CALGARY, March 6, 2012 /CNW/ - Edleun Group, Inc. ("Edleun" or the "Company") (TSX-V: EDU), the leading provider of quality early childhood education and care in Canada, announced today its operational and financial results for the three and 12 month periods ended December 31, 2011.
Highlights for the fourth quarter ended December 31, 2011 include:
- A 44% increase in the number of licensed child care spaces in operation from 2,539 in the third quarter 2011 to 3,660 at the end of the fourth quarter;
- The majority of these spaces were acquired late in the fourth quarter and so the revenue therefrom will be reported in the first quarter of 2012
- For "same centres" in operation during the current and prior year's fourth quarter:
- occupancy increased from 76% to 87%
- revenues increased by 15% and
- centre margin (in dollars) increased 26%
- Highest reported quarterly Adjusted Funds From Operations ("AFFO"), the company's principal measure of profitability, of $211,000;
- Entry into the Ontario market through the acquisition of three centres in the Greater Toronto Area and three in the Windsor area;
- Acquisition of three centres and underlying real estate in the Calgary, Alberta area; and
- Closing of the acquisition of a previously announced property held for development in Kelowna, British Columbia for $1 million.
Highlights for the period subsequent to year end include:
- Entered an into an agreement with Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT"), one of Canada's largest rental apartment owners, to locate child care properties operated by Edleun in selected CAPREIT properties; and
- Announcement of conditional acquisition of a seventh Ontario centre located in Oakville, Ontario comprising 195 spaces for $800,000.
"2011 was highlighted by the initiation of our national expansion strategy that saw us acquire centres in British Columbia and Ontario and we began to see the positive impact on our financial performance in the second half of the year," said Ty Durekas, Chief Executive Officer of Edleun. "These acquisitions set up 2012 very nicely with 83% more child care spaces on line or coming on line through new development compared with the quarter ended September 30, 2011. We continue to focus on a robust pipeline of acquisition opportunities which we believe will drive further growth in our financial performance in 2012."
"It is gratifying to see the Company achieve strong operating results as reflected by the same centre performance outlined herein," said Dale Kearns, Chief Financial Officer. This attests both to the merit of the Company's strategy as well as the success of its post acquisition physical improvements and operational programs in our early learning and care centres. It is also gratifying to see the Company achieve positive operating results as measured by AFFO in the Company's first full fiscal year of operations."
Three months ended December 31, 2011
Fourth quarter revenue was $5.8 million, an 87% increase over the same period a year earlier and a 20% increase on a sequential basis compared to the third quarter of 2011. Same centre revenue increased by 15% when compared with the same three month period in fiscal 2010. Revenue from acquisitions made in the fourth quarter was minimal due to their purchase late in the quarter; sequential revenue increase was otherwise higher due to seasonally strong results and occupancy levels that trended higher overall.
Portfolio centre margin (see Non-IFRS Performance Measures below for centre margin definition) in the fourth quarter improved to $1.8 million, 30% higher than reported for the third quarter and 82% higher than in the same period a year earlier. Same centre margin for the three month period improved by 26% year over year.
Centre margin as a percentage of revenue was 31% in the fourth quarter of 2011, two percentage points higher on a sequential quarter basis as a result of summer seasonality in the third quarter. On a year over year basis, centre margin for the fourth quarter declined slightly from 32% to 31%, largely a function of higher program spending on curriculum and the impact of integrating the British Columbia centres.
| ($000) except per
share and centre
|Q4 2011||Q3 2011||Q2 2011||Q1 2011||Q4 2010||Q3 2010|| Q2 2010
|Centre margin %||31%||29%||32%||34%||32%||27%||31%|
|Loss per share||(0.007)||(0.008)||(0.006)||(0.003)||(0.007)||(0.009)||(0.033)|
| Available under
| # of centres in
| # of centres under
| Licensed spaces in
| Spaces under
Note: Net income for 2010 restated to reflect IFRS
Adjusted Funds from Operations ("AFFO") (see Non-IFRS Performance Measures below for AFFO and FFO definitions) for the fourth quarter of 2011 was $211,000 or $0.002 per share compared to a loss of $(329,000) or $(0.003) per share in the immediately preceding third quarter. The increase of $540,000 was partially due to the summer seasonality factors outlined previously. Funds from Operations ("FFO") for the fourth quarter increased over the previous quarter by $433,000 to $119,000.
