GEC Corp. Reports 2023 First Quarter Financial Results
Vancouver, B.C., January 16, 2023 – Global Education Communities Corp. (TSX: GEC, OTCQX International: GECSF) (“GEC Corp.” or the “Company“) is pleased to report that it has filed on SEDAR its consolidated financial statements and related management’s discussion and analysis for its first quarter of fiscal 2023 ended November 30, 2022 (collectively, the “Q1 Filing“). The following is selected financial information for the three months ended November 30, 2022 (“Q1 2023“) and comparative results (“Q1 2022”). Please refer to the Q1 Filing in its entirety, which is available under GEC Corp.’s profile at www.sedar.com.
The following table presents selected financial data from the Q1 Filing with comparisons. All figures are in thousands of Canadian dollars, except share and per share data, unless otherwise noted.
(1) As defined below under “About Global Education Communities Corp.”
(2) Please refer to “Non-IFRS Financial Measures” at the end of this news release.
(3) Percentage change amounts reflect the relative change in the individual balance with the impact (negative or positive) on net income.
The following tables reconcile EBITDA and Adjusted EBITDA, non-IFRS financial measures, to the most directly comparable IFRS measure disclosed in the Q1 Filing, which is net income (loss).
“We are pleased to report that our total revenue for Q1 2023 has increased by 7% to $18.33 million compared to Q1 2022,” said Toby Chu, Chairman, President and Chief Executive Officer of GEC Corp.. “Most notably, our international educational segment saw a substantial increase of 39% in revenue during Q1 2023 compared to Q1 2022. All GEC®-branded residential properties are fully booked with a waitlist, and our rental rates per square foot are at the highest in the Company’s history. As a result, GEC Corp.’s student housing rental revenue grew 27% from $3.89 million to $4.95 million compared to Q1 2022. Additionally, our EBITDA1 for Q1 2023 reached $3.951 million.”
Toby added, “Between March 2, 2022, to December 7, 2022, Canada’s prime interest rate[1] increased by 139% from 2.7% to 6.45%, causing significant challenges to the financial and credit markets and impacting the finance cost for our student-housing real estate division. Industry speculation is that the interest rate trend will plateau in 2023, allowing the economy to begin recovery from the setbacks caused by the pandemic. Meanwhile, our student-housing division continues to adjust its rental rates to offset the rising costs. Since mid-2022, our student-housing division has been adjusting its rental rates consistently to match rising interest rates and inflation-impacted operating costs.
Toby continued, “Our student housing business is expected to continue to grow in the coming years due to the severe shortage of rental properties in Metro Vancouver and a halt to many rental development projects due to increasing interest rates. A recent news article reported that, “delivering new Metro Vancouver rentals now next to impossible[2]” and noted that the shortage caused by the lack of new rental properties entering the pipeline is compounded by the rental inventory depleting quickly.
“While the supply is in severe shortage, the demand for rental properties is expected to continue to grow given the large volume of international students and new immigrants awaiting approval to enter Canada. According to a CBC report[3], as of August 18, 2022, over 163,000 study permits were still to be processed by Immigration Canada (IRCC) after the school term began. Furthermore, Canada welcomed over 405,000 new immigrants in 2022, with the plan to accept 465,000 permanent residents in 2023, 485,000 in 2024 and 500,000 in 2025, totaling 1.855 million new immigrants over four years, according to a new release[4] published by the Government of Canada.
“These ongoing trends underscore the intrinsic value of the GEC®-branded real estate portfolio. We plan to expand our real estate portfolio during the depressed market conditions by acquiring a permit-ready property for our recently formed GEC® Langara Limited Partnership, an effort to capitalize on the growing need for rental properties in Metro Vancouver.”
