CORRECTION FROM SOURCE: Loyalist Announces Record Revenues, Earnings and Cash Flow

CORRECTION FROM SOURCE: Loyalist Announces Record Revenues, Earnings and Cash Flow
  
 

TORONTO, ONTARIO--(Marketwired - May 29, 2014) - A correction from source is being issued for the release disseminated May 28, 2014 at 07:00 ET. With respect to adjusted EBITDA the numbers $1,758,028 and 65% should have read $2,069,422 and 92%, respectively. The corrected release follows:

Loyalist Group Limited ("Loyalist") (TSX-VENTURE:LOY) today announced record financial results for the three months ended March 31, 2014.

First quarter revenue for the three months ended March 31, 2014 was $15.7 million, an increase of 219% over the same period in 2013. Income from operations was $1.7 million, a 68% increase over the same period in 2013, while net income was $1.6 million, an increase of 87% over the same period in 2013. Cash flow from operations was $2.2 million compared to negative $895,883 a year ago.

Revenues continue to rise as a result of the acquisitions closed through March 31, 2014, as well as organic growth of $400,000, arising from higher enrolment and increased tuition fees. Net income and cash flow were adversely impacted by $500,000 of one-time acquisition, integration and restructuring costs ($200,000 in the year-ago period). Excluding these, operating income would have been $2.2 million and cash from operations $2.7 million.

"Of particular importance, the first quarter demonstrated that Loyalist can not only grow its top and bottom line, but also generate strong cash flows from its school operations," said CEO Andrew Ryu. "Ultimately, our long-term goal is to create cash with which to self fund acquisitions and, as the business matures, start to return cash to shareholders."

Speaking to the first quarter, Mr. Ryu added that "our top line benefited from acquiring schools and from better execution in schools we owned or acquired. Our first quarter, 2014 results are in line with our expectations of the seasonal nature of the first quarter with net income at 9% of gross revenues. The integration of our recent six acquisitions continues, and we expect that the next three quarters will show the results in the form of better profit margins."

"Our assets support our current run-rate expectation of $63.0 million for 2014. We continue to focus on integrating schools and improving the company's overall profitability. While our corporate costs more than doubled over the same period last year, we expect them to stay fixed, and perhaps fall, moving forward, while our revenue continues to grow, which will create the leverage needed to see meaningful profit and cash-flow growth."

"We will also aggressively pursue our student housing and franchise businesses. These are low-risk, high-margin pursuits that allow Loyalist to create greater shareholder value from its asset base. Our students collectively spend millions of dollars a year on rent, and we plan to capture a significant share of that spend over time."

Loyalist generated $120,000 of revenue from its student housing pilot program and modest initial franchise fees in the first quarter of 2014. The company expects both lines of business to accelerate.

The following table summarizes and compares three month results for the periods ended March 31, year over year:

Three months ended March 31,	2014		2013		% Change
Revenue	$	15,714,747	$	4,932,219	+219
Gross profit	$	6,555,981	$	2,131,524	+208
Income from operations	$	1,732,107	$	1,030,155	+68
Net Income	$	1,562,658	$	833,799	+87
Adjusted EBITDA*	$	2,069,422	$	1,079,480	+92

* Adjusted EBITDA, a non-IFRS measure is used by management to act as an indicator of its core operating business, is defined as earnings before interest, taxes, depreciation and amortization, adjusted for integration, restructuring and acquisition costs, loss of foreign exchange and stock based compensation expense.

Loyalist has a number of fiscal goals in 2014:

• To close on accretive acquisitions: Study English in Canada ("SEC") and Upper Career College of Business and Technology ("UCCBT") closed with an effective date of February 1, 2014;
• Close on finance offerings to support the acquisition pipeline - closed $10.01 million bought deal private placement in January 2014; and
• Centralize all accounting functions in the corporate office and roll out the Company's custom-built ERP system to provide standardization of the various student databases and billing/collection and human resource functions across all schools.

With cash balance of $3.1 million as at May 26, 2014 and anticipated profitability, the company has the funds to meet all of its operating obligations and to continue growing by acquisition without raising additional capital.

About Loyalist

Loyalist Group Limited owns and operates private English as a Second Language (ESL) Schools, Career Colleges and Community Colleges in Toronto, Vancouver, Victoria and Halifax.

Forward-Looking Statements

This news release includes certain forward-looking 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", "hopes", "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, but is not limited to, information with respect to prospective financial performance, anticipated capital funding and sources, proposed or potential acquisitions, estimated operating and sales costs, estimated market drivers and demand, business prospects and strategy, new markets for growth and financial position. 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 related to any of the company's announced or proposed acquisitions failing to close or becoming delayed before closing; the company's reliance on its South Korean contract; 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 the online education programs; 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.

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.

Loyalist Group LimitedDavid McAdamVP Corporate Development(604) [e-mail] Group LimitedAndrew RyuCEO(416) 969-9800 [e-mail]