Element Financial Corporation
TSX : EFN

Element Financial Corporation

February 25, 2015 16:30 ET

Element Reports $0.25 Per Share of Free Operating Cash Flow(1) in Q4 and $0.76 for FY 2014 on $9.7 Billion of Earning Assets

TORONTO, ONTARIO--(Marketwired - Feb. 25, 2015) - Element Financial Corporation (TSX:EFN)

  • After tax adjusted operating earnings per share of $0.19 for Q4 and $0.57 for FY 2014
  • Originations increase to $1.7 billion in Q4 and exceed $4.7 billion for FY 2014
  • US market accounted for 71.4 % of originations and 49.1 % of financial revenue in Q4
  • Financial revenue increased to 8.23% of average earning assets in Q4 versus 8.00% in Q3
  • Interest expense remained flat at 2.35% of average earning assets in Q4 versus 2.33% in Q3
  • Operating expenses decreased to 2.52% of average earning assets in Q4 versus 2.61% in Q3
  • Before tax return on average common equity increased to double digits at 10.9% in Q4 from 9.7% in Q3
  • Tangible leverage increased to 3.72:1from 3.47:1 at the end of Q3
  • Book value per share increased to $9.34 at the end of Q4 from $8.93 at the end of Q3

Element Financial Corporation (TSX:EFN) ("Element" or "the Company"), one of North America's leading equipment finance companies, today reported financial results for the 12-month and three-month periods ending December 31, 2014. Free operating cash flow(1) amounted to $189.5 million or $0.76 per share for the 12-month period and $71.8 million or $0.25 per share for the three-month period. After tax adjusted operating income amounted to $148.4 million or $0.57 per share for the 12-month period ended December 31, 2014 and $55.4 million or $0.19 per share for the three-month period ended December 31, 2014.

"These results are in line with the guidance we provided to investors last year and offer improved visibility into how our fully integrated operations can be expected to perform through 2015," said Steven Hudson, Element's Chairman and CEO. "With total assets in excess of $11 billion, we are steadily advancing toward our objective of establishing Element as a profitable and durable North American commercial finance company in each of our four chosen verticals," added Mr. Hudson.

Overall, new originations grew 41.8 percent to $1.67 billion for the three-month period ended December 31, 2014 versus $1.17 billion in Q3-2014. Fleet Management accounted for $727.6 million of Q4 originations versus $482.5 million in the previous period. The Rail Finance vertical contributed $136.7 million to Q4 originations versus $162.6 million in the previous period. Aviation Finance accounted for $397.2 million of Q4 originations versus $157.1 million in the previous period. The Commercial & Vendor vertical accounted for $404.2 million of Q4 originations versus $372.6 million in the previous quarter.

Financial revenue for the three-month period ended December 31, 2014 was $175.7 million or 8.2 percent of average earning assets versus $157.0 million in the previous quarter or 8.0 percent of average earning assets. Other revenue included in financial revenue amounted to $54.8 million or 2.6 percent of average earning assets versus $47.3 million or 2.4 percent of average earning assets in the previous quarter. Interest expense was $50.0 million for the three-month period ended December 31, 2014 or 2.3 percent of average earning assets versus $45.8 million or 2.3 percent of average earning assets in the previous quarter.

Net financial income for the three-month period ended December 31, 2014 was $125.7 million for the quarter versus $111.2 million in the preceding quarter. Adjusted operating expense for the three-month period ended December 31, 2014 was $53.8 million or 2.5 percent of average earning assets versus $51.2 million or 2.6 percent of average earning assets in the previous quarter.

Total earning assets increased by $819.6 million during the three-month period to $9.7 billion as at December 31, 2014 versus $8.9 billion as at the end of the preceding quarter. Finance receivables increased to $8.5 billion and Equipment under operating leases increased to $1.3 billion as at December 31, 2014 versus $7.8 billion and $1.1 billion respectively reported at the end of the preceding quarter.

Total debt increased to $8.0 billion as at December 31, 2014 from $7.3 billion as at September 30, 2014. The Company's tangible leverage ratio increased to 3.72:1 as at December 31, 2014 versus 3.47:1 as at September 30, 2014.

