EDU Brightpath Early Learning, Inc.

CALGARY, Aug. 23, 2011 /CNW/ -- CALGARY, Aug. 23, 2011 /CNW/ - Edleun Group, Inc. ("Edleun" or the "Company") (TSXV: EDU), the leading consolidator and developer of child care facilities across Canada, announced today its operational and financial results for the three and six month periods ended June 30, 2011. All amounts are presented in Canadian dollars unless otherwise specified. Highlights for the quarter ended June 30, 2011 include: -- Initial entry into the British Columbia child care market through the acquisition of six child care centres, five of which closed effective June 30, 2011; -- Increased portfolio-wide occupancy levels from 81.5% at the end of the first quarter to 84.5% at June 30, 2011; -- Commenced construction of the Chestermere Learning Centre and acquired land pursuant to a long term ground lease to construct the McKenzie Towne Learning Centre - two new Calgary area centres that will create nearly 500 licensed child care spaces as well as serve as a template for future developments; -- Definitive agreements to acquire three redevelopment properties, two in Kelowna that will provide approximately 234 child care spaces and one in Calgary that will offer 75 child care spaces; -- Concluded the purchase of an existing child care centre in Stony Plain, Alberta with 121 child care spaces; and -- Completed a $25 million private placement of common shares to fund the acquisition and development of existing and new child care centres and for general working capital purposes. "The second quarter was highlighted by improved occupancy levels at existing centres and strategic entry into the British Columbia market," said Leslie Wulf, Chief Executive Officer of Edleun. "We have broadened our geographic base with the initiation of regional operations in British Columbia and are advancing our new child care centre development program through redevelopment and construction of four child care centres that will add up to 700 new licensed child care spaces into markets with a critical shortage of availability." Second quarter revenue was $3.9 million, a 13% increase on a sequential basis compared to first quarter of 2011.  Growth in occupancy levels on a same centre basis contributed to the majority of the revenue increase with the Calgary region centres representing a strong 5.4% improvement in occupancy levels. Portfolio centre margin improved to $1.3 million, 8% higher than reported for the first quarter of 2011.  On a same centre basis, portfolio centre margin as a percentage of revenue was 34%, consistent with the level reported for the first quarter of 2011.  Including centres acquired in the second quarter, centre margin declined to 32%. This reflected the fact that centres acquired during the quarter were generally underperforming at the time of purchase, five of six centres did not contribute revenue and cash flow because they were only acquired on the last day of the quarter, and the Company incurred significant costs associated with the establishment of a British Columbia regional office without accompanying revenue. FFO and AFFO Adjusted Funds From Operations ("AFFO") (see Non-IFRS Performance Measures below for AFFO and FFO definitions) for the second quarter of 2011 was $100,000 or $0.001 per share compared with $136,000 or $0.001 per share in the immediately preceding first quarter. The $36,000 decline was due primarily to an increase of $108,000 in general and administrative expense partially offset by higher centre margin.  Centre margin growth, while improving in the second quarter was tempered by the addition of underperforming centres and the cost of entering the British Columbia market.  Funds From Operations ("FFO") for the second quarter declined by $93,000 from the first quarter level due to higher stock-based compensation expense and reasons cited in the AFFO discussion.  The reduction in size of the Company's Board of Directors gave rise to accelerated expensing of stock options representing a non-cash charge of $70,000. Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 (47-day period) Revenue $ 3,958 $ 3,502 $ 3,124 $ 2,270 $ 867 Centre margin 1,286 1,194 1,005 616 273 Net loss((1)) (541) (249) (678) (896) (1,724) Loss per share (0.006) (0.003) (0.007) (0.009) (0.033) FFO (22) 71 (193) (564) (1,445) AFFO 100 136 (60) (432) (206) Cash 24,270 7,035 8,662 12,856 22,769 # of operating centres 28 20 20 17 11 Licensed spaces 2,430 1,833 1,815 1,527 1,061 (1) Net income for 2010 restated to reflect IFRS. (2) Amounts stated in thousands of dollars except per share amounts, # of operating centres and licensed spaces. Three months ended June 30, March 31, December 31, 2011 2011 2010((1)) Net loss for the period $ (541) $ (249) $ (678) Depreciation 238 205 178 Property acquisition costs 281 115 307 FFO $ (22) $ 71 $ (193) Stock based compensation - option grants 166 96 132 Maintenance capital expenditures (44) (30) - AFFO $ 100 $ 137 $ (61) Net loss the second quarter of 2011 was $541,000 or ($0.006) per share, an increase of $291,000 compared to the amount reported for the first quarter of 2011.  