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Press release from CNW Group

GMP Capital Inc. Reports First Quarter 2013 Results

Friday, May 03, 2013

GMP Capital Inc. Reports First Quarter 2013 Results

06:00 EDT Friday, May 03, 2013

  • Earned net income of $1.1 million, on an adjusted basis1

For further information about GMP Capital Inc., our results for first quarter 2013 and the meaning of certain references, this earnings release should be read in conjunction with our unaudited interim condensed consolidated financial statements as at and for the three months ended March 31, 2013 (First Quarter 2013 Financial Statements) and our management's discussion and analysis for the three months ended March 31, 2013 (First Quarter 2013 MD&A), which can be accessed on our website at gmpcapital.com and on SEDAR at sedar.com. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars and have been taken from our First Quarter 2013 Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS).

TORONTO, May 3, 2013 /CNW/ - GMP Capital Inc. (GMP) (TSX: GMP) today reported revenue of $48.8 million in first quarter 2013, down 26.1% compared with the same period a year ago.  GMP recorded a net loss of $0.4 million and a diluted loss per share of $0.02 in first quarter 2013 compared with net income of $0.2 million and a diluted loss per share $0.04 in first quarter 2012.  Excluding specified items1, net income1 was $1.1 million in first quarter 2013 and diluted earnings per share (EPS)1 was nil.

"As major shareholders ourselves, senior management is fully cognizant of the near-term impact of the ongoing malaise in global markets. That said, our role as managers is to focus our efforts where they can have lasting impact. Our firm's capital and liquidity position remains extremely strong and we have never been broader in scope or more diversified as a business," said Harris Fricker, Chief Executive Officer, GMP.  "Our franchise has proven itself sustainable through a prolonged and severe downturn and we remain confident in our ability to outperform in better markets."

FINANCIAL HIGHLIGHTS

First Quarter 2013 versus First Quarter 2012

  • Revenue of $48.8 million compared with $66.1 million
  • Net loss of $0.4 million compared with net income of $0.2 million
  • Diluted loss per share of $0.02 compared with $0.04
  • Return on common equity (ROE)1 was negative 2.3% compared with negative 3.7%
  • Excluding specified items, net income was $1.1 million, diluted EPS was nil and ROE was 0.1% compared with net income of $4.4 million, diluted EPS of $0.03 and ROE of 3.1%

Commenting further, Mr. Fricker said, "Our deep-rooted relationship-based culture remains one of our key competitive advantages.  As always, we will remain focused on our clients, helping them effectively manage through these uncertain times."

FIRST QUARTER 2013 BUSINESS SEGMENT HIGHLIGHTS

Capital Markets

  • Revenue of $42.1 million - a decrease of 29% compared with first quarter 2012 primarily due to lower investment banking revenue and lower commission revenue.  Partly offsetting these decreases was higher returns on principal transactions, which included an increase in net gains on client-related fixed income trading activity.
  • Expenses of $42.2 million - a decrease of 26% compared with first quarter 2012 primarily due to lower compensation costs commensurate with lower revenue generation.
  • Loss before income taxes of $0.1 million in first quarter 2013 compared with income before income taxes of $1.9 million in first quarter 2012.

GMP Securities L.P. highlights:

  • Participated in 53 underwriting transactions completed in Canada during first quarter 2013, valued at $4.5 billion, of which we led or co-led 10 of these transactions valued at $0.7 billion. Source: FPinfomart.
  • Ranked sixth in the dollar value of common equity underwriting transactions completed in Canada during first quarter 2013 for which we were lead or co-lead. Source: FPinfomart.
  • Continued to build momentum in debt underwriting reporting a year-over-year increase in both participation and transactions we led or co-led compared with first quarter 2012.

Wealth Management

  • The Wealth Management segment consists of GMP's non-controlling ownership interest in Richardson GMP Limited (Richardson GMP) and commencing this quarter, GMP Investment Management L.P. (GMP IM).
  • Wealth Management reported income before income taxes of $1.5 million in first quarter 2013 compared with a near break-even result in first quarter 2012, driven largely by dividend income of $1.4 million recognized this quarter by GMP on its preferred share investment in Richardson GMP following dividend declarations by Richardson GMP.  GMP's share of Richardson GMP's net income was $0.4 million in first quarter 2013 compared with a net loss of $0.1 million in the same period last year.

Richardson GMP highlights:

  • Earned net income of $1.9 million in first quarter 2013 - up $1.6 million compared with first quarter 2012.
  • Ended first quarter 2013 with assets under administration1 of $15.1 billion, up $1.2 billion or 9% compared with first quarter 2012, and 115 investment advisory teams, up from 108 teams in the same period a year ago.

GMP IM highlights:

  • GMP IM ended first quarter 2013 with assets under management1 of $0.7 billion, up 15% compared with first quarter 2012.
  • Subsequent to quarter end, GMP completed the sale of the majority of the advisory contracts related to GMP IM's assets under management to Fiera Capital Corporation for cash consideration of $10.8 million.

___________________________
1 Considered to be a non-GAAP financial measure. This measure does not have any standardized meaning prescribed by generally accepted accounting principles (GAAP) under IFRS 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 and the "Presentation of Financial Information and Non-GAAP Measures" section in the First Quarter 2013 MD&A.

DIVIDENDS

On May 2, 2013, the board of directors of GMP (Board of Directors) declared a quarterly cash dividend of $0.05 per common share, and a quarterly cash dividend of $0.3438 per Cumulative 5-Year Rate Reset Preferred Share, Series B, each payable on June 30, 2013.  In the event that the payment date is not a business day, dividends shall be paid on the next succeeding day that is a business day, to the respective shareholders of record on June 10, 2013.

