Mr. Gary Mauris reports

DLC RELEASES ANNUAL 2023 RESULTS; ACHIEVES ANNUAL FUNDED VOLUMES OF $56.5 BILLION

Dominion Lending Centres Inc. has released its financial results for the three months and year ended Dec. 31, 2023. For complete information, readers should refer to the annual audited consolidated financial statements, management's discussion and analysis, and annual information form, which are dated March 19, 2024, and are available on SEDAR+ and on the corporation's website.

Dominion Lending includes the corporation and its three main subsidiaries: MCC Mortgage Centres Canada Inc., MA Mortgage Architects Inc. and Newton Connectivity Systems Inc.

Gary Mauris, executive chairman and chief executive officer, commented: "Two thousand twenty-three was, on the whole, a difficult year for our industry. The headwinds faced by the Canadian real estate and lending markets, largely caused by increased interest rates, resulted in fewer mortgage transactions during the year. However, with our continued focus on recruitment and on on-boarding of brokers onto our connectivity platform Velocity, we have seen an increase in funded volumes, revenues, and adjusted [earnings before interest, taxes, depreciation and amortization] in the fourth quarter (as compared to Q4 2022). We anticipate seeing further recovery in our margins and mortgage volumes as the market stabilizes over the next 12 to 18 months, and we believe that we are well situated for the future as we anticipate that those prior headwinds will change course and turn to industry-wide tailwinds, with pent-up real estate transaction demand and the prospect of declining interest rates starting in 2024."

Financial highlights:

• Fourth quarter 2023 financed volumes of $14.2-billion and annual financed volume of $56.5-billion, representing a 1-per-cent increase and 21-per-cent decrease as compared with 2022, respectively;
• Q4 2023 revenue of $15.8-million and annual revenues of $62.5-million, representing a 13-per-cent increase and 12-per-cent decrease compared with 2022, respectively;
• Q4 2023 and annual adjusted EBITDA were $6.5-million and $24.4-million as compared with $3.0-million and $32.1-million in Q4 2022 and annual 2022, respectively;
• The corporation's annual net income for 2023 decreased to $64,000 from $12.3-million in 2022, primarily from lower income from operations from decreased financed volume and higher non-cash finance expense on the preferred share liability;
• The corporation declared a quarterly dividend of three cents per Class A common share, resulting in a dividend payment of $1.4-million in Q4 2023 ($5.8-million for the full fiscal year);
• During 2023, the corporation made repurchases under the normal course issuer bid of 125,493 common shares at an average price of $2.46 per share;
• The corporation amended and restated its credit facility to mature on Dec. 19, 2026; the corporation's balance sheet remained strong with a debt to EBITDA ratio of 1.31 to 1.00 at Dec. 31, 2023.

Selected consolidated financial summary

Attached is the summary of its financial results for the three months and year ended Dec. 31, 2023, and same periods ended Dec. 31, 2022.

During the three months ended Dec. 31, 2023, the corporation saw an increase in revenues over the three months ended Dec. 31, 2022, from higher Newton revenues primarily due to an increase in Velocity adoption and lender contract renewals. However, headwinds continue to impact the Canadian housing market, especially as increased interest rates have decreased Canadian housing sales activity. Consequently, its financed mortgage volumes were flat during the three-month period and decreased during the year ended Dec. 31, 2023, when compared with 2022's equivalent periods. The decrease in annual financed volumes has resulted in a decrease in revenues during the year ended Dec. 31, 2023.

As the corporation's operating expenses are largely fixed in nature and are not proportionate to changes in revenues, changes in the corporation's revenues have a more pronounced impact to adjusted income, adjusted EBITDA and adjusted EBITDA margins. As such, these metrics have increased with higher revenues during the three months ended Dec. 31, 2023, but have decreased during the year ended Dec. 31, 2023, when compared with 2022's equivalent periods.

Income from operations during the three months ended Dec. 31, 2023, increased from higher revenues and lower operating expenses, and decreased during the year ended Dec. 31, 2023, from lower revenues, partly offset by lower operating expenses. The corporation's operating expenses have decreased during the three months and year ended Dec. 31, 2023, when compared with 2022, primarily due to:

• Lower direct costs for commissions and expenses proportionate to financed volume;
• Variances in advertising fund expenditures due to the timing of advertising campaigns;
• Lower professional fees, partially offset by higher personnel costs.

Net income decreased during the three months and year ended Dec. 31, 2023, compared with the prior-year periods. The changes over the previous year are primarily from period-over-period variances in revenue and other expenses. Other expenses increased during the three months and year ended Dec. 31, 2023, primarily from period-over-period variances in finance expense on the preferred share liability (refer to the preferred shares section of its management's discussion and analysis), finance expense and impairment losses recognized for equity-accounted investments.

The corporation recognized a non-cash impairment loss of $3.5-million for the year ended Dec. 31, 2023 (Dec. 31, 2022: $4.8-million), representing the difference between the carrying value of two of its investments (primarily Impact) and its estimated recoverable amounts. The corporation identified the financial performance and its technological and market environments of these investments as indicators of impairment and determined the recoverable value of each investment based on its fair value less cost of disposal, an income-based approach whereby a present value technique is employed that takes into account estimated future cash flows based on assumptions that would be common to any market participant. This approach requires management to make estimates and assumptions about EBITDA, discount rates and perpetual growth rates (Level 3 within the fair value hierarchy).

Free cash flow increased during the three months ended Dec. 31, 2023, from higher adjusted cash flows from operations from higher income from operations and lower maintenance capital expenditures, but decreased during the year ended Dec. 31, 2023, from lower adjusted cash flows from operations from lower income from operations and higher maintenance capex. Maintenance capex has increased during the year ended Dec. 31, 2023, due to the corporation's continued recruitment and renewal efforts.

About Dominion Lending Centres Inc.

Dominion Lending is Canada's leading network of mortgage professionals. Dominion Lending operates through Dominion Lending and its three main subsidiaries, MCC Mortgage Centre Canada, MA Mortgage Architects. and Newton Connectivity Systems, and has operations across Canada. The Dominion Lending extensive network includes over 8,000 agents and over 520 locations. Headquartered in British Columbia, Dominion Lending was founded in 2006 by Mr. Mauris and Chris Kayat.

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