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Company Overview & Quarterly Update February 2017

Company Overview &

Quarterly Update

February 2017

Disclaimer This presentation contains forward- looking information that reflects management’s current expectations related to the futurewww.sedar.com and which potential investors are urged to read. The forward-looking statements included in this presentation are based on factors and assumptions as of the date of this presentation. People Corporation does not undertake to update such forward-looking statements to reflect new information, future events or otherwise, except as provided by law. This presentation is not, and under no circumstances is to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of securities. Under no circumstances should the information contained herein be considered an offer to sell or a solicitation of an offer to invest in securities. This presentation has not been approved or disapproved of by any securities regulatory authority nor has any authority or commission passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is unlawful. " id="pdf-obj-1-2" src="pdf-obj-1-2.jpg">

Disclaimer

This presentation contains forward-looking information that reflects management’s current expectations related to the future financial performance, plans and operating results for People Corporation. All statements included in this presentation, other than statements of historical facts, may constitute forward-looking information, including, without limitation, statements concerning management’s expectations related to the future financial position, possible or assumed future prospects or results, business strategy, proposed acquisitions, budgets, projected costs and plans and objectives of, or involving People Corporation. Potential investors can identify many of these statements by looking for words such as “believe”, “expects”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “plans”, “may”, “would” or similar words or the negative of these terms. There can be no assurance that the plans, intentions or assumptions upon which these forward-looking statements are based will be achieved.

Forward-looking statements are subject to risks and uncertainties, which give rise to the possibility that People Corporation’s assumptions in this presentation may not be correct and its expectations and plans may not be achieved. Although management believes that the forward-looking statements in this presentation are based on information and assumptions that are reasonable, current and complete, there can be no assurance that such expectations will prove to be correct. Some of the factors which could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained in this presentation, include, but are not limited to: our ability to maintain profitability and manage growth; strong competition from other consultants; changes in the current legislation resulting in significant competition from the banking industry; failure of information systems and technology; dependence on key clients; seasonality of revenues and the resulting possible impairment on working capital; reliance on key professionals; availability of additional financing on favourable terms; availability of suitable acquisitions, and if available, on terms that are favourable to People Corporation; change in general economic conditions; and other risks as set out in People Corporation’s current Annual Information Form which can be found at www.sedar.com and which potential investors are urged to read.

The forward-looking statements included in this presentation are based on factors and assumptions as of the date of this presentation. People Corporation does not undertake to update such forward-looking statements to reflect new information, future events or otherwise, except as provided by law.

This presentation is not, and under no circumstances is to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of securities. Under no circumstances should the information contained herein be considered an offer to sell or a solicitation of an offer to invest in securities.

This presentation has not been approved or disapproved of by any securities regulatory authority nor has any authority or

commission passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is unlawful.

Industry Overview • The group benefits industry is a $35+ billion market increasingly suited for scale,

Industry Overview

The group benefits industry is a $35+ billion market increasingly suited for scale, innovation, customization and cost effective providers;

Employers continue to see the value of providing group benefits to attract, retain and

reward their workforce;

Canada’s average benefit cost per capita is expected to grow > 10% through 2019

The industry is recession resistant and inflation proof

The rising cost of healthcare and the changing demographics in the workplace have created a demand for consulting solutions

Overview of People Corporation • People Corporation is a leading provider of innovative group benefits, group

Overview of People Corporation

People Corporation is a leading provider of innovative group benefits, group retirement and HR consulting services in Canada, with the industry’s best consultants delivering customized solutions

 

Among the fastest growing companies in the group benefits, group retirement and HR consulting sectors

National servicing capabilities:

 

~600 professionals and staff in 35 offices across 9 provinces

Broad and deep client base

 

~$1.3B in premiums

~$6.9B in pension assets under administration

~5,100 clients across a wide range of industries

Extremely strong supplier relationships

 

Largest independent customer for some of the leading insurance companies

Product line diversification

 

Innovative and proprietary product/service offerings

 

existing and in various stages of development

 

