Mr. Dan Daviau reports

CANACCORD GENUITY GROUP INC. REPORTS SECOND QUARTER FISCAL 2016 RESULTS

During the second quarter of fiscal 2016, the quarter ended Sept. 30, 2015, Canaccord Genuity Group Inc. generated $190.6-million in revenue. Excluding significant items, the company recorded net income of $1.9-million or a net loss of $900,000 attributable to common shareholders (a loss per common share of one cent). Including all expense items, on an IFRS (international financial reporting standards) basis, the company recorded a net loss of $400,000 or a net loss attributable to common shareholders of $3.1-million (a loss per common share of three cents).

All dollar amounts are stated in Canadian dollars unless otherwise indicated.

Excluding significant items, second quarter loss per common share of one cent was driven by a significant decline in global equity capital markets activity.

"The sharp decline in global capital markets activity during the period negatively impacted performance in many areas of our business," said Dan Daviau, president and chief executive officer of Canaccord Genuity Group. "We are using this period of market weakness productively, with a focus on improving alignment across our global operations to enhance operating efficiencies and drive significantly stronger outcomes for our shareholders and for our clients."

Second quarter of fiscal 2016 compared with second quarter of fiscal 2015

• Revenue of $190.6-million, a decrease of 19 per cent or $45.7-million from $236.3 million;
• Excluding significant items, expenses of $186.2-million, a decrease of 10 per cent or $21.2-million from $207.4-million;
• Expenses of $189.1-million, a decrease of 11 per cent or $22.2-million from $211.3-million;
• Excluding significant items, loss per common share of one cent compared with diluted earnings per share (EPS) of 17 cents;
• Excluding significant items, net income of $1.9-million compared with net income of $20.7-million;
• Net loss of $400,000 compared with net income of $17.6-million;
• Loss per common share of three cents compared with diluted EPS of 14 cents.

Second quarter of fiscal 2016 compared with first quarter of fiscal 2016

• Revenue of $190.6-million, a decrease of 11 per cent or $23.9-million from $214.5-million;
• Excluding significant items, expenses of $186.2-million, a decrease of 6 per cent or $12.9-million from $199.1-million;
• Expenses of $189.1-million, a decrease of 6 per cent or $12.9-million from $202-million;
• Excluding significant items, loss per common share of one cent compared with diluted EPS of 10 cents;
• Excluding significant items, net income of $1.9-million compared with net income of $13.3-million;
• Net loss of $400,000 compared with a net income of $11-million;
• Loss per common share of three cents compared with a diluted EPS of eight cents.

Year-to-date fiscal 2016 compared with year-to-date fiscal 2015

Six months ended Sept. 30, 2015, compared with six months ended Sept. 30, 2014

• Revenue of $405.1-million, a decrease of 16 per cent or $76.7-million from $481.8-million;
• Excluding significant items, expenses of $385.4-million, a decrease of 9 per cent or $37.9-million from $423.3-million;
• Expenses of $391.1-million, a decrease of 10 per cent or $42.5-million from $433.6-million;
• Excluding significant items, diluted EPS of nine cents compared with diluted EPS of 37 cents;
• Excluding significant items, net income of $15.3-million compared with net income of $44.8-million;
• Net income of $10.5-million compared with net income of $36.5-million;
• Diluted EPS of four cents compared with diluted EPS of 29 cents.

Financial condition at end of second quarter fiscal 2016 compared with fourth quarter fiscal 2015

• Cash and cash equivalents balance of $289.4-million, down $32.9-million from $322.3-million;
• Working capital of $426.7-million, a decrease of $500,000 from $427.2-million;
• Total shareholders' equity of $1.128-billion, an increase of $10-million from $1.118-billion;
• Book value per diluted common share of $8.38, a decrease of 33 cents from $8.71;
• On Nov. 4, 2015, the board of directors approved a quarterly dividend of five cents per common share payable on Dec. 10, 2015, with a record date of Nov. 20, 2015;
• On Nov. 4, 2015, the board of directors also approved a cash dividend of 34.375 cents per Series A preferred share payable on Dec. 31, 2015, with a record date of Dec. 18, 2015, and a cash dividend of 35.9375 cents per Series C preferred share payable on Dec. 31, 2015, to Series C preferred shareholders of record as at Dec. 18, 2015.

