Mr. Brian Pang reports

SOLUTION FINANCIAL REPORTS YEAR END 2023 FINANCIAL RESULTS

Solution Financial Inc. today released its financial results for the year ending Oct. 31, 2023.

Earnings highlights for the year ending Oct. 31, 2023:

• Net income for the year decreased to $38,672 compared with $837,554 in 2022;
• Adjusted net income decreased to $451,826 compared with $1,613,436 in 2022;
• Revenue decreased to $15,377,450 compared with $20,347,916 in 2022;
• Total leasing portfolio decreased 2.4 per cent to $25,578,287 at the end of the year.

Operational highlights for the year-end:

• Leveraged the company's new securitization financing facility to further strengthen the company's working capital position, secure more favourable fixed interest rates and position the company for market expansion opportunities;
• Completed several enhancements to the company's lease quote administrative system to streamline quote generation with dealership networks;
• Launched the company's inaugural Lease Club annual leasing and business planning program.

Despite 2023's turbulence in the lending sector, largely fuelled by the Bank of Canada's measures to combat inflation through increased prime lending rates, Solution Financial adeptly steered through these challenges. "We not only preserved our profitability in fiscal 2023, but also avoided any credit losses all the while strengthening our balance sheet and securing debt facilities to support our growth objectives for 2024. This is a notable accomplishment, especially when viewed against the backdrop of difficulties faced by other more heavily leveraged auto lenders," remarked Bryan Pang, chief executive officer of Solution Financial.

"While the heightened prime lending rates indeed impacted our financial performance, our historical profits facilitated favourable tax savings, cushioning the impact. In the public markets, where challenges abound, Solution Financial outperformed many of our counterparts. This success can be attributed to our robust balance sheet, composed of real, performing assets rather than acquired goodwill and excellent new banking and funding partners. Our historically conservative credit policies and financial management were helpful with this achievement but also present a tremendous opportunity for us to fill a rapidly developing market opportunity from other more traditional auto lenders who are under pressure to raise their rates significantly to make up for rising industry credit defaults. We see this growing opportunity as well timed, considering potential reductions in the number of international students coming to Canada, albeit more likely those students who do not have the financial means to fully support themselves while in Canada, which is not the prevalence of our historical clientele.

"As we look ahead to 2024, our focus remains steadfast on educating the Canadian auto market on our unique approach to leasing and expanding our network of supported dealerships in Alberta and Ontario. Our hybrid leasing approach has been a key driver in the vibrancy of Western Canada's luxury and ultraluxury vehicle markets over the past decades and very well suited to a greater audience of consumers across Canada who are looking for a more flexible and engaged lending partner to help them finance their luxury assets. We are committed to continuing this trajectory, ensuring the market's vitality for years to come."

Financial results

Solution is reporting net income of $38,672 or 0.04 cent per share for the year ending Oct. 31, 2023. This compares with net income of $837,544 or 0.9 cent per share for the year ending Oct. 31, 2022.

Adjusted net income, which is more reflective of actual cash earnings, for the year ending Oct. 31, 2023, was $451,826 or 0.5 cent per share compared with $1,613,436 or 1.8 cents per share for the year ending Oct. 31, 2022. Adjusted net income excludes the non-cash accretion expense related to the convertible debentures and right of use assets of $185,062, income tax recovery of $408,000, amortization of $85,681, provision for credit losses of $89,114, and non-recurring listing and financing fees of $461,297.

Lease portfolio

At Oct. 31, 2023, Solution had 306 vehicles in its lease portfolio, a net decrease of three vehicles over the year to bring the total lease portfolio to $25.6-million.

At Oct. 31, 2023, the average remaining lease term for the portfolio was 1.7 years, weighted by net book value for each vehicle. At Oct. 31, 2023, Solutions' 306 leases were generating annualized gross rental and lease cash flows of approximately $7.0-million.

About Solution Financial Inc.

Solution Financial commenced operations in 2004 and specializes in sourcing and leasing luxury and exotic vehicles, yachts, and other high-value assets. Solution works with a select group of luxury automotive and marine dealerships providing lending solutions to clients who prefer more flexible leasing options than those traditionally offered by banks and other lease providers. Typical customers include new immigrants, business owners and international students who tend to upgrade their vehicles more frequently than traditional lease agreements allow. Solution Financial provides a unique leasing experience whereby it partners with its clients to help source limited edition and difficult to acquire vehicles as well as providing white glove services to clients for insuring, maintaining, upgrading and reselling their vehicles.

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