GMP Capital Inc. reports strong results for second quarter 2009



    
    -   Second quarter 2009 revenue up 13% compared with same period in 2008;
        up 49% compared with first quarter 2009

    -   Second quarter 2009 income before income taxes up 57% compared with
        same period in 2008

    -   Strong investment banking revenue, up 47% compared with second
        quarter 2008
    

    TORONTO, Aug. 6 /CNW/ - GMP Capital Inc. ("GMP") (TSX: GMP) reported
revenue of $100.8 million in second quarter ended June 30, 2009, an increase
of 13% compared with second quarter 2008 due primarily to higher investment
banking revenue and gains recorded in principal activities. Income before
income taxes was $26.4 million compared with $16.8 million during the same
period a year ago, an increase of 57%. Net income was $8.1 million ($0.12 per
basic share) compared with $15.7 million ($0.25 per basic unit) reported
during the same period a year ago. Second quarter 2009 included adjustments to
the provision for income taxes to reflect the impact of the completion of the
conversion from an income trust back to a corporation (the "Conversion")
during this period, which in aggregate reduced net income by $8.9 million and
earnings per basic share by $0.15. These adjustments include:

    
    -   $7.7 million in non-cash future income tax expense recorded in order
        to tax-effect intangible assets relating to the EdgeStone acquisition
        at a corporate rate of tax; and

    -   $1.2 million in additional current tax expense accrued this quarter
        in connection with excess taxable income generated by GMP Capital
        Trust in first quarter 2009, which became subject to corporate tax as
        a result of the conversion to a corporation.
    

    Excluding these one-time tax adjustments, net income would have been
$17.0 million ($0.26 per basic share).
    For the six-month period ended June 30, 2009, GMP reported revenue of
$168.3 million, a decrease of 8% compared with the same period in 2008,
largely due to lower commission revenue and lower interest income, which was
partly offset by higher equity underwriting revenue and higher returns in
principal activities. Income before income taxes was $33.8 million compared
with $39.0 million during the same period a year ago, representing a decrease
of 13%. Net income was $15.2 million ($0.23 per basic share) compared with
$36.7 million ($0.57 per basic unit) in the same period in 2008.
    "I am pleased with the strong revenue generation this quarter and the
particularly strong results in investment banking with GMP Securities
participating in many of the quarter's largest transactions. Although
uncertainty remains regarding the timing and extent of the capital markets
recovery, the improving market conditions together with our strong client
focus and deep relationships drove our performance this quarter," said Kevin
Sullivan, Chief Executive Officer, GMP Capital Inc.
    Commenting further on the quarter's activities, Mr. Sullivan said, "We
are pleased to have returned back to a corporate structure in May 2009.
Although the Conversion resulted in certain one-time tax adjustments being
recorded in second quarter, we believe it is the right structure for GMP and
provides us with the necessary flexibility to grow our business. Subsequent to
quarter end, we also took an important step toward accelerating our vision of
becoming Canada's premier independent financial services firm by entering into
a definitive agreement to combine the wealth management business of GMP
Private Client with Richardson Partners Financial Limited. We are excited
about the expanded relationships and opportunities that this new compelling
initiative will bring."

    
    Second Quarter 2009 (compared with second quarter 2008)

    -   Revenue of $100.8 million, up 13%
    -   Expenses of $72.7 million, up 4%
    -   Income before income taxes of $26.4 million, up 57%
    -   Net income of $8.1 million, down 49%
    -   Earnings per basic share of $0.12 compared with earnings per basic
        unit of $0.25
    -   Annualized ROE of 12.1% compared with 22.4% (second quarter 2009 ROE
        of 26.7% when adjusted for one-time tax items)
    -   Quarterly dividend of $0.05 per common share paid July 15, 2009, to
        holders of record June 30, 2009
    -   Successful conversion from an income trust to a corporation effective
        May 15, 2009

    First Half 2009 (compared with first half 2008)

    -   Revenue of $168.3 million, down 8%
    -   Expenses of $131.8 million, down 7%
    -   Income before income taxes of $33.8 million, down 13%
    -   Net income of $15.2 million, down 59%
    -   Earnings per basic share of $0.23 compared with earnings per basic
        unit of $0.57
    -   Annualized ROE of 12.7% compared with 25.8%
    

