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GMP Capital Inc. Reports Third Quarter 2012 Results


Earned net income of $1.6 million, excluding specified items(1)

For further information about GMP Capital Inc., our results for third quarter 2012 and the meaning of certain references, this quarterly earnings release should be read in conjunction with our Third Quarter 2012 Financial Statements and Third Quarter 2012 Management's Discussion and Analysis, which can be accessed on our website at gmpcapital.com and on SEDAR at sedar.com. Unless otherwise indicated, all amounts are expressed in Canadian dollars and have been taken from our Third Quarter 2012 Financial Statements prepared in accordance with International Financial Reporting Standards ("IFRS").

TORONTO, Nov. 9, 2012 /CNW/ - GMP Capital Inc. ("GMP") (TSX: GMP) today reported revenue of $58.1 million in third quarter 2012, representing a 25% increase compared with the same period a year ago. GMP recorded a net loss of $0.4 million and a diluted loss per share of $0.03 in third quarter 2012 compared with a net loss of $4.6 million and a diluted loss per share of $0.09 in third quarter 2011.  Excluding specified items(1), net income was $1.6 million in third quarter while diluted earnings per share were nil(1).

"While market conditions do remain challenging, we are focused on exploiting opportunities across our franchise to add to our talent pool and enhance operating efficiencies," said Harris Fricker, Chief Executive Officer, GMP. "The goal is to increase the torque in our business, the financial benefit of which will become obvious in the context of better market conditions. Looking specifically at the quarter, we remain pleased with the strong performance of our M&A franchise and our recently acquired debt capital markets business."

FINANCIAL HIGHLIGHTS

Third Quarter 2012 versus Third Quarter 2011


    --  Net loss of $0.4 million compared with a net loss of $4.6
        million
    --  Diluted loss per share of $0.03 compared with $0.09
    --  Return on common shareholders' equity ("ROE")(1) was negative
        3.2% compared with negative 9.1%
    --  Excluding specified items(1), net income was $1.6 million(1)
        while diluted earnings per share(1) and ROE(1) were both nil(1)
        in third quarter 2012 compared with a net loss of $0.9 million
        (1), diluted loss per share of $0.03(1) and negative ROE(1) of
        3.4% in third quarter 2011
    --  Our capital position is strong and continues to exceed
        day-to-day operational and regulatory business requirements

First Nine Months 2012 versus First Nine Months 2011
    --  Net loss of $0.5 million compared with $26.7 million
    --  Diluted loss per share of $0.13 compared with diluted earnings
        per share of $0.26
    --  Negative ROE(1) of 4.5% compared with positive 8.8%
    --  Excluding specified items(1), net income was $7.3 million(1),
        diluted loss per share was $0.01(1) and ROE(1) was negative
        0.2%(1) in first nine months 2012 compared with net income of
        $35.8 million(1), diluted earnings per share of $0.38(1) and
        ROE(1) of 12.7%(1 )in first nine months 2011

Commenting further, Mr. Fricker said, "While we can't impact macro-economic 
conditions, we can ensure that our capital position is fundamentally strong 
and our ability to perform in better market conditions is formidable." 

THIRD QUARTER 2012 BUSINESS HIGHLIGHTS

CAPITAL MARKETS
    --  Revenue of $51.3 million - an increase of 35% compared with
        third quarter 2011 primarily due to higher returns on client
        facilitation and principal activities and significantly higher
        advisory revenue.  Partly offsetting these increases was lower
        commission revenue reflecting reduced client trading volumes
        and a decrease in underwriting activity.
    --  Expenses of $50.6 million - an increase of 21% compared with
        third quarter 2011 primarily reflecting the incremental costs
        associated with GMP Securities, LLC acquired in third quarter
        2011 and an increase in variable compensation expense
        commensurate with the higher revenue generation.  Third quarter
        2012 expenses also include $2.5 million in restructuring
        charges, while third quarter 2011 included a $5.0 million
        charge related to an executive management retirement.
    --  Income before income taxes of $0.7 million in third quarter
        2012 compared with a loss before income taxes of $3.8 million
        in third quarter 2011.

