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Goodfellow Reports its Restated Results for the Second Quarter Ended May 31, 2016

DELSON, QUEBEC -- (Marketwired) -- 11/29/16 -- Goodfellow Inc. (TSX: GDL) announced today the completion of its review of accounts undertaken in connection with the discovery of certain discrepancies which led to the announcement on October 13, 2016 of the delay in the filing of its interim financial report, interim management discussion and analysis and interim certificates for the quarter ended August 31, 2016. As a result, the Company restated the consolidated statement of financial position as of May 31, 2016, the Consolidated Statement of Comprehensive Income, Cash Flows and Statement of Change in Shareholders' Equity and Comprehensive Income for the three and six-month periods ended May 31, 2016. The restated interim consolidated financial statements at May 31, 2016 includes adjustments mainly in the inventory valuation following an extensive review process of its new Enterprise Resource Planning (ERP), controls and procedures. The net impact on the statement of financial position was a reduction of $1.1 million in assets, a reduction of $0.2 million in currents liabilities and a reduction of $0.9 million in Shareholders' Equity. The net impact of the adjustments was a reduction of net income from $3.4 million to $2.5 million for the three months ended May 31, 2016. Net income for the six months ended May 31, 2016 decreased from $2.5 million to $1.6 million.

"We are disappointed that inaccuracies impacted our Q2 results. All measures are taken to assure the ongoing accuracy of our reported results. We are assisted by a team from Deloitte to complete this process quickly" said Denis Fraser, President and Chief Executive Officer. "Our results nevertheless, were less than expected. The combination of increased cost related to the implementation of the ERP system and softer margins impacted our profitability."

Goodfellow Inc. is one of eastern Canada's largest independent re-manufacturers and distributors of lumber and hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.

Consolidated Statement of Comprehensive Income (Unaudited)
For the three months and six months ended May 31, 2016 and 2015
(in thousands of dollars, except per share amounts)

                              For the three months        For the six months
                                             ended                     ended
                               May 31                    May 31
                                 2016       May 31         2016       May 31
                             Restated         2015     Restated         2015
                                    $            $            $            $

Sales                         166,623      153,975      275,282      252,072
  Cost of goods sold          138,729      125,653      226,708      203,341
   administrative and
   general expenses            23,810       23,034       45,113       43,412
  Net financial costs             824          713        1,459        1,247
                              163,363      149,400      273,280      248,000

Earnings before income
 taxes                          3,260        4,575        2,002        4,072

Income taxes                      787        1,327          435        1,181

Net earnings                    2,473        3,248        1,567        2,891

Net earnings per share -
 Basic and diluted               0.29         0.38         0.18         0.34

Consolidated Statement of Financial Position (Unaudited)
(in thousands of dollars)

                                          As at
                                          May 31         As at         As at
                                            2016   November 30        May 31
                                        Restated          2015          2015
                                               $             $             $
Current Assets
  Cash                                     1,396           965           494
  Trade and other receivables            122,316        65,670        98,708
  Income taxes receivable                    721             -             -
  Inventories                            138,901        97,665       107,384
  Prepaid expenses                         4,842         4,156         2,852
Total Current Assets                     268,176       168,456       209,438

Non-Current Assets
  Property, plant and equipment           39,343        36,146        36,626
  Intangible assets                        3,614         2,667             -
  Defined benefit plan asset               4,991         4,812         1,832
  Investment in a joint venture            3,444             -             -
Total Non-Current Assets                  51,392        43,625        38,458
Total Assets                             319,568       212,081       247,896

Current liabilities
  Bank indebtedness                      102,107        46,781        66,227
  Trade and other payables                82,367        29,762        52,876
  Income taxes payable                         -         1,595           679
  Provision                                1,111         1,112           941
  Current portion of long-term
   debt                                      183           113            50
Total Current Liabilities                185,768        79,363       120,773

