.7% 113.6% 71,922 32,816 94,078 21,048 11,629 — 10 49,443 (10,722) (31,581) 427 $ 7,140 $ 32,911 (10,722) (15,049) — — 11 28,039 (15,452) 886 405 4,473 28,039 (15,452) (8,114) n.m. 11,629 — (9.1)% 76.3% 30.6% n.m. 5.4% — 55 116,422 (44,944) (62,238) 8,519 5,932 192 129,769 (42,677) (64,571) 59.6% $ 17.4% 30.6% 22,191 $ 97,772 (44,944) (85.5)% (30,637) 17,121 115,318 (42,677) (55,520) Year- over- year change (59.0)% (23.6)% 55.9% 36.5% (100.0)% (71.4)% (10.3)% (5.3)% 3.6% 29.6% (15.2)% (5.3)% 44.8% (1) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. (2) Loss before income taxes includes intersegment allocations. See the Intersegment Allocated Costs section on page 39. (3) Refer to Non-IFRS Measures on page 14 and the Q4 and Fiscal 2023 Selected Financial Information Excluding Significant Items table on page 24. n.m.: not meaningful This 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 expenses 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 Canadian-based operations and support services, which are responsible for front- and back-office IT systems, compliance and risk management, operations, finance, and all administrative functions. Allocations and charges to the Capital Markets and Wealth Management segments in Canada and other regions are recorded as intersegment allocations. Revenue in the Corporate and Other segment for the three months ended March 31, 2023 was $7.1 million compared to $13.5 million in the same quarter a year ago. For the year ended March 31, 2023, revenue was $9.2 million compared to $22.5 million a year ago. During the 12 months ended March 31, 2023, there was a change to the fair value adjustment recorded on certain warrants and illiquid and restricted marketable securities, resulting in a decrease in revenue of $13.0 million, largely recorded in Q1/23. 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 marketable securities as determined under applicable accounting standards may be significant and will be recorded through the consolidated statements of operations. Interest revenue increased by $3.1 million or 248.8% and $8.1 million or 148.7% for the three and 12-month period of fiscal 2023, respectively, compared to the same periods in the prior year due to the increase in interest rates. Expenses in this segment for the three months ended March 31, 2023 increased by $21.4 million or 76.3% to $49.4 million compared to the three months ended March 31, 2022. On a fiscal year basis, total expenses decreased by $13.3 million or 10.3%. Compensation expense increased by $3.3 million or 14.7% compared to the three months ended March 31, 2022 mainly due to higher share-based payment expense compared to Q4/22. Compensation expense decreased by $22.2 million and 23.6% for fiscal 2023, reflecting both the reduced profitability of the Company as a whole and also a decline in the fair value of certain share- based payment awards granted in prior periods compared to fiscal 2022. The increase in other overhead expenses of $6.5 million in Q4 fiscal 2023 was principally due to $5.4 million of professional fees related to the expired management take-over bid, as well as the net result of higher general and administrative expenses which increased by $1.2 million to support higher headcount, partially offset by lower communication costs which decreased by $0.8 million, as well as lower premises and equipment expense which decreased by $1.2 million due to a reallocation of expense CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 39 to the Canadian capital markets and wealth management operations. For the year ended March 31, 2023, other overhead expenses amounted to $32.8 million, $11.8 million higher than fiscal 2022. The increase in other overhead expenses for fiscal 2023 was principally driven by professional fees and other costs incurred by the Company related to the expired management take- over bid as well as higher general and administrative expense as discussed above. During the years ended March 31, 2023 and March 31, 2022, the Company recorded a fair value adjustment of $11.6 million and $8.5 million, respectively, related to the derivative liability component of the non-controlling interests related to the Convertible Preferred Shares issued by CGWM UK. Overall, the loss before income taxes was $31.6 million compared to income before income taxes of $0.9 million for the three months ended March 31, 2022. The net loss before taxes excluding significant items(1) was $15.0 million for the three months ended March 31, 2023, compared to a net loss before taxes of $8.1 million for the same period in the prior year. For fiscal 2023, loss before income taxes was $62.2 million compared to a loss of $64.6 million for fiscal 2022. Excluding significant items(1), loss before income taxes was $30.6 million compared to a loss before income taxes of $55.5 million on a fiscal year basis. INTERSEGMENT ALLOCATED COSTS Included in the Corporate and Other segment are certain support services and other expenses that have been incurred to support the activities within the Canaccord Genuity Capital Markets and Canaccord Genuity Wealth Management segments in Canada as well as in all other regions. Certain trading, clearing and settlement charges are included as a trading cost in the applicable business units and as a trading cost recovery in Corporate and Other. In addition, certain overhead costs are charged by Canaccord Genuity Capital Markets UK & Europe to Canaccord Genuity Wealth Management UK & Crown Dependencies and are included in intersegment allocated costs for these business units. Quarterly Financial Information – Seven Fiscal Quarters Prior to Q4/23(1) The following table provides selected quarterly financial information for the eight most recently completed financial quarters ended on or before March 31, 2023. This information is unaudited but reflects all adjustments of a recurring nature, which are, in the opinion of management, necessary to present a fair statement of the results of operations for the periods presented. Quarter- to-quarter comparisons of financial results are not necessarily meaningful and should not be relied upon as indications of future performance. (C$ thousands, except number of employees and % amounts) Revenue Canaccord Genuity Capital Q4 Q3 Fiscal 2023 Q1 Q2 Q4 Q3 Fiscal 2022 Q1 Q2 Markets $ 226,140 $ 196,879 $ 205,697 $ 164,137 $ 312,046 $ 361,893 $ 304,919 $ 324,216 Canaccord Genuity Wealth Management: North America UK & Crown Dependencies Australia Corporate and Other Total revenue Net income (loss) (Loss) earnings per common share – basic Diluted (loss) earnings per common share Net Income excluding significant items(1) Earnings per common share, excluding significant items(1) – basic Diluted earnings per common share, excluding significant items(1) $ $ $ $ $ 78,410 103,730 14,969 7,140 430,389 3,763 77,364 85,691 16,633 5,549 382,116 (82,065) 73,429 80,970 14,889 5,537 380,522 26,564 72,961 73,337 15,921 (8,986) 317,370 (3,004) 76,165 80,316 17,793 13,473 499,793 68,995 82,589 81,741 20,571 5,423 552,217 66,732 72,367 75,109 18,752 4,014 475,161 61,785 104,158 73,329 17,517 (389) 518,831 73,053 (0.08) $ (1.10) $ 0.17 $ (0.14) (0.08) $ (1.10) $ 0.14 $ (0.14) 17,428 $ 28,197 $ 35,426 $ 19,935 $ $ $ 0.62 0.53 66,822 $ $ $ 0.59 0.52 84,632 $ $ $ 0.56 0.49 69,719 $ $ $ 0.72 0.63 84,654 0.10 $ 0.20 $ 0.30 $ 0.13 $ 0.62 $ 0.80 $ 0.66 $ 0.84 0.07 $ 0.16 $ 0.25 $ 0.11 $ 0.52 $ 0.69 $ 0.58 $ 0.73 (1) Data is in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14 (1) See Non-IFRS Measures on page 14 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 40 Management’s Discussion and Analysis QUARTERLY FINANCIAL 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 adjustments on certain illiquid and restricted marketable securities Total revenue excluding significant items Expenses Significant items recorded in Canaccord Genuity Capital Markets Amortization of intangible assets Change in fair value of contingent consideration Acquisition-related costs Impairment of goodwill and other intangible assets Incentive based costs related to acquisitions Significant items recorded in Canaccord Genuity Wealth Management Amortization of intangible assets Acquisition-related costs Incentive based costs related to acquisitions Costs associated with reorganization of CGWM UK Significant items recorded in Corporate and Other Costs associated with redemption of convertible debentures Development costs Fair value adjustment of non-controlling interests derivative liability Total significant items – expenses Total expenses excluding significant items Net income before income taxes – adjusted Income tax expense (recovery) – adjusted Net income – adjusted Net income attributable to common shareholders Earnings per common share adjusted – basic Diluted earnings per common share adjusted – diluted Q4 Q3 Q2 $ 430,389 $ 424,962 382,116 $ 462,902 380,522 $ 341,490 Fiscal 2023 Q1 317,370 $ 315,476 Q4 Q3 Q2 499,793 $ 403,245 552,217 $ 457,234 475,161 $ 388,124 Fiscal 2022 Q1 518,831 419,130 — 233 1,271 11,447 (9,000) (1,400) — 5,000 $ 430,389 $ 382,349 $ 381,793 $ 328,817 $ 490,793 $ 550,817 $ 475,161 $ 523,831 214 1,643 1,535 1,264 1,283 (14,278) — — — — 1,477 — 102,571 — — — — — — — 648 523 437 367 364 107 — 537 — — 160 293 — — — — — — — — 6,314 — 5,830 — 5,944 (1,656) 4,312 7,582 4,190 515 4,113 6,225 3,178 1,920 3,148 — 1,477 649 1,265 586 625 348 2,095 351 — — — — 4,903 — 808 — 1,310 11,629 — — — — — — — — — — — 794 — — — 468 — 5,464 — 8,519 — — 10,907 112,024 10,312 14,111 6,977 19,849 8,615 9,256 414,055 350,878 331,178 301,365 396,268 437,385 379,509 409,874 $ $ $ $ $ 16,334 $ 31,471 $ 50,615 $ 27,452 $ 94,525 $ 113,432 $ 95,652 $ 113,957 (1,094) 17,428 $ 3,274 28,197 $ 15,189 35,426 $ 7,517 19,935 $ 27,703 66,822 $ 28,800 84,632 $ 25,933 69,719 $ 29,303 84,654 6,793 $ 16,561 $ 25,793 $ 11,879 $ 54,678 $ 75,098 $ 63,326 $ 81,251 0.10 $ 0.20 $ 0.30 $ 0.13 $ 0.62 $ 0.80 $ 0.66 $ 0.07 $ 0.16 $ 0.25 $ 0.11 $ 0.52 $ 0.69 $ 0.58 $ 0.84 0.73 (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. (2) Due to the change in the number of fully diluted shares resulting from the convertible debenture redemption in Q4 fiscal 2021 as well as the impact of the Convertible Preferred Shares issued in the fourth quarter of fiscal 2022 and first quarter of fiscal 2023, 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 annual earnings per share figure. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 41 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. The Company recorded revenue of $430.4 million in Q4/23, which was approximately 4.0% lower than the average for the previous seven quarters. On a consolidated basis, investment banking revenue declined from record level of $305.9 million in Q4/21 to $51.0 million in Q4/23, due to lower market-wide activity in all our geographies. Advisory fees revenue of $104.6 million was approximately 3.0% lower than the average of the last seven fiscal quarters, which included a strong first-half of fiscal 2023 and the record revenue which was achieved in fiscal 2022. Firm-wide commissions and fees revenue declined slightly by 0.1% year- over-year to $196.8 million. Revenue from principal trading activities decreased by 35.8% year-over-year to $26.9 million. The higher interest rate environment supported a 347.7% year-over-year increase in interest revenue to $45.9 million, which was approximately 205% higher than the average of the last seven fiscal quarters. When compared to Q3/23, commissions and fees, investment banking, advisory fees and interest revenues increased by 4.3%, 7.3%, 38.3% and 43.2%, respectively. Global Capital Markets Our global capital markets operations generated revenue of $226.1 million, a decrease of approximately 15% from the average quarterly revenue for the past seven quarters due to the prolonged global market downturn, which has impacted activity levels in all segments, but most notably investment banking. Compared to the previous quarter, revenue was 14.9% higher in Q4/23. Our US capital markets operation was the biggest contributor to capital markets revenue with $114.3 million for the quarter, a decrease of 1.2% from the previous quarter and 22.0% from Q4/22. Fourth quarter revenue in this region was approximately 23% lower than the average of the last seven fiscal quarters. While advisory activity in this business has remained healthy, fourth quarter advisory revenue in this segment was approximately 18% lower than the average of the last seven fiscal quarters, a comparison period that included record quarterly revenues earned in fiscal 2022. Revenue in our Canadian capital markets operations was $70.1 million in Q4/23, a decrease of 5.8% over Q4 fiscal 2022 and an increase of 122.5% on a sequential basis. Fourth quarter revenue in this business was approximately 17% higher than the average of the last seven fiscal quarters; this is primarily attributable to higher advisory and interest revenues, which were approximately 51% and 172% higher than the average of the last seven fiscal quarters. Revenue in our Australian capital markets operations decreased by 55.6% sequentially, principally as a result of a 59.9% decrease in investment banking revenue which reflects lower activity levels in our core focus sectors. Fourth quarter revenue in this region was approximately 58% lower than the average of the last seven fiscal quarters, a comparison period that included record quarterly investment banking revenues earned in the second half of fiscal 2022. Our UK & Europe capital markets operations recorded revenue of $28.2 million for Q4/23, an increase of 46.3% compared to the previous quarter. Fourth quarter revenue in this business was approximately 5.0% higher than the average of the last seven fiscal quarters. Advisory fees revenue was sequentially up 40.7% and approximately 4.0% higher than the average of the previous seven quarters. Global Wealth Management Fourth quarter revenue in our global wealth management businesses amounted to $197.1 million, an increase of 9.7% compared to Q3/23. Fourth quarter revenue in this division was approximately 12% higher than the average of the last seven fiscal quarters. Revenue in our Canaccord Genuity North America wealth management operations increased by 2.9% compared to Q4/22 and by 1.4% sequentially. Fourth quarter revenue in this business was approximately 2% lower than the average of the last seven fiscal quarters. When compared to the average of the past seven fiscal quarters, investment banking revenue in this business was approximately 47% lower while interest revenue increased by approximately 88.0%. AUA(1) were $35.7 billion, an increase of 2.8% when measured against Q3/23, and were 5.8% below their peak of $37.9 billion achieved in Q4/22, reflecting reduced market values in connection with the broad market downturn. The CGWM UK operations have contributed consistently to our revenue and profitability levels. Revenue for Q4/23 was $103.7 million, approximately 32% higher than the average for the past seven quarters, supported by stronger commissions and fees and interest revenue. AUM(1) for this group increased by 4.3% as of the end of Q4/23 to $55.1 billion compared to Q4/22 due to increases in client asset values as well as new assets added to our platform following the completion of the acquisition of PSW. (1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 14. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 42 Management’s Discussion and Analysis Revenue in our Australia wealth management operations reached $15.0 million in Q4/23, a decrease of 10.0% over the previous quarter and a decline of 15.9% compared to the corresponding quarter in fiscal 2022. Fourth quarter revenue in this business was approximately 14% lower than the average of the last seven fiscal quarters, a comparison period that included record quarterly investment banking revenue earned in fiscal 2022. AUM(1) as of March 31, 2023 were $5.4 billion, an increase of 1.5% compared to the corresponding period in fiscal 2022, reflecting our active recruitment efforts in fiscal 2023. Corporate and Other The movement in revenue in the Corporate and Other division was mainly due to fair value adjustment recorded on certain illiquid or restricted marketable securities, as well as changes in interest revenue and foreign exchange gains or losses resulting from fluctuations in the Canadian dollars. Financial Condition Below are selected balance sheet items for the past five fiscal years: (C$ thousands) Assets Cash and cash equivalents Securities owned Accounts receivable Income taxes recoverable Deferred tax assets Investments Equipment and leasehold improvements Goodwill and other intangibles Right-of-use asset Total assets Liabilities and equity Bank indebtedness Securities sold short Accounts payable, accrued liabilities and provisions Income taxes payable Current portion of bank loan Current portion of lease liability Current portion of contingent consideration Promissory note Lease liability Other liabilities Bank loan Deferred tax liabilities Subordinated debt Convertible debentures Non-controlling interests Shareholders’ equity Balance sheet summary as at March 31 2023 2022 2021 2020 2019 $ 1,008,432 $ 1,788,261 1,051,229 3,438,655 1,967 98,224 22,928 34,643 697,272 117,066 715,078 3,355,203 34,209 90,733 18,101 48,180 928,735 103,729 $ 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 — $ 6,302,400 $ 7,250,245 $ 7,631,801 $ 5,956,195 $ 4,749,294 $ — $ — $ — $ — $ 556,303 3,739,992 2,177 13,342 26,712 17,325 — 92,526 98,378 293,780 55,728 7,500 — 343,998 1,054,639 567,290 4,853,894 15,952 6,574 23,928 10,618 — 101,620 75,758 145,467 24,875 7,500 — 238,700 1,178,069 889,607 5,170,957 56,285 12,119 24,311 17,706 — 70,591 19,577 66,200 13,552 7,500 168,112 8,190 1,107,094 875,017 3,680,186 11,721 7,042 23,417 57,859 — 88,922 58,340 79,192 9,903 7,500 128,322 156 928,618 9,639 373,419 3,141,977 5,415 9,294 — — 5,832 — 132,285 50,370 7,978 7,500 127,225 1,997 876,363 Total liabilities and equity $ 6,302,400 $ 7,250,245 $ 7,631,801 $ 5,956,195 $ 4,749,294 ASSETS Cash and cash equivalents were $1.0 billion on March 31, 2023 compared to $1.8 billion on March 31, 2022. Refer to the Liquidity and Capital Resources section on page 44 for more details. Securities owned were $0.7 billion on March 31, 2023 compared to $1.1 billion on March 31, 2022, mainly due to a decrease in equities and convertible debentures owned as of March 31, 2023. Accounts receivable were $3.4 billion at March 31, 2023 compared to $3.4 billion at March 31, 2022, in line with the prior year. Goodwill was $622.8 million and intangible assets were $305.9 million on March 31, 2023. On March 31, 2022, goodwill was $510.3 million and intangible assets were $187.0 million. These amounts represent the goodwill and intangible assets acquired through the purchases of Genuity Capital Markets, Collins Stewart Hawkpoint plc, Eden Financial Ltd., Hargreave Hale, Jitneytrade, McCarthy Taylor, Petsky Prunier, Thomas Miller, Patersons, Adam & Company and Sawaya, and as of March 31, 2023, also included PSW and Results. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 43 During fiscal 2023, the Company recorded an impairment charge of $102.6 million on the goodwill and intangible assets related to the Canadian capital markets CGU. Right-of-use assets at March 31, 2023 were $103.7 million compared to $117.1 million at March 31, 2022, mainly due to amortization recorded during the period. Other assets, consisting of income taxes receivable, deferred tax assets, equipment and leasehold improvements, and investments, were $191.2 million at March 31, 2023 compared to $157.8 million at March 31, 2022. The increase in other assets was mainly due to higher income taxes receivable at March 31, 2023. LIABILITIES AND EQUITY Securities sold short were $556.3 million at March 31, 2023 compared to $567.3 million at March 31, 2022, mostly due to an increase in short positions in corporate and government debt. Accounts payable and accrued liabilities, including provisions, were $3.7 billion at March 31, 2023, a decrease from $4.9 billion at March 31, 2022, mainly due to a decrease in payables to clients. Subordinated debt, income taxes payable and deferred tax liabilities were $65.4 million at March 31, 2023, an increase from $48.3 million at March 31, 2022. The increase was mostly due to the increase in deferred tax liabilities, partially offset by a reduction in income taxes payable. There were also lease liabilities of $119.2 million recorded as of March 31, 2023 [March 31, 2022 – $125.5 million]. At the end of March 31, 2023, deferred and contingent consideration was $54.0 million [March 31, 2022 – $45.3 million]. During the year ended March 31, 2023, there was an adjustment to the contingent consideration related to Sawaya of $1.5 million with a corresponding increase in goodwill. In addition, there was $16.9 million and $3.3 million of contingent and deferred consideration, respectively, arising from the Results acquisition as of March 31, 2023. In addition, the Company recorded a fair value adjustment of $14.3 million related to a change in the fair value of the contingent consideration liability in connection with the acquisition of Sawaya. On May 31, 2022, institutional investors acquired a new series of Convertible Preferred Shares in the amount of £65.3 million ($104.1 million) issued by the Company’s subsidiary, CGWM UK. Both series of the Convertible Preferred Shares and Preference Shares issued to management and employees of CGWM UK were treated as a compound instrument comprised of an equity component, representing discretionary dividends and a liquidation preference, and a liability component that reflects a derivative to settle the instrument by delivering the economic equivalent of a variable number of common shares of CGWM UK. During the years ended March 31, 2023 and March 31, 2022, the Company recorded a fair value adjustment of $11.6 million and $8.5 million, respectively, related to the derivative liability component of the non-controlling interests related to the Convertible Preferred Shares issued by CGWM UK. The carrying value of the derivative liability component of £37.0 million (C$61.7 million) [March 31, 2022 – £25.0 million (C$41.1 million)] is included in other liabilities in the statement of financial position as of March 31, 2023. 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, Thomas Miller, Adam & Company and PSW. The loan is repayable in instalments of principal and interest and matures in September 2024. The interest rate on this loan is 7.177% per annum as at March 31, 2023 [March 31, 2022 – 3.375% per annum]. The total bank loans outstanding as of March 31, 2023, net of financing charges, was $307.1 million [March 31, 2022 – $152.0 million]. Excluding the bank loan in connection with the acquisitions of Hargreave Hale, Thomas Miller, Adam & Company and PSW as described above, subsidiaries of the Company have other credit facilities with banks in Canada and the UK for an aggregate amount of $667.4 million [March 31, 2022 – $657.0 million]. These limited 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, 2023, there were no balances outstanding under these other credit facilities [March 31, 2022 – $nil]. Non-controlling interests were $344.0 million at March 31, 2023 compared to $238.7 million as at March 31, 2022, an increase of $105.3 million, mainly related to the equity component of the new Series of Convertible Preferred Shares issued by CGWM UK, net of dividends received and foreign exchange movement. Non-controlling interests also represent 32.7% [March 31, 2022 – 32.7%] 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 $3.9 million (US$2.9 million) [March 31, 2022 – $3.7 million (US$2.9 million)] as rent guarantees for its leased premises in New York. As of March 31, 2023 and March 31, 2022, there were no outstanding balances under these standby letters of credit. Bank indebtedness and other credit facilities The Company enters into call loans or overdraft positions primarily to facilitate the securities settlement process for both client and Company securities transactions. The bank indebtedness is collateralized by unpaid client securities and/or securities owned by the Company. As of March 31, 2023, and March 31, 2022, the Company had no bank indebtedness outstanding under these facilities. