For further information about GMP Capital Inc., our results for first quarter 2012 and the meaning of certain references, this quarterly earnings
release should be read in conjunction with our First Quarter 2012 Financial Statements and Management’s Discussion and Analysis for the three
months ended March 31, 2012, 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 First Quarter 2012 Financial Statements prepared
in accordance with International Accounting Standard 34, Interim Financial Reporting.
TORONTO, May 4, 2012 – GMP Capital Inc. (“GMP”) (TSX: GMP) today reported revenue of $66.1 million in first
quarter 2012, representing a 43% decrease compared with the same period a year ago primarily due to weaker
performance in our Capital Markets segment. GMP recorded net income of $0.2 million and a net loss attributable to
common shareholders of $2.3 million ($0.04 net loss per basic share) in first quarter 2012 compared with net income of
$26.3 million and net income attributable to common shareholders of $22.5 million ($0.32 per basic share) in first
quarter 2011. This quarter’s results continued to be affected by the unfavourable market environment and also
reflect $4.5 million (pre-tax) in restructuring charges incurred in connection with previously announced senior
management changes and other initiatives.
“Adverse market conditions continue to affect the level of business activity, particularly in the Canadian mid-market
resources sector, resulting in disappointing financial results this quarter,” said Harris Fricker, Chief Executive Officer,
GMP. “Investment banking and trading activity were the areas most impacted by the ongoing challenging market
environment. Wealth Management’s returns reflect lower results at Richardson GMP which were also impacted by
the weaker capital markets activity.”
First Quarter 2012 versus First Quarter 2011
Commenting further, Mr. Fricker said, “The recovery in global economic activity has proven to be slower than first
anticipated. In the context of the current market environment, we remain focused on conservative capital
management and ensuring our cost structure is aligned to the reality of the landscape before us. That said, we
continue to aggressively seek opportunities to add to our global talent pool and position the firm for robust performance
in more normalized market conditions.”
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.
FIRST QUARTER 2012 BUSINESS HIGHLIGHTS
• Revenue of $58.9 million, a decrease of 43% compared with first quarter 2011 due to a sharp decline in
investment banking revenue, particularly in the mining sector, and lower commission revenues.
• Income before income taxes of $1.9 million in first quarter 2012 compared with $40.7 million in first quarter
Capital Markets Highlights:
• GMP Securities L.P. (“GMP Securities”) ranked sixth in the dollar value of common equity underwriting
transactions completed in Canada for which we were lead or co-lead;2
• GMP Securities ranked seventh for equity block trading volumes on the Toronto Stock Exchange and TSX
Venture Exchange, achieving a 4.9% market share;3
• GMP Securities participated in 74 underwriting transactions completed in Canada helping raise approximately
$6.9 billion on behalf of clients, leading or co-leading 16 of these transactions;4 and
• GMP Securities advised on five M&A transactions announced in Canada during first quarter 20125.
• The Wealth Management segment is comprised of GMP’s non-controlling ownership interest in Richardson GMP
Limited (“Richardson GMP”). Wealth Management reported a loss before income taxes of $0.1 million in first
quarter 2012 compared with income before income taxes of $1.1 million in first quarter 2011. Wealth
Management’s first quarter 2012 results reflect lower operating performance by Richardson GMP primarily due
to lower client trading volumes as a result of the continued challenging market environment.
Richardson GMP Highlights (100% basis):
• assets under administration (“AUA”)1 of $13.9 billion; and
• 108 investment advisory teams strategically located in offices across Canada.
• Revenue of $3.1 million, a decrease of 60% compared with first quarter 2011, primarily due to the
arrangements reached with the principals of EdgeStone Capital Partners, L.P. (“EdgeStone”) in fourth quarter
2011 pursuant to which the former EdgeStone principals assumed responsibilities for all aspects of the
EdgeStone business, resulting in the deconsolidation of that business from our results. GMP Investment
Management L.P. (“GMP Investment Management”) also reported lower revenue primarily due to $1.5 million in
performance fees recorded in first quarter 2011 following a distribution by one of its funds. GMP Investment
Management reported increased investment management and fee income in first quarter 2012 compared with
first quarter 2011 due to higher assets under management (“AUM”)1;
• Income before income taxes of $0.1 million compared with $3.7 million in first quarter 2011; and
• GMP Investment Management ended the quarter with AUM1 of $582.3 million.
