Founders Advantage Capital Corp.
TSX VENTURE : FCF

Founders Advantage Capital Corp.

November 10, 2016 20:45 ET

Founders Advantage Capital Corp. Announces Quarterly Results

CALGARY, ALBERTA--(Marketwired - Nov. 10, 2016) - Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the "Corporation") is pleased to report its financial results for the quarter ended September 30, 2016 ("Q4 2016"). The comparative period is the quarter ended September 30, 2015 ("Q4 2015"). Note that during Q4 2016, the Corporation changed its year end from September 30 to December 31. As a result, the Corporation has a one-time, fifteen-month transition year, covering the months of October 2015 to December 2016. All results are presented in Canadian dollars. Readers should refer to the three and twelve months ended September 30, 2016 management discussion and analysis and condensed interim consolidated financial statements for complete information, which are available on SEDAR at www.sedar.com and on the Corporation's website at www.advantagecapital.ca.

Selected highlights

Three months ended September 30, Twelve months ended September 30,
2016 2015 2016 2015
Revenue $ 10,642,963 $ - $ 13,660,734 $ -
Earnings (loss) from operations $ 699,024 $ (847,901) $ (4,733,540) $ (3,281,749)
EBITDA (1) $ 1,868,756 $ (638,330) $ (4,491,716) $ 35,225,336
Normalized EBITDA(1) $ 5,899,559 $ (242,734) $ 4,972,975 $ (1,238,573)
Net (loss) income attributable to shareholders $ (2,842,354) $ (149,886) $ (7,383,992) $ 35,709,351

Notes:

  1. See "Non-IFRS measures" below for the definition of EBITDA and Normalized EBITDA and cautions related thereto.

Three months ended September 30, 2016 Financial Highlights

  • The Corporation completed a $33.3 million common share offering and finalized a $22.0 million senior debt facility in July 2016. The senior debt facility was used to repay the $20 million bridge facility which the Corporation used to fund a portion of the purchase price in acquiring a 60% ownership interest in Dominion Lender Centers ("DLC").
  • Revenues were $10.6 million, compared to nil during Q4 2015, as a result of the acquisition of DLC on June 3, 2016.
  • Earnings from operations were $0.7 million, compared to a loss from operations of $0.8 million during Q4 2015. This increase over the prior year is significantly due to the acquisition of DLC, which is generating revenues from operations. This increase was partially offset by higher general and administrative expenses of $3.5 million, compared to $0.5 million during Q4 2015, the result of higher salaries, professional fees and travel costs. Further, share-based payments increased to $3.2 million, compared to $0.4 million during Q4 2015, due to the Corporation having granted additional share options during the current quarter, compared to the prior year quarter.
  • Net loss was $1.2 million, compared to a net loss of $0.2 million during Q4 2015. The current quarter net loss is the result of the recognition of a full quarter of DLC's financial results, offset by higher head office costs related to a number of items including, salaries, acquisition costs, amortization of intangible assets, finance expense on loans and borrowings and the issuance of share options.

DLC Highlights

For the three months ended September 30, 2016, the Corporation would like to highlight the following financial highlights relating to DLC:

  • DLC's revenue increased by 34% to $10.6 million when compared to the same prior year period ($7.9 million).
  • DLC's expenses increased by 55% to $2.6 million when compared to the same prior year period ($1.7 million), primarily as a result of the growth in the business due to DLC's acquisition of MA Mortgage Architects Inc. effective December 31, 2015.
  • DLC's EBITDA increased by 56% to $6.7 million when compared to the same prior year period ($4.4 million). See "Non-IFRS measures" below for the definition of EBITDA and cautions related thereto.
  • DLC's business tracks the seasonality of home purchases in Canada. Based on the seasonality of DLC's operations, readers are cautioned not to weight quarterly financial data equally for all quarters. In addition, we note that DLC earns mortgage volume bonuses from lenders in the latter quarters of each year as mortgage volume targets are achieved.

Non-IFRS measures

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Normalized EBITDA is defined as EBITDA before non-cash items such as share-based payments and losses recognized on the sale of investments, and any unusual non-operating one-time items such as corporate start-up costs and acquisition and due diligence costs. Readers are cautioned that EBITDA and Normalized EBITDA should not be construed as a substitute or an alternative to applicable generally accepted accounting principle measures as determined in accordance with IFRS.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a permanent investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing majority interest acquisitions of cash flow positive middle-market privately held entities. The Corporation seeks to win mandates by appealing to the segment of the market which is not aligned with traditional private equity control, royalty monetizations or related structures. The Corporation's innovative platform offers disproportionate incentives (contractually) for growth in favour of our partner entrepreneurs. This unique platform is designed to appeal to entrepreneurs who believe in the growth of their businesses and who want the added ability to continue managing the business while partnering with a long-term partner.

The Corporation's common shares are listed on the TSX Venture Exchange under the symbol "FCF".

For further information, please refer to the Corporation's website at www.advantagecapital.ca.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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