BRIGHTPATH EARLY LEARNING INC. FOR IMMEDIATE RELEASE

Transcription

1 BRIGHTPATH EARLY LEARNING INC. FOR IMMEDIATE RELEASE BRIGHTPATH RECORDS HIGHEST EVER REVENUE AND CENTRE MARGIN IN FISCAL YEAR 2015 AND SIGNIFICANT SUCCESS IN NEW CENTRE OPENINGS TORONTO, March 30, 2016/CNW/ - BrightPath Early Learning Inc. ("BrightPath" or the "Company") (TSX-V: BPE), the leading Canadian provider of high-quality, comprehensive early childhood education and care, with 5,790 spaces of licensed capacity within 54 centres located in Alberta, British Columbia and Ontario, announced today its operational and financial results for the three and twelve month periods ended Portfolio performance highlights for the year ended 2015 are as follows (all comparisons are against the prior year period): Revenue increased 6.6% to $54.2 million, with higher revenue reported across all provincial markets; Centre margin rose to 27.4% of revenue compared to 27.2%, with all provincial markets achieving higher centre margin; Adjusted EBITDA of $5.8 million compared to $6.0 million; Funds from Operations ( FFO ) of $4.6 million ($0.038 per share) compared to $4.7 million ($0.039 per share); Adjusted Funds from Operations ( AFFO ) of $4.3 million ($0.036 per share) compared to $4.3 million ($0.036 per share); Net profit of $1.2 million compared to a net loss of $1.6 million; Average occupancy of Stabilized centres of 82.3% compared to 83.8%; Notwithstanding the recent economic challenges in the Alberta market, the Company: Delivered year over year increases in revenue and centre margin in all provincial markets; and Achieved high initial enrollment levels in new centre openings from its growth pipeline, significantly exceeding both its pro forma budgets and industry metrics; and Available capital of $23.6 million at year end to fund the Company s pipeline of growth initiatives, including both the announced additional 814 licensed spaces that represent a 14% increase in the Company s current portfolio of 5,790 spaces, as well as other growth initiatives not yet announced. Highlights for the three months ended 2015 include: Revenue increased 6.9% to $13.8 million, with higher revenue achieved in all provincial markets; Centre margin declined modestly to $3.6 million from $3.7 million, with a decline in Alberta offsetting higher centre margin reported in Ontario and British Columbia; Adjusted EBITDA of $1.3 million, a decrease of $0.6 million; 1

2 FFO of $0.9 million ($0.007 per share) compared to $1.6 million ($0.013 per share); AFFO of $0.9 million ($0.007 per share) compared to $1.4 million ($0.012 per share); Net loss of $0.6 million compared to a net loss of $0.1 million; and Average occupancy of Stabilized centres of 80.3% compared to 84.2%, largely reflecting weakness in Alberta. Significant events for the year ended 2015 include: Construction of the Company s first new development in Edmonton began in May The West Henday centre, comprising 247 licensed spaces in a 20,000 square foot facility developed by BrightPath, will open in April 2016; In November 2015, following on the enrollment success and market demand for the Creekside centre, the Company announced plans to open a new centre nearby in Riocan REIT s Sage Hill Crossing. When completed in early 2017, the Sage Hill centre will offer approximately 130 licensed spaces in 10,000 square feet of leasehold premises; The Company announced plans to develop a new centre in an underserved market in southwest Calgary. The Richmond Early Learning and Child Care Centre will create 247 licensed spaces in a 20,000 square foot facility on a one-acre land parcel within First Capital Realty Inc. s ( First Capital ) London Place West shopping centre. Construction of the facility is expected to begin in the second quarter of 2016; In November 2015, the Creekside centre in the Symons Valley area of northwest Calgary was opened, comprising 247 licensed spaces in a 20,000 square foot facility developed by BrightPath; In September 2015, a new centre located west of Calgary in Cochrane was opened, creating 120 licensed spaces in leased premises; The expansion of the Company s Airdrie centre, located in a suburban community north of the city of Calgary, was opened in July 2015, increasing its licensed capacity from 57 licensed spaces to 117. Based on its success, a further expansion to 147 licensed spaces to satisfy a wait list is underway; In August 2015, BrightPath completed the sale and leaseback of the real estate underlying its McKenzie Towne location in southeast Calgary with an affiliate of First Capital for gross proceeds of $7.5 million. This transaction generated $3.2 million of cash after repayment of indebtedness and fees and $4.0 million of additional bank financing capacity to provide a total of $7.2 million of incremental growth capital to augment funding for the Company s growth pipeline and share repurchase program; and Under the Company s normal course issuer bid, during the three and twelve months ended 2015, the Company purchased 364,500 and 916,200 shares, respectively, for cancellation, of which 798,700 had been cancelled at Cumulatively to date, the Company has purchased for cancellation 1,701,200 shares under its NCIB program at an average price of $0.33 per share. We are pleased with the Company s financial results, improving operations in British Columbia and Ontario, the resiliency of operations in Alberta in light of challenging economic conditions and successful openings of new centres in Alberta during 2015, noted Mary Ann Curran, Chief Executive Officer of the Company. Delivering the highest product and service offering, we are the early childhood education and care provider of choice, resulting in enrollment levels above 2

