Loyalist Announces Second Quarter 2015 Financial Results
Marketwired
TORONTO, ONTARIO--(Marketwired - Aug 26, 2015) - Loyalist Group Limited ("Loyalist" or the "Company") (TSX VENTURE:LOY) today announced financial results for the three and six months ended June 30, 2015. The Financial Statements and Management's Discussion & Analysis for the three and six months ended June 30, 2015 are available on SEDAR (www.sedar.com).
The financial results for the second quarter reflect less than one month of tenure under the Company's new management team. Revenues during the three and six months ended June 30, 2015 were down sharply compared to same periods in 2014 as the business issues experienced by the Company in late 2014 continued to be felt into the first half of 2015. Significant progress to control operating expenses is currently underway and management believes that the impact of these changes will become evident during the third quarter of 2015, the first full quarter under new management. It is also important to note that the $7.7 million of funds raised to date under the Company's non-brokered private placement are not reflected in the financial statements for the second quarter of 2015, as all three tranches of the financing closed subsequent to quarter end.
"We are very disappointed by the second quarter results as we believe they are completely unacceptable on all fronts. Our second quarter revenues and margins suffered from the carryover effect of lower activity levels and significant discounting which was undertaken previously, a practice which our new management team has diminished. Importantly, we have recently experienced year over year improvements in student numbers, which we view as a positive sign that demand levels do not need to be supported by uneconomic discounting and promotional activity. There is also ample room to bring overall expenses down materially, and we have been doing so since late June. Overall, these results demonstrate why aggressive changes were made to senior management, and corporate governance, and also highlight the importance of the Optimization Plan which we announced today in a separate press release," said Shawn Klerer, Chief Executive Officer.
The following table reconciles income from operations to EBITDA and adjusted EBITDA for the three and six months ended June 30, 2015 and 2014.
For the three months ended June 30,
2015
2014
Income (loss) after income taxes
$
(28,592,075
)
$
1,338,872
Interest and accretion
320,783
241,062
Income tax expense (recovery)
15,244
(66,100
)
Amortization
552,136
365,911
EBITDA
$
(27,703,912
)
$
1,879,745
Acquisitions and restructuring costs
180,741
158,897
Optimization costs
1,000,000
-
Foreign exchange gain (loss)
(27,210
)
7,896
Impairment of goodwill and unallocated purchase price
17,613,767
-
Impairment of capital assets and intangible assets
3,248,985
-
Share-based compensation
30,584
-
Adjusted EBITDA
$
(5,657,045
)
$
2,046,538
For the six months ended June 30,
2015
2014
Income (loss) after income taxes
$
(34,559,011
)
$
2,901,530
Interest and accretion
669,672
390,815
Income tax expense (recovery)
28,126
(628,755
)
Amortization
1,114,761
703,226
EBITDA
$
(32,746,452
)
$
3,366,816
Acquisitions and restructuring costs
425,715
323,315
Optimization costs
1,000,000
-
Foreign exchange gain (loss)
(76,547
)
340
Impairment of goodwill and unallocated purchase price
17,613,767
-
Impairment of capital assets and intangible assets
3,248,985
-
Share-based compensation
65,439
-
Adjusted EBITDA
$
(10,469,093
)
$
3,690,471
The following table presents cash flows from (used in) the Company's operating activities.
For the three months ended June 30,
2015
2014
Cash flows from (used in) operating activities
Net income (loss)
$
(28,592,075
)
$
1,338,872
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization
552,136
365,911
Accretion
63,896
141,276
Provision for doubtful accounts
536,870
28,154
Loss on sale of investment
-
-
Share-based payments
30,584
-
Impairment of goodwill and unallocated purchase price
17,613,767
-
Impairment of capital assets and intangible assets
3,248,985
-
Lease inducement
(22,651
)
(19,206
)
Rent deposits
52,618
-
Severance provision
(73,998
)
-
Exchange rate change
426,039
-
Deferred tax expense (recovery)
-
(66,100
)
Changes in working capital balances
1,774,356
(953,760
)
$
(4,389,473
)
$
835,147
For the six months ended June 30,
2015
2014
Cash flows from (used in) operating activities
Net income (loss)
$
(34,559,011
)
$
2,901,530
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization
1,114,761
703,226
Accretion
123,558
193,940
Provision for doubtful accounts
586,357
73,534
Loss on sale of investment
-
-
Share-based payments
65,439
-
Impairment of goodwill and unallocated purchase price
17,613,767
-
Impairment of capital assets and intangible assets
3,248,985
-
Lease inducement
(45,302
)
(128,857
)
Rent deposits
(87,968
)
15,962
Severance provision
76,494
-
Exchange rate change
332,684
-
Deferred tax expense (recovery)
-
(628,755
)
Changes in working capital balances
5,159,872
(119,024
)
$
(6,370,364
)
$
3,011,556
About Loyalist
Loyalist owns and operates private English as a Second Language (ESL) Schools, Career Colleges and Community Colleges in Toronto, Vancouver, Victoria and Halifax.
Forward-Looking Information and Statements
This news release includes certain forward-looking information and statements within the meaning of Canadian securities laws. Such forward-looking information and statements are not representative of historical facts or information or current condition, but instead represent only the Company's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken, "will continue", "will occur" or "will be achieved". The forward-looking information contained herein includes information relating to the Company's operating results. By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.
Any number of important factors could cause actual results to differ materially from these forward-looking statements as well as future results including, but not limited to, risks relating to: the Company's ability to service its outstanding indebtedness and the impact of that indebtedness on the Company's ability to raise additional capital, fund and maintain operations or meet business objectives; the Company's ability to comply with the terms of the amended forbearance agreement with Bank of Montreal and the consequences of any breach or default thereunder; the Company's ability to complete any proposed recapitalization or restructuring activities (including the Optimization Plan referenced herein) on terms acceptable to the Company or at all and the expected cost savings related thereto; the fact that new management of the Company, including the recently appointed Chief Executive Officer and Chief Financial Officer, have had limited experience with the Company and its operations and have not had sufficient time to fully analyze all facets of the Company's business; the impact of negative or unfavourable rumours in the marketplace on the Company's brands and student enrollment; any of the Company's announced or proposed acquisitions failing to close or becoming delayed before closing; carrying on business and activities in international jurisdiction where Canadian laws do not apply; any loss of certain key personnel; levels of student enrolment; delays in rolling out online education programs; delays to the completion of any planned initiatives or the inability to complete those initiatives; competition in the educational services market; and currency fluctuations. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Accordingly, readers should not place undue reliance on any forward-looking information or statements contained in this press release.
The forward-looking information contained in this press release is made as of the date hereof, and the Company does not undertake to update any forward-looking information that is contained or referenced herein, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. All subsequent written and oral forward looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.
Caution Regarding Non-IFRS Financial Measures - The Company references adjusted EBITDA in this press release, which does not have a standardized meaning as prescribed by International Financial Reporting Standards ("IFRS"). This non-IFRS measure is unlikely to be comparable to similar measures presented by other issuers, and has been presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company. This non-IFRS measure should not be considered in isolation or as a substitute for, or more meaningful than, measures prepared in accordance with IFRS, such as net income (loss) or cash flow from operating activities. Please refer to the Company's Management's Discussion and Analysis as at and for the year ended December 31, 2014 for a reconciliation of this non-IFRS measure to measures prescribed by IFRS.
Neither the 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.
