Newfoundland Capital : Mar 9 , 2017 - 2016 Management's Discussion and Analysis and Audited Consolidated Financial Statements

Management's Discussion and Analysis 3

Consolidated Financial Statements 23

2 Newfoundland Capital Corporation Limited

The purpose of the Management's Discussion and Analysis ("MD&A") is to provide readers with additional complementary information regarding the financial condition and results of operations for Newfoundland Capital Corporation Limited (the "Company") and should be read in conjunction with the annual audited consolidated financial statements ("annual financial statements"), prepared as of March 9, 2017, and related notes contained in this 2016 Annual Report.

These documents along with the Company's Annual Information Form, its Management Information Circular and other public information are filed electronically with various securities commissions in Canada through the System for Electronic Document Analysis and Retrieval and can be accessed at www.sedar.com. This information is also available on the Company's website at www.ncc.ca.

The Company's annual financial statements for the year ended December 31, 2016 have been prepared in accordance with International Financial Reporting Standards ("IFRS").

All amounts herein are expressed in Canadian dollars. The Board of Directors, upon recommendation of the Audit and Governance Committee, approved the content of this MD&A on March 9, 2017. Disclosure contained in this document is current to this date, unless otherwise stated.

Management's Discussion and Analysis of financial condition and results of operations contains forward- looking statements. These forward-looking statements are based on current expectations. The use of terminology such as "expect", "intend", "anticipate", "believe", "may", "will", and other similar terminology relate to, but are not limited to, our objectives, goals, plans, strategies, intentions, outlook and estimates. By their very nature, these statements involve inherent risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from those expressed in such forward-looking statements. The Company has outlined in this MD&A a section entitled "Risks, Uncertainties and Opportunities" that discusses possible events or conditions that are beyond management's control and that could affect future results; these include topics surrounding the economy, the regulatory environment, competition, technological developments, cyber security, the dependency on advertising revenues, and potential contingencies. Readers are cautioned not to place undue reliance on these statements. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Newfoundland Capital Corporation Limited owns and operates Newcap Radio, which is one of Canada's leading radio broadcasters with 95 licences across Canada. The Company reaches millions of listeners each week through a variety of formats and is a recognized industry leader in radio programming, sales and networking. It is Canada's largest pure-play radio company, employing approximately 800 of the best radio professionals across the country. The Company's portfolio of radio assets includes 80 FM and 15 AM licences which can be heard throughout Canada. Most of our stations are globally accessible via the internet and various mobile device applications, allowing listeners the flexibility to tune in to our stations at anytime from anywhere. The shares of the Company trade on the Toronto Stock Exchange under the symbols NCC.A and NCC.B.

The Company's long-term strategy is to maximize returns on existing operations and add new licences through business and licence acquisitions and through the Canadian Radio-television and Telecommunications Commission ("CRTC") licence application process.

The Company's day-to-day operating objective is to grow its existing operations by increasing advertising revenue and remaining focused on controlling discretionary costs to continuously improve EBITDA margins. The Company will continue to explore acquisition and expansion opportunities that fit with the Company's objectives. The Company's commitment to its talented employees, its customers, its listeners and to the communities it serves remains critical to its success.

Newfoundland Capital Corporation Limited 3

Consolidated revenue was 3% higher than in 2015 and consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA" (1)) increased by 13%. Consolidated profit was $31.0 million, higher than profit of

$22.9 million last year for various reasons, which are described below. In the Company's core operating segment, Broadcasting, revenue grew by 3% and EBITDA grew by 12% compared to 2015.

The following points provide a brief description of the 2016 financial highlights, details of which follow in the

Analysis of Consolidated Results section:

• The 3% increase in consolidated revenue was due to growth in the broadcasting segment primarily as a result of the growth of revenue in Toronto, Ottawa and Halifax which offset revenue declines in Alberta and Newfoundland and Labrador as a result of challenging economic circumstances in those markets.

• The 1% decrease in operating expenses is primarily a result of reduced CMRRA-SODRAC Inc. ("CSI") and Connect Music Licensing ("Connect") tariffs as a result of a Copyright Board of Canada decision made during the year. The Company's annual financial statements include a $2.2 million recovery in operating expenses as a result of this decision, $1.5 million of which related to a refund of tariffs paid in prior years. The Company's fourth quarter financial statements include a $0.5 million recovery in operating expenses as a result of this decision, $0.3 million of which related to a refund of tariffs paid in prior periods. The impact of this decision on the Company's financial results is described throughout this MD&A as a "reduction and refund of certain copyright tariffs." The impact of this decision is discussed further in the Risks, Uncertainties and Opportunities section of this MD&A.

• The 13% increase in consolidated EBITDA was a result of increased revenue as well as lower operating expenses.

• Profit increased to $31.0 million this year compared to $22.9 million last year. The increase in profit is primarily a result of higher revenue, the recovery of previously paid tariffs, lower interest expense, and a lower effective tax rate.

• The Company increased its annual dividends by 33% to $0.20 per share during 2016 from $0.15 per share in the prior year.

• The Company repurchased a total of 1,158,900 Class A Subordinate Voting shares for cash consideration of $11.1 million during 2016.

  (1)Refer to page 22 Non-IFRS Accounting Measure.

  RECENT OPERATIONAL HIGHLIGHTS

• January and February 2017 - rebranded all British Columbia, New Brunswick, and Nova Scotia country stations as New Country.

• January 2017 - launched a new FM Licence in Hinton, Alberta.

• November 2016 - rebranded all Alberta country stations as "Real Country" except CFCW which will remain as its own brand as it is a well-known country brand in Alberta.

• May 2016 - launched a new FM licence in Clarenville, Newfoundland and Labrador.

• March 2016 - rebranded CKDQ in Drumheller to 910 CFCW, an extension of the Company's legendary CFCW brand, the voice of rural Alberta, which is a well-known country brand that is now available in nearly all of Alberta.

• February 2016 - rebranded CFXJ-FM in Toronto to 93.5 The Move, a rhythmic hot adult contemporary station targeting adults 25 to 44.

• February 2016 - rebranded CKUL-FM in Halifax to Mix 96.5, a hot adult contemporary station playing a variety of pop/rock hits from the 90s to now.

• December 2015 - launched a new FM licence in Fox Creek, Alberta (a repeater of CFXW-FM Whitecourt, Alberta).

4 Newfoundland Capital Corporation Limited