Grey Horse Corporation

Grey Horse Corporation

August 13, 2008 17:00 ET

Grey Horse Reports Second Quarter 2008 Results

14th consecutive profitable quarter

TORONTO, ONTARIO--(Marketwire - Aug. 13, 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 June 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 6 months ended
June. 30 June. 30
2008 2007 2008 2007
Unaudited Unaudited Unaudited Unaudited
Revenue $ 5,259 $ 6,504 $ 8,848 $ 10,008
Revenue Growth -19% 74% -12% 66%
EBITDA $ 1,186 $ 2,555 $ 1,788 $ 3,648
Net income and comprehensive
income $ 656 $ 1,488 $ 926 $ 2,074
Net income & comprehensive
income (decline) growth (56%) 414% (55%) 235%
Earnings per share, basic $ 0.10 $ 0.24 $ 0.14 $ 0.33
Earnings per share, diluted $ 0.10 $ 0.23 $ 0.14 $ 0.32
Diluted earnings per share growth (57%) 360% (56%) 167%
Return on equity (annualized) 16% 46% 11% 33%
Cash and cash equivalents
at period end $ 8,970 $ 7,754 $ 8,970 $ 7,754

Results for the second quarter and for the six-month period ending June 30, 2008 were disappointing to management. Although the Corporation remained solidly profitable during the quarter, revenues and net income were significantly lower than last year. The Corporation continued to be affected by weak market conditions, resulting in an absence of the large-volume margin income and foreign exchange transactions that contributed greatly to last year's results, and in a lower volume of client equity-raising activity. Net income was also affected by the increased costs resulting from the Corporation's investment in its infrastructure over the past year.

Notwithstanding these disappointing results and even in this challenging market, management sees much increasing strength within the Corporation. It continues to be solidly profitable and to make measurable progress both on enhancing its core business and on positioning itself for new opportunities when economic conditions improve.

In respect of the Corporation's prospects for the second half of the fiscal year, management is cautiously optimistic. The Corporation continues to add transfer agent clients at a strong rate; there were 17 net new additions in the second quarter and 35 net new additions in total for the first half of the year. The trust business is now firmly entrenched as a key element of Grey Horse's business, just two years after its launch in June 2006. Fee driven revenues from this service have increased 16% for the first six months of the fiscal year versus the same period last year.

Also, as at August 12, 2008 and assuming present trends continue, quarterly margin income revenues appear stronger in the third quarter than they were in the first half of the year. Lastly, on July 2, 2008, the Corporation solidified its position in the foreign exchange market by acquiring Toro FX Inc. ("Toro") providing expertise and critical mass in a lucrative market and complementing its transfer agent and trust offerings. As a result of this transaction, the Corporation has begun to realize increased foreign exchange revenue since the start of the third quarter. These combined observations lead management to expect a return to double digit growth in revenue for the second half of this fiscal year versus the comparative period last year(1).

As to operating costs, while future quarters will contain additional expenditures related to Toro, the Corporation considers the investment in its core infrastructure (namely staffing costs and rent) to be complete for the foreseeable future or until such time as revenues are materially greater than is currently the case.

Second quarter revenue decreased $1,245 (all figures in $000, except per share amounts) or 19% compared with the second quarter of 2007 and by $1,128 or 11% compared with the comparative year to date. Selling, general and administrative expenses increased overall by $124 or 3% for the second quarter and by $731 or 11% year to date, reflecting the Corporation's hiring of specialized staff and additional office space in Calgary, Vancouver and Toronto. Given these factors, net income decreased $832 or 56% compared with the second quarter of 2007, and $1,148 or 55% compared with the comparative year to date. Basic earnings per share decreased by 14 cents or 58% for the second quarter and by 19 cents or 58% for the year to date. Diluted earnings per share decreased by 13 cents or 57% for the second quarter and by 18 cents or 56% for the year to date. EBITDA decreased by $1,369 or 54% compared with the second quarter of 2007 and by $1,860 or 51% year to date. Annualized return on Equity decreased from 46% to 16% for the quarter and from 33% to 11% for year to date.

Grey Horse President and CEO Kevin Reed said, "Second quarter results continued the trend seen in quarter one, all in line with prevailing capital market conditions. None the less, we remain convinced that we are building a solid and scalable financial services firm that is increasingly well positioned."

(1) This forward looking financial outlook for revenues in the second half of this fiscal year is approved by management as of August 12, 2008. It is provided to give readers a more balanced picture of the Corporation's current financial position and may not be appropriate for other purposes. It is not a guarantee of future performance and involves risks and uncertainties that are difficult to control or predict and that may cause actual results to differ materially from the financial outlook. The financial outlook is based on the material assumptions that (a) the incremental revenue attributable to Toro from its acquisition on July 2, 2008 to the present date, (b) the rate of net new transfer agent clients experienced during the year to date, and (c) margin income revenue since the beginning of the third quarter will maintain their present trends throughout the second half of the current fiscal year. The Corporation's policy for updating forward looking information, including this financial outlook, is set forth on page 1 of its MD&A.

Paul G. Smith, Grey Horse's Executive Vice President and Chief Financial Officer remarked, "By the nature of its business, certain aspects of the Corporation's revenue will tend to rise and fall with financial markets, but the Corporation is now very well placed both to weather weaker periods and to capitalize quickly when conditions improve."

Grey Horse's Consolidated Financial Statements and Management's Discussion and Analysis for the three months ended June 30, 2008 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, August 14, 2008 at 9AM Eastern Daylight Time to discuss its second quarter operating and financial results and answer questions. Participants can listen to the call by dialling 416-641-6136 or 866-300-7687.

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

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, 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.

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

Contact Information

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