March 2, 2011 - GMP Announces Q4/10 and 2010 Results

For further information about GMP Capital Inc., our results for fiscal 2010 and the meaning of certain references, this press release should be read in conjunction with our 2010 Annual Financial Statements and accompanying Management’s Discussion and Analysis for the year ended December 31, 2010, and our 2010 Annual Information Form, which can be accessed on our website at gmpcapital.com and on SEDAR at sedar.com.

 Toronto, ON. (March 2, 2011) – GMP Capital Inc. (“GMP”) (TSX: GMP) today reported revenue of $148.4 million in fourth quarter 2010, representing a 39% increase compared with the same period a year ago due to stronger revenue performance across all business segments, led by record quarterly revenues in the Capital Markets segment. Net income was $38.0 million ($0.54 per basic share) compared with net income of $19.5 million in fourth quarter 2009 ($0.28 per basic share), generating a return on shareholders’ equity (“ROE”)1 of 48.0% in fourth quarter 2010. On March 1, 2011, the Board of Directors approved a 33% increase in the quarterly cash dividend from $0.06 to $0.08 per common share, representing payment for the fourth quarter ended December 31, 2010.

“Fourth quarter 2010 represented an outstanding quarter for GMP with our Capital Markets businesses generating record revenues. We are pleased to have GMP Securities recognized by the Financial Times/Mergermarket as Mid- Market Financial advisor of the year in Canada for fiscal 2010, which we believe is as much an acknowledgement of our client’s success as it is our own,” said Harris Fricker, CEO, GMP. GMP Investment Management continues to grow its assets under management and, during the quarter, expanded its product offerings to institutional investors and high-net-worth clients with the launch of two new investment funds, offering exposure to the restructured Canadian asset-backed commercial paper market. Richardson GMP recorded its first quarterly profit in fourth quarter 2010 as it begins to realize the benefits of its integration efforts amid improving business conditions."

Fiscal 2010 revenue was $443.5 million, representing a year-over-year increase of 28%. Net income was $20.5 million ($0.29 per basic share) compared with net income of $43.1 million in fiscal 2009, generating an ROE of 7.0% for the year compared with 17.3% in fiscal 2009. Results in fiscal 2010 reflect an $80.9 million ($76.5 million after-tax) non-cash impairment charge relating to EdgeStone Capital Partners L.P. (“EdgeStone”). Excluding the impairment charge, adjusted net income1 for fiscal 2010 was $97.0 million, adjusted earnings per basic share1 was $1.38, and adjusted ROE1 was 27.0%. Fiscal 2009 results included $7.7 million in non-cash future income tax expense recognized on GMP’s conversion from an income trust to a corporation during fiscal 2009.

FINANCIAL HIGHLIGHTS

Fourth Quarter 2010 versus Fourth Quarter 2009

  • Revenue of $148.4 million compared with $106.4 million
  • Net income of $38.0 million compared with $19.5 million
  • Earnings per basic share of $0.54 compared with $0.28
  • Annualized ROE1 of 48.0% compared with 26.9%

Fiscal 2010 versus Fiscal 2009

  • Revenue of $443.5 million compared with $346.1 million
  • Net income of $20.5 million compared with $43.1 million
  • Earnings per basic share of $0.29 compared with $0.64
  • Excluding the impairment charge recorded in fiscal 2010, adjusted net income1 was $97.0 million, adjusted earnings per share1 $1.38 and adjusted ROE1 was 27.0%
  • ROE1 of 7.0% compared with 17.3%

1 Represents a non-GAAP measure. This measure does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (“GAAP”) 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.

Commenting further, Mr. Fricker said, “Our results in fiscal 2010 benefited from a gradual improvement in economic and capital market conditions and looking ahead we remain encouraged that our ongoing investments in our franchise, our enviable capital position and our unwavering commitment to our clients’ needs leaves us well positioned for the future. GMP’s success would not be possible without our talented team of professionals whom I’d like to recognize and thank for their focus and commitment.”

