Mr. Praveen Gupta reports

CLIFFSIDE CAPITAL LTD. REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS

Cliffside Capital Ltd. has released financial results for the third quarter ended Sept. 30, 2022. The company continued to pursue its long-term strategy of disciplined growth and is reporting:

• 37-per-cent increase in net finance receivables from $135.7-million as at Sept. 30, 2021, to a record high of $185.9-million as at Sept. 30, 2022;
• $14.0-million in net interest income, a 51.1-per-cent increase compared with the same period in the prior year;
• $7.2-million in net financial revenue before credit losses and excluding mark-to-market gains on derivative financial instruments, resulting in a 38.5-per-cent increase compared with the same period in the prior year;
• $400,000 in 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 finance receivables in the current rate environment and an increase in its provision for credit losses; in light of the overall challenging global business environment, continued high inflation, growth in finance receivables and the prospect of further interest rate increases, the company's provision for credit losses increased by $6-million compared with the same period in the prior 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 0.25 cent per common share (one cent on an annualized basis), which was paid on Nov. 10, 2022. Each such dividend qualified as an eligible dividend as defined in the Income Tax Act (Canada). The dividends were subject to customary Canadian withholding tax for shareholders who are non-resident of Canada.

Business update

The company's partnerships continue to enjoy access to market financing from various Canadian lenders for any purchase of new auto loan receivables. One facility was renewed in October, 2022, for $100-million, a $25-million increase. The financing facility used for CAR LP I will not be renewed past January, 2023. Consistent with its original loan terms and market practice for similar loan facilities, all cash flow from the partnership will repay the senior lender first, and then flow to the mezzanine lender with the remaining balance flowing to the partnership equity.

Global macroeconomic challenges

Recent and continuing macroeconomic global events, including global supply chain delays, the war in Ukraine and higher global inflation, as well as the expectation of a continued inflationary environment, coupled with rising interest rates, have resulted in alternative and non-bank financial companies, such as Cliffside, facing a challenging environment in which to raise equity capital for growth. While Cliffside maintains access to financing sources, management believes that these recent macroeconomic challenges could have an adverse effect on the company's ability to raise new equity capital to finance future growth. Accordingly, the recent pattern of strong growth which the company has experienced may be difficult to maintain. Management and the board of directors are actively monitoring and considering available options to adjust to the current environment and will continue to explore all possibilities available to the company.

About Cliffside Capital Ltd.

Cliffside is focused on investing in strategic partnerships with parties which have specialized expertise and a proven record in originating and servicing loans and similar types of financial assets. Cliffside's strategy is to generate revenue as an investor, affording its shareholders an opportunity to invest in the growing alternative lending sector with the potential for attractive yields and minimal operational risk while earning a reliable total return.

We seek Safe Harbor.