Excluding significant items, second quarter earnings per common share of $0.01⁽¹⁾
Significantly increased scale of global wealth management business; assets under administration and management increase to $54.5 billion 

(All dollar amounts are stated in Canadian dollars unless otherwise indicated)

TORONTO, Nov. 7, 2017 /PRNewswire/ - During the second quarter of fiscal 2018, the quarter ended September 30, 2017, Canaccord Genuity Group Inc. (Canaccord Genuity, the Company, TSX: CF) generated $191.5 million in revenue. Excluding significant items ⁽¹⁾_, the Company recorded net income ⁽³⁾ of $3.5 million or net income of $1.0 million attributable to common shareholders ⁽²⁾ (earnings per common share of $0.01).  In September, the Company completed the acquisition of Hargreave Hale Limited and recorded as significant items acquisition-related costs and certain restructuring expenses in connection with the transaction. Including all significant items, on an IFRS basis, the Company recorded a net loss ⁽³⁾ of $7.3 million or a net loss attributable to common shareholders ⁽²⁾ of $9.8 million (a loss per common share of $0.11).

"Our fiscal second quarter results reflect the increasing stability that our global wealth management operations are capable of delivering against a challenging backdrop for mid-market investment banking and advisory activity," said Dan Daviau, President & CEO of Canaccord Genuity Group Inc. "We are encouraged by improving activity levels heading into the second half of our fiscal year and we look forward to delivering improving returns and stronger long-term stability for our shareholders."

Second Quarter of Fiscal 2018 vs. Second Quarter of Fiscal 2017

• Revenue of $191.5 million, a decrease of 1.1% or $2.1 million from $193.6 million
• Excluding significant items, expenses of $186.2 million, a decrease of 2.4% or $4.5 million from $190.7 million ⁽¹⁾
• Expenses of $198.6 million, an increase of 3.0% or $5.8 million from $192.8 million
• Excluding significant items, earnings per common share of $0.01 compared to a loss per common share of $0.03⁽¹⁾
• Excluding significant items, net income ⁽³⁾ of $3.5 million compared to net income ⁽³⁾ of $2.0 million ⁽¹⁾
• Net loss ⁽³⁾ of $7.3 million compared to net income ⁽³⁾ of $0.2 million
• Loss per common share of $0.11 compared to a loss per common share of $0.05

Second Quarter of Fiscal 2018 vs First Quarter of Fiscal 2018

• Revenue of $191.5 million, a decrease of 4.1% or $8.3 million from $199.8 million
• Excluding significant items, expenses of $186.2 million, a decrease of 5.5% or $10.8 million from $197.0 million ⁽¹⁾
• Expenses of $198.6 million, a decrease of 1.5% or $3.0 million from $201.6 million
• Excluding significant items, earnings per common share of $0.01 compared to a loss per common share of $0.01 ⁽¹⁾
• Excluding significant items, net income ⁽³⁾ of $3.5 million compared to net income ⁽³⁾ of $1.6 million ⁽¹⁾ 
• Net loss ⁽³⁾ of $7.3 million compared to a net loss ⁽³⁾ of $2.6 million
• Loss per common share of $0.11 compared to a loss per common share of $0.05

Year-to-Date Fiscal 2018 vs. Year-to-Date Fiscal 2017
(Six months Ended September 30, 2017 vs. Six Months Ended September 30, 2016)

• Revenue of $391.4 million, a decrease of 2.1% or $8.4 million from $399.8 million 
• Excluding significant items, expenses of $383.2 million, a decrease of 0.4% or $1.4 million from $384.6 million ⁽¹⁾
• Expenses of $400.2 million, an increase of 2.9% or $11.2 million from $389.0 million
• Excluding significant items, diluted EPS of $0.00 compared to diluted EPS of $0.02⁽¹⁾
• Excluding significant items, net income ⁽³⁾ of $5.2 million compared to net income of $10.1 million ⁽¹⁾ 
• Net loss ⁽³⁾ of $9.8 million compared to net income ⁽³⁾ of $7.7 million
• Loss per common share of $0.16 compared to a loss per common share $0.01

Financial Condition at end of Second Quarter Fiscal 2018 vs. Fourth Quarter Fiscal 2017

• Cash and cash equivalents balance of $543.1 million, a decrease of $134.7 million from $677.8 million
• Working capital of $464.7 million, a decrease of $23.8 million from $488.5 million
• Total shareholders' equity of $720.4 million, a decrease of $44.4 million from $764.8 million
• Book value per diluted common share of $4.74, a decrease of $0.34 from $5.08⁽⁴⁾
• On November 7, 2017, the Board of Directors approved a dividend of $0.01 per common share, payable on December 15, 2017, with a record date of December 1, 2017.
• On November 7, 2017, the Board of Directors approved the following cash dividends: $0.24281 per Series A Preferred Share payable on January 2, 2018 with a record date of December 22, 2017; and $0.31206 per Series C Preferred Share payable on January 2, 2018 with a record date of December 22, 2017.   

