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TORONTO, November 23, 2022 /CNW/ – Cliffside Capital Ltd. (“Cliff” or the “Company“) (TSXV: CEP) is pleased to announce its financial results for the third quarter ended September 30, 2022. The Company has pursued its long-term strategy of disciplined growth and announces:
37% increase in net financial receivables $135.7 million like a September 30, 2021
to a record of $185.9 million like a September 30, 2022;
$14.0 million net interest income, an increase of 51.1% over the same period last year;
$7.2 million net financial income before credit losses and excluding mark-to-market gains on derivative financial instruments, an increase of 38.5% compared to the same period of the previous year; and
$0.4 million the net loss before income taxes, due to the amortization of financing costs in one of its partnerships, an increase in net interest expense consistent with the growth of its financial receivables in the current rate environment and an increase in its provision for credit losses. Given the overall challenging global business environment, continued high inflation, growth in financial claims and the prospect of further interest rate hikes, the Company’s provision for credit losses increased of $6 million compared to the same period of the previous year when macroeconomic conditions were more favourable.
Subsequent to the quarter, the Company also declared a quarterly cash dividend on the outstanding common shares of $0.0025 per ordinary share ($0.01 on an annualized basis), which was paid on November 10, 2022. Each of these dividends is qualified as an “eligible” dividend as defined in the income tax law (Canada). Dividends were subject to customary Canadian withholding tax for non-resident shareholders of Canada.
The Company’s partnerships continue to benefit from access to market financing from various Canadian lenders for any purchase of new auto loans receivable. An installation was renewed in October 2022 for $100 milliona $25 million increase. The financing facility used for CAR LP I will not be renewed beyond January 2023. Consistent with the original loan terms and market practice for similar loan facilities, all cash flow from the partnership will first repay the primary lender and then go to the mezzanine lender, with the remaining balance going to the partnership’s equity.
Global Macroeconomic Challenges
Recent and ongoing global macroeconomic events, including global supply chain delays, war in Ukraine, rising global inflation along with the expectation of a continued inflationary environment coupled with rising interest rates has led alternative and non-bank financial companies, such as Cliffside, to face a challenging environment in which to raise equity for growth. Although Cliffside retains access to sources of financing, management believes that these recent macroeconomic challenges could adversely affect the Company’s ability to raise new equity capital to fund its future growth. Consequently, the recent strong growth pattern that the Company has experienced may be difficult to sustain. Management and the Board of Directors are actively monitoring and reviewing the options available to adapt to the current environment and will continue to explore all opportunities available to the Company.
Further information on Cliffside’s financial results is available at www.cliffsidecapital.ca.
Cliffside is focused on investing in strategic partnerships with parties that have specialized expertise and proven experience in originating and servicing loans and similar types of financial assets. Cliffside’s strategy is to generate income as an investor, providing its shareholders with the opportunity to invest in the growing alternative lending industry with the potential for attractive returns and minimal operational risk while achieving a reliable total return. For more information, see Cliffside’s filings on SEDAR at www.sedar.com.
CAUTION REGARDING FORWARD-LOOKING INFORMATION: This press release contains certain “forward-looking statements” under applicable Canadian securities laws. Forward-looking statements include, but are not limited to, statements regarding the business and operations of Cliffside and its partnerships, statements regarding the company’s ability to raise equity in the future, statements regarding renewals expected terms of certain debt financing facilities, the expected terms of such renewals and the intended use of proceeds, and management’s ability to effectively protect and grow the Company’s business in light of recent macroeconomic risks and uncertainties and In progress. Forward-looking statements are necessarily based on a number of estimates and assumptions which, while believed to be reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results to differ. and future events differ materially from those expressed or implied. by such forward-looking statements. These factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; the results of operations; potential for conflicts of interest; the availability of suitable financial claims that can be purchased by the Company’s limited partnerships under existing financing facilities; and the volatility of the price and volume of the Common Shares. There can be no assurance that such statements will prove to be accurate or complete, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Cliffside disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Cliffside Capital Ltd.
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