Press release from CNW Group
GMP Capital Inc. reports second quarter 2011 results
Friday, August 05, 2011
For further information about GMP Capital Inc., our results for second quarter 2011 and the meaning of certain references, this quarterly earnings release should be read in conjunction with our Second Quarter 2011 Financial Statements and Management's Discussion and Analysis for the three and six months ended June 30, 2011, which can be accessed on our website at gmpcapital.com and on sedar.com. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars and have been taken from our Second Quarter 2011 Financial Statements prepared in accordance with International Accounting Standard 34: Interim Financial Reporting using the policies we expect to apply in our annual financial statements for the year ending December 31, 2011, prepared in accordance with International Financial Reporting Standards ("IFRS").
TORONTO, Aug. 5, 2011 /CNW/ - GMP Capital Inc. ("GMP") (TSX: GMP) today reported revenue of $67.6 million for the second quarter ended June 30, 2011, representing a 41% decrease compared with the same period a year ago, reflecting a challenging business environment amid renewed economic uncertainty. Net income was $5.1 million ($0.04 per basic share) compared with $24.1 million in second quarter 2010 ($0.32 per basic share), as a result of lower levels of business activity. Annualized return on common shareholders' equity ("ROE")1 was 3.7% for second quarter 2011.
"Our second quarter results were impacted by the challenging global economic and market conditions," said Harris Fricker, Chief Executive Officer, GMP. "In our Capital Markets business, revenue was lower than our expectations and was negatively impacted by reduced investor confidence and declining equity market valuations, which resulted in lower levels of underwriting activity and reduced institutional trading volumes. Richardson GMP continued to deliver solid profitability amid the economic headwinds, while GMP Investment Management generated higher fee income in second quarter 2011 resulting from a year-over-year increase in assets under management. Despite these difficult conditions, we remain committed to our business strategy and our clients and believe we are well positioned to capitalize on opportunities as markets improve."
SECOND QUARTER 2011 VS. SECOND QUARTER 2010
Revenue of $67.6 million compared with $114.7 million
Net income of $5.1 million compared with $24.1 million
Earnings per basic share of $0.04 compared with $0.32
- Annualized ROE1 of 3.7% compared with 33.6%
FIRST HALF 2011 VS. FIRST HALF 2010
Revenue of $182.9 million compared with $197.4 million
Net income of $31.3 million compared with a net loss of $37.8 million
Earnings per basic share of $0.37 compared with a net loss per basic
share of $0.57
Annualized ROE1 of 16.6% compared with negative 29.0%
Excluding the impacts of one-time cash redemption costs recorded in
connection with the redemption of our long-term debt in the first
quarter of 2011, first half 2011 adjusted net income1 was $35.2 million; adjusted earnings per basic share1 was $0.42; and adjusted ROE1 was 19.0%
- Excluding the impacts of the goodwill and intangible asset impairment charge recorded in the first quarter of 2010, first half 2010 adjusted net income1 was $38.2 million; adjusted earnings per basic share1 was $0.51; and adjusted ROE1 was 21.4%
Commenting further, Mr. Fricker said, "Although the pace of business activity has slowed considerably, we remain confident that the focused strategic investments made in all of our businesses will further strengthen the GMP franchise, expand our client relationships and diversify our business mix. We believe that our Capital Markets business will benefit from the completion of our pending acquisition of Miller Tabak Roberts Securities, LLC and its exceptional distribution capabilities, while in Australia, we have assembled a select team of experienced professionals in Perth and Sydney that will provide investment banking and institutional equity services to Australian-based clients. We remain encouraged by the growth opportunities presented by these two initiatives."
SECOND QUARTER 2011 BUSINESS HIGHLIGHTS
Revenue of $60.6 million decreased 42% compared with second quarter
2010, primarily driven by lower underwriting activity amid challenging
business conditions in the Canadian mid-market compared with record
underwriting activity in the same period last year.
- Operating earnings1 of $12.1 million, down 70% from second quarter 2010 reflecting lower levels of business activity.
Capital Markets Highlights:
GMP Securities L.P. ranked fifth in Canada for equity block trading
volumes, achieving a market share of 7.1 %;2
GMP Securities L.P. led or co-led 20 underwriting transactions completed
in Canada helping raise approximately $944 million on behalf of
- GMP Securities Australia Pty Limited was granted an Australian Financial Services Licence by the Australian Securities & Investments Commission and opened offices in Perth and Sydney.
- Wealth Management, comprised of GMP's non-controlling ownership interest in Richardson GMP, reported operating earnings1 of $0.5 million compared with an operating loss1 of $1.6 million in second quarter 2010 reflecting increased client trading activity and a year-over-year increase in assets under administration ("AUA")1 at Richardson GMP. Richardson GMP's operating results in second quarter 2010 were negatively impacted by post-merger integration-related costs and other expenses recorded in the period.
