CEO Message  

In 2017, we delivered on our promise to diversify our business while at the same time staying true to GMP’s traditional excellence in the small- to mid-cap segments of the domestic capital markets. In 2017, GMP recorded adjusted net income of $18.8 million, a near three-fold increase compared with 2016, and adjusted diluted earnings per share was $0.18.

Fellow Shareholders,

On March 1, 2018, our board of directors declared a special cash dividend of $0.10 per common share, payabe on April 2, 2018. The declaration of a special cash dividend is indicative of the improvement in GMP operational performance, the firm’s solid capital positioning and our outlook for the first half of 2018.

2017 saw the continuation of a multi-year bear market in commodities, which remained an encumbrance on client activity and, in turn, our financial performance. Market conditions in 2017 remained challenging for independents in Canada given their focus on small- to mid-cap companies and investor emphasis toward liquidity in larger cap names. This was most evident in our mining and energy businesses, where business activity has experienced a precipitous decline. In fact, the dollar value of industry-wide equity underwriting transactions completed in 2017 in the energy and mining sectors was down 52 per cent and 27 per cent, respectively. It would be a gross understatement to state that these are daunting cyclical conditions. In addition, we continue to be challenged by technological disintermediation, which has resulted in the commoditization of parts of the business that were very lucrative. However, providing a much needed counterbalance to these cyclical lows was the emergence of significant revenue opportunities in 2017 in the burgeoning blockchain/cryptocurrency and cannabis sectors. And, moving quickly to capitalize on revenue opportunities has always been part of our DNA.

Response to Immense Opportunities that Exist in the Burgeoning Blockchain/Cryptocurrencies and Cannabis Sectors

An explicit element of our strategic agenda has been to diversify and further strengthen the non-commodities portion of our franchise. And that is precisely what we have delivered. By all accounts, 2017 was a breakthrough year for blockchain/cryptocurrencies and cannabis financings with the Canadian capital markets ecosystem and its rich history of supporting emerging small- to mid-cap companies playing a leading role. Much of this activity is occurring in the small- to mid-cap sectors and is being led by GMP . Canada has been financing junior mining and energy companies for decades through junior capital pools, shells and reverse takeovers (RTOs), and we found that the structure is very flexible in being able to provide significant capital to early stage companies in these sectors so that they can scale and build in order to compete globally.

The proliferation of blockchain/cryptocurrencies and cannabis companies on Canadian exchanges this year has been a much welcomed respite from the prolonged commodities malaise. These two sectors have rapidly become meaningful business silos for our firm and a significant source of diversification.

While we are proud to continue to be recognized as leaders in commodities, an area of historic strength for our firm, we have always maintained a strong non-commodities franchise. Moreover, we have maintained the ability to react quickly to new opportunities. For the first time in over a decade, underwriting fees in our non-commodities businesses surpassed those in commodities and accounted for 67 per cent of total underwriting fees in 2017.

Blockchain and Cryptocurrencies

During the second half of the year, we launched a dedicated blockchain and cryptocurrencies practice to help corporate clients and investors capitalize on the transformative and disruptive potential of blockchain technology and the emerging digital currency space. As we began to understand distributed ledger technology, and the cryptography that underpins it, it was clearly a step change and, if the first stage of the internet was the transmission of information, we are entering the stage of the transmission of value and an entire sea change. The level of activity in this market of quality plays and quality teams is as high as we’ve seen since the internet age. Canada’s place in this technological revolution is dramatically more important that what it was in the first phase of the internet.

We are now recognized as one of the leading players in the finance world in matters relating to distributed ledger technology. The team is comprised of eight investment banking professionals and two research professionals. Our blockchain/cryptocurrencies investment banking team was awarded Top Gun distinction by Brendan Woods in 2017.

Our entry into this space was logical. GMP has been on the front lines of technology-driven disintermediation – both as disrupter and disruptee. We don’t get paid to ‘touch’ transactions as they grind their way through the endless grid of intermediaries who have for centuries cornered the need to validate the system, its transactions and its participants. And we don’t maintain huge centralized client databases that cobble together systems and processes from different decades. There is no innovator’s dilemma at GMP. So to blockchain, with its revolutionary distributed ledger technology, we have but one thing to say: “Welcome.”