    WEALTH MANAGEMENT TRANSACTION

    As previously announced, on July 23, 2009, we entered into a definitive
agreement that will result in the combination of our wealth management
business of GMP Private Client with Richardson Partners Financial Limited.
This exciting new enterprise in Canadian wealth management will operate under
the name Richardson GMP Limited ("Richardson GMP"). "This transaction will
allow us to accelerate the execution of our growth strategy, which has always
been to grow our assets under management business. Richardson GMP will be able
to draw upon the strength of a proven institutional firm, GMP Securities, in
order to better satisfy the capital market needs of its clients," said Kevin
Sullivan, Chief Executive Officer, GMP Capital Inc.
    Concurrent with the creation of Richardson GMP, which is expected to
occur in late October 2009, James Richardson & Sons, Limited, will make a
significant investment in GMP through a subscription for common shares. This
strategic investment represents a strong validation of our business franchise
which will further enhance GMP's financial strength. "This is an opportunity
for both firms to participate in the acceleration of a shared vision to create
Canada's leading independent investment firm," said Mr. Sullivan.

    
    SECOND QUARTER 2009 BUSINESS SEGMENT HIGHLIGHTS

    Capital Markets

    -   Revenue of $81.8 million, up 17% compared with second quarter 2008
    -   Operating earnings of $31.2 million, up 35% compared with second
        quarter 2008
    -   Strong investment banking revenue of $53.6 million, up 47% compared
        with second quarter 2008 primarily due to stronger equity
        underwriting activity and GMP's participation in several of the
        quarter's largest transactions
    -   Sales and trading commission income of $20.4 million, down 30%
        compared with second quarter 2008, primarily due to lower transaction
        volumes on the Toronto Stock Exchange ("TSX"). In second quarter
        2009, facilitation trading losses were 3% of gross commissions
        generated compared with 12% in the same period a year ago, largely
        due to improved liquidity conditions
    -   GMP Securities ranked No. 2 in block trading volume on the TSX with a
        12.8% market share(1)
    -   GMP Securities ranked No. 1 in the value of common equity
        underwriting transactions completed in Canada having led or co-led 26
        transactions valued at $2.4 billion, and participated in 52
        underwriting transactions valued at approximately $4.4 billion(2)

    Wealth Management

    -   Revenue of $11.1 million, down 16% compared with second quarter 2008
    -   Operating loss of $1.0 million compared with an operating loss of
        $0.2 million in second quarter 2008
    -   Assets under administration of $3.7 billion, down compared with
        $4.8 billion reported in second quarter 2008; however, up compared
        with $3.4 billion reported during first quarter 2009
    -   Assets under administration has grown for two consecutive quarters
        reflecting improving market conditions and the net addition of client
        assets
    -   Subsequent to second quarter 2009, GMP Private Client hired one
        additional advisory team in Calgary bringing the total number of
        investment advisory teams to 41 as at the date hereof

    Alternative Investments

    -   Revenue of $9.3 million, up 27% compared with second quarter 2008
        primarily reflecting a $1.9 million increase in unrealized gains in
        principal activities compared with the same period last year, arising
        from GMP's investment in the domestic GMP Diversified Alpha Fund, and
        higher investment management fees earned by GMP Investment Management
        and EdgeStone
    -   Operating earnings of $4.7 million compared with $2.8 million in
        second quarter 2008
    -   The domestic GMP Diversified Alpha Fund generated a net return of
        25.82% for the six months ended June 30, 2009; fully recovering the
        negative returns recorded during the challenging market conditions in
        fiscal 2008
    -   Assets under management of $1.3 billion
    -   Subsequent to second quarter 2009, EdgeStone's Equity Fund II sold
        one of its portfolio company investments, Trimaster Manufacturing,
        Inc., resulting in carried interest and other revenue of $2.6 million
        to be recognized by GMP in third quarter 2009

    ---------------------------
    (1) Source: CanadaEquity.com as at July 6, 2009.
    (2) Source: FPinfomart as at July 6, 2009. Data is ranked by value of
        transactions and is presented on a "Full Credit to Book" basis
        whereby the entire transaction value is allocated to the bookrunner.
    