Richardson GMP Limited Highlights:
Revenue of $39.5 million increased 18% compared with second quarter
2010, primarily due to higher commission revenue on the strength of
increased client trading activity as well as higher investment
management and fee income primarily due to a year-over-year increase in
Operating earnings1 were $2.3 million compared with an operating loss1 of $4.0 million in second quarter 2010 due primarily to stronger
revenue generation and prudent cost management; and
- AUA1 of $13.9 billion as at June 30, 2011, an increase of 17% relative to June 30, 2010, and 109 advisory teams located in 17 cities across Canada.
Revenue of $2.8 million decreased 55% compared with second quarter 2010,
primarily due to lower investment management and fee income at
EdgeStone and lower results in principal activities relating to GMP's
investment in the GMP Diversified Alpha Fund and the GMPIM Equity
- Operating loss1 was $1.1 million compared with operating earnings1 of $1.4 million in second quarter 2010, largely driven by lower revenue generation.
GMP Investment Management L.P. Highlights:
Assets under management ("AUM")1 of $600 million as at June 30, 2011, nearly double the $307 million in
AUM across its various funds last year;
Generated a return of 2.07% in the six months ended June 30, 2011 for
the GMP Diversified Alpha Fund (Class F), net of management fees and
other expenses; and
Generated a return of 16.1% in the six months ended June 30, 2011 for
the Canadian ABCP Fund L.P., net of management fees and other expenses.
1 Represents a non-GAAP measure. This measure does not have any standardized meaning prescribed by generally accepted accounting principles ("GAAP") and is therefore unlikely to be comparable to similar measures presented by other issuers. This data should be read in conjunction with the "Non-GAAP Measures" section at the end of this press release.
2 Source: CanadaEquity.com as at July 11, 2011.
On August 4, 2011, the Board of Directors declared a quarterly cash dividend of $0.10 per common share, and a quarterly cash dividend of $0.3438 per Cumulative 5-Year Rate Reset Preferred Share, Series B, each payable on September 30, 2011, to the respective shareholders of record at the close of business on September 9, 2011.
NORMAL COURSE ISSUER BID ACTIVITY
During the three months ended June 30, 2011, GMP purchased for cancellation 2.181 million common shares under its normal course issuer bid for an aggregate cost of $30.4 million.
GMP executives will host a conference call and live audio webcast today at 10:00 a.m. (ET) to discuss GMP's second quarter results. The call may be accessed by dialing 416-644-3415 or toll free at 1-877-974-0445. The link to the live audio webcast will be accessible at gmpcapital.com. A replay of the conference call can be accessed by telephone until Friday, August 12, 2011, by dialing 416-640-1917 or 1-877-289-8525 (toll free) and entering access code 4448149#.
Consistent with our management framework, we use certain measures to assess our financial performance which are not generally accepted accounting principle measures ("GMP") under IFRS. These measures do not have any standardized meaning prescribed by GMP, and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GMP earnings measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of GAAP's performance, liquidity, cash flows and profitability.
GMP uses "operating earnings (loss)" as a supplement to net income (loss) to assess the operating performance of its business segments and its corporate segment and also to assess GAAP's overall performance. Operating earnings (loss) represents "Income (loss) before income taxes" excluding "Impairment charge" as set out in the unaudited interim consolidated statements of income (loss) for the three and six months ended June 30, 2011, prepared in accordance with IFRS. GMP also evaluates the performance of its consolidated operations using annualized return on common equity ("ROE"). The ROE calculation is based on net income available to common shareholders divided by total average common shareholder equity for the period, which are measures derived from information contained in our Second Quarter 2011 Financial Statements, which were prepared in accordance with IFRS.
Assets under administration ("AUA") is a non-GAAP measure of client assets reported at market value that is used by management in assessing the performance of the Wealth Management segment. Assets under management ("AUM") is a non-GAAP measure of client assets reported at market value that is used by management in assessing the performance of GMP Investment Management and EdgeStone. The transition to IFRS from Canadian GAAP has had no significant impact on the measurement of AUA and AUM.
Adjusted measures exclude: (i) from first half 2011 financial results, the impact of the one-time redemption costs recorded in connection with the redemption of all of the outstanding senior unsecured notes issued by Griffiths McBurney L.P., an indirect, wholly-owned subsidiary of GMP, that was completed during first quarter 2011; and (ii) from first half 2010 financial results, the impact of goodwill and intangible asset impairment charges recorded during first quarter 2010. Management believes excluding such charges from these measures is more reflective of ongoing operating results and will provide readers with a better understanding of how management views GMP's performance. These adjusted measures should also improve the comparability of GMP's financial results for first half 2011 with the corresponding prior period.