SUMMARY OF OPERATIONS

Corporate

• On August 11, 2017, the Company announced the filing of a normal course issuer bid (NCIB) to purchase common shares of the Company through the facilities of the TSX and on alternative trading systems during the period from August 15, 2017 to August 14, 2018.  The purpose of any purchase under this program is to enable the Company to acquire shares for cancellation.  The maximum number of shares that may be repurchased represented 5.0% of the Company's outstanding common shares at the time of filing the NCIB.  There have been no shares purchased under this and the previous NCIB during the six months ended September 30, 2017.
• On September 18, 2017, the Company, through its UK & Europe based wealth management business, Canaccord Genuity Wealth Management ("CGWM (UK)"), completed its previously announced acquisition of Hargreave Hale Limited ("Hargreave Hale"). The Company acquired 100% of Hargreave Hale for cash and deferred consideration of £52.4 million (C$86.4 million) and additional contingent consideration of up to £27.5 million (C$45.4 million). The contingent consideration is structured to be payable over a period of up to three years, subject to the achievement of certain performance targets related to the retention and growth of client assets and revenues and an amount determined with reference to the fund management business.  The cash consideration was funded in part from a credit facility provided to CGWM (UK) by National Westminster Bank plc and HSBC Bank plc in the amount of £40.0 million (C$66.9 million).  Additional contingent consideration, if paid, will be funded from the ongoing cash flow of the business. The Company expensed $4.4 million of acquisition related costs and $2.0 million of restructuring expense for Q2/18 and $6.5 million of acquisition-related costs for the six months ended September 30, 2017.  In connection with the acquisition, an additional expense of £14.0 million (C$23.4 million) is expected to be recorded as a significant item over a four-year measurement period. This amount includes certain incentive-based payments determined with reference to financial targets and other performance criteria.

Capital Markets

• Canaccord Genuity participated in 66 investment banking transactions globally, raising total proceeds of C$6.3 billion ⁽⁵⁾ during fiscal Q2/18
• Canaccord Genuity led or co-led 23 transactions globally, raising total proceeds of C$541.6 million ⁽⁵⁾ during fiscal Q2/18
• Significant investment banking transactions for Canaccord Genuity during fiscal Q2/18 include:
• £200.0 million initial public offering of Triple Point Social Housing REIT plc on LSE
• £58.8 million for accesso Technology Group plc on AIM
• £53.0 million for Pacific Industrial and Logistics REIT plc on AIM
• AUD$134.6 million for Cooper Energy Limited on ASX
• C$35.0 million for Barkerville Gold Mines on TSXV
• AUD$32.5 million for Osprey Medical, Inc. on ASX
• C$30.0 million for Canaccord Genuity Acquisition Corp. on TSX
• C$25.1 million for The Hydropothecary Corporation on TSXV
• US$20.1 million for Summit Therapeutics on Nasdaq
• US$20.1 million for T2 Biosystems Inc. on Nasdaq
• C$24.1 million for Bowmore Exploration Ltd. (Osisko Metals) on TSX
• In Canada, Canaccord Genuity participated in raising $225.0 million for government and corporate bond issuances during fiscal Q2/18
• Canaccord Genuity generated advisory revenues of $30.4 million during fiscal Q2/18, an increase of $9.1 million or 42.8% compared to the same quarter last year
• During fiscal Q2/18, significant M&A and advisory transactions included:
• Cape plc on its £575 million sale to Altrad Investment Authority SAS
• Sandvine Corporation on its C$562 million sale to Francisco Partners and Procera Networks
• Monitise plc on its £75 million sale to Fiserv, Inc.
• OSRAM Licht AG on its acquisition of Digital Lumens
• Sientra Inc. on its acquisition of Miramar Labs
• Shore Gold Inc. on the consolidation of the Star-Orion South Diamond Project and earn-in option agreement with Rio Tinto
• Pollard Banknote on its C$51 million acquisition of Innova
• ICG on its investment in Blackrock Expert Services
• Carmanah Technologies on the US$19.5 million sale of its Go Power! Business to Valterra Products
• Goals Soccer Centres Plc on the formation of its joint venture with City Football Group
• Atlas for Men on the refinancing and dividend recapitalization of its existing LBO
• NCE Computer Group on its sale to Park Place Technologies
• CORWIL Technology on its sale to Integra Technologies
• Stirling Square on its investment in Isoclima Group as part of a management buyout
• Dalradian Resources on its C$20 million purchase of the 2% net smelter return royalty on its Curraghinalt gold deposit from Minco plc
• RG group on its €145 million sale to LBO France from Abénex Capital
• Tiama on its €150 million sale to Caravelle private equity fund

