Equity Financial Holdings Inc

Equity Financial Holdings Inc

February 09, 2011 18:48 ET

EQI Reports 2010 Results

Highest Annual Revenue and Highest Net Income in Our History

Earnings per Share 50 Cents

TORONTO, ONTARIO--(Marketwire - Feb. 9, 2011) - Equity Financial Holdings Inc. (formerly Grey Horse Corporation) (TSX:EQI) ("EQI" 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, 2010.

Financial Highlights (all amounts, except per-share, are in $000s unless otherwise stated)
  Three months ended Dec. 31 Twelve months ended Dec. 31
  2010 2009 2010 2009
  Unaudited Unaudited Audited Audited
Revenue $ 5,580 $ 4,607 $ 23,693 $ 20,098
Revenue growth   21%   (7%)   18%   3%
EBITDA $ 1,203 $ 874 $ 5,662 $ 4,645
Net income and comprehensive income $ 731 $ 299 $ 3,405 $ 2,388
Net income & comprehensive income (decline) growth   144%   (53%)   43%   (16%)
Earnings per share, basic $ 0.11 $ 0.04 $ 0.50 $ 0.36
Earnings per share, diluted $ 0.11 $ 0.04 $ 0.49 $ 0.36
Diluted earnings per share (decline) growth   175%   (60%)   36%   (16%)
Return on equity (annualized)   11%   6%   14%   12%
Cash and cash equivalents at period end $ 15,481 $ 11,912 $ 15,481 $ 11,912

This was a successful year for the Corporation as we recorded both the highest annual revenue and the highest net income in our history.

The year's results reflect strong performance across our organization, once again confirming our message about the increasing strength of our brand and the diversity of our operations. All of our lines of business recorded an increase in revenue, built on consistently strong day to day operations. The performance of our transfer agency business exceeded expectations, with revenues increasing 27%. Our expenses also increased, due to a variety of recurring and non-recurring factors. However, as our operating results increasingly benefit from economies of scale, our greater revenue translated into overall growth in net income.

Highlights of our results for the year are as follows:

Revenue increased by $3,595 or 18%, to $23,693 (2009 - $20,098), the highest in our history, driven in particular by our transfer agency business, but also reflecting enhanced performance across all of our lines of business.

Net income increased by $1,017 or 43%, to $3,405 (2009 - $2,388), also the highest in our history.

Basic earnings per share increased by 14 cents or 39%, to 50 cents (2009 – 36 cents). This matches the highest reported basic earnings per share in our history - we reported an amount of 50 cents for the year ended December 31, 2007 (when our profile and breadth of activities was limited, and our volume of shares outstanding was lower). Diluted earnings per share was 49 cents (2009 – 36 cents).

Earnings before interest, taxes, depreciation and amortization (EBITDA)1 increased by $1,018 or 22%, to $5,662 (2009 - $4,645).

Annualized return on Equity increased from 12% to 14%.2

Our revenue and net income for the fourth quarter of 2010 increased 21% and 144% respectively compared to the same period in 2009. This reflects all the positive factors discussed above; the increase in net income is distorted, however, by our write-down of certain intangible assets in the fourth quarter of 2009.

In January of last year we announced our intended entry into the business of mortgage lending and deposit-taking (see our January 27, 2010, news release for further details). During the fourth quarter of 2010, we made expenditures of $694 in technology, processes, policy development and human resources, amounting to $1,678 for the year as a whole. Our objectives are twofold: (1) to meet the requirements and expectations of regulators in order to successfully obtain their approval to commence and carry on business, and (2) to build a sound, efficient, and scalable operating platform from which to grow our business volumes. The new processes and systems have been purposely designed to supplement our existing capabilities with industry-standard mortgage and deposit information platforms and have been fully integrated with our current technology infrastructure environment.

We require various regulatory approvals for this initiative to progress. Although there is no guarantee we will obtain these approvals, we remain of the view that discussions with the regulator continue to proceed positively. If we are successful in this initiative, additional capital will be required.

Our President & CEO Paul G. Smith said,

"Results for 2010 were the best in our history, which is a testament to the strength of our current business lines. We also remained focused on identifying and pursuing strategies that will broaden our scope of operations. In particular, our application to expand into the residential mortgage and deposit-taking business, if we are successful in gaining regulatory approvals, will generate a new revenue stream and further diversify our activities in the financial services sector. Although current market conditions continue to demand a cautious outlook for any entity in our sector, our momentum at the end of the year is strong across all our lines of business, providing an informed basis for a confident outlook."

Our Consolidated Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2010 can be found in our filings on SEDAR at www.sedar.com and on the Corporation's website at www.equityfinancialholdings.com.

About Equity Financial Holdings Inc.

Through its wholly owned subsidiaries, EQI provides transfer agent, corporate trust, corporate secretary, and foreign exchange services to corporations in North American capital markets. Learn more at www.equityfinancialholdings.com.

Certain portions of this press release as well as other public statements by the Corporation contain "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements", which may not be based on historical fact. Wherever possible, words such as "will", "plans," "expects," "estimates," "anticipates," "believes," "intends," "may," and similar expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward-looking information. Such forward-looking statements include, without limitation, statements regarding the Corporation's intention to commence operations as a deposit-taking institution, the Corporation's belief that it will receive all necessary regulatory approvals in connection therewith, and the Corporation's EBITDA, fee income, expense levels, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, catastrophic events, and the Corporation's ability to complete strategic transactions and integrate acquisitions and other factors. Such statements reflect the Corporation's current views with respect to future events and are subject to a number of risks and uncertainties. 
Actual results may differ materially from results contemplated by the forward-looking statements. Readers should not place undue reliance on such forward-looking statements, as they reflect the Corporation's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation, are inherently subject to significant business, economic, regulatory, competitive, political and social uncertainties and contingencies. Many factors could cause the Corporation's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including among others a significant downturn in capital markets or the economy as a whole, errors or omissions by the Corporation in providing services to its customers, significant changes in interest rates, foreign currency exchange rates or the cost of complying with applicable regulatory requirements, inability to raise funds through public or private financing, failure to obtain the approvals required to carry on its proposed deposit-taking and mortgage activities in a timely manner and/or on acceptable terms and conditions, failure by the Corporation to attract and to retain the necessary employees to meet its needs, a failure of the computer systems of the Corporation or one or more of its service providers or the risks detailed from time-to-time in the Corporation's quarterly filings, annual information forms, annual reports and annual filings with securities regulators. Forward-looking information will be updated as required pursuant to the requirements of applicable securities laws. 

(1) EBITDA (Earnings Before Income Taxes, Depreciation and Amortization) and Return on Equity (net income divided by the average of opening and closing shareholders' equity) do not have any standardized meaning prescribed by Canadian GAAP and may not be comparable to similar measures presented by other issuers. However, we believe financial analysts and investors view these as key measures of certain aspects of our performance. They use EBITDA as an indication of our ability to invest in property, plant and equipment, and to raise and service debt; and they use Return on Equity as a key indicator of whether we use our capital resources efficiently. These measures 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.

(2) Refer to the previous footnote for a discussion on Return on Equity. We calculate this as net income for the year of $3,405, divided by the average of reported shareholders' equity at December 31, 2009 of $22,010 and at December 31, 2010 of $26,759.

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

Contact Information

  • Equity Financial Holdings Inc.
    Paul G. Smith
    President & CEO
    (416) 361-0930