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CEO Message  

Fellow Shareholders,

We are encouraged by both the solid revenue and earnings growth we reported in 2018 and the considerable strides made toward honing the firm’s focus on its core and profitable Canadian capital markets and wealth management businesses. The domestic capital markets are what we know better than most and where our firm is consistently top-tier. It is in these arenas where our franchise remains an active and meaningful industry player.

As challenging as 2018 was in many respects, particularly in the fourth quarter, GMP delivered solid financial results from continuing operations. We grew revenue by 15% and recorded adjusted net income from continuing operations of $34.8 million. Leading the way was a 46% increase in investment banking revenue with year-over-year growth from the cannabis, blockchain and energy sectors. Of note, our non-commodities businesses accounted for 70% of total investment banking revenue in 2018. That said, we generated adjusted EPS from continuing operations of 40 cents and adjusted ROE was 17.4%. In 2018, we also returned $23.1 million to shareholders through common stock dividends and share repurchases. We were also pleased to have reinstated a regular quarterly cash dividend of $0.025 per common share and declared two special cash dividends of $0.10 and $0.075 per common share in March and November, respectively. These decisions were made in recognition of GMP’s improved financial performance, strong capital levels and improving outlook.


2018 turned out to be mixed from both a macro and financial perspective. While the first three quarters of the year proved fairly constructive in equity markets, led largely by growth in the cannabis sector, the fourth quarter witnessed higher levels of equity market volatility and negative performance across virtually all asset classes. The result was a broad-based equity markets retreat in 2018. The S&P/TSX Composite Index declined by 11.6% in 2018 with most of the year’s losses recorded in the fourth quarter, where the index declined by 10.9%. In the U.S., the S&P 500 Index was down 6.24% in 2018.

In 2018, Canadian independent dealers continued to benefit from significant capital raisings and advisory activity by domestic and U.S. cannabis companies. The Canadian capital markets experienced a surge in cannabis listings, with initial support from Canadian investors giving way to capital inflows from an increasingly international investor base. GMP reaffirmed the leadership role it plays in this growth sector; being named as a top cannabis influencer/financier in the Financial Post’s Cannabis Power List. We helped our cannabis companies raise in excess of $3.7 billion in total capital in 2018, and we advised on the first-ever merger between two public U.S. cannabis companies.

 On a less positive note, fiscal 2018 saw no abatement in the bear market for commodities that began in 2014 and remains a significant headwind for all Canadian independent dealers. The dollar value of industry-wide common equity underwriting transactions completed in Canada in the energy and mining sectors was down 88.7% and 34.6%, respectively, compared with 2017.


As we look back on the past three years, GMP has substantially transformed its operating structure. Our key strategic focus has been to ensure we are active in markets where we can be a top-tier player. That means Canada and it means being a meaningful player in capital markets and wealth management.

The bottom line has benefited from substantial reductions to the fixed cost side of our business and the exiting of certain under-performing and underutilized businesses in international jurisdictions. Following the sale of our U.S. fixed income business in early 2019, that process is now complete. In 2018, we also further streamlined our Canadian capital markets business to better align our operations with the current level of business opportunities in the marketplace.

A key element of our strategic agenda has always been to remain operationally lean and to maintain the agility to respond quickly to emerging opportunities. This has always been core to the firm’s DNA. GMP Securities early and deep leadership in cannabis/blockchain and GMP FirstEnergy’s leadership in oil and gas best evidence this distinguishing strength. Our domestic capital markets franchise continues to make a meaningful contribution to the success of the entrepreneurial sectors; remaining as robust and relevant as at any time in our nearly quarter century history. We believe this is where we can continue to differentiate and disrupt.

Heading into 2019, the opportunity for our firm is continuing to do what we do best, namely helping entrepreneurs efficiently access the requisite capital and advice they need to grow their business.


Richardson GMP remains a core building block of long-term value creation. Our partners manage a highly coveted wealth management business that is consistently profitable and scalable. Richardson GMP recorded adjusted EBITDA of $45.4 million on total revenue of $290.1 million in 2018. Total assets under administration ended the year at $27.4 billion administered by 166 advisory teams.

Richardson GMP is focused on growth. Over the next five years, Richardson GMP strives to grow aggressively its business by leveraging its unique positioning in Canada’s wealth management industry landscape. Given the changes the Canadian banks are making in their wealth management businesses, our partners are optimally positioned to attract large book investment advisors who want to be in the advice delivery game, unencumbered by the potential conflicts inherent at the banks. Our current dialogue with many of the country’s top advisors confirms that there continues to be a notable demand for a very high-quality, non-bank alternative. And, we believe, Richardson GMP is that premier alternative destination.