"With the US market accounting for more than 71 percent of the new originations reported in the fourth quarter of last year, we started 2015 with more than 63 percent of our earning assets based in the US," noted Mr. Hudson. "The solid performance that we are seeing from this market in the first quarter gives us further confidence in our guidance of $1.44 of free operating cash flow per share and $1.05 of after tax adjusted operating EPS for the current fiscal year."

(1) See Non-IFRS Measures

Conference Call

A conference call to discuss the results with analysts will be held on Wednesday, February 25, 2015 at 6:00 p.m. ET. The conference call can be accessed by dialing the following numbers:

North America Toll-Free: 1-877-695-6175 passcode 5943633

Local & International: 416-340-2217 passcode 5943633

A series of presentation slides will be referenced by management during the conference call. These slides will be available on the Company's website in advance of the conference call and may be accessed at www.elementcorp.com/investors/presentations-1.

The conference call will be recorded and can be accessed until March 27, 2015 by dialing 1-800-408-3053 or 905-694-9451 and entering the pass code 8134713.

Audited Statements and MD&A

Element's audited financial statements and related management discussion and analysis as at and for the fiscal year ended December 31, 2014 have been filed on SEDAR (www.sedar.com).

Non-IFRS Measures

The Company's unaudited condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and accounting policies adopted are in accordance with IFRS.

The Company believes that certain Non-IFRS Measures can be useful to investors because they provide a means by which investors can evaluate the Company's underlying key drivers and operating performance of the business, exclusive of certain adjustments and activities that investors may consider to be unrelated to the underlying economic performance of the business of a given period. Throughout this Press Release, management used a number of terms and ratios which do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures presented by other organizations. A full description of these measures can be found in the Management Discussion & Analysis that accompanies the financial statements for the quarter ended December 31, 2014.

The following table provides a reconciliation of non-IFRS to IFRS measures related to the Company:

