Solid fundamentals for LOYThere is a large market for international education here in Canada, with the largest concentration of international students being in Ontario and British Columbia. The Company is well positioned with 16 schools operating in Ontario, British Columbia and Nova Scotia and 2 agencies operating in South Korea. The Company acquired UIS, PPC, MTi, KGIC and KGIBC during 2013, SEC and UCCBT, and Uhak during 2014, and Kim Okran in January 2015 in order to meet the growing demand for short-term language training and career training programmes. The Company’s acquisition of KGIC and UIS also addresses the growing demand for Pathway programs, which bridge ESL programs to post-secondary institutions. The Company is currently in the process of expanding UIS’ operations which includes providing Pathway programs to non-Loyalist ESL school students, and utilizing UIS’ permit to recruit Chinese students in order to increase marketing opportunities and overseas exposure. These acquisitions substantially increased the size of the Company making the successful integration of these additions a critical activity. Management continues to consolidate and integrate the operations of its acquisitions incurring integration costs and acquisition and restructuring costs.
As at March 31, 2015, Loyalist operated 25 campuses across its various brands in Toronto, Vancouver, Victoria, and Halifax and 19 agency offices across South Korea, USA and Philippines.
The Company benefited from the full effect of revenues from UIS, PPC, MTi, KGIC and KGIBC acquisitions and partial effect of revenues from SEC, UCCBT and Uhak, Kim Okran acquisitions. Revenue in the first quarter fell year-over-year partly as a result of our rebranding exercise that led to the closing of some smaller, less profitable schools. As of April, these schools have been integrated into other schools and we expect profitability to improve. While revenue decreased over the comparable period in 2014, the Company expects improvement in gross revenues and net earnings resulting from its recent acquisitions and increased efficiencies through integration.
Loyalist’s goal is to become an industry leader in the international education market. The key factors to the Company’s continued growth include improving financial performance through consolidating operations, and increasing market share through acquisitions and brand promotion.
The Company’s new senior leadership team will temporarily shift the strategic focus of the Company from acquisitions to concentrating on enhancing profitability. Management will realize on the synergistic value of schools and rationalize assets that are inconsistent with this philosophy. During the second quarter of 2015 management has tightened controls around spending, improved margins with vigilance on discounting, and reduced personnel resulting in a projected annualized savings of $3.5 million, with more to come.