For further information about GMP Capital Inc., our results for second
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 and
six months ended June 30, 2013 (Second Quarter 2013 Financial
Statements), and our management's discussion and analysis for the three
and six months ended June 30, 2013 (Second 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 Second Quarter 2013
Financial Statements prepared in accordance with International
Financial Reporting Standards (IFRS).
TORONTO, Aug. 9, 2013 /CNW/ - GMP Capital Inc. (GMP) (TSX: GMP) today
reported revenue of $60.3 million in second quarter 2013, down 3.8%
compared with the same period a year ago. GMP recorded net income of
$4.8 million, a net loss attributable to common shareholders of $3.5
million and a diluted loss per share of $0.05 in second quarter 2013
compared with a net loss of $0.4 million, a net loss attributable to
common shareholders of $4.1 million and a diluted loss per share $0.06
in second quarter 2012.
"Market conditions remained challenging for the quarter driven by very
low levels of activity in the resource sectors. That said, the
resilience of our business is reflected in the performance of our
non-resource investment banking franchise, the growth in our U.S. fixed
income operations and the ongoing evolution of our wealth management
business," said Harris Fricker, Chief Executive Officer, GMP.
FINANCIAL HIGHLIGHTS
Second Quarter 2013 versus Second Quarter 2012
-
Revenue of $60.3 million compared with $62.7 million
-
Net income of $4.8 million compared with a net loss of $0.4 million
-
Diluted loss per share of $0.05 compared with $0.06
-
Return on common equity (ROE)1 was negative 5.7% compared with negative 6.8%
-
Excluding specified items1, GMP recorded a net loss of $0.3 million, diluted loss per share of
$0.02 and ROE of negative 2.5% compared with net income of $1.3
million, diluted loss per share of $0.04 and ROE of negative 3.9%
-
Completed the sale of the majority of the advisory contracts related to
certain assets under management for cash consideration of $10.8
million. The positive impact to second quarter 2013 net income
attributable to common shareholders was $4.2 million.
First Half 2013 versus First Half 2012
-
Revenue of $109.2 million compared with $128.8 million
-
Net income of $4.4 million compared with a net loss of $0.2 million
-
Diluted loss per share of $0.08 compared with $0.10
-
ROE1 was negative 4.0% compared with negative 5.2%
-
Excluding specified items1, net income was $0.8 million, diluted loss per share of $0.02 and ROE
of negative 1.1% compared with net income of $5.8 million, a diluted
loss per share of $0.01 and ROE of negative 0.4%
Commenting further, Mr. Fricker said, "We believe that we have now
substantially completed the personnel and operational changes needed to
sustain the business through the downturn and to position it for
out-performance in more normalized markets."
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 Second Quarter 2013
MD&A.
|
SECOND QUARTER 2013 BUSINESS SEGMENT HIGHLIGHTS
Capital Markets
-
Revenue of $45.4 million - a decrease of 19.5% compared with second
quarter 2012 largely due to lower investment banking revenue, primarily
due to lower advisory revenue, amid ongoing challenging market
conditions in the Canadian mid-market resource sectors. Additionally,
second quarter 2012 was bolstered by a significant advisory transaction
recorded in our industrials and special situations sector. Partly
offsetting this decrease was higher returns on principal transactions,
and higher commission revenue. Higher returns from principal
transactions reflect lower losses on client facilitation trading, an
increase in net gains on client-related fixed income trading activity
and lower losses on security positions acquired in connection with
investment banking mandates.
-
Improving revenue diversification:
-
46.5% of investment banking revenue generated in second quarter 2013 in
non-resource sectors
-
48.8% year-over-year increase in fixed income client trading revenue in
our U.S. operations
-
Expenses of $51.3 million - a decrease of 3.8% compared with second
quarter 2012 primarily due to a 24.3% decrease in variable
compensation, commensurate with lower revenue generation, as well as a
year-over-year decrease in share-based compensation expense. Second
quarter 2013 expenses included $7.1 million in pre-tax restructuring
charges. Excluding restructuring charges in both periods, fixed
salaries and benefits decreased 11% or $0.9 million year-over-year
reflecting the benefits from operating efficiencies introduced earlier
this year.
-
Loss before income taxes of $5.9 million in second quarter 2013 compared
with income before income taxes of $3.1 million in second quarter 2012.
-
Excluding specified items1, income before income taxes was $2.1 million compared with $5.8 million
in second quarter 2012.
GMP Securities L.P. highlights:
-
Participated in 39 underwriting transactions completed in Canada during
second quarter 2013, valued at $3.2 billion, of which we led or co-led
13 of these transactions valued at $0.9 billion. Source: FPinfomart.
