CIBT earns $989,214 in H1 of fiscal 2016
2016-04-15 07:22 ET - News Release
Mr. Toby Chu reports
CIBT REPORTS FINANCIAL RESULTS FOR SECOND QUARTER ENDING FEBRUARY 29TH, 2016
CIBT Education Group Inc. has filed on SEDAR its consolidated financial statements and related management's discussion analysis for its second quarter ending Feb. 29, 2016. To review the filing, please visit SEDAR.
"CIBT has experienced two high performance quarters in the first half of fiscal 2016 with the addition of three new student housing projects, valued at nearly $90-million, in conjunction with equity investment partners," said Toby Chu, president and chief executive officer, vice-chairman of CIBT. "At the start of fiscal 2016, we added one hotel property located in downtown Vancouver to our student housing portfolio followed by a brand-new condominium property to be fitted as serviced apartments in Burnaby Heights while expanding our previously acquired $20.5-million project to a $31-million project during the second quarter of the year.
"We have already begun to see the benefits and success of our new strategy with substantial increases in property value across the GEC-branded portfolio in just one year," continued Mr. Chu. "While we expect that our shareholders will continue to see further valuation gains from these properties, it is part of our strategy to continue to solidify our education assets, monetize on some of our real estate assets and provide additional returns to our shareholders. We will continue to add properties to our student housing portfolio while seeking school acquisition opportunities as part of our business objective. Our strategy will continue to focus on international students enrolled in our schools and our partner schools which act as a pipeline feeding our student housing properties.
"As real estate values in metro Vancouver continue to climb, the inventory of student housing held with our equity investment partners is in an enviable position. We will be able 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 while enjoying the increases in valuation. Our plan is 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."
SUMMARY HIGHLIGHTS OF CIBT'S SECOND QUARTER 2016 FINANCIAL REPORT Six months ended Feb. 29, 2016 Feb. 28, 2015 Total revenues $19,139,186 $15,431,493 ------------ ----------- Educational revenues -- CIBT $1,402,724 $1,246,582 ------------ ----------- Commission revenues -- GEA $386,519 $206,211 ------------ ----------- Educational revenues -- SSDC $12,600,784 $12,244,766 ------------ ----------- Design and advertising revenues -- IRIX $467,866 $520,045 ------------ ----------- Rental revenues -- GEC $656,485 $81,569 ------------ ----------- Development fees -- GEC and corporate $3,624,808 $1,132,320 ------------ ----------- General and administrative expenses $10,110,368 $9,544,479 ------------ ----------- Share-based payment expense $498 $7,265 ------------ ----------- Foreign exchange gain (loss) ($20,101) $210,253 ------------ ----------- Gain (loss) on fair value changes in investment properties $0 $3,287,857 ------------ ----------- Income tax recovery (provision) -- net $0 ($3,409) ------------ ---------- Income (loss) -- continuing operations $989,214 $2,785,852 ------------ ----------- Income (loss) -- discontinued operations $0 $0 ------------ ----------- Net income (loss) $989,214 $2,785,852 ------------ ----------- Income (loss) per share $0.02 $0.04 ------------ ----------- Net income (loss) -- CIBT Education Group Inc. shareholders $2,092,698 $639,714 ------------ ----------- Income (loss) per share -- CIBT Education Group Inc. shareholders $0.02 $0.08 ------------ ----------- Total assets $93,028,872 $75,086,072 ------------ ----------- Long-term liabilities $25,471,704 $23,790,321
Total income for the second quarter of 2016 increased to $19.14-million from $15.43 compared with same period last year.
The company generated revenue of approximately $3.62-million from student housing development fees, and $660,000 of rental income from these properties. Rental income was generated by GEC Viva Tower while the building was undergoing renovation to accommodate additional beds.
Earnings per share attributable to CIBT shareholders are two cents per share as compared with eight cents per share for the same period in fiscal 2015. Please note that in the second quarter of fiscal 2016, the company did not record any gain on fair value changes as compared with the second quarter of fiscal 2015 in which there was a gain on fair value changes in property of $3.29-million which reflected the increased property value of GEC Viva suites.
Fair values of properties acquired since Aug. 31, 2015, were not included in this quarterly report and will be included in future reports as the company takes possession of those properties over time. Due to the rising property values across the entire portfolio, it is currently anticipated that gain on fair value changes for up to three properties will be added to the company's future reports in coming months.
Compared with the same period last fiscal year, net income attributable to CIBT shareholders increased from $640,000 to $2.09-million, an increase of 227 per cent.
Total assets increased to $93.03-million from $75.09-million, an increase of $17.94-million (plus 24 per cent). Corresponding long-term liabilities increased to $25.47-million from $23.79-million, an increase of $1.68-million (plus 7 per cent).
EBITDA (earnings before interest, tax, depreciation and amortization) was $1.57-million, a decrease from $3.42-million from the previous year due to a gain on fair value changes recorded in the second quarter of fiscal 2015 as compared with nil for the second quarter of fiscal 2016.
Normalized EBITDA net of non-recurring expenses was $1.97-million, a decrease from $3.48-million due to a gain on fair value changes recorded in the second quarter of fiscal 2015 as compared with nil for the second quarter of fiscal 2016.
Subsequent to the second quarter ending Feb. 29, 2016, two limited partnerships organized by the company received additional investment capital of $5.49-million.
"Since the launching of our student housing initiative, the company has successfully negotiated five student housing properties with co-investors at each project level," commented Mr. Chu. "Such arrangement allows CIBT to expand rapidly without diluting its share structure. 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 and recorded as part of the 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-per-cent 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.
"The company is currently working on several other projects including the education supercentre, education megacentre and other prospective student housing properties throughout metro Vancouver with anticipated purchase prices ranging from $20-million to $200-million each."
We seek Safe Harbor.