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Loyalist Group to spin off student housing business
Ticker Symbol: C:LOY
Loyalist Group to spin off student housing business
Loyalist Group Ltd (C:LOY)
Shares Issued 154,732,423
Last Close 2/6/2015 $0.50
Monday February 09 2015 - News Release
Mr. Andrew Ryu reports
LOYALIST TO SPIN-OFF HOUSING BUSINESS
Loyalist Group Ltd.'s board of directors has approved a strategic plan to spin off its student housing business into a separate entity. The Company is confident that transitioning the housing business into a stand-alone entity will better position it to capitalize on market opportunities and enhance shareholder value, while at the same time allowing Loyalist to focus on its fast-growing ESL, Career-College and Agency businesses.
"After a year-long pilot program we've grown our housing business into a small but profitable revenue-generating operation. Of far greater importance, we've learned how best to grow it substantially and rapidly, and to that end we feel it necessary to spin it off and raise capital separately. Our recent acquisitions of two overseas agencies will allow us not only to significantly grow our education business but also our housing subsidiary," said Chief Executive Officer Andrew Ryu.
"After a year of study we have come to realize that the growth opportunities in student housing are significant, from catering not only to Loyalist's large and fast-growing student body but also those of other schools, not limited to the ESL space. We believe that a large presence in the lucrative student housing market will deliver significant returns to our shareholders and I'm very eager to ramp up our efforts."
Completion of the transaction is subject to customary conditions for a transaction of this nature including, but not limited to, the receipt of all required corporate, regulatory and other third-party approvals. Loyalist intends to maintain an interest in the new housing entity post-spinoff.
We seek Safe Harbor.
© 2015 Canjex Publishing Ltd.
Loyalist Group closes acquisition of Kim Okran Int'l
Ticker Symbol: C:LOY
Loyalist Group closes acquisition of Kim Okran Int'l
Loyalist Group Ltd (C:LOY)
Shares Issued 154,732,423
Last Close 1/23/2015 $0.45
Monday January 26 2015 - News Release
Mr. Andrew Ryu reports
LOYALIST CLOSES SECOND SOUTH KOREAN AGENCY ACQUISITION
Loyalist Group Ltd. has closed the acquisition of Kim Okran International Studies Centre, a South Korean student recruiting agency that provides information and registration services to South Korean students looking to study abroad, particularly in Canada.
Pursuant to the terms of the purchase agreement, the total consideration payable by Loyalist for Kim Okran was $4.65-million. Of the amount paid to the vendors on closing, $3.9-million was paid in cash and $750,000 was paid through the issuance of 1,442,307 Loyalist common shares at a per share price of 52 cents, with 75 per cent of such shares to be held in escrow for up to 12 months following closing as security for certain defined post closing adjustments.
Kim Okran had consolidated revenue of $4.7-million and adjusted earnings before interest, taxes, depreciation and amortization of $900,000 for the 12-month period ended December, 2013.
"We are excited to welcome Kim Okran into the Loyalist group," said chief executive officer Andrew Ryu. "The acquisition of another of our important agency partners, along with the recently acquired [Uhak website], further strengthens our vertical integration strategy by positioning Loyalist to reduce our direct costs of attracting students and grow our student population."
About Kim Okran
Kim Okran is one of the 10 largest South Korean education information and counselling centres, with four branch offices in South Korea and eight overseas affiliated study abroad agencies, seven in Canada and one in the Philippines.
We seek Safe Harbor.
Loyalist to Acquire Second Agency in South Korea
TORONTO, ONTARIO--(Marketwired - Jan. 12, 2015) - Loyalist Group Limited ("Loyalist", the "Company") (TSX VENTURE:LOY) is pleased to announce that it has entered into a definitive agreement to acquire Kim Okran International Studies Centre ("Kim Okran"), a South Korean-based student recruiting agency that provides information and registration services to South Korean students looking to study abroad, particularly in Canada.
Kim Okran had consolidated revenue of $4.7 million and adjusted EBITDA of $0.9 million for the 12-month period ended December 2013. Kim Okran's revenue is based upon commissions earned on gross student tuition fees of approximately $20.0 million.
"Building upon our recently completed acquisition of Uhak.com, the largest student recruiting agency in South Korea, the Kim Okran acquisition further enhances Loyalist's vertical integration strategy," said Chief Executive Officer Andrew Ryu. "By acquiring another one of our largest agency partners, we will be in a position to further reduce our direct costs of attracting students. The acquisition will also provide Loyalist with a strong source for growing its student population. We expect an annualized additional net benefit to Loyalist of approximately $2.1 million in the year following closing of the acquisition from increased student numbers and reduced marketing expenses. The Kim Okran team will make a fine addition to the Loyalist family."
Loyalist will pay $4.65 million for Kim Okran, of which $3.9 million will be paid in cash, subject to certain closing adjustments, and $0.75 million will be paid through the issuance of 1,442,307 Loyalist common shares at a price of $0.52 per share, with 75% of such shares being held in escrow for a period up to 12 months following closing as security for certain defined post-closing adjustments. The parties expect to complete the transaction on or around January 27, 2015.
Loyalist Group appoints Kim president of operations
2014-12-19 09:07 ET - News Release
Mr. Andrew Ryu reports
LOYALIST ANNOUNCES NEW MANAGEMENT APPOINTMENTS
Loyalist Group Ltd. has made a number of management appointments. The appointments are in line with Loyalist's continuing process of developing strong management capabilities to continue its growth strategy.
Tony Kim has been appointed president of operations. Mr. Kim has over 15 years of experience in the education services industry and was previously the owner of Study English in Canada (SEC), a licensed English as a second language school operator with campuses in Toronto and Vancouver. Loyalist acquired SEC in February, 2014. In his new position, Mr. Kim is responsible for all of Loyalist's school operations across its 25 campuses in Vancouver, Toronto, Victoria and Halifax.
Sung Lim will assume the role of chief business development officer, and will focus on Loyalist's acquisitions strategy and new business development.
Other management appointments include:
Steve Kang as vice-president of finance;
Alex Kim as vice-president of corporate operations;
Steve Sohn as vice-president of operations.
"We continue to establish a solid foundation on which to build our ambitious growth strategy," said chief executive officer, Andrew Ryu. "The strong management team that we assembled will allow us to deliver solid top and bottom line growth."
