Mr. Chris Johnson reports

CROWN CAPITAL PARTNERS ANNOUNCES Q2 2023 FINANCIAL RESULTS

Crown Capital Partners Inc. has released its financial results for the three and six months ended June 30, 2023. Crown's complete financial statements and management's discussion and analysis are available on SEDAR.

Q2 2023 financial and operating highlights:

• Network services revenue was $6.4-million, consistent with $6.4-million in Q2 2022, with the commencement of new projects at Community Network Partners being offset by declines in the revenues of WireIE and Galaxy. The network services segment contributed net income before income taxes of $500,000, inclusive of depreciation and amortization expense totalling $700,000. This compares with net income before income taxes of $1.0-million in Q2 2022. The reduction in profitability in this segment is due to both a continuing contraction of WireIE's business and the wind-down of certain high-margin contracts at Galaxy, with multiple growth initiatives within its Community Network Partners and Galaxy subsidiaries still at early stages of ramping up.
• Distribution services revenue was $8.9-million, an increase of 6 per cent compared with Q1 2023, due primarily to increased capacity utilization and customer activity levels at facilities that commenced operations in 2022. This segment reported a net loss before income taxes of $1.2-million, inclusive of depreciation expense totalling $1.3-million. Overall capacity utilization continues to increase and was 70 per cent at the end of Q2 2023, compared with 53 per cent in Q1 2023 and 39 per cent in Q4 2022. Crown expects capacity utilization to increase significantly in 2023, leading to a material increase in the revenue and operating earnings from this segment.
• In Q2 2023, Crown's share of earnings of Crown Partners Fund totalled $900,000 (Q2 2022 -- $300,000), including $300,000 in respect of Crown's general partnership interest as a result of an increase in the accrued performance bonus payable to Crown by the fund and $600,000 in respect of Crown's limited partnership interest. Compared with March 31, 2023, the carrying value of Crown's investment in Crown Partners Fund decreased by $3.1-million as a result of $4.0-million (Crown's share) of distributions in respect of loan repayments within the fund.
• Crown reported a net loss of $1.2-million (21 cents per basic share) in Q2 2023, compared with a net income of $500,000 (eight cents per basic share) in Q2 2022. The reduction in net income compared with the prior-year period is the result of losses from distribution services during the ramp-up of its operations, slightly lower earnings from network services and higher finance costs due to a higher level of debt, partially offset by a higher share of earnings of Crown Partners Fund.
• Total equity at quarter-end was $48.6-million, down from $50.7-million at the end of 2022, reflecting the net losses attributable to shareholders in the first six months of 2023. Total equity per share was $8.66 per basic share, compared with $8.98 as at Dec. 31, 2022.
• On May 16, 2023, the holders of Crown's convertible debentures approved an extraordinary resolution approving a package of amendments to the terms of the convertible debentures, including an extension of the maturity date to Dec. 31, 2024, an increase in the interest rate from 6 per cent to 10 per cent, a removal of conversion rights and a removal of Crown's ability to repay principal in common shares.

"Our network services and distribution services businesses continue to advance their growth initiatives, which should translate to meaningful increases in revenues and profits in both segments. We have a significant pipeline of fibre optic projects that, as they are constructed, will add new customers and contribute to revenue and profit growth for years to come. Similarly, in our Go Direct business, we continue to add both new customers and warehouse capacity while improving warehouse utilization, which we expect will directly translate into growing revenues and profits," said Chris Johnson, president and chief executive officer of Crown.

Conference call and webcast

Crown will host a conference call and webcast to discuss its Q2 2023 financial results at 10 a.m. ET on Aug. 11, 2023. The call will be hosted by Mr. Johnson and Michael Overvelde, chief financial officer. To participate in the call, dial 416-764-8650 or 888-664-6383 using the conference ID 50976765. The webcast can be accessed on the company's website under investor relations. Listeners should access the webcast or call 10 to 15 minutes before the start time to ensure they are connected.

About Crown Capital Partners Inc.

Founded in 2000 within Crown Life Insurance Company, Crown Capital Partners is a capital partner to entrepreneurs and growth businesses mainly operating in the telecommunications infrastructure, distribution services and distributed power markets. The company focuses on growth industries that require a specialized capital partner, and it aims to create long-term value by acting as both a direct investor in operating businesses serving these markets and as a manager of investment funds for institutional partners.

We seek Safe Harbor.