FISCAL 2010 BUSINESS HIGHLIGHTS

CAPITAL MARKETS

GMP Securities reaffirmed its position as one of the leaders in the Canadian capital markets. In fiscal 2010, GMP Securities:

• ranked first in the dollar value of common equity underwriting transactions completed in Canada, for which we were lead or co-lead;2

• ranked first among Canadian investment dealers in the dollar value of M&A transactions announced in the midmarket; 3

• named Mid-Market Financial Advisor of the Year in Canada by the Financial Times/Mergermarket;

• ranked second in Canada for equity block trading volumes on the TSX and TSX Venture Exchange (“TSXV”), achieving a 9.7% market share;4

• participated in 205 underwriting transactions completed in Canada helping raise approximately $17.8 billion on behalf of clients, leading or co-leading 94 of these transactions;5 and

• continued the expansion of its European capabilities and profitability, across sales and trading, research and investment banking, with the addition of several senior members and a steady increase in distribution of Canadian mid-market securities, particularly resource-based stocks, to an expanding European institutional client base.

WEALTH MANAGEMENT

The Wealth Management segment is comprised of GMP’s non-controlling ownership interest in Richardson GMP Limited (“Richardson GMP”). Business highlights for Richardson GMP for fiscal 2010 include:

• as at December 31, 2010, assets under administration (“AUA”)6 of $13.5 billion and 109 advisory teams located in 17 cities across Canada;

• completed the successful transition to a new management team who are focused on achieving growth in AUA and recruitment efforts;

• achieved notable cost synergies, including the rationalization of office space, systems and staffing levels and the adoption of a single set of operational, client and employee policies; and

• Richardson GMP was ranked #1 overall in the annual Investment Executive Brokerage Report Card for serving the needs of high-net-worth investors.

2 Source: FPinfomart as at February 9, 2011.

3 Source: Mergermarket as at February 9, 2011.

4 Source: CanadaEquity.com as at February 9, 2011.

5 Source: GMP Capital Inc. internal reports.

6 Represents a non-GAAP measure. This measure does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (“GAAP”) 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. 

ALTERNATIVE INVESTMENTS

During fiscal 2010, GMP Investment Management L.P. (“GMP Investment Management”):

  • increased assets under management (“AUM”)7 in the GMP Diversified Alpha Master Fund, Ltd. (“Alpha Master Fund”) by $100.7 million, ending the year with AUM6 of $354.7 million;
  • generated a return of 11.5% in 2010 for the Alpha Domestic Fund (Class F), net of management fees and other expenses, with an inception to date return of 24.9% since its launch in April 2008, outperforming the S&P 500 and the S&P/TSX Composite Index by 29.8% and 24.2% respectively over the same period since inception;
  • launched the Genesis Partners Fund LP, a speculative fund which invests primarily in private equity investments and seeks to provide opportunities to generate attractive returns over the long term;
  • launched the Canadian ABCP Investment Fund and the Canadian ABCP Fund LP, which allow investors to make a single purpose investment in the restructured Canadian ABCP market, which provides the opportunity for superior risk-adjusted returns over the long-term;
  • added several professionals to its team, including two former Lipper award winning portfolio managers; and
  • subsequent to year end, launched the GMPIM Equity Opportunities Fund, a quantitatively driven long/short investment fund focused on North American equities.

Subsequent to year-end, Sam Duboc, Gil Palter and Steve Marshall (the “Principals”) announced their resignation as senior officers of EdgeStone, effective March 31, 2011. Beginning April 1, 2011, the Principals will continue to provide ongoing support and management services to the existing EdgeStone equity funds through a consulting services arrangement entered into in early 2010 among EdgeStone, GMP and the Principals.

REDEMPTION OF OUTSTANDING NOTES

On February 22, 2011, Griffiths McBurney L.P., an indirect, wholly-owned subsidiary of GMP, delivered a redemption notice to the holders of $60 million in aggregate principal amount of senior unsecured notes issued by it (the “Notes”) indicating that we intend to redeem all outstanding Notes in accordance with the terms of the note indenture governing the Notes. The Notes will be redeemed for a redemption price equal to the principal amount of the Notes, together with all accrued and unpaid interest up to, but not including, the redemption date, plus a redemption cost calculated in accordance with terms of the note indenture. GMP anticipates completing the redemption of the Notes on or about March 24, 2011.

COMMON SHARE DIVIDEND DECLARED

On March 1, 2011, the Board of Directors approved a 33% increase in the quarterly cash dividend from $0.06 to $0.08 per common share, representing payment for the fourth quarter ended December 31, 2010, payable on March 21, 2011 to shareholders of record on March 10, 2011.

