GMP Capital Inc. reported revenue of $100.8 million in the second quarter ended June 30, an increase of 13% compared with Q2 2008 due primarily to higher investment banking revenue and gains recorded in principal activities.
Income before 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, compared with $15.7 million in the same period a year ago.
Q2 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 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 million.
For the six-month period ended June 30, 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 taxes was $33.8 million compared with $39 million during the same period a year ago, representing a decrease of 13%. Net income was $15.2 million compared with $36.7 million 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, CEO of GMP Capital.
“We are pleased to have returned back to a corporate structure in May. Although the conversion resulted in certain one-time tax adjustments being recorded in Q2, we believe it is the right structure for GMP and provides us with the necessary flexibility to grow our business.” Sullivan said. “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 Ltd. We are excited about the expanded relationships and opportunities that this new compelling initiative will bring.”
The new enterprise will operate under the name Richardson GMP Ltd. and Sullivan said that “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.”
Concurrent with the creation of Richardson GMP, which is expected to occur in late October, James Richardson & Sons, Ltd., Richardson Partners’ parent, will make a significant investment in GMP through a subscription for common shares.
GMP Capital reports strong Q2 results
Revenue rose, but net income fell as a result of adjustments in converting back to a corporation
- By: IE Staff
- August 6, 2009 August 6, 2009
- 09:27