Equity Financial Holdings Inc. (TSX:EQI) ("Equity" or "the Corporation"), a
Canadian financial services company serving the corporate and institutional
markets and the retail mortgage market, today reported its annual financial
results for the year ended December 31, 2012.
Financial Highlights (all dollar amounts, except per-share, are in $000s,
unless otherwise stated)
----------------------------------------------------------------------------
Fiscal year ending Change
----------------------------------------------------------------------------
Dec. 31, Dec. 31,
2012 2011 $ %
----------------------------------------------------------------------------
Operating Results
----------------------------------------------------------------------------
Net interest income $ 4,791 $ 1,332 $ 3,459 260
----------------------------------------------------------------------------
Other revenue 2,083 13,571 (11,488) (85)
----------------------------------------------------------------------------
Net interest income and other
revenue 6,874 14,903 (8,029) (54)
----------------------------------------------------------------------------
Net earnings and comprehensive
income(1) 534 9,230 (8,696) (94)
----------------------------------------------------------------------------
Earnings per share, basic(1) $ 0.06 $ 1.07 $ (1.01) (94)
----------------------------------------------------------------------------
Earnings per share, diluted(1) $ 0.06 $ 1.05 $ (0.99) (94)
----------------------------------------------------------------------------
Return on equity(2) 1% 24%
----------------------------------------------------------------------------
Balance Sheet Highlights
----------------------------------------------------------------------------
Cash and cash equivalents $ 34,429 $ 25,568 $ 8,861 35
----------------------------------------------------------------------------
Assets 251,442 129,736 121,706 94
----------------------------------------------------------------------------
Liabilities 199,175 79,738 119,437 150
----------------------------------------------------------------------------
(1) As a result of the Transaction noted below we have also reported on the
operating results of continuing and discontinued operations. Please refer
to our 2012 Audited Financial Statements and MD&A for additional details.
(2) Return on equity (net earnings divided by the simple average of
reported shareholders' equity at the beginning and end of the period) does
not have any standardized meaning prescribed by IFRS 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 return on equity as a key
indicator of whether we use our capital resources efficiently. This
measure should not be considered as an alternative to cash flows from
operating activities nor to any other measures of performance presented in
accordance with IFRS.
Our total net earnings were down $8,696 or 94%, to $534 for the year ended
December 31, 2012, primarily affected by the absence of significant revenue from
large-volume transactions which had contributed to record results in 2011. Our
total earnings per share also decreased by $1.01 or 94%, to $0.06 (basic) for
the year ended December 31, 2012.
Subsequent to December 31, 2012, we executed a definitive agreement for the sale
of the assets of our transfer agent and corporate trust services business to an
affiliate of TMX Group Inc. (we announced this "Transaction" today in a separate
press release). This Transaction represents the culmination of a strategic
review undertaken in 2012 during which we considered options for obtaining
capital resources to support further growth in our mortgage business, which we
believe offers the best potential returns to our shareholders. By realizing the
inherent value of the assets being sold we will immediately improve EFT's
regulatory capital position and expect to reduce our need to consider further
equity or debt financing over the coming years.
Our mortgage lending and deposit-taking business unit provided a source of
growth for the Corporation in a year where our other business units were
negatively affected by difficult market conditions. Revenue and net earnings
contributed by the mortgage unit increased each quarter in 2012 and mortgages
receivable more than doubled to a balance of $198,147 as at December 31, 2012
($84,780 as at December 31, 2011). Net interest income represents a reliable and
recurring revenue stream which increased $3,459 or 260%, to $4,791 year over
year, driven by the growth in our mortgage loan portfolio.
Our foreign exchange segment experienced an absence of large-volume transactions
in 2012 compared to those which occurred in 2011. These large-volume foreign
exchange revenues are associated with our corporate trust services and are
included in the Transaction. We also saw a decline in revenue from retail
foreign exchange operations, leading to the decision to begin winding down our
day-to-day foreign exchange business. This wind-down is expected to be completed
in the first quarter of 2013, at which time our foreign exchange segment will be
reclassified as a discontinued operation. Other revenue from our foreign
exchange segment decreased 87% by $11,807 to $1,726 for the year ended December
31, 2012.
Our transfer agent and corporate trust segment also experienced a decline in
revenue for the financial year ended December 31, 2012 compared to 2011.
Persistently difficult capital market conditions that started in the second half
of 2011 affected transaction volumes for the transfer agent business and
provided limited opportunities for our corporate trust group to act in merger
and acquisition transactions. As a result of these factors, revenue from
transfer agent and corporate trust decreased by $4,993 or 23%, to $17,169 for
the year ended December 31, 2012.
Equity Financial Holdings President & CEO, Paul G. Smith said,
"The decision to sell our transfer agent and corporate trust services business
represents the culmination of our strategic review, resulting in our decision to
shift our strategy and focus on our mortgage unit. We believe adopting this
exclusive focus on our growing business unit - in which we recorded growth in
revenue and net earnings each quarter in 2012 - offers greater potential for our
company. With the proceeds from the sale of our transfer agent and trust
business to TMX Group Inc., we have the opportunity to invest in the future
growth of our mortgage business in order to create value for our shareholders."