[1] https://www.icicibank.ca/en/personalbanking/ratehistory_popup_interestrates
[2] https://www.westerninvestor.com/british-columbia/delivering-new-metro-vancouver-rentals-now-next-to-impossible-6337442
[3] https://www.cbc.ca/news/canada/toronto/international-students-waiting-for-permits-1.6578113
[4] https://www.canada.ca/en/immigration-refugees-citizenship/news/2022/11/an-immigration-plan-to-grow-the-economy.html
About Global Education Communities Corp.:
Global Education Communities Corp. is one of Canada’s largest education and student housing investment companies focused on the domestic and global education market since 1994. GEC Corp. owns business and language colleges, student-centric rental apartments, recruitment centres and corporate offices at 41 locations in Canada and abroad. Its education subsidiaries include Sprott Shaw College Corp. (“SSCC”) (established in 1903), Sprott Shaw Language College (“SSLC”), Vancouver International College Career Campus (“VIC”) and CIBT School of Business & Technology Corp. (“CIBT China”). GEC Corp. offers over 150 educational programs in healthcare, business management, e-commerce, cyber-security, hotel management, and language training through these schools. In 2022, GEC Corp. serviced over 10,000 domestic and international students through its educational and rental housing subsidiaries.
GEC Corp. owns Global Education City Holdings Inc. (“GECH”), an investment holding and development company focused on education-related real estate such as student-centric rental apartments, a hotel and education super-centres. Under the GEC® brand, GECH provides accommodation services to 90 schools in Metro Vancouver, serving 3,000 students from 71 countries. The total portfolio and development budget under the GEC® brand is nearly $1.3 billion.
GEC Corp. also owns Global Education Alliance Inc. (“GEA”) and Irix Design Group Inc. (“IRIX”). GEA recruits international students for elite kindergartens, primary and secondary schools, colleges and universities in North America. Irix Design is a leading design and advertising company based in Vancouver, Canada. Visit us online and watch our corporate video at www.GECHQ.com.
For more information, contact:
Toby Chu
Chairman, President & CEO
Global Education Communities Corp.
Investor Relations Contact: 1-604-871-9909 extension 319 or | Email: info@GECHQ.com
FORWARD-LOOKING STATEMENTS
Some statements in this news release contain forward-looking information (the “forward-looking statements“) about Global Education Communities Corp. and its plans. Forward-looking statements are statements that are not historical facts. Forward-looking statements in this news release include, without limitation, that the interest rate trend will plateau in 2023, allowing the economy to begin recovery from the setbacks caused by the pandemic; the student housing business is expected to continue to grow due to a shortage of available rental units; and the Company intends to acquire a permit-ready property for its recently formed GEC® Langara Limited Partnership. The forward-looking statements are subject to various risks, uncertainties and other factors (collectively, the “Risks”) that could cause GEC Corp.’s actual results or achievements to differ materially from those expressed in or implied by forward-looking statements. The Risks include, without limitation, national and global economic factors, the completion of the acquisition of the property for GEC® Langara Limited Partnership, customary risks of the construction industry, unexpected delays or requirements of the applicable municipalities, and the other risk factors identified in the MD&A forming part of the Q1 Filing. Forward-looking statements are based on the beliefs, opinions and expectations of GEC Corp.’s management at the time they are made, and GEC Corp. does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances should change, except as may be required by law.
NON-IFRS FINANCIAL MEASURES
The Company has included certain non-IFRS financial measures throughout this document including: (a) Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”); (b) Adjusted EBITDA which is EBITDA adjusted for the gain (loss) on change in fair value of the Company’s investment properties and the gain (loss) on change in fair value of derivative instruments; and (c) Gross Profit (“Gross Profit”) which is the difference between revenue and direct costs of sales. These non-IFRS financial measurements do not have any standardized meaning as prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Accordingly, these performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Management uses EBITDA and Adjusted EBITDA metrics to measure the profit trends of the business units and segments in the consolidated group since it eliminates the effects of financing decisions. Management uses Gross Profit to assess how efficiently the Company generates profit from the sale of goods or services. Certain investors, analysts and others utilize these non-IFRS financial metrics in assessing the Company’s financial performance. These non-IFRS financial measurements have not been presented as an alternative to net income (loss) or any other financial measure of performance prescribed by IFRS. Reconciliation of the non-IFRS measures have been provided throughout the Company’s MD&A, as applicable, filed under the Company’s profile on www.SEDAR.com.