Summary of operations

Corporate

• On Aug. 4, 2015, the board of directors approved the filing of an application to renew the normal course issuer bid (NCIB) to provide for the ability to purchase, at the company's discretion, up to a maximum of 5,163,737 common shares through the facilities of the Toronto Stock Exchange and on alternative trading systems during the period from Aug. 13, 2015, to Aug. 12, 2016. The purpose of any purchases under this program is to enable the company to acquire shares for cancellation. The maximum number of shares that may be purchased represents 5 per cent of the company's outstanding common shares. A total of 375,050 shares have been purchased under the terms of the NCIB during the six months ended Sept. 30, 2015, of which 15,000 shares were held in treasury as of Sept. 30, 2015, until subsequently cancelled on Oct. 30, 2015;
• On Sept. 11, 2015, the appointment of Mr. Daviau as president and chief executive officer of Canaccord Genuity Group was announced, effective Oct. 1, 2015.

Capital markets

• Canaccord Genuity participated in 62 transactions globally, raising total proceeds of $5.8-billion during fiscal Q2 2016;
• Canaccord Genuity led or co-led in 26 transactions globally, raising total proceeds of $1.6-billion during fiscal Q2 2016;
• Significant investment banking transactions for Canaccord Genuity during fiscal Q2 2016 include:
  • $402.5-million for Acasta Enterprises Inc. on the TSX;
  • $206.9-million (U.S.) for Atara Biotherapeutics Inc. on Nasdaq;
  • 200.7 million British pounds for Market Tech Holdings Ltd. on the AIM;
  • $155.2-million (U.S.) for ConforMIS Inc. on Nasdaq;
  • $138-million (U.S.) for Penumbra Inc. on the New York Stock Exchange;
  • $117.2-million (U.S.) for vTv Therapeutics Inc. on Nasdaq;
  • 127.8 million British pounds for The Renewables Infrastructure Group Ltd. on the London Stock Exchange;
  • $105-million for NYX Gaming Group Ltd. on the TSX;
  • $98-million (U.S.) for Aquinox Pharmaceuticals Inc. on Nasdaq;
  • 91.2 million British pounds for HICL Infrastructure Company Ltd. on the LSE;
  • $81.2-million for Automotive Properties REIT on the TSX;
  • $51-million (U.S.) for Energy Focus Inc. on Nasdaq;
  • $45-million (Australian) for Freelancer Ltd. on the Australian Securities Exchange;
  • 35.9 million British pounds for Ediston Property Investment Company PLC on the LSE;
  • 32.4 million euros for Cellnovo Group SA on Euronext Paris;
  • $20-million (Australian) for MainStream Aquaculture Pty Ltd. (private placement);
• In Canada, Canaccord Genuity participated in raising $233-million for government and corporate bond issuances during fiscal Q2 2016;
• Canaccord Genuity generated advisory revenues of $43.9-million during fiscal Q2 2016, a decrease of $11.8-million or 21 per cent compared with the same quarter last year;
• During fiscal Q2 2016, significant M&A (mergers and acquisitions) and advisory transactions included:
  • Distech Controls Inc. on its $318-million sale to Acuity Brands Inc.;
  • Data & Audio-Visual Enterprises Wireless Inc., operating as Mobilicity, on its sale to Rogers Communications;
  • NYX Gaming Group Ltd. on its $150-million acquisition of Chartwell Technology Inc. and Cryptologic Ltd.;
  • Charles Bank Capital Partners on its acquisition of Six Degrees Technology Group Ltd.;
  • Bridgepoint Development Capital and shareholders of Siblu Holdings Ltd. on the sale of Siblu to Stirling Square Capital Partners;
  • Altura Medical Inc. on its sale to Lombard Medical Inc.;
  • Amino Technologies PLC on the acquisition of Entone Inc.;
  • Anite PLC on its sale to Keysight Technologies Inc.;
  • Shoe Sensation Inc. on its sale to J.W. Childs Associates LP;
  • Harvest International New Energy Inc., a subsidiary of Sunshine Kaidi New Energy Group Co. of China, on the $147-million acquisition of Alter NRG Corp.;
  • TFS Corp. Ltd. on its acquisition of ViroXis Corp. and Santalis Pharmaceuticals;
  • United House Group Holdings on the disposal of Tegeneration Portfolio to Telford Homes PLC.

