CALGARY, Aug. 16, 2012 /CNW/ - Edleun Group, Inc. ("Edleun" or the
"Company") , the leading provider of quality early childhood
education and care in Canada, announced today its operational and
financial results for the three and six months ended June 30, 2012.
During the quarter, the Company continued to grow its portfolio
through strategic acquisitions and development to 45 centres
providing 4,368 licensed child care spaces at June 30, 2012. Child
care centre operational highlights during the second quarter of
2012 include: -- In June, completion of the redevelopment of the
Lawrence Learning Centre in Kelowna with 140 licensed child care
spaces with operations commencing in July; -- At the end of the
second quarter, completion of the development of the Chestermere
Learning Centre, the first new greenfield development with
operations commencing in July providing 247 licensed child spaces
to this growing suburban Calgary community; -- At the end of June,
the Company acquired an operating child care centre in Airdrie,
Alberta for $75,000. This facility is situated in leased premises
under long term lease, adds 51 licensed child care spaces to the
Company's portfolio and will contribute to results beginning in the
third quarter 2012; -- At the end of June, the Company acquired
established Montessori child care centres in each of Ajax and
Markham, Ontario for $1.1 million. These centres are situated in
leased premises under long term leases, add 194 licensed child care
spaces to the Company's portfolio and will contribute to results
beginning in the third quarter of 2012; and -- In April, completion
of the redevelopment of the Highland Park Learning Centre in
Calgary and commencement of operations. This child care centre adds
75 licensed child care spaces to the Company's portfolio. Financial
highlights for the three months ended June 30, 2012: -- Reported a
127% increase in revenue compared to the same period in 2011 (June
30, 2011 - $3.96 million versus June 30, 2012 - $9.0 million) due
to the increased number of child care spaces and higher occupancy
rates; -- Increased same-centre occupancy levels by five percentage
points from 84.6% in the second quarter of 2011 to 89.6% in the
second quarter of 2012; -- Increased same centre revenue by 11% and
same centre margin (in dollars) by 27% compared to the second
quarter period a year earlier; -- More than doubled the number of
licensed child care spaces over the same period in 2011 from 2,038
to 4,368, with an additional 806 under development and coming on
line beginning in the third quarter of 2012; and -- Closed a
private placement of $5 million five year 6.75% debentures
convertible into common shares at $1.10 per share. "In the second
quarter, we continued to demonstrate the merit and success of
Edleun's business model with significant increases in same centre
occupancy, revenue and gross margin," said Ms. Mary Ann Curran, CEO
of Edleun. "We have successfully acquired centres and improved
their performance following the introduction of programming,
services and physical renovations. The new "state of the art"
Chestermere and McKenzie Towne Learning Centres each comprise
approximately 247 licensed child care spaces and provide a
significant source of high quality licensed child care spaces to
these underserved communities. We are pleased with the early
reception that these centres have received in these communities and
the substantial pre-enrollment by parents for the upcoming school
year." "In addition to these new developments - which are
approximately triple the size and impact of an acquired
centre - we completed the redevelopment of two child care
centres, one in Calgary and one in Kelowna, British Columbia," said
Dale Kearns, President and CFO. "The combination of the
development, redevelopment and recent acquisitions of centres will
add approximately 900 or 22% new licensed child care centres; which
begin to impact our operational and financial results in the third
quarter 2012. We continue to pursue an active pipeline of
acquisitions, co-location centres, and several sites in Alberta for
potential development. Our third new development property, located
in the Brookfield Properties master-planned community of Seton in
South Calgary is in the development permit process and is
anticipated to add a further 400 licensed child care spaces to this
rapidly growing area of the city on completion of two phases of
development. The Company secured $5 million of highly accretive
debt capital to enable the funding of the expansion and execution