In furtherance of Loyalist's brand strategy, Loyalist appointed managing directors for each of its brands. Loyalist operates several school brands, each with its own features and attributes, under the overall Loyalist umbrella. The following are the newly appointed managing directors:
Amanda Cabrera -- PGIC;
Cindy Juarez -- Cornerstone;
Anna Kielar -- SEC;
Dylan Matter -- MTI;
Barbara Godt -- KGIC;
Nayoung Choi -- UIS.
"Our multiple brand structure is unique in Canada and a strong differentiating factor in our service offering," said Mr. Ryu.
We seek Safe Harbor.
© 2014 Canjex Publishing Ltd. All rights reserved.
Loyalist to develop new business with JoonAng
2014-12-11 09:09 ET - News Release
Mr. Andrew Ryu reports
LOYALIST SIGNS BUSINESS DEVELOPMENT AGREEMENT WITH MAJOR SOUTH KOREAN MEDIA COMPANY
Loyalist Group Ltd. has signed a business development agreement with JoonAng Daily Media Plus, a subsidiary of JoonAng Daily Newspaper, one of South Korea's largest media companies and an affiliate of Samsung Corp.
Under the agreement, Loyalist and JoonAng have entered into a strategic partnership to mutually develop business opportunities domestically and internationally.
"We are excited to partner with a major media company in South Korea to develop new businesses and strengthen our brand image, particularly as they relate to government and business relationships," said chief executive officer Andrew Ryu. "We expect that the agreement will enhance our revenue-generating capabilities in both South Korea and Canada."
Right after Loyalist Group completes acquisition of Uhak
2014-12-09 09:07 ET - News Release
Mr. Andrew Ryu reports
LOYALIST CLOSES SOUTH KOREAN AGENCY ACQUISITION
Loyalist Group Ltd. has closed the acquisition of Uhak, the largest South Korean-based student recruiting agency, providing information and registration services to South Korean students looking to study abroad.
Pursuant to the terms of the purchase agreement, the total consideration payable by Loyalist for Uhak was $8.1-million. Of the amount paid to the vendor on closing, $5.3-million was paid in cash, and $2.8-million was paid through the issuance of 5,384,615 Loyalist common shares at a per-share price of 52 cents, with 4,230,769 of such shares to be held in escrow for up to 24 months following closing as security for certain defined postclosing adjustments.
Uhak had consolidated revenue of $10.3-million, representing student tuition fees of approximately $40-million and adjusted net income of $1.0-million (earnings before interest, taxes, depreciation and amortization -- $1.2-million) in the 12-month period ended December, 2013.
"We are pleased to welcome Uhak's former owner as a new Loyalist shareholder and colleague," said chief executive officer Andrew Ryu. "We expect that the acquisition of one of our largest agency partners will enable us to reduce the cost of attracting students and to increase our revenue by growing our student population."
Loyalist Group CEO Ryu buys 100,000 shares of Loyalist
2014-12-02 09:09 ET - News Release
Mr. Andrew Ryu reports
LOYALIST GROUP LIMITED INSIDER PURCHASES SHARES IN OPEN MARKET
Loyalist Group Ltd.'s Andrew Ryu, a director, and president and chief executive officer of the company, has purchased 100,000 common shares in the capital of Loyalist through the facilities of the TSX Venture Exchange at prices between 46 cents and 47 cents per share with a total value of approximately $47,000.
As a result of this acquisition, Mr. Ryu now owns, directly and indirectly, 17,566,102 common shares, which represents approximately 11.8 per cent of the total outstanding common shares.
Mr. Ryu said of the purchases: "I am a strong believer in Loyalist's business model and I am extremely pleased with our recent results. With my increased shareholding, I am even more strongly aligned with Loyalist's long-term growth."
Mr. Ryu acquired the shares for investment purposes and he may in the future take such actions in respect of his holdings as deemed appropriate in light of the circumstances then existing, including the purchase of additional shares or other securities of Loyalist through open-market purchases or privately negotiated transactions, or the sale of all or a portion of his holdings in the open market or in privately negotiated transactions to one or more purchasers.
Loyalist agreement to acquire Uhak ACCEPTED by TSX
Loyalist Group Ltd (C:LOY)
Shares Issued 148,814,592
Last Close 12/4/2014 $0.45
Friday December 05 2014 - Acquisition
The TSX Venture Exchange has accepted for filing documentation relating to a share purchase agreement dated Nov. 24, 2014, between an arm's-length party and Loyalist Group Ltd. Pursuant to the agreement, the company shall acquire all the issued and outstanding shares of Uhak.com Co. Ltd., which runs a South Korean-based student recruiting agency and has offices in South Korea, Philippines, Canada, United States, England, Australia and New Zealand.
In consideration the company shall pay a total of $5.3-million plus issue 5,384,615 common shares to the vendor.
For more information, refer to the company's news release dated Nov. 24, 2014.
© 2014 Canjex Publishing Ltd.
Loyalist Group earns $1.88-million in Q3 2014
Ticker Symbol: C:LOY
Loyalist Group earns $1.88-million in Q3 2014
Loyalist Group Ltd (C:LOY)
Shares Issued 148,814,592
Last Close 11/25/2014 $0.58
Wednesday November 26 2014 - News Release
Mr. Andrew Ryu reports
LOYALIST ANNOUNCES RECORD THIRD QUARTER 2014 RESULTS
Loyalist Group Ltd. has released financial results for the three and nine months ended Sept. 30, 2014.
Third quarter revenue for the three months ended September 30, 2014, was a record $19.6 million, an increase of 93% over the same period in 2013. Income from operations was $3.2 million, a 43% increase over the same period in 2013, while net income was $1.9 million, an increase of 14% over the same period in 2013. Adjusted EBITDA was $3.6 million, an increase of 50% over the same period in 2013, and Adjusted EBITDA margin was 18.6%.
Revenues continue to rise as a result of acquisitions closed through September 30, 2014, as well as organic growth of $1,000,000 or 10.0 % on the base business, as enrollments continued to trend higher. Student count on a "same store" basis was up 4% year over year.
"Our third quarter continued to demonstrate the potential of our acquisition and integration strategy with double digit organic growth and record revenues," said CEO Andrew Ryu. "While the third quarter is traditionally our strongest quarter due to industry seasonality, our exceptional results exceeded our expectations. We are very pleased with the performance of our most recent acquisitions in the third quarter."
