Mr. Dan Daviau reports

CANACCORD GENUITY GROUP INC. REPORTS FIRST QUARTER FISCAL 2017 RESULTS

During the first quarter of fiscal 2017, the quarter ended June 30, 2016, Canaccord Genuity Group Inc. generated $206.2-million in revenue. Excluding significant items(1), the company recorded net income of $8.1-million or net income of $4.3-million attributable to common shareholders(2) (earnings per common share of five cents). Including all significant items, on an IFRS (international financial reporting standards) basis, the company recorded net income of $7.5-million or net income attributable to common shareholders(2) of $3.7-million (earnings per common share of four cents).

"During the quarter, we made strong progress to achieve most of our cost-reduction initiatives and we delivered on our commitment to strengthen our alignment with our shareholders through the completion of our employee private placement," said Dan Daviau, president and chief executive officer of Canaccord Genuity Group Inc. "While we are encouraged by improving activity levels in Canada, Australia and the U.S., we expect continuing challenges for our U.K. and Europe capital markets operations given the uncertainty in that region. In addition, the continued stability of our wealth business in the U.K. and Europe and the return to profitability of our Canadian wealth business provide added confidence in our outlook."

First quarter of fiscal 2017 compared with first quarter of fiscal 2016

• Excluding significant items, revenue of $205-million, a decrease of 4.4 per cent or $9.5-million from $214.5-million(1);
• Excluding significant items, expenses of $193.9-million, a decrease of 2.6 per cent or $5.2-million from $199.1-million(1);
• Revenue of $206.2-million, a decrease of 3.9 per cent or $8.3-million from $214.5-million;
• Expenses of $196.2-million, a decrease of 2.9 per cent or $5.8-million from $202-million;
• Excluding significant items, earnings per common share of five cents, compared with earnings per common share of 10 cents(1);
• Excluding significant items, net income of $8.1-million, compared with net income of $13.3-million(1);
• Net income of $7.5-million, compared with net income of $11-million;
• Earnings per common share of four cents, compared with earnings per common share of eight cents.

First quarter of fiscal 2017 compared with fourth quarter of fiscal 2016

• Excluding significant items, revenue of $205-million, an increase of 2 per cent or $4.1-million from $200.9-million(1);
• Excluding significant items, expenses of $193.9-million, a decrease of 5.1 per cent or $10.4-million from $204.3-million(1);
• Revenue of $206.2-million, an increase of 2.6 per cent or $5.3-million from $200.9-million;
• Expenses of $196.2-million, a decrease of 14 per cent or $32-million from $228.2-million;
• Excluding significant items, earnings per common share of five cents, compared with a loss per common share of six cents(1);
• Excluding significant items, net income of $8.1-million, compared with a net loss of $2.1-million(1);
• Net income of $7.5-million, compared with a net loss of $22.7-million;
• Earnings per common share of four cents, compared with a loss per common share of 29 cents.

Financial condition at end of first quarter fiscal of 2017 compared with fourth quarter of fiscal 2016

• Cash and cash equivalents balance of $282.2-million, a decrease of $146.1-million from $428.3-million;
• Working capital of $385.7-million, an increase of $4.4-million from $381.3-million;
• Total shareholders' equity of $735.7-million, a decrease of $14.2-million from $749.9-million;
• Book value per diluted common share of $4.75, a decrease of $0.24 from $4.99(3).

On Aug. 3, 2016, the board of directors considered the company's dividend policy in the context of the market environment and the company's business activity and approved a continued suspension of the quarterly common dividend. This suspension will be reviewed quarterly and a determination will be made on the basis of business conditions and profitability.

On Aug. 3, 2016, the board of directors approved a cash dividend of 34.375 cents per Series A preferred share, payable on Sept. 30, 2016, with a record date of Sept. 16, 2016, and a cash dividend of 35.9375 cents per Series C preferred share, payable on Sept. 30, 2016, to Series C preferred shareholders of record as at Sept. 16, 2016.