of our growth plans. The Company's solid financial position and low
level of financial leverage enabled us to secure this financing on
attractive terms. We are well positioned to execute on our near
term plans without dilution to our shareholders." Financial Review
($000's except where otherwise noted and per share amounts) Three
and six months ended June 30, 2012 For the three months ended June
30, 2012, the Company reported revenue of $9.0 million, an increase
of 127% compared with $3.96 million of revenue in the same period
of the prior year. This is primarily due to a twofold increase in
the number of centres and spaces (23 centres and 2,330 licensed
spaces added), combined with occupancy improvements and modest rate
increases. Same centre revenue increased 11% in the three month
period. For the six months ended June 30, 2012 the Company reported
revenue of $17.01 million compared to revenue in the same period in
2011of $7.46 million, an increase of 128% while same centre
revenues increased 13%. Portfolio centre margin (see Non-IFRS
Performance Measures below for centre margin definition) for the
three month period ended June 30, 2012 was $1.61 million, 125%
higher than the same period of 2011. As a percentage of revenue,
centre margin was 32.2%, down marginally from 32.5% in the second
quarter of 2011. For the six month period ended June 30, 2012
centre margin was $2.95 million or 119% higher than the same period
of 2011, with a decrease of 1.3 percentage points to 31.9% as a
percentage of revenue. The decrease in margin as a percentage
of revenue for the six month period was primarily as a result of
smaller centres in British Columbia that carry higher labour costs
and a low occupancy centre in Ontario acquired through a
receivership proceeding. Overall occupancy excluding this centre
was 87.1%, an increase of 0.8 percentage points from the preceding
quarter. Same centre margin (in dollars) for the three and six
months ended June 30, 2012 increased by 27% and 23%, respectively,
compared to the three and six months ended June 30, 2011. $000's Q2
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 (except per 2012 2012 2011 2011 2011 2011
2010 2010 2010 share (47-day amounts) period) Revenue $ 8,984 $
8,030 $ 5,840 $ 4,877 $ 3,958 $ 3,502 $ 3,124 $ 2,270 $ 867 Centre
margin 2,893 2,537 1,841 1,406 1,286 1,194 1,005 616 273 Centre
margin 32 31 31 29 32 34 32 27 31 % Net loss(1) (355) (731) (811)
(957) (541) (249) (678) (896) (1,724) Adjusted 800 735 192 (294)
137 144 (59) (392) (769) EBITDA FFO 563 604 119 (314) (22) 71 (193)
(564) (1,445) AFFO 750 789 211 (329) 100 136 (61) (432) (206) Per
share amounts: Net loss (0.003) (0.006) (0.007) (0.008) (0.006)
(0.003) (0.007) (0.009) (0.033) FFO 0.005 0.005 0.001 (0.003)
(0.002) 0.001 (0.002) (0.006) (0.028) AFFO 0.006 0.007 0.002
(0.003) 0.001 0.001 (0.008) (0.005) (0.004) Cash 3,961 3,803 1,911
18,026 24,270 7,035 8,662 12,856 22,769 Available 18,394 18,626
22,100 24,800 24,800 24,800 - - - under credit facility # of
centres 45 40 38 29 22 20 20 17 11 in operation (2) # of centres 4
6 5 3 2 1 - - - under development or redevelopment (2) Total # of
49 46 43 32 24 21 20 17 11 centres Licensed 4,368 3,908 3,660 2,539
2,038 1,833 1,815 1,527 1,061 spaces in operation(2) Spaces under
806 1,031 803 569 494 247 - - - development or redevelopment (2)
Total spaces 5,174 4,939 4,463 3,108 2,532 2,080 1,815 1,527 1,061
Notes: 1. 2010 amounts have been restated from Canadian GAAP to
IFRS. 2. As at the date of this report, the Company has 46 centres
in operation representing 4,615 licensed spaces and three centres
under development or redevelopment representing 559 licensed
spaces. Adjusted EBITDA was $800 for the second quarter 2012
compared to $137 for the same period a year earlier and $735 on
sequential basis from the first quarter. (See Non-IFRS Performance
Measures below for Adjusted EBITDA definition). On a sequential
quarter basis, revenue increased 12% as a result of two centre
acquisitions, fee increases and occupancy increases. Four
centre acquisitions in the second quarter closed at the end of the
fiscal period resulting in no revenue contribution for these until
the third quarter 2012. Offsetting Adjusted EBITDA growth was
higher general and administrative expense, due principally to the
investment in the review and selection of operational and financial
information systems to support the Company in its growth objectives
and a higher amount of professional fees incurred to prepare the
Company's first Annual Information Form filing together with the
creation of a deferred share unit plan. As these expenses are
