Portfolio Growth of More Than $100 Million in First Six Months
TORONTO, Aug. 13, 2018 /CNW/ - Chesswood Group Limited
("Chesswood" or "the Company") (TSX: CHW), a North American
commercial equipment finance provider for small and medium-sized
businesses, today reported its second quarter results for the
periods ended June 30, 2018.
Chesswood's gross finance receivables grew to $804 million in the quarter driven by record
second quarter originations of $114
million, a 31% increase from $87
million in the second quarter of last year. Net income also
increased to $5.6 million from
$3.7 million in the second quarter of
2017, and to $11.5 million in the
first six months of this year compared to $8.4 million in the same period last year.
Between the adoption of IFRS 9 in 2018, the repayment of the
Company's convertible debentures in early January 2018 and the lower foreign exchange rates
compared to last year, there are a number of meaningful adjustments
required in order to compare the second quarter and six-month
operating income(1) this year with the same periods in
2017. These adjustments are provided for in the chart below:
Financial
Highlights
|
|
|
|
|
|
(in CDN
$000's)
|
For the Three Mths
Ended
|
|
For the Six Mths
Ended
|
|
June 30
2018
|
June 30
2017
|
|
June 30
2018
|
June 30
2017
|
|
|
|
|
|
|
Average FX
Rate
|
1.2911
|
1.3449
|
|
1.2781
|
1.3343
|
|
|
|
|
|
|
Operating
income(1)
|
$8,046
|
$9,290
|
|
$16,385
|
$17,339
|
IFRS 9 impact
(a)
|
900
|
-
|
|
1,197
|
-
|
Impact of exchange
rate difference (b)
|
442
|
-
|
|
935
|
-
|
Interest expense on
conv deb (c)
|
-
|
(325)
|
|
-
|
(650)
|
Normalized
operating income
|
$9,388
|
$8,965
|
|
$18,517
|
$16,689
|
(a)
|
The provision for
credit losses for the three and six months ended June 30, 2018 was
calculated in accordance with IFRS 9. Prior period comparatives
were prepared in accordance with IAS 39, and have not been
restated. The Company's provision for credit losses would
have been $1.2 million lower in the six months ended June 30, 2018
if the same accounting guidelines used in the prior year had been
used in 2018.
|
(b)
|
U.S. dollar results
for the six months ended June 30, 2018 were converted at an
exchange rate of 1.2781, which was the average exchange rate for
the period (2017 - 1.3343). This lower exchange rate
compared to the same quarter in 2017 understates the improvement in
our 2018 U.S. operating results compared to the same period in 2017
by $935,000.
|
(c)
|
Prior to redemption
in January 2018, convertible debenture interest expense was not
part of operating income whereas the interest expense on the funds
used to repay the debentures (from the corporate credit facility)
is deducted as an expense in calculating operating income in
2018.
|
"We continue to expand our business relationship with our
customers. As we fund transactions from A to C in credit quality,
we offer our broker-customers a one-stop shop for their funding
needs," said Barry Shafran,
Chesswood's President and CEO "and our customers have responded by
embracing our programs along with our high service levels" added
Shafran.
Financial
Highlights
|
|
|
|
|
|
(in CDN $000's,
except EPS)
|
For the Three Mths
Ended
|
|
For the Six Mths
Ended
|
|
June 30
2018
|
June 30
2017
|
|
June 30
2018
|
June 30
2017
|
|
|
|
|
|
|
Average FX
Rate
|
1.2911
|
1.3449
|
|
1.2781
|
1.3343
|
|
|
|
|
|
|
Net
Income(2)
|
$5,616
|
$3,749
|
|
$11,516
|
$8,445
|
|
|
|
|
|
|
Earnings Per Share -
basic
|
$0.31
|
$0.21
|
|
$0.64
|
$0.47
|
|
|
|
|
|
|
(1) - See
"Non-GAAP Measures" below.
|
(2) - Provision for
credit losses included in net income for 2018 is in accordance with
IFRS 9. Prior
period
comparatives were prepared in accordance with IAS 39 and have not
been restated.
|
Net income in the second quarter of 2017 was lowered by a
non-cash loss of approximately $1.1
million on Chesswood's holdings of shares of Dealnet Capital
Corp.
Non-GAAP Measures
Operating Income is not a recognized measure under International
Financial Reporting Standards and does not have a standard meaning.
Accordingly, this measure may not be comparable to similar measures
presented by other issuers. Please refer to the Company's
Management Discussion and Analysis in Chesswood's 2017 Annual
Report and 2018 Second Quarter Report for additional information
concerning these measures and a reconciliation of these measures to
the Company's consolidated net income.
About Chesswood
Through two wholly-owned subsidiaries in the U.S. and
Canada, Chesswood Group Limited is
North America's only
publicly-traded commercial equipment finance company focused on
small and medium-sized businesses. Our Colorado-based Pawnee Leasing Corporation,
founded in 1982, finances a highly diversified portfolio of
commercial equipment leases and loans through established
relationships with over 600 independent brokers in U.S.. In
Canada, Blue Chip Leasing
Corporation has been originating and servicing commercial equipment
leases and loans since 1996, and today operates through a
nationwide network of more than 50 independent brokers. Based in
Toronto, Canada, Chesswood's
shares trade on the Toronto Stock Exchange under the symbol
CHW.
Learn more at www.chesswoodgroup.com, www.PawneeLeasing.com and
www.BlueChipLeasing.com.
This press release contains forward-looking statements that
involve a number of risks and uncertainties because they relate to
events and depend on circumstances that will occur in the future.
Many factors could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements. By its nature, this information is subject to inherent
risks and uncertainties that may be general or specific and which
give rise to the possibility that expectations, forecasts,
predictions, projections or conclusions will not prove to be
accurate, that assumptions may not be correct and that objectives,
strategic goals and priorities will not be achieved. Additional
information about the risks and uncertainties of the Company's
businesses and material factors or assumptions on which information
contained in forward-looking statements is based is provided in its
publicly filed documents, including the Company's annual
information form and management's discussion and analysis of the
financial condition and performance, which are available
electronically through the System for Electronic Document Analysis
and Retrieval at www.sedar.com.
NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED
HEREIN.
SOURCE Chesswood Group Limited