Summary of operations

Corporate

• On June 6, 2016, Canaccord Genuity Group Inc. announced a non-brokered private placement to employees of the company at a purchase price of $4.17 per unit, with each unit consisting of one common share of the company and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one common share of the company at an exercise price of $4.99 for a period of six months following the third anniversary of closing. Proceeds of the private placement were used to finance the company's employee benefits trusts, established under its long-term incentive plan, which will purchase common shares in the market to cover grants of restricted share units to those employees who have participated in the private placement.
• The company issued a total of 6,876,824 units at a price of $4.17 per unit in connection with the private placement (6,730,561 units were issued prior to June 30, 2016, with the balance issued after June 30, 2016).
• On June 30, 2016, the company completed its sale of Canaccord Genuity Singapore Pte. Ltd. to SAC Capital Private Ltd.

Capital markets

• Canaccord Genuity participated in 86 investment banking transactions globally, raising total proceeds of $10.3-billion(4) during the fiscal first quarter of 2017.
• Canaccord Genuity led or co-led 34 transactions globally, raising total proceeds of $1.1-billion(4) during the fiscal first quarter of 2017.
• Significant investment banking transactions for Canaccord Genuity during the fiscal first quarter of 2017 include:
  • $20-million (Australian) for Airxpanders Inc. on the Australian Securities Exchange;
  • $60.5-million (Australian) for TFS Corp. Ltd. on the ASX;
  • $50-million (Australian) for NetComm Wireless Ltd. on the ASX;
  • $39.8-million (Australian) for Redbubble Ltd. on the ASX;
  • $10-million (Australian) for Oklo Resources Ltd. on the ASX;
  • $32-million (Australian) for Yowie Group Ltd. on the ASX;
  • $20-million (Australian) for Altura Mining Ltd. on the ASX;
  • 19.1 million pounds for Tyman PLC on the London Stock Exchange;
  • 16.8 million pounds for Goals Soccer Centres PLC on the LSE;
  • 27.2 million pounds for Mortgage Advice Bureau (Holdings) PLC on the LSE;
  • 40 million pounds for Vernalis PLC on the LSE;
  • 30.3 million pounds for The Renewables Infrastructure Group on the LSE;
  • 100-million-pound bond issue for Burford Capital on LSE;
  • $28.8-million (U.S.) for Abraxas Petroleum Corp. on Nasdaq;
  • $22.5-million (U.S.) for SCYNEXIS Inc. on Nasdaq;
  • $70-million (U.S.) initial public offering for Selecta Biosciences Inc. on Nasdaq;
  • $152-million (U.S.) for Renewable Energy Group Inc. on Nasdaq;
  • $172.5-million (U.S.) initial public offering for Twilio Inc. on NYSE;
  • $65-million for DHX Media Ltd. on the Toronto Stock Exchange;
  • $60.1-million for ProMetic Life Sciences Inc. on the TSX;
  • $32.3-million for Sabina Gold & Silver Corp. on the TSX;
  • $109.3-million (U.S.) for Mainstreet Health Investments Inc. on the TSX;
  • $49.1-million for Rye Patch Gold Corp. on the TSX Venture Exchange;
  • $150-million for NYX Gaming Group on the TSX-V;
  • $20.7-million for Seabridge Gold Inc. on the TSX.
• In Canada, Canaccord Genuity participated in raising $275.4-million for government and corporate bond issuances during the fiscal first quarter of 2017.
• Canaccord Genuity generated advisory revenues of $39.1-million during the fiscal first quarter of 2017, an increase of $17.4-million or 80.3 per cent compared with the same quarter last year.
• During the fiscal first quarter of 2017, significant M&A (mergers and acquisitions) and advisory transactions included:
  • NYX in connection with its acquisition of OpenBet for 270 million pounds;
  • Tahoe Resources Inc. on its $945-million acquisition of Lake Shore Gold Corp.;
  • Reservoir Minerals on its merger with Nevsun Resources for total consideration of $440-million (U.S.), and exercise of its rights of first offer related to Reservoir's Timok copper project for total consideration of $262.5-million (U.S.);
  • Plug Power Inc. on its $40-million (U.S.) loan facility;
  • GuestLogix on the $38.5-million (U.S.) sale of its OpenJaw business to TravelSky Technology Ltd.;
  • Claude Resources Inc. on its $337-million sale to Silver Standard Resources Inc.;
  • MeetMe on its $54.6-million (U.S.) acquisition of Skout;
  • Blacksmith Applications Inc. on its sale to Strattam Capital;
  • Seabridge Gold Inc. on its acquisition of SnipGold Inc.;
  • Maxwell Technologies Inc. on the $21-million (U.S.) sale of its microelectronics product line to Data Device Corp.;
  • DLH Holdings in connection with its $38.8-million (U.S.) acquisition of Danya International;
  • The Luminaires Group on its recapitalization by Sentinel Capital Partners;
  • Daintree Networks Inc. on its sale to Current, a subsidiary of General Electric;
  • Lyceum Capital Partners on the 50-million-pound acquisition of Sabio Ltd.