3 industry standards. The Company is also managing costs and successfully expanding BrightPath s capacity through new locations with demonstrated high demand. We remain focused on realizing the benefits from these same priorities and further enhancing shareholder value in Financial Review ($000 s except where otherwise noted and per share amounts) Year ended Centres at end of year (#) Licensed spaces at end of year (#) 5,790 5,372 5,137 Average occupancy (%) Ending occupancy (%) Revenue ($) 54,170 50,808 46,818 Centre margin ($) 14,819 13,819 12,176 Adjusted EBITDA ($) 5,821 5,954 3,048 FFO ($) 4,560 4,693 1,895 FFO per share ($) AFFO ($) 4,336 4,334 1,986 AFFO per share ($) Net profit (loss) ($) 1,224 (1,568) (3,469) Net profit (loss) per share ($) (0.013) (0.028) Total assets ($) 85,071 82,877 83,298 Total long-term financial liabilities ($) 19,001 24,162 22,467 Q Q Q Q Q Q Q Q Revenue $ 13,796 $ 12,815 $ 13,912 $ 13,647 $ 12,911 $ 12,013 $ 13,181 $ 12,703 Centre margin 3,629 3,265 3,976 3,949 3,741 2,782 3,670 3,626 Centre margin % Adjusted EBITDA 1, ,781 1,819 1, ,704 1,560 FFO ,436 1,551 1, ,365 1,250 AFFO ,373 1,516 1, ,311 1,329 Net profit (loss) (560) 1, (85) (963) 133 (653) Per share amounts: FFO AFFO Net profit (loss) (0.005) (0.001) (0.008) (0.005) For the year ended 2015, the Company reported revenue of $54,170 (December 31, $50,808) and centre margin of $14,819 ( $13,819). The 6.6% increase in revenue year over year included the positive impact of successful openings of new centres in Surrey, British Columbia, Cochrane and Calgary, Alberta, the expansion of the Company s centre in Airdrie, Alberta and a 3.3% increase in Stabilized centre revenue. The positive effect of fee increases in Stabilized centres was partially offset by a decline in average occupancy from 83.8% to 82.3% primarily due to a decline in enrollments in Alberta. Notwithstanding the change in average occupancy, centre margin as a percentage of revenue increased to 27.4% compared to 27.2% in 2014, with the increase mainly attributable to fee increases and a sharp focus on managing operating cost increases through improved procurement processes. 3