As at and for the three months
ended
As at and for the years ended
$ thousands (except % and per share amounts) December 31, 2014 September 30,
2014
December 31, 2013 December 31, 2014 December 31, 2013
Reported and adjusted income measures
Net income (loss) A 47,064 (19,959 ) (278 ) 54,069 (1,650 )
Adjustments:
Amortization of debenture synthetic discount 1,445 1,418 - 2,863 -
Share-based compensation 6,135 4,861 4,212 18,851 11,949
Amortization of intangible assets from acquisitions 7,840 746 1,176 10,447 2,206
Integration costs 3,346 50,832 200 54,178 11,200
Transaction costs - 31,856 14,560 44,963 35,060
Provision (recovery) of income taxes 6,008 (9,758 ) 489 4,099 6,496
Adjusted operating income B 71,838 59,996 20,359 189,470 65,261
Provision for taxes applicable to adjusted operating income C (16,393 ) (12,724 ) (5,322 ) (41,085 ) (17,581 )
After-tax adjusted operating income D=B-C 55,445 47,272 15,037 148,385 47,680
Selected cash flow amounts
Free operating cash flow B 71,838 59,996 20,359 189,470 65,261
Selected statement of financial position amounts
Finance receivables, before allowance for credit losses (1) E 8,482,904 7,828,873 2,774,299 8,482,904 2,774,299
Allowance for credit losses F 16,915 16,308 11,071 16,915 11,071
Finance receivables, net (1) G=E-F 8,465,989 7,812,565 2,301,425 8,465,989 2,763,228
Equipment under operating leases (1) H 1,279,670 1,113,530 239,055 1,279,670 239,055
Total earning assets I=G+H 9,745,659 8,926,095 3,002,283 9,745,659 3,002,283
Average earning assets, net J 8,543,386 7,853,916 2,454,446 5,888,922 1,893,778
Goodwill and intangible assets K 863,008 821,288 182,673 863,008 182,673
Accounts payable and accrued liabilities L 368,113 380,096 80,917 368,113 80,917
Secured borrowings M 7,751,395 6,994,852 1,713,973 7,751,395 1,893,910
Unsecured convertible debentures N 303,147 301,189 - 303,147 -
Total debt O 8,054,542 7,296,041 1,893,910 8,054,542 1,893,910
Average debt P 7,536,131 6,835,759 1,752,400 4,779,722 1,381,880
Total shareholders' equity Q 2,830,951 2,723,435 889,072 2,830,951 1,446,656
Preferred shares R 365,113 365,113 115,000 365,113 115,000
Common shareholders' equity S=Q-R 2,465,838 2,358,322 1,331,656 2,465,838 1,331,656
Average common shareholders' equity T 2,406,023 2,223,893 961,860 1,840,665 736,981
Average total shareholders' equity U 2,771,135 2,588,328 977,678 2,121,399 740,968
Non-IFRS and IFRS Key Annualized Operating Ratios and per Share Information:
As at and for the three months ended As at and for the years ended
$ thousands (except % and per share amounts) December 31, 2014 September 30,
2014
December 31, 2013 December 31, 2014 December 31, 2013
Free operating cashflow per share [basic] (1) (B-Y)/W $ 0.25 $ 0.21 $ 0.12 $ 0.76 $ 0.47
After-tax adjusted operating income per share [basic] (D-Y)/W $ 0.19 $ 0.16 $ 0.09 $ 0.57 $ 0.34
Key annualized operating ratios
Financial leverage ratio (O)/Q 2.85 2.68 1.31 2.85 1.31
Tangible leverage ratio (2) 3.72 3.47 1.56 3.72 1.56
Average financial leverage ratio P/U 2.72 2.64 1.79 2.25 1.86
Allowance for credit losses as a percentage of finance receivables F/E 0.20 % 0.21 % 0.40 % 0.20 % 0.40 %
Adjusted operating income on average common shareholders' equity (B-Y)/T 10.93 % 9.69 % 8.34 % 9.26 % 8.81 %
Adjusted operating income on average earning assets B/J 3.36 % 3.06 % 3.32 % 3.22 % 3.45 %
After-tax adjusted operating income on average common shareholders' equity (D-Y)/T 8.20 % 7.40 % 6.12 % 7.03 % 6.43 %
After-tax adjusted operating income on average earning assets D/J 2.60 % 2.41 % 2.45 % 2.52 % 2.52 %
Per share information
Number of shares outstanding (including special warrants) V 264,059 264,056 188,935 264,059 188,935
Weighted average number of shares outstanding [basic] W 264,057 258,381 160,530 225,289 138,423
Weighted average number of shares outstanding [diluted] X 268,889 258,381 160,530 230,145 138,423
Cumulative preferred share dividends during the period Y $ 6,109 $ 6,145 $ 312 $ 18,935 $ 312
Net income (loss) per share [basic] (A-Y)/W $ 0.16 $ (0.10 ) $ - $ 0.16 $ (0.01 )
Net income (loss) per share [diluted] (A-Y)/X $ 0.15 $ (0.10 ) $ - $ 0.15 $ (0.01 )
Book value per share S/V $ 9.34 $ 8.93 $ 7.05 $ 9.34 $ 7.05
(1) Prior period free operating cashflow per share [basic] has been restated for the change in definition applied in the current period.
(2) The tangible leverage ratio has been computed beginning September 30, 2014 to conform and be in accordance with the Company's latest secured borrowing agreements, prior periods have been computed based on (O+L)/(Q-K).
Selected Financial Information and Financial Ratios
The following tables summarize key financial data and key operating ratios for the three-month periods ended December 31, 2014, September 30, 2014 and December 31, 2013:
As at and for the three months ended
(in $000's for stated values, except ratios and per share amounts) December 31, 2014 September 30,
2014
December 31, 2013
