GMP Capital Inc. (TSX: GMP) reported a net loss of $62.4 million in the first quarter of 2010, despite a 23% jump in revenue, as the securities firm recorded impairment charges related to its EdgeStone unit.

For the three months ended March 31, GMP reported revenue of $82.6 million, up 23% from $67.4 million in the same period last year.

Its net loss of $62.4 million compared with net income of $7.1 million in first quarter 2009.

The company recorded $80.5 million, or $76.1 million after-tax, in non-cash impairment charges, relating to goodwill and intangible assets in the EdgeStone reporting unit. The company had previously announced new employment agreements with certain senior offices of EdgeStone that are expected to reduce management fees, and amendments being made to a partnership agreement of EdgeStone Capital Equity Fund III.

These “are indicators that the goodwill and intangibles assets related to the EdgeStone business have been impaired,” the company said.

In response, it performed an analysis of the carrying value of its goodwill and intangible assets related to the EdgeStone business, and found that “the fair value of the EdgeStone reporting unit was now less than its carrying value,” which led to the impairment charges.

“Our performance in first quarter 2010 was obviously negatively affected by the impairment charges recorded; however, these charges are non-cash in nature and do not affect GMP’s liquidity, cash flow from operating activities or debt covenants,” said Kevin Sullivan, CEO of GMP.

GMP’s operating earnings were $21.9 million in the first quarter, up 162% compared with the first quarter of 2009, reflecting stronger revenue generation in capital markets and higher revenue recorded in the corporate and alternative investments segments. Investment banking revenue jumped 69% over last year.

“Our investment banking franchise benefitted from improved activity in the Canadian mid-market, particularly in the resource and industrials sectors,” said Sullivan. “In addition, we added new professionals to GMP Investment Management as we continue to develop new product offerings for high-net- worth and institutional investors.”

Richardson GMP posts revenue of $33.3 million

GMP’s wealth management unit reported an operating loss of $1.9 million in first quarter, compared with an operating loss of $1.8 million in the same period last year. These results reflect GMP’s share of Richardson GMP’s operating results for first quarter 2010, which were negatively impacted by a provision for doubtful accounts and post-merger integration-related costs recorded in the quarter.

Richardson GMP generated revenue of $33.3 million during its first full quarter of operations, and had assets under administration of $12.6 billion as at March 31, 2010, an increase of $400 million compared with the end of 2009.

The firm had 114 investment advisory teams at the end of the quarter, unchanged from last quarter.

It remains focused on the integration of its client-facing operations, ongoing training and support to its investment advisors and the rationalization of its staffing and operating systems, which are now largely complete, GMP said.

IE