Loyalist Group Limited

Loyalist Group Limited

June 10, 2015 09:26 ET

Loyalist Provides Additional Information Related to Tuition Fee Revenue and Deferred Revenue for Q4 2014 and Q1 2015

TORONTO, ONTARIO--(Marketwired - June 10, 2015) - Loyalist Group Limited ("Loyalist" or the "Company") (TSX VENTURE:LOY) wishes to provide additional information related to tuition fee revenue and deferred revenue in response to a number of investor and analyst inquiries seeking clarification of the Company's overall business activity levels during Q4 2014 and Q1 2015.


As described in the notes to the audited financial statements for the year ended December 31, 2014, Loyalist's accounting for tuition fees revenue recognition is on a straight-line basis over the period of instruction. Tuition fees paid in advance of course offerings are recorded as deferred revenue and set up as a liability on Loyalist's balance sheet and later recognized into revenue over the period of instruction.

From a timing perspective, tuition fees which are paid in advance of course offerings during a particular reporting period may span several reporting periods depending on (i) timing of start date and (ii) length of study period. This can result in volatility between quarters when reviewing either deferred revenue or tuition fee revenue in isolation.


The following table highlights the trend between tuition fees, which were recognized as revenue in the statement of earnings during each of the past five quarters and deferred revenue recognized as a liability on the balance sheet at the end of each respective quarter:

Quarter Deferred
Tuition Fee
Q1/14 $7,639,323 $13,900,009 $21,539,332
Q2/14 $7,819,874 $14,628,440 $22,448,314
Q3/14 $5,422,743 $16,059,663 $21,482,406
Q4/14 $9,686,323 $7,692,264 $17,378,587
Q1/15 $12,506,815 $7,501,981 $20,008,796

During the fourth quarter of 2014 and the first quarter of 2015, Loyalist experienced a significant increase in deferred revenue at the end of each period. This resulted in a lower level of tuition fee revenues recognized during the quarter than would have otherwise been the case if deferred revenue had remained relatively constant between quarters.

Total activity level (deferred revenue plus tuition fee revenues), declined during the fourth quarter of 2014 when compared to the first three quarters of 2014. There has been a significant recovery in total activity during the first quarter of 2015 when compared the fourth quarter of 2014.


In order to better understand the underlying driver of the sharp divergence between tuition fee revenue recognized and overall activity level during Q4 2014 and Q1 2015, management further reviewed the underlying data on a student by student basis during these periods.

Management determined that the timing of start dates were heavily weighted towards the end of Q1 2015. This timing resulted in significantly higher deferred revenue balances and lower tuition fees recognized when compared to the first three quarters of 2014.

Based on the $12.5 million of deferred revenue as at March 31, 2015, management reviewed the timing of tuition fee revenue to be recognized into the statement of earnings over the scheduled period of instruction as follows:

Q2 2015: 57%
Q3 2015: 28%
Q4 2015: 10%
Q1 2016 and beyond: 5%

As noted above, approximately 85% of the $12.5 million deferred revenue balance as at March 31, 2015 will be recognized into revenue during Q2 2015 and Q3 2015.

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 and student recruiting agencies in South Korea.

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; the Company's ability to service its outstanding indebtedness and the impact of that indebtedness on the Company's ability to raise additional capital, fund operations or meet business objectives; 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.

Caution Regarding Non-IFRS Financial Measures - The Company references adjusted EBITDA in this press release, which does not have a standardized meaning as prescribed by International Financial Reporting Standards ("IFRS"). This non-IFRS measure is unlikely to be comparable to similar measures presented by other issuers, and has been presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company. This non-IFRS measure should not be considered in isolation or as a substitute for, or more meaningful than, measures prepared in accordance with IFRS, such as net income (loss) or cash flow from operating activities. Please refer to the Company's Management's Discussion and Analysis as at and for the year ended December 31, 2014 for a reconciliation of this non-IFRS measure to measures prescribed by IFRS.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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