Canaccord Genuity Wealth Management (global)

• Globally, Canaccord Genuity Wealth Management generated $63.9-million in revenue in the first quarter of fiscal 2017.
• Assets under administration in Canada and assets under management in the United Kingdom and Europe and Australia were $33-billion at the end of the first quarter of fiscal 2017(3).

Canaccord Genuity Wealth Management (North America)

• Canaccord Genuity Wealth Management (North America) generated $29.5-million in revenue and, after intersegment allocations and before taxes, recorded net income of $400,000 in the first quarter of fiscal 2017.
• Assets under administration in Canada were $9.8-billion as at June 30, 2016, an increase of 6.8 per cent from $9.2-billion at the end of the previous quarter and a decrease of 7.8 per cent from $10.6-billion at the end of the fiscal first quarter of 2016(3).
• Assets under management in Canada (discretionary) were $1.27-billion as at June 30, 2016, an increase of 0.9 per cent from $1.26-billion at the end of the previous quarter and a decrease of 10.6 per cent from $1.4-billion at the end of the fiscal first quarter of 2016(3).
• Canaccord Genuity Wealth Management had 138 advisory teams(5) at the end of the first quarter of fiscal 2017, a decrease of one advisory team from March 31, 2016, and a decrease of nine from June 30, 2015.

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

• Wealth management operations in the U.K. and Europe generated $33.2-million in revenue and, after intersegment allocations, and excluding significant items, recorded net income of $6.4-million before taxes in the first quarter of fiscal 2017(1).
• Assets under management (discretionary and non-discretionary) were $22.4-billion (12.9 billion pounds) as at June 30, 2016, a decrease of 1.8 per cent from $22.8-billion (12.2 billion pounds) at the end of the previous quarter and a decrease of 1.8 per cent from $22.8-billion (11.6 billion pounds) at June 30, 2015(3). In local currency (pounds), assets under management at June 30, 2016, increased by 5.7 per cent compared with March 31, 2016, and 11.2 per cent compared with the first quarter of 2016.

                    SELECTED FINANCIAL INFORMATION EXCLUDING SIGNIFICANT ITEMS(1)
                         (in thousands of dollars, except per-share amounts)
  
                                                                          Three months ended June 30,
                                                                                   2016         2015

Total revenue per IFRS                                                         $206,180     $214,454
Total expenses per IFRS                                                         196,169      202,007
Significant items recorded in Canaccord Genuity
Amortization of intangible assets (expenses)                                        818        1,410
Net gain realized on business disposal (revenue)                                 (1,193)           -
Significant items recorded in Canaccord Genuity Wealth Management
Amortization of intangible assets (expenses)                                      1,405        1,467
Total significant items                                                           1,030        2,877
Total revenue excluding significant items                                       204,987      214,454
Total expenses excluding significant items                                      193,946      199,130
Net income before taxes -- adjusted                                             $11,041      $15,324
Income taxes -- adjusted                                                          2,902        2,005
Net income -- adjusted                                                           $8,139      $13,319
Earnings per common share -- basic, adjusted                                      $0.05        $0.10
Earnings per common share -- diluted, adjusted                                    $0.05        $0.10

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

"Fellow shareholders:

"Our first fiscal quarter was again characterized by heightened volatility across global markets. Following the U.K. referendum vote to leave the European Union in late June (Brexit), global stock markets initially sold off before staging a partial recovery during the last week of the quarter. Despite the excessive volatility throughout the period, the S&P/TSX Composite finished the quarter 5.1 per cent higher on a total return basis, primarily owing to a safe-haven gold rally and continued oil price appreciation. The less resource-centric S&P 500 posted more modest gains of 2.5 per cent for the quarter, while the MSCI EAFE index declined 1.2 per cent on the back of weak European performance related to the U.K. referendum.