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 44 Management’s Discussion and Analysis In the normal course of business, the Company enters into contracts that give rise to commitments of future minimum payments that affect its liquidity. The following table summarizes the Company’s long-term contractual obligations on March 31, 2023: (C$ thousands) Premises and equipment operating leases Bank loan(1) Total contractual obligations Total Fiscal 2024 Fiscal 2025 – Fiscal 2026 Fiscal 2027 – Fiscal 2028 142,547 342,897 485,444 34,148 35,365 69,513 47,809 307,532 355,341 22,188 — 22,188 Thereafter 38,402 — 38,402 (1) Bank loan obtained to finance a portion of the cash consideration for the acquisitions in CGWM UK. The bank loan bears interest at 7.177% [March 31, 2022 – 3.375%] per annum and is repayable in instalments of principal and interest and matures in September 2024. Liquidity and capital resources The Company has a capital structure comprised of preferred shares, common shares, retained earnings and accumulated other comprehensive income (OCI). On March 31, 2023, cash and cash equivalents were $1.0 billion, a decrease of $779.8 million from $1.8 billion as of March 31, 2022. During fiscal 2023 ended March 31, 2023, financing activities provided cash in the amount of $71.2 million, mainly due to proceeds from a bank loan obtained in connection with the acquisition of PSW, issuance of Convertible Preferred Shares in CGWM UK, partially offset by purchases of common shares for the LTIP, dividends paid on Convertible Preferred Shares issued in the UK & Crown Dependencies, payment of dividends to non-controlling interests in Australia, and cash dividends paid on common and preferred shares. Investing activities used cash in the amount of $288.1 million for the acquisitions of PSW and Results, the purchase of equipment and leasehold improvements and intangible assets. Operating activities used cash in the amount of $584.4 million, which was largely due to changes in non-cash working capital. An increase in cash of $21.5 million was attributable to the effect of foreign exchange translation on cash balances. Compared to the year ended March 31, 2022, cash provided by financing activities increased by $214.1 million due to additional proceeds from a bank loan in the current year, the redemption of convertible debentures in April 2021 and additional purchases of common shares under the substantial issuer bid and NCIB in fiscal 2022 compared to the current year. Cash used in investing activities increased by $86.1 million during fiscal 2023 ended March 31, 2023 compared to the same period last year, mainly due to the acquisitions of PSW and Results during the current fiscal year. Changes in non-cash working capital balances as well as reduced profitability led to a decrease in cash provided by operating activities of $847.7 million. In addition, cash balances increased by $32.5 million from the effects of foreign exchange translation on cash balances. Overall, cash and cash equivalents decreased by $779.8 million from $1.8 billion at March 31, 2022 to $1.0 billion at March 31, 2023. The Company’s business requires capital for operating and regulatory purposes. The Company’s working capital, including cash and cash equivalents, is fully deployed by the Company in its operations to support regulatory capital levels as required and counter- party requirements, including cash deposit requirements needed to maintain current levels of activity. The majority of current assets reflected on the Company’s audited consolidated statement 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. The Company has certain commitments as discussed in the Off-Balance Sheet Arrangements and Bank Indebtedness and Other Credit Facilities sections above. Other than contracts entered into in the ordinary course of business, the Company has not entered into any contract which can reasonably be regarded as material. Outstanding Preferred and Common 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 2023 2022 4,540,000 4,000,000 4,540,000 4,000,000 87,477,151 99,594,391 104,497,584 87,381,995 n/a 88,057,175 99,697,799 104,500,074 94,871,398 109,434,474 (1) Excludes 11,994,885 unvested shares purchased by employee benefit trusts for the LTIP, and 122,355 outstanding shares related to share purchase loans. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 45 Includes 11,994,885 unvested shares purchased by employee benefit trusts for the LTIP, and 122,355 outstanding shares related to share purchase loans. Includes 4,903,193 share issuance commitments net of forfeitures. (2) (3) (4) This is the diluted share number used to calculate diluted EPS. For the year ended March 31, 2023, the instruments involving potential common shares were excluded from the calculation of diluted loss per share as they were anti-dilutive. Preferred shares SERIES A PREFERRED SHARES The Company issued 4,540,000 Cumulative 5-Year Rate Reset First Preferred Shares, Series A (Series A Preferred Shares) at a purchase price of $25.00 per share for gross proceeds of $113.5 million. The aggregate net amount recognized after deducting issue costs, net of deferred taxes of $1.0 million, was $110.8 million. On September 1, 2021, the Company announced the reset of the dividend rate on its Cumulative 5-Year Rate Reset First Preferred Shares, Series A (the “Series A Preferred Shares”). Quarterly cumulative cash dividends, as declared, were paid at an annual rate of 3.885% for the five years ended September 30, 2021. Commencing October 1, 2021 and ending on and including September 30, 2026, quarterly cumulative dividends, if declared, will be paid at an annual rate of 4.028%. The dividend rate will be reset every five years at a rate equal to the five-year Government of Canada yield plus 3.21%. SERIES B PREFERRED SHARES 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 (the “Series B Preferred Series”), subject to certain conditions, on September 30, 2021 and have the option on September 30 every five years thereafter. The number of shares tendered for conversion by the conversion deadline of September 30, 2021 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, 2021 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 The Company issued 4,000,000 Cumulative 5-Year Rate Reset First Preferred Shares, Series C (the “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. On June 1, 2022, the Company announced the reset of the dividend rate on its Series C Preferred Shares. Quarterly cumulative cash dividends, as declared, were paid at an annual rate of 4.993% for the five years ended June 30, 2022. Commencing July 1, 2022 and ending on and including June 30, 2027, quarterly cumulative dividends, if declared, will be paid at an annual rate of 6.837%. The dividend rate will be reset every five years at a rate equal to the five-year Government of Canada yield plus 4.03%. SERIES D PREFERRED SHARES 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 (the “Series D Preferred Series”), subject to certain conditions, on June 30, 2022 and have the option on June 30 every five years thereafter. The number of shares tendered for conversion by the conversion deadline of June 15, 2022 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, 2022 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. The Company did not redeem any Series C Preferred Shares on June 30, 2022. Terms of the Series A and C Preferred Shares are disclosed in Note 19 of the March 31, 2023 consolidated financial statements. COMMON SHARES On August 18, 2022, the Company filed a notice to renew the NCIB to provide the Company with the choice to purchase up to a maximum of 4,959,281 of its common shares during the period from August 21, 2022 to August 20, 2023 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 12-month period ended March 31, 2023, there were 502,000 shares purchased under the NCIB. There were also 83,300 shares purchased under the NCIB during the year ended March 31, 2022 and cancelled during fiscal 2023, which ended March 31, 2023. 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, 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 46 Management’s Discussion and Analysis 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, 2022 and will continue for one year (to August 20, 2023) 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 76,881 common shares of the Company (which is 25% of the average daily trading volume (ADTV) of common shares of the Company on the TSX in the six calendar months from February 2021 to July 2022 (25% of the ADTV of 307,527)). As of May 31, 2023, the Company has 99,594,391 common shares issued and outstanding. ISSUANCE AND CANCELLATION OF COMMON SHARE CAPITAL Balance, March 31, 2021 Shares issued in connection with settlement of Petsky Prunier deferred consideration Shares issued in connection with exercise of PSO Shares purchased and cancelled under the substantial course issuer bid Shares purchased and cancelled under the normal course issuer bid Balance, March 31, 2022 Shares issued in connection with settlement of Sawaya deferred consideration Shares issued in connection with exercise of PSO Shares purchased and cancelled under the normal course issuer bid Balance, March 31, 2023 Share-Based Payment Plans LONG-TERM INCENTIVE PLAN Number of shares 108,191,331 736,850 609,046 (6,451,612) (3,387,816) 99,697,799 195,993 285,899 (585,300) 99,594,391 Under the LTIP, eligible participants are awarded restricted share units (RSUs), which generally vest over three years. For employees in Canada, the US, the Channel Islands, Australia and the UK, employee benefit trusts (the Trusts) have been established. The Company or certain of its subsidiaries, as the case may be, funds 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. INDEPENDENT DIRECTOR 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 director 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 10 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. EXECUTIVE EMPLOYEE DEFERRED SHARES UNITS On June 1, 2021, the Company adopted a DSU plan for certain key senior executives. All DSU awards will be cash-settled on the retirement of the employee, a “good leaver” departure after three years from the date of grant, or death. The DSUs are settled in cash one year after the participants’ departure from the Company, under certain conditions of the plan. 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 and based on 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. 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 rateably over four years (with one-third vesting on each of the second, third and fourth anniversaries of the date CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 47 of the grant). The PSOs will also be subject to market (stock price) performance vesting conditions and have a 4x exercise price cap on payout value (i.e., the gain on the exercise of the options is limited to 3x the exercise price). PSW CONDITIONAL SHARE PLAN In connection with the acquisition of PSW, the Company adopted a share-based payment plan in respect of CGWM UK ordinary shares for certain key employees of PSW. The plan is subject to various vesting conditions and, accordingly, the Company recognizes the cost of such awards as an expense over the applicable vesting period. 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. 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 and 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 CG G Sponsors Inc. I Jitneytrade Inc. Finlogik Inc. Finlogik Tunisie, SARL Canaccord Genuity SAS Canaccord Genuity Wealth (International) Limited(1) Canaccord Genuity Financial Planning Limited(1)(4) Canaccord Genuity Wealth Limited(1) Canaccord Genuity Wealth Group Limited(1) Canaccord Genuity Wealth (International) Holdings Limited(1) Hargreave Hale Limited(1) CG Wealth Planning Limited(1) Adam & Company Investment Management Limited(1)(4) Punter Southall Wealth Limited(1)(4) 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 Genuity (2021) LLC Canaccord Genuity Finance Corp. Canaccord Adams (Delaware) Inc. Canaccord Genuity Securities LLC CG Sawaya, LLC Canaccord Genuity (2021) Holdings ULC Canaccord Genuity (2021) Limited Partnership Canaccord Genuity (2021) GP ULC Stockwave Equities Ltd. Canaccord Genuity Group Finance Company Ltd. Canaccord Genuity (Hong Kong) Limited Canaccord Genuity Emerging Markets Ltd. Canaccord Financial Group (Australia) Pty Ltd(2) Canaccord Genuity (Australia) Limited(2) Canaccord Genuity Financial Limited(2) Patersons Asset Management Limited(2) Canaccord Genuity Asia (Beijing) Limited Country of incorporation Canada 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 United Kingdom Canada United States United States Canada United States Canada United States United States United States Canada United States United States United States Canada Canada Canada Canada Canada China (Hong Kong SAR) Bahamas Australia Australia Australia Australia China March 31, 2023 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 65% 65% 65% 65% 100% March 31, 2022 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 96.7% 96.7% 96.7% 96.7% 96.7% 96.7% 96.7% 96.7% n/a 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 65% 65% 65% 65% 100% 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 48 Management’s Discussion and Analysis The Balloch Group Limited Canaccord Genuity Asia (Hong Kong) Limited Canaccord Genuity (Dubai) Ltd.(3) Canaccord Genuity Wealth Group Holdings (Jersey) Limited(1) Canaccord Genuity Hawkpoint Limited Canaccord Genuity Management Company Limited(1)(4) % equity interest Country of incorporation British Virgin Islands China (Hong Kong SAR) United Arab Emirates Jersey United Kingdom Ireland March 31, 2023 100% 100% 100% 94.5% 100% 100% March 31, 2022 100% 100% 100% 96.7% 100% 100% (1) The Company issued Convertible Preferred Shares to certain institutional investors and certain equity instruments in CGWM UK within the context of the transaction value and reflecting a 5.5% interest in the outstanding ordinary shares of CGWM UK. On an as converted basis, Convertible Preferred Shares, Preference Shares and Ordinary Shares issued to management and employees of CGWM UK together represent a 33.1% equity equivalent interest. (2) The Company owns 65% 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, 2023 the Company is considered to have a 67.3% interest because of the shares held in a trust controlled by Canaccord Financial Group (Australia) Pty Ltd. [March 31, 2022 – 67.3%]. (3) The Company sold its interest in Canaccord Genuity (Dubai) Ltd. subsequent to March 31, 2023. (4) This company was wound-up as part of an internal restructuring subsequent to March 31, 2023. Security trades executed for employees, officers and directors of Canaccord Genuity Group Inc. are transacted in accordance with terms and conditions applicable to all clients. Commission income on such transactions in the aggregate is not material in relation to the overall operations of Canaccord Genuity Group Inc. The Company offers various share-based payment plans to its key management personnel, including common share purchase loans, a long-term incentive plan, a PSU plan, a PSO plan, and a senior executives DSU 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, 2023 and March 31, 2022. (in thousands) Short-term employee benefits Share-based payments Total compensation paid to key management personnel 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 March31, 2023 $ 48,804 892 49,696 March31, 2023 $ 18,115 600 March 31, 2022 $ 33,585 736 34,321 March 31, 2022 $ 12,009 1,271 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, 2023. The Company’s consolidated financial statements for the years ended March 31, 2023 and March 31, 2022 were also prepared in accordance with IFRS. The preparation of the March 31, 2023 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 the valuation of deferred tax assets, impairment of goodwill, intangible assets and other long-lived assets, allowance for credit losses, fair value of financial instruments, 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 preliminary purchase price allocation, including the valuation of goodwill and intangible assets acquired in connection with the acquisitions of PSW and Results, as well as the valuation of the contingent consideration related to Results and Sawaya. The Company operates in various tax jurisdictions and is subject to tax policies and legislations that pertain to the Company’s activities in Canada and in foreign countries. As the tax laws and policies of various countries are subject to continual change and interpretations, the final outcome of certain tax transactions may be uncertain. The Company is affected by changes in tax laws and regulations, including the introduction of Pillar Two (15% global minimum tax) as proposed by the Organization for Economics Co-operation and Development. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 49 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, 2023. CONSOLIDATION The Company owns 65% of the voting shares of Canaccord Financial Group (Australia) Pty Ltd. (CFGA) which owns 100% of Canaccord Genuity (Australia) Limited (CGAL) and Canaccord Genuity Financial Limited (CGF) as at March 31, 2023. The Company completed an evaluation of its contractual arrangements with the other shareholders of CFGA 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, 2023 and 2022. Therefore, the financial position, financial performance and cash flows of CGAL and CGF have been consolidated. 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 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 CGU’s 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, and 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 50 Management’s Discussion and Analysis 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 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, 2023 were $13.0 million [2022 – $9.1 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 M&A 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. 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 51 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 LTIP (or the “Plan”). Independent directors also receive DSUs as part of their remuneration, which can only be settled in cash (cash-settled transactions). Certain executives may also receive PSOs as part of their remuneration, which are equity-settled. In addition, certain senior executives receive PSUs as well as DSUs under the senior executives DSU plan 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. 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 the 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 in 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 52 Management’s Discussion and Analysis 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 OCI relating to that particular foreign operation is recognized in the consolidated statements of operations. The Company also has monetary assets and liabilities that are receivable or payable from a foreign operation. If settlement of the receivable or payable is neither planned nor likely to occur in the foreseeable future, the differences upon translation are recognized in accumulated other comprehensive income (loss), as these receivables and payables form part of the net investment in the foreign operation. PROVISIONS Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the statements of operations net of any reimbursement. If the effect of the time value of money is significant, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense. Financial Instruments 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. Forward contracts to buy US dollars at March 31, 2023 had a notional amount of US$1.8 million compared to $2.3 million on March 31, 2022. Forward contracts outstanding to sell US dollars had a notional amount of US $3.9 million, an increase of US $2.1 million from March 31, 2022. 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 a 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 & Crown Dependencies 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 & US Government bond futures contracts to mitigate its risk. The Company’s Canadian operations also began trading other types of futures contracts, including but not limited to index futures and commodity futures. At March 31, 2023, the notional amount of the Canadian bond futures contracts outstanding was short $1.4 million [March 31, 2022 – long $9.7 million]. The fair value of all 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 year ended March 31, 2023. 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 53 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, 2023. Disclosure Controls and Procedures and Internal Control over Financial Reporting DISCLOSURE CONTROLS AND PROCEDURES As of March 31, 2023, an evaluation was carried out, under the supervision of and with the participation of management, including the President & Chief Executive Officer (CEO) and the Executive Vice President & Chief Financial Officer (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 our disclosure controls and procedures were effective as of March 31, 2023. INTERNAL CONTROL OVER FINANCIAL REPORTING Management, including the President & CEO and the Executive Vice President & CFO, has designed internal control over financial reporting as defined under National Instrument 52-109 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Based on that evaluation, the President & CEO and the Executive Vice President & CFO concluded that the Company’s internal control over financial reporting was designed and operating effectively as of and during the year ended March 31, 2023 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, 2023 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 and Risk Management Committees. See the Company’s current AIF for details of the Audit and Risk Committee’s mandate as it relates to risk management. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 54 Management’s Discussion and Analysis The Audit and Risk 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 (CRO) 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. 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 CRO 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 its market risk exposure is prudent within a set of risk limits set by the Risk Management Committee and approved by the Audit and Risk 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 listed options and equity securities. The Company is also exposed to specific interest rate risk, credit spread risk and liquidity risk in respect of its principal trading in fixed income securities. In addition to active supervision and the 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 of 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 55 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 an 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. 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 internal and third-party systems to process a high number of transactions and provide other technology and support functions. 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 The purposes of a risk and control self-assessment (RCSA) are 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 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 and Risk 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 and safekeeping of client funds, use and safekeeping of client data, credit granting, collection activity, anti-money laundering, anti-insider trading, anti-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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 56 Management’s Discussion and Analysis 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 provides services only 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 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 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 in matters relating to cybersecurity. The Company devotes considerable effort and resources to defending against and mitigating 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 senior management via the Cybersecurity Committee and the Audit and Risk 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 for 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 set-up 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 in the event of a remote working environment. Because of these efforts, the Company was well prepared and experienced no visible disruptions to its operations as a result of having most employees working from remote locations. Trading desks operated smoothly and effectively both to 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 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Management’s Discussion and Analysis 57 Significant geopolitical, economic and market risk The Company’s wealth management and capital markets businesses are by nature subject to numerous risks, including changes in the economic, political and market conditions that are outside the Company’s control. These conditions have the potential to cause reductions in investor confidence which could impact AUA growth, and activity levels in our investment banking, advisory and trading businesses. The effects of geopolitics on the global economy are difficult to predict and, in many cases, have not caused major disruptions to global economic growth. However, the war in Ukraine and sanctions on Russia are having a substantial economic impact given their influence on global oil, commodity and agricultural markets. It is also expected that the geopolitical impacts of this crisis may have implications for decades to come. While the impacts of these factors on our business are inherently difficult to predict, such factors have the potential to adversely impact the Company’s revenues, operating margins, compensation ratios and expense levels due to their possible negative impacts on market volumes, asset prices, volatility or liquidity. Control risk As of March 31, 2023, senior officers and directors of the Company collectively owned approximately 14.7% of the issued and outstanding (25.1% fully diluted) common shares of Canaccord Genuity Group Inc. If a sufficient number of these shareholders were to act or vote together, they would have the power to exercise significant influence over all matters requiring shareholder approval, including the election of the Company’s directors, amendments to its articles, amalgamations and plans of arrangement under Canadian law and mergers or sales of substantially all of its assets. This could prevent Canaccord Genuity Group from entering into transactions that could be beneficial to the Company or its other shareholders. Also, third parties could be discouraged from making a tender offer or takeover bid to acquire any or all of the outstanding common shares of the Company. Any significant change in these shareholdings through sale or other disposition, or significant acquisitions by others of the common shares in the public market or by way of private transactions, could result in a change of control and changes in business focus or practices that could affect the profitability of the Company’s business. Restrictions on ownership and transfer of common shares Restrictions on ownership and transfer of common shares in the articles of Canaccord Genuity Group Inc. to prevent unauthorized change in control without regulatory approval could, in certain cases, affect the marketability and liquidity of the common shares. 