GMP Securities L.P. ("GMP Securities") highlights:
    --  advised on seven M&A  transactions completed in Canada valued
        at approximately US$1.2 billion(2), including acting as
        financial advisor to Westaim Corporation on the sale of Jevco
        Insurance Company to Intact Financial Corporation for US$537
        million and financial advisor to PetroMagdalena Energy Corp. on
        its US$256 million acquisition by Pacific Rubiales Energy
        Corp.; and
    --  participated in 42 underwriting transactions completed in
        Canada, valued at $5.7 billion, of which GMP Securities led or
        co-led nine of these transactions valued at $0.2 billion(3).

WEALTH MANAGEMENT
    --  The Wealth Management segment is comprised of GMP's
        non-controlling ownership interest in Richardson GMP Limited
        ("Richardson GMP").  Wealth Management reported a loss before
        income taxes of $0.1 million in third quarter 2012 compared
        with income before income taxes of $1.6 million in third
        quarter 2011.  Third quarter 2011 included $1.5 million in
        dividend revenue recognized by GMP on its preferred share
        investment in Richardson GMP following dividend declarations by
        Richardson GMP.
    --  Richardson GMP ended the quarter with assets under
        administration(1) of $14.5 billion, which represented a 12%
        year-over-year increase and an increase of 6% relative to
        second quarter 2012.

ALTERNATIVE INVESTMENTS
    --  Revenue of $2.6 million - a decrease of 6% compared with third
        quarter 2011 due primarily to the deconsolidation of EdgeStone
        Capital Partners, L.P. from GMP's financial results in fourth
        quarter 2011.  The decrease was partly offset by higher returns
        from principal activities at GMP Investment Management L.P. in
        connection with GMP's investments in the funds managed by GMP
        Investment Management L.P.;
    --  Loss before income taxes of $0.1 million compared with a loss
        before income taxes of $1.2 million in third quarter 2011; and
    --  Assets under management(1) of $611 million.

DIVIDENDS
On November 8, 2012, GMP's 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 
December 31, 2012, to the respective shareholders of record at the close of 
business on December 10, 2012.

______________________________________
(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 Third Quarter 2012 Management's Discussion and Analysis.
(2) Source: Bloomberg as at October 10, 2012.
(3) Source: GMP Capital Inc. internal reports as at October 10, 2012.

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 2012 results.  Interested 
parties are invited to access the conference call by dialing 416-644-3416 or 
1-800-814-4860 (toll free) or via live audio webcast at 
http://www.gmpcapital.com/investor. A recording of the conference call will be 
available until Friday, November 16, 2012, by dialing 416-640-1917 or 
1-877-289-8525 (toll free) and entering access code 4562711#. The webcast will 
be archived at http://www.gmpcapital.com/investor.

NON-GAAP MEASURES
Consistent with GMP's management framework, management uses certain measures 
to assess GMP's financial performance, which are not 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 the third quarter 2012 Management's Discussion and 
Analysis.

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

ended ended ended ended ($000s, except as September September September September otherwise noted) 30, 2012 30, 2011 30, 2012 30, 2011

Reported Results

(Loss) income before income taxes (1,329) (5,773) (2,271) 36,642

Income tax (benefit) expense (971) (1,179) (1,748) 9,913

Net (loss) income (358) (4,594) (523) 26,729

Net (loss) income attributable to common shareholders (1,913) (6,010) (8,288) 19,110

Reported Measures

Net (loss) income per common share:

Basic (0.03) (0.09) (0.13) 0.28

Diluted ¹ (0.03) (0.09) (0.13) 0.26

Average common equity 242,745 266,359 243,440 289,704

ROE ² (3.2) % (9.1) % (4.5) % 8.8 %


                                                                               