2 Source: FPinfomart as at April 9, 2012
3 Source: CanadaEquity.com as at April 9, 2012.
4 Source: GMP Capital Inc. internal reports as at April 9, 2012.
5 Source: Mergermarket as at April 9, 2012.
On May 3, 2012, the board of directors of GMP approved a 50% reduction in the quarterly common share cash
dividend from $0.10 to $0.05 per share. “While our capital position and businesses remain solid, we believe
conservative capital management is a prudent response to the continued difficult market conditions in Canada and
globally and provides us with greater financial flexibility going forward,” said Harris Fricker. The board also
declared a quarterly cash dividend of $0.3438 per Cumulative 5-Year Rate Reset Preferred Share, Series B. The
common share and preferred share dividends are each payable on June 30, 20126, to the respective shareholders of
record on June 8, 2012.
GMP executives will host a conference call and live audio webcast today at 9:00 a.m. (ET) to discuss GMP’s first
quarter 2012 results. Interested parties are invited to access the call 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, May 11, 2012, by dialing 416-640-1917 or 1-877-289-8525 (toll free) and entering
access code 4527041#. The webcast will be archived at http://www.gmpcapital.com/investor.
Consistent with GMP’s management framework, management uses certain measures to assess GMP’s 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 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.
Return on Common Equity
GMP evaluates the performance of its consolidated operations using ROE. Our ROE calculation is based on net income available
to common shareholders divided by total average common shareholder equity for the period, which are measures derived from
information contained in our First Quarter 2012 Financial Statements, which were prepared in accordance with IFRS.
Assets under Administration/Management
AUA is a measure of the market value of client assets administered by Richardson GMP and in respect of which Richardson GMP
earns commissions or fees. AUA is used by management in assessing the performance of the Wealth Management segment
because such commissions or fees earned by Richardson GMP impact the performance of GMP’s Wealth Management segment
through GMP’s proportionate share of Richardson GMP’s net income. AUM is a measure of the net asset value of funds (the “GMP
IM Funds”) managed by GMP Investment Management and in respect of which GMP Investment Management earns management
fees and may also earn performance fees. Up until November 30, 2011, AUM also included the amount of committed and/or
invested capital in the funds managed by EdgeStone in respect of which EdgeStone earned management fee income or received
general partner distributions. The amount of management fees earned by GMP is directly related to the level of AUM in the
Alternative Investments segment. The amount of performance fees earned is related to both the investment performance and
the level of AUM of the GMP IM Funds. AUM is used by management in assessing the performance of GMP’s Alternative
Investments segment because it is a key driver of revenues for the segment. AUA and AUM are not included in GMP’s
Consolidated Balance Sheets.
Management believes that presenting certain results and measures on an adjusted basis which excludes the impacts of specified
items may be more reflective of ongoing operating results and provides readers with an enhanced understanding of how
management views GMP’s core performance. Management assesses performance on both a reported and an adjusted basis and
considers both bases to be useful in assessing underlying, ongoing business performance. Presenting results on both bases also
permits readers to assess the impact of the specified items on the results for the periods presented. We exclude the following
to arrive at our adjusted measures:
(i) from first quarter 2012 financial results, the share-based compensation expense recorded in connection with the Common
Shares issued to certain key employees of GMP Securities, LLC (“GMP USA”, and formerly Miller Tabak Roberts Securities, LLC)
in connection with our acquisition of GMP USA in third quarter 2011. Management regards these shares as part of the purchase
price consideration, notwithstanding the accounting treatment which treats these shares as share-based compensation due to
the obligations imposed on key employees to forfeit their unvested shares in the event they cease to be an employee of GMP.
(ii) from first quarter 2011 financial results, the impact of the one-time redemption costs (the “Redemption Costs”) recorded in
connection with the redemption of all of the outstanding senior unsecured notes issued by Griffiths McBurney L.P., an indirect,
6 In the event that the payment date is not a business day, such dividend shall be paid on the next succeeding day that is a business day. wholly-owned subsidiary of GMP, which was completed in first quarter 2011. Management has excluded the Redemption Costs as
they are not expected to re-occur and therefore unlikely to be reflective of GMP’s core performance.
6 In the event that the payment date is not a business day, such dividend shall be paid on the next succeeding day that is a business day.
The following table provides a reconciliation of GMP’s reported results to its adjusted measures:
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 2012 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, variations in the market value of
securities, the volatility and liquidity of equity and fixed income trading markets, the 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 the “Risk Management” section in the 2011 Annual MD&A and the First Quarter 2012 MD&A and “Risk Factors” in
GMP’s annual information form dated March 13, 2012. These risks and uncertainties are not the only ones facing the GMP Group. Additional
risks and uncertainties not currently known to us or that 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 First Quarter 2012 MD&A and include, without limitation: lingering uncertainty over European
sovereign debt, the potential that economic expansion could be dampened by rising fuel prices, slower growth in China and expectations for
continued negative pressure on capital markets in 2012. 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 the 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 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., 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, 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 alternative investment products provided by GMP Investment Management 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
email@example.com or firstname.lastname@example.org