-
Ranked fifth in the dollar value of common equity underwriting
transactions completed in Canada during second quarter 2013 for which
we were lead or co-lead. Source: FPinfomart.
-
Advised on five advisory transactions completed in second quarter 2013,
valued at $1.1 billion.
-
Despite challenging markets, GMP proudly supported businesses and the
local communities in Calgary by donating 100% of all agency trading
commission dollars generated on June 26, 2013, to support the Canadian
Red Cross Alberta Floods Fund.
Wealth Management
-
The Wealth Management segment consists of GMP's non-controlling
ownership interest in Richardson GMP Limited (Richardson GMP) and
commencing in 2013, this segment also includes the financial results of
our asset management business, CQI Capital Management L.P. (CQI),
formerly GMP Investment Management L.P.
-
Wealth Management reported income before income taxes of $10.5 million
in second quarter 2013 compared with a loss before income taxes of $1.9
million in second quarter 2012, driven largely by cash proceeds of
$10.8 million received from the sale of certain advisory contracts to
Fiera Capital Corporation which was completed on April 30, 2013.
-
Excluding specified items1, net loss before income taxes was $0.7 million compared with $1.9
million in second quarter 2012.
Richardson GMP highlights:
-
Revenue of $39.1 million - an increase of 12% compared with second
quarter 2012 primarily due to higher investment management and fee
income commensurate with increased average assets under administration
(AUA)1.
-
Earned adjusted net income2 of $3.9 million in second quarter 2013 - up $2.8 million compared with
second quarter 2012.
-
Ended second quarter 2013 with AUA of $14.7 billion, up $1.0 billion or
7% compared with second quarter 2012, and 116 investment advisory
teams, up from 111 teams in the same period a year ago.
2. 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 "Supplemental Information"
section at the end of this press release and in the Second Quarter 2013
MD&A.
|
CQI highlights:
-
Completed the sale of the majority of the advisory contracts related to
certain assets under management for cash consideration of $10.8
million.
-
Launched the CQI Income Opportunities Fund, a North American income fund
aimed at offering stable returns with lower volatility and a view
toward wealth preservation.
DIVIDENDS
On August 8, 2013, the board of directors of GMP 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 September 30, 2013, to the respective shareholders of
record on September 10, 2013.
GMP APPOINTS NEW DIRECTOR
GMP is pleased to announce that the board of directors appointed Fiona
L. Macdonald as an independent director, effective August 8, 2013. Ms.
Macdonald is currently the Executive Compensation Practice Leader,
Canada and US West for Towers Watson. She has more than 20 years
experience in the area of executive and director compensation
strategies. Ms. Macdonald holds both a BA in International Relations,
as well as an MBA, from the University of British Columbia and is a
graduate of the Institute of Corporate Directors program. GMP's board
is now comprised of 10 directors, including seven independent
directors.
NORMAL COURSE ISSUER BID ACTIVITY
During the three months ended June 30, 2013, GMP purchased for
cancellation 252,000 common shares under its normal course issuer bid
for an aggregate cost of $1.5 million.
CONFERENCE CALL
GMP executives will host the call followed by a question-and-answer
session for analysts and institutional investors. Interested parties
are invited to access the quarterly 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,
August 16, 2013, by dialing 416-640-1917 or 1-877-289-8525 (toll free)
and entering access code 4624682#. 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 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 the Second Quarter 2013 MD&A.