$ $ $
After tax adjusted operating income (loss) per share (basic) (1) 0.19 0.16 0.09
Free operating cash flows per share (basic) (1) 0.25 0.21 0.12
Financial revenue (1) 175,703 157,043 50,945
Adjusted operating income (1) 71,838 59,996 20,359
After tax adjusted operating income (1) 55,445 47,272 15,037
Income/(loss) before taxes 53,072 (29,717 ) 211
Net income/(loss) 47,064 (19,959 ) (278 )
Total assets 11,290,502 10,449,512 3,454,653
Finance receivables, net 8,465,989 7,812,565 2,763,228
Equipment under operating leases 1,279,670 1,113,530 239,055
Total earning assets 9,745,659 8,926,095 3,002,283
New originations 1,665,765 1,174,764 997,172
New originations PHH Arval 662,772 414,041
Loan acquisitions (2) - 4,298,224 -
Secured borrowings 7,751,395 6,994,852 1,893,910
Convertible debentures 303,147 301,189 -
Total debt 8,054,542 7,296,041 1,893,910
Average finance receivables (1) 7,396,499 6,914,798.86 2,398,255
Average equipment under operating leases (1) 1,146,887 939,117 56,191
Average earning assets (1) 8,543,386 7,853,915.86 2,454,446
Average debt outstanding (1) 7,536,131 6,835,759 1,752,400
Number of shares outstanding (including special warrants) 264,059 264,056 188,935
Weighted average number of shares outstanding (including special warrants) [basic] 264,057 258,381 160,530
Weighted average number of shares outstanding [diluted] 268,889 258,381 160,530
Total shareholders' equity 2,830,951 2,723,435 1,446,656
Average common shareholders' equity (1) 2,406,023 2,223,893 961,860
Net income (loss) per share [basic] 0.16 (0.10 ) -
Net income (loss) per share [diluted] 0.15 (0.10 ) -
(1) For additional information, see "Description of Non-IFRS Measures" section.
(2) Fair value assigned to the finance receivable assets from the acquisition of PHH Arval on July 7, 2014.
The following table summarizes key operating ratios as at and for the three months ended:
As at and for the three-months ended
December 31, September 30, December 31,
2014 2014 2013
Ratios
Financial leverage ratio (2) (3) 2.85 2.68 1.31
Average financial leverage ratio (2) 2.72 2.64 1.79
Tangible leverage ratio (2) (4) 3.72 3.47 1.56
Average tangible leverage ratio (2) (4) 3.13 3.08 2.26
Allowance for credit losses as a percentage of finance receivables (2) 0.20 % 0.21 % 0.40 %
Annualized credit loss provision as a percentage of average finance receivables (2) 0.12 % 0.22 % 0.18 %
Portfolio average remaining life (in months, excluding equipment under operating leases) (2) 24.8 16.4 27.8
Adjusted operating income on average common shareholders' equity (2) 10.93 % 9.69 % 8.34 %
Adjusted operating income on average earning assets (2) 3.36 % 3.06 % 3.32 %
After-tax adjusted operating income on average common shareholders' equity (2) 8.20 % 7.40 % 6.12 %
After-tax adjusted operating income on average earning assets (2) 2.60 % 2.41 % 2.45 %
Book value per share $ 9.34 $ 8.93 $ 7.05
(1) All are ratios presented on an annualized basis.
(2) For additional information, see "Description of Non-IFRS Measures" section.
(3) Financial leverage ratio is computed as total debt (the sum of secured borrowings and extendible convertible debentures) divided by total shareholders equity.
(4) The tangible leverage ratio has been computed beginning with the quarter ended September 30, 2014 to conform to the terms of the Company's latest secured borrowing agreements. For prior periods tangible leverage ratio has been computed as the sum of secured borrowings, convertible debentures and accounts payable and accrued liabilities, divided by shareholders equity less goodwill and intangible assets.
Selected Financial Information and Financial Ratios
The following tables summarize key financial data and key operating ratios as at and for the year ended December 31, 2014:
As at and for the year ended As at and for the year ended As at and for the year ended As at and for the nine-months ended As at and for the year ended
(in $000's for stated values, except ratios and per share amounts) December 31,
2014
December 31,
2013
December 31,
2012
December 31,
2011
March 31,
2011
$ $ $ $ $
After tax adjusted operating income (loss) per share (basic) (1) 0.57 0.34 0.14 (0.01 ) (0.34 )
Free operating cash flows per share (basic) (1) 0.76 0.47 0.19 (0.01 ) (0.34 )
Financial revenue (1) 474,323 163,117 53,006 10,386 1,728
Adjusted operating income (1) 189,470 65,261 14,910 (428 ) (1,449 )
After tax adjusted operating income (1) 148,385 47,680 10,941 (1,034 ) (1,449 )
Income/(loss) before taxes 58,168 4,846 (11,370 ) (7,544 ) (1,449 )
Net income/(loss) 54,069 (1,650 ) (6,420 ) (6,071 ) (1,449 )
Total assets 11,290,502 3,454,653 1,508,892 416,715 47,073
Finance receivables, net 8,465,989 2,763,228 1,314.617 231,537 37,586
Equipment under operating leases 1,279,670 239,055 - - -
Total earning assets 9,745,659 3,002,283 1,314.617 231,537 37,586
New originations 4,717,146 2,101,755 689,330 119,671 46,604
New originations PHH Arval 1,076,813 - - - -