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 AIF. 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 and capital requirements; and such other factors as the Board determines to be relevant. Dividend Declaration On June 16, 2023, the Board of Directors approved a dividend of $0.085 per common share, payable on July 4, 2023, with a record date of June 23, 2023. On June 16, 2023, the Board approved a cash dividend of $0.25175 per Series A Preferred Share payable on June 30, 2023 to Series A Preferred shareholders of record as at June 23, 2023. On June 16, 2023, the Board approved a cash dividend of $0.42731 per Series C Preferred Share payable on June 30, 2023 to Series C Preferred shareholders of record as at June 23, 2023. Additional Information Additional information relating to Canaccord Genuity Group Inc., including its Annual Information Form, is available on the Company’s website at www.cgf.com/investor-relations/investor-resources/financial-reports/ and on SEDAR at www.sedar.com. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 58 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, 2023 and 2022, and the consolidated statements of operations, consolidated statements of comprehensive (loss) 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, 2023 and 2022, 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated 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 merger and acquisition [“M&A”] transactions As at March 31, 2023, the Group has $364.6 million of advisory fee revenue related to corporate finance and M&A transactions. The Group 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 Group completed delivery of its performance obligations and recognize revenue accordingly. The details of the Group’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 with 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 Group’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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT 59 Key audit matter How our audit addressed the key audit matter Impairment of goodwill in cash-generating units [“CGUs”] As at March 31, 2023, the Group has $622.8 million of goodwill recognized within CGUs. Management assesses at least annually, or when indicators of impairment exist, whether there has been an impairment loss in the carrying value of these assets. When testing goodwill for impairment, management compares the carrying amount of a 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 five-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 judgment. The Group recognized a $101.7 million impairment charge in relation to the goodwill of the Canada Capital Markets CGU in the year ended March 31, 2023. Due to the subjectivity involved in forecasting and discounting future cash flows and the significance of the CGUs’ recognized goodwill as at March 31, 2023, this audit area is considered a key audit risk. The details of the Group’s accounting policies for goodwill are disclosed in note 5, “Summary of significant accounting policies”. Other information To test the estimated FVLCS of the CGUs, our audit procedures included, among others: • With the assistance of our valuation specialists, we evaluated the appropriateness and mathematical accuracy of the impairment models for the CGUs. As part of this evaluation, we compared the carrying values used in models for each CGU to the financial records of the Group and compared the CGUs identified by the Group to the lowest level of operations monitored by management and others in the organization and assessed if the grouping of CGUs was appropriate for the purpose of the impairment test. • With the assistance of our valuation specialists, we evaluated the assumptions and inputs into the Group’s calculation of the recoverable amounts for the CGUs, including the revenue, incentive compensation costs, discount rate and terminal growth rate, by comparing those assumptions to historical results and third-party data. • We performed sensitivity analyses on significant assumptions, including revenue growth rates, and expense growth rates to evaluate changes in the recoverable amount of the CGUs that would result from changes in the assumptions. • We assessed the Group’s disclosures in relation to this matter. 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 and 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. 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 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 60 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 auditor’s 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 Sean Musselman. Chartered Professional Accountants Licensed Public Accountants Toronto, Canada June 16, 2023 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT 61 March 31, 2023 $ March 31, 2022 $ Notes $ 6 9, 23 1,008,432 $ 715,078 3,355,203 34,209 15 10 12 14 14 13 6, 7 9, 23 27 16 17 18 7,11 15 7, 11 17 18 5,112,922 90,733 18,101 48,180 305,915 622,820 103,729 6,302,400 556,303 3,720,332 19,660 2,177 7,500 13,342 26,712 17,325 4,363,351 55,728 98,378 293,780 92,526 1,788,261 1,051,229 3,438,655 1,967 6,280,112 98,224 22,928 34,643 186,993 510,279 117,066 7,250,245 567,290 4,845,672 8,222 15,952 7,500 6,574 23,928 10,618 5,485,756 24,875 75,758 145,467 101,620 4,903,763 5,833,476 1,054,639 343,998 1,398,637 6,302,400 1,178,069 238,700 1,416,769 7,250,245 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 deferred and contingent consideration Total current liabilities Deferred tax liabilities Other liabilities Bank loan Lease liabilities Total liabilities Equity Attributable to equity holders of CGGI Attributable to 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 TERRENCE A. LYONS 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 62 Canaccord Genuity Group Inc. Consolidated Statements of Operations For the years ended (in thousands of Canadian dollars, except per share amounts) March 31, 2023 $ March 31, 2022 $ Notes 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 Acquisition-related costs Impairment of goodwill and intangible assets Fair value adjustment of non-controlling interest derivative liability Change in fair value of contingent consideration Loss and other costs in connection with extinguishment of convertible debentures Share of loss of an associate Net (loss) income before income taxes Income tax expense (recovery) Current Deferred Net (loss) income for the year Net (loss) income attributable to: CGGI shareholders Non-controlling interests Weighted average number of common shares outstanding (thousands) Basic Diluted (Loss) earnings 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. / 2023 ANNUAL REPORT 749,114 160,944 364,554 117,238 115,245 3,302 761,843 561,725 493,057 158,978 36,028 34,371 1,510,397 2,046,002 936,872 96,083 21,986 85,482 54,539 138,461 41,634 26,335 36,058 7,403 102,571 11,629 (14,278) — 55 1,248,184 102,824 20,074 73,873 23,598 101,431 27,593 23,894 22,422 9,197 — 8,519 — 5,932 192 1,544,830 1,667,733 (34,433) 378,269 20,173 136 20,309 (54,742) 122,072 (14,368) 107,704 270,565 (90,104) 35,362 246,314 24,251 87,382 n/a 94,871 109,434 12, 14 13 11 14 8 7 15 8 20 20 20 $ 20 $ 21 $ 21 $ 21 $ (1.16) $ (1.16) $ 1.00 $ 1.71 $ 0.34 $ 2.50 2.16 1.00 1.25 0.32 63 Canaccord Genuity Group Inc. Consolidated Statements of Comprehensive (Loss) Income For the years ended (in thousands of Canadian dollars) Net (loss) income for the year Other comprehensive income (loss) Net change in unrealized gains (losses) on translation of foreign operations, net of tax Comprehensive (loss) income for the year Comprehensive (loss) income attributable to: CGGI shareholders Non-controlling interests See accompanying notes March 31, 2023 $ (54,742) 38,832 (15,910) March 31, 2022 $ 270,565 (33,566) 236,999 (54,001) $ 38,091 $ 211,433 25,566 8 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. Common shares, closing 20 566,345 64 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 Acquisition of common shares for long-term incentive plan (LTIP) Release of vested common shares from employee benefit trusts Change in shares committed to purchase under the normal course issuer bid Shares issued in connection with acquisition of Sawaya Partners Shares issued in connection with exercise of performance stock options (PSOs) Shares purchased and cancelled under normal course issuer bid Shares purchased and cancelled under substantial issuer bid Net unvested share purchase loans Contributed surplus, opening Share-based payments, net Shares purchased and cancelled under normal course issuer bid Shares purchased and cancelled under substantial issuer bid Shares committed to purchase under the normal course issuer bid Unvested share purchase loans Change in current net income tax receivable and deferred tax asset relating to share-based payments Contributed surplus, closing Retained earnings, opening Net (loss) income attributable to CGGI shareholders Common share dividends Preferred share dividends Shares purchased and cancelled under substantial issuer bid Retained earnings, closing Deferred consideration, opening Payment during the year Deferred consideration in connection with acquisition of Sawaya Partners Deferred consideration, closing Accumulated other comprehensive income, opening Reclassification of other comprehensive income to non-controlling interest Other comprehensive income (loss) attributable to CGGI shareholders Accumulated other comprehensive income, closing Total shareholders’ equity Non-controlling interests, opening Non-controlling interests, closing Total equity See accompanying notes CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT March 31, 2023 $ March 31, 2022 $ Notes 19 205,641 576,166 (69,416) 55,240 3,411 2,883 1,924 (4,034) — 171 64,241 (12,444) (2,597) — 2,537 (171) (2,166) 49,400 251,540 (90,104) (30,936) (10,948) — 119,552 11,378 (2,883) — 8,495 69,103 — 36,103 105,206 21 21 11 205,641 662,366 (60,824) 34,188 4,770 — 4,099 (23,527) (44,801) (105) 576,166 62,402 45,983 (21,787) (27,486) (2,537) 105 7,561 64,241 73,220 246,314 (30,797) (9,484) (27,713) 251,540 — — 11,378 11,378 103,465 519 (34,881) 69,103 1,054,639 1,178,069 238,700 8,190 8 343,998 238,700 1,398,637 1,416,769 Canaccord Genuity Group Inc. Consolidated Statements of Cash Flows For the years ended (in thousands of Canadian dollars) OPERATING ACTIVITIES Net (loss) income for the year Items not affecting cash Amortization Amortization of right-of-use assets Deferred income tax expense (recovery) Share-based compensation expense Fair value adjustment of non-controlling interests derivative liability Impairment of goodwill and intangible assets Share of loss of associate Change in fair value of contingent consideration Impairment of investments Interest expense in connection with lease liabilities Changes in non-cash working capital Decrease/(increase) in securities owned Decrease in accounts receivable Increase in income taxes receivable, net Decrease in securities sold short Decrease in accounts payable, accrued liabilities and provisions Cash (used in) provided by operating activities FINANCING ACTIVITIES 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 issuance of convertible preferred shares and other equity instruments in UK & Crown Dependencies wealth management operations, net of acquisition related costs Payment of cash dividends on convertible preferred shares issued in UK & Crown Dependencies wealth management operations Payment of dividends to Australian non-controlling interests Redemption of convertible debentures Proceeds from bank loan Proceeds from exercise of performance share options Payment of bank loan Cash dividends paid on common shares Cash dividends paid on preferred shares Lease payments Cash provided by (used in) financing activities INVESTING ACTIVITIES Purchase of equipment and leasehold improvements, net of disposals Purchase of intangibles Acquisition of Punter Southall Wealth, net of cash acquired Acquisition of Results International Group LLP Acquisition of Adam & Company, net of cash acquired Acquisition of Sawaya Partners, net of cash acquired Investment in associate Purchase of investments Payment of deferred and contingent consideration Cash used in investing activities Effect of foreign exchange on cash balances Decrease in cash position Cash position, beginning of year Cash position, end of year Supplemental cash flow information Interest received Interest paid Income taxes paid See accompanying notes Notes 12, 14 13 22 8 14 7 10 65 March 31, 2023 $ March 31, 2022 $ (54,742) 270,565 41,634 26,335 136 59,495 11,629 102,571 55 (14,728) 4,750 7,603 336,152 83,452 (42,351) (10,987) (1,135,420) (584,416) 27,593 23,894 (14,368) 146,827 8,519 — 192 — — 6,518 (9,647) 539,655 (36,162) (322,316) (378,017) 263,253 (6,631) — (69,416) (45,314) (100,000) (60,824) 102,223 224,963 (20,368) (7,683) — 159,400 1,924 (13,041) (30,936) (10,948) (33,301) 71,223 (24,348) (4,006) (238,591) (8,211) — — — — (12,955) (288,111) 21,475 (779,829) 1,788,261 1,008,432 (7,141) — (168,112) 88,465 4,099 (8,432) (30,797) (9,484) (30,282) (142,859) (12,122) (2,541) — — (93,316) (45,513) (1,490) (14,161) (32,852) (201,995) (13,430) (95,031) 1,883,292 1,788,261 $ $ $ 36,100 115,231 $ 52,570 $ 22,232 64,532 $ 160,055 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 66 Canaccord Genuity Group Inc. Notes to consolidated financial statements As at March 31, 2023 and March 31, 2022 and for the years ended March 31, 2023 and 2022 (in thousands of Canadian dollars, except per share amounts) 1. Corporate information Through its principal subsidiaries, Canaccord Genuity Group Inc. (the Company or CGGI) is an independent, full-service investment dealer with capital markets operations in North America, the UK & Europe, Asia, and Australia. The Company also has wealth management operations in Canada, the UK, the Crown Dependencies 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 2200, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1K8 (as of May 15, 2022). 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. 2. Basis of preparation STATEMENT OF COMPLIANCE These audited 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 certain investments at fair value through profit or loss, securities owned, securities sold short, non-controlling interests derivative liability, 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 16, 2023. 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. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 67 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. Certain factors impact and cast additional uncertainty on the assumptions used by management in making its judgments and estimates. These factors include, but are not limited to, inflation, significant monetary and fiscal interventions by the government and central banks to stabilize economic conditions, including slowing economic growth, inflation and rising interest rates, as well as the impact of the war in Ukraine and the resulting humanitarian crisis on the global economy. 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 values of levels 2 and 3 financial instruments, provisions and the valuation of the non-controlling interests derivative liability. 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 preliminary purchase price allocation, including the valuation of goodwill and intangible assets acquired in connection with the acquisitions of Punter Southall Wealth and Results International Group LLP, as well as the valuation of the contingent consideration related to Results International Group LLP. For year ended March 31, 2022, estimates and assumptions were utilized in connection with the valuation of goodwill and intangible assets acquired in connection with the acquisitions of Adam & Company and Sawaya Partners. The Company operates in various tax jurisdictions and is subject to tax policies and legislations that pertain to the Company’s activities in Canada and in other foreign countries. As the tax laws and policies of various countries are subject to continual change and interpretations, the final outcome of certain tax transactions may be uncertain. The Company is affected by changes in tax laws and regulations, including the introduction of Pillar Two (15% global minimum tax) as proposed by the Organization for Economics Co-operation and Development. During the year ended March 31, 2022, certain institutional investors acquired convertible preferred shares (“A Convertible Preferred Shares”) in the amount of £125.0 million (C$218.0 million) issued by CGWM UK. On May 31, 2022, certain institutional investors purchased a new series of Convertible Preferred Shares (B Convertible Preferred Shares) issued by CGWM UK for £65.3 million ($104.1 million as of the issuance date). The two series of the Convertible Preferred Shares are collectively described as Convertible Preferred Shares in discussions below. The Convertible Preferred Shares issued contain no obligation for the Company to deliver cash or other financials assets. Judgment was used to conclude that the Convertible Preferred Shares are a compound instrument comprised of an equity component, representing discretionary dividends and a liquidation preference, and a liability component that reflects a derivative to settle the instrument, if applicable, by delivering the economic equivalent of a variable number of common shares of CGWM UK. The fair value of the Convertible Preferred Shares at issuance was allocated to its respective equity and derivative components. The fair value of the derivative was established first and the residual amount was recorded as the equity component. The derivative components will be remeasured at the end of each reporting period using the Company’s best estimate of its value with any changes in fair value recorded through net income for the period. Significant judgment is required in respect of the estimates and assumptions to be used in the determination of the fair value of the derivative component at each reporting period. In the discussions below, unless otherwise noted, Hargreave Hale Limited is referred to as “Hargreave Hale” (renamed as Canaccord Genuity Asset Management), Petsky Prunier LLC is referred to as “Petsky Prunier”, Sawaya Partners LLC is referred to as “Sawaya”, McCarthy Taylor Limited (renamed as CG McCarthy Taylor Limited) and whose operations were subsequently transferred to CG Wealth Planning Limited is referred to as “McCarthy Taylor”, Thomas Miller Wealth Management Limited (renamed as CG Wealth Planning Limited) and the private client business of Thomas Miller Investment (Isle of Man) Limited are referred to as “Thomas Miller”, Patersons Securities Limited (renamed as Canaccord Genuity Financial Limited) is referred to as “Patersons”, the private client investment management business acquired from Adam & Company (including the acquisition of the entire issued capital of Adam & Company Investment Management Limited) is referred to as “Adam & Company”, and Jitneytrade Inc., Finlogik Capital Inc. and Finlogik Inc. are collectively referred to as “Jitneytrade”, Punter Southall Wealth Limited as “PSW” and Results International Group LLP as “Results”. Consolidation The Company owns 65% [March 31, 2022 – 65%] of the voting shares of Canaccord Financial Group (Australia) Pty Ltd. (CFGA) which owns 100% of Canaccord Genuity (Australia) Limited (CGAL) and Canaccord Genuity Financial Limited (CGF) as at March 31, 2023. The Company completed an evaluation of its contractual arrangements with the other shareholders of CFGA 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, 2023 and 2022. Therefore, the financial position, financial performance and cash flows of CGAL and CGF have been consolidated. 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 68 Notes to Consolidated Financial Statements 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 and at each reporting date after the grant date in the case of cash-settled awards. 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 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 CGUs are disclosed in Note 14. 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 , 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 69 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. 3. Adoption of new and revised standards There were no new accounting standards adopted for the year ended March 31, 2023. 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, 2023. 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 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 70 Notes to Consolidated Financial Statements 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), Patersons, Collins Stewart Hawkpoint plc (CSHP), Eden Financial Ltd., Hargreave Hale, McCarthy Taylor, Petsky Prunier, Adam & Company, Sawaya , PSW and Results are customer relationships, non-competition agreements, brand name, trading licenses, fund management contracts, contract book, favorable lease, client books 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. Amortization is being recorded as follows: • Brand name with definitive lives – up to a maximum of three years • Customer relationships – up to a maximum of 14 years • Technology – internally developed or acquired software up to a maximum of 10 years • Fund management contracts – up to a maximum of 10 years • Contract book – over the contract book period, usually up to a maximum of 2 years • Client books – up to a maximum of 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 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. Indefinite life 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 71 CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on deposit, treasury bills, 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 Financial assets are classified as fair value through profit or loss (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 statements of operations. The net gain or loss recognized in the statements of operations includes any unpaid dividend or interest earned on the financial asset. Financial assets measured at FVTPL consist of securities owned and investments not subject to significant influence by the Company. 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 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 A financial asset is classified as fair value through other comprehensive income (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. There are no financial assets classified as FVOCI. Financial assets classified as amortized cost 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 twelve months from initial recognition; therefore, the allowance is limited to twelve 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, 2023. A financial asset or group of financial assets is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 72 Notes to Consolidated Financial Statements 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. Securities sold short, non-controlling interests derivative liability and contingent and deferred considerations are classified as held for trading and recognized at fair value. Financial liabilities classified as amortized cost 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 cost include accounts payable and accrued liabilities, bank loans, 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. 