NORMAL COURSE ISSUER BID RENEWED

The Toronto Stock Exchange (“TSX”) and the Board of Directors approved the renewal of GMP’s normal course issuer bid (“NCIB”), which is set to expire on March 3, 2011. As at March 1, 2011, GMP had 73,055,155 common shares outstanding. GMP may purchase for cancellation up to 5,596,417 common shares, representing 10% of the public float of 55,964,173 common shares on March 1, 2011, from time to time over the 12-month period commencing on March 4, 2011 and ending on the earlier of the date on which purchases under the NCIB have been completed and March 3, 2012. Daily repurchases will be limited to 38,291 common shares, subject to certain prescribed exemptions, including block purchase exceptions. The daily repurchase limit represents 25% of the average daily trading volume of 153,165 common shares for the six-month period prior to the date of the NCIB filing. All purchases will be made in accordance with TSX requirements and the price which GMP will pay for any common shares acquired will be the prevailing market price of common shares at the time of acquisition. The actual number of common shares that may be purchased and the timing of any such purchases will be determined at GMP’s discretion, subject to the limitations referred to above. All purchases will be effected by GMP Securities through the facilities of the TSX and will be funded from GMP’s working capital. GMP continues to believe that, depending on the trading price of its shares and other factors, the purchase and cancellation of a portion of the Corporation’s common shares is an appropriate use of available working capital and in the best interests of GMP and its shareholders.

During fiscal 2010, under its NCIB, GMP repurchased for cancellation 87,700 common shares for an aggregate cost of $1.1 million.

7 Represents a non-GAAP measure. This measure does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (“GAAP”) 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. 
 

FOURTH QUARTER 2010 VERSUS FOURTH QUARTER 2009

Fourth quarter 2010 revenue increased $42.0 million or 39% compared with fourth quarter 2009 due to stronger revenue performance across all business segments, led by record quarterly revenues in the Capital Markets segment.

Capital Markets revenue increased $41.3 million or 48% to $126.8 million compared with fourth quarter 2009 due to higher revenues in principal activities, significant investment banking revenue recognized in the period and an increase in sales and trading commission revenue.

Alternative Investments revenue increased $5.2 million or 41% largely due to higher performance fees recognized in fourth quarter 2010 compared with the same period a year ago, reflecting higher AUM levels, the launch of new funds and stronger performance in the funds managed by GMP Investment Management. Carried interest of $2.3 million recorded in fourth quarter 2010 relating to the EdgeStone Venture Fund, also contributed to the increase in revenues in the Alternative Investments segment. Higher investment management and fee income compared with fourth quarter 2009 in GMP Investment Management was offset by lower investment management and fee income in EdgeStone on lower levels of AUM.

Wealth Management’s results in fourth quarter 2010 reflect GMP’s share of Richardson GMP’s results, while fourth quarter 2009 includes the consolidated results of GMP Private Client L.P. (“GMP Private Client”) (a former whollyowned subsidiary of GMP that combined with another entity to form Richardson GMP on November 12, 2009) up to November 11, 2009 and GMP’s share of Richardson GMP’s results from November 12, 2009 to December 31, 2009. Since the comparability of revenues and expenses is limited following the creation of Richardson GMP, management has determined to complete the comparison of the financial performance of Wealth Management for fourth quarter 2010 with fourth quarter 2009 based on net operating results generated by the Wealth Management segment for the periods examined. Wealth Management reported operating earnings8 of $0.9 million in fourth quarter 2010 compared with an operating loss8 of $1.3 million in fourth quarter 2009 reflecting stronger client transaction volumes resulting from favourable market conditions and the realization of cost savings and other synergies following completion of integration-related activities.

Expenses for GMP increased $11.1 million or 14% compared with fourth quarter 2009 driven by an increase in employee compensation and benefits expenses of $12.9 million. Employee compensation and benefits expense in fourth quarter 2009 included $4.6 million in expenses relating to GMP Private Client. The increase in employee compensation and benefits expense in fourth quarter 2010 was largely driven by higher variable compensation recorded in the Capital Markets segment, which rose $17.3 million compared with fourth quarter 2009 commensurate with stronger revenue generation. Fixed salaries and benefits also increased $1.2 million compared with fourth quarter 2009 largely due to higher expenses recorded in the Corporate segment relating to support services provided to Richardson GMP and higher salaries and benefits expenses in EdgeStone in connection with employment arrangements reached with certain senior officers in the first quarter of 2010. Higher salaries and benefits expense was also recorded in GMP Investment Management in support of continued growth.