In an effort to achieve its growth targets, Richardson GMP continues to make significant investments in new technologies, including a newly enhanced client portal, MyRichardsonGMP, which clients can use to upload or access important documents/
statements, and the launch of an internal digital wealth management platform or
robo-advisor aimed at smaller client accounts. Additionally, Richardson GMP launched a refreshed, revitalized brand that reframes the conversation about wealth by focusing on simplifying the growing complexity for Canadian families and business owners.

The rebrand solidifies Richardson GMP’s network of like-minded partners dedicated solely to providing family wealth planning and estate planning, including the intergenerational transfer of wealth. Simply put, Richardson GMP strives to be the firm that best helps its clients transfer wealth and family businesses to the next generation.


Independent investment dealers have always played an essential and fundamental role in the efficient functioning of the Canadian capital markets ecosystem. Despite the tectonic structural changes the industry has endured over the past decade, 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. Whether it is junior oil and gas and mining companies or more recently the early and deep involvement in two of today’s biggest investment trends, cannabis and blockchain, independents take the leap of faith that is necessary to supply capital to these entrepreneurial sectors. The bank-owned firms don’t have the DNA to do that. One of our key competitive advantages lies in our firm being more nimble and agile in the provision of investment banking services compared with the supercilious Canadian bank-owned investment dealers. If they’re a cruise ship, we’re a Viking ship. There’s no salad bar on a Viking ship.


This past year, Canada became the first wealthy nation in the world to legalize the recreational use of cannabis, bringing nearly all operators into a regulated framework. The legalization of both medical and recreational cannabis at the national level in Canada is in sharp contrast to the U.S., where it remains prohibited by federal law. Why is that distinction important? The simple answer is competitive advantage. Canadian cannabis companies enjoy unencumbered access to capital formation via the Canadian capital markets and unrivalled growing capacity. Access to an increasingly international investor base and soaring equity market valuations have provided these firms with enormous amounts of capital to grow operations, build market share, and acquire smaller industry players. Canada has established itself as the undisputed leader in the global cannabis industry. It is abundantly clear that the sentiment shift in favour of cannabis will continue to gain support in 2019. We see no reason why Canada should not continue to be a global leader in the cannabis space given our front-runner status.


In contrast to cannabis, the energy sector is the poster child for government policy failure. The ongoing Canada “risk-off” trade that began late 2014 coupled with the lack of progress on pipelines and infrastructure projects led to a massive migration of international capital out of Western Canada and primarily into the United States, where there are far less regulatory, financial and political obstacles to operating. According to the Canadian Association of Petroleum Producers, 2018 marks the fifth straight year that capital spending contracted. Quite frankly, our inability as a wealthy nation, to get product to tidewater on either coast via pipelines and an increasing dependence on crude-by-rail is really depressing. The impasse has contributed to record discounts of more than US$50/barrel for Western Canadian crude relative to global benchmarks. In an effort to bolster Canadian crude prices, the Alberta government mandated production cuts in early 2019 and purchased rail cars to increase shipping capacity by rail.

It is widely perceived globally that the Canadian Energy industry is mired in bureaucracy, regulation and procedure. Canadian companies are among the best in the world but seemingly endless political dithering has created considerable hurdles to hold their progress back, thus hurting the sector’s competitiveness. The silver lining is that trend is not irremediable. Canada has been blessed with one of the great caches of resource wealth in the world and harvesting that responsibly — including the gold standard on environmental protection which, of course, should absolutely be the rule that governs both business and governments alike.

The firm remains long-term bullish on Canada and we are encouraged by the conditional approval of Trans Mountain by the National Energy Board this past February, albeit construction is several years away. Oil remains the world’s No. 1 source of energy, and we don’t see that abating for decades to come. However, balancing extractive industries with new technology and renewable energy is the way forward for Canada’s energy economy, as long as an appropriate balance is struck between the two. As the British say: “Mind the gap.”

We believe the Canadian energy sector will recapture the interest of global investors only when there are increasing signs we are willing to address some of the larger and broader aspects of the industry, many of them structural. GMP FirstEnergy remains well positioned as the only viable independent in Canada’s largest and most valuable industry.


2018 was an important year of transformation for GMP with solid operating performance from continuing operations. It marked the conclusion of a multi-year process that resulted in meaningful changes to our organizational structure, ensuring we remain active in markets where we can be a highly agile top-tier industry player; namely Canada capital markets and wealth management. The harsh reality is that we faced some monumental industry challenges over the past decade. The decline in legacy businesses as a consequence of monumental structural changes to our industry is a simple reality. We believe GMP has successfully counteracted these obstacles through an unrelenting refocus on our core and profitable Canadian business. Net income from continuing operations of nearly $35 million in 2018 confirms that Canada remains the fulcrum for sustainable earnings growth.

GMP is unequivocally more focused, leaner and nimbler today, retaining the capacity to pivot to the upside from a position of strength. We continue working toward identifying additional areas where we can improve in an effort to enhance shareholder returns. We thank you for your continued support as we continue on our journey.


President and Chief Executive Officer



President and Chief Executive Officer