SLT.WT.U Saltire Capital Ltd

TORONTO, March 20, 2025 /CNW/ - Saltire Capital Ltd (TSX: SLT.U) (TSX: SLT.WT.U) ("Saltire" or the "Company"), today reported its financial results as at and for the year ended December 31, 2024.  The Company's audited consolidated financial statements ("Financial Statements") along with its management discussion and analysis have been filed on the System for Electronic Document Analysis and Retrieval Plus ("SEDAR+") and may be viewed by shareholders and interested parties under the Company's profile on SEDAR+ at www.sedarplus.ca. All references to "$" herein are to United States Dollars.

Qualifying Acquisition and Private Placement

As previously announced, Saltire (formerly FG Acquisition Corp., a special purpose acquisition company) successfully completed the acquisition of Strong/MDI Screen Systems, Inc. ("MDI") on September 25, 2024 (the "MDI Acquisition").  The MDI Acquisition together with the launch of Saltire's new investment platform constituted Saltire's qualifying acquisition ("Qualifying Acquisition").  As consideration for the MDI Acquisition, Saltire issued to Strong Global Entertainment Inc., MDI's parent company and the vendor under the MDI Acquisition, 1,972,723 common shares ("Common Shares") in the capital of Saltire (valued at $10 per share) and 900,000 series A preferred shares (with an aggregate $9 million initial redemption value) as well as approximately $0.8 million in cash (collectively, the "Acquisition Consideration").  Simultaneously with the completion of the Qualifying Acquisition, the Company also completed an offering of 433,559 Common Shares at a price of $10.00 per Common Share, for gross proceeds of approximately $4.3 million on a private placement basis (the "Private Placement").

2024 Annual Results

For the year ended December 31, 2024, the Company reported net operating income of $1.8 million, compared to net operating income of $3.4 million for the year ended December 31, 2023.  The decline in net operating income was primarily attributable to certain non-recurring expenses related to the Qualifying Acquisition, as well as an increase in the Company's operating expenses as a public company.

The net loss for the year ended December 31, 2024 was $47.3 million, which includes the $44.6 million listing expense pursuant to RTO accounting discussed below, as well as a $2.0 million loss on change in fair value of warrants liability that is a non-cash liability subject to quarterly fair valuation.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for 2024 produced a loss of $46.0 million, which includes the $44.6 million Listing Expense pursuant to RTO accounting discussed below, as well as $2.0 million loss on change in fair value of warrants liability that is a non-cash liability subject to quarterly fair valuation. EBITDA for 2023 was $3.6 million (2023 was neither impacted by RTO accounting, nor by change in fair value of warrants liability since the results of standalone Saltire were only included in Financial Statements from the date of MDI Acquisition).  Adjusted EBITDA for 2024 was $2.7 million, as compared to $3.6 million in 2023. The decline in Adjusted EBITDA was driven by certain non-recurring expenses associated with the Qualifying Acquisition and increased expenses as a public company.  "EBITDA" and "Adjusted EBITDA" are non-IFRS measures. See "Non-IFRS Measures" below.

"We are pleased to have launched Saltire as a public company and report our first year's results post MDI acquisition", said Andrew Clark, CEO of Saltire. "Saltire has a number of initiatives under way in 2025 which we believe will build considerable shareholder value in the coming months and years".

Accounting for Qualifying Acquisition

In accordance with the applicable IFRS® Accounting Standards ("IFRS") as issued by the International Accounting Standards Board, the Qualifying Acquisition was treated as a reverse takeover ("RTO").  Under IFRS, MDI is the accounting acquirer and Saltire is the accounting acquiree in the Qualifying Acquisition. The Financial Statements reflect the Qualifying Acquisition accordingly.