either one-time, or above what would be typically incurred, it is
anticipated that they should decline or be eliminated hereon. Funds
From Operations ("FFO") (see Non-IFRS Performance Measures below
for FFO and Adjusted Funds From Operations ("AFFO") definitions)
for the second quarter of 2012 was $563 compared to $(22) for the
second quarter of 2011, due primarily to portfolio growth, offset
by higher finance and stock based compensation expense. FFO per
share for the second quarter of 2012 was $0.005, consistent with
the first quarter of 2012 and compared to $(0.002) for the second
quarter of 2011. AFFO for the second quarter of 2012 was $750
compared to $789 in the first quarter of 2012 and $100 in the
second quarter of 2011. Offsetting the modest increase in
Adjusted EBITDA on a sequential basis was a higher level of
maintenance capital expenditures. AFFO per share for the
second quarter of 2012 was $0.006 compared to $0.007 for the first
quarter of 2012 and $0.001 for the second quarter of 2011. Adjusted
EBITDA, FFO & AFFO Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011
Adjusted EBITDA $ 800 $ 735 $ 192 $ (294) $ 137 Net loss for the
period $ (355) $ (731) $ (810) $ (957) $ (541) Depreciation and
certain other 478 459 325 313 238 non cash items Acquisition costs
440 876 605 330 281 FFO $ 563 $ 604 $ 119 $ (314) $ (22) Stock
based compensation 237 196 104 69 166 Maintenance capital
expenditure (50) (11) (12) (84) (44) AFFO $ 750 $ 789 $ 211 $ (329)
$ 100 Net loss decreased for the three month period ended June 30,
2012 from $541 in 2011 to $355 in 2012. For the six month period
ended June 30, 2012 net loss was $1,086 compared with $790 for the
six months ended June 30, 2011. Included in net loss are
acquisition costs that are expensed as incurred which for the three
and six months ended June 30, 2012 were $440 and $1,316,
respectively, compared with $281 and $396, respectively, in the
same periods of 2011. During the six months ended June 30,
2012 the Company incurred $478 of cost associated with the
restructuring of its internal acquisitions group. Under IFRS,
acquisition costs are not deferred or capitalized and must be
expensed in the period in which they are incurred. The one-time,
and above typical level of general and administration expense noted
regarding the second quarter Adjusted EBIDTA, also impacted the
Company's net income, FFO and AFFO in the quarter. The Company's
investment in its corporate and operational infrastructure is
anticipated to benefit the Company going forward and enable lower
general and administration expenses and increased profitability in
future quarters. The Company continues to be in a solid financial
position. At June 30, 2012, the Company had cash equivalents and
available credit totalling $22.3 million. Capital allocated
to the completion of development projects is $4.0 million. As such,
the Company has sufficient capacity to fund the remaining
construction costs on its development projects and in-place
non-dilutive capital to fund its acquisition pipeline for the
balance of the year. Outlook According to various government
sources, there remains a significant shortage of child care
availability in Canada. The Company believes that the
opportunities to acquire, develop and co-locate child care centres
in the near and medium term are abundant. The early signs of
success in its first two newly developed centres at Chestermere and
McKenzie Towne have bolstered the confidence of the Company in
advancing its pipeline of new developments. The Company has access
to sufficient capital resources to undertake these activities in
subsequent quarters of 2012. Operationally in the third quarter,
the Company expects to see a more pronounced impact than in prior
years from summer seasonality as a result of its initial
acquisitions of Montessori schools. The Company utilizes these
periods of lower occupancy to address maintenance activities in
order to have a minimal impact on the centres during peak
operations. The third quarter of 2012 will be transitional, if not
transformational, for the Company in its evolution and strategic
development. The Company announced significant enhancements to the
management team with the hiring of Ms. Mary Ann Curran as CEO and
Mr. Dean Michaels as Senior Vice President of Acquisitions and
Development. The senior management team is well positioned to
continue and expand its growth opportunities while providing the
leadership and systems to enable this growth to be achieved
effectively for its customers and profitably for its shareholders.
