Second Quarter Report 2023
ACCORD FINANCIAL CORP.
MESSAGE FROM THE PRESIDENT AND CEO
Enclosed are the financial statements, as well as Management's Discussion and Analysis, for the quarter ended June 30, 2023 together with comparative figures for December 31, 2022 and the same period of 2022. These financial statements have not been reviewed by the Company's auditors but have been reviewed and approved by its Audit Committee and Board of Directors.
After more than a year of navigating tough headwinds, reflected in a flat or slightly declining loan portfolio most quarters, Accord's portfolio turned the corner in the second quarter. The Company's finance receivables and loans grew to $479.3 million at June 30, 2023, up 5.7% year-over-year. New business activity across all our operating companies is building.
It's been a long journey; the rapid change in business conditions through 2022 created challenges within our core markets and headwinds to growth and earnings. Inflation and rising interest rates hampered financial performance for small and medium sized businesses across many industries, and Accord's operating companies faced related challenges, including a weaker credit environment, and in many sectors, weaker deal flow.
The tide is starting to turn; the economic environment is beginning to provide the ingredients for growth. Economic uncertainty often leads the major banks to restrict their lending appetite, which provides opportunities for Accord as our expertise, and reliance on strong collateral, allows us to finance companies that may no longer meet the banks' criteria. We are seeing evidence of this now in the form of stronger deal flow in all our operating companies, in many cases originating with the banks.
Table of Contents
- Message From the President and CEO
- Management's Discussion and Analysis
- Consolidated Statements of Financial Position (Unaudited)
- Consolidated Statement of Earnings (Unaudited)
- Consolidated Statement of Comprehensive Income (Unaudited)
- Consolidated Statements of Changes in Equity (Unaudited)
- Consolidated Statements of Cash Flows (Unaudited)
- Notes to the Consolidated Financial Statements
Inside back cover Corporate Information
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ACCORD FINANCIAL CORP.
MESSAGE FROM THE PRESIDENT AND CEO
Adding to the organic growth, on July 1st Accord launched its next generation program with Export Development Canada (EDC), building on our successful risk- sharing partnership, unique in the non-bank small business lending segment. The Accord|EDC Trade Expansion Lending Program ("TELP") provides financing to companies engaged throughout the export supply chain (including companies supporting exporters with goods and services). EDC's 75% loan loss guarantee allows Accord to offer faster, simpler approvals, supporting a wider range of SMEs. Since 2021 Accord has lent $250.0 million to more than 1,500 Canadian small businesses, supported by similar EDC programs now replaced by TELP.
Looking past the headline growth, over the last several quarters Accord has grappled with two balance sheet challenges. First, $20.6 million of convertible debentures, issued in 2018, were set for repayment at the end of this year; with the public markets unconducive to a new issue, our debenture holders voted to extend the term to January 2026. This support from an important stakeholder group brings clarity to the balance sheet as we prepare for the next phase of growth. Second, we've faced challenges at BondIt Media Capital, which is funded by a dedicated debt facility outside of our banking group; growth there is limited within the current facility, and market forces have hindered BondIt from passing through increased interest costs over the past year. We continue to work on a number of strategies to address these challenges.
Supported by generally higher yields, revenue rose slightly year-over-year to $17.9 million in the second quarter and grew 11.4% to $36.4 million for the six months to June 30, 2023, compared to the same period last year. However, rising interest costs, and challenges at BondIt, contributed to a net loss attributable to shareholders of $263 thousand. Year-to-date net earnings attributable to shareholders were $1.8 million, down from $3.3 million in the same period last year. Book value per common share held steady at $11.79, compared to $11.80 at the start of the year.
We are grateful for the support shown by Accord's investors and debenture holders through this tough period. Our equity base remains strong at more than $100.0 million and we continue to enjoy support from a syndicate of six major banks, combining for ample funding to support the next phase of growth. For forty-five years Accord has successfully navigated through multiple economic cycles, giving us valuable perspective as the current environment unfolds. With ambition, deep market presence and financial strength, Accord is poised to unlock potential for our investors in the year ahead.
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ACCORD FINANCIAL CORP.
MESSAGE FROM THE PRESIDENT AND CEO
On August 2nd the Board of Directors declared a regular quarterly dividend of $0.075 per common share, payable September 1, 2023, to shareholders of record at the close of business August 15, 2023.
Simon Hitzig
President and Chief Executive Officer
August 10, 2023
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