Canaccord Genuity Wealth Management (global)

• Globally, Canaccord Genuity Wealth Management generated $62.5-million in revenue in Q2 2016;
• Assets under administration in Canada and assets under management in the United Kingdom, Europe and Australia were $33.2-billion at the end of Q2 2016.

Canaccord Genuity Wealth Management (North America)

• Canaccord Genuity Wealth Management (North America) generated $26.2-million in revenue and, after intersegment allocations and before taxes, recorded a net loss of $1.7-million in Q2 2016;
• Assets under administration in Canada were $9.5-billion as at Sept. 30, 2015, a decrease of 11 per cent from $10.6-billion at the end of the previous quarter and a decrease of 12 per cent from $10.8-billion at the end of fiscal Q2 2015;
• Assets under management in Canada (discretionary) were $1.36-billion as at Sept. 30, 2015, a decrease of 4 per cent from $1.42-billion at the end of the previous quarter and a decrease of 2 per cent from $1.39-billion at the end of fiscal Q2 2015;
• Canaccord Genuity Wealth Management had 141 advisory teams, a decrease of six advisory teams from June 30, 2015, and a decrease of 21 from Sept. 30, 2014.

Canaccord Genuity Wealth Management (U.K. and Europe)

• Wealth management operations in the U.K. and Europe generated $34-million in revenue and, after intersegment allocations and excluding significant items, recorded net income of $6-million before taxes in Q2 2016;
• Assets under management (discretionary and non-discretionary) were $22.9-billion (11.4 billion British pounds) as at Sept. 30, 2015, an increase of 1 per cent from $22.8-billion (11.6 billion British pounds) at the end of the previous quarter and an increase of 12 per cent from $20.4-billion (11.3 billion British pounds) from Sept. 30, 2014.

  
                    SELECTED FINANCIAL INFORMATION EXCLUDING SIGNIFICANT ITEMS (1) 
                        (In thousands of dollars, except per-share amounts) 
                                        
                                                             Three months ended       Six months ended  
                                                                       Sept. 30,              Sept. 30,
                                                            2015           2014     2015          2014
          
Total revenue per IFRS                                  $190,602       $236,271 $405,056      $481,827 
Total expenses per IFRS                                 $189,103       $211,326 $391,110      $433,594  
Significant items recorded in Canaccord Genuity                                                            
Amortization of intangible assets                          1,320          1,707    2,730         3,448 
Restructuring costs                                            -              -        -             -         
Significant items recorded in Canaccord Genuity                                                             
Wealth Management                                                                 
Amortization of intangible assets                          1,557          2,224    3,024         4,464  
Restructuring costs                                            -              -        -           783 
Significant items recorded in corporate and other                                                                   
restructuring costs                                            -              -        -         1,600  
Total significant items                                    2,877          3,931    5,754        10,295    
Total expenses excluding significant items               186,226        207,395  385,356       423,299 
Net income before taxes - adjusted                        $4,376        $28,876  $19,700       $58,528  
Income taxes  -- adjusted                                  2,433          8,130    4,438        13,765    
Net income  -- adjusted                                   $1,943        $20,746  $15,262       $44,763   
(Loss) earnings per common share -- basic, adjusted       $(0.01)         $0.19    $0.10         $0.40     
(Loss) earnings per common share -- diluted, adjusted     $(0.01)         $0.17    $0.09         $0.37   

(1) Figures excluding significant items are non-IFRS measures.

"Fellow shareholders:

"Our second quarter was one of the more challenging periods for global capital markets in recent history. During the three-month period, the MSCI world equity index fell 9.9 per cent, the S&P/TSX lost 8.6 per cent and the S&P 500 dropped 6.9 per cent. This translated into significantly lower capital markets activity for our business when compared to the same period last year.