On the integration front, Mr. Ryu commented that "we continue to devote significant resources to the integration and consolidation of our acquisitions so that we can realize the synergies inherent in our consolidation strategy. At the end of the third quarter we implemented another wave of restructuring measures that should yield significant savings going forward."
The following table summarizes and compares three month results for the periods ended September 30, year over year:
Three months ended September
30, 2014 2013 % Change
Revenue $ 19,626,107 $ 10,180,761 +93%
Gross Profit $ 8,374,269 $ 4,785,282 +75%
Income From Operations $ 3,233,689 $ 2,268,592 +43%
Net Income $ 1,885,246 $ 1,657,480 +14%
Adjusted EBITDA(i) $ 3,643,056 $ 2,430,511 +50%
(i)Adjusted EBITDA, a non-IFRS measure 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, and loss on foreign exchange.
http://www.marketwired.com/press-release/loyalist-announces-record-third-quarter-2014-results-tsx-venture-loy-1971859.htm
Bias opinion
http://www.pinnacledigest.com/blog/pinnacle-digest/investors-bet-esl-provider-loyalist-group
Loyalist to Acquire Largest Agency in South Korean
Nachrichtenquelle: Marketwired | 24.11.2014, 15:01 | 53 Aufrufe | 0 | druckversion
TORONTO, ONTARIO--(Marketwired - Nov. 24, 2014) - Loyalist Group Limited ("Loyalist", the "Company") (TSX VENTURE:LOY) is pleased to announce that it has entered into a definitive agreement to acquire all the shares of Uhak.com ("Uhak"), a South Korean based student recruiting agency, providing information and registration services to South Korean students looking to study abroad.
Uhak had consolidated revenue of $10.3 million, representing student tuition fees of approximately $40 million, and adjusted net income of $1.0 million (EBITDA $1.2 million) in the 12-month period ended December 2013.
"This acquisition adds a new dimension to Loyalist's vertical integration strategy," said Chief Executive Officer Andrew Ryu. "By acquiring one of our largest agency partners, we will be in a position to reduce our direct costs of attracting students, as well as strengthening ourselves a source for growing our student population, with an expected annualized additional net benefit of approximately $2.0 million within the first year. We look forward to welcoming the Uhak team into the Loyalist family."
Loyalist will pay $8.1 million for Uhak, of which $5.3 million will be paid in cash, subject to certain closing adjustments, and $2.8 million will be paid through the issuance of 5,384,615 Loyalist common shares at a price of $0.52 per share, with $2.2 million of such shares being held in escrow for a period up to 24 months following closing as security for certain defined post-closing adjustments. The parties expect to complete the transaction on or around December 5, 2014.
Mr. Ryu also stated "It should be noted that students do not necessarily have to attend one of our schools for Loyalist to benefit from students going overseas to study, as we will share in the commission fees for students who might choose to attend a school in another country (for example Australia, the USA or England)".
Completion of the transaction is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange and the Bank of Korea.
Growth without diluting existing shareholders.
Expansion and growth, time to increase the EBITDA and share price. Low interest and NO Dilution with the Bank of Montreal. Both facilities bear interest at the Canadian dollar prime rate plus 1.25 per cent to 1.75 per cent
Loyalist arranges $18.5-million credit facility
Ticker Symbol: C:LOY
Loyalist arranges $18.5-million credit facility
Loyalist Group Ltd (C:LOY)
Shares Issued 148,814,592
Last Close 11/14/2014 $0.455
Monday November 17 2014 - News Release
Mr. Andrew Ryu reports
LOYALIST ANNOUNCES NEW $18.5 MILLION CREDIT FACILITY
Loyalist Group Ltd. has entered into a new $18.5-million credit facility, replacing the company's current credit facility thus adding an additional $18-million of capital to support Loyalist's growth.
"The additional capital provided by the new credit facility will allow us to fund our aggressive growth and acquisition program," said chief executive officer Andrew Ryu. "We believe the ability to obtain a facility of this size signifies a new phase in the maturation of Loyalist."
Mr. Ryu added that: "Previously we have raised equity capital to fund our acquisition plans. The credit facility will now allow us to manage our capital structure in a more efficient manner and to continue to grow without diluting our existing shareholders."
The new credit facility expires on Nov. 17, 2019, and comprises a $3.5-million revolving operating facility and a $15-million term loan acquisition facility. The facilities are being provided by Bank of Montreal. Both facilities bear interest at the Canadian dollar prime rate plus 1.25 per cent to 1.75 per cent, depending on the company's debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio. The acquisition facility may be drawn upon in periodic advances as required until Nov. 17, 2016, and can be repaid at any time without penalty.
The new credit facility is secured by a first charge over all of the assets of Loyalist and its subsidiaries, contains positive, negative and financial covenants, and includes other usual and customary terms and conditions.
We seek Safe Harbor.
© 2014 Canjex Publishing Ltd.
Read more at http://www.stockhouse.com/companies/bullboard/v.loy/loyalist-group-limited#rlthJUcRQV2d8YMK.99
Loyalist Announces Record Second Quarter 2014 Results
Published: Aug 27, 2014 7:01 a.m. ET
TORONTO, ONTARIO, Aug 27, 2014 (Marketwired via COMTEX) -- Loyalist Group Limited ("Loyalist" or the "Company") (LOY) today announced financial results for the three months ended June 30, 2014.
Second quarter revenue for the three months ended June 30, 2014, was a record $17.2 million, an increase of 262% over the same period in 2013. Income from operations was $2.2 million, a 157% increase over the same period in 2013, while net income was $1.3 million, an increase of 182% over the same period in 2013. Cash flow has improved by $1.0 million, to $0.8 million compared to a year ago.
Revenues continue to rise as a result of acquisitions closed through June 30, 2014, as well as organic growth of $600,000 or 12.1 % on the base business, as enrollments continued to trend higher. Net income and cash flow were adversely impacted by acquisition, integration and restructuring costs of $700,000 ($400,000 in the year ago period).
"Our second quarter demonstrated the potential of our platform with strong organic growth and record revenues," said CEO Andrew Ryu. "In a quarter without any acquisitions, the strength of our core business is evident in the numbers."
Mr. Ryu added that, "The second quarter results exceeded our expectations, and continue to reflect the seasonal nature of our industry. We are pleased with the performance of our recent acquisitions."