4 For the three months ended 2015, revenue was $13,796 ( $12,911), an increase of 6.9%, and centre margin was $3,629 ( $3,741), a decrease of 3.0%. The reasons for the increase in revenue are substantially the same as those discussed above for the fiscal year. Centre margin year over year was relatively consistent and as a percentage of revenue decreased to 26.3% compared to 29.0% a year earlier. Centre margin erosion was caused by limited labour savings on enrollment losses as centres maintained staff ratios, as well as the impact of new centre openings, which tend to operate less efficiently during enrollment ramp up. Adjusted EBITDA for the year ended 2015 was $5,821 compared to $5,954 in the same period in As noted, fee increases and efficiencies in operating costs, resulting in an increase in centre margin year over year, were offset by higher general and administrative and operating lease expenses. General and administrative expense increased $363 mainly due to nonrecurring expense savings in the latter part of 2014 and higher information technology costs and professional fees incurred in The 24.5% increase in operating lease expense was primarily due to the impact of the McKenzie Towne centre sale and leaseback, the openings of the Surrey, Cochrane and Creekside centres and the Airdrie centre expansion. Adjusted EBITDA for the fourth quarter of 2015 was $1,306 compared to $1,889 in the fourth quarter of Adjusted EBITDA decreased $583 primarily due to lower centre margin of $112, with the balance mainly from the effect of incremental lease expense incurred from the McKenzie Towne centre sale and leaseback and prior year non-recurring general and administrative expense savings. In August 2015, the Company completed a transaction for the sale and leaseback of its McKenzie Towne centre location in Calgary, Alberta for gross proceeds of $7,500. Net cash proceeds from the transaction after repayment of indebtedness and transaction fees were $3,211. In addition, $4,004 of bank financing capacity was created. In total, this transaction generated approximately $7.2 million of incremental capital to augment the Company s available capital for funding its growth pipeline and other initiatives to create shareholder value. The transaction, effected at a capitalization rate of 6.76%, serves to validate and underscore not only the inherent strength of BrightPath s operating and financial covenant as a tenant, but also the value of its real estate portfolio. Net profit for the year ended 2015 was $1,224 compared to a net loss of $1,568 for the year ended Included in the 2015 results was a $1,791 gain on the sale and leaseback of the McKenzie Towne centre. In 2014, the loss included a loss on the disposition of development land of $302 and non-recurring restructuring costs of $968. Net loss for the fourth quarter of 2015 was $560 compared to a net loss of $85 in the fourth quarter of Basic net profit (loss) per share for the three and twelve months ended 2015 was $(0.005) and $0.010 ( $(0.001) and $(0.013)), respectively. For the year ended 2015, Alberta Stabilized centre occupancies averaged 87.1% compared to 89.7% in Stabilized centre occupancy during the fourth quarter of 2015 was 84.7% compared to 90.6% a year earlier. While the Company experienced enrollment losses 4

5 primarily during the fourth quarter of 2015 as a result of the economic downturn, enrollment levels have shown signs of stabilizing during the first quarter of Attesting to both the need for space in certain areas of Alberta and the acceptance by consumers of the superior product offered by the Company in its new state-of-the-art centres is the fact that BrightPath s newest development in the Symons Valley area of Calgary, which opened in November 2015, has achieved 97% enrollment for its full day care, with enrollment of before and after school care spaces gaining momentum. The Company s next new centre in Edmonton, scheduled to open in April 2016, has achieved 69% pre-enrollment for full day care spaces released to the market with before and after school care spaces building more slowly as expected in advance of the September school year. These new developments, along with the successful openings of the Cochrane centre and Airdrie centre expansion, have delivered high enrollment levels that have significantly exceeded both the Company s pro forma time frame and industry metrics which typically anticipate a 24-month period for ramp up of enrollment and centre stabilization. These high enrollment levels also underscore the Company s long term strategy of taking advantage of significant shortages of quality child care spaces in select Canadian markets, and, despite the recent economic challenges in Alberta, delivery of these state-of-the-art centres offering a superior product continues to be very well received. In Ontario, the Company has focused on rebuilding occupancy, reconfiguring space and pursuing opportunities to add capacity in line with the new patterns of demand for early childhood development and care. As a result of the adoption of full day kindergarten, the turnover of children in centres is higher resulting in more time required to ramp up enrollment when the new school year begins. For the year ended 2015, Ontario portfolio occupancies averaged 71.6% compared to 72.2% in Occupancy declined slightly to 69.0% in the fourth quarter of 2015 from 70.4% in the fourth quarter in the prior year. At present, the enrollment level in Ontario centres is 79% compared to 75% a year ago, reflecting improved market conditions. Occupancy in Stabilized centres in British Columbia increased to 81.9% for the year ended 2015 from 80.5% in For the fourth quarter of 2015, Stabilized centre occupancy increased to 82.5% from 82.2% in the fourth quarter of Occupancy at the Surrey facility, opened in September 2014, has steadily improved ahead of expectations and industry metrics and is currently in excess of 80% of licensed capacity. 5