Canaccord Genuity Wealth Management (Global)
Contributions from Hargreave Hale from September 18, 2017 are included in the operating figures under Canaccord Genuity Wealth Management (UK & Europe) below.

• Globally, Canaccord Genuity Wealth Management generated $70.6 million in revenue in Q2/18
• Assets under administration in Canada and assets under management in the UK & Europe and Australia were $54.5 billion at the end of Q2/18⁽⁴⁾

Canaccord Genuity Wealth Management (North America)

• Canaccord Genuity Wealth Management (North America) generated $32.1 million in revenue and, after intersegment allocations and before taxes, recorded net income of $1.1 million in Q2/18
• Assets under administration in Canada were $12.8 billion as at September 30, 2017, an increase of 1.0% from $12.7 billion at the end of the previous quarter and an increase of 23.9% from $10.3 billion at the end of fiscal Q2/17⁽⁴⁾
• Assets under management in Canada (discretionary) were $2.7 billion as at September 30, 2017, an increase of 1.5% from Q1/18 and an increase of 120.5% from $1.2 billion at the end of fiscal Q2/17⁽⁴⁾
• Canaccord Genuity Wealth Management had 134 Advisory Teams ⁽⁶⁾ at the end of fiscal Q2/18,  a decrease of one Advisory Team from June 30, 2017 and a decrease of five from September 30, 2016

Canaccord Genuity Wealth Management (UK & Europe)

• Wealth management operations in the UK & Europe generated $37.5 million in revenue and, after intersegment allocations, and excluding significant items, recorded net income of $7.5 million before taxes in Q2/18⁽¹⁾
• Assets under management (discretionary and non-discretionary) were $40.8 billion (£24.4 billion) as at September 30, 2017, an increase of 58.4% from $25.8 billion (£15.3 billion) at the end of the previous quarter and an increase of 75.8% from $23.2 billion (£13.6 billion) at September 30, 2016⁽⁴⁾. In local currency (GBP), assets under management at September 30, 2017 increased by 59.8% compared to Q1/18 and 78.8% compared to September 30, 2016.  The increase in AUM in Q2/18 was largely due to the acquisition of Hargreave Hale.

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

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

Selected financial information excluding significant items ⁽¹⁾

Fellow Shareholders:

Canaccord Genuity Group earned revenue of $192 million for our second quarter of fiscal 2018. While we are encouraged by the improving momentum for small- and mid-cap global growth equities that began in late September, the operating environment we witnessed for most of the three-month period was in many respects a continuance of the conditions we experienced in our first fiscal quarter, with the added impact of the typical summer slowdown in North American markets. 

Despite this being a challenging period for capital markets activities in most of our regions, I would like to highlight the positive impact that our strategic shift to strengthening contributions from our global wealth management operations has contributed to our overall results. Excluding significant items ⁽¹⁾, net income for the three-month period was $3.5 million and diluted earnings per share was $0.01, improvements of 77% and 133% respectively when compared to the similar revenue environment that we experienced in the same period last year.

Driving long-term stability for our shareholders requires a disciplined focus on achieving a balance that will also allow us to deliver more consistent results from our global capital markets operations. During the quarter, we incurred restructuring costs of $6.3 million, of which $4.3 million was attributable to our realignment efforts in our US and Canadian capital markets businesses, with the balance related to our acquisition of Hargreave Hale. Additionally, cost containment continues to be an important priority across our operations. Excluding significant items ⁽¹⁾, expenses as a percentage of revenue decreased by 1.3 percentage points year-over-year. Non-compensation related operating expenses decreased a further 4% and our firm wide general & administrative expenses declined by 7%, when compared to the same period last year.

Wealth Management: Added scale marks an important point in our journey to long-term stability

Our global wealth management operations earned combined revenue of $70 million in the second quarter, a year-over-year improvement of 9%. At the end of the three-month period, total assets under management and administration for Canaccord Genuity Wealth Management grew to $55 billion.