On the integration front, Mr. Ryu commented that, "The successful integration of our acquisitions is critical to the overall profitability of Loyalist and we continue to devote significant resources to that end. As well, it is important that we build a strong central infrastructure to control and manage the business. The growth rate of our corporate costs is slowing and we expect to see savings in the future to leverage our investment."
"The student housing pilot continues to show promise with revenues for the quarter in excess of $150,000. We will continue to actively grow this program."
The following table summarizes and compares three month results for the periods ended June 30, year over year:
----------------------------------------------------------------------- ----- Three months ended June 30, 2014 2013 % Change ---------------------------------------------------------------------------- Revenue $ 17,185,078 $ 4,751,159 +262% ---------------------------------------------------------------------------- Gross Profit $ 7,315,695 $ 1,770,766 +313% ---------------------------------------------------------------------------- Income From Operations $ 2,201,133 $ 853,424 +158% ---------------------------------------------------------------------------- Net Income $ 1,338,872 $ 474,021 +182% ---------------------------------------------------------------------------- Adjusted EBITDA(i) $ 2,567,044 $ 932,937 +175% ----------------------------------------------------------------------------
(i) 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, and loss on foreign exchange.
The following table summarizes and compares six month results for the periods ended June 30, year over year:
----------------------------------------------------------------------- ----- Six months ended June 30, 2014 2013 % Change ---------------------------------------------------------------------------- Revenue $ 32,899,825 $ 9,683,378 +240% ---------------------------------------------------------------------------- Gross Profit $ 13,871,676 $ 3,902,289 +255% ---------------------------------------------------------------------------- Income From Operations $ 3,933,240 $ 1,883,578 +115% ---------------------------------------------------------------------------- Net Income $ 2,901,530 $ 1,307,819 +122% ---------------------------------------------------------------------------- Adjusted EBITDA(i) $ 4,636,466 $ 2,012,417 +130% ----------------------------------------------------------------------------
(i) 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, and loss on foreign exchange.
Loyalist has a number of goals in 2014:
-- To close on accretive acquisitions: -- Study English in Canada and Upper Career College of Business and Technology closed with an effective date of February 1, 2014. -- To close on finance offerings to support the acquisition pipeline: -- Closed $10.01 million bought deal private placement in January 2014. -- To 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.
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.
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.
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", "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 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.
Contacts: Loyalist Group Limited David McAdam VP Corporate Development (604) 961-3513 dmcadam@loyalistgroup.com Loyalist Group Limited Douglas Chornoboy Chief Financial Officer (416) 969-9800 dchornoboy@loyalistgroup.com www.loyalistgroup.com
SOURCE: Loyalist Group Limited
(C) 2014 Marketwire L.P. All rights reserved.
Loyalist Group Limited Ranked 3rd on the 2014 PROFIT 500
Jun 12, 2014 11:54 AM ET
NEWS RELEASE TRANSMITTED BY Marketwired FOR: Loyalist Group Limited TSX VENTURE SYMBOL: LOY JUNE 12, 2014 Loyalist Group Limited Ranked 3rd on the 2014 PROFIT 500 TORONTO, ONTARIO--(Marketwired - June 12, 2014) - Editors Note: There is an image associated with this press release. Loyalist Group Limited ("Loyalist" or the "Company") (TSX VENTURE:LOY) is pleased to announce that Canadian Business and PROFIT today ranked Loyalist 3rd on the 26th annual PROFIT 500, the definitive ranking of Canada's Fastest-Growing Companies. Published in the July issue of Canadian Business and online at PROFITguide.com, the PROFIT 500 ranks Canadian businesses by their revenue growth over five years. Loyalist made the 2014 PROFIT 500 list with five-year revenue growth of 5,514%. "The members of the PROFIT 500 are the elite of the country's entrepreneurial community," says James Cowan, Editor-in-Chief of Canadian Business and PROFIT. "Their stories are lessons in business strategy, innovation, management excellence and sheer tenacity." "I am very pleased to be on the Profit 500 ranking" Loyalist CEO Andrew Ryu said. "It is a badge of great honour and privilege to officially receive such high appraisal for our endeavours, but such prestige would not have been possible without the hard work and contributions of those behind the curtains. We would not have achieved this honour without our hard working staff, our supportive partners and our passionate executives. Ultimately, this award belongs to them." About PROFIT and PROFITguide.com PROFIT: Your Guide to Business Success is Canada's preeminent media brand dedicated to the management issues and opportunities facing small and mid-sized businesses. For 32 years, Canadian entrepreneurs across a vast array of economic sectors have remained loyal to PROFIT because it's a timely and reliable source of actionable information that helps them achieve business success and get the recognition they deserve for generating positive economic and social change. Visit PROFIT online at PROFITguide.com. About Canadian Business Founded in 1928, Canadian Business is the longest-serving, best-selling and most-trusted business publication in the country. With a readership of more than 800,000, it is the country's premier media brand for executives and senior business leaders. It fuels the success of Canada's business elite with a focus on the things that matter most: leadership, innovation, business strategy and management tactics. We provide concrete examples of business achievement, thought-provoking analysis and compelling storytelling, all in an elegant package with bold graphics and great photography. Canadian Business-what leadership looks like. 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. 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. To view the image associated with this press release, please visit the following link: http://media3.marketwire.com/docs/PROFIT500.jpg. -30- FOR FURTHER INFORMATION PLEASE CONTACT: Loyalist Group Limited Andrew Ryu CEO (416) 969-9800 aryu@loyalistgroup.com or Loyalist Group Limited David McAdam VP Corporate Development (604) 336-3316 dmcadam@loyalistgroup.com INDUSTRY: Education and Training - Schools and Courses, Colleges/Universities SUBJECT: CNT
Loyalist Group earns $1.56-million in Q1
2014-05-28 07:04 ET - News Release
Mr. Andrew Ryu reports
LOYALIST ANNOUNCES RECORD REVENUES, EARNINGS AND CASH FLOW
Loyalist Group Ltd. today released 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 per cent over the same period in 2013. Income from operations was $1.7-million, a 68-per-cent increase over the same period in 2013, while net income was $1.6-million, an increase of 87 per cent over the same period in 2013. Cash flow from operations was $2.2-million compared with 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 chief executive officer 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: "Our topline 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 per cent 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 table summarizes and compares three-month results for the periods ended March 31, year over year.