The addition of the 900 licensed child spaces from the newly opened
Chestermere Learning Centre, the scheduled opening of the McKenzie
Towne Early Learning Centre and other recent redevelopments and
acquisitions during the third quarter, are expected to deliver
increased profitability beginning in the fourth quarter of 2012 and
continuing in 2013. Non IFRS Performance Measures 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 those properties owned
by the Company. Adjusted EBITDA is calculated by deducting from
centre margin general and administrative expenses, operating lease
expense and taxes other than income taxes. FFO is calculated by
adjusting the net loss to add back acquisition costs expensed as
incurred, depreciation and certain other non cash items. The
Company's business, which is oriented toward the acquisition and
development of child care centres and includes the ownership of a
significant portfolio of real estate, reports net income that
includes deduction for 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
financial metrics to measure and compare operating performance. 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. 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.
Conference Call Edleun Group Inc. will hold a conference call
Friday, August 17, 2012 at 10:00 am ET (8:00 am MT), to discuss the
results of the second quarter of fiscal 2012. 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 Friday,
August 24, 2012, at midnight. To access the archived conference
call, dial (416) 849-0833 or 1-855-859-2056 and enter the
reservation number 20949906 followed by the number sign. A live
audio webcast of the conference call will be available at:
http://www.newswire.ca/en/webcast/detail/1020089/1102805. 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 , 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 of 46
operating centres in its portfolio and three in various stages of
development or redevelopment representing approximately 5,200
licensed child care spaces. Forward-Looking Statements 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. Edleun Group, Inc.
Condensed Consolidated Statements of Financial Position (Unaudited)
(CDN $000's) June 30, 2012 December 31, 2011 Assets Non-current
assets Property and equipment $ 42,861 $ 33,434 Goodwill 25,985
22,940 Definite life intangible assets 725 340 69,571 56,714
Current assets Cash and cash equivalents 3,961 1,911 Accounts
receivable 3,121 1,589 Prepaid and other expenses 1,753 3,606 Short
term investments 39 39 8,874 7,145 Total Assets $ 78,445 $ 63,859
Liabilities Non-current liabilities Long term debt and financing
leases $ 6,745 $ 2,151 Deferred tax liability 42 42 Convertible
debentures - liability 4,264 - component 11,051 2,193 Current
liabilities Accounts payable and accrued 5,333 2,877 liabilities
Deferred revenue 992 399 Current portion of debt and 463 109
financing leases 6,788 3,385 Total Liabilities 17,839 5,578
Shareholders' Equity Share capital 65,987 62,931 Convertible
debentures - equity 428 - component Equity settled share based
1,257 1,330 compensation Accumulated deficit (7,066) (5,980) Total
Shareholders' Equity 60,606 58,281 Total Liabilities and
Shareholders' $ 78,445 $ 63,859 Equity Edleun Group, Inc. Condensed
Consolidated Statements of Operations and Comprehensive Loss Three
and six months ended June 30, 2012 and 2011 (Unaudited) Three
months ended June 30, Six months ended June 30, 2012 2011 2012 2011