Loan acquisitions (2) 4,298,224 573,008 756,236 158,474 -
Secured borrowings 7,751,395 1,893,910 989,128 172,517 33,250
Convertible debentures 303,147 - - - -
Total debt 8,054,542 1,893,910 989,128 172,517 33,250
Average finance receivables (1) 5,027,425 1,879,729 629,485 168,099 17,782
Average equipment under operating leases (1) 861,497 14,049 - - -
Average earning assets (1) 5,888,922 1,893,778 629,485 168,099 17,782
Average debt outstanding (1) 4,779,722 1,381,880 453,356 119,624 15,980
Number of shares outstanding (including special warrants) 264,059 188,935 102,542 66,380 4,412
Weighted average number of shares outstanding (including special warrants) [basic] 225,289 138,423 78,132 33,302 3,923
Weighted average number of shares outstanding [diluted] 230,145 138,423 78,132 33,302 3,923
Total shareholders' equity 2,830,951 1,446,656 423,425 238,341 8,001
Average common shareholders' equity (1) 1,840,665 736,981 300,807 91,687 7,178
Net income (loss) per share [basic] 0.16 (0.01 ) (0.08 ) (0.18 ) (0.37 )
Net income (loss) per share [diluted] 0.15 (0.01 ) (0.08 ) (0.18 ) (0.37 )
The following table summarizes key operating ratios as at and for the years ended:
As at and for the year ended
December 31, 2014 December 31, 2013
Ratios
Financial leverage ratio (1) (2) 2.85 1.31
Average financial leverage ratio (1) 2.25 1.86
Tangible leverage ratio (1) (3) 3.72 1.56
Average tangible leverage ratio (1) (3) 2.60 2.39
Allowance for credit losses as a percentage of finance receivables (1) 0.20 % 0.40 %
Annualized credit loss provision as a percentage of average finance receivables (1) 0.26 % 0.29 %
Portfolio average remaining life (in months, excluding equipment under operating leases) (1) 24.8 27.8
Adjusted operating income on average common shareholders' equity (1) 9.26 % 8.81 %
Adjusted operating income on average earning assets (1) 3.22 % 3.45 %
After-tax adjusted operating income on average common shareholders' equity (1) 7.03 % 6.43 %
After-tax adjusted operating income on average earning assets (1) 2.52 % 2.52 %
Book value per share $9.34 $7.05
(1) For additional information, see "Description of Non-IFRS Measures" section.
(2) Financial leverage ratio is computed as total debt (the sum of secured borrowings and extendible convertible debentures) divided by total shareholders equity.
(3) The tangible leverage ratio has been computed beginning with the quarter ended September 30, 2014 to conform to the terms of the Company's latest secured borrowing agreements. For prior periods tangible leverage ratio has been computed as the sum of secured borrowings, convertible debentures and accounts payable and accrued liabilities, divided by shareholders equity less goodwill and intangible assets.
Results of Operations - For the three months ended December 31, 2014, September 30, 2014 and December 31, 2013 and twelve months ended December 31, 2014 and 2013
The following table sets forth a summary of the Company's results of operations for the three months ended December 31, 2014, September 30, 2014 and December 31, 2013 and twelve months ended December 31, 2014 and 2013:
For the three-month periods ended For the years ended
December 31,
2014
September 30,
2014
December 31,
2013
December 31,
2014
December 31,
2013
(in 000's for stated values, except per unit amounts) $ $ $ $ $
Net Financial Income
Interest income 102,527 96,249 41,030 298,868 135,262
Rental revenue, net (1) 20,664 17,306 1,058 62,645 1,058
Total interest income and rental revenue, net 123,191 113,555 42,088 361,513 136,320
Interest expense 50,046 45,819 16,745 140,383 49,525
Net interest income and rental revenue, net before provision for credit losses 73,145 67,736 25,343 221,130 86,795
Provision for credit losses 2,268 3,851 1,064 12,945 5,404
Net interest income and rental revenue, net 70,877 63,885 24,279 208,185 81,391
Other revenue items 54,780 47,339 9,921 125,755 32,201
Net financial income 125,657 111,224 34,200 333,940 113,592
Operating Expenses
Salaries, wages and benefits 32,835 33,285 10,015 91,251 34,650
General and administration expenses 20,984 17,943 3,826 53,219 13,681
Amortization of debenture synthetic discount 1,445 1,418 - 2,863 -
Share-based compensation 6,135 4,861 4,212 18,851 11,949
61,399 57,507 18,053 166,184 60,280
Business acquisition costs
Amortization of intangibles from acquisition 7,840 746 1,176 10,447 2,206
Integration costs 3,346 50,832 200 54,178 11,200
Transaction costs - 31,856 14,560 44,963 35,060
11,186 83,434 15,936 109,588 48,466
Net income/(loss) before taxes 53,072 (29,717 ) 211 58,168 4,846
Tax expense/(recovery) 6,008 (9,758 ) 489 4,099 6,496
Net income/(loss) for the period 47,064 (19,959 ) (278 ) 54,069 (1,650 )
Net income/(loss) per share [basic] 0.16 (0.10 ) - 0.16 (0.01 )
Net income/(loss) per share [diluted] 0.15 (0.10 ) - 0.15 (0.01 )
(1) Rental revenue, net is represents rental income earned on equipment under operating leases, less depreciation.