Audited annual consolidated financial statements and Management's Discussion and
Analysis for the fiscal year ended December 31, 2012 can be found on SEDAR at
www.sedar.com and on Equity's website at www.equityfinancialholdings.com.
Analyst Conference Call
Equity will hold a conference call on February 13, 2013 at 9:00 AM Eastern Time
to discuss its operating results and to answer questions. Participants can dial
416-340-2218 or toll free 866-226-1793.
About Equity Financial Holdings Inc.
Through its wholly owned subsidiaries, EQI provides foreign exchange and retail
mortgage services to the corporate and institutional markets and the retail
mortgage market. Learn more at www.equityfinancialholdings.com.
Advisory notes:
Certain portions of this press release as well as other public statements by
Equity Financial Holdings Inc. (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," "targets," "continue", "estimates," "scheduled," "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, those relating to
the anticipated timing and completion of the proposed sale transaction and the
Corporation's ability to receive all necessary approvals related thereto, the
expected effect of the completion of the proposed sale transaction on the
Corporation, its business, operations and financial results, the Corporation's
expected need for regulatory capital and equity or debt financing, the expected
timing of the Corporation's previously announced wind-down of its day-to-day
retail foreign exchange operations and its expected impact on the Corporation's
business, operations and financial results, the Corporation's earnings
expectations, 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 activities, business competition,
technological change, changes in government regulations and regulatory
guidelines, unexpected judicial or regulatory proceedings, catastrophic events,
and the Corporation's ability to complete strategic transactions and integrate
acquisitions and other factors.
All material assumptions used in making forward-looking statements are based on
management's knowledge of current business conditions and expectations of future
business conditions and trends, including their knowledge of the current credit,
interest rate and liquidity conditions affecting the Corporation and the
Canadian economy, retail mortgage markets, housing sales, and equity and capital
market, as well as those assumptions relating to the completion of the proposed
sale transaction and receipt of required approvals in connection therewith and
those assumptions relating to the Corporation's ability to implement and realize
on its new strategic focus, assumptions relating to the Corporation's ability to
wind-down its day-to-day retail foreign exchange operations and the expected
impact on the Corporation's business, operations and financial results, and
assumptions relating to the Corporation's capital and debt or equity financing
requirements. Certain material factors or assumptions are applied by the
Corporation in making forward-looking statements, including without limitation,
the Corporation's ability to successfully close the proposed sale transaction
and successfully implement and realize on its new strategic focus, factors and
assumptions regarding interest and foreign exchange rates, availability of key
personnel, the effect of competition, government regulation of its business,
computer failure or security breaches, future capital requirements, its ability
to fund its mortgage business, the value of mortgage originations, the
competitive nature of the alternative mortgage market, the expected margin
between the interest earned on its mortgage portfolio and the interest to be
paid on its deposits, the relative continued health of real estate markets,
acceptance of its products in the marketplace, as well as its operating cost
structure and the current tax regime.
Forward-looking 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 failure to successfully close the proposed
sale transaction, failure by the corporation to implement or realize on its new
strategic focus, a significant downturn in capital markets or the economy as a
whole, delays in completing the wind-down of the Corporation's day-to-day retail
foreign exchange operations or other unforeseen circumstances arising from such
wind-down, reduced large-volume foreign exchange revenue which could lead to an
impairment of goodwill in our foreign exchange unit, errors or omissions by the
Corporation in providing services to its customers, significant changes in
foreign currency exchange rates, extreme price and volume fluctuations in the
stock markets, significant increases in the cost of complying with applicable
regulatory requirements, civil unrest, economic recession, pandemics, war and
acts of terrorism which may adversely impact the North American and global
economic and financial markets, inability to raise funds through public or
private financing in the event that the Corporation incurs operating losses or
requires substantial capital investment in order to respond to unexpected
competitive pressures, significant changes in interest rates, failure by Equity
Financial Trust Company ("EFT") to meet ongoing regulatory requirements, the
failure of borrowers or counterparties to honour their financial or contractual
obligations to EFT, failure by the Corporation to generate or obtain sufficient
cash or cash equivalents in a timely manner and at a reasonable price or to meet
its commitments as they become due, failure by EFT to adequately monitor and/or
adjust its mortgage portfolio management practices for changing circumstances,
failure by the Corporation to attract and to retain the necessary employees to
meet its needs, failure by EFT to adequately monitor the services provided by
third party service providers or to establish alternative arrangements if
required, failure by EFT to secure sufficient deposits from securities dealers
or a sufficient level of mortgage origination from its mortgage broker network,
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. The Corporation disclaims any intent or obligation
to update or revise publicly any forward-looking statements whether as a result
of new information, estimates, future events or results, or otherwise, unless
required to do so by applicable laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Equity Financial Holdings Inc.
Paul G. Smith
President & CEO
(416) 361-0930 Ext 270
www.equityfinancialholdings.com
EFT Canada Inc. (TSXV:EFT)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
EFT Canada Inc. (TSXV:EFT)
Historical Stock Chart
Von Jun 2023 bis Jun 2024