Pre-Tax Impact of                                                  
Adjusting Items                                                                

Corporate Segment                                                              

  Charges to Interest
  expense -
  Redemption of                                                    
  senior unsecured
  notes                    —       —       —          5,466  

  Charges to Selling,
  general and
  administration -                                                 
  Business
  acquisition-related
  costs                    —            125      —          1,221  

Capital Markets                                                    
Segment                                                                        

  Charges to Employee
  compensation and                                                 
  benefits:                                                                    
    Executive                                                      
    retirement             —          5,000      —          5,000  
    Restructuring                                                  
    costs                     2,465      —          7,847           856  
    Retention shares          2,088            78         5,590            78  

Impact of adjusting
items on income                                                    
before income taxes           4,553         5,203        13,437        12,621  
                                                                               

After-Tax Impact of                                                
Adjusting Items                                                                

Corporate Segment                                                              

  Charges to Interest
  expense -
  Redemption of                                                    
  senior unsecured
  notes                    —       —       —          3,908  

  Charges to Selling,
  general and
  administration -                                                 
  Business
  acquisition-related
  costs                    —             90      —            880  

  Recovery of income
  tax expense -                                                    
  Favourable tax
  assessment                (1,122)      —        (1,122)      —   

Capital Markets                                                    
Segment                                                                        

  Charges to Employee
  compensation and                                                 
  benefits:                                                                    
    Executive                                                      
    retirement             —          3,601      —          3,601  
    Restructuring                                                  
    costs                     1,875      —          5,843           617  
    Retention shares          1,155            44         3,111            44  

Impact of adjusting                                                
items on:                                                                      

  Net income                  1,908         3,735         7,832         9,050  

  Net income
  attributable to                                                  
  common shareholders         1,908         3,735         7,832         9,050  

  Net income per                                                   
  common share:                                                                
    Basic                      0.03          0.06          0.12          0.13  
    Diluted                    0.03          0.05          0.11          0.12  
                                                                               

Adjusted Results ²                                                             

Income (Loss) before                                               
income taxes                  3,224         (570)        11,166        49,263  

Income tax expense            1,674           289         3,857        13,484  

Net income (loss)             1,550         (859)         7,309        35,779  

Net (loss) income
attributable to                                                    
common shareholders             (5)       (2,275)         (456)        28,160  
                                                                               

Adjusted Measures ²                                                            

Net (loss) income per                                              
common share:                                                                  

  Basic                    —         (0.03)        (0.01)          0.42  

  Diluted ¹                —         (0.03)        (0.01)          0.38  

Average common equity       243,699      266,359        248,129       294,679  

ROE                        —          (3.4) %       (0.2) %        12.7 %

¹ In the 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. 
² Return on equity and adjusted results and 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.  The table above 
outlines such measures with their closest GAAP counterparts.  

 

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 2012 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, variations in the market value of securities, the 
volatility and liquidity of equity and fixed income trading markets, the 
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 the "Risk Management" 
section in the Third Quarter 2012 MD&A and "Risk Factors" in GMP's annual 
information form dated March 13, 2012. These risks and uncertainties are not 
the only ones facing GMP, together with its consolidated operations controlled 
by it (the "GMP Group").  Additional risks and uncertainties not currently 
known to us or that 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 Third Quarter 2012 
MD&A and include, without limitation: escalation of the sovereign debt crisis 
in Europe, a hard-landing of China's economy, insufficient response to high 
unemployment and the government debt burden in the U.S. and declines in the 
level of commodity prices. 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 the 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 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., 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, 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 alternative investment 
products provided by GMP Investment Management 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. 

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

SOURCE: GMP Capital Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/09/c6552.html

CO: GMP Capital Inc.
ST: Ontario
NI: FIN ERN CONF 

-0- Nov/09/2012 11:00 GMT

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