Founders Advantage Capital Corp.
TSX VENTURE : FCF

Founders Advantage Capital Corp.

August 29, 2016 21:41 ET

Founders Advantage Capital Corp. Announces Third Quarter 2016 Results

CALGARY, ALBERTA--(Marketwired - Aug. 29, 2016) - Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the "Corporation") is pleased to report its financial results for the third quarter ended June 30, 2016 ("Q3 2016"). The comparative period is the third quarter ended June 30, 2015 ("Q3 2015"). All results are presented in Canadian dollars. Readers should refer to the Q3 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.

Q3 2016 Financial and Operational Highlights

  • The Corporation completed a $28.8 million subscription receipt offering in April 2016, along with a $20.0 million bridge financing in May 2016. This cash was used to partially fund the acquisition of a 60% interest in Dominion Lending Centres ("DLC"), which closed on June 3, 2016. As a result, the Corporation's results are materially impacted by the consolidation of DLC's financial information as at and for the 27 days ended June 30, 2016.
  • Revenues were $3.0 million, compared to nil during Q3 2015. This increase is due to the consolidation of DLC during the quarter.
  • Loss from operations was $1.8 million, compared to $0.8 million during Q3 2015. This increase is due to additional expenses being incurred as a result of the change in business model of the Corporation as well as share-based compensation of $1.1 million, compared to $0.2 million during Q3 2015. These increases in costs were partially offset by the $1.4 million income from operations generated by DLC during the current quarter.
  • Net income was $1.0 million, compared to a net loss of $0.9 million during Q3 2015. This increase is significantly due to the recognition of a deferred tax recovery for $3.8 million, partially offset by additional expenses being incurred as a result of the change in business model as well interest expense related to the bridge debt facility used to partially fund the DLC acquisition.

DLC Highlights

For the three months ended June 30, 2016, the Corporation would like to highlight the following financial highlights relating to DLC (the following DLC financial data is provided for the full three months ended June 30, 2016 and we note that the DLC acquisition was completed by the Corporation on June 3, 2016):

  • DLC's revenue increased by 29% to $8,172,558 for the three months ended June 30, 2016 when compared to the same prior year period ($6,346,000).
  • DLC's expenses increased by 68% to $3,775,440 for the three months ended June 30, 2016 when compared to the same prior year period ($2,243,710), 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 14% to $2,804,860 for the three months ended June 30, 2016 when compared to the same prior year period ($2,466,248). 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. Readers are cautioned that EBITDA should not be construed as an alternative to a statement of cash flows as a measure of liquidity and cash flows and should not be construed as an alternative to net income or loss 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 passive and 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 and passive 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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