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 73 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 collateral for securities borrowed and securities loaned is 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 appropriately collateralized. Securities purchased under agreements to resell and securities sold under agreements to repurchase represent collateralized financing transactions. The Company receives securities purchased under agreements to resell, makes delivery of securities sold under agreements to repurchase, monitors the market value of these securities on a daily basis and delivers or obtains additional collateral as appropriate. The Company manages its credit exposure by establishing and monitoring aggregate limits by customer for these transactions. Interest earned on cash collateral is based on a floating rate. SECURITIES PURCHASED UNDER REVERSE REPURCHASE AGREEMENTS AND OBLIGATIONS RELATED TO SECURITIES SOLD UNDER REPURCHASE AGREEMENTS The Company recognizes these transactions on the trade date at amortized cost using the effective interest rate method. Securities sold and purchased under repurchase agreements remain on the consolidated statement of financial position. Reverse repurchase agreements and repurchase agreements are treated as collateralized lending and borrowing transactions. REVENUE RECOGNITION Revenue is recognized 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 a 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, 2023 were $13.0 million [2022 – $9.1 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 (M&As) 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 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 74 Notes to Consolidated Financial Statements as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statements of operations when the asset is derecognized. The assets’ residual values, useful lives and methods of amortization are reviewed at each financial year end, and are adjusted prospectively where appropriate. INCOME TAXES Current income tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in the Company’s tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statements of operations. Deferred tax Deferred taxes are accounted for using the liability method. This method requires that deferred taxes reflect the expected deferred tax effect of temporary differences at the reporting date between the carrying amounts of assets and liabilities for financial statement purposes and their tax bases. Deferred tax liabilities are recognized for all taxable temporary differences, except for taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and carryforward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses, can be utilized. The carrying amounts of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. No deferred tax liability has been recognized for taxable temporary differences associated with investments in subsidiaries from undistributed profits and foreign exchange translation differences as the Company is able to control the timing of the reversal of these temporary differences. The Company has no plans or intention to perform any actions that will cause the temporary differences to reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is charged or credited in the statements of operations except where it relates to items that may be credited directly to equity, in which case the deferred tax is recognized directly against equity. 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 (LOSS) 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 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 75 effect in connection with the long-term incentive plan (LTIP) and other share-based payment plans based on the treasury stock method. The treasury stock method determines the number of incremental common shares by assuming that the number of shares the Company has granted to employees has been issued. The Convertible Preferred Shares issued by CGWM UK are factored into the diluted EPS by adjusting net income (loss) attributable to common shareholders of the Company to reflect our proportionate share of CGWM UK’s earnings on an as-converted basis if the calculation is dilutive. 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 restricted share units, or “RSUs”). This program is referred to as the long-term incentive plan (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 well as DSUs under the senior executives DSU plan 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. 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 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 for independent directors 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 and DSUs were measured at fair value on the grant date. Changes in value of the PSUs and DSUs 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, 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 76 Notes to Consolidated Financial Statements 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 (FCA) 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 (including Dubai), Australia, and the US. The Company’s operations in Asia are allocated to the Canadian and Australian capital markets operations. 6. Securities Owned and Securities Sold Short Corporate and government debt Equities and convertible debentures March 31, 2023 March 31, 2022 Securities owned $ 428,119 $ 286,959 715,078 $ Securities sold short $ 394,284 162,019 556,303 $ $ Securities owned $ 548,639 502,590 $ 1,051,229 $ Securities sold short $ 456,206 111,084 567,290 $ $ As at March 31, 2023, corporate and government debt maturities range from 2023 to 2080 [March 31, 2022 – 2022 to 2080] and bear interest ranging from 0.00% to 20.00% [March 31, 2022 – 0.00% to 16.00%]. 7. Financial Instruments CATEGORIES OF FINANCIAL INSTRUMENTS The categories of financial instruments, excluding cash and cash equivalents and bank indebtedness and investment accounted for under the equity method, held by the Company at March 31, 2023 and 2022 are as follows: Fair value through profit or loss Amortized cost Total March 31, 2023 $ March 31, 2022 $ March 31, 2023 $ March 31, 2022 $ March 31, 2023 $ March 31, 2022 $ $ 715,078 $ 1,051,229 $ — $ — $ 715,078 $ 1,051,229 — — — — 11,569 — — — — 10,990 1,939,685 869,883 332,055 213,580 — 1,693,579 1,020,112 512,147 212,817 1,939,685 869,883 332,055 213,580 11,569 1,693,579 1,020,112 512,147 212,817 10,990 $ $ 726,647 $ 1,062,219 $ 3,355,203 3,438,655 $ 4,081,850 $ 4,500,874 $ 556,303 $ 567,290 $ — $ — $ 556,303 $ 567,290 — — — — — — 1,361,601 1,738,806 619,925 1,334,026 2,652,558 859,088 1,361,601 1,738,806 619,925 1,334,026 2,652,558 859,088 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 at FVTPL 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 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 77 Subordinated debt Deferred and Contingent consideration Bank loan Non-controlling interest-derivative Fair value through profit or loss Amortized cost Total March 31, 2023 $ — 53,998 — 61,705 March 31, 2022 $ — 45,286 — 41,090 March 31, 2023 $ 7,500 — 307,122 — March 31, 2022 $ 7,500 — 152,041 — March 31, 2023 $ 7,500 53,998 307,122 61,705 March 31, 2022 $ 7,500 45,286 152,041 41,090 Total financial liabilities $ 672,006 $ 653,666 $ 4,034,954 $ 5,005,213 $ 4,706,960 $ 5,658,879 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. As at March 31, 2023 and 2022, the Company held the following classes of financial instruments measured at fair value: Securities owned Corporate debt Government debt Corporate and government debt Equities Convertible debentures Equities and convertible debentures Investments Securities sold short Corporate debt Government debt Corporate and government debt Equities Equities Deferred and contingent consideration Non-controlling interest – derivative liability Securities owned Corporate debt Government debt Corporate and government debt Equities Convertible debentures Equities and convertible debentures Investments March 31, 2023 $ 13,462 414,657 428,119 285,474 1,485 286,959 715,078 11,569 726,647 (3,109) (391,175) (394,284) (162,019) (162,019) (556,303) (53,998) (61,705) (672,006) March 31, 2022 $ 37,820 510,819 548,639 499,221 3,369 502,590 1,051,229 10,990 1,062,219 Estimated fair value March 31, 2023 Level 2 $ 13,462 233,778 247,240 60,568 1,485 62,053 309,293 — 309,293 (3,109) (208,962) (212,071) (10,604) (10,604) (222,675) — — (222,675) Estimated fair value March 31, 2022 Level 2 $ 37,820 156,962 194,782 67,218 3,369 70,587 265,369 — 265,369 Level 1 $ — 180,879 180,879 208,253 — 208,253 389,132 — 389,132 — (182,213) (182,213) (151,415) (151,415) (333,628) — — (333,628) Level 1 $ — 353,857 353,857 353,353 — 353,353 707,210 — 707,210 Level 3 $ — — — 16,653 — 16,653 16,653 11,569 28,222 — — — — — — (53,998) (61,705) (115,703) Level 3 $ — — — 78,650 — 78,650 78,650 10,990 89,640 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 78 Notes to Consolidated Financial Statements Securities sold short Corporate debt Government debt Corporate and government debt Equities Non-controlling interest – derivative liability Deferred and contingent consideration Movement in net Level 3 financial assets (liability) March 31, 2022 $ (5,001) (451,205) (456,206) (111,084) (567,290) (41,090) (45,286) (653,666) Estimated fair value March 31, 2022 Level 2 $ (5,001) (185,536) (190,537) (28,674) (219,211) — — (219,211) Level 1 $ — (265,669) (265,669) (82,410) (348,079) — — (348,079) Balance, March 31, 2022 Payment of contingent and deferred consideration in connection with acquisition of Thomas Miller and PSW Adjustment to contingent consideration in connection with Sawaya [Note 11] Addition of deferred and contingent consideration in connection with Results [Note 11] Addition of deferred consideration in connection with PSW Change in fair value of contingent consideration in connection with Sawaya [Note 11] Movement in fair value of level 3 securities owned during the period Non-controlling interest derivative liability component in connection with issuance of B Convertible Preferred Shares [Note 8] Fair value adjustment of non-controlling interest derivative liability Foreign exchange revaluation $ Balance, March 31, 2023 Fair value estimation i. Level 2 financial instruments Level 3 $ — — — — — (41,090) (45,286) (86,376) 3,264 12,955 (1,519) (18,847) (10,140) 14,278 (61,997) (7,970) (11,629) (5,876) (87,481) Level 2 financial instruments include the Company’s investment in certain corporate and government debt, convertible debt and over- the-counter equities. The fair values of corporate and government debt and convertible debt classified as Level 2 are determined using the quoted market prices of identical assets or liabilities in markets that do not have transactions which take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company regularly reviews the transaction frequency and volume of trading in these instruments to determine the accuracy of pricing information. ii. 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 a 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, 2023 was $14.9 million [March 31, 2022 – $78.7 million]. As at March 31, 2023, the Company, either directly or through a wholly owned subsidiary, held investments in Capital Markets Gateway LLC, InvestX Capital Ltd. and Proactive Group Holdings Inc. which have been classified as Level 3 financial instruments given they do not have any observable inputs or market indicators [Note 10]. The Convertible Preferred Shares and Preference Shares issued to management and employees of CGWM UK [Note 8] were treated as a compound instrument comprised of an equity component, representing discretionary dividends and a liquidation preference, and a liability component that reflects a derivative to settle the instrument by delivering the economic equivalent of a variable number of common shares of CGWM UK. During the year ended March 31, 2023, a fair value adjustment of $11.6 million [March 31, 2022 – $8.5 million] was recorded in the statement of operations. The derivative liability component of £37.0 million (C$61.7 million) [March 31, 2022 – £25.0 million (C$41.1 million)] is included in the statement of financial position as of March 31, 2023. In connection with the acquisitions of Sawaya and Results, there are current and long-term portion of deferred and contingent considerations recorded of $54.0 million as of March 31, 2023. During the year ended March 31, 2023, the Company recorded a reduction in the fair value of the contingent consideration in connection with the acquisition of Sawaya of $14.3 million through the consolidated statements of operations. The long-term portion of the deferred and contingent consideration and the non-controlling interests derivative liability are included as other liabilities in the statement of financial position as at March 31, 2023. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 79 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, 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, 2023 and 2022. 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 $3.1 million as at March 31, 2023 [March 31, 2022 – $2.9 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, 2023 and 2022, 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 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, 2023 and March 31, 2022, respectively: Financial liability Securities sold short Subordinated debt(1) Accounts payable and accrued liabilities Current portion of bank loan Current portion of deferred and contingent consideration Long term portion of bank loan Long term portion of deferred and contingent consideration Non-controlling interests derivative liability Carrying amount $ Contractual term to maturity March 31, 2023 556,303 7,500 3,720,332 13,342 17,325 293,780 36,673 61,705 March 31, 2022 567,290 7,500 4,845,672 6,574 10,618 145,467 34,668 41,090 Due on demand Due on demand(1) Due within one year Due within one year Due within one year Fiscal 2025 Fiscal 2025 to 2027 Fiscal 2027 (1) Subject to approval from Canadian Investment Regulatory Organization (formerly Investment Industry Regulatory Organization of Canada) The fair values for cash, accounts receivable and accounts payable and accrued liabilities approximate their carrying values and will be paid within twelve months. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 80 Notes to Consolidated Financial Statements Market risk Market risk is the risk that the fair value of financial instruments will fluctuate because of changes in market prices. The Company separates market risk into three categories: fair value risk, interest rate risk and foreign exchange risk. Fair value risk When participating in underwriting activities, the Company may incur losses if it is unable to resell the securities it is committed to purchase or if it is forced to liquidate its commitment at less than the agreed upon purchase price. The Company is also exposed to fair value risk as a result of its principal trading activities in equity securities, fixed income securities, and derivative financial instruments. Securities at fair value are valued based on quoted market prices where available and, as such, changes in fair value affect earnings as they occur. Fair value risk also arises from the possibility that changes in market prices will affect the value of the securities the Company holds as collateral for client margin accounts. The Company mitigates its fair value risk exposure through controls to limit concentration levels and capital usage within its inventory trading accounts, as well as through monitoring procedures of the margin accounts. The following table summarizes the effect on earnings as a result of a fair value change in financial instruments as at March 31, 2023 and March 31, 2022, 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, 2023 March 31, 2022 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 286,959 10,000 (10,000) 502,590 18,000 (18,000) Equities and convertible debentures sold short Interest rate risk (162,019) (6,000) 6,000 (111,084) (4,000) 4,000 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 securities owned, net of 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, 2023 and 2022 if interest rates had increased or decreased by 100 basis points applied to balances as of March 31, 2023 and March 31, 2022, 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, 2023 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, 2022 Net income effect of a 100 bps decreases in interest rates(1) $ Carrying value Asset (Liability) $ Cash and cash equivalents, net of bank indebtedness $ 1,008,432 $ 7,362 $ (7,362) $ 1,788,261 $ 13,054 $ (13,054) Securities owned, net of 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 158,775 (868,923) 332,055 578,084 (7,500) (307,122) 1,159 (6,343) 2,424 4,220 (55) (2,242) (1,159) 6,343 (2,424) (4,220) 55 2,242 483,939 (1,632,446) 512,147 359,553 (7,500) (152,041) 3,533 (11,917) 3,739 2,625 (55) (1,110) (3,533) 11,917 (3,739) (2,625) 55 1,110 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. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 81 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, 2023: Currency US dollar Pound sterling Australian dollar As at March 31, 2022: 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 $ (1,407) $ (393) 70 1,407 $ 393 $ (70) $ 23,072 $ 48,975 $ 4,074 $ (23,072) (48,975) (4,074) 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 $ $ (920) (360) (93) $ 920 360 93 $ 22,670 30,365 5,509 Effect of a 5% depreciation in foreign exchange rate on OCI $ (22,670) (30,365) (5,509) $ $ 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, 2023: To sell US dollars To buy US dollars Forward contracts outstanding at March 31, 2022: Notional amount (millions) USD$ USD$ 3.9 1.8 Average price $1.35 (CAD/USD) $1.35 (CAD/USD) Maturity Fair value April 3, 2023 April 3, 2023 — — To sell US dollars To buy US dollars Notional amount (millions) USD$ USD$ 1.8 2.3 Average price $1.25 (CAD/USD) $1.25 (CAD/USD) Maturity Fair value April 1, 2022 April 1, 2022 — — 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 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 82 Notes to Consolidated Financial Statements the euro. The weighted average term to maturity is 63 days as at March 31, 2023 [March 31, 2022 – 68 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, 2023 and March 31, 2022, respectively. The fair value of the forward contract assets and liabilities is included in the accounts receivable and payable balances. Foreign exchange forward contracts $ 108 $ 98 $ 13,812 $ 82 $ 75 $ Assets Liabilities Notional amount Assets Liabilities Notional amount 11,760 March 31, 2023 March 31, 2022 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, and in accordance with terms specified by a regulated futures exchange; they 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, 2023, the notional amount of the bond futures contracts outstanding was short $1.4 million [March 31, 2022 – long $9.7 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, 2023 and March 31, 2022. The fair value of all 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, 2023 and 2022, the floating rate was nil. March 31, 2023 March 31, 2022 BANK INDEBTEDNESS Cash Securities Loaned or delivered as collateral $ Borrowed or received as collateral $ Loaned or delivered as collateral $ $ $ 205,794 $ $ 282,142 130,651 $ $ 186,174 157,222 $ $ 203,465 Borrowed or received as collateral $ 206,328 309,123 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, 2023, the Company had a nil balance outstanding [March 31, 2022 – $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, Thomas Miller, Adam & Company and Punter Southall. The balance outstanding at March 31, 2023, net of unamortized financing fees, was $307.1 million [March 31, 2022 – $152.0 million] [Note 17]. The facility ends on September 30, 2024 and the then outstanding payments are immediately due for repayment. OTHER CREDIT FACILITIES Excluding the bank loan in connection with the acquisitions of Hargreave Hale, Thomas Miller, Adam & Company and Punter Southall as described above, subsidiaries of the Company have other credit facilities with banks in Canada and the UK for an aggregate amount of $667.4 million [March 31, 2022 – $657.0 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, 2023, there was no bank indebtedness outstanding [March 31, 2022 – $nil]. A subsidiary of the Company has also entered into secured irrevocable standby letters of credit from a financial institution totaling $3.9 million (US$2.9 million) [March 31, 2022 – $3.7 million (US$2.9 million)] as rent guarantees for its leased premises in New York. As of March 31, 2023, and March 31, 2022, there were no outstanding balances under these standby letters of credit. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 83 8. NON-CONTROLLING INTERESTS UK & Crown Dependencies Wealth Management On July 29, 2021, certain institutional investors acquired convertible preferred shares (“A Convertible Preferred Shares”) in the amount of £125.0 million (C$218.0 million) issued by CGWM UK. On May 31, 2022, certain institutional investors purchased a new series of Convertible Preferred Shares (“B Convertible Preferred Shares”) issued by CGWM UK for £65.3 million ($104.1 million as of the issuance date of May 31, 2022). The proceeds, net of discount of $2.1 million, were used in connection with the acquisition of PSW [note 11]. The B Convertible Preferred Shares bear the same terms as the A Convertible Preferred Shares issued during the year ended March 31, 2022 except for differences in conversion ratios. The two series of the Convertible Preferred Shares are collectively described as Convertible Preferred Shares in discussions below. Cumulative dividends, when, as and if declared by the Board of Directors of CGWM UK, are payable by CGWM UK on the Convertible Preferred Shares at the greater of an annual 7.5% coupon and the proportionate share that such shares would receive, on an as converted basis, in respect of any dividends declared and paid in respect of ordinary shares of CGWM UK. No dividends may be paid on any other class of shares of CGWM UK unless and until the cumulative dividends on the Convertible Preferred Shares are declared and paid. If a liquidity event occurs before the end of five years from the date of issuance of the A Convertible Preferred Shares the Convertible Preferred Shares will carry a liquidation preference equal to the greatest of (i) the amount of principal plus accrued but unpaid dividends attributable to the Convertible Preferred Shares had they been issued five years prior, (ii) an amount equal to 1.5 multiplied by the issue price of the Convertible Preferred Shares (less any previously paid dividends), or (iii) the amount which the holders of the Convertible Preferred Shares would receive on an as converted basis. If a liquidity event occurs on or after the fifth anniversary then the Convertible Preferred Shares will carry a liquidation preference equal to the greater of (i) the amount of principal plus accrued but unpaid dividends attributable to the Convertible Preferred Shares or (ii) the amount which the holders of the Convertible Preferred Shares would receive on an as converted basis. If a liquidity event has not occurred after five years, then CGWM UK has an option to acquire the Convertible Preferred Shares at the greater of the applicable liquidation preference amount and the amount which would provide the holders of the Convertible Preferred Shares with an internal rate of return of 11.5% (including all previously paid dividends). After the fifth anniversary of the issuance of the A Convertible Preferred Shares the holders of the Convertible Preferred Shares have certain rights in respect of initiating a liquidity event. The Convertible Preferred Shares carry customary minority rights in respect of CGWM UK governance and financial matters, including representation on the CGWM UK Board of Directors. In connection with the issuance of the A Convertible Preferred Shares, CGWM UK provided for the purchase of certain equity instruments in CGWM UK by management and employees of CGWM UK. £24.6 million (CAD$42.7 million at the time of issuance) of such equity instruments in CGWM UK have been purchased in connection with this equity program. Included in these equity instruments of CGWM UK were preferred shares with the same economic attributes as the A Convertible Preferred Shares (the “Preference Shares”). Preference Shares in the amounts of £7.5 million (CAD$13.0 million) were outstanding as of March 31, 2023. The other equity interests purchased by management and employees of CGWM UK are ordinary shares of CGWM UK with certain restrictions on transfer and limited governance rights. In connection with the purchase of the ordinary shares, a limited recourse loan of £4.0 million (CAD$6.7 million as of March 31, 2023) as well as certain full recourse employee loans were made. A management incentive plan has been implemented which, subject to certain minimum threshold levels, will provide for certain payments if a liquidity event occurs within six years or after six years if a liquidity event has not occurred and the A Convertible Preferred Shares are no longer outstanding. In connection with the acquisition of PSW [Note 11], the Company also issued £4.0 million ($6.4 million as of the acquisition date of May 31, 2022) of ordinary shares of CGWM UK as part of the purchase consideration. In addition, a management incentive plan has been implemented. A total of £2.5 million of CGWM UK ordinary shares are expected to be issued in connection with this plan. On an as-converted basis, the Company holds an approximate 66.9% equity equivalent interest in CGWM UK. Together, the equity instruments purchased by management and employees of CGWM UK in connection with the issuance of the A Convertible Preferred Shares and with the equity instruments issued and to be issued in connection with the acquisitions of PSW represent an approximate 5.1% equity equivalent interest in CGWM UK on an as-converted basis. The Convertible Preferred Shares and Preference Shares do not give rise to any obligation for the Company to deliver cash or other financial assets to the holders thereof. The Convertible Preferred Shares and Preference Shares were treated as a compound instrument comprised of an equity component, representing discretionary dividends and a liquidation preference, and a liability component that reflects a derivative to settle the instrument, if applicable, by delivering the economic equivalent of a variable number of common shares of CGWM UK. The equity component of the Convertible Preferred Shares and Preference Shares are included in equity and the derivative liability component is included in other liabilities in the statement of financial position as of March 31, 2023. The fair value of the Convertible Preferred Shares and Preference Shares at issuance was allocated to the respective equity and derivative liability components. The fair value of the non-controlling interests derivative liability was established first and the residual amount was recorded to the equity component. The derivative components will be remeasured at the end of each reporting 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 84 Notes to Consolidated Financial Statements period using the Company’s best estimate of its value. During the twelve months ended March 31, 2023, the Company recorded a derivative liability in connection with the issuance of the B Convertible Preferred Shares of £5.0 million ($8.0 million as of May 31, 2022). During the year ended March 31, 2023, a fair value adjustment of $11.6 million [March 31, 2022 – $8.5 million] was recorded in the statement of operations. The carrying value of the derivative liability component of £37.0 million (C$61.7 million) [March 31, 2022 – £25.0 million (C$41.1 million)] is included in other liabilities in the statement of financial position as of March 31, 2023. The Company uses a Black Scholes model to estimate the fair value of the derivative liability embedded in the Convertible Preferred Shares and Preference Shares. The fair value is calculated using the estimated fair value as determined on an as converted equity equivalent basis and the amount of the liquidation preference of the Convertible Preferred Shares and Preference Shares. Other assumptions include estimates in respect of volatility, the risk-free interest and dividend rates. Significant judgment is involved in the assumptions and estimates used to determine the fair value of the derivative liability component at each reporting period. Australia The Company owns 65% of the issued shares of Canaccord Financial Group (Australia) Pty Ltd., and through that ownership a 65% indirect interest in Canaccord Genuity (Australia) Limited and Canaccord Genuity Financial Limited as of March 31, 2023 [March 31, 2022 – 65%]. Because of shares held in an employee trust controlled by CFGA, the Company holds a 67% ownership for accounting purposes. 