Strong third party benefits administration platform

Sophisticated operating platform for coordination and delivery of product/service offering

Overview of People Corporation • People Corporation is a leading provider of innovative group benefits, group

People Corporation now has 600 professionals and staff in 35 offices and satellite offices across 9 provinces

Operational Model • The ‘corporate’ resources, services and support that People Corporation provides has made it

Operational Model

The ‘corporate’ resources, services and support that People Corporation provides has made it a ‘partner-of-choice’ for local/regional firms in sectors that are consolidating

Corporate Shared Services Shared Support • • • • • • • • • • Accounting
Corporate
Shared Services
Shared Support
Accounting and Finance
Financial Reporting
Technology
Legal
Corporate Development
Business Development
Integrated Solutions
Group Retirement Solutions
Concierge Client Services
Marketing and Branding
Product Development
Wellness
Internal Talent Management
Group Benefits & Pensions
Third Party Administration
HR Consulting
Business Model and Economics Group Benefits Employees Client Insured premiums Advice PC Consultant Commission Insurance Carrier

Business Model and Economics

Group Benefits

Employees
Employees
   
 

Client

 
 
 

Insured

premiums

Advice

PC Consultant

 

Commission

Insurance Carrier

Insurance Carrier
Business Model and Economics Group Benefits Employees Client Insured premiums Advice PC Consultant Commission Insurance Carrier

Insured coverage;

Administration

services

Third Party Administration (TPA)

Employees Insured Self-insured coverage coverage; Administration services Client Advice Self-insured claim reimbursement; Administration fees; Insured premiums
Employees
Insured
Self-insured
coverage
coverage;
Administration
services
Client
Advice
Self-insured claim
reimbursement;
Administration fees;
Insured premiums
PC Consultant
PC TPA
Insured
Commission
premiums
Insurance Carrier

HR Consulting

Client Advice Fees
Client
Advice
Fees
PC Consultant
PC Consultant
PC Operating and Acquisition Model People Corporation’s Operating and Acquisition Models position the company for continued

PC Operating and Acquisition Model

People Corporation’s Operating and Acquisition Models position the company for continued

growth while providing cash flow protection against economic, industry, company and acquisition risk factors

Operating Model

Attractive Revenue Composition

Signification proportion of recurring revenue

Strong Industry

Fundamentals

Healthcare inflation Growing importance of benefits

Risk Diversification

Client, industry, geographic, business line

New Product Line Growth Opportunities

Pension and retirement practice Individual financial services

Acquisition Model

Protected

Preference on distribution of

Cash Flow

EBITDA

Sound

Transition

Deal structure keeps vendors retained, engaged and

Strategy

motivated

Flexibility

Ability to customize structure to

Provides Deal

meet Vendor objectives

Flow

increases ability to win deals

Financial Profile • Consistently strong financial results, with extraordinary growth – Revenue growth of $73M since

Financial Profile

Consistently strong financial results, with extraordinary growth

Revenue growth of $73M since fiscal 2009, to $86.8M for the twelve months ending November 30, 2016

Significant growth in Adjusted EBITDA, which has increased 12.1x since fiscal 2009

Ongoing trend of posting year-over-year increases in revenue and Adjusted EBITDA

Strengthening margins as operating leverage of past investments materializes

Substantial cash flow generation, used to fund growth initiatives and maintain strong balance sheet

Revenue $79.8 $86.8 $42.5 $49.3 $13.6 $20.7 $24.4 $27.2 $32.9 2009 2010 2011 2012 2013 2014
Revenue
$79.8 $86.8
$42.5 $49.3
$13.6 $20.7 $24.4 $27.2 $32.9
2009 2010
2011
2012 2013
2014 2015 2016
LTM
Q1-17
EBITDA $14.1 $14.6 $9.2 $7.5 $4.3 $2.7 $2.3 $1.9 $1.2 2009 2010 2011 2012 2013 2014
EBITDA
$14.1 $14.6
$9.2
$7.5
$4.3
$2.7
$2.3
$1.9
$1.2
2009 2010 2011 2012
2013 2014
2015 2016
LTM
Q1-17
Financial Position • At of November 30, 2016, total of $39M of undrawn credit availability on