Three months ended March 31,
2014 2013
Revenue $ 15,714,747 $ 4,932,219
Gross profit $ 6,555,981 $ 2,131,524
Income from operations $ 1,732,107 $ 1,030,155
Net income $ 1,562,658 $ 833,799
Adjusted EBITDA $ 1,758,028 $ 1,079,480
Loyalist has a number of fiscal goals in 2014:
To close on accretive acquisitions -- Study English in Canada and Upper Career College of Business and Technology closed with an effective date of Feb. 1, 2014;
Close on finance offerings to support the acquisition pipeline -- closed $10.01-million bought-deal private placement in January, 2014;
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, billing/collection and human resource functions across all schools.
With a 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.
We seek Safe Harbor.
© 2014 Canjex Publishing Ltd. All rights reserved.
Loyalist Announces Record Revenues and Record Income from Operations
V.LOY | April 30, 2014
TORONTO, ONTARIO--(Marketwired - April 30, 2014) - Loyalist Group Limited ("Loyalist") (TSX VENTURE:LOY) today announced record financial results for the year ended December 31, 2013.
Revenue for 2013 was $31 million, an increase of 126% over 2012. Net income was $1.8 million, while income for operations was $3,120,034, a 17% increase over 2012.
Revenues continue to rise as a result of six acquisitions made during 2012 and 2013, as well as organic growth arising from higher enrolment and increased tuition fees. Net income was adversely impacted by $2.1 million in one-time acquisition, integration and restructuring costs.
"2013 was a year of aggressive growth," said CEO Andrew Ryu. "Our top line benefited from buying new schools and from better execution in schools we owned or acquired. Our gross profit - revenue less the school-level costs of teacher salaries, rents and so on - almost doubled, but was lower on a percentage basis because we acquired a big school, KGIC, late in the year. The fourth quarter is always the slowest in our industry because of the Christmas holiday, so revenue falls but salaries and rents must still be paid. This lowers our gross profit. We expect gross margin percentage to bounce back for 2014, when we'll report school results for the whole year."
"Our assets support our current run-rate expectation of $63 million for 2014. We expect to focus on integrating schools this year, improving the company's overall profitability. While our overhead or corporate costs, more than doubled last year, we expect them to stay fixed, and perhaps fall, moving forward, which should create the leverage needed to see meaningful profit growth. We therefore expect to see margins improve this year."
"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 expect to capture a significant share of that spend over time."
Our long-term objectives are intact: top-line growth of 20% per year and normalized profit margins of 15%.
The following table summarizes and compares full year results, year over year:
2013 2012 % Change
Revenue $ 30,682,269 $ 13,657,914 +126
Gross profit $ 11,028,527 $ 5,803,672 +92
Income from operations $ 3,120,034 $ 2,782,493 +17
Net Income $ 1,845,444 $ 2,232,156 -17%
Adjusted EBITDA* $ 3,702,947 $ 2,925,305 +29
The company notes that had it owned all its schools as of January 1, 2013, revenues would have been over $54 million for the full year.
As previously reported Loyalist attained a number of its fiscal goals in 2013:
Closed six acquisitions: Urban International School (Toronto), Pan Pacific College ("PPC" Vancouver), MTi Community College ("MTi" Vancouver) and KGIC/KGIBC (Halifax, Toronto, Vancouver and Victoria);
Closed on $13,190,237 in gross proceeds through two private placement finance offerings;
Closed on a $5.2 million 5-year convertible debenture;
Established the corporate office in downtown Toronto and Vancouver;
Centralized all accounting functions in the corporate office and started the roll out of the Company's custom built ERP to provide standardization of the various Student Data bases and billing/collection and human resource functions across all schools.
With cash balance of $6.0 million as at April 29, 2014 and anticipated profitability, the company has the funds to meet all of its operating and promissory note obligations and to continue growing by acquisition without raising capital.
About Loyalist
Loyalist Group Limited (the "Company") owns and operates private English as a Second Language (ESL) Schools, Career Colleges and Community Colleges in Toronto, Vancouver, Victoria and Halifax.
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.
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 Corporation's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Corporation'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, 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 Corporation 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 Corporation 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 Corporation's announced or proposed acquisitions failing to close or becoming delayed before closing; the Corporation'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 Corporation 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 Corporation 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 Corporation 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 Corporation or persons acting on its behalf is expressly qualified in its entirety by this notice.
Loyalist Group Limited
David McAdam
VP Corporate Development
(604) 961-3513
dmcadam@loyalistgroup.com
Loyalist Group Limited
Andrew Ryu
CEO
(416) 969-9800 x222
aryu@loyalistgroup.com
Back to School Re: Loyalist & Consolidation
The basic business model of Loyalist. It's a consolidation story, a roll-up play. AR and team will continue to go out and acquire, and consolidate schools, and when required, re-brand.
Loyalist acquired WTC & PPC for very reasonable prices - 0.2x and 0.6x respectively, revenue multiples. They did not just give "some small time owner of a small school a bunch of cash and company stock." For the money, Loyalist acquired students, human resources (teachers, admin staff, etc.), educational literature (course materials), classroom and office space, and overseas agents. In this case, from a financial perspective it just didn't make sense to keep the schools intact, so they got re-branded during the consolidation process. Some schools, like KGIC and SEC are well-organized and well-recognized enough to stand on their own during consolidation and don't get re-branded.
At the end of the day Loyalist needs to establish a name for itself in the industry. It just doesn't make sense from a business perspective to keep every school intact. In fact, in the case of WTC in particular the company saved almost $1 million by literally closing its doors and moving the students to other Loyalist campuses. Decisions like that are just apart of the consolidation process.
Unprecedented Development
Great find frankz! I find this extremely interesting because Loyalist hasn't filled an NI 44-101 for any prior finanancings. I don't think that this is actually regarding a PP coming. While the Company will continue to need to complete a number of PPs going forward (that is part of the accretive business model of Loyalist and necessary to complete further M&A). Rather, perhaps management is looking at offering a new share. Maybe a preferred share with a dividend? I've seen this before. For a Company with good revenue generating positive cash-flow, why not? This is a very interesting, and unprecedented development.
