Dear Fellow Shareholders,
We spent considerable time reviewing and actively discussing
strategic priorities, which included overseeing the rightsizing
of the firm’s Canadian operations to keep pace with a changing
business landscape; reinstating a regular quarterly cash dividend
and paying special cash dividends on two separate occasions.
Additionally, we sold our U.S. fixed income operations to a third
party in early 2019 and we continued collaborating closely with
our partners at Richardson GMP.
This year’s financial results from continuing operations evidence
a marked improvement in our performance and largely reflect the
strides we made in streamlining and refocusing the franchise on
our profitable core Canadian operations. GMP delivered adjusted
net income from continuing operations of $34.8 million and
adjusted diluted earnings per share of $0.40 for the year.
The Board, together with management, continue to work diligently
to refocus the firm’s resources and strategic agenda on markets
that matters most: our core Canadian capital markets franchise
and our ownership interest in Richardson GMP. Make no mistake,
the domestic market, particularly the small- to mid-cap segments,
is where we are consistently top-tier and profitable despite a
multi-year risk-off trade in commodities.
We executed a number of timely tactical and strategic decisions
over the past several years, resulting in a more agile, more
efficient, more disruptive and, most importantly, a more profitable
GMP. And, as always, guiding the firm’s prudent decision making is
a steadfast commitment to maintaining a strong risk culture and
the firm’s solid capital positioning.
REINSTATING QUARTERLY CASH DIVIDEND AND PAID SPECIAL DIVIDENDS
We made the pivotal decision in 2018 to reinstate a regular
quarterly cash dividend and pay two separate special dividends on
our common shares. In recognition of GMP’s improving financial
performance, its strong capital position and the Board and
management’s positive outlook for the franchise, we reinstated a
quarterly cash dividend of $0.025 per common share and declared
special cash dividends of $0.10 per common share in March and an
additional $0.075 per common share in November. Our philosophy
in this area is unchanged: the Board plans to continue returning
excess capital to shareholders.
Diversification and resiliency were also key themes in 2018.
GMP successfully translated an early leadership position in the
emerging cannabis and blockchain businesses into meaningful
business silos and significant contributors to the firm’s profitability.
The cannabis sector represented our largest business in 2018.
On a less positive note, 2018 saw a continuation of the bear market
in Canadian commodities. Despite the ongoing negative investor
sentiment and political and regulatory uncertainties, aptly outlined
by Harris in his letter to shareholders, we remain long-term bullish
on the world’s number one source of energy: oil. When activity
and international investor interest in the Canadian energy sector
inevitably returns, GMP FirstEnergy is well positioned as the only
viable Canadian independent energy franchise.
DIVERSITY FUELS TRANSFORMATION
Diversity plays a vital role in any firm’s success. Diversity in
thinking, business acumen, cultural background, gender and
areas of expertise helped fuel GMP’s transformation. Collectively,
this leads to in-depth, and candid conversations across the firm
helping ensure we execute against what, we believe, is the right path
forward. With the benefit of hindsight, we may have approached
some decisions differently; however, our decisions were made with
the best available information at the time and are always made
with the best interest of shareholders in mind.
Additionally, one of the Board’s most fundamental responsibilities
is to regularly evaluate its composition with a view to ensure the
Board benefits from a broad range of perspectives and relevant
experience. In 2018, GMP continued to support diversity and
meritocracy, including at the Board level, seeing the value it brings
across the entire franchise.
One of the Board’s top priorities in 2018 was evolving its own
composition including an increase in the representation of women.
While all Board appointments are made on merit, we continue to
believe in the importance of a diverse Board.
In June 2018, the Board welcomed Kishore Kapoor as an
independent director. Mr. Kapoor is one of two James Richardson
& Sons, Limited director nominees on the Board, replacing Donald
Solman, who resigned from the Board on the same date. The Board
and senior management would like to thank Mr. Solman for his service and contributions to GMP. Kish brings
a wide range of leadership experience and
business acumen in wealth management,
asset management and capital markets.
Following a comprehensive search for appropriate
candidates, the Board welcomed Julie Lassonde
(September 2018) as an independent director.
Julie brings over 20 years’ experience in a
variety of senior executive and director roles in
the mining industry. Julie is a respected industry
leader and her in-depth experience in capital
markets and the natural resources sector are a
valuable addition to our Board. The addition of
both Kish and Julie complements our Board’s
existing skills, backgrounds and expertise, and we
look forward to their valuable perspectives and
contributions. With these additions to the Board,
five new directors have joined our Board in the
past five years.
The firm’s key focus is now squarely on its
consistently profitable Canadian capital markets
operations and its ownership interest in
Richardson GMP. GMP continues to demonstrate
its resilience given its improved financial
performance from continuing operations in
2018 and its ability to win greater market share
in the non-commodities portion of its business.
We believe GMP remains on the right track as
it enters the next phase of its evolution. We
are encouraged by both the solid revenue and
earnings growth we reported in 2018.
I would like to thank our shareholders
for their ongoing support and my fellow
Board members for their insight and
DONALD A. WRIGHT
Chairman of the Board of Directors
DONALD A. WRIGHT
Chair of the Board of Directors