GMP Capital Inc. Reports Second Quarter 2019 Results

GMP Capital Inc. (GMP) (TSX: GMP) today reported a net loss from continuing operations of $3.8 million and revenue from continuing operations of $26.5 million in second quarter 2019.  On an adjusted basis¹, net loss from continuing operations was $0.6 million in second quarter 2019 compared with net income of $5.0 millionin second quarter 2018.

“The results for this quarter were impacted by the 35% industry wide decline in common equity underwriting transactions compared to the prior period, largely in the cannabis, blockchain and mining sectors, an uncertain market environment as well as costs incurred in connection with the sale of the Capital Markets business to Stifel,” said Harris Fricker, CEO of the Capital Markets business.  “With the overwhelming vote in support of the Sale Transaction earlier this week and the equally positive reception from our clients and employees regarding the prospect and opportunities that we expect to arise under the formidable Stifel platform, we are now busy preparing to seamlessly transition our Capital Market business to Stifel”.

GMP reported a net loss of $26.7 million and a diluted loss per share of $0.41 in first half 2019 from continuing operations compared with net income of $6.8 million and EPS of $0.06 in first half 2018.  The decline in performance reflects the $28.5 million non-cash goodwill impairment charge recorded in first quarter 2019. Additionally, first quarter 2019 included an $8.3 million non-cash gain relating to reclassification of a cumulative foreign currency translation adjustment in connection with the sale of discontinued operation. On an adjusted basis, first half 2019 net income from continuing operations was $6.2 million and EPS was $0.05.

On a consolidated basis, GMP recorded a net loss of $19.3 million in first half 2019 compared with net income of $4.6 million in first half 2018.  The decline in performance was primarily due to the non-cash goodwill impairment charge recorded in first quarter 2019.  Additionally, first quarter 2019 included an $8.3 million non-cash gain relating to reclassification of cumulative foreign currency translation adjustments in connection with the sale of discontinued operations.  On an adjusted basis¹, GMP recorded net income of $13.7 million in first half 2019 compared with net income of $11.4 million in first half 2018.

Discontinued Operation

In January 2019, GMP completed the sale of its U.S. fixed income business, which was conducted through its wholly owned U.S. subsidiary GMP Securities, LLC to a third party.  As required under IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations, the operating results of the disposed U.S. fixed income business are reported as discontinued operations throughout this press release.  Certain previously reported figures have been retrospectively restated to show the discontinued operations separately from continuing operations.  For further information relating to discontinued operations, please refer to Note 8 to the 2018 Annual Financial Statements and Note 5 to the Second Quarter 2019 Financial Statements.

Net income from discontinued operations was nil in second quarter 2019 compared with a net loss of $0.9 million in second quarter 2018.  Net income from discontinued operations was $7.5 million in first half 2019 compared with a net loss of $2.2 million in first half 2018.  The improvement reflects an $8.3 million non-cash gain in connection with the sale of discontinued operations in the first quarter of 2019.

SOURCE GMP Capital Inc.