CIBT Education earns $6-million in fiscal 2015
2015-12-02 15:10 ET - News Release
Mr. Toby Chu reports
CIBT REPORTS FINANCIAL RESULTS FOR FISCAL YEAR ENDING AUGUST 31ST 2015
CIBT Education Group Inc. has filed on SEDAR its annual consolidated financial statements and related management's discussion and analysis for its fiscal year ending Aug. 31, 2015. To review the filing, please visit SEDAR.
"Fiscal 2015 was a transformative year for the Company because of the successful integration of our self-sustaining education business with our rapidly expanding student housing portfolio, to which we negotiated the addition of nearly $100 million in student housing properties in conjunction with equity investment partners during the year," said Toby Chu, President and CEO, Vice Chairman of CIBT. "At the start of the year we set out to prove a business model that aggressively acquired real estate assets in order to take advantage of the increasing demand for Vancouver real estate and the limited supply of housing solutions for students living in the Greater Vancouver area. We are now able to take our existing students as well as the increased number of international students entering Canada every year and provide them with clean, safe and convenient housing solutions while generating value for our shareholders in the form of gains on real estate ownership, ongoing rental revenue, and additional fees for identifying undervalued properties." "We have already begun to see the benefits and success of our new strategy with the purchase of GEC Viva Suites, up $8 million in property value in just 7 months with a factored-in discount for conservative reasons," continued Toby Chu. "While our shareholders will continue to see further valuation gains from other properties we acquired this year, it is part of our strategy to monetize on some of these assets in the near future and provide additional returns to our shareholders." "Moving into 2016, CIBT will continue to add properties to our student housing portfolio while also seeking school acquisition opportunities as part of its core business objective. While the education business is not expected to grow at a rapid pace due to the competitive market environment, it remains a clear benefit to our strategy as international students enrolled in our schools and our partner schools continue to act as a pipeline feeding our student housing properties." Summary highlights of CIBT's fiscal 2015 financial report are as follows:
Selected Financial Information 12 Months Ended12 Months Ended August 31, 2015August 31, 2014 Total revenues $32,178,951 $30,916,154 Educational revenues - CIBT $2,260,260 $2,371,950 Commission revenues - GEA $619,077 $843,022 Educational revenues - SSDC $24,988,426 $25,218,361 Design and advertising revenues - IRIX $1,082,119 $860,989 Rental revenues - GEC $647,046 $0 Development fees - Corporate $2,582,023 $1,621,832 General and administrative expenses $19,335,528 $19,729,134 Share-based payment expense $15,909 $15,992 Foreign exchange gain (loss) $227,728 $98,720 Gain (loss) on fair value changes in investment properties $7,615,175 $0 Income tax recovery (provision) - net ($962,396) $503,978 Income (loss) - Continuing operations $6,000,774 ($1,717,434) Income (loss) - Discontinued operations $0 $7,030,395 Net income (loss) $6,000,774 $5,312,961 Income (loss) per share $0.02 $0.08 Net income (loss) - CIBT Education Group Inc. shareholders $1,040,020 $5,159,490 Income (loss) per share - CIBT Education Group Inc. shareholders$0.02 $0.08 Total assets $80,666,757 $41,696,200 Long-term liabilities $24,340,590 $1,116,723 EPS before Non-Controlling Interest $0.09 $0.10 EPS after Non-Controlling Interest $0.02 $0.08
Total income for fiscal year 2015 increased to $32.17 million from $30.91 from fiscal 2014. The Company generated revenue of approximately $2.58 million from student housing development fees, and $0.65 million of rental income from these properties. Rental income was generated from 7 months of operations, since the Company took possession of GEC Viva Suites while the property was under renovation to accommodate additional beds. Gain on Fair Value Changes in Property includes changes to the property value of GEC Viva Suites. Fair values of other properties negotiated during fiscal 2015 were not included in this report and will be included in future reports as we take possession of those properties over time. Despite increase in revenue, General Administrative Expenses decreased by 2%. Net Profit increased from $5.31 million to $6.00 million, an increase of 13%. Earnings per share before Non-Controlling Interest is $0.09 per share, and after Non-Controlling Interest is $0.02 per share. "In fiscal 2015, the Company negotiated three student housing properties with co-investors at each project level," continued Mr. Chu. "Such arrangement allows CIBT to expand rapidly without diluting the share structure of CIBT. As a result of our investment structure, we own a carrying equity interest in all of the properties we manage. Firstly, CIBT benefits from development fees for seeking and identifying the suitable project. Secondly, CIBT also receives a management fee which is based on the gross rental income of each property, which is recorded as housing rental income. Thirdly, CIBT also has the right, through its equity ownership, to share the annual net profit generated from each property. Lastly and most importantly, CIBT will participate in any future gain from the sale of the property. Given the rising property prices in Vancouver and ongoing shortage of rental housing in Vancouver (less than 0.5% vacancy rate in some areas of downtown Vancouver according to CMHC), management believes the valuation gain from these properties will generate far more value and substantial returns to shareholders upon exit. As the Company's student housing business now has a proven track record, CIBT plans to increase its capital base in fiscal 2016 by raising new equity or convertible debt, and utilize the new capital to increase its ownership in all future projects, hence reducing the Non-Controlling Interest so that the net earnings per share can be re-directed to CIBT shareholders. Subsequent to the year end, the Company assumed management of another downtown Vancouver hotel. The plan is for CIBT subsidiary, GEC Holdings, to hold an equity interest in the investment vehicle in addition to managing the student hotel. CIBT received a structuring fee of $1.8 million for arranging this transaction. The purchase of this property was completed on November 18th, 2015. Total purchase price paid by the investment vehicle was approximately $40 million. The Company is currently working on several other projects including the Education Super Center and other prospective student housing properties throughout Metro Vancouver with anticipated purchase prices ranging from $19.5 million to $170 million each."
We seek Safe Harbor.
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