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, both CGAL and CGFL are regulated by the Australian Securities and Investments Commission. Summarized statement of profit or loss for the years ended March 31, 2023 and 2022: Revenue Expenses Net income before taxes Income tax (recovery) expense Net income Attributable to: CGGI shareholders Non-controlling interests Australia UK & Crown Dependencies Total 2023 $ 2022 $ 127,838 248,721 119,690 190,744 8,148 (462) 8,610 57,977 20,935 37,042 2023 $ 343,728 289,424 54,304 6,403 47,901 2022 $ 2023 $ 2022 $ 310,495 471,566 559,216 252,681 409,114 443,425 57,814 9,528 48,286 62,452 115,791 30,463 5,941 56,511 85,328 Australia UK & Crown Dependencies Total 2023 $ 2022 $ 5,899 29,670 7,372 2,711 8,610 37,042 2023 $ 15,250 32,651 47,901 2022 $ 2023 $ 2022 $ 31,407 21,149 61,077 16,879 35,362 24,251 48,286 56,511 85,328 Summarized statement of financial position as at March 31, 2023 and 2022: Australia UK & Crown Dependencies Total 2023 $ 2022 $ 2023 $ 2022 $ 2023 $ 2022 $ Current assets Non-current assets Current liabilities Non-current liabilities 172,683 235,141 38,523 33,473 86,439 133,434 18,238 16,313 225,682 1,622,049 143,925 364,915 Summarized cash flow information for the years ended March 31, 2023 and 2022: 162,826 397,967 398,365 1,041,733 1,660,572 1,075,206 227,690 230,364 200,753 381,228 94,256 182,515 Cash provided by operating activities Cash (used in) provided by financing activities Cash used by investing activities Foreign exchange impact on cash balance Net (decrease) increase in cash and cash equivalents CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Australia UK & Crown Dependencies Total 2023 $ 6,655 (7,683) (2,468) (4,134) (7,630) 2022 $ 33,150 (31,125) (1,530) (2,291) (1,796) 2023 $ 32,329 231,549 (256,245) 2,928 2022 $ 86,100 70,034 (98,755) (8,274) 2023 $ 2022 $ 38,984 223,866 (258,713) (1,206) 119,250 38,909 (100,285) (10,565) 10,561 49,105 2,931 47,309 Notes to Consolidated Financial Statements 85 The non-controlling interests as of March 31, 2023 and 2022 comprised of the following: As at and for the period ended March 31 Australia UK & Crown Dependencies Total Balance, opening Comprehensive income attributable to non-controlling interests Foreign exchange on non-controlling interests Dividends paid to non-controlling interest Issuance of convertible preferred shares, net of discount Issuance of equity instruments to management and employees Reclassification to derivative liability on issuance date Issuance of equity instruments in connection with acquisition of PSW [Note 11] Acquisition-related costs, net of deferred tax recovery Share-based payment Increase in non-controlling interests due to issuance of partly paid shares Payment of dividends on convertible preferred shares Reclassification of other comprehensive income on issuance date Balance, ending 2023 $ 23,301 5,440 (582) (7,683) — — — 2022 $ 8,190 8,687 329 (5,853) — — — — — — — — — — 10,843 — — — 1,105 20,476 23,301 2023 $ 215,400 32,651 (4,790) — 102,017 206 (7,970) 6,376 — — — (20,368) — 323,522 Comprehensive income attributable to non-controlling interests Australia UK & Crown Dependencies Total 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 2022 $ 2023 $ 2022 $ — 238,701 38,091 (5,372) — (7,683) 8,190 25,566 (4,783) (5,853) 102,017 212,449 35,722 (34,682) 206 (7,970) 6,376 — — (2,834) — 1,740 — 10,843 (7,139) (519) (20,368) — 16,879 (5,112) 212,449 35,722 (34,682) — (2,834) 1,740 — (7,139) (1,624) 215,399 343,998 238,700 March 31 2023 $ March 31 2022 $ 5,440 32,651 38,091 8,687 16,879 25,566 March 31, 2023 $ March 31, 2022 $ $ 1,939,685 $ 869,883 332,055 213,580 1,693,579 1,020,112 512,147 212,817 $ 3,355,203 $ 3,438,655 March 31, 2023 $ March 31, 2022 $ $ 1,361,601 $ 1,738,806 619,925 1,334,026 2,652,558 859,088 $ 3,720,332 $ 4,845,672 Amounts due from and to brokers and investment dealers include balances from resale and repurchase agreements, securities loaned and borrowed, and 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 Canadian Investment Regulatory Organization (“CIRO”) (formerly Investment Industry Regulatory Organization of Canada) 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, 2023 – 9.70% to 11.00% and 0.00% to 0.05%, respectively; March 31, 2022 – 5.7% to 6.5% and 0.00% to 0.05%, respectively]. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 86 Notes to Consolidated Financial Statements As at March 31, 2023, the allowance for doubtful accounts was $3.1 million [March 31, 2022 – $2.9 million]. See below for the movements in the allowance for doubtful accounts: Balance, March 31, 2021 Charge for the year Recoveries Foreign exchange Balance, March 31, 2022 Charge for the year Recoveries Foreign exchange Balance, March 31, 2023 10. Investments Investment accounted for under the equity method Investments held as fair value through profit or loss Breakdown of investments is as follows: INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD Canaccord Genuity G Ventures Corp. Katipult Technology Corp. Link Investment Management Inc. International Deal Gateway Blockchain Inc. Other INVESTMENTS HELD AS FAIR VALUE THROUGH PROFIT AND LOSS (FVTPL) Capital Markets Gateway LLC InvestX Capital Ltd Proactive Group Holdings Inc. Investments accounted for under equity method $ $ 6,841 4,835 (8,625) (106) 2,945 3,888 (3,751) — 3,082 March 31, 2023 $ March 31, 2022 $ 6,532 11,569 18,101 11,938 10,990 22,928 March 31, 2023 March 31, 2022 1,243 500 250 4,500 39 1,298 3,000 2,500 4,500 640 6,532 $ 11,938 March 31, 2023 March 31, 2022 4,177 3,392 4,000 3,864 3,126 4,000 11,569 $ 10,990 The Company recorded a net share of loss on associates of $0.06 million during the year ended March 31, 2023 [March 31, 2022 – net loss of $0.2 million]. Additionally, the Company recorded aggregate impairments during the year of $4.75 million on certain of these investments, including $2.5 million on Katipult Technology Corp (“Katipult) and $2.25 million on Link Investment Management Inc (“Link”). The Company is considered to exert significant influence over the operations of Katipult, Link and International Deal Gateway Blockchain Inc. factoring in potential voting rights, even though the Company does not currently have any entitlement to a share of the net assets of these companies. Accordingly, these investments are treated as equity investments and included as investments in the consolidated statement of financial position as at March 31, 2023. Investments held as FVTPL The Company holds certain investments classified as FVTPL as the Company does not exert significant influence over the operations of these investments. 11. Business Combinations RESULTS INTERNATIONAL GROUP LLP On August 17, 2022, the Company, through its UK & Europe capital markets business, completed its acquisition of Results International Group LLP (Results). The initial cash consideration net of liabilities assumed was £5.3 million ($8.2 million), with CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 87 additional contingent consideration of up to £14.45 million ($22.5 million) payable over a period of four years following completion, subject to the achievement of performance targets related to revenue. The contingent consideration was recorded at its fair value of £10.1 million ($15.7 million) as of the acquisition date. There was also deferred consideration of £2.0 million ($3.1 million), payable over a period of three years following completion, in cash or the Company’s shares based on the Company’s option. The fair value of the contingent consideration is classified as Level 3 in the fair value hierarchy and was determined using on a Monte Carlo simulation using various assumptions including an earnings before interest, taxation, depreciation and amortization (EBITDA) forecast, a risk-free rate of 2.0% and a volatility factor of 8.0%. Option pricing models require the input of highly subjective assumptions including 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 contingent consideration. The preliminary purchase price, determined by the fair value of the consideration given at the date of the acquisition and the fair value of the net assets acquired on the date of the acquisition, was as follows: CONSIDERATION Cash net of liabilities assumed Deferred consideration Contingent consideration NET ASSETS ACQUIRED Accounts receivable Equipment and leasehold improvements Right of use assets Accounts payable and accrued liabilities Lease liabilities Identifiable intangible assets Deferred tax liability related to identifiable intangible assets Goodwill $ $ $ 8,211 3,112 15,735 27,058 1,307 38 3,667 (5,079) (4,171) 2,728 (641) 29,209 27,058 Identifiable intangible assets of $2.7 million were recognized and relate to the contract book, brand name and customer relationships. The goodwill of $29.2 million represents the value of expected synergies arising from the acquisition. Goodwill is not deductible for tax purposes. The above amounts included in the purchase price allocation are preliminary. The purchase price and the fair value of the net assets acquired from Results are estimates, which were made by management at the time of the preparation of these audited consolidated financial statements based on available information. Amendments may be made to these amounts as well as the identification of intangible assets and the allocation of identifiable intangible assets between indefinite life and finite lives. Values based on estimates are subject to changes during the period ending twelve months after the acquisition date. The aggregate acquisition-related expenses incurred by the Company during the year ended March 31, 2023 in connection with the acquisition of Results were $1.5 million which comprised mainly of professional fees. Revenue and net loss generated by Results including acquisition-related costs, were $3.8 million and $3.7 million, respectively, since the acquisition date. Had Results been consolidated from April 1, 2022, as part of the consolidated statement of operations, the consolidated revenue and net loss would have been approximately $1.5 billion and $53.0 million, respectively, for the twelve months ended March 31, 2023. These figures represent historical results and are not necessarily indicative of future performance. PUNTER SOUTHALL WEALTH LIMITED On May 31, 2022, the Company, through CGWM UK completed its acquisition of the private client investment management business of Punter Southall Wealth Limited (PSW) for cash payment of £164.0 million ($261.4 million), issuance of shares from CGWM UK of £4.0 million ($6.4 million) and deferred consideration of £6.4 million (C$10.1 million) related to the purchase of excess regulatory capital. The deferred consideration was paid in October 2022. In connection with the completion of the acquisition, a subsidiary of the Company modified its existing banking arrangements and increased its bank loan by an additional £100 million (C$159.4 million as of the issuance date of May 31, 2022). In addition, certain institutional investors have made an additional investment in CGWM UK through the purchase of a new series of Convertible Preferred Shares in the amount of £65.3 million ($104.1 million as of the acquisition date of May 31, 2022). [Note 8] 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 88 Notes to Consolidated Financial Statements Also, in connection with the acquisition, the Company adopted a share-based payment plan for certain awards to be made to certain employees of PSW. [Note 22] The preliminary purchase price, determined by the fair value of the consideration given at the date of the acquisition and the fair value of the net assets acquired on the date of the acquisition, are disclosed below. CONSIDERATION Cash Issuance of CGWM UK ordinary shares [Note 8] Deferred consideration NET ASSETS ACQUIRED Cash Accounts receivable Equipment and leasehold improvements Right of use assets Deferred tax assets Accounts payable and accrued liabilities Lease liabilities Identifiable intangible assets Deferred tax liability related to identifiable intangible assets Goodwill $ $ 261,416 6,376 10,140 277,932 22,832 6,653 448 3,073 598 (10,063) (3,728) 136,022 (33,547) 155,644 277,932 Identifiable intangible assets of $136.0 million were recognized and relate to customer relationships and brand name. The goodwill of $155.6 million represents the value of expected synergies arising from the acquisition. Goodwill is not deductible for tax purposes. The above amounts included in the purchase price allocation are preliminary. The purchase price and the fair value of the net assets acquired from PSW are estimates, which were made by management at the time of the preparation of these audited consolidated financial statements based on available information. Amendments may be made to these amounts as well as the identification of intangible assets and the allocation of identifiable intangible assets between indefinite life and finite lives. Values based on estimates are subject to changes during the period ending twelve months after the acquisition date. The aggregate acquisition-related expenses incurred by the Company during the period ended March 31, 2023 in connection with the acquisition of PSW were $5.9 million which comprised mainly of professional fees. Revenue and net income generated by PSW including acquisition-related costs, were $45.9 million and $10.6 million, respectively, since the acquisition date. Had PSW been consolidated from April 1, 2022, as part of the consolidated statement of operations, the consolidated revenue and net loss would have been approximately $1.5 billion and $48.6 million, respectively, for the twelve months ended March 31, 2023. These figures represent historical results and are not necessarily indicative of future performance. ADAM & COMPANY During the twelve months ended March 31, 2023, the Company finalized its purchase price accounting in connection with the acquisition of Adam & Company. There were no changes to the purchase price and fair value of net assets acquired on the date of the acquisition disclosed in the Company’s audited consolidated financial statements for the year ended March 31, 2022. The purchase price, determined by the fair value of the consideration given at the date of the acquisition and the fair value of the net assets acquired on the date of the acquisition, was as follows: CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT CONSIDERATION PAID Cash NET ASSETS ACQUIRED Accounts receivable Deferred tax assets Accounts payable and accrued liabilities Identifiable intangible assets Deferred tax liability related to identifiable intangible assets Goodwill Notes to Consolidated Financial Statements 89 $93,316 93,316 5,875 673 (2,334) 52,930 (12,901) 49,073 $ 93,316 Identifiable intangible assets of $52.9 million were recognized and relate to customer relationships and brand name. The goodwill of $49.1 million represents the value of expected synergies arising from the acquisition. Goodwill is not deductible for tax purposes. SAWAYA PARTNERS On December 31, 2021, the Company completed its acquisition of Sawaya Partners (Sawaya), a leading independent M&A advisory firm to the Consumer & Retail sector based in the US. During the twelve months ended March 31, 2023, the Company finalized its purchase price accounting. There was a remeasurement of the contingent consideration which resulted in an increase of $1.5 million in both goodwill and contingent consideration as of and for the twelve months ended March 31, 2023. During the year ended March 31, 2023, the Company recorded a decline in the fair value of the contingent consideration of $14.3 million through the consolidated statement of operations. [Note 7] The purchase price, determined by the fair value of the consideration given at the date of the acquisition and the fair value of the net assets acquired on the date of the acquisition, was as follows: CONSIDERATION Cash Deferred consideration Contingent consideration NET ASSETS ACQUIRED Accounts receivable Equipment and leasehold improvements Right of use assets Accounts payable and accrued liabilities Lease liabilities Identifiable intangible assets Goodwill $ $ 45,513 11,378 44,626 101,517 78 1,122 4,070 (77) (4,070) 5,155 95,239 $ 101,517 Identifiable intangible assets of $5.2 million were recognized and relate to the contract book and brand name. The goodwill of $95.2 million represents the value of expected synergies arising from the acquisition. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 90 Notes to Consolidated Financial Statements 12. Equipment and Leasehold Improvements March 31, 2023 Computer equipment Furniture and equipment Leasehold improvements March 31, 2022 Computer equipment Furniture and equipment Leasehold improvements Cost Balance, March 31, 2021 Reclassification Additions Disposals Foreign exchange Balance, March 31, 2022 Acquisitions of Results and PSW [Note 11] Additions Disposals Foreign exchange Balance, March 31, 2023 Accumulated amortization and impairment Balance, March 31, 2021 Reclassification Amortization Disposals Foreign exchange Balance, March 31, 2022 Amortization Disposals Foreign exchange Balance, March 31, 2023 Cost $ Accumulated amortization $ Net book value $ 19,906 34,957 107,560 162,423 21,197 28,965 91,779 16,957 26,884 70,402 114,243 17,522 25,564 64,212 141,941 107,298 Computer equipment $ Furniture and equipment $ Leasehold improvements $ 24,024 1,879 3,348 (7,052) (1,002) 21,197 10 2,875 (4,620) 444 19,906 29,751 — 2,346 (2,796) (336) 28,965 110 6,874 (1,177) 185 34,957 90,871 (2,038) 15,050 (11,035) (1,069) 91,779 366 15,860 (1,245) 800 107,560 Computer equipment $ Furniture and equipment $ Leasehold improvements $ 21,906 1,478 2,048 (7,041) (869) 17,522 2,580 (3,604) 459 16,957 26,810 — 1,828 (2,792) (282) 25,564 2,209 (1,025) 136 26,884 72,860 (1,637) 4,454 (10,817) (648) 64,212 6,888 (1,152) 454 70,402 2,949 8,073 37,158 48,180 3,675 3,401 27,567 34,643 Total $ 144,646 (159) 20,744 (20,883) (2,407) 141,941 486 25,609 (7,042) 1,429 162,423 Total $ 121,576 (159) 8,330 (20,650) (1,799) 107,298 11,677 (5,781) 1,049 114,243 The carrying value of any temporarily idle property, plant and equipment is not considered material as at March 31, 2023 and March 31, 2022. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT 13. Right-of-Use Assets Cost Balance, March 31, 2021 Additions Extinguishment Foreign exchange As at March 31, 2022 Additions Extinguishment Foreign exchange As at March 31, 2023 Amortization Balance, March 31, 2021 Charge for the year As at March 31, 2022 Charge for the year As at March 31, 2023 Net book value as at March 31, 2022 Net book value as at March 31, 2023 The right of use assets comprise mostly of leases for office premises. ¡ 14. Goodwill and Other Intangible Assets Notes to Consolidated Financial Statements 91 $ $ 133,122 61,424 (4,020) (1,660) 188,866 19,430 (7,813) 1,381 201,864 47,906 23,894 71,800 26,335 98,135 117,066 103,729 Brand names (indefinite life) $ Goodwill $ Brand names $ Customer relationships $ Technology $ Trading licenses $ Fund management contracts $ Contract book Favorable lease Client books Total $ Gross amount Balance, March 31, 2021 702,747 44,930 544 163,546 39,632 625 38,781 6,150 526 — 294,734 Additions Foreign exchange Reclassification 142,821 (12,657) — — 1,382 — — (42) — 52,116 (8,345) 184 2,541 (1,704) (184) Balance, March 31, 2022 832,911 44,930 1,884 207,501 40,285 Additions Foreign exchange Adjustments 184,853 27,823 1,594 — — — 274 120 — 137,795 4,006 8,599 — 470 — Balance, March 31, 2023 1,047,181 44,930 2,278 353,895 44,761 — (8) — 617 — (14) — 603 — 4,308 — 1,931 62,278 (1,947) — (80) — (3) — — (12,129) — — 36,834 10,378 523 1,931 344,883 — 535 — 682 859 — — 42 — — 142,757 (66) — 10,545 — 37,369 11,919 565 1,865 498,185 Accumulated amortization and impairment Balance, March 31, 2021 (322,632) — (364) (96,245) (27,194) (625) (12,811) (6,150) (422) — (143,811) Amortization Foreign exchange — — — (335) (11,297) (3,002) — 6 3,461 1,290 — 8 (3,620) (1,112) (103) (206) (19,675) 795 36 2 (2) 5,596 Balance, March 31, 2022 (322,632) — (693) (104,081) (28,906) (617) (15,636) (7,226) (523) (208) (157,890) Amortization Impairment Foreign exchange — — (805) (19,040) (3,127) (101,729) — — — — (76) (842) (1,787) — (479) — — 14 (3,369) (3,626) — (183) (30,150) — — (384) (641) — (42) — 7 (842) (3,388) Balance, March 31, 2023 (424,361) (1,574) (125,750) (32,512) (603) (19,389) (11,493) (565) (384) (192,270) Net book value March 31, 2022 March 31, 2023 510,279 44,930 1,191 103,420 622,820 44,930 704 228,145 11,379 12,249 — — 21,198 3,152 — 1,723 186,993 17,980 426 — 1,481 305,915 Identifiable intangible assets purchased through the acquisitions of Genuity Capital Markets (Genuity), the initial 50% 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, Patersons, Adam & Company, Sawaya, PSW and Results are customer relationships, trading licences, fund management contracts, contract book, technology and brand names 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 92 Notes to Consolidated Financial Statements acquired through the acquisitions of Petsky Prunier, Adam & Company and Sawaya, 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 UK & Europe Canaccord Genuity Wealth Management CGUs UK & Crown Dependencies (Channel Islands) UK & Crown Dependencies (UK wealth) Australia Intangible assets with indefinite lives Goodwill Total March 31, 2023 $ March 31, 2022 $ March 31, 2023 $ March 31, 2022 $ March 31, 2023 $ March 31, 2022 $ $ 44,930 $ — — 44,930 — $ — $ — 206,664 31,304 101,732 $ 189,608 — — — — — — — 89,944 292,145 2,763 88,644 127,434 2,861 44,930 $ 206,664 31,304 89,944 292,145 2,763 146,662 189,608 — 88,644 127,434 2,861 $ 44,930 $ 44,930 $ 622,820 $ 510,279 667,750 $ 555,209 Goodwill acquired in connection with PSW [Note 11] is included in the Canaccord Genuity Wealth Management (UK Wealth) CGU and goodwill acquired in connection with Results is included in the Canaccord Genuity Capital Markets UK & Europe for the purpose of goodwill impairment testing. [Note 11] The Genuity brand name is considered to have an indefinite life as the Company has no plans to cease its use in the future. Goodwill and intangible assets with indefinite lives are tested for impairment annually at March 31, and whenever 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; then, if any impairment loss remains, the other assets of the unit are reduced on a pro rata basis. Impairment losses relating to goodwill cannot be reversed in future periods. The Company considers the relationship between its market capitalization and the book value of its equity, among other factors, when reviewing for indicators of impairment. 