EDU Brightpath Early Learning, Inc.

CALGARY, Nov. 18, 2011 /CNW/ - Edleun Group, Inc. ("Edleun" or the "Company") , the leading consolidator and developer of child care facilities across Canada, announced today its operational and financial results for the three and nine month periods ended September 30, 2011. Highlights for the third quarter ended September 30, 2011 include: -- On a portfolio wide basis, revenues for the third quarter of 2011 increased by 115% compared with the same period a year earlier and by 23% sequentially from the second quarter of 2011; -- On a portfolio wide basis, centre margin as a percentage of revenue in the third quarter of 2011 increased to 29%, up from 27% in the same period a year ago; -- For those centres in full operation during the current and prior year's third quarter ("same centre basis") revenues increased by 28%, centre margin in dollars by 43%, and centre margin as a percentage of revenue from 28% to 31%; -- On a same centre basis, occupancy in the third quarter of 2011 rose to 89% from 79% in the same period a year ago, testament to the Company's strategy of improving the physical state of its centres, the educational curriculum, nutritious meal and other programs offered by Edleun; -- Six child care centres in British Columbia acquired in June 2011 came on stream; -- Acquisition of a redevelopment property in Calgary for $830,000 with a capacity of 75 licensed child care spaces upon opening; -- Purchase of a redevelopment property in Kelowna, British Columbia for $950,000 which will add 127 licensed child care spaces in this underserved market; -- Acquisition of an underperforming child care centre and underlying real estate in Calgary for $1,125,000 that adds 95 spaces to Edleun's portfolio; and -- Subsequent to quarter end, the company closed on the purchase of three child care centres and underlying real estate in the Calgary area that add 263 child care spaces; and entered into a definitive agreement to acquire a fourth centre in this market with 70 licensed spaces. "The third quarter was critical on several fronts: it marked the beginning of our expansion outside of Alberta with acquisitions in British Columbia, initial steps to enter the Ontario market and measurable advancement of our co-location strategy," said Ty Durekas, President and CEO of Edleun. "The Company made important strides in program areas including curriculum, in-centre technology based learning and corporate development and marketing.  Edleun continues to raise the bar in terms of the quality of our centres and the excellence of our operations and staff. This is evidenced by the Company's improving financial performance and the positive feedback from families with children in Edleun centres." Financial review Third quarter revenue was $4.9 million, a 115% increase over the same period a year earlier and a 23% increase on a sequential basis compared with the second quarter of 2011. Same centre revenue revenues increased by 28% when compared with the same three month period in fiscal 2010.  Six centres located in British Columbia acquired at the end of June 2011 contributed to revenue in the third quarter, offset, in part, by the effect of summer seasonality. Revenue for the nine months ended September 30, 2011 was $12.3 million compared with $3.1 million a year earlier, the fourfold increase due to a larger portfolio of centres and organic growth therein. Portfolio centre margin in the third quarter improved to $1.4 million, 9% higher than reported for the second quarter of 2011 and more than double the level in the third quarter a year earlier. Same centre margin in dollars for the three month period improved by 43% year over year. Centre margin for the nine months ended September 30, 2011 was $3.9 million, a fourfold increase from the prior year period. Centre margin as a percentage of revenue of 29% in the third quarter of 2011 was three points lower on a sequential quarter basis as a result of summer seasonality and the impact of start-up and integration costs in the recently acquired British Columbia centres.  