Financial Position

At of November 30, 2016, total of $39M of undrawn credit availability on PC’s $61M credit facility

   

At November 30, 2016

   
 

Authorized

Outstanding

Available

 

Revolving Loan

5,000,000

-

5,000,000

Term Loan

22,215,000

20,548,875

-

Acquisition Loan

34,000,000

-

34,000,000

 

61,215,000

20,548,875

39,000,000

 

Acquisition Accordian

15,000,000

-

15,000,000

Total

76,215,000

20,548,875

54,000,000

 

Acquisition Revolver may be increased by an additional $15M through an accordion feature, taking total credit availability under the facility to $76M

On October 6, 2016 the company closed a Bought Deal Private Placement Financing, providing gross proceeds of approximately $20.1M which will be used to fund growth initiatives and for general corporate purposes. These proceeds have been applied to reduce PC’s revolving Acquisition Loan facility until such time as they are used.

In addition to above credit availability, cash balances of $10.5M as at November 30, 2016

Current shares outstanding of approximately 50.8M, implying a market capitalization of ~$220M

based on recent trading prices

Leadership team is highly aligned with investors, with ownership of approximately 20% among insiders, directors and executive officers

Recent Highlights • Two more major recognitions in the last 12 months: – 2016 PROFIT 500

Recent Highlights

Two more major recognitions in the last 12 months:

2016 PROFIT 500 (fourth consecutive year), the definitive ranking of Canada's Fastest-Growing Companies by PROFIT Magazine;

2016 TSX Venture 50 (second consecutive year), which represents the top 10 companies listed on the TSX Venture Exchange in each of five major industry sectors

Recent Highlights • Two more major recognitions in the last 12 months: – 2016 PROFIT 500

Invested in leadership in the corporate office and at the practice level; restructured senior management team to position company for ongoing growth

Dennis Stewner joined in April 2016 as Chief Financial Officer and Chief Operating Officer, taking on an increased scope of operational responsibilities

Other previously announced executive appointments over the past two years include:

 

Bonnie Chwartacki previously Executive Vice President, assumed the role of President

Brevan Canning previously Vice President Finance, assumed the role of Executive Vice President and Group Head Group Benefit Solutions

Lisa Villani joined August 2015 as Executive Vice President, Consulting Solutions (Brokerage Division)

Enhanced the Board of Directors with the appointment of Eric Stefanson, who brings significant experience in government, industry and public practice

Continued to develop and roll-out unique product offerings

Expanded group benefits and HR consulting service offerings in the Saskatchewan market

Enhanced ‘stop-loss’ product offering for clients on the TPA platform

myWellness product offering focused on the student market

Investment Highlights • Favourable underlying industry fundamentals and business characteristics – Large and growing sectors, with

Investment Highlights

Favourable underlying industry fundamentals and business characteristics

 

Large and growing sectors, with current dynamics creating consolidation opportunity

Recession-resistant product/service with natural inflationary growth of 5+%

Substantial portion of revenues are ‘recurring’ in nature, with typical customer persistency of 8-10 yrs

One of Canada's largest independent Third-Party Administration businesses and the fastest- growing group benefits, group retirement and human resources consulting services organization in the country

 

National servicing capability with ~600 professionals across Canada

Broad client base, with ~5,100 clients diversified across sector, geography and size

Significant momentum in acquisition strategy, with eight transactions completed in last two fiscal years

Consistently strong financial results, with extraordinary growth

 

Revenues have increased more than six-fold since fiscal 2009, with Adjusted EBITDA increasing 12.1x

Impact of significant investments in people and technology is being realized, with a significant portion of increased revenue flowing directly to bottom line, given high operating leverage

Strong cash flow generation, healthy balance sheet and ready access to capital to continue to execute

 

organic and acquisition-based growth strategies

Experienced management team with a track record of successfully building businesses

 

Diverse experience and complementary skill sets

Strong alignment of interests given high degree of insider ownership