"We are enthusiastic about our prospects for 2012," said Dale Kearns. "Including funds on hand and availability under our bank credit facility; we begin 2012 with $24 million of non-dilutive capital available for our acquisition and development programs."
|Three months ended|
|($000)||Q4 2011||Q3 2011||Q2 2011||Q1 2011||Q4 2010|
|Net loss for the period||$||(810)||$||(957)||$||(541)||$||(249)||$||(678)|
|Other non-cash items||23||-||-||-||-|
|Property acquisition costs||605||330||281||115||307|
|Stock based compensation - option grants||104||69||166||96||132|
|Maintenance capital expenditures||(12)||(84)||(44)||(31)||-|
Net loss for the fourth quarter of 2011 was $(810,000) or $(0.007) per share, a decrease of $146,000 compared with the loss reported for the third quarter of 2011. In anticipation of greater growth in coming periods, property acquisition costs, which under new IFRS accounting standards must be expensed as incurred, rose in each quarter throughout 2011. Clearly these expenditures benefit the Company on a long term basis, and are critical to the Company's strategy of consolidating the Canadian child care market.
| Years ended December 31,
$(000) except per share amounts and centre count
|Centres in operation at year end||38||20|
|General and administrative||4,642||2,917|
|Depreciation and amortization||1,058||306|
|Net loss per share||(0.024)||(0.055)|
|AFFO per share||0.001||(0.012)|
(1) Represents only 7 ½ months of operating activity as initial property acquisitions occurred in May, 2010
For the year ended December 31, 2011 the Company reported revenues of $18,177,000 (December 31, 2010 - $6,261,000), centre margin of $5,727,000 (December 31, 2010 - $1,894,000) and a loss of $2,557,000 (December 31, 2010 - $3,348,000). The increases in revenue and centre margin when compared with results for 2010 resulted from a larger portfolio of centres combined with organic growth.
Portfolio centre margin as a percentage of revenue was 32% for the year ended December 31, 2011 compared with 30% for the year ended December 31, 2010. The increase in centre margins can be attributed to organic growth within the centre portfolio as a result of the Company completing its renovation program on newly acquired centres and implementation of various new programming including educational curriculum and certified nutrition meal programs.
Net loss for the year ended December 31, 2011 was $(2,557,000) or $(0.024) per share compared with a net loss of $(3,348,000) or $(0.055) per share for the year ended December 31, 2010 for reasons noted above.
Notwithstanding the fact that the Company is in the early stages of its growth strategy as well as achievement of economies of scale inherent in its operating and cost structure, it is noteworthy that the Company delivered positive AFFO - the Company's primary measure of financial performance - of $118,000 for 2011, the Company's first full fiscal year of operation. This represents a significant increase of $866,000 over 2010 AFFO during which time the Company commenced operations.
The Company is poised to significantly increase its AFFO in the first quarter of 2012, and for the balance of the year based on the following drivers and assumptions.
Since the Company's initial six Ontario based acquisitions were completed in mid-December 2011, and three Calgary based acquisitions closed in November 2011, these nine acquisitions with 1,111 licensed child care spaces had limited impact on the fourth quarter 2011 financial results. In contrast, these acquisitions will provide a full year of operations benefiting the Company's financial performance in 2012.
In addition, the Company's "state of the art" new child care centre developments in Calgary, the Chestermere Learning Centre and the McKenzie Towne Learning Centre, will begin to contribute to the Company's results as they come on stream beginning in the summer of 2012. In total these centres will add approximately 500 licensed child care spaces to these underserved communities. Furthermore the redevelopment of the Lawrence Learning Centre in Kelowna, British Columbia and the Highland Learning Centre in Calgary, Alberta, combined with the closing of the previously announced seventh Ontario acquisition with 127, 75 and 195 licensed child care spaces respectively, are expected to be completed late in the first quarter or in the second quarter of 2012. In total these centres, fully funded by the Company's currently available capital resources will further contribute to AFFO from 709 licensed child care spaces, without requiring dilution to shareholders.
