Stock Name: GMP
Amount: CAD 0.10
Announcement Date: 04/11/2011
Record Date: 07/12/2011
Dividend Detail:
For further information about GMP Capital Inc., our results for third
quarter 2011 and the meaning of certain references, this quarterly
earnings release should be read in conjunction with our Third Quarter
2011 Financial Statements and Management's Discussion and Analysis for
the three and nine months ended September 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 Third 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, Nov. 4, 2011 /CNW/ - GMP Capital Inc. ("GMP") (TSX: GMP) today reported a net loss of $4.6 million ($0.09 loss per
basic share) in third quarter 2011 compared with net income of $23.1
million ($0.32 per basic share) in third quarter 2010. GMP recorded
revenue of $46.3 million for the third quarter ended September 30,
2011, representing a 55% decrease compared with the same period a year
ago, reflecting the challenging business and capital markets
environment which persisted in the quarter. This quarter's results were
significantly affected by the unfavourable market environment and also
reflect a $5.0 million (pre-tax) charge recorded in connection with a
previously announced executive management retirement.
"Third quarter 2011 marked disappointing results for the firm. Global
economic uncertainty intensified this quarter resulting in a
significant contraction in overall business activity in our Capital
Markets segment," said Harris Fricker, Chief Executive Officer, GMP.
"Heightened equity market volatility together with declining global
equity market valuations and lower investor confidence resulted in
weaker investment banking revenue, unrealized losses in principal
activities and reduced trading volumes. Despite these challenges, our
partners at Richardson GMP Limited continued to build on their current
momentum delivering positive results again this quarter while GMP
Investment Management L.P. continued to grow its fee income and net new
assets under management."
FINANCIAL HIGHLIGHTS
Third Quarter 2011 vs. Third Quarter 2010
Net loss of $4.6 million compared with net income of $23.1 million
Net loss per basic share of $0.09 compared with earnings per basic share
of $0.32
Revenue of $46.3 million compared with $102.8 million
Annualized ROE1 of negative 9.1% compared with 31.5%1
First NINE MONTHS 2011 vs. First NINE MONTHS 2010
Net income of $26.7 million compared with a net loss of $14.8 million
Earnings per basic share of $0.28 compared with a net loss per basic
share of $0.25
Revenue of $229.2 million compared with $300.2 million
Annualized ROE1 of 8.8% compared with negative 8.4%
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 nine months 2011 adjusted net income1 was $30.6 million; adjusted earnings per basic share1 was $0.34; and adjusted ROE1 was 10.5%
Excluding the impacts of the goodwill and intangible asset impairment
charge recorded in the first quarter of 2010, first nine months 2010
adjusted net income1 was $61.3 million; adjusted earnings per basic share1 was $0.83; and adjusted ROE1 was 22.7%
Commenting further, Mr. Fricker said, "As a result of the financial
uncertainty gripping the industry we have focused our priorities on
cost reduction measures aimed at ensuring our discretionary
expenditures remain commensurate with lower levels of business
activity. We believe the current dislocation in the market will
provide opportunities to expand and further strengthen our franchise.
We will continue to explore opportunities to grow our businesses
responsibly, where it makes sense, adding capabilities which are
complementary to our core domestic securities operations. GMP remains
fundamentally strong with a solid capital position and a resilient
franchise to weather the current financial storm and, we believe, we
are well positioned to benefit when markets return to more normal
levels of activity."
THIRD QUARTER 2011 BUSINESS HIGHLIGHTS
Capital Markets
Operating loss1 of $3.8 million compared with operating earnings1 of $36.4 million in third quarter 2010 reflecting a significant decline
in business activity.
Revenue of $37.9 million, a decrease of 59% compared with third quarter
2010 due to a significant decline in investment banking revenue, losses
recorded in client facilitation and principal activities and lower
commissions.
Capital Markets Highlights:
GMP Securities L.P. ranked sixth in Canada for equity block trading
volumes, achieving a market share of 6.7%;2 and
GMP Securities L.P. participated in 38 underwriting transactions
completed in Canada helping raise approximately $4.3 billion on behalf
of clients.3
Wealth Management
Wealth Management is comprised of GMP's non-controlling ownership
interest in Richardson GMP Limited ("Richardson GMP") and also includes
dividend revenue recognized on our investment in Richardson GMP
preference shares following dividend declarations made by Richardson
GMP from time to time. Wealth Management reported operating earnings1 of $1.6 million compared with an operating loss1 of $0.1 million in third quarter 2010. Wealth Management's third
quarter 2011 performance reflects Richardson GMP's improved operating
results and $1.5 million in dividend revenue recorded following
dividend declarations by Richardson GMP during third quarter 2011.
Richardson GMP Highlights (100% basis):
Operating earnings1 were $1.2 million compared with $0.3 million in third quarter 2010 due
primarily to stronger revenue generation;
Revenue of $36.3 million, an increase of 12% compared with third quarter
2010 primarily due to higher investment management and fee income; and
Despite net market depreciation, primarily in equity assets, assets
under administration ("AUA")1 were $12.9 billion as at September 30, 2011, with $0.3 million in net
new assets added in third quarter 2011.
Alternative Investments
Operating loss1 of $1.2 million compared with operating earnings1 of $1.4 million in third quarter 2010, largely reflects lower revenue
generation.
Revenue of $2.7 million, a decrease of 55% compared with third quarter
2010, primarily due to unrealized losses recorded on GMP's investment
in the GMP Diversified Alpha Fund and the GMPIM Equity Opportunities
Fund and lower investment management and fee income at EdgeStone
Capital Partners, L.P. These decreases were partly offset by higher fee
income generated by GMP Investment Management L.P. ("GMP Investment
Management") in third quarter 2011 due to higher assets under
management ("AUM").1
GMP Investment Management Highlights:
AUM1 of $576 million as at September 30, 2011, representing a 73% increase
compared with the same period last year.
