GMP CAPITAL INC. REPORTS THIRD QUARTER RESULTS
TORONTO, Nov. 5 /CNW/ - GMP Capital Inc. ("GMP") (TSX: GMP) today reported revenue of $100.9 million in third quarter 2010, representing an increase of 41% compared with the same period a year ago primarily driven by strong results in the Capital Markets segment. Net income increased 167% to $22.4 million ($0.32 per basic share) compared with $8.4 million ($0.12 per basic share) reported in the same period a year ago.
"We are pleased with our strong operating performance in third quarter 2010 which is a reflection of our unwavering commitment to ensuring the financial success of our clients. The Capital Markets business benefited from improved client trading activity, particularly in the latter part of the quarter and robust investment banking activity in the Canadian mid-market. GMP Investment Management continued to make good progress in growing their assets under management this quarter, while our Wealth Management segment, through Richardson GMP, benefitted from improving equity markets and the substantial completion of its integration activities. Richardson GMP generated its first monthly profit in September and we remain excited by their prospects for future earnings growth," said Harris Fricker, CEO, GMP.
FINANCIAL HIGHLIGHTS
Third Quarter 2010 versus Third Quarter 2009
- Revenue of $100.9 million compared with revenue of $71.5 million, an
increase of 41%
- Notable increase in investment banking revenue to $55.2 million, an
increase of 92%
- Net income of $22.4 million compared with net income of $8.4 million
- Basic earnings per share of $0.32 compared with $0.12
- Annualized return on common equity ("Annualized ROE")(1) of 30.8%
compared with 13.2%
First Nine Months 2010 versus First Nine Months 2009
- Revenue of $295.1 million compared with revenue of $239.7 million
- Investment banking revenue of $178.8 million, an increase of 62%
- Net loss of $17.5 million compared with net income of $23.6 million.
Excluding impairment charges recorded in the first quarter of 2010
relating to the EdgeStone reporting unit, adjusted net income(1) was
$58.5 million (adjusted earnings per share(1) of $0.83) and adjusted
Annualized ROE(1) was 22.4%. Net income in first nine months 2009
included $7.7 million in income tax adjustments in connection with
GMP's conversion to a corporation, which occurred in May 2009.
For further information about GMP, our results for third quarter 2010 and the meaning of certain references, this press release should be read in conjunction with our Third Quarter 2010 Financial Statements and GMP's Management's Discussion and Analysis for the three and nine months ended September 30, 2010, which can be accessed on our website at www.gmpcapital.com and on SEDAR at www.sedar.com.
"We believe that our solid performance this quarter highlights a growing awareness of the GMP brand, as we continue to maintain a leadership position in the Canadian capital markets and forge new client relationships with entrepreneurs in Canada and in select geographic locations globally. Our strength lies in the breadth and depth of our client relationships across the entire GMP franchise and in our ability to bring together people and ideas to deliver value for our clients and shareholders," said Kevin Sullivan, Deputy Chairman, GMP.
Commenting further, Mr. Fricker said, "We are encouraged by our solid results this quarter and, while global economic conditions remain uncertain, we believe our firm is well positioned to exploit opportunities in our core markets."
EDGESTONE UPDATE
Subsequent to quarter end, GMP and EdgeStone entered into arrangements with Bridgescale Partners LLC ("Bridgescale"), a venture capital firm specializing in later-stage technology companies. Pursuant to the arrangement, a senior member of EdgeStone's venture fund team joined Bridgescale and, together with Bridgescale, will continue to manage the Venture Funds' portfolio company investments through to realization.
These arrangements preserve the continuity of senior professional oversight of the Venture Funds for the limited partners, an important priority for GMP, and allow GMP and EdgeStone to move forward with a more focused strategy on middle market buy-out and other private equity activities. Commenting on the arrangement, Mr. Fricker said, "We believe this strategy provides the opportunity for improved operating earnings at EdgeStone and greater opportunities to leverage other businesses within the GMP franchise. GMP remains committed to working closely with Sandra Bosela, President and Managing Partner of EdgeStone, and the EdgeStone team to support the private equity business going forward."
COMMON SHARE DIVIDEND DECLARED
On November 4, 2010, the Board of Directors declared a quarterly cash dividend of $0.06 per share for the third quarter ended September 30, 2010, payable on November 25, 2010 to shareholders of record on November 16, 2010.