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 93 Cash flow estimates for each of these CGUs were based on management assumptions as described above and utilized a compounded annual growth rate and a terminal growth rate. The discount rates, compound annual growth rates and terminal growth rates for each CGU are summarized in the table below. Canaccord Genuity Capital Markets CGUs Canada US UK & Europe Canaccord Genuity Wealth Management CGUs UK & Crown Dependencies (Channel Islands) UK & Crown Dependencies (UK wealth) Australia Discount rate Compound annual Growth rate Terminal growth rate March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022 14.0% 14.0% 14.0% 12.5% 12.5% 14.0% 12.5% 12.5% — 12.5% 12.5% 12.5% 10.9% 2.5% 10.0% 5.0% 7.5% 5.0% 5.0% 0.0% — 5.0% 5.0% 5.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% — 2.5% 2.5% 2.5% Due to the effect of weak equity market conditions globally and particularly in Canada, the Canadian capital markets operation experienced substantial declines in business activity and revenue and has incurred material losses on a year-to-date basis. With these adverse changes in the business environment, continued weakness in commodity prices and a challenging outlook as negative economic conditions persist, it was determined that the carrying value of our Canadian capital markets CGU exceeded its fair value during an interim test as at December 31, 2022. As a result, the Company recorded an impairment charge in respect of goodwill of $101.7 million during the three months ended December 31, 2022. In addition, the Company recorded an impairment charge related to the unamortized intangible assets of $0.8 million allocated to the Canadian capital markets CGU. Sensitivity testing was conducted as part of the impairment test of goodwill and indefinite life intangible assets for the Canaccord Genuity Capital Markets – UK & Europe CGU. The sensitivity testing included assessing the impact that reasonably possible declines in revenue estimates for the twelve month period ending on March 31, 2024, declines in growth rates after that period and increases in the discount rates would have on the recoverable amounts of the CGUs, with other assumptions being held constant. An increase of the discount rate of 1.8 percentage points, a decrease in the estimated revenue for the twelve month period ending March 31, 2024 of $2.6 million, a decrease in the five year compound annual growth of 2.1 percentage points or a decrease in the terminal growth rate of 2.4% may result in the estimate of the recoverable amount declining below the carrying value with the result that an impairment charge may be required. Any such impairment charge would be determined after incorporating the effect of any changes in key assumptions including any consequential effects of such changes on estimated operating income and on other factors. 15. Income Taxes The major components of income tax expense are as follows: Consolidated statements of operations Current income tax expense Current income tax expense Adjustments in respect of prior years Deferred income tax expense (recovery) Origination and reversal of temporary differences Impact of change in tax rates Income tax expense reported in the statements of operations March 31, 2023 $ March 31, 2022 $ $ 22,125 $ 122,348 (276) (1,952) 20,173 122,072 138 (2) 136 (14,301) (67) (14,368) 20,309 $ 107,704 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 94 Notes to Consolidated Financial Statements 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 (loss) income before income taxes Income tax (recovery) expense at the statutory rate of 27.0% (2022 – 27.0%) Difference in tax rates in foreign jurisdictions Permanent differences Impairment of goodwill and intangible assets Change in accounting and tax base estimate Impact of change in tax rate Share-based payments Other Income tax expense reported in the statements of operations March 31, 2023 $ March 31, 2022 $ (34,433) (9,370) (5,443) 8,815 26,414 835 (1,671) 1,446 (717) 378,269 102,129 (1,978) 7,441 — 2,074 1,957 (1,470) (2,449) $ 20,309 $107,704 The following were the deferred tax assets and liabilities recognized by the Company and movements thereon during the year: Unrealized (loss) 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, 2023 $ $ (5,778) $ 1,103 16,978 2,551 34,968 9,025 53,221 (82,348) 5,285 $ 35,005 $ March 31, 2022 $ (33,770) 1,273 36,250 3,085 39,368 10,195 54,139 (42,087) 4,896 73,349 March 31, 2023 $ $(27,992) $ 170 19,492 534 4,400 1,170 918 5,530 (4,086) $ 136 $ March 31, 2022 $ 17,398 498 (11,337) 553 (10,189) 250 (12,302) 12,845 (12,084) (14,368) 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 (expense) recovery recognized in the consolidated statements of operations Deferred taxes acquired in business combination Tax benefit recognized in equity Foreign exchange and other Ending balance as of March 31 March 31, 2023 $ $ 90,733 $ (55,728) $ 35,005 $ March 31, 2022 $ 98,224 (24,875) 73,349 March 31, 2023 $ 73,349 (136) (34,191) (5,722) 1,705 $ 35,005 $ March 31, 2022 $ 67,677 14,368 (12,255) 742 2,817 73,349 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 $6.3 million [2022 – $2.8 million] in the UK & Europe and $6.3 million [2022 – $6.5 million] in the US have been recognized as deferred tax assets. The losses in these jurisdictions can be carried forward indefinitely. Tax loss carryforwards of $24.1 million [2022 – $30.8 million] in Canada have been recognized as a deferred tax asset and can be carried forward 20 years. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 95 At the balance sheet date, the Company has tax loss carryforwards of approximately $23.8 million [2022 – $22.4 million] and other temporary differences of $nil [2022 – $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 are to carry forward indefinitely. 16. Subordinated Debt Loan payable, interest payable monthly at prime + 4% per annum, due on demand March 31, 2023 $ 7,500 March 31, 2022 $ 7,500 The loan payable is subject to a subordination agreement and may only be repaid with the prior approval of the CIRO. As at March 31, 2023 and 2022, the interest rates for the subordinated debt were 10.7% and 6.7%, respectively. The carrying value of subordinated debt approximates its fair value due to the short-term nature of this liability. 17. Bank Loan Loan Less: Unamortized financing fees Current portion Long-term portion March 31, 2023 $ 310,192 (3,070) 307,122 13,342 293,780 March 31, 2022 $ 154,498 (2,457) 152,041 6,574 145,467 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, Thomas Miller, Adam & Company and PSW. During the year ended March 31, 2023, the Company obtained an additional bank loan of £100.0 million (C$166.8 million as of March 31, 2023) [Note 11]. The loan is repayable in instalments of principal and interest and matures in September 2024. The interest rate on this loan is 7.177% per annum as at March 31, 2023 [March 31, 2022 – 3.375% per annum]. 18. 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 March 31, 2023 $ 34,148 28,674 19,134 12,000 48,579 142,535 (23,297) 119,238 (26,712) 92,526 March 31, 2022 $ 30,351 29,919 24,732 16,340 55,635 156,977 (31,429) 125,548 (23,928) 101,620 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 96 Notes to Consolidated Financial Statements 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, 2023 March 31, 2022 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. On September 1, 2021, the Company announced the reset of the dividend rate on its Cumulative 5-year Rate Reset First Preferred Shares, Series A (“Series A Preferred Shares”). Quarterly cumulative cash dividends, as declared, were paid at an annual rate of 3.885% for the five years ended September 30, 2021. Commencing October 1, 2021 and ending on and including September 30, 2026, quarterly cumulative dividends, if declared, will be paid at an annual rate of 4.028%. The dividend rate will be reset every five years at a rate equal to the five-year Government of Canada 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, 2021 and have the option on September 30 every five years thereafter. The number of shares tendered for conversion by the conversion deadline of September 30, 2021 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, 2021 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. On June 1, 2022, the Company announced the reset of the dividend rate on its Cumulative 5-year Rate Reset First Preferred Shares, Series C (the “Series C Preferred Shares”). Quarterly cumulative cash dividends, as declared, were paid at an annual rate of 4.993% for the five years ended June 30, 2022. Commencing July 1, 2022 and ending on and including June 30, 2027, quarterly cumulative dividends, if declared, will be paid at an annual rate of 6.837%. The dividend rate will be reset every five years at a rate equal to the five-year Government of Canada 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, 2022 and have the option on June 30 every five years thereafter. The number of shares tendered for conversion by the conversion deadline of June 15, 2022 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, 2022 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. No shares were redeemed on June 30, 2022. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 97 March 31, 2023 March 31, 2022 Amount $ 686,043 — (1,334) (118,364) Number of shares 99,594,391 — (122,355) (11,994,885) Amount $ 685,270 (3,411) (1,505) (104,188) Number of shares 99,697,799 (495,100) (122,355) (11,023,169) 566,345 87,477,151 576,166 88,057,175 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 Balance, March 31, 2021 Shares issued in connection with settlement of Petsky Prunier deferred consideration Shares issued in connection with exercise of PSOs (performance stock options) Shares purchased and cancelled under the substantial course issuer bid Shares purchased and cancelled under the normal course issuer bid Balance, March 31, 2022 Shares issued in connection with settlement of Sawaya deferred consideration Shares issued in connection with exercise of PSO Shares purchased and cancelled under the normal course issuer bid Balance, March 31, 2023 Number of shares 108,191,331 736,850 609,046 (6,451,612) (3,387,816) 99,697,799 195,993 285,899 (585,300) 99,594,391 Amount $ 749,500 — 4,098 (44,801) (23,527) 685,270 2,883 1,924 (4,034) 686,043 On August 18, 2022, 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 4,959,281 of its common shares during the period from August 21, 2022 to August 20, 2023 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, 2023, there were 502,000 shares purchased under the NCIB. There were also 83,300 shares purchased under the NCIB during the year ended March 31, 2022 and cancelled during the year ended March 31, 2023. [iii] (LOSS) EARNINGS PER COMMON SHARE (Loss) earnings per common share Net (loss) income attributable to CGGI shareholders Preferred share dividends Net (loss) income attributable to common shareholders Weighted average number of common shares (number) Basic (loss) earnings per share Diluted (loss) earnings per common share Net (loss) income attributable to common shareholders Weighted average number of common shares (number) Dilutive effect in connection with LTIP (number) Shares payable in connection with Results deferred consideration (number) Dilutive effect in connection with acquisition of Sawaya (number) Dilutive effect in connection with PSOs (number) Adjusted weighted average number of common shares (number) For the years ended March 31, 2023 $ March 31, 2022 $ $ $ (90,104) $ (10,948) (101,052) 87,381,995 (1.16) $ 246,314 (9,484) 236,830 94,871,398 2.50 (101,052) 236,830 n/a n/a n/a n/a n/a n/a 94,871,398 10,922,398 — 783,972 2,856,706 109,434,474 Diluted (loss) earnings per common share $ (1.16) $ 2.16 For the year ended March 31, 2023, the instruments involving potential common shares were excluded from the calculation of diluted loss per share as they were anti-dilutive. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 98 Notes to Consolidated Financial Statements 21. Dividends COMMON SHARE DIVIDENDS The Company declared the following common share dividends during the year ended March 31, 2023: Record date June 17, 2022 September 2, 2022 December 2, 2022 February 24, 2023 Payment date Cash dividend per common share Total common dividend amount June 30, 2022 $ September 15, 2022 $ December 15, 2022 $ March 10, 2023 $ 0.085 0.085 0.085 0.085 $ $ $ $ 8,429 8,431 8,431 8,461 On June 16, 2023, the Board of Directors approved a dividend of $0.085 per common share, payable on July 4, 2023, with a record date of June 23, 2023. [Note 28] PREFERRED SHARE DIVIDENDS Record date June 17, 2022 September 16, 2022 December 23, 2022 March 17, 2023 Payment date Cash dividend per Series A Preferred Share Cash dividend per Series C Preferred Share Total preferred dividend amount June 30, 2022 $ September 30, 2022 $ January 3, 2023 $ March 31, 2023 $ 0.251750 0.251750 0.251750 0.251750 $ $ $ $ 0.312060 0.427310 0.427310 0.427310 $ $ $ $ 2,391 2,852 2,852 2,852 On June 16, 2023, the Board approved a cash dividend of $0.25175 per Series A Preferred Share payable on June 30, 2023 to Series A Preferred shareholders of record as at June 23, 2023. [Note 28] On June 16, 2023, the Board approved a cash dividend of $0.42731 per Series C Preferred Share payable on June 30, 2023 to Series C Preferred shareholders of record as at June 23, 2023. [Note 28] 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 8,198,677 RSUs [year ended March 31, 2022 – 4,825,572 RSUs] granted in lieu of cash compensation to employees during the year ended March 31, 2023. The Trusts purchased 6,951,114 common shares [year ended March 31, 2022 – 4,531,020 common shares] during the year ended March 31, 2023. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 99 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, 2023 was $10.17. [March 31, 2022 – $13.45]. Awards outstanding, March 31, 2021 Grants Vested Forfeited Awards outstanding, March 31, 2022 Grants Vested Forfeited Awards outstanding, March 31, 2023 Common shares held by the Trusts, March 31, 2021 Acquired Released on vesting Common shares held by the Trusts, March 31, 2022 Acquired Released on vesting Common shares held by the Trusts, March 31, 2023 [ii] INDEPENDENT DIRECTOR DEFERRED SHARE UNITS Number 11,663,809 4,825,572 (5,096,244) (212,602) 11,180,535 8,198,677 (5,979,398) (115,399) 13,284,415 Number 11,588,393 4,531,020 (5,096,244) 11,023,169 6,951,114 (5,979,398) 11,994,885 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 director 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. During the year ended March 31, 2023, the Company granted 81,920 DSUs [2022 – 53,629 DSUs]. The carrying amount of the liability relating to DSUs at March 31, 2023 was $3.9 million [2022 – $7.7 million]. [iii] EXECUTIVE EMPLOYEE DEFERRED SHARES UNITS On June 1, 2021, the Company adopted a deferred share unit (DSUs) plan for certain key senior executives. All DSU awards will be cash settled on the retirement of the employee, a “good leaver” departure after three years from the date of grant, or death. The DSUs are settled in cash one year after the participants’ departure from the Company under certain conditions of the plan. The carrying amount of the liability recognized in accounts payable and accrued liabilities relating to DSUs at March 31, 2023 was $9.6 million [March 31, 2022 – $5.4 million]. [iv] 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 the 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. The carrying amount of the liability recognized in accounts payable and accrued liabilities relating to PSUs at March 31, 2023 was $106.9 million [March 31, 2022 – $140.2 million]. [v] PERFORMANCE STOCK OPTIONS The Company adopted a performance share option (PSO) plan for certain senior executives. The PSOs have a term of five years and will time-vest rateably over four years (with one-third vesting on each of the second, third and fourth anniversaries of the date of the grant). The PSOs will also be subject to market (stock price) performance vesting conditions, and have a four times exercise price cap on payout value (i.e., the gain on the exercise of the options is limited to three times the exercise price). During the year ended March 31, 2023, the stock price performance vesting conditions had been met on all the outstanding options. A total of 4,855,668 options outstanding (net of options already exercised) had met both stock price performance and time-based 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 100 Notes to Consolidated Financial Statements vesting conditions and are therefore fully vested and outstanding as of March 31, 2023. A total of 4,122,335 PSOs expired on June 14, 2023. In addition, 600,000 PSOs will expire on August 16, 2023. The following is a summary of the Company’s PSOs as at March 31, 2023: Balance, March 31, 2021 Exercised Balance, March 31, 2022 Grants Exercised Balance, March 31, 2023 Number of PSOs Weighted average exercise price ($) $ $ $ 6,237,001 (609,046) 5,627,955 300,000 (705,620) 5,222,335 6.78 6.73 6.79 8.77 6.73 6.92 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, 2023: Dividend yield Expected volatility Risk-free interest rate Expected life 3.78% 48.60% 3.39% 4 years 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. [vi] PSW CONDITIONAL SHARE PLAN In connection with the acquisition of PSW [Note 11], the Company adopted a share-based payment plan in the amount of £2.5 million (CAD $4.2 million) in respect of CGWM UK ordinary shares for certain key employees of PSW. The plan is subject to various vesting conditions and accordingly, the Company recognizes the cost of such awards as an expense over the applicable vesting period. [vii] SHARE-BASED COMPENSATION EXPENSE Long-term incentive plan Deferred share units (cash-settled) Deferred share units (cash-settled) – senior executives PSO PSU (cash-settled) Other share-based payment plan Total share-based compensation expense For the years ended March 31, 2023 $ 45,426 (561) 4,029 635 8,685 1,281 59,495 March 31, 2022 $ 82,452 342 5,435 1,393 55,465 1,740 146,827 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 101 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 CG G Sponsors Inc. I Jitneytrade Inc. Finlogik Inc. Finlogik Tunisie, SARL Canaccord Genuity SAS Canaccord Genuity Wealth (International) Limited(1) Canaccord Genuity Financial Planning Limited(1)(4) Canaccord Genuity Wealth Limited(1) Canaccord Genuity Wealth Group Limited(1) Canaccord Genuity Wealth (International) Holdings Limited(1) Hargreave Hale Limited(1) CG Wealth Planning Limited(1) Adam & Company Investment Management Limited(1)(4) Punter Southall Wealth Limited(1)(4) 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 Genuity (2021) LLC Canaccord Genuity Finance Corp. Canaccord Adams (Delaware) Inc. Canaccord Genuity Securities LLC CG Sawaya, LLC Canaccord Genuity (2021) Holdings ULC Canaccord Genuity (2021) Limited Partnership Canaccord Genuity (2021) GP ULC Stockwave Equities Ltd. Canaccord Genuity Group Finance Company Ltd. Canaccord Genuity (Hong Kong) Limited Canaccord Genuity Emerging Markets Ltd. Canaccord Financial Group (Australia) Pty Ltd(2) Canaccord Genuity (Australia) Limited(2) Canaccord Genuity Financial Limited(2) Patersons Asset Management Limited(2) Canaccord Genuity Asia (Beijing) Limited The Balloch Group Limited Canaccord Genuity Asia (Hong Kong) Limited Canaccord Genuity (Dubai) Ltd.(3) Canaccord Genuity Wealth Group Holdings (Jersey) Limited(1) Canaccord Genuity Hawkpoint Limited Canaccord Genuity Management Company Limited(4) % equity interest Country of incorporation Canada 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 United Kingdom Canada United States United States Canada United States Canada United States United States United States Canada United States United States United States Canada Canada Canada Canada Canada China (Hong Kong SAR) Bahamas Australia Australia Australia Australia China British Virgin Islands China (Hong Kong SAR) United Arab Emirates Jersey United Kingdom Ireland March 31, 2023 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 65% 65% 65% 65% 100% 100% 100% 100% 94.5% 100% 100% March 31, 2022 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 96.7% 96.7% 96.7% 96.7% 96.7% 96.7% 96.7% 96.7% n/a 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 65% 65% 65% 65% 100% 100% 100% 100% 96.7% 100% 100% (1) The company issued Convertible Preferred Shares to certain institutional investors and certain equity instruments in CGWM UK within the context of the transaction value and reflecting a 5.55% interest in the outstanding ordinary shares of CGWM UK. On an as converted basis, convertible preferred shares, preference shares and ordinary shares issued to management and employees of CGWM UK together represent a 33.1% equity equivalent interest. [Note 8] 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 102 Notes to Consolidated Financial Statements (2) The Company owns 65% 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, 2023 the Company is considered to have a 67.3% interest because of the shares held in a trust controlled by Canaccord Financial Group (Australia) Pty Ltd. [March 31, 2022 – 67.3%] [Note 8]. (3) The Company sold its interest in Canaccord Genuity (Dubai) Ltd. subsequent to March 31, 2023. (4) This company was wound-up as part of an internal restructuring subsequent to March 31, 2023. [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, 2023 and 2022: 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, 2023 $ 48,804 892 49,696 March 31, 2022 $ 33,585 736 34,321 March 31, 2023 $ 18,115 600 March 31, 2022 $ 12,009 1,271 [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. 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 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 & Crown Dependencies. 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 & Crown Dependencies (Channel Islands). Amortization of identifiable intangible assets acquired through the acquisitions of Eden Financial Ltd., Hargreave Hale, McCarthy Taylor, Thomas Miller, Adam & Company and PSW is allocated to the Canaccord Genuity Wealth Management UK & Europe (UK Wealth) segment. Amortization of identifiable intangible assets acquired through the acquisitions of Petsky Prunier and CG Sawaya is allocated to the Canaccord Genuity Capital Markets US segment. Amortization of identifiable intangible assets acquired through the acquisition of Results is allocated to Canaccord Genuity Capital Markets UK and Europe 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. