Mr. Laurie Goldberg reports

PEOPLE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 2017

People Corp. has released financial results for the quarter ended Nov. 30, 2016.

"People Corp.'s fiscal 2017 year started off strong with healthy financial results and tangible progress on strategic objectives," said Laurie Goldberg, chairman and chief executive officer. "Our investment in BPA Financial Group last April, along with organic growth initiatives, has been a key factor in this quarter's results."

Highlights of financial results for the quarter ended Nov. 30, 2016

Financial results from operations

People's financial results for the quarter ended Nov. 30, 2016, reflect the focused execution of its strategic and operational plans, which include initiatives centred on enhancing the company's client delivery capabilities, consultant growth and productivity, and acquisitions. The effect of the acquisition of BPA Financial Group Ltd. is fully reflected in the results as the transaction closed April 13, 2016.

                        FINANCIAL HIGHLIGHTS
                     (in thousands of dollars)

                                 Three months ended    Three months ended 
                                      Nov. 30, 2016         Nov. 30, 2015

Revenue                                  $ 23,344.7             $16,314.9
Adjusted EBITDA before REI                 $4,736.2              $4,117.8
Adjusted EBITDA                            $3,735.7              $3,204.6
Net income (loss)                           ($275.5)              ($149.1)

For the three months ended Nov. 30, 2016, the company experienced revenue growth of $7-million (43.1 per cent) due primarily to revenues from the BPA acquisition and organic growth. The company recognized acquired growth of $5.6-million (34.2 per cent) and organic growth of $1.4-million (8.9 per cent). Organic growth is primarily from the addition of new clients from the company's existing and expanded benefits consulting team and natural inflationary factors. Quarterly organic growth rates can vary due to timing of renewals and acquisitions and as such, annual organic growth is a better reflection of the company's organic growth rate.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) before REI (retained economic interest) is adjusted EBITDA before considering the retained economic interest attributable to vendors and/or principals of acquired companies. For the three months ended Nov. 30, 2016, the company reported adjusted EBITDA before REI of $4.7-million, representing an increase of $600,000 (15 per cent). The increase in adjusted EBITDA is directly due to the investments related to expanded leadership and associated operating costs to accommodate future growth and the continued investment in new benefit consultants and related support costs incurred to drive organic growth.

Adjusted EBITDA for the first quarter of fiscal 2017 was $3.7-million, representing an increase of $500,000 (16.6 per cent), as compared with the same period in fiscal 2016. The increase in adjusted EBITDA is due to the factors affecting adjusted EBITDA before REI, net of retained economic interest attributable to vendors and/or principals of acquired companies.

For the three months ended Nov. 30, 2016, the company reported an increase in net loss of $100,000 resulting from an increase in finance expenses, including accretion of REI liabilities; acquisition-related amortization of intangible assets; and income tax expense, partially offset by the increase in adjusted EBITDA.

Summary financial position

The company continues to be well positioned to execute on its growth strategy, with a strong financial position and ready access to financial capital. In addition, the financial position of the company will accommodate the continuing operational investments required to ensure the company is delivering upon its value proposition to its clients and achieving operational excellence and enhanced profitability.

The company had cash balances of $10.5-million as at Nov. 30, 2016, a decrease of $3.9-million (minus 27.2 per cent) as compared with Aug. 31, 2016, primarily resulting from net cash from operating (including annual variable compensation and bonuses paid each year in the first quarter) and investing activities.

On Oct. 6, 2016, the company completed a bought deal private placement financing, issuing 5,439,500 common shares at $3.70 per share, resulting in net proceeds of $18.9-million to be used to finance growth initiatives and for general corporate purposes.

On Oct. 31, 2016, the company used the net proceeds from the offering to fully repay the term acquisition credit facility.

In addition to its cash resources, the company maintains a credit facility agreement with its senior lender that totals $61.2-million of credit capacity. The credit facility consists of a $5-million revolving facility, a $22.2-million term loan and a $34-million revolving acquisition facility. The credit facility agreement provides for an option, subject to the satisfaction of certain terms and conditions, to increase the acquisition revolver by an additional $15-million of capacity, which would result in the size of the acquisition revolver being increased to $49-million and overall credit capacity being increased to $76.2-million. At Nov. 30, 2016, the company has $20.5-million drawn against the term loan, resulting in $40.7-million of unused credit capacity available.

In addition to the credit facility with its senior lender, as of Nov. 30, 2016, the company had $1.3-million owing to vendors from previous acquisitions, of which $500,000 is due in the next 12 months.

The complete financial statements and management discussion and analysis for the three months and the year ended Nov. 30, 2016, along with additional information about the company and all of its public filings, are available on SEDAR.

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