8 Represents a non-GAAP measure. This measure does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (“GAAP”) 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.

Non-compensation related expenses decreased $1.7 million in fourth quarter 2010 compared with fourth quarter 2009, which included $2.2 million in non-compensation expenses relating to GMP Private Client. Selling, general and administrative expenses were unchanged from a year ago, which included $2.1 million in expenses relating to GMP Private Client. Increases in selling, general and administrative expenses were reported by Capital Markets reflecting higher expenditures in travel and business development, transaction-related costs and higher charitable giving. The Corporate segment also experienced increases in fourth quarter 2010 compared with the same period last year due to costs incurred in connection with the support services arrangement with Richardson GMP. Higher selling, general and administrative expense incurred in GMP Investment Management to support the continued growth in that business was offset by lower selling, general and administrative expense in EdgeStone. Amortization expense decreased $1.5 million compared with fourth quarter 2009, which included $0.2 million in expenses relating to GMP Private Client. This decrease was largely due to lower amortization expense recorded in the Corporate segment in connection with the EdgeStone intangible assets.

In fourth quarter 2009, GMP recorded a $3.3 million non-operating gain in connection with the creation of Richardson GMP. GMP recorded net income of $38.0 million ($0.54 per basic share) in fourth quarter 2010 compared with net income of $19.5 million ($0.28 per basic share) in fourth quarter 2009. For fourth quarter 2010, GMP reported a ROE of 48.0% compared with a ROE of 26.9% in fourth quarter 2009.

BUSINESS SEGMENT FINANCIAL PERFORMANCE

FOURTH QUARTER 2010 VERSUS FOURTH QUARTER 2009

CAPITAL MARKETS

Capital Markets revenue increased $41.3 million or 48% to $126.8 million compared with fourth quarter 2009 due to higher results in principal activities, significant investment banking revenue recognized in the period and an increase in sales and trading commission revenue.

Investment banking revenue increased $15.2 million or 29% to $67.0 million compared with fourth quarter 2009 led by a $10.1 million increase in equity underwriting revenue. The increase in investment banking revenue reflects continued robust activity in the Canadian mid-market resource sector, which benefited from favourable equity markets and strong commodity prices. During fourth quarter 2010, GMP Securities led or co-led 37 underwriting transactions with an aggregate dollar value of $2.0 billion.

Capital Markets recorded revenue of $29.2 million in its principal activities in fourth quarter 2010 compared with revenue of $13.3 million during the same period a year ago.

Commission revenue increased $10.6 million or 59% compared with the same period last year largely due to a 34% increase in the volume of trades executed by GMP Securities on the TSX and TSXV over the same period. During fourth quarter 2010, GMP Securities ranked third in block trading volume on the TSX and TSXV, achieving a market share of 9.2% compared with a market share of 12.5% in fourth quarter 2009.

Expenses of $72.6 million, represented an increase of $19.7 million compared with fourth quarter 2009 largely due to higher variable compensation, which rose $17.3 million, commensurate with the increased business activity experienced in the period. Selling, general and administrative expenses increased $1.5 million largely due to higher travel and business development expenses, higher transaction-related costs due to higher trading volumes and higher charitable giving.

Capital Markets recorded operating earnings9 of $54.3 million for fourth quarter 2010 compared with $32.6 million in fourth quarter 2009.

9 Represents a non-GAAP measure. This measure does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (“GAAP”) 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. 

WEALTH MANAGEMENT

Wealth Management reported operating earnings10 of $0.9 million in fourth quarter 2010 compared with an operating loss10 of $1.3 million in fourth quarter 2009 reflecting stronger client transaction volumes resulting from favourable market conditions and the realization of cost savings and other synergies following completion of integration-related activities. Fourth quarter 2009 results were negatively impacted by post merger integration costs incurred by Richardson GMP during this time.