"Delivering on our commitment to reduce operating expenses and drive profitability

"Despite industry headwinds and the environment of persistent uncertainty leading up to the Brexit referendum, I am pleased to report that we have returned our business to profitability during the first fiscal quarter of 2017. We achieved this improved result by managing our business more effectively across our platform, while maintaining a strong client focus in an improving, but still challenging, environment.

"Excluding significant items and incentive compensation, in the first fiscal quarter we have reduced our firm-wide operating expenses by 6.8 per cent compared to the same period last year and our general and administrative costs by 11.8 per cent on a year-over-year basis. Since we began our restructuring initiatives six months ago, we have achieved most of our cost-reduction objectives, with an additional benefit from the fluctuation in foreign exchange rates toward the end of our first fiscal quarter. We continue to explore additional expense reduction measures and we are well on track to deliver our targeted $30-million reduction.

"Improving fundamentals in Canadian and Australian capital markets

"During the first quarter of fiscal 2017, Canaccord Genuity participated in 86 transactions globally, to raise total proceeds of $10.3-billion for growth companies. Our global capital markets operations generated revenues of $140.6-million during the quarter, an increase of 1.4 per cent compared to the previous fiscal quarter. The strongest contributions came from our Canadian and Australian capital markets businesses, which recorded sequential revenue increases of 25 per cent and 15.4 per cent, respectively. This performance was offset by a small loss in our U.S. capital markets operation, and more substantially by losses in our U.K. and Europe capital markets business, which was the most impacted by general uncertainty leading up to the recent Brexit referendum.

"Total financing activity in our key markets was lower compared to the same period last year, a result of ongoing broad market volatility. With the exception of our Australian investment banking operation, all regions recorded a decline in investment banking revenue on a year-over-year basis. However, I am pleased to report that investment banking revenue increased by 117.9 per cent when compared to our most recent fiscal quarter, and we are encouraged by the improving activity levels in our core focus sectors and specifically in the natural resource sectors, a historical area of strength for our business.

"Revenue generated from advisory fees during our first quarter increased by 80.3 per cent on a year-over-year basis. Our Canadian capital markets operation reported the highest increase in advisory fees revenue of 362 per cent, mainly due to the completion of Reservoir Minerals Inc., NYX Gaming Group and Luminaires Group transactions during the quarter. The competitive environment for independent investment banks in Canada is changing rapidly, and the strength of our local team in combination with our differentiated global platform leaves Canaccord Genuity very well positioned for long-term success in this market. Our U.S. operations also reported an increase of $7.3-million in advisory fees revenue compared to the first quarter of last year, further strengthening the diversity of our revenue streams in the region. Offsetting these increases was a decline of $8-million in our U.K. and Europe operations compared to the same period last year.

"Volatile market conditions helped our trading operations deliver strong results. On a year-over-year basis, revenues generated through principal trading activities increased by 22.1 per cent, to $27.5-million. Our U.S. capital markets business was the primary contributor to this result, which recorded an increase of 12.3 per cent, driven by strong performance by our International Equities Group, in addition to stronger fixed-income and options activity. In an environment of continued pressure on traditional equity commissions, this business has successfully shifted its revenue mix into areas of near-term growth.

"In recent months we have undertaken important initiatives to streamline our U.K. and Europe capital markets business that we expect will help this business to better withstand challenging market conditions. We anticipate that the ongoing uncertainty related to the Brexit referendum result will continue to put pressure on near- to medium-term capital-raising activities in the region. However, our efforts to better align our investment banking, advisory, and sales and trading teams across regions ensure that clients in this geography can benefit from the perspectives and resources available across our global platform, at a time when they need us most.

"In any operating environment, we continue to focus on driving profitable growth with a heightened emphasis on improving efficiencies across our operation in a client-centric manner. We are pleased to see activity levels improving, and we expect that our ongoing efforts to realign our businesses will improve our long-term profitability.

"Stable contribution from U.K. and Europe wealth management

"Our global wealth management operations generated revenue of $63.9-million during our first fiscal quarter.