"The Company has a significant acquisition pipeline, with a quantity and quality at least equal to any point since inception of its operations," said Dale Kearns. "The Company remains significantly underleveraged with debt capital. With its current cash resources, its positive cash flow from operations, and $22.5 million available under its credit facility, the Company is well-positioned to advance its acquisition pipeline using its currently in-place capital without requiring dilution to shareholders. As such, these initiatives should prove to be highly accretive to the Company's financial results."
Non IFRS Performance Measures
The Company's business, which is focused on the acquisition and development of Canadian child care centres and includes the ownership of a significant portfolio of real estate, reports net income/loss that includes deduction for property acquisition costs and non-cash charges such as depreciation and stock based compensation expense. Reflecting these factors and consistent with the practice of the Canadian real estate industry, the Company focuses on FFO and AFFO as key and relevant financial metrics to measure and compare operating performance. The Company believes that FFO and AFFO are meaningful non-IFRS supplemental financial measures. FFO and AFFO do not have standardized meanings prescribed by IFRS. The Company's method of calculating FFO and AFFO may be different from other entities and, accordingly, may not be comparable to such other entities. FFO and AFFO: (i) do not represent cash flow from operating activities as defined by IFRS; (ii) are not indicative of cash available to fund all liquidity requirements, including capital for growth; and (iii) are not to be considered as alternatives to IFRS based net income for the purpose of evaluating operating performance.
The Company uses centre margin as a performance indicator of child care centre operating results. Centre margin does not have a standardized meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures by other entities. Centre margin is determined by deducting centre expenses from revenue. Centre expenses exclude net rents due under leases for leasehold properties and mortgage interest, if any, on properties owned by the Company.
Net income / loss is impacted by, among other items, accounting standards that require child care centre acquisition and transaction costs to be expensed as incurred. As the Company executes its consolidation and development strategy in the Canadian child care market, it will routinely incur such expenses which will negatively impact the Company's reported net income / loss, but not FFO and AFFO.
Edleun Group Inc. will hold a conference call on Wednesday March 7th at 10:30 am Eastern Time, to discuss the results of the fourth quarter of fiscal 2011. The Company's full Financial Statements and Management's Discussion and Analysis will be available on SEDAR at www.sedar.com.
To access the conference call by telephone, dial (647) 427-7450 or 1-888-231-8191. Please connect approximately 10 minutes prior to the beginning of the call. The conference call will be archived for replay until Wednesday, March 14, 2012, at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 59280685 followed by the number sign.
A live audio webcast of the conference call will be available at: http://www.newswire.ca/en/webcast/detail/931743/995775. Please connect at least 10 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.
About Edleun Group Inc.
Edleun is the leading provider of high-quality, community-based Early Learning & Care child care centres in Canada offering early education and child care services to children ages six weeks to 13 years. Edleun is committed to preparing children for the next step in their education and life, offering families and employers access to and choice of quality early childhood education programs, as well as enhanced opportunities and career advancement for Early Childhood Educators.
Publicly traded on the Toronto Stock Exchange (TSX-V:EDU), the Company's objectives include the acquisition and subsequent improvement of existing child care centres and developing new state-of-the-art Early Learning and Care Centres in underserved Canadian communities.
The Company currently has a total 45 centres in its portfolio including: 38 centres in operation and 5 in various stages of development or redevelopment representing 4,463 licensed child care spaces.
Certain statements in this Release which are not historical facts may constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Any statements related to Edleun's projected revenues, earnings, growth rates, revenue mix, staffing and resources, and product plans are forward looking statements as are any statements relating to future events, conditions or circumstances. The use of terms such as "believes", "anticipated", "expected", "projected", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of Edleun to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions. Except as required by law, Edleun does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.