Following the closing of our acquisition of Hargreave Hale on September 18, our wealth management business in the UK & Europe ended the quarter with a significant increase in assets under management to $41 billion, cementing its position as a top 10 wealth manager by assets in the region. Fee-related revenue in this business increased to 73%, from 71% a year ago. While the revenue and profitability associated with the increase in client assets from the Hargreave Hale acquisition will be more wholly reflected in our next fiscal quarter, the business has continued to post impressive asset growth and fund sales as we progress with our integration efforts. This acquisition closed on September 18 and has contributed roughly £2 million in second quarter revenue for our wealth management business in the UK & Europe.

Our Canadian wealth management business earned revenue of $32 million for the second quarter, an improvement of 8% compared to the same period last year. Assets under management and administration in this business reached $12.8 billion, a year-over-year improvement of 24%.

With an added benefit from strengthening market valuations, results in this business were driven by steady execution of our strategy of investing in and developing our talent pool to facilitate the delivery of a differentiated service model. At the end of our second fiscal quarter, average book size per advisory team improved by 21% compared to a year ago. Discretionary assets in this business increased by 121% year-over-year, which helped lift the percentage of fee-related revenue in this business to 42% for our second fiscal quarter.

Our recent achievements have led to an increased pipeline of recruiting activity in our Canadian wealth management business and we are attracting growing interest from advisory teams in all regions across Canada. We are also continuing to explore opportunities to grow our Australian wealth management operations.

Global Capital Markets: Positioned for stronger performance as the mid-market environment improves

In late September, relative performance of the S&P Global Small Cap index began to show a positive upturn, having lagged the Global Large Cap index for most of the calendar year. We see this as an encouraging indication that the environment for growth stocks is improving.

For most of the three-month period, global new issue activity for small and mid-cap equities posted further declines from the previous quarter and the impact of this was most notable in our Canadian and US capital markets businesses. Headwinds from low volatility, low rates and a flat yield curve also impacted trading volumes across our operations. For our second fiscal quarter, revenue for our global capital markets division was $119 million.

Our UK & Europe capital markets business delivered a profitable quarterly result on improved investment banking and advisory activity. On a year-over-year basis, second quarter revenue in this operation improved by 24%. As the realities of Brexit draw near, our teams in the region have been productive in several transactions that leverage our unique cross-border capabilities and relationships to help companies in the UK secure investment and partnerships from across Europe. In Australia, activity levels have begun to regain momentum following a period of subdued activity in the previous quarter, a result of a significant rotation out of small cap equities. Second quarter investment banking activity in this region was broadly in-line with historical levels and revenue for the second quarter improved by 210% sequentially, which helped this this business deliver a pre-tax profit margin of 11%.

Second quarter performance from our Canadian and US operations was weaker in part due to the typical summer slowdown, and also a result of the lower levels of mid-market equity issuance that took place across our industry in both regions. During the quarter, we made some staffing reductions in both businesses in the interest of fostering a more intensive focus on driving profitability in core focus areas, while paring back on strategies that have been difficult to scale in the current market environment.

On a positive note, advisory revenues earned by our US business for the first half of fiscal 2018 were 7% higher than the same period last year. This team has leveraged our strengths in the healthcare and technology sectors to build a solid pipeline of advisory work, which is a strong complement to our equity capital markets activities in the region. Our US equities business has also continued to gain market share in the region, despite the softer trading environment. In Canada, our origination teams have been actively leveraging our strengths as the leading independent mid-market investment bank to help entrepreneurs access growth capital in emerging high-growth sectors with notable activity in the cannabis and fintech segments. Our recent establishment of Canaccord Genuity Acquisition Corp. as an alternate vehicle to access public markets has also attracted interest from numerous entrepreneurs with established businesses and strong growth potential.

Each of our operations in Canada, US, Australia, UK, Europe & Dubai has its own distinct regional advantages, but our global capabilities are an extraordinary differentiator and an important competitive advantage for our business. Across our global capital markets operations, activity levels heading into our third fiscal quarter are markedly stronger than in the first half of the year. Strengthening commodity prices helped to lift the TSX to near-record levels in October, which bodes well for activities in our Canadian and Australian capital markets businesses. We are also progressing with the establishment of ancillary businesses within our capital markets operations which will allow us to capture greater efficiencies from our existing infrastructure, while offering a broader suite of products and services to our existing client base.