"Our wealth management operations in the U.K. and Europe have continued to increase assets under management during the quarter in local currency terms, a testament to the world-class product offering and commitment to clients demonstrated by our asset management, portfolio management and wealth planning teams in the region. At the end of the fiscal quarter, assets under management measured in local currency increased by 11.2 per cent, to 12.9 billion pounds, compared to the first quarter of the last fiscal year. With the benefit of our recently upgraded platform and a commitment to exceptional client service, I am also pleased to say that our teams successfully managed the elevated trading volumes following the news of the Brexit referendum outcome. This strong franchise continues to deliver stable, recurring revenues and net income for our firm.

"I am also pleased to report that our Canadian wealth management business has returned to profitability for the first time since the second quarter of fiscal 2012. While assets under administration and management in our Canadian wealth management operations were negatively impacted by lower market values and a reduced number of advisory teams when compared to the same period a year ago, income before income taxes for the first fiscal quarter of 2017 was $400,000, up from a loss of the same amount during the same period last year. This result was largely driven by our ongoing expense-reduction initiatives.

"Looking ahead, we will continue to focus on improving recurring revenue growth across our wealth management operations, to help offset the inherent volatility of our global capital markets businesses.

"Strengthening alignment with our shareholders and changes to our board of directors

"A key priority for our organization is ensuring that employees and senior managers are directly aligned with the best interests of our shareholders. We implemented a program to increase share ownership by our most senior, revenue-producing employees during the quarter. To accomplish this, we initiated and closed a private placement of common shares and warrants to employees, which was fully subscribed. I am pleased to report that employees now own approximately 40 per cent of common shares on a fully diluted basis.

"We made the decision to reduce the size of our board, and consequently Dennis Miller and Bill Eeuwes have decided not to stand for re-election to the board of directors at our coming annual general meeting. I would like to thank both Dennis and Bill for their wise counsel and valuable contributions.

"Looking ahead

"Broad market fundamentals indicate that we should be entering an improving environment for our business and there are signs of improving activity levels across core focus sectors.

"As the world reacts to the impact of the recent outcome of the Brexit referendum, I assure you that our commitment to our businesses and our clients across our capital markets and wealth management operations in the U.K. and Europe has not changed. While the long-term outcome of this development is uncertain, we remain focused on the opportunities we can create for our business and for our clients and our business.

"We remain committed to delivering our strategic priorities for our clients and our shareholders, and I thank you for your ongoing support.

"Dan Daviau, president and 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 Canaccord Genuity's website.

Conference call and webcast presentation

Interested parties are invited to listen to Canaccord Genuity's fiscal first quarter 2017 results conference call, via live webcast or a toll-free number. The conference call is scheduled for Thursday, Aug. 4, 2016, at 5 a.m. PT, 8 a.m. ET, 1:00 p.m. (U.K. time), 8 p.m. China Standard Time and 10 p.m. Australia ET. 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 on Canaccord Genuity's website.

Analysts and institutional investors can call in via telephone at:

Within Toronto:  647-427-7450

Toll-free outside Toronto:  1-888-231-8191

Toll-free from the United Kingdom:  0-800-051-7107

Toll-free from France:  0-800-917-449

Toll-free from Northern China:  10-800-714-1191

Toll-free from Southern China:  10-800-140-1195

Toll-free from Australia:  1-800-287-011

Toll-free from United Arab Emirates:  800-017-8071

Please ask to participate in Canaccord Genuity's first quarter 2017 results call. If a passcode is requested, please use 32141306.

A replay of the conference call will be available on Aug. 4, 2016, after 8 a.m. PT, 11 a.m. ET, 4:00 p.m. (U.K. time) and 11 p.m. China Standard Time, and on Aug. 5, 2016, at 1 a.m. Australia ET, until Sept. 19, 2016, at 416-849-0833 or 1-855-859-2056 by entering passcode 32141306 followed by the pound sign.

Notes:

1. Figures excluding significant items are non-IFRS measures;
2. Net income attributable to common shareholders is calculated as the net income adjusted for non-controlling interests and preferred share dividends;
3. Non-IFRS measures;
4. Transactions over $1.5-million. Internally sourced information;
5. Advisory teams normally comprise one or more investment advisers (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 the advisory team count, as it typically takes a new IA approximately three years to build an average-sized book of business.