Mr. William Tharp reports

GRENVILLE STRATEGIC ROYALTY ANNOUNCES 2014 THIRD QUARTER RESULTS

Grenville Strategic Royalty Corp. has released its financial and operating results for the three and nine months ended Sept. 30, 2014. Financial references are in Canadian dollars unless otherwise specified.

Third quarter 2014 highlights

• Revenues of $905,000 for the three months ended Sept. 30, 2014;
• Net income of $529,000;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $542,000;
• Royalty agreements acquired were $9.5-million for the third quarter of 2014, bringing the total value of acquired royalties since inception to the end of the third quarter of 2014 to $20.1-million;
• Average royalty payment per $1-million invested was $243,000 for the month of September;
• Acquired additional investments in royalty agreements of $4-million subsequent to the end of the period, bring royalty agreements acquired since inception to $24.1-million.

"Our growing portfolio of royalty investments generated strong revenue, net income and adjusted EBITDA during the quarter," said William (Bill) R. Tharp, president and chief executive officer of Grenville. "This is a milestone quarter for the company, with material improvements to the diversification of the portfolio and corresponding growth in both investment pace and individual deal size. As a result of these positive results, rapidly increasing revenues and, most importantly, material adjusted EBITDA, along with strong future growth prospects, the company is now focused on delivering its next significant milestone, the design and implementation of a plan to return capital to shareholders in the form of a regular dividend. With a solid foundation set in place, the company will continue to build on its successes while managing the business to achieve our target average royalty payment per $1-million invested of $250,000."

         FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER OF 2014

                                      Three months ended   Nine months ended
                                          Sept. 30, 2014      Sept. 30, 2014

Revenues                                       $ 905,384         $ 1,409,546
Profit (loss) after income taxes                 528,558          (3,377,297)
Basic and diluted earnings (loss)                                           
per share                                         0.0089            (0.0734)
Adjusted EBITDA(1)                               541,579             551,810
Royalty agreements acquired in                                              
period                                         9,540,053          18,210,768

Revenues

Revenues were $905,000 and $1.41-million for the three and nine months ended Sept. 30, 2014, respectively. Royalty payment income represented 93 per cent and 91 per cent of total revenue during the respective periods. The improvement, compared with revenue of $52,000 and royalty payment income of 53 per cent of total revenue for the period from July 29, 2013, to Dec. 31, 2013, is primarily due to additional royalty agreements acquired during 2014 as the company scales its portfolio.

Operating expense

Total operating expenses were $32,000 and $4,442,000 for the three and nine months ended Sept. 30, 2014, respectively. Operating expenses for the three-month period were impacted by an unrealized foreign exchange gain of $361,000 resulting from the translation of royalty agreements denominated in U.S. dollars, and a share-based payment expense of $28,000. Net of foreign exchange gains and share-based expenses, operating expenses were $377,000 for the three-month period, or approximately $126,000 per month, which is in line with management's expectations. Operating expenses for the nine-month period included $3,636,000 in expenses related to the reverse takeover, completed in February, 2014, $248,000 in unrealized foreign exchange gain and $186,000 in share-based payment expense. Net of these three items, operating expenses were $867,000 for the period. Operating expenses for the period from July 29, 2013, to Dec. 31, 2013, were $161,000.

Profit after income taxes

Profit after income taxes was $528,559 (or one cent per basic and diluted share) for the three months ended Sept. 30, 2014, compared with a loss of $108,856 (a loss of one cent per basic and diluted share) for the period July 29, 2013, to Dec. 31, 2013. Profit in the quarter was attributable to the revenues generated from the growing portfolio of investments, as well as $373,302 in unrealized foreign exchange gain and the $27,959 share-based payment expense mentioned above.

Adjusted EBITDA

Adjusted EBITDA was $541,579 and $551,810 for the three months and nine months ended Sept. 30, 2014, respectively, compared with a loss of $23,844 for the period from July 29, 2013, to Dec. 31, 2013. Adjusted EBITDA margin was 60 per cent for the quarter.

Average royalty payment per $1-million invested

The average royalty payment per $1-million invested for the month of September, 2014, was $243,451 versus the company's target of $250,000 for the month. Management believes that as the company's portfolio achieves a greater level of diversification, monthly results will become more closely aligned with this target. Management expects the average royalty to increase in the latter quarter of the year as seasonally adjusted revenue are generally higher than in the earlier part of the year for most portfolio companies. Current results are consistent with management's expectations at this stage of the financial year.

Rolling three-month average investment per month

As of Oct. 31, 2014, the rolling three-month average investment per month was $3,805,000.

Rolling three-month average investment per transaction

As of Oct. 31, 2014, the rolling three-month average investment per transaction was $1.68-million.

Outlook

Grenville continues to experience strong deal flow through its robust network. Current volatility in the broader markets has the potential to provide the company with enhanced deal flow, as small-and-medium-sized enterprises often face difficulty in accessing growth capital in challenging equity markets.

Since its inception, Grenville has built a diversified portfolio of approximately $24-million of invested capital across 22 investments in 18 portfolio companies. Management's target in building a balanced portfolio is to achieve a rate of $250,000 of annual revenue per $1-million of invested capital. Based on the existing investments, the portfolio has reached a scale at which it is generating stable income and adjusted EBITDA, as designed. Additionally, as provided in the rolling three-month average investment per month and per transaction summaries above, management believes the company can maintain, or exceed, the pace and rate of capital deployment achieved to date.

Dividend strategy

Based on this performance, the company is now focused on the design and implementation of a plan to return capital to shareholders in the form of a regular dividend. The quantum and timing of such dividend will be determined by the board following a review of the company's cash flow, earnings, working capital requirements, financial position, future prospects and other factors deemed relevant by the board. The board believes that the transition to a growth-and-dividend company is supported by the underlying strength of the company's business and clearly demonstrates the power of the company's royalty-based business model.

Grenville's scalable business model provides the capability to acquire an expanding portfolio of income-producing royalties. This expansion, combined with the company's modest corporate cost structure, generates strong free cash flow available for distribution, which the company believes should enable it to fund a meaningful dividend strategy.

We seek Safe Harbor.