In terms of share price weakness as of late, I believe that is just the market placing their bets on the financing, and even the lack of continuous newsflow from the company (others may be "getting bored"). Loyalist isn't the flashiest play, they aren't going to wow the market with a new discovery tomorrow. But over time, and especially given the complete lack of competition, they will monopolize the ESL market in Canada (atleast that's the goal).
To re-iterate what I would like to see from the company - $12.5 million in revenue, and a EBITDA of about $3.6 million. My EBITDA target might not breakdown quite that simply (we might see some one-time acquisition-related costs for KGIC/KGIBC), but the Company should still be generating good profit.
The EQA Designation is Only a Good Program for Loyalist
The EQA designation is ONLY A GOOD initiative for Loyalist. The implications are as follows:
-First and foremost, if anyone is concerned about Loyalist schools getting EQA certifications, there is a stand procedure in place to qualify. Some Loyalist schools are already EQA designated. The others will follow. The program itself was only introduced in 2009, and has been optional since its inception. Schools must be compliant by December 2015. Loyalist has more than enough capital and resources to accomplish this. The risk is nil.
- The schools that cannot meet the requirements will close and lose their students. Loyalist will be able to absorb these students. Since British Columbia is one of two provinces where the majority of ESL students study, this is very good for Loyalist
- The schools that cannot afford to get certified, Loyalist can buy on the cheap in a fire sale because they're going to be closing their doors anyway. The end of 2015 might be a very exciting time for Loyalist
- The British Columbia government has committed to increasing the number of international students by 50% by 2016. There is going to be a massive influx of students to British Columbia over the next couple of years, which Loyalist should benefit from, especially through re-branding and consolidation to strengthen the LOYALIST BRAND
Loyalist Settles All Payments For King George Schools
Moving Forward And Upward
Loyalist settles all payments for King George schools
Loyalist Group Ltd (C:LOY)
Shares Issued 148,814,592
Last Close 3/19/2014 $0.68
Friday March 21 2014 - News Release
Mr. Andrew Ryu reports
LOYALIST SATISFIES OUTSTANDING AMOUNTS OWING IN RESPECT OF KGIC ACQUISITION
Loyalist Group Ltd. has satisfied all undisputed amounts owing under the promissory note given by it in connection with the acquisition of King George International College (KGIC), an accredited and licensed English-as-a-second-language (ESL) school, and King George International Business College (KGIBC), a registered career college in Toronto, Vancouver and Victoria, which was previously announced on Sept. 18, 2013. KGIC and KGIBC have a total of eight campuses in Halifax, Toronto, Vancouver and Victoria.
"The company continues to work through the final stages of the integration of KGIC and KGIBC with the other brands under the Loyalist label, and we are very pleased with the co-operative manner in which this integration is being accomplished," stated Andrew Ryu, chief executive officer of Loyalist.
We seek Safe Harbor.
© 2014 Canjex Publishing Ltd.
Dr. Sarah Eaton, an educational leader, researcher, author, and professional speaker, wrote an article about the differences between public and private ESL institutions, taking specific focus on Loyalist to highlight some inherent differences.
Here is an excerpt:
"But there’s a new form of “public” education on the block and it is not to be ignored. Educational companies that are publicly traded on the stock market are drastically different from private companies. Public companies are obliged to share financial information with shareholders and investors. The accountability to the people who choose to put their dollars into the company is significant. Shareholders can ask questions — and demand answers. If their students are not happy or successful, they’ll leave. Sales will drop and they’ll close their doors. Their very existence depends on their students’ success... But public companies put it all out there for anyone to look at, scrutinize and ultimately judge. That’s a good thing. When it comes to ESL, it’s more transparent than what we see in public institutions. The very nature of accountability and reporting in education in Canada is changing… It’s strange, but true that when it comes to ESL, publicly traded companies like Loyalist Group Ltd may turn out to be more transparent, more accountable and more responsive to questioning from outsiders than some “public” institutions."
Here is a link to the full article:
http://drsaraheaton.wordpress.com/2014/02/18/a-new-kind-of-loyalist-public-esl-education-takes-on-a-whole-new-twist-in-canada/
Canada-Korea Free Trade Agreement (CKFTA)
This agreement is nothing to scoff at and has very positive implications for Loyalist!
"This landmark agreement constitutes Canada’s first free trade agreement in the Asia-Pacific region and will provide new access for Canadian businesses and workers to the world’s 15th-largest economy and the fourth-largest in Asia. In fact, the Canada-Korea Free Trade Agreement is projected to create thousands of jobs for hardworking Canadians by boosting Canada’s economy by $1.7 billion and increase Canadian exports to South Korea by 32 percent. South Korea is not only a major economic player in its own right and a key market for Canada; it also serves as a gateway for Canadian businesses and workers into the dynamic Asia-Pacific region as a whole." (FATD GoC Link)
South Korea already sends more students to Canada than any other country in the world, with this new agreement in place expect that number to increase substantially. South Koreans have a lot of incentive to now choose Canada as their place of education. Since Loyalist Group schools are the premiere choice for ESL students that come to study in Canada I expect the company to see increased enrollment across the board at its schools from South Korea.
Not only from new South Korean students who can now afford to study in Canada due to the decreased cost-of-living expenses associated with the CKFTA, but also from South Koreans who are studying elsewhere abroad and now have significantly more incentive to come to Canada.
Also, and this point should not be over-looked, Andrew is Korean and has very strong ties within the country and the community. Hopefully Andrew can leverage his connections to accelerate the rollout of the franchise program.
Loyalist has already signed five franchise agreements, and expects to add several more franchise agreements per quarter over the coming years.
"Franchising is the logical next step in our evolution towards becoming a truly global brand in the ESL market," said chief executive officer Andrew Ryu. "We are easily the No. 1 choice of foreign students who want to come to Canada. But there are millions of other students who will choose to study in their home countries rather than coming to Canada. These students still want a first-rate curriculum and the ability to earn a recognized diploma, and Loyalist can offer both of those things. We expect this to be highly accretive to our income as the cost of setting up and running this business is small relative to the potential revenues."
The CKFTA also allows Loyalist to more easily strike partnerships with South Korean schools and institutions, as well as negociate more favourable referall rates (and/or open more offices in South Korea for student referals in-house).
No matter how you break it down it's very good for the company going forward.
SO IT STARTS To Move Up From Here ......
Oh we are headed HIGHER .Much interest, with 40 post in last 3 days with a nice pop of. 20 Year end figures on the way shortly, no doubt they will be good. Those in The know accumulating as we speak?
