Grey Horse Corporation

Grey Horse Corporation

March 10, 2010 17:30 ET

Grey Horse Reports 2009 Results

Revenue increased 3%, EPS of 36 cents

20th consecutive profitable quarter

TORONTO, ONTARIO--(Marketwire - March 10, 2010) - 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 fiscal year and three months ended December 31, 2009.

Financial Highlights (all amounts, except per-share, are in $000s unless otherwise stated)1

  3 months ended Dec 31 12 months ended Dec 31
2009 2008 2009 2008
Unaudited Unaudited Audited Audited
Revenue  $ 4,607  $ 4,961  $ 20,098  $ 19,528
Revenue growth   (7%)   22%   3%   11%
EBITDA $ 874 $ 1,151 $ 4,645 $ 5,094
Net income and comprehensive income $ 299 $ 640 $ 2,388 $ 2,855
Net income & comprehensive income (decline) growth   (53%)   2%   (16%)   (11%)
Earnings per share, basic $ 0.04 $ 0.10 $ 0.36 $ 0.43
Earnings per share, diluted $ 0.04 $ 0.10 $ 0.36 $ 0.43
Diluted earnings per share (decline) growth   (60%)   11%   (16%)   (9%)
Return on equity (annualized)   6%   14%   12%   16%
Cash and cash equivalents at period end $ 11,912 $ 10,160 $ 11,912 $ 10,160

We experienced many successes during 2009, but our ability to fully profit from these was limited during the year by unfavourable market conditions. Our revenues increased relative to 2008, but our net income was lower.

We are confident that Grey Horse is well-placed to benefit from an improvement in the overall financial environment, and we continued to become more competitive during 2009. In respect of our transfer agent business, an increasing share of newly listed entities came to us as clients, and our client mix evolved to include exchange-traded funds. We entered into a license and maintenance agreement and implemented a transaction processing system which removes all our previous size-based systems limitations and further enhances our ability to provide services to larger clients with more complex requirements. We were named as depositary agent for a cash deal of approximately $8.5 billion, the largest Canadian cash deal of 2009 and also the largest transaction, by a factor of four, for which we have ever been engaged. Our foreign exchange business continued to grow, and we completed our acquisition of Toro FX Inc.

It was however a trying year for our industry, attributable to three major factors in particular, which placed constraints on our profitability:

  • the level of interest rates remained low, severely limiting our returns on balances held in trust;
  • the volume of mergers, acquisitions and other corporate transactions was also low, restricting the related opportunities for our trust and transfer agent services;
  • and, although an increasing proportion of newly listed entities came to us as clients, the overall volume of new listings was also abnormally low (while showing signs of possible recovery in the fourth quarter).

Revenue increased $570, or 3%, to $20,098 (2008: $19,528). This total includes large volume transactions generating $2,770 (2008: $3,028) related to margin income and to foreign exchange. Net income decreased $467 or 16%, to $2,388 (2008: $2,855), reflecting the challenges described above. Basic earnings per share correspondingly decreased by 7 cents or 16%, to 36 cents per share (2008: 43 cents), and diluted earnings per share decreased by 7 cents or 16% to 36 cents per share (2008: 43 cents). Costs related to implementing transaction processing software in our transfer agent business affected earnings per share by 5 cents. EBITDA decreased by $449 or 9%, to $4,645 (2008: $5,094). Return on Equity decreased from 16% to 12%.

Our revenue and net income for the fourth quarter of 2009 decreased 7% and 53% respectively compared to the same period in 2008. The disproportionate decline in net income primarily reflects the fact that we recognized the write-down of intangible assets related to the previous transaction processing software in that quarter and had no large volume revenue transactions.

Our people, infrastructure, and increased market awareness and sophistication have greatly increased our capability to compete for more complex revenue opportunities. Management remains confident about our capacities and outlook. However, Canada has been in a recession, facing widespread economic challenges, and there is no consensus about prospects for financial markets over the coming year.

On January 27, 2010 we announced our planned expansion into the business of mortgage lending and deposit-taking, which we believe is an attractive opportunity with the potential to significantly enhance our growth and further diversify our activities in the financial services sector.

Grey Horse President & CEO Paul G. Smith said, "Over the coming year, we will strive to maintain a systematic market approach, focusing on increasing our visibility to potential clients and on proactively managing our current relationships. If we are successful in gaining regulatory approvals, our expansion into the residential mortgage business industry will generate a new revenue stream and further diversify our activities in the financial services sector."

Grey Horse's Consolidated Financial Statements and Management's Discussion and Analysis for the year ending December 31, 2009 can be found in the Company's filings on SEDAR at and on the Corporation's website at

Quarterly Conference Call
Grey Horse will hold a conference call on Thursday, March 11, 2010 at 9AM Eastern Daylight Time to discuss its first quarter operating results and answer questions. Participants can dial 416-340-8527 or Toll Free 877-240-9772.

About Grey Horse
Grey Horse provides stock transfer, corporate trust, foreign exchange, corporate secretary and compliance services through the Equity group of companies. Learn more at The company's shares trade on the Toronto Stock Exchange under the symbol GHC.

Certain information included in press releases may be forward-looking and involve risks and uncertainties. The results or events predicted in such 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. If and when forward-looking information is set out in this press release, Grey Horse will also set out the material risk factors or assumptions used to develop the forward-looking information. Forward-looking information will be updated as required pursuant to the requirements of National Instrument 51-102. 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.

1 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, for 2008, the loss on disposal of assets incurred during the first quarter) 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.

The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release.

Contact Information

  • Grey Horse Corporation
    Kevin Reed
    (416) 361-0930
    Grey Horse Corporation
    Paul G. Smith
    President & CEO
    (416) 361-0930