And finally, I'd like to provide an update on our expectations for the upcoming implementation of MiFID II. First and foremost, we have developed a strategy to capitalize on our commitment to producing the highly focused research and strong trade execution that adds the greatest value for our buy side clients and gives us confidence in our ability to continue to attract commissions. Given our material UK presence, we have been preparing for this development for some time and we have been having an active dialogue with our clients around pricing and their approach to MIFID II payment mechanisms. We expect limited impact to our capital markets business once this change is implemented. With the added benefit of our proprietary stock screening and idea generation tool, Quest®, we also see opportunities to provide enhanced offerings for existing and new clients.

A balanced business model puts us on track for greater earnings stability through the cycle

This was a pivotal quarter for our organization, as we added meaningful scale in our global wealth management operations, a strategy we will continue to build upon and one which will deliver improved long-term stability for our shareholders.

Looking ahead, we maintain a constructive outlook for investment banking and advisory activity. Our unique global mid-market capabilities strengthen our competitive position in all our regions and the backdrop for our core focus sectors is healthy. With our efforts to better focus and align our operations, and the new and improving contributions from our wealth management businesses, I am confident that market-driven challenges are more navigable for our business than ever before.

Dan Daviau
President & CEO
Canaccord Genuity Group Inc.

ACCESS TO QUARTERLY RESULTS INFORMATION
Interested investors, the media and others may review this quarterly earnings release and supplementary financial information at http://www.canaccordgenuitygroup.com/EN/IR/FinReports/Pages/default.aspx

QUARTERLY CONFERENCE CALL AND WEBCAST:

Interested parties are invited to listen to Canaccord Genuity's second quarter conference call, via live webcast or a toll free number. The conference call is scheduled for Wednesday, November 8, 2017 at 5:00 a.m. Pacific time, 8:00 a.m. Eastern time, 12:00 p.m. UK time, 9:00 p.m. China Standard Time, and midnight Australia EST. During the call, senior executives will comment on the results and respond to questions from analysts and institutional investors.

The conference call may be accessed live and archived on a listen-only basis at: http://www.canaccordgenuitygroup.com/EN/NewsEvents/Pages/Events.aspx

Analysts and institutional investors can call in via telephone at:

• 647-427-7450 (within Toronto)
• 1-888-231-8191 (toll free outside Toronto)
• 0-800-051-7107 (toll free from the United Kingdom)
• 0-800-91-7449 (toll free from France)
• 10-800-714-1191 (toll free from Northern China)
• 10-800-140-1195 (toll free from Southern China)
• 1-800-287-011 (toll free from Australia)
• 800-017-8071 (toll free from United Arab Emirates)

Please ask to participate in the Canaccord Genuity Group Inc. Q2/18 results call.  If a passcode is requested, please use 93950590.

A replay of the conference call will be made available from approximately two hours after the live call on November 8, 2017, until December 22, 2017 at 416-849-0833 or 1-855-859-2056 by entering passcode 93950590 followed by the pound (#) sign.

ABOUT CANACCORD GENUITY GROUP INC.:
Through its principal subsidiaries, Canaccord Genuity Group Inc. (the Company) is a leading independent, full-service financial services firm, with operations in two principal segments of the securities industry: wealth management and capital markets. Since its establishment in 1950, the Company has been driven by an unwavering commitment to building lasting client relationships. We achieve this by generating value for our individual, institutional and corporate clients through comprehensive investment solutions, brokerage services and investment banking services. The Company has offices in 10 countries worldwide, including wealth management offices located in Canada, the UK, Guernsey, Jersey, the Isle of Man and Australia. Canaccord Genuity, the international capital markets division, operates in Canada, the US, the UK, France, Ireland, Hong Kong, China, Australia and Dubai. To us there are no foreign markets.^TM

Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the TSX. Canaccord Genuity Series A Preferred Shares are listed on the TSX under the symbol CF.PR.A. Canaccord Genuity Series C Preferred Shares are listed on the TSX under the symbol CF.PR.C.

_____________________________
¹ Figures excluding significant items are non-IFRS measures.  See Non-IFRS measures on pages 5.
² Net (loss) income attributable to common shareholders is calculated as the net (loss) income adjusted for non-controlling interests and preferred share dividends.
³ Before non-controlling interests and preferred share dividends.
⁴ See Non-IFRS Measures on pages 5.
⁵ Transactions over $1.5 million. Internally sourced information.
⁶ 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. 

SOURCE Canaccord Genuity Group Inc.