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 103 For the years ended March 31, 2023 Canaccord Genuity Capital Markets $ Canaccord Genuity Wealth Management $ 156,187 126,588 362,549 116,900 25,067 5,562 591,772 34,356 2,005 338 76,593 3,240 Corporate and Other $ 1,155 — — — 13,585 (5,500) Total $ 749,114 160,944 364,554 117,238 115,245 3,302 Canaccord Genuity Capital Markets $ 174,826 463,118 488,579 158,232 8,985 9,334 Canaccord Genuity Wealth Management $ 587,001 98,607 4,478 744 21,580 7,997 March 31, 2022 Corporate and Other $ 16 — — 2 5,463 17,040 Total $ 761,843 561,725 493,057 158,978 36,028 34,371 698,759 10,303 490,833 29,662 89,292 1,669 1,278,884 41,634 924,199 6,784 512,719 20,192 109,468 617 1,546,386 27,593 15,756 3,383 18,848 1,477 7,133 25,296 32,739 5,926 3,446 7,379 2,952 — 26,335 36,058 54,539 7,403 15,278 1,366 13,072 537 5,444 20,861 8,852 8,660 — — — — — — 102,571 11,629 11,629 — (14,278) — 55 — 55 — — — — — — — — — — 23,894 22,422 23,598 9,197 3,172 195 1,674 — — 8,519 8,519 5,932 5,932 192 192 (43,966) 21,651 116,715 23,293 (107,182) (44,944) (34,433) — 341,838 20,007 143,679 22,670 (107,248) (42,677) 378,269 — 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 Acquisition related costs Impairment of goodwill and intangible assets 102,571 Fair value adjustment of non-controlling interest derivative liability Change in fair value of — contingent consideration (14,278) Costs associated with redemption of convertible debentures Share of loss of an associate (Loss) Income before intersegment allocations and income taxes Intersegment allocations (Loss) income before income taxes (65,617) 93,422 (62,238) (34,433) 321,831 121,009 (64,571) 378,269 For geographic reporting purposes, the Company’s business operations are grouped into Canada, the US, the UK & Europe (including Dubai) and Australia. The Asian operations are 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 & Crown Dependencies United States Australia $ For the years ended March 31, 2023 $ 454,741 $ 440,003 487,769 127,884 March 31, 2022 $ 692,432 430,850 673,997 248,723 $ 1,510,397 $ 2,046,002 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 104 Notes to Consolidated Financial Statements The following table presents selected figures pertaining to the financial position of each geographic location: UK & Crown Dependencies $ 9,399 413,393 251,564 674,356 Canada $ 31,692 — 47,903 79,595 United States $ 4,076 206,664 186 210,926 Australia $ 3,013 2,763 6,262 12,038 $ $ $ 15,847 101,732 48,932 $ 9,796 216,078 127,117 $ 5,506 189,608 3,746 $ 3,494 2,861 7,198 166,511 $ 352,991 $ 198,860 $ 13,553 $ Total $ 48,180 622,820 305,915 976,915 34,643 510,279 186,993 731,915 As at March 31, 2023 Equipment and leasehold improvements Goodwill Intangible assets Non-current assets As at March 31, 2022 Equipment and leasehold improvements Goodwill Intangible assets Non-current assets 25. Capital Management The Company’s business requires capital for operating and regulatory purposes, including funding current and future operations. The Company’s capital structure is underpinned by shareholders’ equity, which is comprised of preferred shares, common shares, contributed surplus, retained earnings and accumulated other comprehensive income , and is further complemented by the subordinated debt, non-controlling interests, bank loans and convertible debentures. The following table summarizes our capital as at March 31, 2023 and 2022: Type of capital Preferred shares Common shares Deferred consideration Contributed surplus Retained earnings Accumulated other comprehensive income Shareholders’ equity Non-controlling interests Subordinated debt Bank loan March 31, 2023 $ 205,641 566,345 8,495 49,400 119,552 105,206 1,054,639 343,998 7,500 307,122 March 31, 2022 $ 205,641 576,166 11,378 64,241 251,540 69,103 1,178,069 238,700 7,500 152,041 1,713,259 $ 1,576,310 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 CIRO • Canaccord Genuity Limited, Canaccord Genuity Wealth Limited, Canaccord Genuity Financial Planning Limited, CG McCarthy Taylor Limited, CG Wealth Planning Limited, Adam & Company Investment Management Limited, Punter Southwall 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. / 2023 ANNUAL REPORT Notes to Consolidated Financial Statements 105 • Canaccord Genuity (Dubai) Ltd. is subject to regulation in the United Arab Emirates by the Dubai Financial Services Authority (DFSA). The Company sold its interest in Canaccord Genuity (Dubai) Ltd subsequent to March 31, 2023 • Canaccord Genuity Emerging Markets Ltd. is subject to regulation in the Bahamas by the Securities Commission of the Bahamas • Canaccord Genuity Insurance Company Ltd is subject to regulation by the Financial Services Commission (Barbados) 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, 2023. 26. Client Money At March 31, 2023, the UK & Europe operations held client money in segregated accounts of $3.280 billion (£1.967 billion) [2022 – $2.859 billion (£1.740 billion)]. This client money comprises of $7.121 million (£4.270 million) [2022 – $7.345 million (£4.469 million)] of cash to settle outstanding trades and $3.272 billion (£1.962 billion) [2022 – $2.852 billion (£1.735 billion)] of segregated deposits which are held on behalf of clients and which are not reflected on the consolidated statements of financial position. Movement in settlement balances is reflected in operating cash flows. 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, 2023 and 2022: Balance, March 31, 2021 Additions Utilized Balance, March 31, 2022 Additions Utilized Balance, March 31, 2023 Legal provisions $ Restructuring provisions $ 8,551 2,515 (4,419) 6,647 13,363 (1,874) 18,136 1,806 — (231) 1,575 — (51) 1,524 Total provisions $ 10,357 2,515 (4,650) 8,222 13,363 (1,925) 19,660 Commitments, litigation proceedings and contingent liabilities In the normal course of business, the Company is involved in litigation, and as of March 31, 2023, 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, 2023, 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. The Company is subject to certain rules, regulations, and other regulatory requirements specific to the broker-dealer business and, as such, the Company operates within a regulatory framework involving certain governmental agencies and organizations. As a regulated entity and in the normal course, the Company is subject to periodic reviews and examinations by those agencies and organizations. The Company maintains policies and procedures designed to ensure compliance with these rules, regulations and requirements, but, in the event that a regulatory authority determines that there was a failure by the Company to follow or comply with certain procedures or a regulatory requirement or there is a deficiency in the Company’s records or reports or some other 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 106 Notes to Consolidated Financial Statements compliance or financial failure then the Company may agree to pay a fine or penalty or agree to certain other sanctions, or, alternatively, a regulatory authority may impose a fine, penalty or other sanction. If such circumstances arise, the Company records a provision for any matter where a payment is considered probable and can be reasonably estimated. In connection with this regulatory oversight, the Company is involved in an enforcement matter arising from a regulatory review of the Company’s wholesale market making activities. Although the Company expects that the underlying enforcement matter will be resolved in the ordinary course and expects that the resolution of the enforcement matter will not have a material impact on its financial condition or results of operations, the Company may incur a significant penalty and additional costs related to its business or become subject to other terms or conditions that may adversely impact its business. An estimate for a settlement of the enforcement matter has been recorded as of March 31, 2023, based on management’s judgment and based on the information currently available to the Company, but because the ultimate resolution of this matter is not known and the amount of the loss is uncertain, the Company may be required to make a payment that is more than the amount recorded. In determining the estimate, management referred to previous enforcement matters that were settled by other companies recognizing that facts and circumstances in such cases were significantly different than those in the Company’s current matter. These other cases reflected a wide range of settlement payments, and it is reasonably possible that an actual settlement will exceed the estimate currently recorded as of March 31, 2023. An actual estimate of any such excess cannot be made at this time. Adjustments will be recorded in subsequent periods if further information becomes available that changes the estimate. 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 provides services only 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 favor 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. Risks associated with emerging industries such as the cannabis industry 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 Company may be unable to recover amounts in respect of any indemnity claims. 28. Subsequent Events 1. BUSINESS COMBINATION On May 29, 2023, the Company, through its Canadian wealth management business, completed its previously announced acquisition of Mercer Global Investments Canada Limited’s Canadian private wealth business for cash consideration of $2.4 million and contingent consideration subject to achievement of certain performance targets. 2. DIVIDENDS On June 16, 2023, the Board of Directors approved a dividend of $0.085 per common share, payable on July 4, 2023, with a record date of June 23, 2023. [Note 21] On June 16, 2023, the Board approved a cash dividend of $0.25175 per Series A Preferred Share payable on June 30, 2023 to Series A Preferred shareholders of record as at June 23, 2023. [Note 21] On June 16, 2023, the Board approved a cash dividend of $0.42731 per Series C Preferred Share payable on June 30, 2023 to Series C Preferred shareholders of record as at June 23, 2023. [Note 21] CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT 107 SUPPLEMENTAL INFORMATION Advisory note: This supplemental information is not audited and should be read in conjunction with the audited financial statements contained herein. FINANCIAL HIGHLIGHTS(1)(2)(3) (C$ thousands, except for AUM, AUA, common and preferred share information, financial measures and percentages) Financial results Revenue Expenses Income taxes expense Net (loss) income Net (loss) income attributable to CGGI shareholders Net (loss) income attributable to common shareholders For the years ended and as at March 31 2023 2022 2021 2020 2019 1,510,397 1,544,830 20,309 (54,742) (90,104) (101,052) 2,046,002 1,667,733 107,704 270,565 246,314 236,830 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 Business segment (Loss) income 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 ($) Basic (loss) earnings Diluted (loss) earnings Common share price ($) 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 (65,617) 93,422 (62,238) 8,834 35,694 55,101 5,432 96,227 (1.16) (1.16) 12.58 6.24 10.95 321,831 121,009 (64,571) 8,482 37,881 52,830 5,352 96,063 2.50 2.16 16.52 11.42 12.35 317,319 116,855 (64,272) 6,307 32,240 52,298 4,228 88,766 2.30 2.04 13.25 3.93 11.50 87,477 99,594 104,498 87,382 n.a. 1,144,253 88,057 99,698 104,500 94,871 109,434 1,290,575 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 8,540 8,540 8,540 8,540 8,540 Dividends per common share Common dividend yield (closing common share price) 0.34 3.1% 0.32 2.6% 0.25 2.2% 0.20 4.6% 0.20 3.4% (1) (2) (3) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. The operating results of the Australian operations have been fully consolidated, and a 32.7% non-controlling interest has been recognized for the three months and fiscal 2023 [15% non-controlling interest has been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022]. The operating results of CGWM UK have been fully consolidated, and a 5.55% non-controlling interest in the outstanding ordinary shares of Canaccord Genuity Wealth Management Holdings (Jersey) Limited has been recognized for the three and twelve months ended March 31, 2023 [three and twelve months ended March 31, 2022 — 1.5%]. 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, Patersons since October 21, 2019, Adam & Company since October 1, 2021, Sawaya since December 31, 2021, PSW since May 31, 2022 and Results since August 17, 2022. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 108 Supplemental Information Condensed Consolidated Statements of Operations and Retained Earnings(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 Development costs Amortization of right of use assets Restructuring costs Acquisition-related costs Impairment of goodwill and other assets Fair value adjustment of non-controlling interests derivative liability Change in fair value of contingent consideration Loss on extinguishment of convertible debentures Share of loss (gain) of an associate Income before income taxes Income taxes expense (recovery) Net income for the year Non-controlling interests Net (loss) income attributable to CGGI shareholders Retained earnings (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 Shares purchased and cancelled under substantial issuer bid 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 Canaccord Genuity Capital Markets Canaccord Genuity Wealth Management Corporate and Other For the years ended and as at March 31 2023 2022 2021 2020 2019 749,114 160,944 364,554 117,238 115,245 3,302 1,510,397 936,872 96,083 21,986 85,482 54,539 138,461 41,634 36,058 26,335 — 7,403 102,571 11,629 (14,278) — 55 1,544,830 (34,433) 20,309 (54,742) 35,362 (90,104) 251,540 (30,936) (10,948) — — — — 119,552 62.0% 40.3% 102.3% (2.3)% (59.0)% (3.6)% (1.16) (1.16) 792,853 708,304 9,240 1,510,397 761,843 561,725 493,057 158,978 36,028 34,371 2,046,002 1,248,184 102,824 20,074 73,873 23,598 101,431 27,593 22,422 23,894 — 9,197 — 8,519 — 5,932 192 1,667,733 378,269 107,704 270,565 24,251 246,314 73,220 (30,797) (9,484) — — (27,713) — 251,540 61.0% 20.5% 81.5% 18.5% 28.5% 13.2% 2.50 2.16 1,303,074 720,407 22,521 2,046,002 735,239 761,551 197,092 246,801 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 — 5,922 — — — 4,354 922 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 1,312,228 663,619 31,841 2,007,688 586,884 236,962 206,507 108,834 63,690 20,990 1,223,867 556,475 294,241 142,228 125,830 51,008 20,785 1,190,567 738,313 83,964 18,094 66,666 33,678 113,612 32,594 12,053 22,866 1,921 (124) — — — — 207 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 0.65 689,469 511,435 22,963 1,223,867 716,625 83,577 41,719 64,930 25,453 100,768 24,280 15,513 — 13,070 3,064 — — — 8,608 304 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 0.48 704,326 461,811 24,430 1,190,567 (1) (2) (3) (4) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. The operating results of the Australian operations have been fully consolidated, and a 32.7% non-controlling interest has been recognized for the three and twelve months ended March 31, 2023 [15% non-controlling interest has been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022]. The operating results of CGWM UK have been fully consolidated, and a 5.55% non-controlling interest in the outstanding ordinary shares of Canaccord Genuity Wealth Management Holdings (Jersey) Limited has been recognized for the three and twelve months ended March 31, 2023 [three and twelve months ended March 31, 2022 — 1.5%]. 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, Patersons since October 21, 2019, Adam & Company since October 1, 2021, Sawaya since December 31, 2021, PSW since May 31, 2022 and Results since August 17, 2022. 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. / 2023 ANNUAL REPORT Supplemental Information 109 Condensed Consolidated Statements of Financial Position As at March 31 (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 asset 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 liability Current portion of 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) 2023 2022 2021 2020 2019 1,008,432 715,078 3,355,203 34,209 90,733 18,101 48,180 928,735 103,729 6,302,400 — 556,303 3,739,992 2,177 13,342 26,712 17,325 — 92,526 98,378 293,780 55,728 7,500 — 343,998 1,054,639 6,302,400 2023 275 499 427 1,201 180 737 394 86 231 — 2,829 145 474 252 119 8,834 35,694 55,101 5,432 96,227 1,788,261 1,051,229 3,438,655 1,967 98,224 22,928 34,643 697,272 117,066 7,250,245 — 567,290 4,853,894 15,952 6,574 23,928 10,618 — 101,620 75,758 145,467 24,875 7,500 — 238,700 1,178,069 7,250,245 2022 278 489 405 1,172 143 581 378 91 222 — 2,587 146 464 220 115 8,482 37,881 52,830 5,352 96,063 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 — 70,591 19,577 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 — 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 — 88,922 58,340 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 — 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 — — 5,832 — 132,285 50,370 7,978 7,500 127,225 1,997 876,363 4,749,294 2019 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 (1) (2) (3) These miscellaneous operational statistics are non-IFRS measures. See Non-IFRS Measures on page 14. 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 110 Supplemental Information Quarterly Financial Highlights(1)(2)(3) (C$ thousands, except for AUM, AUA, common and preferred share information, financial measures and percentages) Financial results Revenue Expenses Income taxes expense Net income (loss) Net (loss) income attributable to CGGI shareholders Net (loss) 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 ($) Basic (loss) earnings Diluted (loss) earnings Common share price ($) 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 Fiscal 2023 Fiscal 2022 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 430,389 382,116 380,522 317,370 424,962 462,902 341,490 315,476 4,898 12,468 26,564 (3,004) 17,170 (10,173) 14,779 (12,564) 1,664 1,279 3,763 (82,065) (92,775) (95,166) (4,326) (7,178) 499,793 552,217 475,161 518,831 403,245 457,234 388,124 419,130 26,648 73,053 72,001 69,650 28,251 66,732 58,645 56,254 25,252 61,785 56,583 54,232 27,553 68,995 58,657 56,266 7,925 (98,819) 29,995 (11,962) 29,083 (31,581) 22,800 22,125 (5,893) 2,477 12,219 (12,802) 71,743 23,919 93,126 28,677 886 (26,820) 72,845 23,696 (9,504) 84,117 44,717 (29,133) 8,834 35,694 55,101 5,432 96,227 8,428 34,735 54,403 5,250 94,388 8,047 33,739 49,992 4,876 88,607 7,952 33,857 52,166 4,694 90,717 8,482 37,881 52,830 5,352 8,385 37,472 59,407 5,065 96,063 101,944 7,637 35,768 57,508 4,814 98,090 6,989 34,588 55,605 4,691 94,884 (0.08) (0.08) 11.80 8.20 10.95 (1.10) (1.10) 8.51 6.24 8.39 0.17 0.14 10.10 6.71 6.77 (0.14) (0.14) 12.58 8.21 8.43 0.62 0.53 15.85 11.48 12.35 0.59 0.52 16.52 12.95 15.08 0.56 0.49 15.55 12.63 13.93 0.72 0.63 14.27 11.42 13.58 86,033 99,186 87,477 99,594 87,215 99,382 87,846 99,186 104,498 104,955 104,907 104,590 88,636 n.a 100,563 102,198 104,981 86,782 87,461 86,661 94,689 88,221 88,057 96,836 99,698 105,811 106,444 107,407 104,500 104,038 110,765 111,834 97,065 105,790 108,976 110,084 110,810 91,235 96,138 94,997 8,540 8,540 8,540 8,540 8,540 8,540 8,540 8,540 0.085 0.085 0.085 0.085 0.085 0.085 0.075 0.075 (1) (2) (3) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. The operating results of the Australian operations have been fully consolidated, and a 32.7% non-controlling interest has been recognized for the three months and fiscal 2023 [15% non-controlling interest has been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022]. The operating results of CGWM UK have been fully consolidated, and a 5.55% non-controlling interest in the outstanding ordinary shares of Canaccord Genuity Wealth Management Holdings (Jersey) Limited has been recognized for the three and twelve months ended March 31, 2023 [three and twelve months ended March 31, 2022 — 1.5%]. 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, Patersons since October 21, 2019, Adam & Company since October 1, 2021, Sawaya since December 31, 2021, PSW since May 31, 2022 and Results since August 17, 2022. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Supplemental Information 111 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 assets Development costs Acquisition-related costs Impairment of goodwill and other assets Fair value adjustment of non-controlling interests derivative liability Change in fair value of contingent consideration Share of loss (gain) of an associate Loss on extinguishment of convertible debentures Income before income taxes Income tax expense Net income (loss) for the period Non-controlling interests Net (loss) 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 (loss) earnings per share Diluted (loss) earnings per share Canaccord Genuity Capital Markets Canaccord Genuity Wealth Management Corporate and Other Fiscal 2023 Fiscal 2022 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 196,774 50,962 104,649 26,921 45,949 5,134 430,389 188,647 47,494 75,667 35,123 32,085 3,100 382,116 240,303 276,066 24,109 23,417 4,859 6,904 22,343 23,239 12,281 23,915 32,825 43,344 11,533 10,838 6,580 6,552 5,473 13,326 — — — 102,571 11,629 (14,278) 10 — 424,962 5,427 1,664 3,763 8,089 (4,326) 64.1% 34.6% 98.7% 1.3% 30.7% 0.9% (0.08) (0.08) 226,140 197,109 7,140 430,389 — — 25 — 462,902 (80,786) 1,279 (82,065) 10,710 (92,775) 62.9% 58.3% 121.1% (21.1)% (1.6)% (21.5)% (1.10) (1.10) 196,879 179,688 5,549 382,116 182,770 43,772 101,294 26,973 22,395 3,318 380,522 222,059 23,809 5,400 20,545 10,519 31,536 11,068 6,388 10,333 (179) — — — 12 — 341,490 39,032 12,468 26,564 9,394 17,170 58.4% 31.4% 89.7% 10.3% 31.9% 7.0% 0.17 0.14 205,697 169,288 5,537 380,522 180,923 18,716 82,944 28,221 14,816 (8,250) 317,370 198,444 24,748 4,823 19,355 7,824 30,756 8,195 6,815 6,926 7,582 — — — 8 — 315,476 1,894 4,898 (3,004) 7,169 (10,173) 62.5% 36.9% 99.4% 0.6% n.m. (0.9)% (0.14) (0.14) 164,137 162,219 (8,986) 317,370 196,976 108,801 122,353 41,960 10,264 19,439 499,793 294,695 23,588 5,327 20,336 7,483 29,434 8,945 6,697 6,214 515 — — — 11 — 403,245 96,548 27,553 68,995 10,338 58,657 59.0% 21.7% 80.7% 19.3% 28.5% 13.8% 0.62 0.53 312,046 174,274 13,473 499,793 197,009 151,025 153,297 33,980 9,639 7,267 552,217 340,929 25,401 5,389 18,048 6,014 28,658 6,792 5,464 5,195 6,762 — 8,519 — 63 — 457,234 94,983 28,251 66,732 8,087 58,645 61.7% 21.1% 82.8% 17.2% 29.7% 12.1% 0.59 0.52 361,893 184,901 5,423 552,217 185,105 106,261 139,413 30,390 8,458 5,534 475,161 290,234 25,451 5,195 18,958 5,353 21,782 5,987 5,715 6,943 1,920 — — — 118 468 388,124 87,037 25,252 61,785 5,202 56,583 61.1% 20.6% 81.7% 18.3% 29.0% 13.0% 0.56 0.49 304,919 166,228 4,014 475,161 182,753 195,638 77,994 52,648 7,667 2,131 518,831 322,326 28,384 4,163 16,531 4,748 21,557 5,869 6,018 4,070 — — — — — 5,464 419,130 99,701 26,648 73,053 1,052 72,001 62.1% 18.7% 80.8% 19.2% 26.7% 14.1% 0.72 0.63 324,216 195,004 (389) 518,831 (1) (2) (3) (4) Financial measures are in accordance with IFRS except for figures excluding significant items. See Non-IFRS Measures on page 14. The operating results of the Australian operations have been fully consolidated, and a 32.7% non-controlling interest has been recognized for the three months and fiscal 2023 [15% non-controlling interest has been recognized for the first nine months of fiscal 2022 and 32.7% for the fourth quarter of fiscal 2022]. The operating results of CGWM UK have been fully consolidated, and a 5.55% non-controlling interest in the outstanding ordinary shares of Canaccord Genuity Wealth Management Holdings (Jersey) Limited has been recognized for the three and twelve months ended March 31, 2023 [three and twelve months ended March 31, 2022 — 1.5%]. 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, Patersons since October 21, 2019, Adam & Company since October 1, 2021, Sawaya since December 31, 2021, PSW since May 31, 2022 and Results since August 17, 2022. 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 112 Supplemental Information Condensed Consolidated Statements of Financial Position (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 asset Liabilities and shareholders’ equity Fiscal 2023 Fiscal 2022 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 893,052 778,289 1,008,432 715,078 946,567 1,034,804 1,788,261 1,790,177 1,725,252 1,364,952 686,983 1,051,229 1,159,854 1,136,754 1,141,213 733,967 3,355,203 3,184,749 3,279,578 3,154,183 3,438,655 3,137,364 4,291,580 3,862,988 17,342 77,264 8,879 21,686 524,875 79,791 6,306,680 6,079,979 6,269,473 6,128,151 7,250,245 7,039,426 7,886,293 7,098,990 55,840 65,928 20,969 51,467 924,062 1,000,600 114,557 109,236 9,568 89,186 24,815 23,724 725,569 79,169 1,967 98,224 22,928 34,643 697,272 117,066 8,012 83,674 20,430 21,271 522,449 76,871 31,777 78,661 20,402 43,883 963,555 113,903 34,209 95,013 18,101 48,180 928,735 103,729 50,011 70,950 18,781 50,849 — — 536,647 — 440,641 — 556,303 — 634,594 — 567,290 — 876,313 1,219,252 — Bank indebtedness Securities sold short 814,493 Accounts payable, accrued liabilities and other 3,739,992 3,481,430 3,717,035 3,682,651 4,853,894 4,436,267 4,988,873 4,780,498 37,013 Income taxes payable 15,432 Current portion of bank loan Current portion of lease liability 23,898 — 12,399 Current portion of contingent consideration — 118,321 Short-term loan facility 64,096 Lease liability 19,482 Other long-term liabilities 57,097 Bank loan 19,180 Deferred tax liabilities 7,500 Subordinated debt — Convertible debentures Non-controlling interests 6,337 1,058,919 1,002,780 1,079,840 1,089,983 1,178,069 1,107,972 1,151,429 1,123,244 Shareholders’ equity 6,306,680 6,079,979 6,269,473 6,128,151 7,250,245 7,039,426 7,886,293 7,098,990 15,952 6,574 23,928 10,618 — 101,620 75,758 145,467 24,875 7,500 — 238,700 6,266 6,843 24,446 11,034 — 63,281 80,875 154,501 25,629 7,500 — 238,499 4,270 6,270 23,233 12,615 — 101,709 81,120 293,255 58,990 7,500 — 325,914 1,552 13,116 26,681 17,547 — 95,887 99,517 294,795 56,368 7,500 — 348,212 1,638 6,182 25,679 27,779 — 101,735 94,460 286,621 54,002 7,500 — 330,355 2,177 13,342 26,712 17,325 — 92,526 98,378 293,780 55,728 7,500 — 343,998 59,284 42,166 154,016 15,010 7,500 — 208,208 8,183 6,836 25,536 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) Q4 275 499 427 1,201 180 737 394 86 231 2,829 145 474 252 119 8,834 35,694 55,101 5,556 96,351 Fiscal 2023 Q3 Q2 275 282 498 439 1,212 506 422 1,210 182 737 406 84 229 2,850 148 477 255 116 8,428 34,735 54,403 5,250 94,388 182 730 403 90 230 2,845 149 476 256 113 8,047 33,739 49,992 4,876 88,607 Q1 279 497 422 1,198 143 588 376 92 218 2,615 146 474 221 114 7,952 33,857 52,166 4,694 90,717 Q4 278 489 405 1,172 143 581 378 91 222 2,587 146 464 220 115 8,482 37,881 52,830 5,352 96,063 Fiscal 2022 Q3 270 474 382 1,126 136 576 366 86 220 2,510 146 464 226 112 8,385 37,472 59,407 5,065 101,944 Q2 268 463 380 1,111 133 545 337 89 215 2,430 146 460 204 108 7,637 35,768 57,508 4,814 98,090 Q1 266 470 379 1,115 131 533 315 82 207 2,383 145 460 202 109 6,989 34,588 55,605 4,691 94,884 (1) (2) (3) These miscellaneous operational statistics are non-IFRS measures. See Non-IFRS Measures on page 14. 