DIVIDENDS
On November 3, 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 December 31, 2011, to the respective shareholders of
record at the close of business on December 9, 2011.
NORMAL COURSE ISSUER BID ACTIVITY
During the three months ended September 30, 2011, GMP purchased for
cancellation 577,682 common shares under its normal course issuer bid
for an aggregate cost of $4.4 million.
CONFERENCE CALL
GMP executives will host a conference call and live audio webcast today
at 10:00 a.m. (ET) to discuss GMP's third quarter results. The call
may be accessed by dialing 416-644-3416 or toll free at 1-800-814-4860.
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, November 11, 2011, by dialing 416-640-1917 or 1-877-289-8525
(toll free) and entering access code 4473330#.
NON-GAAP MEASURES
Consistent with our management framework, we use certain measures to
assess our financial performance which are not generally accepted
accounting principle measures ("GAAP") 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 earnings 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.
Operating earnings (loss)
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 GMP's overall performance.
Operating (loss) earnings represents "(loss) income before income
taxes" excluding "Impairment charge" as set out in the unaudited
interim consolidated statements of operations for the three and nine
months ended September 30, 2011, prepared in accordance with IFRS.
Return on Common Equity
GMP evaluates the performance of its consolidated operations using
annualized return on common equity ("ROE"). Our ROE calculation is
based on net income (loss) available to common shareholders divided by
total average common shareholder equity for the period, which are
measures derived from information contained in our Third Quarter 2011
Financial Statements, which were prepared in accordance with IFRS.
Assets under Administration/Management
AUA is a measure of client assets reported at market value that is used
by management in assessing the performance of GMP's Wealth Management
segment. AUM is a measure of client assets reported at market value
that is used by management in assessing the performance of GMP
Investment Management and EdgeStone.
Adjusted measures exclude:
(i) | from first nine months 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 nine months 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 core
performance.These adjusted measures should also improve the
comparability of GMP's financial results for first nine months 2011
with the corresponding prior period.
The following table provides a reconciliation of GMP's adjusted
measures:
Non-GAAP measures | | | | | |||||
| | For the nine months ended September 30, 2011 | | For the nine months ended September 30, 2010 | |||||
($000, except per share and percentage amounts) | | As reported IFRS | Redemption Costs | Adjusted IFRS | | As reported IFRS | Impairment Charges | Adjusted IFRS | |
Income before income taxes | | 36,642 | 5,466 | 42,108 | | 9,017 | 80,464 | 89,481 | |
Income tax | | 9,913 | (1,558) | 11,471 | | 23,809 | (4,399) | 28,208 | |
Net income (loss) | | 26,729 | 3,908 | 30,637 | | (14,792) | 76,065 | 61,273 | |
| | | | | | | | | |
Net income (loss) attributable: | | | | | | | | | |
| GMP Capital Inc. Shareholders | | 22,913 | 3,908 | 26,821 | | (17,603) | 76,065 | 58,462 |
| Non-controlling interests | | 3,816 | - | 3,816 | | 2,811 | - | 2,811 |
| | | | | | | | | |
Net income (loss) attributable to GMP Capital Inc. shareholders | 22,913 | 3,908 | 26,821 | | (17,603) | 76,065 | 58,462 | ||
Dividend declared on Series B Preferred Shares | | (3,803) | - | (3,803) | | - | - | - | |
Net income (loss) attributable to common shareholders | | 19,110 | 3,908 | 23,018 | | (17,603) | 76,065 | 58,462 | |
| | | | | | | | | |
Weighted-average number of common shares - Basic | | 67,539 | | 67,539 | | 70,579 | - | 70,579 | |
Basic earnings (loss) per common share | | $0.28 | $0.06 | $0.34 | | ($0.25) | $1.08 | $0.83 | |
Weighted-average number of common shares - Diluted | | 74,288 | | 74,288 | | 75,914 | | 75,914 | |
Diluted earnings (loss) per common share1 | | $0.26 | $0.05 | $0.31 | | ($0.25) | $1.00 | $0.77 | |
Average common equity | | 289,704 | | 292,961 | | 280,633 | | 344,020 | |
Return on common equity | | 8.8% | | 10.5% | | (8.4%) | | 22.7% | |
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 and other common shares subject to vesting conditions
under stock-based compensation programs on diluted net loss per common
share will be anti-dilutive; therefore, basic and diluted net loss per
common share will be the same.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" as defined
under applicable Canadian securities laws. These statements include,
but are not limited to, statements concerning our 2011 objectives, our
strategies to achieve those objectives, as well as statements made with
respect to management's beliefs, estimates, projections 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. 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,
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. 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 our current
expectations, see the "Risk Management" section in the 2010 Annual
MD&A, the "Risk Management" and "Risk Factors" sections in the Third
Quarter 2011 MD&A and "Risk Factors" in GMP's annual information form
dated March 1, 2011. In addition, GMP may not realize the anticipated
benefits from its acquisition of Miller Tabak Roberts Securities, LLC
("MTR"), due to a variety of factors including, without limitation, the
inability to effectively integrate MTR into its operations, failure to
retain key MTR employees, failure to maintain or develop key client
relationships and the impact of the economy and its potential negative
effects on the areas where MTR conducts its business. 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 Third Quarter 2011 MD&A
and include, without limitation, volatile capital markets, continued
concerns of a global recession and the threat of sovereign debt
defaults by certain European countries. 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 independent 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 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., Miller Tabak Roberts 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, 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.
______________________________________
1Represents 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 October 13, 2011.
3 Source: FPinfomart as at October 13, 2011.
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 orinvestorrelations@gmpcapital.com
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