Investor interest in the cannabis sector surged in 2017 in advance of the anticipated legalization in Canada in the summer of 2018. Regulatory and legislative uncertainty in the U.S. is providing Canadian cannabis companies with a golden opportunity to cement themselves as global leaders in the space. For the most part, the junior exchanges and the independents have funded the cannabis space. Medical marijuana is changing people’s quality of life and Canadian capital markets are funding first class companies.

The industry, which has been largely ignored by Canadian banks, has tremendous growth potential. Equity issuances by Canadian cannabis companies have exceeded $1 billion in 2017 and we expect that momentum to continue into 2018.

Increased competition in this space will only lend further credibility to this growing sector and will help broaden distribution. However, the independent brokerage community will always have a distinct competitive advantage for three primary reasons:

1.) We have been early leaders in funding banking relationships when access to bank credit was next to impossible to secure;

2.) As we have done since our founding, we have been connecting small- to mid-cap companies with the capital they need to prosper, so we have the requisite infrastructure and expertise to support their growth; and

3.) We understand risk in the small- to mid-cap sectors better than most and are comfortable operating in this space.

The Crucial Role Independents Play: Connecting Early Stage Entrepreneurs with Growth Capital

Strong and viable independent players are necessary if we are to continue to see capital flow to the small- to mid-cap segments of the markets – vital to the success of the Canadian economy. The proliferation of blockchain and cannabis companies on Canadian exchanges best evidences the important role that independents continue to play in the efficient functioning of the Canadian capital markets. These emerging growth sectors have been largely ignored by the large incumbent banks. Central to this expertise is a highly coordinated team of sales, trading, and research professionals working closely with our investment banking teams. Institutional market and trade flow intelligence is central to GMP’s ability to be a meaningful player in executing bought deal financings. Dialogue with our clients re-affirms the importance of maintaining a fully integrated platform and we remain highly committed to the value we provide clients in these businesses despite an industry wide pullback in headcount in these areas. Given the current daunting cyclical and ongoing structural changes, the key is running lean and preserving capital and liquidity strength. GMP has both, which provides it with the financial wherewithal to dynamically pivot in improving markets to capture emerging opportunities. Protecting this capability remains our top priority.

There is no doubt that the risk-off trade in commodities has been real and profound. However, there is also no doubt that the value proposition of any Canadian investment dealer must include a top-tier franchise in the country’s top two economic sectors, namely mining and energy. This is unlikely to change. And, GMP is the only Canadian independent with both. Given the success and leadership of our franchise in these important sectors over the past decade, GMP has been mistakenly categorized as exclusively a commodities franchise. That simply is not the case. We make no apologies for building a leader in commodities. We are very proud of that leadership and our competitive positioning in those sectors; however, we are also enjoying considerable success and growth in market share in sectors outside of commodities. We are a firm of entrepreneurs who will continue to play a crucial role in connecting Canadian small- and mid-cap companies with the advice and capital necessary to grow their businesses, regardless of industry sector.

Canadian Energy Infrastructure Investment: Essential for Global Competitiveness

Canadian oil continues to trade at a notable discount to West Texas Intermediate on the global market. The major stumbling block is a dearth of pipeline capacity in Canada. This shortage has contributed to a multi-year risk-off trade in the Canadian oil patch and the trend has been exacerbated by the outflow of foreign capital in favour of the better operating environment in the U.S. energy sector.

We believe the obvious lack of collaboration between industry and government on this essential Canadian energy infrastructure, has, without question, hurt Canada’s global energy competitiveness. Unlike Canadian producers, the U.S. benefit from existing pipeline infrastructure, a more competitive tax system, an energy-friendly administration, and, most discouraging, an industry north of the 49th that suffers from self-inflicted regulatory and political obstruction. An inter-provincial trade war is the latest hurdle for investors.

