Mr. Ken Thomson reports

MONTFORT CAPITAL ANNOUNCES YEAR END AND FOURTH QUARTER FINANCIAL RESULTS

Montfort Capital Corp. has released its financial results for the fourth quarter and year ended Dec. 31, 2023. All figures are reported in Canadian dollars unless otherwise noted.

Fiscal year 2023 highlights

For the year ended Dec. 31, 2023, compared with the year ended Dec. 31, 2022, the company generated the following financial results:

• Record total revenue of $51.5-million, an increase of $20.2-million or 64.4 per cent compared with the year ended Dec. 31, 2022.
• Interest income from investments of $37.5-million, up $14.0-million or 59.8 per cent compared with the year ended Dec. 31, 2022.
• Income from transaction and other fees of $12.5-million, an increase of 90.1 per cent or $5.9-million from $6.6-million during the year ended Dec. 31, 2022.
• Income from settlements of loans of $60,000, a decrease of $700,000 or 92 per cent from $800,000 in the year ended Dec. 31, 2022.
• Performance fee income of to $1.4-million, an increase of $900,000 or 205.2 per cent from $400,000.
• Net loss of $12.5-million compared with net income of $3.9-million in the year ended Dec. 31, 2022. The change in year-over-year performance is largely driven by the change in accounting for TIMIA LP's; an impairment loss of $3.6-million and increase in expected credit loss expense (loans receivable) of $1.6-million and expected credit loss (accounts receivable) expense of $4.7-million. In addition, contributing to the net loss in the current period are increases in expenses, including interest and financing fee costs and foreign exchange unrealized losses, and restructuring costs.
• Adjusted net loss (a non-GAAP (generally accepted accounting principles) measure) attributable to shareholders and adjusted net loss per common share (a non-GAAP measure) was $8.5-million, or 12 cents per share, in the year ended Dec. 31, 2023, compared with adjusted net income of $3.1-million in the year ended Dec. 31, 2022, or two cents per share.
• Total assets of $402.5-million as at Dec. 31, 2023, compared with $455.5-million at Dec. 31, 2022. The main driver for the decrease was the maturity of a purchased loan portfolio returned to the lenders in accordance with the agreement of $74,533,460. Adjusting for this one time return of loans, total assets increased $21,572,331.
• Total assets under management and administration (a non-GAAP measure) was $411-million as at Dec. 31, 2023, compared with $490-million as at Dec. 31, 2022.

Fourth quarter 2023 highlights

For the three months ended Dec. 31, 2023, the company generated the following financial results:

• Total revenue of $12.1-million, a decrease of $1.7-million or 12.4 per cent compared with the three months ended Dec. 31, 2022.
• Interest income from investments of $9.0-million, down $1.5-million or 14.3 per cent compared with $10.5-million for the three month period ended Dec. 31, 2022.
• Income from transaction and other fees of $2.9-million, a decrease of 12.3 per cent or $400,000 from $3.3-million for the three months ended Dec. 31, 2022.
• Performance fee income of $300,000, an increase of $200,000 or 146.1 per cent from $100,000 for the three months ended Dec. 31, 2022.
• Net loss of $5.6-million compared with net income of $1.2-million in the prior three-month period ended Dec. 31, 2022.

"While there are certainly recent accomplishments that we should celebrate, such as record annual revenue, the launch of a new line of business, and securing significant new funding capacity in Brightpath, Langhaus and Nuvo, we are not at all pleased with our financial results in 2023," said Ken Thomson, chief executive officer of Montfort Capital. "We were not immune to challenging conditions in the credit markets, which is reflected in our credit loss provision, and the legal and professional fees that we incurred to put in place our increased funding capacity were significant. We are confident that our credit loss provision represents a peak and not a trend, and that the investment we have made in new funding capacity will benefit our shareholders in the future. The management team and the board of directors, who are also large shareholders of Montfort, are laser-focused on profitability and making the appropriate tactical and strategic decisions that will allow us to achieve it as quickly as possible."

Financial review

The company originates, underwrites and manages secured loans through the following operating divisions:

• Brightpath Capital, one of Canada's leading providers of alternative residential mortgages.
• Langhaus Financial provides insurance policy-backed lending solutions to high-net-worth individuals and entrepreneurs in Canada.
• Nuvo Financial is focused on providing net asset value (NAV) loans to small and mid-sized investment funds in Canada.
• Pivot Financial, which specializes in asset-backed private credit targeting mid-market borrowers in Canada.
• TIMIA Capital, a technology lending platform that offers revenue-based investment to fast growing, business-to-business software-as-a-service (or SaaS) businesses in North America.

Montfort's overall assets under management and administration (AUMA) includes assets under management plus loans managed on behalf of third parties. Montfort's overall AUMA, as at Dec. 31, 2023, was $411-million compared with $490-million in overall AUMA as at Dec. 31, 2022. Total assets were $403-million as at Dec. 31, 2023, compared with $456-million as at Dec. 31, 2022. The decrease in total assets was due to a decision by management to terminate a low-margin administration partnership on a portfolio of loans.

The company divides its private credit business into two distinct segments: consumer lending made up of Brightpath Capital and Langhaus Financial, and corporate lending which includes TIMIA Capital, Nuvo Financial and Pivot Financial.

Consumer lending

Brightpath's consumer lending loan portfolio includes a portfolio of approximately 600 mortgages. Mortgages are secured by residential property, located primarily in Ontario, and have a maturity of one year or less.

Langhaus is the leading non-bank provider of insurance policy-backed lending solutions to high-net-worth individuals and entrepreneurs throughout Canada.

The consumer lending segment reported over $298-million AUMA as at Dec. 31, 2023.

Corporate lending

Pivot addresses the borrowing needs of small to mid-sized enterprises in Canada with bespoke term debt structures, bridge loans, asset-based revolving loan facilities and accounts receivable factoring facilities. Pivot portfolio companies typically have one to 100 employees and $1-million to $100-million in revenue.

TIMIA targets companies seeking capital primarily in the following three subsectors: software-as-a-service (SaaS), software-enabled service companies and hardware-enabled service companies. The company is able to efficiently originate transactions, automate aspects of the underwriting process as well as manage the loan portfolio and investors on an ongoing basis.

Nuvo launched late 2023 and successfully funded its first investment in Q1 2024. Nuvo is focused on providing net asset value (NAV) loans to small and mid-sized investment funds in Canada.

The corporate lending segment reported $113-million AUMA as at Dec. 31, 2023.

This news release is qualified in its entirety by the company's financial statements for the three and 12 months ended Dec. 31, 2023, and 2022, and the associated management's discussion and analysis respecting the same periods, which can be downloaded from the company's profile on SEDAR+.

About Montfort Capital Corp.

Montfort is a trusted provider of focused private credit strategies for institutional investors, family offices and wealth managers. The company employs focused strategies, experienced management teams and advanced technology to drive superior risk-adjusted investment returns.

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