Overall Performance Highlights for the Three-Months Ended December 31, 2014

The Company's earning assets, consisting of the Company's Finance receivables and Equipment under operating leases, have grown substantially during the period to December 31, 2014 to $9,745.7 million from $3,002.3 million reported at December 31, 2013. The growth over December 31, 2013 is primarily due to the combined effect of the total new originations for the year in the amount of $4,717.1 million, helped by the large contribution of the Trinity vendor program and new origination volume contributed by PHH Arval, the acquisition of PHH Arval which added $4,298.2 million of finance receivables on July 7, 2014, net of repayments, syndication activities, depreciation of equipment under operating leases, changes in foreign exchange rates and others of $2,271.9 million.

The Company is reporting a net income of $47.1 million for the three months ended December 31, 2014, compared to a net loss of $0.3 million in the comparative period ended December 31, 2013, and a net loss of $20.0 million in the immediately preceding quarter ended September 30, 2014. Basic net income per share was $0.16 for the three-months ended December 31, 2014, compared to a net loss per share of $0.00 for the comparative period ended December 31, 2013 and a net loss per share of $0.10 for the immediately preceding quarter ended September 30, 2014. The increase over the comparative period ended December 31, 2013 is due to the increased volume of business and earning assets during the current quarter and the timing of acquisition costs incurred related to the acquisition of the rail and helicopter portfolios in December 2013. The increase over the immediately preceding quarter is primarily due to the timing of business acquisition costs related to the acquisition of PHH Arval.

As indicated previously, management believes that adjusted operating income is the most appropriate operating measure of the Company's performance as it excludes non-cash items related to share-based compensation and business acquisition costs which do not relate to maintaining operating activities. For the three months ended December 31, 2014, the Company is reporting adjusted operating income of $71.8 million and after-tax adjusted operating income per share of $0.19, compared to $20.4 million in adjusted operating income or $0.09 in after-tax operating income per share for the comparative three months ended December 31, 2013, and compared to $60.0 million in adjusted operating income or $0.16 in after-tax operating income per share for the immediately preceding quarter ended September 30, 2014.

As indicated previously, Management also believes that Free Operating Cash Flows and Free Operating Cash Flows per Share as described in the Non-IFRS Measures section of this MD&A are a key statistics to properly assess the operating performances of the Company to mostly reflect the substantial value being created by the very long deferral of cash income taxes and the investment value produced by that deferral. Thus, while the Company is reporting after-tax adjusted operating income per share of $0.19 for the three months ended December 31, 2014, free operating cash flows per share reaches $0.25 per share, compared to $0.09 and $0.12, respectively, for the comparative three months ended December 31, 2013, and $0.16 and $0.21, respectively, for the immediately preceding quarter ended September 30, 2014.