In the current environment, Canadian producers are price takers, given the U.S. remains our only major market for oil and gas exports. We believe our inability to transport oil and gas to world markets squanders our nation’s resource wealth and geographic advantage, namely proximity to Asian and European markets. It is imperative that our political and business leaders work in unison to ensure that we continue to capitalize, responsibly, on the natural-resource wealth upon which this country has been built. Our wealth as a country is not our birthright nor is its continuance in any way guaranteed. We simply must be competitive on the global stage. A lack of hard timelines and a regulatory process that has been subject to dithering and near endless legal challenges will continue to be the major stumbling block for domestic and international investor confidence in the Canadian energy sector.

Richardson GMP: There is Always a Model Where Entrepreneurialism Can Succeed

Richardson GMP remains a highly coveted and strategic synergistic asset. Richardson GMP continues to be a great example of what can be accomplished by an independent Canadian wealth manager with scale, bespoke wealth solutions and a differentiated ownership structure. Unlike its competitors, Richardson GMP remains steadfast in not mixing advice with the sale of house product. Advisors have the freedom, flexibility and support required to develop truly customized investment solutions that best serve clients’ needs. The strength of this value proposition for high-net-worth households is evidenced by the firm’s ongoing strong financial performance.

Since its formation in 2009, clients have benefited from exclusive access to the breadth of innovative new issue product from our industry leading capital markets platform. The combination of GMP Securities’ proven origination capabilities and Richardson GMP’s first-rate high-net-worth retail distribution is clearly working. GMP Securities’ equity capital markets team will continue to work closely with Richardson GMP in structuring and marketing new issue transactions. This tight collaboration is key to facilitating GMP Securities’ involvement in numerous financings, particularly yield-oriented offerings.

The synergies between the two platforms also extend to a services agreement, whereby GMP Securities provides Richardson GMP with carrying broker services largely in the areas of trade execution, clearing and settlement, custody and trade confirmations.

Richardson GMP continues to deliver solid profitability and remains highly synergistic with our capital markets franchise. Additionally, Richardson GMP’s investment advisors own approximately 36 per cent of the business. This remains a differentiated ownership structure in the Canadian wealth management landscape. Simply put, Richardson GMP is company run by entrepreneurs serving entrepreneurs.

GMP remains committed to working with our partners at Richardson GMP as they continue to grow the business and solidify their firm’s standing as a leading wealth management firm in Canada.


GMP remains a viable and fierce competitor with an exceptional core of talented professionals that can identify and exploit opportunities as they arise. Our leadership team is collaborative and highly adept at running the firm in a manner that limits cost and mitigates risk. Possessing a deep and sound understanding of all aspects of the business, we can confidently say that we have the right leaders running the right teams. Each member of our leadership team brings a diverse set of skills, industry experience and transactional expertise. Our people are top tier and have demonstrated exceptional professionalism in the face of a daunting operating environment.


2017 was all about building on the foundation we laid over the past several years. While not without challenges, our improved adjusted net income performance in 2017 demonstrates the powerful operating leverage of a leaner, agile and better diversified franchise.   Having successfully executed on the cost side of the business, the next logical step was driving revenue opportunities. As promised, we made considerable strides toward diversifying our business.   GMP is an early leader in the emerging blockchain/cryptocurrencies and cannabis growth sectors.

Make no mistake, there were hard lessons learned from weathering both cyclical and structural changes facing our industry. However, we believe the real opportunity for our firm is continuing to do what we do best, namely helping small- to mid-cap companies efficiently access the requisite capital needed to grow their business. The key is remaining a lean and agile industry participant with the capacity to pivot to the upside from a position of strength when markets are more accommodative. I am reminded of a Japanese proverb that goes something like this “Vision without action is a daydream. Action without vision is a nightmare”. GMP has a clear strategic path forward and our actions over the past three years have been deliberate, measured and meaningful, with the ultimate goal of bolstering shareholder value.

President and Chief Executive Officer