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Loyalist Group Limited ("Loyalist" or "the Company") (TSX Venture: LOY) owns and operates private English as a Second Language (ESL) schools across Canada, with a focus on Vancouver and Toronto. The Company offers ESL for international students, training programs for teaching ESL (TESL), career training courses, and corporate English for professionals. The Company has commenced a strategic initiative to become the premiere consolidator of independent, privately owned and operated schools, in what is considered to be a large and extremely fragmented market. Substantial revenue and cost synergies can be realized quickly, thus making acquisitions highly accretive to earnings. We believe that Loyalist is in a good position to continue executing its growth strategy given its experienced management team and the economies of scale gained over time.
CANADIAN LANGUAGE TRAINING MARKET
· ESL training is important to both international students and landed immigrants in accelerating their settlement in Canada, and/or their career progression
· Canada is one of the top 5 most popular host countries for international students, and Ontario and British Columbia are the most chosen destinations.
· Languages Canada reported that ~150K students attended its member institutions in 2012, generating ~$592M in tuition revenue and ~$1.9B in annual revenue for the country.
An overwhelming majority of students are from a country where English is not the first language, which creates a large marketplace for Loyalist to pursue:
An attractive characteristic of the ESL market is its recession-proof nature. While data specifically regarding foreign students studying under short-term language programs is limited, according to Citizenship and Immigration Canada, the total number of long-term international students in Canada(across all levels of education) has consistently trended upwards, growing by a 10-year CAGR of 6.7%
A recent report by the Advisory Panel on Canada's International Strategy recommended that Canada should aim to have more than 450,000 full-time international students enrolled by 2022. Here's an interesting fact, education services is Canada's 11th largest export globally, and its single-largest export to China. A 2011 report commissioned by Foreign Affairs and International Canada indicated that in 2010 international students in Canada spent in excess of $7.7B on tuition, accommodation, and discretionary spending. This translates roughly into 86,570 jobs and $455M in government tax revenue. Part of Canada's brand is based on a relatively higher-quality education system and a reputation for excellence across the education spectrum. As such, Canada's government has undertaken efforts to increase Canada's positioning as one of the top-ranked ESL student destinations, which currently include the U.S., the U.K., Australia, and New Zealand. With applicants facing an increased amount of difficulty pursuing studies within the U.S., and the U.K., Canada is expected to be the net beneficiary. These factors all bode very well for Loyalist to continue to grow and attract new students, as well as the Canadian industry in general.
The Canadian ESL market is extremely fragmented with no large incumbent provider, characterized by a large number of schools in B.C. and Ontario, generating a relatively small amount of revenue and likely constrained by capital with no clear exit strategy. According to Languages Canada, there are ~185 accredited member programs across the country, with ~35% of these programs in the public sector (ex., universities and colleges) and ~65% in the private sector (ex. Private and not-for-profit schools).
The majority of private sector programs are represented by 'mom-and-pop' owner/operators. The lack of another aggressive consolidator and the upcoming retirement of the baby boomer generation that have created well-run but small scale ESL businesses, has created the perfect storm for the Company to gain significant market share through highly accretive acquisitions. Since going public, Loyalist has acquired 8 ESL schools and 6 career colleges, representing an expected annual revenue run rate of ~32M In 2013. This figure represents less than 10% of the total market share. The Company's acquisitions have largely been concentrated in British Columbia and Ontario (~42% and ~37%, respectively) where the majority of international students reside.
MERGERS & ACQUISITIONS
Acquisition Strategy
Loyalist is primarily a growth by acquisition play. The Company's strategic initiative to date has been to acquire schools, consolidate operations, and build its brand in the market. As previously mentioned, Loyalist has acquired 8 ESL schools and 6 career colleges, operating primarily in the highly fragmented Vancouver and Toronto markets.
Most of the ~185 Language Canada accredited vendors consist primarily of independently owned private businesses with annual revenues ranging from $0.5M to $1M. Given the current market environment, access to deal flow for Loyalist should not be a problem over the next few years.
In addition to the typical mom-and-pop school, Loyalist has identified five to six independent operators with annual revenue in excess of $10M, which if acquired would certainly propel Loyalist's growth prospects and timeframe. The King George International College (KGIC)/KGIC Business College (KGIBC) acquisition in September was by far the Company's largest to date. "This acquisition almost doubles our revenue and EBITDA," commented Loyalist CEO Andrew Ryu. "It also offers organic growth as it allows us to attract significantly more student business from Asia and strengthens the Loyalist brand as a dominant ESL player in Canada." More of these large educational institutions may be acquired over time in order to reach management's stated 5-year goal of achieving $200M+ in revenue.
Example of Synergy Generation
Mr. Ryu has outlined a very straight-forward strategy: acquire ESL and ESL-related schools primarily located within Toronto and Vancouver to create geographic clusters. Once a sizeable cluster/hub has been established, acquisitions are made immediately accretive by eliminating duplicate operating expenses such as back-office administration, non-essential staff, and optimization of physical space.
While the qualitative aspects of the consolidation strategy are intriguing, the following quantitative example highlights the accretive aspect of the strategy: In 2011, Loyalist acquired Pacific Gateway International College (PGIC) for ~$1M and Western Town College for ~$1M, which were generating a combined revenue of ~$10.4M. Since the acquisition, a reduction of unnecessary staff has resulted in savings of ~$1.2M on an annualized basis in fiscal 2011 alone. In fiscal 2012, the addition of six new schools resulted in additional cost synergies of ~$1.2M. Combined, this represents about 5% of the top line in fiscal 2013 (with the synergistic effects of the KGIC/KGIBC acquisition yet to be realized). Extrapolating on these metrics, it's possible that Loyalist can increase its EBITDA margin to the 25%-30% level through further acquisitions as well as organic growth.
Loyalist's acquisition strategy is well supported given the geographic congruence of potential clientele to congregate to particular city centres and areas. As Loyalist continues to scale its operations, standardization of practices, and enhanced brand value will lead to a higher influx of students into its programs.
Attractive Prices Paid To Date
As highlighted in Figure 3, Loyalist has been able to acquire its targets for very reasonable prices; consider the valuation metrics: average ~0.6x revenue multiple. This ability to negotiate favourable deals reflects the Company's consolidator status within the industry.