Property acquisition costs, which under IFRS are expensed as incurred, increased $166,000 reflecting higher transaction volume; general and administrative expense increased $108,000; and non cash depreciation and stock-based compensation expense increased $103,000. At June 30, 2011, the Company had working capital of $25.8 Million (December 31, 2010 - $8.3 Million) which included cash and cash equivalents of $24.3 Million (December 31, 2010 - $8.7 Million).  The Company has secured a five year $25 million credit facility agreement with a Canadian bank, under which there are no current borrowings, and completed a private placement with net proceeds of $23.6 million. As at June 30, 2011, the Company has grown in just over one year from a start-up in May 2010 with 11 child care centres with 1,061 licensed spaces to 34 child care centers with 3,328 licensed spaces, including centers acquired, under construction and development. "The second quarter of 2011 was a significant in that it marked a continuation of the company's growth and commensurate increase in future cash flow," said Dale Kearns, Edleun's Chief Financial Officer. "Earnings and cash flow recorded in the second quarter do not yet depict the financial impact from the Company's significant acquisition activity in the quarter, as five of the centres acquired closed on June 30, 2011, while expenses related to these acquisitions were incurred in advance thereof. In addition, the Company has incurred expenses to secure and advance the above noted development and redevelopment properties which will substantially contribute to cash flow over the next year. Moreover, the Company completed the quarter with approximately $50 million of financial liquidity, which will be used to advance our pipeline of additional acquisitions, developments, and redevelopments and contribute to cash flow without dilution to shareholders." Non IFRS Performance Measures 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 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 Funds From Operations ("FFO") and Adjusted Funds From Operations ("AFFO") as key and relevant financial metrics to measure and compare operating performance. FFO and AFFO are non-IFRS supplemental financial measures. Results are impacted by, among other items, accounting guidelines that require property 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. 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.  The Company also uses FFO and AFFO as indicators of financial performance.  FFO and AFFO do not have standardized meanings prescribed by IFRS. FFO and AFFO are presented to assist in the analysis of the Company's performance.  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. Conference Call Edleun Group Inc. will hold a conference call on Wednesday, August 24, 2011 at 10:00 am Eastern Time, to discuss the results of the second 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, August 31, 2011 at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number: 92987592 followed by the number sign. A live audio webcast of the conference call will be available at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3631320. 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, educational child care in Canada.  The Company is committed to providing children, families and employers with access to, and choice of, quality early childhood education programs, helping Canadians balance their work and family lives. The Company's objectives include the acquisition and improvement of existing child care centres and development of new child care centres across Canada.  Edleun is also pursuing the development of new "state of the art" child care centres in a number of Calgary and Edmonton residential communities which are currently underserved. 