    OTHER

    For further information about GMP, our results for second quarter 2009
and the meaning of certain references, this press release should be read in
conjunction with the Unaudited Interim Consolidated Financial Statements and
GMP's Management's Discussion and Analysis for the three and six months ended
June 30, 2009, which can be accessed on GMP's website at gmpcapital.com and on
SEDAR at sedar.com.

    SECOND QUARTER 2009 CONFERENCE CALL

    Management will host a conference call and live audio webcast today at
10:00 a.m. (ET) to discuss GMP's second quarter ended June 30, 2009. The call
may be accessed by dialling 416-644-3417 or 1-800-733-7571. The audio webcast
will be accessible at gmpcapital.com and will be archived on the site. A
replay of the conference call will be available from Thursday, August 6, 2009,
at 12:00 p.m. (ET) to Thursday, August 13, 2009, at 11:59 p.m. (ET). The
dial-in number for the replay is 416-640-1917 or 1-877-289-8525; access code
21308183 followed by the number sign.

    ABOUT GMP CAPITAL INC.

    GMP Capital Inc. carries on business through the following principal
entities: GMP Securities L.P., Griffiths McBurney Corp., GMP Securities Europe
LLP, GMP Private Client L.P., EdgeStone Capital Partners, L.P. and GMP
Investment Management L.P. GMP Securities L.P. is a leading independent
Canadian investment dealer focused on investment banking and institutional
equities for corporate clients and institutional investors. GMP Securities
L.P. can be found on the web at gmpsecurities.com. Griffiths McBurney Corp.
services institutional clients in the United States while GMP Securities
Europe LLP provides investment banking and institutional equity services to
clients located in Europe. GMP Private Client L.P. is a full-service
investment firm focused on high-net-worth private investors that provides
wealth preservation, income and growth strategies delivered by seasoned
investment advisors. GMP Private Client L.P. can be found on the web at
gmpprivateclient.com. EdgeStone Capital Partners, L.P. is one of Canada's
leading private equity firms, providing capital, strategic direction and
business and financial advice to help promising mid-market and early stage
companies achieve their full potential. EdgeStone Capital Partners, L.P. can
be found on the web at edgestone.com. GMP Investment Management L.P., through
its private funds, seeks to generate superior risk-adjusted investment returns
over the long term by executing selected investment strategies. GMP Investment
Management L.P.'s offerings are aimed at both high-net-worth individuals and
institutional investors. The website is gmpcapital.com. GMP Capital Inc. has
offices in Toronto, Calgary, Montreal, Vancouver and London, England.

    Forward-Looking Statements

    This press release may contain "forward-looking statements" (as defined
under applicable securities laws) concerning anticipated future events,
results, circumstances, performance or expectations that are not historical
facts but instead represent our beliefs, expectations, estimates and
projections regarding future events, many of which, by their nature, are
inherently uncertain and beyond our control. These statements include, but are
not limited to, statements made with respect to management's beliefs, plans,
estimates, 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 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, 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
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 those
expressed or implied in any forward-looking statement made by us or on our
behalf. For a description of risks that could cause our actual results to
materially differ from our current expectations, please see the "Risk
Management" section in GMP's 2008 Annual MD&A and "Risk Factors" in GMP's
annual information form dated February 26, 2009. Material factors or
assumptions that were applied to drawing a conclusion or making an estimate
set out in the forward-looking information include: the uncertainty regarding
the timing and the extent of recovery of global economic and capital market
conditions, improving liquidity conditions and high but falling equity market
volatility on the level of public offerings, merger and acquisition activity
and securities trading; a rise in the market value of securities and certain
commodity prices; continued weakness in the United States' economy leading to
a decreased demand for Canadian exports to the United States; and a weak
Canadian dollar relative to the United States dollar. For other factors or
assumptions applied see the "Business Environment and Market Outlook - Market
Outlook" section included in GMP's 2008 Annual MD&A. 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 "financial
outlook" for purposes of applicable securities laws, and as such the financial
outlook may not be appropriate for purposes other than this press release.




For further information:

For further information: 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, rcolella@gmpcapital.com or
investorrelations@gmpcapital.com


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