"For the second fiscal quarter of 2016, Canaccord Genuity Group Inc. earned revenue of $190.6-million. Excluding significant items, net income for the period was $1.9-million, which translated into a loss per common share of one cent. The overall decline in net income we experienced was largely a result of reduced activity by corporate issuers, leading to a decrease in investment banking and advisory fees when compared to the same period last year. Notwithstanding the difficult environment, we are pleased to report year-over-year revenue growth in our U.S. capital markets, and U.K. and Europe wealth management businesses.

"Committed to driving net income growth

"As incoming CEO, I am intensely focused on addressing the challenges in our business. With the support of my global colleagues, I have prioritized initiatives which centre on driving longer term value creation and ultimately, improving our net income results. I firmly believe the principles driving these initiatives will become entrenched in our corporate culture, and better enhance alignment across our firm and with our shareholders.

"Specifically, we are using this period of market weakness to address and eliminate any barriers which have inhibited our regional businesses from maximizing opportunities globally. We have renewed our emphasis on key verticals to drive growth, and we are working to enhance global coordination across our firm, as a more partnership-based organization. Through improved transparency and a stronger bottom-line focus, our employees will become better aligned with shareholders. Most importantly, we are working to redefine our culture and strengthen our reputation as a leading global independent investment bank.

"An important component of these initiatives is a commitment to improve global alignment and operating efficiencies across our business. Since Oct. 1, we have made early progress in identifying areas where we can reduce fixed costs and strengthen alignment between our front- and back-office operations. While I am confident we can implement certain developments near term, the benefits of larger projects may require multiple quarters to translate into our financial results. I look forward to updating you on our advancements, as we approach the release of our third quarter results in early February.

"Capital markets

"In the second fiscal quarter of 2016, Canaccord Genuity participated in 62 transactions and raised total proceeds of $5.8-billion for our clients.

"During this three-month period, global equity capital markets volumes fell to their lowest levels since 2011. While the industry saw improving demand for new issues at the start of the quarter, significant volatility in August and September led to the withdrawal or postponement of a number of transactions. With the exception of our U.S. capital markets business, which generated revenues of $55.9-million, or 44.2 per cent of global capital markets revenues, all other geographies had declining revenue for the period. Compared to the same quarter last year, revenue from our global capital markets business declined by 26 per cent, to $126.5-million.

"In Canada, equity underwriting activity decreased by 52 per cent compared to the same period last year. As a result, our Canadian capital markets business experienced the most significant decline in revenue, a 64-per-cent drop compared to the same period one year ago. The decrease was magnified by two substantial transactions that took place during second fiscal quarter of last year.

"The strong start to the quarter allowed our U.K. and Europe business to increase year-over-year equity underwriting revenues by 7.9 per cent, but lower activity in advisory and principal trading impacted total revenues for this business, which declined by 22 per cent to $38.3-million for the quarter.

"While our Australian business has demonstrated its ability to outperform in recent quarters, a dramatic drop in capital raising activity across the Asia-Pacific region during the period was reflected in second quarter results, and revenue in this business fell 38 per cent, to $7.5-million. During the period, we took steps to establish a single point of leadership for the Asia-Pacific region, an initiative which will promote better alignment across our investment banking and advisory practices, and one we expect will enhance earnings capability going forward.

"The steps we are taking to improve global alignment will provide opportunities for incremental revenue improvement over the coming quarters. Additionally, with our differentiated service offering and proven global execution capabilities, each of our businesses continues to enjoy a strong pipeline. I am confident in our ability to deliver value on behalf of growth companies when market conditions are supportive.

"While we remain cautious in our outlook for near-term global investment banking and advisory activity, we are focused on positioning our business to capitalize on the intermediate and longer term opportunities in sectors we have targeted for growth.

"Stronger fee-based business limits losses for wealth management operations

"Our global wealth management operations generated revenue of $60.2-million for the quarter, a decrease of $1.2-million compared to the second quarter of last year. This result was mostly attributable to lower commission fees and revenues associated with the decline in investment banking activity in our North American operations.