Revenue $ 8,984 $ 3,958 $ 17,014 $ 7,460 Centre expenses Salaries,
4,358 1,946 8,376 3,655 wages and benefits Other 1,733 726 3,208
1,325 operating expenses Centre margin 2,893 1,286 5,430 2,480
Lease 539 160 983 290 Finance 82 - 128 - General and 1,495 1,042
2,839 1,975 administrative Taxes, other 59 - 73 - than income taxes
Acquisition 440 281 1,316 396 costs Stock-based 237 166 433 262
compensation Depreciation 411 237 803 443 and amortization 3,263
1,886 6,575 3,366 Loss before (370) (600) (1,145) (886) other
income Other income 15 59 59 96 Net Loss and $ (355) $ (541) $
(1,086) $ (790) Total Comprehensive Loss Net loss per share Basic
and $ (0.003) $ (0.006) $ (0.009) $ (0.008) diluted Weighted
average number of common shares Basic and 121,050,016 96,296,823
117,894,089 99,285,161 diluted Edleun Group, Inc. Condensed
Consolidated Statements of Changes in Shareholders' Equity Three
and six months ended June 30, 2012 and 2011 (Unaudited) Convertible
Debentures Equity (CDN 000's) - Settled Accumulated Share Equity
Share Based Deficit Shareholders' Capital Component Compensation
Equity Balance at $ 38,463 $ - $ 1,089 $ (3,424) $ 36,128 January
1, 2011 Share 25,003 - - - 25,003 issuance Share (1,483) - - -
(1,483) issuance costs Stock-based - - 262 - 262 compensation
Warrants 232 - (36) - 196 exercised Stock options 382 - (75) - 307
exercised Net loss and - - - (790) (790) comprehensive loss Balance
at June $ 62,597 $ - $ 1,240 $ (4,214) $ 59,623 30, 2011 Balance at
$ 62,931 $ - $ 1,330 $ (5,980) $ 58,281 January 1, 2012 Stock-based
- - 433 - 433 compensation Warrants 2,662 - (412) - 2,250 exercised
Options 394 - (94) - 300 exercised Issue of - 428 - - 428
convertible debentures Net loss and - - - (1,086) (1,086)
comprehensive loss Balance at June $ 65,987 $ 428 $ 1,257 $ (7,066)
$ 60,606 30, 2012 Edleun Group, Inc. Condensed Consolidated
Statements of Cash Flow Three and six months ended June 30, 2012
and 2011 (Unaudited) Three months ended June Six months ended June
30, 30, 2012 2011 2012 2011 Cash provided by (used in): Operating
Activities: Net loss $ (355) $ (541) $ (1,086) $ (790) Items not
affecting cash: Depreciation and 445 237 837 443 amortization
Amortization of 15 16 30 29 deferred financing costs Stock-based
237 166 433 262 compensation Change in non-cash (45) (1,284) 709
(2,081) working capital 297 (1,406) 923 2,137 Investing Activities
Acquisitions (948) (4,888) (2,173) (4,888) Property and (4,315)
(395) (7,948) (1,506) equipment Restricted cash - 116 - 116 (5,263)
(5,167) (10,121) (6,278) Financing Activities Proceeds of share -
25,003 - 25,003 issue Share issuance - (1,483) - (1,483) costs
Exercise of - - 2,250 196 warrants Exercise of 300 288 300 307
options Loan proceeds 299 - 4,219 - Loan repayments (67) - (113) -
Proceeds of 5,000 - 5,000 - convertible debentures issue
Convertible (344) - (344) - debenture issuance costs Finance lease
(64) - (64) - repayments 5,124 23,808 11,248 24,023 Change in Cash
and 158 17,235 2,050 15,608 Cash Equivalents Cash and cash 3,803
7,035 1,911 8,662 equivalents, beginning of period Cash and cash $
3,961 $ 24,270 $ 3,961 $ 24,270 equivalents, end of period Cash and
cash equivalents comprised of: Cash $ 3,961 $ 24,167 Cash
equivalents - 103 $ 3,961 $ 24,270
Edleun Group, Inc. CONTACT: please contact Dale Kearns, President
of Edleun Group, Inc. at(403)705-0362 ext. 406, or Nick Hurst of
the Equicom Group, Inc. at (403)218-2835.
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