THIRD QUARTER 2010
BUSINESS SEGMENT HIGHLIGHTS
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CAPITAL MARKETS
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- Revenue increased $39.7 million or 77% to $91.0 million in third
quarter 2010 compared with third quarter 2009
- Investment banking revenue increased $26.5 million or 92% to $55.2
million in third quarter 2010 compared with third quarter 2009
consistent with improved activity in the Canadian mid-market during
the period
- Sales and trading commissions increased $1.9 million or 11% to $18.4
million in third quarter 2010 compared with third quarter 2009
benefitting from a 25% year-over-year increase in the number of
shares traded by GMP Securities on behalf of its clients on the
Toronto Stock Exchange and TSX Venture Exchange
- Operating earnings increased $22.9 million or 169% to $36.5 million
in third quarter 2010 compared with third quarter 2009
- GMP Securities ranked first among Canadian investment dealers, for
the third consecutive quarter in 2010, in the dollar value of common
equity underwriting transactions completed in Canada for which we
were lead or co-lead(2)
- GMP Securities participated in 34 underwriting transactions completed
in Canada helping raise approximately $3.0 billion on behalf of
clients, leading or co-leading 16 of these transactions(3)
- GMP Securities ranked third in Canada for equity block trading volume
on the Toronto Stock Exchange and TSX Venture Exchange, achieving an
8.8% market share(4)
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WEALTH MANAGEMENT
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- Wealth Management reported an operating loss of $0.3 million in third
quarter 2010 compared with an operating loss of $1.1 million in third
quarter 2009
- Richardson GMP's management believes that expenses associated with
integration-related activities are now substantially complete
- Richardson GMP remains focused on the acceleration of organic growth
and the recruitment of additional experienced investment advisors
- As at September 30, 2010, assets under administration(5) were $12.8
billion and Richardson GMP ended the quarter with 113 investment
advisory teams
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ALTERNATIVE INVESTMENTS
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- Revenue decreased $4.3 million or 41% to $6.1 million in third
quarter 2010 compared with third quarter 2009, largely due to lower
investment management and fee income and lower unrealized gains
recorded in principal activities in third quarter 2010 arising from
GMP's investment in the GMP Diversified Alpha Domestic Fund
- Operating earnings were $1.3 million for third quarter 2010 compared
with $5.9 million in third quarter 2009
- The GMP Diversified Alpha Master Fund had an inception-to-date return
of 19.1%, net of management fees and other expenses, for the period
ended September 30, 2010, which compares favourably to the negative
7.4% return on the S&P/TSX Composite Index over the same period
CONFERENCE CALL
Management will host a conference call and live audio webcast today at 10:00 a.m. (ET) to discuss GMP's third quarter ended September 30, 2010. The call may be accessed by dialling 416-644-3418 or 1-877-974-0447 (toll free). The link to the live audio webcast will be accessible at www.gmpcapital.com. A replay of the conference call can be accessed by telephone until Friday, November 12, 2010, by calling 416-640-1917 or 1-877-289-8525 (toll free) and entering access code 4376396 followed by the number sign.
(1) Represents a non-GAAP measure. This measure does not have any
standardized meaning prescribed by GAAP and is therefore unlikely to
be comparable to similar measures presented by other issuers. This
data should be read in conjunction with the "Presentation of
Financial Information and Non-GAAP Measures" section in GMP's
Management's Discussion and Analysis for the three and nine-months
ended September 30, 2010.
(2) Source: FPinfomart as at October 8, 2010.
(3) Source: GMP Capital Inc. - internal reports.
(4) Source: CanadaEquity.com as at October 8, 2010.
(5) Represents a non-GAAP measure. This measure does not have any
standardized meaning prescribed by GAAP and is therefore unlikely to
be comparable to similar measures presented by other issuers. This
data should be read in conjunction with the "Presentation of
Financial Information and Non-GAAP Measures" section in GMP's
Management's Discussion and Analysis for the three and nine-months
ended September 30, 2010
ABOUT GMP CAPITAL INC.
GMP Capital Inc. carries on business through the following principal entities: GMP Securities L.P., Griffiths McBurney Corp., GMP Securities Europe LLP, EdgeStone Capital Partners, L.P. and GMP Investment Management L.P. GMP Capital Inc. also has a significant non-controlling ownership interest in Richardson GMP Limited. The GMP Capital Inc. website is located at www.gmpcapital.com. GMP Capital Inc. has offices in Toronto, Calgary, Montreal and London, England. GMP Securities L.P. is a leading independent Canadian investment dealer focused on investment banking and institutional equities for corporate clients and institutional investors. GMP Securities L.P. can be found on the web at www.gmpsecurities.com. Griffiths McBurney Corp. services institutional clients in the United States while GMP Securities Europe LLP provides investment banking and institutional equity services to clients located in Europe. EdgeStone Capital Partners, L.P. is a leading private equity firm, providing capital, strategic direction and business and financial advice to help promising mid-market and early stage companies achieve their full potential. EdgeStone Capital Partners, L.P. can be found on the web at www.edgestone.com. GMP Investment Management L.P., through its private funds, seeks to generate superior risk-adjusted investment returns over the long term by executing selected investment strategies. GMP Investment Management L.P.'s offerings are aimed at both high-net-worth individuals and institutional investors. Richardson GMP Limited is a full-service investment firm, combining tradition and innovation to offer Canadian families and entrepreneurs access to innovative wealth management and investment services delivered by an experienced team of independent investment professionals. Richardson GMP Limited can be found on the web at www.richardsongmp.com.
Forward-Looking Statements
This press release contains "forward-looking statements" as defined under applicable Canadian securities laws including such forward-looking statements concerning the payment of a dividend on GMP's common shares in respect of the third quarter ended September 30, 2010, Richardson GMP's prospects for future earnings growth, and 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 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, 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 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 risks that could cause our actual results to materially differ from our current expectations, please see the "Risk Management" section in GMP's 2009 Annual MD&A and "Risk Factors" in GMP's annual information form dated March 1, 2010. 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 2009 Annual MD&A, as updated in GMP's Management's Discussion and Analysis for the three and nine months ended September 30, 2010 and include, without limitation, a slow-down in global economic growth rates from earlier this year; low inflation; expectations of additional quantitative easing by some major central banks; increased public offering, M&A and securities trading activity influenced by a rally in the market during late third quarter 2010; continued United States dollar weakness; and the implementation of fiscal and monetary measures to address sovereign debt concerns in Europe. 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.
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, [email protected], or [email protected]
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