Non-Current Liabilities
  Provision                                  503           477           499
  Long-term debt                             188             -            37
  Deferred income taxes                    4,718         4,141         2,535
  Defined benefit plan obligation              -             -         1,675
Total Non-Current Liabilities              5,409         4,618         4,746
Total Liabilities                        191,177        83,981       125,519

Shareholders' equity
  Share capital                            9,152         9,152         9,152
  Retained earnings                      119,239       118,948       113,225
                                         128,391       128,100       122,377
Total Liabilities and
 Shareholders' Equity                    319,568       212,081       247,896

Consolidated Statement of Cash Flows (Unaudited)
For the three months and six months ended May 31, 2016 and 2015
(in thousands of dollars)

                              For the three months       For the six months
                                              ended                   ended

                                 May 31                  May 31
                                   2016      May 31        2016      May 31
                               Restated        2015    Restated        2015
                                      $           $           $           $

Operating Activities
  Net Earnings                    2,473       3,248       1,567       2,891
  Adjustments for :
    Depreciation                    938         746       1,736       1,477
    Accretion expense on
     provision                       13           3          26         (11)
    Income taxes                    787       1,327         435       1,181
    (Gain) Loss on disposal
     of property, plant and
     equipment                        -         (21)          -          16
    Interest expense                529         463         963         807
    Funding in (excess)
     deficit of pension plan
     expense                        (54)         56        (179)        113
    Share of the profits of
     the joint venture             (444)          -        (444)          -
                                  4,242       5,822       4,104       6,474

  Changes in non-cash
   working capital items        (11,211)      4,134     (46,725)    (25,771)
  Interest paid                    (508)       (401)     (1,164)       (765)
  Income taxes paid              (2,505)       (284)     (3,058)     (1,499)
                                (14,224)      3,449     (50,947)    (28,035)
Net Cash Flows from
 Operating Activities            (9,982)      9,271     (46,843)    (21,561)

Financing Activities
  Net increase (decrease) in
   bank loans                     2,500      (6,000)     15,500      (1,500)
  Increase in banker's
   acceptances                    2,500       2,000      30,500      22,000
  Increase in long-term debt        560           -       1,050           -
  Reimbursement of long-term
   debt                             (56)       (847)       (792)       (833)
  Dividends paid                 (1,276)          -      (1,276)          -
                                  4,228      (4,847)     44,982      19,667

Investing Activities
  Acquisition of property,
   plant and equipment             (568)       (611)       (934)     (1,117)
  Increase in intangible
   assets                          (622)          -      (1,305)          -
  Proceeds on disposal of
   property, plant and
   equipment                          -           3           -          17
  Business acquisitions, net
   of cash acquired                (587)          -      (4,795)          -
                                 (1,777)       (608)     (7,034)     (1,100)

Net cash (outflow) inflow        (7,531)      3,816      (8,895)     (2,994)
Cash position, beginning of
 period                          (3,180)    (10,549)     (1,816)     (3,739)
Cash position, end of period    (10,711)     (6,733)    (10,711)     (6,733)

Cash position is comprised
 of :
  Cash and cash equivalents       1,396         494       1,396         494
  Bank overdraft                (12,107)     (7,227)    (12,107)     (7,227)
                                (10,711)     (6,733)    (10,711)     (6,733)

Consolidated Statement of Change in Shareholders' Equity (Unaudited)
For the six months ended May 31, 2016 and 2015
(in thousands of dollars)

                                           Share     Earnings         Total
                                         Capital     Restated      Restated
                                               $            $             $

Balance as at November 30, 2014            9,152      110,334       119,486

  Net earnings                                 -        2,891         2,891

Total comprehensive income                     -        2,891         2,891

Balance as at May 31, 2015                 9,152      113,225       122,377

Balance as at November 30, 2015            9,152      118,948       128,100

  Net earnings                                 -        1,567         1,567

Total comprehensive income                     -        1,567         1,567

Transactions with owners of the

  Dividends                                    -       (1,276)       (1,276)

Balance as at May 31, 2016                 9,152      119,239       128,391

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