GROWTH STRATEGY
The success of any growth by acquisition strategy is best measured by the number of future opportunities, along with the extent of potential revenue and cost synergies.
From a cost perspective, synergies have been realized by reducing operating expenses. Overlapping staff (ex. finance/general and administrative), consolidating excess space and converting non-revenue generating space (ex. for G&A purposes) into revenue generating classrooms.
Furthermore, as the scale of the business increases, the Company should be able to mitigate the single largest expenditure for any ESL school, which research has shown is the commissions paid to foreign, third-party recruitment agents. Agents typically earn a fee equal to 20-30% of the tuition paid by the student.
Loyalist can mitigate these fees in a couple of ways. The Company can use its increased purchasing power, through increased economies of scale, to negotiate lower rates. The Company can also open recruitment offices abroad, run internally. In fact, the Company has already moved forward with this and already has 5 offices - Brazil, Japan, South Korea, Taiwan, and Saudi Arabia. When the Company starts to realize a decline in commission fees as a percentage of revenue it will start to see a significant increase in its EBITDA margin, and will be a significant step in achieving the 25%-30% margin level.
The Company's acquisition this past summer of Urban International School (UIS), a high school, represents an interesting opportunity - UIS has a permit to directly recruit Chinese students, which is expected to open cross-marketing opportunities. Loyalist can feed existing UIS students into its university and college programs, while also being able to directly target the enormous Chinese market for the first time.
Aside from cost synergies, there are numerous potential revenue synergies through consolidation. As a larger and publicly traded educational organization, Loyalist has a lot of potential to develop a stronger brand, thereby helping it win market share away from smaller, mom-and-pop competitors. At the same time, improving the Loyalist brand can help strengthen relationships with government agencies, universities, corporations, and agents, all of whom refer students to Loyalist's schools.
This is perhaps the most exciting opportunity, the Company could complement tuition revenue with additional offerings such as student housing. Management has stated its intention to "investigate ways in which to monetize student lodging opportunities." While the details are not known, so the metrics don't yet factor into our valuation, it is known that there are currently pilot projects in operation at a handful of Loyalist schools. This expansion into the student housing market could represent an important second phase to growing the Company, and could be a crucial driver of long-term growth. Hopefully we'll hear more about this at the upcoming AGM.
Another interesting possibility would be to offer online correspondence courses, integrating live chat via an application like Skype to offer personalized tutoring, or classroom-like services to students. This would be an excellent low cost, high margin opportunity since the curriculum has already been developed, and software is already being developed.
Other potentially complimentary businesses include travel tours or SAT/GMAT/MCAT/LSAT/GRE, etc. coaching/testing.
FINANCIAL ANALYSIS
As highlighted in Figure 4, Loyalist has experienced very swift and increasingly profitable growth. This reflects the Company's aggressive acquisition strategy, along with the benefits of initial cost synergies generated from greater economies of scale.
The Company is currently operating a >20% EBITDA margin. As the business scales, increases its brand, and generates a greater proportion of business from its own recruitment agencies, it's very feasible to reach an EBITDA margin ~25-30%. Even being conservative, one would have to project minimal growth given recent results.
The slight hiccup during Q2 2013 was a direct result of the Professional Association of Foreign Service Officers strike, which caused a backlog in processing visas of all types including those required for international students attending schools in Canada. This revenue should be reflected in the coming quarters as Loyalist accommodates these students.
It will be very interesting to see how the Company consolidates its most recent and largest acquisition to date, KGIC & KGIBC. The acquisition adds revenues of ~$25M, with EBITDA margins at the time of acquisition around 10%, and at a cost of only 0.54x revenue (lower than the average of the Company's previous acquisitions). The enormity of this deal can act as a catalyst for the Company going forward and accelerate its 5-year $200M+ revenue plan.
We believe that the Company could exit 2013 with a revenue run rate of ~$32.4M, EBITDA of ~$6.6M, cash of ~5M (pending the closing of the announced financing) and fully diluted shares of ~132M. Given management's track record to cut costs, it's really a matter of when we're going to see the results from the KGIC acquisition. As more acquisitions take place there will be a standard of practices in place to efficiently and effectively consolidate new growth.
We believe that the Company could exit 2014 with a revenue run rate of ~$60M, EBITDA of ~$15M, and no need for further dilution (see Figure 5). Debt can be used to supplement cash in acquisitions, and organic growth will improve the bottom line as well as the EBITDA margins.
This results in a valuation of ~$1.54 per fully diluted share, as outlined in the figure above.
**The financial section is pending accurate completion with updated financial numbers from Company filings. Margin assumptions will be re-visited then.
CONCLUSION
We believe that Loyalist Group Limited represents a unique investment opportunity for small-cap investors that are looking for an interesting consolidation story, with limited downside risk and the potential for significant capital appreciation. The Company's current operations are highly profitable and we expect Loyalist to continue its accretive acquisition pace towards becoming the premiere provider of ESL training in Canada. We believe that the Company remains undervalued at its current market capitalization. Our $1.54 price target is aggressive, but well within the abilities of management given their track record. We believe that there is significant potential for a higher re-rating with each subsequent acquisition by the Company.
Key investment highlights include:
· The market for short-term language training in Canada is large and extremely fragmented
· The ESL market is recession-proof by nature, during hard economic times people go back to school to re-train
· Loyalist has the experience and capital required to consolidate this industry (large insider holding and institutional support)
· There are considerable synergies to consolidation (many options to decrease opex and capex while increasing revenues)
· Long-term upside potential exists through expansion into the student housing market (pilot projects are currently running)
Disclaimer: This report is prepared for informational purposes only and is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. This report does not constitute or contain investment advice. We are not soliciting any action based upon this material. It does not take into account the particular investment objective, financial situation or needs of individuals. Before any action, an individual should seek professional advice. All expressions or opinions are subject to change without notice. The author has no position in any of the mentioned or related securities including derivatives in such securities. Any photocopying or retransmission of this report without permission is prohibited and subject to liability. The author does not guarantee any returns nor guarantee the outcome of what has been portrayed in this report.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Published on Dec 10, 2013
Cormark Securities has updated coverage on Loyalist Group, symbol LOY on the TSX Venture Exchange. Following the announcement that the company has commenced a pilot program to offer housing to its students, analyst David McFadgen reiterated his buy recommendation, and $1.30 target price plus last finance was a bought deal. More
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