6 Adjusted EBITDA, AFFO and FFO Q Q Q Q Q Q Q Q Centre margin for the period 3,629 3,265 3,976 3,949 3,741 2,782 3,670 3,626 General and administrative expense (1,129) (1,271) (1,258) (1,192) (903) (1,138) (1,170) (1,276) Taxes, other than income taxes (41) (40) (44) (43) (52) (44) (43) (43) Operating lease expense (1,153) (1,039) (893) (895) (897) (799) (753) (747) Adjusted EBITDA $ 1,306 $ 915 $ 1,781 $ 1,819 $ 1,889 $ 801 $ 1,704 $ 1,560 Q Q Q Q Q Q Q Q Net profit (loss) for the period (560) 1, (85) (963) 133 (653) Depreciation and certain other non-cash items Acquisition and development costs Restructuring costs Loss on disposition of development land Gain on sale and leaseback - (1,791) FFO $ 877 $ 696 $ 1,436 $ 1,551 $ 1,609 $ 469 $ 1,365 $ 1,250 Stock based compensation Maintenance capital expenditure (298) (163) (216) (113) (268) (331) (147) (24) AFFO $ 851 $ 596 $ 1,373 $ 1,516 $ 1,448 $ 246 $ 1,311 $ 1,329 FFO for the year ended 2015 was $4,560 compared to $4,693 for the year ended 2014, reflecting the factors affecting Adjusted EBITDA. FFO per share for the year ended 2015 was $0.038 compared to $0.039 for the same period in FFO for the fourth quarter of 2015 was $877 compared to $1,609 in the fourth quarter of FFO per share for the fourth quarter of 2015 was $0.007 compared to $0.013 for the same period in AFFO for the year ended 2015 of $4,336 ($0.036 per share) was consistent with AFFO of $4,334 ($0.036 per share) for the year ended AFFO for the fourth quarter of 2015 was $851 compared to $1,448 a year earlier. AFFO per share for the fourth quarter of 2015 was $0.007 compared to $0.012 for the fourth quarter of

7 Centre Portfolio Overview The Company s centre locations, number of licensed spaces and average occupancies are provided in the table that follows. Centres typically experience lower levels of attendance June through August due to seasonal factors. As well, new centres typically exhibit lower occupancy levels during ramp up of enrollments, thereby adversely impacting total portfolio occupancies prior to achieving stabilization. 7

8 Stabilized Centres Three months ended 2015 Three months ended 2014 Year ended 2015 Year ended 2014 Alberta Ending Centres # Ending Spaces # 3,238 3,178 3,238 3,178 Avg. Occupancy % British Columbia Ending Centres # Ending Spaces # Avg. Occupancy % Ontario Ending Centres # Ending Spaces # 1,402 1,407 1,402 1,407 Avg. Occupancy % Total Stabilized Centres Ending Centres # Ending Spaces # 5,217 5,166 5,217 5,166 Avg. Occupancy % Non-stabilized Centres Alberta Ending Centres # Ending Spaces # Avg. Occupancy % British Columbia Ending Centres # Ending Spaces # Avg. Occupancy % Ontario Ending Centres # Ending Spaces # Avg. Occupancy % Total Non-stabilized Centres Ending Centres # Ending Spaces # Avg. Occupancy % Total Portfolio (All Centres) Ending Centres # Ending Spaces # 5,790 5,372 5,790 5,372 Avg. Occupancy %

