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GMP Capital posts Q1 loss, revenue plunges 43%

Published: 09:25 04 May 2012 EDT

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GMP Capital (TSE:GMP) dipped into the red in the first quarter due to weaker performance in its capital markets segment, the
investment dealer said Friday.

For the three months ended March 31, net loss was $2.3 million or four cents per share, compared with net income of $22.5 million or 29 cents per share a year earlier.

Revenue fell 43 percent to $66.1 million from $115.3 million a year earlier.

"Adverse market conditions continue to affect the level of business activity, particularly in the Canadian mid-market resources sector, resulting in disappointing financial results this quarter," said GMP's CEO Harris Fricker.

"Investment banking and trading activity were the areas most impacted by the ongoing challenging market environment. Wealth Management's returns reflect lower results at Richardson GMP which were also impacted by the weaker capital markets activity."

GMP said the latest earnings also reflected $4.5 million in restructuring charges related to a previously-announced senior management changes and other initiatives.

Revenue from GMP's capital markets business declined 43 percent toC$58.9 million on weak investment banking, particularly in the mining sector, and lower commission revenues.

GMP was founded in 1995 and quickly became one of Canada's most successful independent investment dealers.

The firm has cut its quarterly dividend to 5 cents per share from 10 cents.

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