"When compared to previous periods of similar revenue generation, our Canadian Wealth Management business has been able to successfully limit losses, highlighting the progress we have made in reducing fixed costs and shifting towards a stronger recurring revenue model. Importantly, expenses as a percentage of revenue in this business were 86.7 per cent for the quarter, unchanged from the previous three-month period and a decrease of 3.5 percentage points when compared to the same period last year.

"Our in-house asset management platform has been a significant contributor to improving the financial strength of this business. One year ago, we launched our proprietary asset management product, GPS optimized portfolios, and brought management of our ETF (exchange-traded fund) portfolios in-house. Since then, total assets under management in these products have surpassed $200-million dollars.

"Our U.K. Wealth Management operations generated revenue of $34-million, an increase of 14 per cent compared to the second quarter of fiscal 2015. Since 70 per cent of revenue in this business is attributable to fee-related activities, it is less sensitive to changes in market conditions. At the end of the quarter, assets under management in this business were $22.9-billion, an increase of 12 per cent from the same period one year ago. Additionally, assets in funds managed by our in-house investment team surpassed $1-billion at the end of the quarter. While a percentage of total asset growth is attributable to the impact of foreign exchange rates, revenue growth for the period demonstrates our ability to attract and retain assets in a challenging market environment.

"Looking ahead, we will continue to pursue opportunities to increase fee-based revenues -- and ultimately, shareholder value -- across our global wealth management operations. As we continue to strengthen our wealth management offering, we expect to achieve this growth both organically and through strategic business opportunities.

"Commitment to our communities

"In any market, our teams are committed to making positive contributions in the communities where we operate. During the quarter, we hosted the third annual Canaccord Genuity Great Camp Adventure Walk to benefit the Hospital for Sick Children. A grand total of $2.2-million was raised to support the goal of improving health and well-being for children around the world. From Oct. 14 to 23, through commissions generated from designated agency trades, our U.S. capital markets team helped raise $600,000 (U.S.) to benefit Youth INC during Trading Week for Kids, bringing our four-year contribution to more than $3-million.

"Positioning our business to excel as global growth visibility improves

"Our success depends on the strength of many components.

"While each of our geographies is in a different state of evolution, all are capable of growing market share and producing stronger returns. Although we expect this challenging operating environment to persist through the balance of the fiscal year, I believe we have a number of opportunities to strengthen our offering and continue to enhance the delivery of regional and global service levels for our clients. Looking ahead, we will continue to identify our greatest areas of opportunity and focus our efforts where we can be most successful.

"I am committed to creating a robust culture of accountability and partnership, which empowers our employees to deliver the best work of their careers. We have a highly capable and focused team in place, all of whom are energized and eager to advance our strategic goals and continue to deliver stronger outcomes for our clients and our shareholders.

"I am confident in the strength of our global franchise. As we navigate these difficult markets together, I encourage you to measure our success with a longer term view of creating significant shareholder value.

"Kind regards,

"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 on the company's website.

Conference call and webcast presentation

Interested parties are invited to listen to Canaccord Genuity's fiscal second quarter 2016 results conference call via live webcast or a toll-free number. The conference call is scheduled for Thursday, Nov. 5, 2015, at 5 a.m. Pacific Time, 8 a.m. Eastern Time, 1 p.m. U.K. time, 9 p.m. China Standard Time and, on Nov. 6, 2015, at 12 a.m. Australian 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 via the Internet on the company's website.

Analysts and institutional investors can call in via telephone at:

• 647-427-7450 (within Toronto);
• 1-888-231-8191 (toll-free in North America);
• 0-800-051-7107 (toll-free from the U.K.);
• 1-800-760-620 (toll-free from Ireland);
• 0-800-917-449 (toll-free from France);
• 0-800-183-0171 (toll-free from Germany);
• 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).

Please request to participate in Canaccord Genuity Group's Q2 2016 earnings call. If a passcode is requested, please use 57509793.

A replay of the conference call will be available on Nov. 5, 2015, after 8 a.m. (Pacific Time), 11 a.m. (Eastern Time), 4 p.m. (U.K. time), and, on Nov. 6, 2015, at 12 a.m. (China Standard Time) and at 3 a.m. (Australian EST) until Dec. 25, 2015, at 416-849-0833 or 1-855-859-2056, by entering passcode 57509793, followed by the pound symbol.