9 Deferred Share Units ( DSUs ) For the three months ended 2015, pursuant to the Board of Directors DSU plan, five members of the board of directors of BrightPath elected to receive board fees in the form of DSUs in lieu of cash remuneration, representing $0.06 million fair value in respect of 194,334 DSUs. The DSUs were issued on January 18, Outlook For the year ended 2015, despite challenges in the Alberta market, the Company increased revenue and centre margin on a year over year basis by 6.6% and 7.2%, respectively, and reported net profit of $1,224. The Company remains focused on generating substantially higher Adjusted EBITDA and enhancing shareholder value through: continuous product advancement enabling optimized pricing and occupancy levels; disciplined management of enrollment and mix; continuously improving management of all costs labour, other operating and general and administrative; realizing cash flow from development initiatives announced in 2014 and earlier in 2015, as well as those in the pipeline but not yet announced; and other measures to enhance shareholder value, including monetization of select assets and the NCIB program. In Alberta, while the Company experienced enrollment losses primarily during the fourth quarter of 2015 as a result of the economic downturn, enrollment levels have shown signs of stabilizing during the first quarter of Confirming the need for space in certain areas of Alberta and the acceptance by consumers of the superior product offered by the Company are the successful openings of the Creekside and Cochrane centres and Airdrie centre expansion, as well as the achievement of high pre-enrollment at the Company s next new centre in Edmonton to be opened in April In British Columbia, the Company continues to focus on building enrollments, managing labour and operating costs and looking for opportunities to grow and develop larger facilities offering an appropriate scale of operations in the suburban markets surrounding Vancouver. In Ontario, the multi-year planned roll out of FDK was completed in The supply of licensed spaces in Ontario continues to adjust to the new patterns of demand for early childhood development and care. The Company continues to concentrate on becoming Ontario parents provider of choice through effectively marketing BrightPath s brand and product and pursuing opportunities to add capacity and grow BrightPath s base of centres. As noted on earlier occasions, BrightPath s management and board of directors believe that the current price of the Company s common shares on the TSX Venture exchange does not appropriately or adequately reflect the Company s current value, operational performance, financial results and strategic achievements, or its near and longer term growth prospects. We 9

10 have previously outlined the disconnect between the price of the Company s shares and the value of its increasingly profitable operations and owned real estate portfolio with a gross book value of $45 million. As such, we were pleased to validate the financial opportunity underpinning this disconnect with the sale of real estate underlying the Company s McKenzie Towne centre during the third quarter of This transaction created the availability of an additional $7.2 million of capital to augment the funding already available for the Company s pipeline of growth initiatives and the purchase of the Company s common shares. The Company continues to initiate and explore other opportunities to surface value for its shareholders. The Company believes that the undervaluation of its share price is not only significant based on its current operations and real estate holdings, but is also further highlighted by the future growth of approximately 814 licensed spaces which have been announced. The pro forma cash flow per share which will be generated by this growth pipeline is highly accretive as it is fully funded and can be delivered without any equity dilution to shareholders. Furthermore, those centres can be operated without any significant increase in general and administration overhead expense. NON- IFRS PERFORMANCE MEASURES The Company uses centre margin as an indicator of centre performance. 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. Centre expenses include labour and direct costs and exclude operating lease expense for leasehold properties and mortgage interest, if any, on those properties owned by the Company. The Company also uses Adjusted EBITDA, FFO and AFFO as indicators of financial performance. Adjusted EBITDA is calculated by deducting the following from centre margin: operating lease expense, general and administrative expenses, and taxes other than income taxes. FFO is calculated by adjusting net profit (loss) to add back acquisition costs expensed as incurred, depreciation and certain other non-cash items. AFFO is calculated by adjusting FFO to add back stock based compensation and deduct maintenance capital expenditures. Maintenance capital expenditures consist of capital expenditures that are capitalized for accounting purposes but are considered to be recurring costs such as facilities and leasehold maintenance and the replacement of learning materials, toys, furniture, appliances and other equipment. Maintenance capital expenditures do not occur evenly over the course of the year with these activities typically occurring with greater intensity during the seasonally slower summer months. Adjusted EBITDA, FFO and AFFO do not have standardized meanings prescribed by IFRS. The Company s method of calculating Adjusted EBITDA, FFO and AFFO may be different from other entities and, accordingly, may not be comparable to such other entities. Adjusted EBITDA, 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. 10