On a year over year basis, centre margin for the third quarter improved from 27% to 29% reflecting higher occupancy levels. Lower centre margin levels in the third quarter are anticipated because of reduced demand during summer months. Third quarter results also reflected the Company taking  advantage of the summer slowdown to undertake maintenance capital expenditures for centres, expansion of curriculum and implementation of in-centre technology based learning. (In thousands of Canadian dollars expect per share amounts) Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 (47-day period) Revenue $ 4,877 $ 3,958 $ 3,502 $ 3,124 $ 2,270 $ 867 Centre 1,406 1,286 1,194 1,005 616 273 margin Centre 29% 32% 34% 32% 27% 31% margin % Net loss (1) (957) (541) (249) (678) (896) (1,724) Loss per (0.008) (0.006) (0.003) (0.007) (0.009) (0.033) share FFO (314) (22) 71 (193) (564) (1,445) AFFO (329) 100 136 (60) (432) (206) Cash 18,026 24,270 7,035 8,662 12,856 22,769 # of 29 22 20 20 17 11 centres Licensed 2,539 2,038 1,833 1,815 1,527 1,061 spaces Occupancy (1)     Net income for 2010 restated to reflect IFRS FFO and AFFO Adjusted Funds From Operations ("AFFO") (see Non-IFRS Performance Measures below for AFFO and FFO definitions) for the third quarter of 2011 was negative $329,000 or $(0.003) per share compared to $100,000 or $0.001 per share in the immediately preceding second quarter.  This decline of $429,000 was due primarily to an increase in general administrative expense which included expenditures on marketing that management anticipates to be distributed more evenly through the full year going forward.  The summer season also represents the opportune time to invest in and introduce new curriculum, technology, toys and furniture to the centres which is expected to benefit operations going forward. Funds from Operations ("FFO") for the third quarter declined by $292,000 for reasons cited above. (in thousands of Canadian dollars) Three monthsended September 30, June 30, March 31, December 31, 2011 2011 2011 2010 Net loss for the period $ (957) $ (541) $ (249) $ (678) Depreciation 313 238 205 178 Property acquisition 330 281 115 307 costs FFO $ (314) $ (22) $ 71 $ (193) Stock based compensation 69 166 96 132 - option grants Maintenance capital (84) (44) (31) - expenditures AFFO $ (329) $ 100 $ 136 $ (61) Net loss for the third quarter of 2011 was $957,000 or ($0.008) per share, an increase of $416,000 compared with the loss reported for the second quarter of 2011. This loss, in part, reflects a significant increase in costs related to child care centre acquisitions which, in turn, is a reflection of the Company's acquisition and pipeline expansion strategy. In anticipation of greater growth in coming periods, property acquisition costs have risen in each quarter this year. While these expenditures should benefit the Company on a long term basis, under IFRS these costs are expensed. The loss also reflects higher general and administrative expense which increased $437,000 (for the reasons discussed above). "We are particularly pleased with same centre year -over -year increases in quarterly revenue of 23%, centre margin in dollars of 43% and centre margin as a percentage of revenue from 28% to 31%, a strong indication that our strategy of offering quality care is successful and well received by parents," said Dale Kearns Chief Financial Officer of Edleun. "We were also pleased to see the impact of summer seasonality was at the low end of our range of expectations. Moreover, the Company completed the third quarter with approximately $43 million of financial liquidity. Approximately $17 million is committed under various purchase agreements and development programs, leaving ample funding to continue to further advance our pipeline of additional acquisitions, developments, and redevelopments in new markets without dilution to shareholders." As at September 30, 2011, the Company has grown from a start-up in May 2010 with 11 child care centres and 1,061 licensed spaces in Alberta to 38 child care centres with 3,675 licensed spaces (including those centres acquired and under contract, construction or redevelopment) located in Alberta and British Columbia. Outlook Edleun management continues to evaluate and pursue a range of acquisition opportunities in both existing and new markets, including Ontario and Eastern Canada. As well, part of the Company's strategy to bring further supply of licensed child care spaces to the Canadian market involves working with leading commercial and residential property owners to co-locate new centres in their properties.  These co-location opportunities will provide an important amenity to parents in underserved communities and offers Edleun access to markets that may not otherwise be available. 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 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. FFO and AFFO are meaningful 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 Monday November 21 at 4:00 pm Eastern Time, to discuss the results of the third 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 Monday, November 28, 2011, at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 29155078 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=3750560. 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, Early Learning & Care child care centres in Canada offering early education and child care services to children ages 6 weeks to 13 years.  