The Company undertakes no obligation, except as required by law, to update publicly or otherwise any forward-looking information, whether as a result of new information, future events or otherwise, or the above list of factors affecting this information. Many factors could cause the actual results of Edleun to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Consolidated Statements of Financial Position
|(CDN $000's)|| December 31,
| December 31,
| January 1,
|Property and equipment||$||33,434||$||18,717||$||-|
|Definite life intangible assets||340||-||-|
|Cash and cash equivalents||1,911||8,662||-|
|Prepaid and other expenses||3,606||243||-|
|Short term investments||39||204||-|
|Deferred tax liability||42||34||-|
|Accounts payable and accrued liabilities||2,877||1,369||75|
|Equity settled share based compensation||1,330||1,089||-|
|Total Shareholders' Equity||58,281||36,129||(75)|
|Total Liabilities and Shareholders' Equity||$||63,859||$||37,612||$||-|
Consolidated Statements of Operations and Comprehensive Loss
| Three months ended
| Year ended
|Salaries, wages and benefits||2,944||1,566||9,107||3,316|
|Other operating expenses||1,055||554||3,343||1,051|
|General and administrative||1,299||915||4,642||2,917|
|Depreciation and amortization||302||178||1,058||306|
|Loss before other income||(862)||(676)||(2,800)||(3,357)|
|Loss before income taxes||(802)||(644)||(2,549)||(3,314)|
|Deferred tax expense||8||34||8||34|
|Net Loss and Total Comprehensive Loss||$||(810)||$||(678)||$||(2,557)||$||(3,348)|
|Net loss per share|
|Basic and diluted||$||(0.007)||$||(0.007)||$||(0.024)||$||(0.055)|
|Weighted average number of common shares|
|Basic and diluted||116,338,199||92,227,801||107,797,856||60,430,314|
Consolidated Statements of Changes in Shareholders' Equity
|(000's)||Share Capital|| Equity Settled
|Balance, January 1, 2010||$||-||$||-||$||(75)||$||(75)|
|Reverse takeover transaction|
|Share capital acquired from legal parent||901||-||-||901|
|Deficit and contributed surplus elimination of legal parent||(117)||-||-||(117)|
|Equity consideration - finders fee||300||-||-||300|
|Equity consideration - asset purchase||1,000||-||-||1,000|
|Share issuance costs||(3,921)||-||-||(3,921)|
|Fair value of warrants issued||(448)||448||-||-|
|Exercise stock options||6||-||-||6|
|Net loss and comprehensive loss||-||-||(3,348)||(3,348)|
|Balance, December 31, 2010||$||38,463||$||1,089||$||(3,423)||$||36,129|
|Balance, January 1, 2011||$||38,463||$||1,089||$||(3,423)||$||36,129|
|Share issuance costs||(1,494)||-||-||(1,494)|
|Stock options exercised||727||(157)||-||570|
|Net loss and comprehensive loss||-||-||(2,557)||(2,557)|
|Balance, December 31, 2011||$||62,931||$||1,330||$||(5,980)||$||58,281|
Consolidated Statements of Cash Flow
| Three months ended
| Year ended
|Cash provided by (used in):|
|Items not affecting cash:|
|Amortization of deferred financing costs||15||-||59||-|
|Deferred tax expense||8||34||8||34|
|Change in non-cash working capital||150||356||(1,524)||822|
|Reverse takeover cash acquisition||-||-||-||558|
|Property and equipment||(3,655)||(1,905)||(10,116)||(4,576)|
|Short term investments||49||(49)||165||(204)|
|Proceeds of share issue||-||-||25,003||40,742|
|Share issuance costs||-||(22)||(1,494)||(3,921)|
|Exercise of warrants||-||-||196||-|
|Exercise of options||262||-||569||-|
|Change in Cash and Cash Equivalents||(16,115)||(4,194)||(6,751)||8,662|
|Cash and cash equivalents, beginning of period||18,026||12,856||8,662||-|
|Cash and cash equivalents, end of year||$||1,911||$||8,662||$||1,911||$||8,662|
For further information:
please contact Dale Kearns, Chief Financial Officer of Edleun Group, Inc. at (403) 705-0362 ext. 406, or Nick Hurst of the Equicom Group, Inc. at (403) 218-2835.