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, November 4, 2011 — 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.”
THIRD QUARTER 2011 VS. THIRD QUARTER 2010
Represents 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.
FIRST NINE MONTHS 2011 VS. FIRST NINE MONTHS 2010
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
• 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
2 Source: CanadaEquity.com as at October 13, 2011.
3 Source: FPinfomart as at October 13, 2011.
• 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
• 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.
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.
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#.
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, whollyowned
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:
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.
For further information please contact:
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
firstname.lastname@example.org or email@example.com