The following table provides a reconciliation of GMP's adjusted measures:
For the six months ended
June 30, 2011
For the six months ended
June 30, 2010
|($000, except per share and percentage amounts)||
|Income (loss) before income taxes||42,415||5,466||47,881||(24,263)||80,464||56,201|
|Net income (loss)||31,323||3,908||35,231||(37,848)||76,065||38,217|
|Net income (loss) attributable:|
|GMP Capital Inc. shareholders||27,342||3,908||31,250||(40,200)||76,065||35,865|
|Net income (loss) attributable to GMP Capital Inc. shareholders||27,342||3,908||31,250||(40,200)||76,065||35,865|
|Dividend declared on Series B Preferred Shares||(2,222)||-||(2,222)||-||-||-|
|Net income (loss) attributable to common shareholders||25,120||3,908||29,028||(40,200)||76,065||35,865|
|Weighted-average number of common shares - Basic||68,428||68,428||70,525||70,525|
|Basic earnings (loss) per common share||$0.37||$0.06||$0.42||($0.57)||$1.08||$0.51|
|Weighted-average number of common shares - Diluted||75,640||75,640||76,091||76,091|
|Diluted earnings (loss) per common share 1||$0.33||$0.05||$0.38||($0.57)||$1.00||$0.47|
|Average common equity||302,311||305,242||277,395||334,444|
|Return on common equity||16.6%||19.0%||(29.0%)||
- In case of a net loss, the effect of common share options and warrants potentially exercisable and the impact of shares pledged on share purchase loans on diluted net loss per common share will be anti-dilutive; therefore, basic and diluted net loss per common share will be the same.
This press release contains "forward-looking statements" as defined under applicable Canadian securities laws and may also include additional forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent management's beliefs, expectations, estimates and projections regarding future events, many of which, by their nature, are inherently uncertain and beyond our control. These statements include, but are not limited to, statements made with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.
These forward-looking statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in this press release. GAAP's primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation, variations in the market value of securities, the volatility and liquidity of equity trading markets, the volume of new financings and mergers and acquisitions ("M&A"), competition in the marketplace for suitable investments, sustainability of fees, nature and type of portfolio company investments, ability to realize carried interest entitlements and dependence on key personnel. The acquisition of Miller Tabak Roberts Securities, LLC is also subject to various risks and uncertainties, including that the conditions to closing will not be satisfied or waived or that the transaction will otherwise not be consummated. Other factors, such as general economic conditions, including interest rate and exchange rate fluctuations, may also have an effect on GMP's results of operations. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking statement made by us or on our behalf. For a description of additional risks that could cause our actual results to differ materially from our current expectations, please see the "Risk Management" section in the 2010 Annual MD&A, the "Risk Management" and "Risk Factors" sections in the Second Quarter 2011 MD&A and "Risk Factors" in GMP's annual information form dated March 1, 2011. Material assumptions or factors underlying the forward-looking statements contained in this press release are set out in the "Business Environment and Market Outlook" section in the Second Quarter 2011 MD&A and include, without limitation, the slowing momentum of economic recovery, renewed economic uncertainty, inflationary pressures, on-going European sovereign debt concerns, the US budget debate, continuing global supply chain disruptions, lower energy prices and muted global growth. Although forward-looking information contained in this press release 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. Certain statements included in this press release may be considered a "financial outlook" for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release. The forward-looking statements contained in this press release are made as of the date of this press release, and should not be relied upon as representing GMP's views as of any date subsequent to the date of this press release.
Except as required by applicable law, management and the board of directors of GMP undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
ABOUT GMP CAPITAL INC.
GMP Capital Inc. ("GMP") is a leading diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a client base that includes corporate clients, institutional investors and high-net-worth individuals in three integrated reporting segments. The Capital Markets segment provides investment banking, including advisory and underwriting services, institutional equity sales and trading and equity research through offices located in Toronto, Montreal, Calgary, London, Perth and Sydney. The Capital Markets segment conducts its business through the following operating entities: GMP Securities L.P., Griffiths McBurney Corp., GMP Securities Europe LLP and GMP Securities Australia Pty Limited. Wealth Management consists of GMP's non-controlling ownership interest in Richardson GMP Limited, a full-service independent firm focused on providing exclusive and comprehensive wealth management and investment services delivered by an experienced team of investment professionals. The Alternative Investments segment consists of the investment management and advisory services and alternative investment products provided by GMP Investment Management L.P. and EdgeStone Capital Partners, L.P. GMP is listed on the Toronto Stock Exchange under the symbol "GMP". For further information, please visit our corporate website at gmpcapital.com.
For further information:
GMP Capital Inc.
Rocco Colella, Director, Investor Relations
145 King Street West, Suite 300, Toronto, Ontario AA5H 1J8
Tel: (416) 941-0894; Fax: (416) 943-6175
rcoleUa@gmpcapital.com or email@example.com