The table below provides a reconciliation of GMP's reported results to
its adjusted measures:
|
Three months ended June 30
|
Six months ended June 30
|
($000, except as otherwise noted)
|
2013
|
2012
|
2013
|
2012
|
Reported Results
|
|
|
|
|
Income (loss) before income taxes
|
3,531
|
(809)
|
3,188
|
(942)
|
Income tax benefit
|
(1,249)
|
(433)
|
(1,170)
|
(777)
|
Net income (loss)
|
4,780
|
(376)
|
4,358
|
(165)
|
Net loss attributable to common shareholders
|
(3,492)
|
(4,087)
|
(4,968)
|
(6,375)
|
Reported Measures
|
|
|
|
|
Net loss per common share (dollars):
|
|
|
|
|
|
Basic
|
(0.05)
|
(0.06)
|
(0.08)
|
(0.10)
|
|
Diluted ¹
|
(0.05)
|
(0.06)
|
(0.08)
|
(0.10)
|
ROE ²
|
(5.7)%
|
(6.8)%
|
(4.0)%
|
(5.2)%
|
Pre-Tax Impact of Adjusting Items
|
|
|
|
|
|
Retention shares
|
879
|
1,758
|
1,877
|
3,502
|
|
Restructuring costs
|
7,769
|
968
|
9,145
|
5,382
|
|
AUM sale transaction
|
(11,843)
|
—
|
(11,843)
|
—
|
Impact of adjusting items on income (loss) before income taxes
|
(3,195)
|
2,726
|
(821)
|
8,884
|
After-Tax Impact of Adjusting Items:
|
|
|
|
|
|
Retention shares
|
490
|
981
|
1,048
|
1,956
|
|
Restructuring costs
|
5,723
|
714
|
6,718
|
3,968
|
|
AUM sale transaction
|
(11,310)
|
—
|
(11,310)
|
—
|
Impact of adjusting items on net income (loss)
|
(5,097)
|
1,695
|
(3,544)
|
5,924
|
Adjusted Results ²
|
|
|
|
|
Income before income taxes
|
336
|
1,917
|
2,367
|
7,942
|
Net income
|
(317)
|
1,319
|
814
|
5,759
|
Net loss attributable to common shareholders
|
(1,507)
|
(2,392)
|
(1,430)
|
(451)
|
Adjusted Measures ²
|
|
|
|
|
Net loss per common share (dollars):
|
|
|
|
|
|
Basic
|
(0.02)
|
(0.04)
|
(0.02)
|
(0.01)
|
|
Diluted ¹
|
(0.02)
|
(0.04)
|
(0.02)
|
(0.01)
|
ROE
|
(2.5)%
|
(3.9)%
|
(1.1)%
|
(0.4)%
|
1. In the case of a net loss, the effect of 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. The table above outlines our adjusted results and
adjusted measures with their closest GAAP counterparts.
|
SUPPLEMENTAL INFORMATION
The following supplemental information reflects how management of
Richardson GMP assesses the financial performance of Richardson GMP.
Supplemental Financial Information - Richardson GMP
Richardson GMP's management assesses performance on both a reported and
an adjusted basis and considers both basis to be useful in assessing
underlying, ongoing business performance. Presenting results on both
basis also permits readers to assess the impact of specified items on
financial results. Richardson GMP's management uses certain measures to
assess the financial performance of Richardson GMP that 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 Richardson
GMP's performance, liquidity, cash flows and profitability. Richardson
GMP's management believes adjusting certain results by excluding the
impact of the specified items is more reflective of ongoing financial
performance and cash generating capabilities and provides readers with
an enhanced understanding of how management views Richardson GMP's core
performance. For further information, refer to the "Supplemental
Information" section in the Second Quarter 2013 MD&A.
The following table sets forth an overview of the consolidated financial
results of Richardson GMP for the periods indicated, on a 100% basis;
noting, however, that GMP owns a 32.3% non-controlling interest of
Richardson GMP as at June 30, 2013.
($000, except as otherwise noted)
|
Three months ended
|
|
%
|
Six months ended
|
|
%
|
June 30
|
increase/
|
June 30
|
increase/
|
2013
|
2012
|
|
(decrease)
|
2013
|
2012
|
(decrease)
|
Revenue
|
39,119
|
|
35,050
|
12 %
|
77,643
|
|
73,914
|
5 %
|
Expenses
|
37,882
|
|
36,576
|
4 %
|
74,462
|
|
75,185
|
(1)%
|
Employee compensation and benefits
|
24,837
|
|
22,931
|
8 %
|
49,953
|
|
48,073
|
4 %
|
Non-compensation expenses
|
13,045
|
|
13,645
|
(4)%
|
24,509
|
|
27,112
|
(10)%
|
Net income (loss) - reported
|
1,237
|
|
(1,526)
|
n.m.
|
3,181
|
|
(1,271)
|
n.m.
|
Impact of adjusting items:
|
|
|
|
|
|
Interest
|
400
|
|
400
|
—
|
797
|
|
800
|
—
|
Depreciation and amortization
|
852
|
|
937
|
(9)%
|
1,691
|
|
2,001
|
(15)%
|
Share-based compensation
|
257
|
|
120
|
114 %
|
461
|
|
590
|
(22)%
|
Transition assistance loan amortization
|
1,127
|
|
1,154
|
(2)%
|
2,250
|
|
2,265
|
(1)%
|
Net income - adjusted1
|
3,873
|
|
1,085
|
n.m.
|
8,380
|
|
4,385
|
91 %
|
Number of advisory teams
|
116
|
|
111
|
5 %
|
|
|
AUA at period-end ($ millions)1
|
14,694
|
|
13,712
|
7 %
|
|
|
n.m. = not meaningful
1. Considered to be a non-GAAP financial measure. This measure does not
have any standardized meaning prescribed by GAAP under IFRS and is
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 Second 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 Second Quarter 2013 MD&A and include, without
limitation: continued economic recovery in the U.S., slow growth and
weak demand for commodities in emerging markets including China,
subdued Canadian capital markets activity. 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 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
CQI Capital 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.