Edleun strives to provide children with a solid foundation for future success and to inspire a lifelong love of learning.  The Company values real-life learning techniques, using the familiar framework of a young child's day, relationships and experiences to create learning opportunities in everyday moments. Edleun's commitment is to provide 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 developing new "state of the art" Early Learning & Care centres in 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. Consolidated Statements of Financial Position September 30, December 31, January1, ($000's) 2011 2010 2010 Assets Non-current assets Property and equipment $ 26,441 $ 18,717 $ - Intangible assets 13,162 9,183 - 39,603 27,900 - Current assets Cash and cash equivalents 18,026 8,662 - Accounts receivable 1,072 603 - Prepaid expenses 1,984 243 - Deferred financing costs 255 - - Short term investments 88 204 - 21,425 9,712 - Total Assets $ 61,028 $ 37,612 $ - Liabilities Non-current liabilities Deferred tax liability $ 34 $ 34 $ - 34 34 - Current liabilities Accounts payable and accrued 2,084 1,369 75 liabilities Deferred revenue 185 80 - 2,269 1,449 75 Total Liabilities 2,303 1,483 75 Shareholders' Equity Share capital 62,586 38,463 - Contributed surplus 1,309 1,089 - Accumulated deficit (5,170) (3,423) (75) Total Shareholders' Equity 58,725 36,129 (75) Total Liabilities and $ 61,028 $ 37,612 $ - Shareholders' Equity Condensed Consolidated Statements of Operations, Comprehensive Loss and Deficit Three monthsended Nine monthsended September 30, September 30, ($000's) 2011 2010 2011 2010 Revenue $ 4,877 $ 2,270 $ 12,337 $ 3,137 Centre expenses Salaries, 2,508 1,260 6,164 1,751 wages and benefits Other 963 395 2,288 498 operating expenses 1,406 615 3,885 888 Lease expense 267 116 557 148 General and 1,479 942 3,454 2,002 administrative Property 330 222 725 483 acquisition costs Stock-based 69 132 331 808 compensation Depreciation 313 110 756 128 2,458 1,522 5,823 3,569 Loss before (1,052) (907) (1,938) (2,681) the undernoted items Other income 95 11 191 11 Net Loss and $ (957) $ (896) $ (1,747) $ (2,670) Comprehensive Loss Net loss per share Basic and $ (0.008) $ (0.010) $ (0.017) $ (0.054) diluted Weighted average number of common shares Basic and 116,005,319 92,220,301 104,919,792 49,714,678 diluted Condensed Consolidated Statements of Changes in Shareholders' Equity Share Contributed Accumulated Shareholders' (000's) Capital Surplus Deficit Equity Balance, January $ - $ - $ (75) $ (75) 1, 2010 Reverse takeover transaction Share capital 901 - - 901 acquired from legal parent Deficit and (117) - - (117) contributed surplus elimination of legal parent Equity 300 - - 300 consideration - finders fees Equity 1,000 - - 1,000 consideration - asset purchase Share issuance 40,742 - - 40,742 Share issuance (3,899) - - (3,899) costs Fair value of (448) 448 - - warrants issued Stock-based - 508 - 508 compensation Net loss and - - (2,670) (2,670) comprehensive loss Balance,September $ 38,479 $ 956 $ (2,745) $ 36,690 30, 2010 Balance, January $ 38,463 $ 1,089 $ (3,423) $ 36,129 1, 2011 Share issuance 25,003 - - 25,003 Share issuance (1,494) - - (1,494) costs Stock-based - 331 - 331 compensation Warrants 232 (36) - 196 exercised Stock options 382 (75) - 307 exercised Net loss and - - (1,747) (1,747) comprehensive loss Balance, $ 62,586 $ 1,309 $ (5,170) $ 58,725 September 30, 2011 Condensed Consolidated Statements of Cash Flow Three months ended Ninemonths ended September30, September 30, (000's) 2011 2010 2011 2010 Cash provided by (used in): Operating Activities: Net loss $ (957) $ (896) $ (1,747) $ (2,670) Items not affecting cash: Depreciation 313 110 756 128 Amortization of 15 - 44 - deferred financing costs Stock-based 69 132 331 808 compensation Change in non-cash 407 (15) (1,674) 467 working capital (153) (669) (2,290) (1,267) Investing Activities Acquisitions (1,125) (7,052) (6,012) (20,452) Reverse takeover cash - - - 558 acquisition Property and (4,955) (2,120) (6,462) (2,671) equipment Restricted cash - (39) 116 (155) (6,080) (9,211) (12,358) (22,720) Financing Activities Proceeds of share - - 25,003 40,742 issue Share issuance costs (11) (33) (1,494) (3,899) Exercise of warrants - - 196 - Exercise of options - - 307 - (11) (33) 24,012 36,843 Change in Cash and (6,244) (9,913) 9,364 12,856 Cash Equivalents Cash and cash 24,270 22,769 8,662 - equivalents, beginning of period Cash and cash $ 18,026 $ 12,856 $ 18,026 $ 12,856 equivalents, end of period   Edleun Group, Inc. 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.

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