ALTERNATIVE INVESTMENTS

Alternative Investments revenue increased $5.2 million to $17.7 million largely due to higher performance fees recognized in fourth quarter 2010 compared with the same period a year ago. Other revenue rose $5.2 million in fourth quarter 2010 as GMP Investment Management and Proprietary Partner L.P. recorded $9.6 million in performance fees, compared with $6.5 million in the prior period, reflecting higher AUM levels, the launch of new funds and stronger performance by the funds managed by GMP Investment Management compared with the prior period. Other revenue also reflects carried interest revenue of $2.3 million recorded in fourth quarter 2010 following the disposition of a portfolio company, Protus IP Solutions Inc., by the EdgeStone Venture Fund.

Fourth quarter 2010 other revenue also includes an impairment charge of $0.7 million relating to GMP’s investment in Equity Fund III, to reflect a reduction in value of our investment which management has determined to be otherthan- temporary. This adjustment was made following an assessment of the impacts to Equity Fund III of amendments to its partnership agreements in fiscal 2010. Fourth quarter 2009 other revenue reflects an impairment charge of $0.5 million relating to GMP’s investment in the EdgeStone Capital Energy-I Fund, L.P. (the “Energy-I Fund”), following the termination of the commitment period of the EdgeStone Capital Energy Fund partnerships (the “Energy Fund”) as described below.

In Alternative Investments, investment management and fee income of $5.6 million in fourth quarter 2010, represented a decline of $0.1 million compared with fourth quarter 2009. Despite higher revenue recorded by GMP Investment Management, EdgeStone’s results reflect lower levels of invested capital and a reduction in the annual management fee received by EdgeStone from 2% to 1.5% on the aggregate capital committed to Equity Fund III, effective July 1, 2010. In fourth quarter 2009, EdgeStone received approvals from its limited partners to terminate the commitment period of the Energy Fund and arranged for the Energy Fund to return all fees and expenses paid by limited partners during fiscal 2009. EdgeStone incurred a charge of $0.8 million in fourth quarter 2009 relating to the fee reimbursements, which it recorded as a reduction in investment management and fee income of $0.6 million with the remaining amount recorded as an administrative expense.

Principal activities revenue in Alternative Investments was largely unchanged at $0.9 million in fourth quarter 2010 compared with fourth quarter 2009.

GMP recorded unrealized gains of $1.5 million arising from Griffith McBurney L.P.’s investment in the Alpha Domestic Fund compared with unrealized gains of $0.9 million in fourth quarter 2009. These results were partly offset by a $0.6 million negative valuation adjustment recorded in fourth quarter 2010 by GMP relating to a portfolio company investment of the Energy-I Fund. GMP consolidates the Energy-I Fund in its consolidated financial statements as management has determined that GMP is the primary beneficiary of the Energy-I Fund.

Expenses of $5.9 million in fourth quarter 2010, represented a decline of $0.1 million compared with fourth quarter 2009 largely due a decrease in employee compensation and benefits expenses of $0.3 million resulting from lower variable compensation, partly offset by higher fixed salaries and benefits, which reflect the new employment arrangements entered into with certain senior officers of EdgeStone in the first quarter of 2010 and higher salaries and benefits expense in GMP Investment Management due to the addition of professionals to its team.

Non-compensation related expenses increased $0.2 million largely driven by investments in infrastructure associated with GMP Investment Management partly offset by lower selling, general and administrative expenses in EdgeStone. Alternative Investments reported operating earnings11 of $11.8 million in fourth quarter 2010 compared with $6.6 million in fourth quarter 2009.

10,11 Represents a non-GAAP measure. This measure does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (“GAAP”) 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.
 



GMP CAPITAL INC. – UNAUDITED SEGMENT FINANCIAL RESULTS
For further details relating to segmented information see Note 26 to the 2010 Annual Financial Statements.



CONFERENCE CALL
Management will host a conference call and live audio webcast today at 10:00 a.m. (ET) to discuss GMP’s fourth quarter and fiscal year ended December 31, 2010. The call may be accessed by dialing 416-644-3418 or 1-877-974-0446 (toll free). The link to the live audio webcast will be accessible at gmpcapital.com. A replay of the conference call can be accessed by telephone until Wednesday, March 9, 2011, by calling 416-640-1917 or 1-877-289-8525 (toll free) and entering access code 4410562#.