11 Centre operating results are also analyzed based on Stabilized and Non-stabilized centres which may not be comparable with that used by other entities. Acquired and newly-developed centres are deemed to be stabilized after 24 months, or sooner if normalized occupancy levels are achieved. Net profit (loss) is impacted by, among other items, accounting standards that require centre acquisition and transaction costs to be expensed as incurred. As the Company executes its consolidation and development strategy in the Canadian market, it will routinely incur such expenses which will negatively impact the Company s reported net profit/loss, but not Adjusted EBITDA, FFO and AFFO. QUARTERLY CONFERENCE CALL BrightPath s quarterly results conference call is scheduled for Thursday, March 31, 2016 at 10:00 am EST. The call details are as follows: To access the conference call by telephone, dial (647) or (888) Please connect approximately 10 minutes prior to the beginning of the call. A live audio webcast of the conference call will be available at: Please connect at least 10 minutes prior to the web 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. The conference call will be archived for replay until Thursday, April 14, 2016 at midnight. To access the archived conference call, dial (416) or (855) and enter the reservation number followed by the number sign. ABOUT BRIGHTPATH EARLY LEARNING INC. BrightPath Early Learning Inc. is a Canadian leader in child care and early education with 54 locations in major markets across the country. Meeting the highest standards in curriculum, nutrition, technology and recreational programming, BrightPath is committed to providing families with the very best child development and care Canada has to offer. For more information, visit (TSX V: BPE). For further information regarding this release, please contact Dale Kearns, President & Chief Financial Officer of BrightPath Early Learning Inc. at (403) ext FORWARD-LOOKING STATEMENTS Certain statements contained herein constitute forward-looking statements regarding the future growth, results of operations, performance and opportunities of the Company. Forward-looking statements can generally be identified by the use of, but not limited to, the following words: plans, expects or does not expect, budget, scheduled, estimate, forecast, pro 11

12 forma, anticipate or does not anticipate, believe, intend, inferred, potential and similar expressions or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Forward-looking statements are not historical facts, but reflect the Company s current expectations regarding future results or events based on information currently available and what the Company believes to be reasonable assumptions. All forward-looking statements are qualified by these cautionary statements. Forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results or events to differ materially from those expressed, implied or projected include, but are not limited to, general economic conditions, the Company s ability to meet and maintain forecasted occupancy levels, general government policies, continued availability of government child care subsidies to parents, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, changes in interest rates, credit spreads and the availability of financing. In addition, please refer to the Risks and Uncertainties section of the Company s annual Management s Discussion and Analysis. As such, the Company gives no assurance that actual results will be consistent with these forward-looking statements. Readers should not place undue reliance on any such forward-looking statements. These forward-looking statements are made as of the date hereof. The Company undertakes no obligation to publicly update or revise any such statement, reflect new information or reflect the occurrence of future events or circumstances, except as required by securities laws. 12

13 BrightPath Early Learning Inc. Consolidated Statements of Financial Position (CDN $000 s) Assets Non-current assets Property and equipment $ 49,779 $ 45,811 Goodwill and definite life intangible assets 30,042 30,074 79,821 75,885 Current assets Cash 1,537 3,455 Accounts receivable 1,958 1,983 Prepaid expenses and deposits 1,716 1,515 Short term investments ,250 6,992 Total Assets $ 85,071 $ 82,877 Liabilities Non-current liabilities Provision for restructuring costs $ - $ 45 Long term debt and financing leases 14,697 19,762 Convertible debentures liability component 4,304 4,355 19,001 24,162 Current liabilities Accounts payable and accrued liabilities 5,198 2,924 Current portion of provision for restructuring costs Deferred revenue Current portion of debt and financing leases 5,184 1,418 11,382 5,510 Total Liabilities 30,383 29,672 Shareholders Equity Share capital 65,374 65,871 Convertible debentures equity component Equity settled share-based compensation 2,985 2,419 Accumulated deficit (14,013) (15,427) Total Shareholders Equity 54,688 53,205 Total Liabilities and Shareholders Equity $ 85,071 $ 82,877 13