Overall Performance Highlights for the Year Ended December 31, 2014

The Company's earning assets, consisting of the Company's Finance receivables and Equipment under operating leases, have grown substantially during the year ended December 31, 2014 to $9,745.7 million from $3,002.3 million reported at December 31, 2013. The growth over December 31, 2013 is primarily due to the combined effect of the total new originations for the year in the amount of $4,717.1 million, helped by the large contribution of the Trinity vendor program and new origination volume contributed by PHH Arval, the acquisition of PHH Arval which added $4,298.2 million of finance receivables on July 7, 2014, net of repayments, syndication activities, amortization of equipment under operating leases, and changes in foreign exchange rates and others of $2,271.9 million.

The Company is reporting a net income for the year ended December 31, 2014 of $54.1 million, compared to a net loss of $1.7 million for the comparative year ended December 31, 2013. Basic net income per share for the year ended December 31, 2014 was $0.16 versus a net loss per share of $0.01 for the comparative year ended December 31, 2013.

As indicated previously, management believes that adjusted operating income is the most appropriate operating measure of the Company's performance as it excludes non-cash items related to share-based compensation and business acquisition costs which do not relate to maintaining operating activities. For the year ended December 31, 2014, the Company is reporting adjusted operating income of $189.5 million and after-tax adjusted operating income per share of $0.57, compared to $65.3 million and $0.34 per share in the comparative year ended December 31, 2013.

As indicated previously, Management also believes that Free Operating Cash Flows and Free Operating Cash Flows per Share as described in the Non-IFRS Measures section of this MD&A are a key statistics to properly assess the operating performances of the Company to mostly reflect the substantial value being created by the very long deferral of cash income taxes and the investment value produced by that deferral. Thus, while the Company is reporting after-tax adjusted operating income per share of $0.57 for the year ended December 31, 2014, free operating cash flows per share reaches $0.76 per share, compared to $0.34 and $0.47 per share for the year ended December 31, 2013, respectively.

Consolidated Financial Position
The following table sets forth a summary of the Company's consolidated financial position as of the dates presented:
As at
December 31,
2014
September 30,
2014
December 31,
2013
(in 000's for stated values, except per unit amounts) $ $ $
Cash 66,869 46,776 12,401
Restricted cash 443,238 455,998 103,550
Finance receivables 8,465,989 7,812,565 2,763,228
Equipment under operating leases 1,279,670 1,113,530 239,055
Derivative financial instruments 5,746 5,424 -
Deferred tax assets 39,405 69,028 28,231
Non-portfolio assets 989,585 946,191 308,188
Total assets 11,290,502 10,449,512 3,454,653
Accounts payable and accrued liabilities 368,113 380,096 80,917
Secured borrowings 7,751,395 6,994,852 1,893,910
Convertible debentures 303,147 301,189 -
Derivative financial instruments 11,196 6,305 3,014
Deferred tax liabilities 25,700 43,635 30,156
Total liabilities 8,459,551 7,726,077 2,007,997
Shareholders' equity 2,830,951 2,723,435 1,446,656
Total liabilities and shareholders' equity 11,290,502 10,449,512 3,454,653

About Element Financial Corporation

With total assets in excess of $11 billion, Element Financial Corporation is one of North America's leading equipment finance companies. Element operates across North America in four verticals of the equipment finance market - Commercial & Vendor Finance, Aviation Finance, Railcar Finance and Fleet Management

This release includes forward-looking statements regarding Element and its business. Such statements are based on the current expectations and views of future events of Element's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements, including, among others, statements regarding new originations in the current quarter, the anticipated pipeline of prospective transactions, and proposed purchases of portfolios of finance assets. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Element, including risks regarding the equipment finance industry, economic factors, risks related to completion of the proposed purchases of portfolios of finance assets, and many other factors beyond the control of Element. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. A discussion of the material risks and assumptions associated with this outlook can be found in Element's 2014 MD&A, and 2013 Annual Information Form, all of which have been filed on SEDAR and can be accessed at www.sedar.com. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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