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, EdgeStone Capital Partners, L.P. and GMP Investment Management L.P. GMP Capital Inc. also has a noncontrolling ownership interest in Richardson GMP Limited. The GMP Capital Inc. website is located at gmpcapital.com. GMP Capital Inc. has offices in Toronto, Calgary, Montreal and London, England. 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. EdgeStone Capital
Partners, L.P. is a Canadian private equity manager, focused on middle market buy-out and other private equity activities. 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. GMP Investment Management L.P. can be found on the web at gmpim.com. Richardson GMP Limited is a full-service investment firm, combining tradition and innovation to offer Canadian families and entrepreneurs access to wealth management and investment services delivered by an experienced team of independent investment professionals. Richardson GMP Limited can be found on the web at richardsongmp.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
rcolella@gmpcapital.com or investorrelations@gmpcapital.com

Forward-Looking Statements
This press release contains “forward-looking statements” as defined under applicable Canadian securities laws including the payment of a dividend on GMP’s common shares in respect of the fourth quarter ended December 31, 2010, the expected redemption of Notes by Griffiths McBurney L.P. on or about March 24, 2011, the resignation of the EdgeStone Principals, and additional forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent management’s 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 (“M&A”), 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 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 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 2010 Annual MD&A and “Risk Factors” in GMP’s annual information form dated March 1, 2011. Material factors or assumptions underlying the forward-looking statements contained in this press release are set out in the “Business Environment and Market Outlook” section of the 2010 Annual MD&A and include without limitation, the ability of Griffiths McBurney L.P. to satisfy the requirements under the note indenture to complete the redemption of the Notes; improving pace of economic and business activity in North America in connection with the level of public offerings, M&A activity and securities trading opportunities,
decreasing equity market volatility, prolonged low interest rate environment, strong and rising commodity prices, lower demand for Canadian resources from less certain economic activity in emerging markets; ongoing concerns over sovereign debt issues within the European Union, and a strengthening Canadian dollar relative to the United States dollar. Readers are cautioned that the preceding list of material factors or assumptions is not exhaustive. 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 Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release. The forward-looking statements contained in this press release are 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, GMP, management and the board of directors of GMP undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

NON-GAAP MEASURES
Consistent with GMP’s management framework, management uses certain non-GAAP measures to assess the GMP Group’s financial performance. 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 earnings measures should not be considered as alternatives to net income or comparable metrics determined in accordance with GAAP as indicators of GMP’s performance, liquidity, cash flows and profitability. GMP uses “Operating earnings/(loss)”, a non-GAAP measure, as a supplement to net income to assess the operating performance of its business segments and its corporate segment and also to assess GMP’s overall performance. Operating earnings/(loss) represents “Income before income taxes and non-controlling interest” excluding “Impairment charge” as set out in 2010 Annual Financial Statements. GMP also uses “adjusted” results, which are non-GAAP financial measures, to assess GMP’s overall performance. Adjusted measures exclude the impacts of the goodwill and intangible asset impairment charges recorded during fiscal 2010. Management believes excluding these impairment charges from these measures is more reflective of ongoing operating results and will provide readers with a better understanding of how management views GMP’s performance. These adjusted measures should also improve the comparability of GMP’s financial results for fiscal 2010 with the corresponding prior period. This press release should be read in conjunction with the “Presentation of Financial Information and Non-GAAP Measures” section in GMP’s 2010 Annual MD&A, which can be accessed on GMP’s website at gmpcapital.com and on the SEDAR website at sedar.com. The following table provides a reconciliation of GMP’s adjusted measures:

GMP also evaluates the performance of its consolidated operations using an annualized return on common equity (“ROE”). Our ROE calculations are based on net income available to common shareholders divided by total average common shareholder equity for the period. Assets under administration (“AUA”) is a non-GAAP measure of client assets that is used by management to assess the performance of GMP’s Wealth Management segment. AUA is the market value of client assets administered by Richardson GMP in respect of which Richardson GMP earns commissions or fees. Assets under management (“AUM”) is a non-GAAP measure of client assets that is used by management to assess the performance of EdgeStone and GMP Investment Management. AUM for EdgeStone represents the amount of committed and/or invested capital managed through the EdgeStone Funds in respect of which EdgeStone earns management fee income or receives general partner distributions. AUM for GMP Investment Management represents the net asset value of the funds managed by GMP Investment Management in respect of which GMP Investment Management earns management fees and may also earn performance fees.

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