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. Condensed Consolidated Statements of Financial Position June 30, December 31, January 1, 2011 2010 2010 Assets Non-current assets Property and equipment $ 20,752,316 $ 18,716,969 $ - Intangible assets 13,083,431 9,182,598 - 33,835,747 27,899,567 - Current assets Cash and cash equivalents 24,270,226 8,662,254 - Accounts receivable 788,259 603,058 110 Prepaid expenses 1,822,337 242,593 - Deferred financing costs 265,159 - - Short term investments 88,000 203,976 - 27,233,981 9,711,881 110 Total Assets $ 61,069,728 $ 37,611,448 $ 110 Liabilities Non-current liabilities Deferred tax liability $ 34,053 $ 34,053 $ - 34,053 34,053 - Current liabilities Accounts payable and accrued 1,241,653 1,368,521 75,000 liabilities Deferred revenue 170,660 80,432 - 1,412,313 1,448,953 75,000 Total Liabilities 1,446,366 1,483,006 75,000 Shareholders' Equity Share capital 62,596,956 38,463,083 110 Contributed surplus 1,239,874 1,088,746 - Accumulated deficit (4,213,468) (3,423,387) (75,000) Total Shareholders' Equity 59,623,362 36,128,442 (74,890) Total Liabilities and $ 61,069,728 $ 37,611,448 $ 110 Shareholders' Equity Condensed Consolidated Statements of Operations, Comprehensive Loss and Deficit Three months ended June 30, Six months ended June 30, 2011 2010 2011 2010 Revenue $ 3,957,913 $ 867,252 $ 7,459,886 $ 867,252 Centre expenses Salaries, wages 1,946,511 491,023 3,655,341 491,023 and benefits Other operating 725,832 103,177 1,325,436 103,177 expenses 1,285,570 273,052 2,479,109 273,052 Lease expense 159,722 32,124 290,166 32,124 General and 1,041,648 1,009,924 1,975,204 1,060,424 administrative Property 280,795 261,240 395,530 261,240 acquisition costs Stock-based 166,113 676,053 261,834 676,053 compensation Depreciation 237,512 17,510 442,687 17,510 1,885,790 1,996,851 3,365,421 2,047,351 Loss before the (600,220) (1,723,799) (886,312) (1,774,299) undernoted items Other income 59,441 249 96,231 249 Net Loss and $ (540,779) $ (1,723,550) $ (790,081) $ (1,774,050) Comprehensive Loss Net loss per share Basic and $ (0.006) $ (0.034) $ (0.008) $ (0.063) diluted Weighted average number of common shares Basic and 96,296,823 50,965,266 99,285,161 28,109,609 diluted Condensed Consolidated Statements of Changes in Shareholders' Equity Contributed Accumulated Shareholders' Share Capital Surplus Deficit Equity Balance, $ 110 $ - $ (75,000) $ (74,890) January 1, 2010 Reverse takeover transaction Share capital 901,554 - - 901,554 acquired from legal parent Deficit and (117,269) - - (117,269) contributed surplus elimination of legal parent Equity 300,000 - - 300,000 consideration - finders fees Equity 1,000,000 - - 1,000,000 consideration - asset purchase Share issuance 40,742,500 - - 40,742,500 Share issuance (3,866,655) - - (3,866,655) costs Fair value of (448,312) 448,312 - - warrants issued Stock-based - 376,053 - 376,053 compensation Net loss and - - (1,774,050) (1,774,050) comprehensive loss Balance, June $ 38,511,928 $ 824,365 $ (1,849,050) $ 37,487,243 30, 2010 Balance, $ 38,463,083 $ 1,088,746 $ (3,423,387) $ 36,128,442 January 1, 2011 Share issuance 25,003,000 - - 25,003,000 Share issuance (1,482,529) - - (1,482,529) costs Stock-based - 261,834 - 261,834 compensation Warrants 231,886 (35,936) - 195,950 exercised Stock options 381,516 (74,770) - 306,746 exercised Net loss and - - (790,081) (790,081) comprehensive loss Balance, June $ 62,596,956 $ 1,239,874 $ (4,213,468) $ 59,623,362 30, 2011 Condensed Consolidated Statements of Cash Flow Three months ended June 30, Six months ended June 30, 2011 2010 2011 2010 Cash provided by (used in): Operating Activities: Net loss $ (540,779) $ (1,723,550) $ (790,081) $ (1,774,050) Items not affecting cash: Depreciation 237,512 17,510 442,687 17,510 Amortization 15,843 - 29,463 - of deferred financing costs Stock-based 166,113 676,053 261,834 676,053 compensation Change in (1,284,890) 431,266 (2,081,253) 481,766 non-cash working capital (1,406,201) (598,721) (2,137,350) (598,721) Investing Activities Acquisitions (4,887,579) (13,400,000) (4,887,579) (13,400,000) Reverse takeover - 558,418 - 558,418 cash acquisition Property and (395,236) (550,348) (1,506,242) (550,348) equipment Restricted cash 115,976 (115,976) 115,976 (115,976) (5,166,839) (13,507,906) (6,277,845) (13,507,906) Financing Activities Proceeds of 25,003,000 40,742,500 25,003,000 40,742,500 share issue Share issuance (1,482,529) (3,866,655) (1,482,529) (3,866,655) costs Exercise of - - 195,950 - warrants Exercise of 287,667 - 306,746 - options 23,808,137 36,875,845 24,023,167 36,875,845 Change in Cash 17,235,097 22,769,218 15,607,972 22,769,218 and Cash Equivalents Cash and cash 7,035,129 - 8,662,254 - equivalents, beginning of period Cash and cash $ 24,270,226 $ 22,769,218 $ 24,270,226 $ 22,769,218 equivalents, end of period Cash and cash equivalents comprised of: Cash $ 24,166,930 $ 768,374 Cash equivalents 103,296 22,000,844 $ 24,270,226 $ 22,769,218   To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/23/c5793.html p please contact either Leslie Wulf, Chief Executive Officer, or Dale Kearns, Chief Financial Officer of Edleun Group, Inc. at (403) 800-0890, or Nick Hurst of the Equicom Group, Inc. at (403) 218-2835. /p

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