GMP Capital Inc. announced its first quarter results April 30, which show the company reported a net loss from continuing operations of $3-million in the first quarter of 2020, a decrease compared to net income of $0.2-million reported in the first quarter of 2019.
The company says the declines were due largely to a number of factors, including a $1.6-million charge for professional fees and restructuring costs incurred in the first quarter of 2020 in connection with GMP’s intention to consolidate the ownership of Richardson GMP. The company also received $0.6-million in dividends on its preferred share investments in Richardson GMP in the first quarter of 2019, compared with nil in the first quarter of 2020. Tax expenses related to dividends paid on GMP’s preferred shares and declining contributions from the company’s emerging markets operations also contributed to the decline.
“Our top priority this quarter, before the current and severe public health crisis, was to complete the potential RGMP (Richardson GMP) transaction announced on February 26, 2020,” says Kish Kapoor, interim president and CEO of GMP. “However, once it was clear that we were in the midst of a prolonged pandemic, we made the responsible decision to defer the transaction and shifted our priority to assisting our clients, partners and employees in navigating the unprecedented health and safety challenges and heightened volatility in financial markets. Our results this quarter reflect the impact of both these events.” The company adds that it is not possible to reliably estimate how such developments will impact on financial results in future periods.
All three of Richardson GMP’s shareholder groups have agreed to extend contractual negotiations between the two companies that were set to expire April 16, to 60 days following the date that emergency declarations and similar orders are withdrawn or terminated by the Government of Ontario.
GMP says the two companies are continuing to work toward entering a definitive agreement and remain hopeful that they will do so in the future. Richardson GMP reported assets under administration of $25.4-billion at the end of the quarter, down 12 per cent from the beginning of the year. Adjusted earnings for the quarter came in at $11.5-million, down $1.7-million or 13 per cent from the $13.2-million reported in the first quarter of 2019.
Although the company paid $3-million in dividends in the first quarter of 2020, and although the company announced it had net working capital of $126.1-million as of March 31 even after accounting for costs related to the Richardson GMP transaction, the board of directors decided to suspend the company’s quarterly common share dividend. The company will continue to pay preferred share dividends of $0.23 and $0.27 on June 30 to preferred shareholders of record on June 15, 2020.