CONFERENCE CALL

GMP executives will host the conference call and audio webcast today at 9 a.m. (ET) to discuss GMP's first quarter 2013 results, followed by a question-and-answer session for analysts and institutional investors.  Interested parties are invited to access the conference call on a listen-only basis by dialing 416-644-3414 or 1-800-814-4859 (toll free) or via live audio webcast at http://www.gmpcapital.com/investor.  A recording of the conference call will be available until Friday, May 10, 2013, by dialing 416-640-1917 or 1-877-289-8525 (toll free) and entering access code 4610154#. The webcast will be archived at http://www.gmpcapital.com/investor.

NON-GAAP MEASURES
Consistent with GMP's management framework, management uses certain financial measures to assess GMP's financial performance, which are not generally accepted accounting principle (GAAP) measures under IFRS. These measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of GMP's performance, liquidity, cash flows and profitability. For further information, refer to  the "Presentation of Financial Information and Non-GAAP Measures" section in First Quarter 2013 MD&A.

The table below provides a reconciliation of GMP's reported results to its adjusted measures:

($000, except as otherwise noted)           Q1 2013     Q1 2012
Reported Results                                  
Loss before income taxes                 (343)             (133)  
Income tax expense (benefit)                 79             (344)  
Net (loss) income                 (422)             211  
Net loss attributable to common shareholders                 (1,476)             (2,288)  
Reported Measures                                  
Net loss per common share (dollars):                                  
Basic           $     (0.02)       $     (0.04)  
Diluted ¹           $     (0.02)       $     (0.04)  
ROE ²                 (2.3) %           (3.7) %
Pre-Tax Impact of Adjusting Items                                  
  Retention shares                 998             1,744  
  Restructuring costs                 1,376             4,414  
Impact of adjusting items on loss before income taxes                 2,374             6,158  
After-Tax Impact of Adjusting Items                                  
  Retention shares                 558             975  
  Restructuring costs                 995             3,254  
Impact of adjusting items on net income                 1,553             4,229  
Adjusted Results ²                                  
Income before income taxes                 2,031             6,025  
Net income                 1,131             4,440  
Net income attributable to common shareholders                 77             1,941  
Adjusted Measures ²                                  
Net income per common share (dollars):                                  
  Basic           $           $     0.03  
  Diluted ¹           $           $     0.03  
ROE                 0.1 %           3.1 %
                                   
1.   In the case of a net loss, the effect of GMP's common share options and warrants on
diluted net loss per common share will be anti-dilutive; therefore, basic and diluted net
loss per common share will be the same.
2.   Return on common equity, adjusted results and adjusted measures are considered to
be non-GAAP financial measures. These measures do not have any standardized
meaning prescribed by GAAP under IFRS and are therefore unlikely to be comparable
to similar measures presented by other issuers.
     

FORWARD-LOOKING INFORMATION
This press release contains "forward-looking information" as defined under applicable Canadian securities laws.   This information includes, but is not limited to, statements concerning our 2013 objectives, our strategies to achieve those objectives, as well as statements made with respect to management's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information 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 information reflects management's current beliefs and is based on information currently available to management.

Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in this press release. GMP'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: variation in the market value of securities, volatility and liquidity of equity and fixed income trading markets, volume of new financings and mergers and acquisitions (M&A), dependence on key personnel and sustainability of fees. 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 GMP's actual results and could cause its actual results to differ materially from those expressed or implied in any forward-looking information disclosed by management or on its behalf.  For a description of additional risks that could cause our actual results to materially differ from our current expectations, see "Risk Management" in the 2012 Annual MD&A and the First Quarter 2013 MD&A and "Risk Factors" in GMP's 2013 Annual Information Form dated March 13, 2013. These risks and uncertainties are not the only ones facing GMP together with its consolidated operations controlled by it and its predecessors (GMP Group).  Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also impair the operations of the GMP Group.  Material assumptions or factors underlying the forward-looking information contained in this press release are set out in the "Business Environment and Market Outlook" section of the First Quarter 2013 MD&A and include, without limitation: sluggish global economic recovery, persistent European sovereign debt issues, weak commodity prices, slowing growth in China, slow European growth, weak demand for commodities.  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 this forward-looking information. 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 information contained in this press release is 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 GMP's Board of Directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

ABOUT GMP CAPITAL INC.
GMP Capital Inc. (GMP) is a leading independent diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a global client base that includes corporate clients, institutional investors and high-net-worth individuals in two integrated reporting segments. The Capital Markets segment provides investment banking, including advisory and underwriting services, institutional sales and trading and research through offices located in Toronto, Montreal, Calgary, New York, Miami, Dallas, London, Perth and Sydney.  The Capital Markets segment conducts its business through the following operating entities: GMP Securities L.P., GMP Securities, LLC, 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 and the investment management and alternative investment products provided by GMP Investment Management L.P.  Richardson GMP Limited is a full-service independent firm focused on providing exclusive and comprehensive wealth management and investment services delivered by an experienced team of investment professionals. GMP is listed on the Toronto Stock Exchange under the symbol "GMP". For further information, please visit our corporate website at gmpcapital.com.

 

SOURCE: GMP Capital Inc.

For further information:

GMP Capital Inc.
Rocco Colella, Director, Investor Relations
145 King Street West, Suite 300, Toronto, Ontario M5H 1J8
Tel: (416) 941-0894; Fax: (416) 943-6175
rcolella@gmpcapital.com or investorrelations@gmpcapital.com

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