May 18, 2017

Founders Advantage Capital Corp. Provides Update and Increases 2017 Guidance

CALGARY, ALBERTA–(Marketwired – May 18, 2017) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation” or “FAC”) is pleased to report the following key performance indicators for its investee entities for the three months ended March 31, 2017. The Corporation anticipates its quarterly financial statements and related management’s discussion and analysis will be filed on May 29, 2017:

Dominion Lending Centres Limited Partnership (“DLC”)

  • Total revenues for the three months ended March 31, 2017 were $7.3 million, up 17.8% from the same quarter in the prior year (March 31, 2016 – $6.2 million);
  • Total funded mortgage volumes were $6.77 billion, up 11.2% from the same quarter in 2016 (March 31, 2016 – $6.1 billion);
  • Total number of brokers as at March 31, 2017 was 5,300, compared to 5,001 as at March 31, 2016 (an increase of 6.0%); and
  • Total number of franchisees as at March 31, 2017 was 469, compared to 424 as at March 31, 2016 (an increase of 10.6%).

Club16 Limited Partnership (“Club16”)

  • Total revenues for the three months ended March 31, 2017 were $5.47 million, up 9.2% from the same quarter in the prior year (March 31, 2016 – $5.0 million); and
  • Total number of members as at March 31, 2017 was 80,296, compared to 76,554 as at March 31, 2016 (an increase of 4.9%).

Impact Radio Accessories (“Impact”)

  • The acquisition of a 52% interest in Impact closed on March 1, 2017, part-way through the quarter ending March 31, 2017 (only 31 days of Impact results will be included in the Corporation’s quarterly financial statements); and
  • Total revenues for the three months ended March 31, 2017 were $2.4 million, consistent with the total revenues from the same quarter in the prior year.

Increase to 2017 Guidance

The Corporation is increasing its 2017 guidance relating to its proportionate interest of anticipated investee annual adjusted EBITDA to a range of $19.5 million – $20.7 million (being an increase of $2.5 million from the guidance of $17.0 million – $18.0 million released on January 24, 2017). The above guidance assumes FAC ownership for a full financial year and is prior to FAC’s corporate expenses, including G&A. Further, the above guidance does not reflect any additional acquisitions that FAC intends on completing in 2017.

As at the date hereof, the Corporation has an aggregate of 38.1 million class A common shares issued and outstanding.

Non-IFRS measures

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted 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. Readers are cautioned that EBITDA and adjusted 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 controlling 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 investees. 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.

Cautionary Statement Regarding Forward-Looking Financial Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • The Corporation’s interest of anticipated investee annual EBITDA for 2017; and
  • That the Corporation expects to complete additional acquisitions in 2017.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • The Corporation being able to source and negotiate transactions on acceptable terms and in a timely manner;
  • That the Board of Directors for each of the investee entities resolves to distribute cash as expected; and
  • That the business of DLC, Club16 and Impact will not suffer any material adverse changes.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • The adequacy of the Corporation’s existing resources to complete additional potential transactions;
  • The return for any acquisition not being as expected by the Corporation post-closing; and
  • Incremental risks associated with any additional investee company, as well as the risks associated with the industries in which additional investees operate.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

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