14 BrightPath Early Learning Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) Three and twelve months ended 2015 and 2014 Three months ended Year ended (CDN $000 s except for per share amounts) Revenue $ 13,271 $ 12,471 $ 52,409 $ 49,258 Government grants ,761 1,550 Total revenue 13,796 12,911 54,170 50,808 Centre expenses Salaries, wages and benefits 7,500 6,920 29,228 27,007 Other operating expenses 2,667 2,250 10,123 9,982 Centre margin 3,629 3,741 14,819 13,819 Operating leases 1, ,980 3,196 Finance costs ,334 1,449 General and administrative 1, ,850 4,487 Taxes, other than income taxes Restructuring costs Acquisition and development ,454 1,613 Gain on sale and leaseback - - (1,791) - Loss on disposition of development land Share-based compensation Depreciation and amortization ,139 2,914 4,174 3,849 13,700 15,522 Profit (loss) before other income and income taxes (545) (108) 1,119 (1,703) Other income (15) Profit (loss) before income taxes (560) (85) 1,224 (1,568) Income taxes Net Profit (Loss) and Total Comprehensive Income (Loss) $ (560) $ (85) $ 1,224 $ (1,568) Net profit (loss) per share Basic $ (0.005) $ (0.001) $ $ (0.013) Diluted $ (0.005) $ (0.001) $ $ (0.013) 14

15 BrightPath Early Learning Inc. Consolidated Statements of Changes in Shareholders Equity Years ended 2015 and 2014 (CDN $000 s) Share Capital Convertible Debentures Equity Component Equity Settled Share-based Compensation Accumulated Deficit Shareholders Equity Balance at January 1, 2014 $ 66,030 $ 342 $ 2,026 $ (13,911) $ 54,487 Share-based compensation Deferred share units redeemed 18 - (18) - - Shares purchased for cancellation (177) (125) Net loss and comprehensive loss (1,568) (1,568) Balance at 2014 $ 65,871 $ 342 $ 2,419 $ (15,427) $ 53,205 Balance at January 1, 2015 $ 65,871 $ 342 $ 2,419 $ (15,427) $ 53,205 Share-based compensation Shares purchased for cancellation (497) (307) Net profit and comprehensive income ,224 1,224 Balance at 2015 $ 65,374 $ 342 $ 2,985 $ (14,013) $ 54,688 15

16 BrightPath Early Learning Inc. Consolidated Statements of Cash Flow Three and twelve months ended 2015 and 2014 Three months ended Year ended (CDN $000 s) Cash provided by (used in): Operating Activities Net profit (loss) $ (560) $ (85) $ 1,224 $ (1,568) Items not affecting cash: Depreciation and amortization ,139 2,914 Depreciation included in operating costs Finance costs ,334 1,449 Gain on sale and leaseback - - (1,791) - Loss on disposition of development land Share-based compensation Change in fair value of convertible debenture liability component (5) (24) (116) (122) Change in non-cash working capital (2,543) (1,290) 168 (1,677) Change in non-current portion of provision for restructuring costs - (68) (45) (73) Cash provided by (used in) operations (1,684) (169) 4,633 1,786 Finance costs paid (338) (400) (1,127) (1,232) (2,022) (569) 3, Investing Activities Property and equipment (1,444) (636) (10,674) (3,509) Net proceeds on sale and leaseback - - 7,214 - Net proceeds on disposition of development land (1,444) 82 (3,460) (2,791) Financing Activities Loan proceeds 2,997 3,298 3,931 3,298 Loan repayments (277) (311) (5,247) (1,166) Financing transaction costs (4) (21) (36) (68) Finance lease repayments (86) (63) (281) (247) Shares purchased for cancellation (155) (65) (331) (65) 2,475 2,838 (1,964) 1,752 Change in Cash (991) 2,351 (1,918) (485) Cash at beginning of period 2,528 1,104 3,455 3,940 Cash at end of period $ 1,537 $ 3,455 $ 1,537 $ 3,455 16