DLS DealNet Capital Corp

• Consumer Finance Segment Profit Increases 13% YoY
• Mobile Engagement Segment Profit Increase 25% YoY
• Adjusted Operating Expenses Decline 2% YoY
• Adjusted Loss Before Income Taxes Declines to $962 Thousand

TORONTO, May 28, 2018 /CNW/ - Dealnet Capital Corp. ("Dealnet" or the "Company") (TSX VENTURE: DLS), reported today its financial results for the three-month period ending March 31, 2018. All results are reported under International Financial Reporting Standards ("IFRS") and in Canadian dollars, unless otherwise specified.

For the three-month period ending March 31, 2018, the Company reported an adjusted loss before income tax of $962 thousand or $0.00 per share prior to the recognition of a $1.1 million non-cash loss of control charge and $373 thousand of operating losses attributable to the March 9, 2018 assignment of its Gemma call centre operations into bankruptcy. This compares favourably to the adjusted loss before income taxes of $1.9 million or $0.01 per share for the same period last year and the adjusted net loss before income taxes of $3.7 million or $0.01 for the immediately preceding quarter.

During and subsequent to the end of the three-month period ending March 31, 2018, the Company announced the following developments:

• On March 9, 2018, the Company filed assignments to allow for an orderly, court supervised wind-up of Gemma Communications eliminating approximately $3.6 million in annual operating losses;
• On April 5, 2018 the Company announced that it had commenced writing consumer finance contracts in the Province of Quebec;
• On April 9, 2018, the Board of Directors appointed Mr. Brent Houlden to the position of President and Chief Executive Officer of the Company and appointed Harold Bridge as Chairman; and
• On May 15, 2018, a Shareholders Rights Plan was approved by the Board and is in effect subject to ratification by shareholders at the Company's annual general and special meeting scheduled for June 26, 2018.

"Having lower overhead costs, reduced headcount and exited businesses that were draining cash, I am pleased to report that we started to see the net impact of these measures in the first quarter of 2018," said Brent Houlden, Dealnet's President and Chief Executive Officer. "Removing the charges relating to the Gemma bankruptcy that we incurred in Q1 would bring our EBITDA for the period to approximately a $150 thousand positive result. Our changed focus to growth initiatives in a tighter cost environment is expected to improve this result over the balance of 2018."

Q1-2018 Financial Highlights

Portfolio Growth

As at March 31, 2018, Dealnet's portfolio of finance receivables increased to $172.9 million with 33,165 financing contracts in place up from $170.7 million and 32,509 contracts as at December 31, 2017.  This increase is after new originations, net of a higher provision for credit losses and customer payments.

Portfolio Quality

As at March 31, 2018, the percentage of past due balances in the Company's finance receivable portfolio decreased to 6.2% on its lease portfolio and 2.1% on its loan portfolio (6.5% and 2.5% as at December 31, 2017, respectively).

Gross Profit

For the three-month period ending March 31, 2018, the Company reported gross profit of $4.9 million, an increase of 15 percent from the $4.2 million reported in the same period last year, primarily driven by the Mobile Engagement segment, which increased 25 percent to $2.2 million for the three-month period ending March 31, 2018 versus $1.7 million for the same period last year.

Operating Expenses

Consolidated salaries, wages and benefits and general and administrative expenses decreased 15% to $5.0 million for the three-month period ending March 31, 2018 versus $5.9 million for the same period last year.

Loss Before Income Taxes

The Company`s loss before income taxes was $2.4 million for the three-month period ending March 31, 2018 versus $2.9 million for the same period last year.  

Key Performance Indicators

The following table summarizes some of the Key Performance Indicators that the Company uses to measure the achievement of its business plan objectives:

The financial statements for the three-month period ending March 31, 2018 together with management's discussion and analysis of these results have been filed on SEDAR and are available on the Company's website at www.dealnetcapital.com.

The Company will host a conference call to discuss these results on May 29, 2018 commencing at 10:00 A.M. Eastern Time.

Conference Call Details:

About Dealnet Capital Corp.

Dealnet is a specialty finance company servicing the $20 billion home improvement finance market through both dealer-based and direct homeowner-based originations of secured finance assets (equipment leases and loans). The company earns net finance income over the term of these assets and from fee income derived from the transaction support services that it provides to its dealer network. The Company also uses its engagement platform to provide customer support services on a contract basis to third-party institutions.

For additional information please visit www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking Statements

This news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's Management's Discussion and Analysis. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking information.

SOURCE Dealnet Capital Corp.