Grey Horse Reports Third Quarter 2008 Results
Revenues for the quarter increase 59%
Net income for the quarter increases 162%
15th consecutive profitable quarter
Toronto, Ontario, November 6, 2008
- Grey Horse Corporation (TSX: GHC)
("Grey Horse" or "the Corporation"), a Canadian financial services company serving
the corporate and institutional market, reported today its financial results for the three months ended September 30, 2008.
Financial Highlights (all amounts, except per-share, are in $000s unless otherwise stated)
The following unaudited information was determined in accordance with Canadian Generally Accepted Accounting Principles,
except for EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and Return on Equity (Net income divided
by the average of opening and closing shareholders’ equity), which do not have any standardized meaning prescribed by Canadian GAAP and
may not be comparable to similar measures presented by other issuers. However, the Corporation believes that these are viewed by financial
analysts and investors as key measures of certain aspects of its performance. They should not be considered as an alternative to cash flows
from operating activities nor to any other measures of performance presented in accordance with Canadian GAAP.
| ($000, except per share amounts) |
3 months ended Sep. 30
|
9 months ended Sep. 30
|
|
2008 |
2007 |
2008 |
2007 |
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
| Revenue |
$ 5,687 |
$ 3,576 |
$ 14,567 |
$ 13,585 |
| Revenue Growth |
59% |
49% |
7% |
61% |
| EBITDA |
$ 2,148 |
$ 940 |
$ 3,936 |
$ 4,588 |
| Net income and comprehensive income |
$ 1,289 |
$ 492 |
$ 2,215 |
$ 2,566 |
| Net income & comprehensive income (decline) growth |
162% |
44% |
(14%) |
167% |
| Earnings per share, basic |
$ 0.19 |
$ 0.08 |
$ 0.34 |
$ 0.41 |
| Earnings per share, diluted |
$ 0.19 |
$ 0.07 |
$ 0.33 |
$ 0.38 |
| Diluted earnings per share growth |
171% |
40% |
(13%) |
124% |
| Return on equity (annualized) |
29% |
13% |
16% |
24% |
| Cash and cash equivalents at period end |
$ 9,929 |
$ 11,554 |
$ 9,929 |
$ 11,554 |
The Corporation’s results represent two distinct but related sources of activity. The most prominent
differences in quarter-to-quarter results arise from large-volume margin income or foreign exchange
transactions, related to one-off client events or requirements. A small number of transactions of
this kind, or their absence, can dramatically transform quarterly revenue and net income. By comparison,
the ongoing revenues from the Corporation’s core businesses - transfer agent and corporate trust services -
although also affected by the level of capital market activity (such as the volume of equity-raising
activities by clients) are relatively more stable.
The impact of such large volume transactions is evident in these third quarter results. Revenues
for the quarter increased 59% compared with the third quarter of 2007 and revenue for the year to date
increased 7% compared with last year’s comparative period. By far the greatest contributor to the difference
between the quarters is the impact of large volume transactions, in particular arising from foreign exchange services.
The Corporation has steadily built its capacity to identify and compete for more complex opportunities, and
management has done much work on building the Corporation’s brand and infrastructure. In management’s view,
it is increasingly reasonable to expect that such large volume transactions will be a recurring element of the
Corporation’s results in future periods. However, this kind of activity is by its nature volatile, depending
on fluctuations in capital market activities and other unpredictable factors. The Corporation’s success in
obtaining such transactions in a particular quarter does not provide a basis for predicting similar success
in any subsequent quarters.
The third quarter also reflected the initial impact of the Corporation’s acquisition of Toro FX Inc. (Toro)
on July 2, 2008. The acquisition was motivated by the Corporation’s desire to solidify its position in the
foreign exchange market, and shows early and promising signs in this regard.
Selling, general and administrative expenses increased overall by $903 or 34% for the third quarter and increased
by $1,634 or 18% for the year to date reflecting the additional operating expenditures related to Toro’s operations
and to the Corporation’s deliberate expansion. Except for some remaining upgrades to its technology platform, the
Corporation does not anticipate initiating any major new expenditures above current levels in the foreseeable future
(or until such time as revenues are materially greater than their current level).
Net income increased by 162% for the third quarter to $1,289; however, is 14% lower year to date to $2,215
reflecting the Corporation’s investment over the past year in its core infrastructure (primarily staffing costs,
rent and technology).
Basic earnings per share increased by 11 cents or 138% for the third quarter, but are lower by 7 cents or 17% to 34
cents for the year to date. Diluted earnings per share increased by 12 cents or 171% for the third quarter, but
decreased by 5 cents or 13% for the year to date to 33 cents for the year to date. EBITDA increased by $1,208 or
129% compared with the third quarter of 2007, but decreased by $652 or 14% for the nine months year to date.
Annualized return on Equity increased from 13% to 29% for the quarter, but decreased 24% to 16% for the year to date.
Management believes the third quarter results confirm the Corporation’s ability, even in a very challenging market,
both to maintain its core business and to position itself to obtain rewarding new opportunities. By the nature of
its business, certain aspects of the Corporation’s revenue will always tend to rise and fall with financial markets,
and prolonged poor market conditions could affect operating results. However, such conditions might also create
offsetting opportunities - for example, to provide trust services relating to acquisitions or other corporate transactions.
Overall, management believes the Corporation is well placed both to weather weaker periods and to capitalize quickly when
conditions improve and opportunities arise.
Grey Horse President and CEO Kevin Reed said, "Despite the current widespread unease in capital markets, third quarter
results offer encouraging signs of the company’s ability to perform in a challenging market. The company and its
management will continue to focus on the building of a solid and scalable financial services firm increasingly able to
compete for more complex opportunities."
Grey Horse’s Consolidated Financial Statements and Management’s Discussion and Analysis for
the three months ended September 30, 2008 can be found in the Company’s filings on SEDAR
at www.sedar.com and on the Corporation’s website at
www.greyhorseccorp.com.
Quarterly Conference Call
Grey Horse will hold a conference call on Wednesday, November 12, 2008 at 9AM Eastern Daylight Time to discuss its
third quarter operating and financial results and answer questions. Dial in numbers will be provided in a
separate release prior to the call.
About Grey Horse
Through its wholly owned subsidiaries, Grey Horse provides transfer agent, corporate trust, corporate secretary,
foreign exchange and limited market dealer services to corporations in North American capital markets.
Learn more at www.greyhorsecorp.com.
For more information, contact Kevin Reed, President & CEO, or Paul G. Smith, EVP & CFO, of
Grey Horse Corporation at (416) 361-0930.
The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release.
Certain information included in this press release may be forward-looking and involve risks and uncertainties.
The results or events predicted in these statements may differ materially from actual results or events. Factors
that might cause a difference include, but are not limited to, competitive developments, risks associated with Grey
Horse’s growth, the state of the financial markets, frequency of large volume transactions, regulatory risks and other
factors. Unless otherwise required by applicable securities laws, Grey Horse disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
More detailed information about potential factors that could affect Grey Horse’s financial and business results is included
in public documents Grey Horse files from time to time with Canadian securities regulatory authorities.