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT 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 Crown Dependencies 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 and Australia. 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 needs of clients in each of its markets. The Company’s 113 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 (loss) per share (EPS) 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 (loss) 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. 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 114 Glossary 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 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, 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). 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. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT 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 Figures that exclude significant items provide useful information by excluding certain items that may not be indicative of the Company’s core operating results. Financial statement items that exclude significant items are non-IFRS measures. To calculate these non-IFRS financial statement items, we exclude certain items from our financial results prepared in accordance with IFRS. The items which have been excluded are referred to herein as significant items. The following is a description of the composition of the non-IFRS measures used in this MD&A (note that some significant items excluded may not be applicable to the calculation of the non-IFRS measure for each comparative period): (i) revenue excluding significant items, is composed of revenue per IFRS excluding any applicable fair value adjustments on certain illiquid or restricted marketable securities, warrants and options as recorded for IFRS reporting purposes but which are excluded for management reporting purposes and are not used by management to assess operating performance; (ii) expenses excluding significant items, is composed of expenses per IFRS less any applicable amortization of intangible assets acquired in connection with a business combination, acquisition-related expense items, which includes costs recognized in relation to both prospective and completed acquisitions, certain incentive-based costs related to the acquisitions and growth initiatives of CGWM UK and US and UK capital markets divisions, certain costs included in Corporate & Other development costs related to the expired management-led takeover bid for the common shares of the Company, impairment of goodwill and intangible assets in our Canadian capital markets operations, costs associated with the redemption of convertible debentures, costs associated with the reorganization of CGWM UK, change in fair value of contingent consideration in connection with prior acquisitions, fair value adjustments to the derivative liability component of non-controlling interests in CGWM UK; (iii) overhead expenses excluding significant items are calculated as expenses excluding significant items less compensation expense; (iv) net income before taxes after intersegment allocations and excluding significant items, is composed of revenue excluding significant items less expenses excluding significant items; (v) income taxes (adjusted), is composed of income taxes per IFRS adjusted to Glossary 115 reflect the associated tax effect of the excluded significant items; (vi) net income excluding significant items, is net income before income taxes excluding significant items less income taxes (adjusted); (vii) non-controlling interests (adjusted), is composed of the non-controlling interests per IFRS less the amortization of the equity component of the non-controlling interests in CGWM UK; and (viii) net income attributable to common shareholders excluding significant items, is net income excluding significant items less non-controlling interests (adjusted) and preferred share dividends paid on the Series A and Series C Preferred Shares. Other items which have been excluded as significant items in prior periods for purposes of determining expenses, net income before taxes, net income and net income attributable to common shareholders all excluding significant items include impairment of goodwill and other assets, gains or losses related to business disposals including recognition of realized translation gains on the disposal of foreign operations, restructuring costs, certain accounting charges related to the change in the Company’s long-term incentive plan (LTIP) as recorded with effect on March 31, 2018, and loss related to the extinguishment of convertible debentures as recorded for accounting purposes. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 116 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 Terry Lyons has been appointed by the Board of Directors of Canaccord Genuity Group Inc. as its Lead Director. One of his responsibilities is to receive and determine appropriate action on any communications from interested parties that are addressed to the independent directors of the Board. Such communications may be sent to Terry Lyons in writing by mail care of the Corporate Secretary of Canaccord Genuity Group Inc. It is recommended that such communications be addressed as “Terry Lyons, Lead Director, Canaccord Genuity Group Inc., c/o Corporate Secretary, 40 Temperance Street, Suite 2100, Toronto, M5H 0B4, TO BE OPENED BY ADDRESSEE ONLY.” Such communications will be forwarded, unopened, to Mr. Lyons. 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. / 2023 ANNUAL REPORT CORPORATE GOVERNANCE 117 • 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, 2023 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, 2023. Governance The Board is currently composed of seven directors, five 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 AND RISK COMMITTEE The Audit and Risk 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 and Risk Committee are Terry Lyons (Chair), Michael Auerbach, Amy Freedman, Jo-Anne O’Connor, and Rod Phillips. The Audit and Risk Committee has adopted a charter which specifically defines the roles and responsibilities of the Audit and Risk Committee. The Audit and Risk Committee Charter can be found in the Company’s AIF filed on SEDAR. The Audit and Risk 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 and Risk 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 and Risk Committee. After consultation with management, the Audit and Risk Committee is responsible for setting the external auditor’s compensation. The external auditor attends each meeting of the Audit and Risk Committee, and a portion of each meeting is held without the presence of management. The Audit and Risk Committee annually reviews and approves the external auditors’ audit plan and must approve any audit and non-audit work performed by the external auditors. The CFO and senior finance staff attend each meeting of the Audit and Risk Committee other than the portion of the meeting which is held without management present to allow more open discussion. The Audit and Risk 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 five unrelated directors: Michael Auerbach (chair), Amy Freedman, Terry Lyons, Jo-Anne O’Connor and Rod Phillips. 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. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 118 Board of Directors Michael Auerbach Chair of Corporate Governance and Compensation Committee, Audit and Risk Committee Michael Auerbach, age 47, is an entrepreneur, investor, business consultant, media producer, and private diplomat. Since 2013, he has served as the founder and managing member of Subversive Capital LLC, which is dedicated to investing in radical companies whose core missions subvert the status quo and require sophisticated regulatory strategies for success. Subversive Capital has been a pioneering investor in emerging industries, specializing in both early and late-stage investments as well as SPAC acquisitions. Since November 2021, he has also served as the managing member of Subversive Capital Advisor LLC, an SEC-registered investment advisor. Mr. Auerbach served as the Chief Executive Officer of Subversive Acquisition LP, which was a publicly traded Canadian special purpose acquisition company prior to merging into Intercure Ltd., a leading Israeli cannabis company, in April 2021. Michael served as Chairman of Subversive Capital Acquisition Corp., which was a publicly traded Canadian special purpose acquisition company prior to engaging in the Qualifying Transaction and becoming TPCO Holding Corp. In his capacity as a private diplomat, Mr. Auerbach serves as Partner, Head of Business Intelligence, at Dentons Global Advisors and was former longtime executive of Albright Stonebridge Group, a part of Dentons Global Advisors, a global consulting firm founded by former Secretary of State Madeleine Albright. Prior to joining Albright Stonebridge Group in November 2012, Michael founded and then sold a risk consulting firm to Control Risks – a leading global risk consulting firm. Michael started his career during the dot-com boom of the late 1990s running Panopticon Inc., a VC incubator concentrating on Internet and mobile technology. Michael was the Executive Producer of Pseudo Programs – the first Internet Television network. Mr. Auerbach has also held senior positions at the Center for American Progress and The Century Foundation, where he concentrated on issues related to U.S. Foreign Policy, National Security, and Conflict Resolution. His work has been published in a variety of national and international publications and he served as a Visiting Professor at the New School for Social Research. He has also taught at the University of Cape Town and Cyprus College. Mr. Auerbach serves as a member of the board of directors and the lead independent director of Atai Life Sciences N.V., a Nasdaq- listed, clinical-stage biopharmaceutical company, since June 2021. He has also served on the board member of Tuscan Holdings Corp. II, a Nasdaq-listed blank check company, from June 2019 to December 2022. Mr. Auerbach served on the board of directors of Tilray Brands Inc., the first Nasdaq-listed global cannabis company, from February 2018 to May 2021. Mr. Auerbach also sat on the board of directors of Privateer Holdings, Inc from June 2013 to December 2019. Privateer Holdings was the leading cannabis private equity firm that founded Tilray. Mr. Auerbach presently sits on the boards of the Theodore C. Sorensen Center for International Peace and Justice, the KiDS Board of NYU’s Hassenfeld Children’s Hospital, Next for Autism, which produces Night of Too Many Stars, Finding a Cure for Epilepsy (FACES), and Sophie Gerson Healthy Youth Foundation. In addition to Canaccord Genuity Group Inc., Mr. Auerbach is a director of the following public companies: Atai Life Sciences NV and The Parent Company (TPCO Holding Corp.) Daniel Daviau Dan Daviau, age 58, was appointed President and Chief Executive Officer and a director of the Company effective on October 1, 2015. CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Mr. Daviau also served as Chief Executive Officer of Canaccord Genuity Corp. from October 1, 2015 to June 2023, 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 Goodmans LLP, 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. Amy Freedman Independent director Audit and Risk Committee, Corporate Governance and Compensation Committee Amy Freedman, age 50, is a Partner and Head of Engagement Fund Investment at Ewing Morris & Co. Investment Partners Ltd. Ms. Freedman was previously CEO of Kingsdale Advisors, a leading shareholder services and advisory firm specializing in strategic and defensive advisory, governance advisory, proxy and voting analytics and investor communications. Prior to Kingsdale, Ms. Freedman spent over 15 years in capital markets as an investment banker with global firms including Stifel and Morgan Stanley in both Toronto and New York. She holds an MBA and JD from the University of Toronto. In addition to Canaccord Genuity Group Inc., Ms. Freedman is a director of the following public company: Mandalay Resources Corporation. David Kassie David Kassie, age 67, 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 full-time Chairman of the Board. Board of Directors 119 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 (SickKids). Mr. Kassie holds a B.Comm. (Honours) in Economics from McGill University (1977) and an MBA from the University of Western Ontario (1979). In addition to Canaccord Genuity Group Inc., Mr. Kassie is a director of the following public company: Reitmans (Canada) Limited. Terrence A. Lyons, ICD.D. Lead Director, Chair of Audit and Risk Committee, Corporate Governance and Compensation Committee Terrence (Terry) Lyons, ICD.D, age 73, is a corporate director and currently serves as Lead Director and Chair of the Audit and Risk Committee. He is an Independent Director and Chair of the Audit Committee of Martinrea International Inc. He is also a Director of several public and private corporations, including Mineral Mountain Resources Ltd. and Waterotor Technologies Inc. (Chairman). Mr. Lyons is a retired Managing Partner of Brookfield Asset Management, past Chairman of Three Valley Copper Corp., Polaris Materials Corp. (recently acquired by Vulcan Materials), Northgate Minerals Corp. (now Alamos Gold), Eacom Timber Corp. (acquired by Interfor) and Westmin Mining and Vice-Chairman of Battle Mountain Gold (acquired by Newmont Gold). He was previously on the Board of Directors of Canaccord Genuity Group Inc. for 18 years from 2004 to 2022, having served as Lead Director and Chair of the Audit Committee. Mr. Lyons is a Civil Engineer (UBC) with an MBA from Western University. He is a Member Emeritus of the Advisory Board of the Richard Ivey School of Business and is active in sports and charitable activities, is a past Governor of the Olympic Foundation of Canada, past Chairman of The Mining Association of B.C., past Governor and member of the Executive Committee of the B.C. Business Council, past Co-Chair of the B.C. Business Hall of Fame, past Director of the Institute of Corporate Directors (BC) and a former director of the BC Pavilion Corp. (Pavco). In 2007, he was awarded the INCO Medal by the Canadian Institute of Mining and Metallurgy for distinguished service to the mining industry. In addition to Canaccord Genuity Group Inc., Mr. Lyons is a director of the following public companies: Martinrea International Inc., and Mineral Mountain Resources Ltd. Jo-Anne O’Connor Audit and Risk Committee, Corporate Governance and Compensation Committee Jo-Anne O’Connor, age 63, has over 35 years experience within financial services, with expertise in capital markets. Ms. O’Connor spent close to 30 years (1985 to 2014) at Wood Gundy and CIBC, with senior positions in Institutional Equity Trading. From 2017 to 2020, Ms. O’Connor was Managing Director and Chief Operating Officer for a family office, Crescentwood Capital. She is currently the President and Chief Executive Officer of Strategem Capital Corporation, a publicly-traded company (SGE-TSXV) providing growth through diverse investment assets. Ms. O’Connor is not currently a director of any other public companies. Rod Phillips Independent Director Audit and Risk Committee, Corporate Governance and Compensation Committee Rodney (Rod) Phillips, age 58, is a business and public policy leader and lifelong community volunteer. He was the Member of Provincial Parliament (MPP) for Ajax, Ontario and served as Ontario’s Minister of the Environment, Conservation, and Parks, Minister of Finance, and Minister of Long-term Care. Prior to his public service, Mr. Phillips was the President and CEO of the Ontario Lottery and Gaming Corporation, and of Morneau Shepell (Lifeworks). He began his career as a management consultant with KPMG. He also worked with Goodmans LLP and as Chief of Staff to the first Mayor of the amalgamated city of Toronto. Mr. Phillips was also Canadian Chair and Global Advisory Board Member of Afiniti and served as Chair of the Board of Directors for Postmedia Network Inc., and as a member of the corporate boards of Data Communications Management, Top Aces, and the Interprovincial Lottery Corporation. Mr. Phillips served as the volunteer chair of CivicAction and the TELUS Community Fund and on the Boards of Toronto International Film Festival, the Canadian Psychiatric Research Foundation, the Global Business and Economic Roundtable on Addiction and Mental Health, the Council of the College of Physicians and Surgeons of Ontario, Bridgepoint Health, and the Toronto Community Foundation. He is a past President of the Canadian Club of Toronto. Mr. Phillips has an Honours BA in Political Science and English from the University of Western Ontario, and an MBA from Wilfrid Laurier University. He is also a graduate of the Rotman School of Management Directors Education Program with Institute of Corporate Directors designation, ICD.D. Mr. Phillips is currently not a director of any other public companies. 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 120 Locations Capital Markets CANACCORD GENUITY CAPITAL MARKETS Canada Toronto Canaccord Genuity Corp. 40 Temperance St Suite 2100 Toronto, ON Canada M5H 0B4 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 10022 USA Telephone: 212.389.8000 New York 33 Whitehall Street, 27th Floor New York, NY 10004 USA Telephone: 212.842.6020 New York 888 7th Avenue New York, NY 10019 USA Telephone: 212.331.0150 Boston 99 High Street, Suite 1200 Boston, MA 02110 USA Telephone: 617.371.3900 Toll free: 1.800.225.6201 San Francisco 44 Montgomery Street, Suite 1600 San Francisco, CA 94104 USA Telephone: 415.229.7171 Toll free: 1.800. 225.6104 Nashville 1033 Demonbreun Street, Suite 620 Nashville, TN 37203 USA Telephone: 615.490.8500 Minneapolis 45 South 7th Street, Suite 2640 Minneapolis, MN 55402 USA Telephone: 612.332.2208 Charlotte 227 W. Trade Street, Suite 1820 Charlotte, NC 28202 USA Telephone: 212.389.8000 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 Bahamas 119 Harbour Way, Ocean Club Estate Paradise Island Nassau Asia-Pacific Beijing Unit 1421-22, South Tower, Beijing Kerry Centre, 1 Guanghua Road, Chaoyang District Beijing 100020 China Telephone: 8610.8622.9070 Hong Kong 1505, 15/F, ICBC Tower, Three Garden Road, Central, Hong Kong Telephone: 852.3919.2500 Hainan Rm 206, 2th Floor, Building 8829, Walker Park Hainan Resort Software Community Chengmai, Hainan 571924 China Telephone: 86898.6748.6602 Melbourne Level 42, 101 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 25 Martin Place Sydney NSW 2000, Australia Telephone: 61.2.9263.2700 Portsea 3741 Point Nepean Place Portsea, Victoria 3944, Australia Locations 121 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 1620 Dickson Avenue, Suite 320 Kelowna, BC Canada V1Y 9Y2 Telephone: 250.712.1100 Toll free: 1.888.389.3331 Ontario Toronto 40 Temperance Street, Suite 2100 Toronto, ON Canada M5H 0B4 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 Oakville 200-1267 Cornwall Road Oakville, ON Canada L6J 7T5 Telephone: 905.582.3315 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 201 Portage Avenue, Suite 1010 Winnipeg, MB Canada R3B 3K6 Telephone: 204.259.2850 Toll free: 1.877.259.2888 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 & Crown Dependencies London 88 Wood Street London, UK EC2V 7QR Telephone: 44.20.7523.4500 Edinburgh 4th Floor, 40 Princes Street Edinburgh EH2 2BY Telephone: 44.131.380.9500 Jersey 37 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 Guernsey – Operations Operations Centre, Landes du Marche, Vale Guernsey GY1 3TY 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 Worcester Slip House Princes Drive Worcester WR1 2AB Telephone: 44.1905.953600 York 29 High Petergate York Yorkshire YO1 7HP Telephone: 44.1904.232780 2023 ANNUAL REPORT / CANACCORD GENUITY GROUP INC. 122 Locations Southampton Ocean Village Innovation Centre Ocean Way Southampton SO14 3JZ Telephone: 44.23.8212.4170 Birmingham 7th Floor, 4 Temple Row Birmingham B2 5HG Telephone: 44.121.230.1910 Guildford 4th Floor, Tempus Court Onslow Street Guildford GU1 4SS Telephone: 44.1483.961100 Newcastle City Quadrant 11 Waterloo Street Newcastle NE1 4DP Telephone: 44.1919.178520 Australia Melbourne Level 42, 101 Collins Street Melbourne, VIC, 3000, Australia Telephone: 61.3.8688.9100 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 Albany, Western Australia, 6330 Telephone: 61.8.9842.4700 Busselton Suite 3 72 Duchess Street Busselton, Western Australia, 6280 Telephone: 61.8.9754.0700 Gold Coast Level 9, 21 Upton Street Gold Coast, Queensland, 4215 Telephone: 61.7.5631.2300 Adelaide Level 6, 26 Flinders 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 40 Temperance Street, Suite 2100 Toronto, ON Canada M5H 0B4 Telephone: 416.869.7368 CANACCORD GENUITY GROUP INC. / 2023 ANNUAL REPORT Shareholder Information Corporate Headquarters Corporate Website STREET ADDRESS Canaccord Genuity Group Inc. 609 Granville Street, Suite 2200 Vancouver, BC, Canada MAILING ADDRESS Pacific Centre 609 Granville Street, Suite 2200 P.O. Box 10337 Vancouver, BC V7Y 1H2, Canada Stock Exchange Listing Common shares: TSX: CF www.canaccordgenuity.com General Shareholder Inquiries and Information INVESTOR RELATIONS 40 Temperance Street, Suite 2100 Toronto, ON Telephone: 416 869 7293 Email: investor.relations@cgf.com Media Relations and Inquiries from Institutional Investors and Analysts Christina Marinoff Senior Vice President, Head of Investor Re- lations & Global Corporate Communications Phone: 416-687-5507 Email: cmarinoff@cgf.com The Canaccord Genuity Group Inc. Annual Report for the year ended March 31, 2023 is available on our website at www.cgf.com. For a printed copy, please contact the Investor Relations department. Preferred shares: Series A (TSX): CF.PR.A. Series C (TSX): CF.PR.C. Expected Dividend(1) and Earnings Release Dates for the next four quarters Expected earnings release date Preferred dividend record date Preferred dividend payment date Common dividend record date Common dividend payment date Q1/24 Q2/24 Q3/24 Q4/24 August 3, 2023 November 14, 2023 February 7, 2024 June 5, 2024 September 15, 2023 December 22, 2023 March 15, 2024 June 21, 2024 October 2, 2023 January 2, 2024 April 1, 2024 July 2, 2024 September 1, 2023 December 1, 2023 March 1, 2024 June 21, 2024 September 15, 2023 December 15, 2023 March 15, 2024 July 2, 2024 (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 information, please visit www.canaccordgenuity.com Auditor Ernst & Young LLP Chartered Professional Accountants Vancouver, BC This page intentionally left blank. SHAREHOLDER INFORMATION STOCK EXCHANGE LISTINGS TSX: CF, CF.PR.A, CF.PR.C 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 SVP, Head of Investor Relations & Global Corporate 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 40 Temperance Street, Suite 2100 Toronto, ON M5H 0B4 Telephone: 416.869.7293 Email: investor.relations@cgf.com TRANSFER AGENT AND REGISTRAR For information about stock transfers, address changes, dividends, lost stock certificates, tax forms and estate transfers, contact: CORPORATE HEADQUARTERS Canaccord Genuity Group Inc. Pacific Centre 609 Granville Street, Suite 2200 P.O. Box 10337 Vancouver, BC V7Y 1H2 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 common share dividends paid by Canaccord Genuity Group Inc. since 2006 are eligible, as are common share dividends paid hereafter, unless otherwise indicated. INDEPENDENT AUDITOR Ernst & Young LLP Chartered Professional Accountants Vancouver, BC, Canada For information about fees paid to shareholders’ auditors, refer to our Fiscal 2023 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 Friday, August 4, 2023 10:00 a.m. (Eastern time) Shareholders and duly appointed proxyholders can attend the virtual meeting online by going to https://web.lumiagm.com/419983261. EDITORIAL AND DESIGN SERVICES The Works Design Communications Ltd. 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 3 A N N U A L R E P O R T NORTH AMERICA Bahamas Boston Calgary Charlotte Edmonton Halifax Kelowna Miami Minneapolis Montréal Nashville New York San Francisco Toronto Vancouver Waterloo Winnipeg UK & EUROPE Birmingham Blackpool Dublin Edinburgh Guernsey Guildford Isle of Man Jersey Lancaster Llandudno London Newcastle Norwich Nottingham Southampton Worcester York AUSTRALIA Adelaide Albany Busselton Melbourne Perth Sydney ASIA Beijing Hong Kong WEALTH MANAGEMENT OFFICES CAPITAL MARKETS OFFICES www.cgf.com Des exemplaires en français du présent rapport et des documents d’information connexes pour l’exercice 2023 peuvent être obtenus à l’adresse : www.canaccordgenuity.com/fr/relations-investisseurs/relations-investisseurs/rapports-financiers 

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