As MDI was deemed to be the acquirer for accounting purposes, its assets, liabilities and operations since incorporation are included in the Financial Statements at their historical carrying values. Saltire's results of operations have been included from September 25, 2024, being the closing date of the MDI Acquisition.  The applicable IFRS accounting rules require that the Company recognize the difference between (A) the deemed value of the common shares of Saltire outstanding prior to the Qualifying Acquisition and (B) the net liabilities of Saltire as of Qualifying Acquisition closing date deemed assumed by MDI in the reverse takeover as listing expense in the Company's consolidated statements of income (loss) and comprehensive income (loss).  The value of Saltire's common shares outstanding prior to the Qualifying Acquisition was approximately $28.8 million (being 2,877,955 shares at $10.00 per share), which is deemed as the consideration paid by MDI under RTO accounting rules ("Deemed Consideration").  Saltire's net liabilities assumed by MDI on closing of the Qualifying Acquisition were approximately $15.8 million ("Assumed Net Liabilities"), which included (among other items) approximately $11.1 million for non-cash warrant liabilities, and $4.3 million for the Private Placement proceeds received but reflected as a liability on Saltire's opening balance sheet for RTO accounting purposes (and subsequently recorded as common shares equity).  The difference between the Deemed Consideration and Assumed Net Liabilities of $44.6 million was reported as a listing expense (the "Listing Expense") in the consolidated statements of income (loss) and comprehensive income (loss).  There is no net impact of the Listing Expense on the total consolidated shareholders' equity of the Company given the Acquisition Consideration recorded in the Financial Statements.  The warrant liabilities reflected in the Financial Statements are non-cash in nature. Accordingly, over the term of the warrants this liability will either get converted to equity upon the exercise of warrants or get reduced to zero in the event the warrants expire without being exercised.

About Saltire

Saltire is a long-term capital partner that allocates capital to equity, debt and/or hybrid securities of high-quality private companies. Investments made by Saltire consist of meaningful and influential stakes in carefully selected private companies that the management believes are under-valued businesses with high barriers to entry, predictable revenue streams and cash flows and defensive characteristics, with a view to significantly improve the fundamental value over the long-term.  Although Saltire primarily allocates capital to private companies, Saltire may, in certain circumstances if the opportunity arises, also pursue opportunities with orphaned or value challenged small and micro-cap public companies. Saltire provides investors with access to private and control-level investments typically reserved for larger players, while maintaining liquidity.

Non-IFRS Measures

EBITDA and Adjusted EBITDA are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies.  Rather, these measures are provided as additional information to complement the IFRS measures disclosed in the Financial Statements by providing further understanding of Saltire's results of operations from management's perspective. Accordingly, these measures should neither be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.

EBITDA and Adjusted EBITDA are used to provide shareholders with supplemental measures of the Company's operating performance and thus highlight trends in the Company's business that may not otherwise be apparent when relying solely on IFRS measures.

Securities regulations require non-IFRS measures to be clearly defined and reconciled with their most directly comparable IFRS measure.  Management believes that EBITDA and Adjusted EBITDA are useful measures to assess the performance of the Company as they provide more meaningful operating results by excluding the effects of items that are not reflective of underlying business performance and other one-time or non-recurring items.

The following table provides the reconciliation of net loss/income to EBITDA and Adjusted EBITDA for the years ended December 31, 2024 and December 31, 2023:

Forward Looking Information

Certain statements in this press release are prospective in nature and constitute forward-looking information and/or forward-looking statements within the meaning of applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements include, but are not limited to, statements concerning Saltire's initiatives and the impact of same on shareholder value, as well as other statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, outlook, circumstances, performance or expectations that are not historical facts.

Forward-looking statements generally, but not always, can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "could", "would", "will", "expect", "intend", "estimate", "forecasts", "seek", "anticipate", "believes", "should", "plans" or "continue" or similar expressions suggesting future outcomes or events and the negative of any of these terms.

Forward-looking statements reflect management's current beliefs, expectations and assumptions and are based on information currently available to management. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause such differences include but are not limited to those risk factors set out in the Company's final prospectus dated August 2, 2024.

All forward-looking statements included in and incorporated into this press release are qualified by these cautionary statements. Unless otherwise indicated, the forward-looking statements contained herein are made as of the date of this press release, and except as required by applicable law, the Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE Saltire Capital Ltd.