Gems bottom line benefits from school seat shortage
Revenue at the private education provider Gems Education grew more than 20 per cent in the year through March as rising fees and pupil numbers boosted its top line.
Gems, which runs schools in Abu Dhabi and Dubai, as well as internationally, earned US$674.8 million in revenue in the year through March, up 20.6 per cent against the previous year’s figure of $559.6m.
The company cited increases in enrolment, annual average revenue per pupil and other income as reasons for the growth.
The school operator said its enrolment had increased by almost 9 per cent to more than 98,000 pupils in the year through the end of March. Capacity across all of its schools at that point was just under 109,000.
Gems did not disclose its profit or respond to requests for comment.
The Dubai-based private equity group Fajr Capital, along with the US investor Blackstone and the Bahraini sovereign wealth fund Mumtalakat, bought a minority stake in Gems in October last year. The company issued a $200m sukuk in January and opened three schools in the first quarter of this year.
Fees have risen across the UAE as a shortage of school slots means there is little downward pressure on fees at private schools. Inflation figures showed spending on education rising at a clip of about 4.5 per cent last year.
The Abu Dhabi Education Council says that the emirate’s pupil population is growing at a rate of about 7 per cent per year, and will reach 280,000 by 2020. Amal Al Qubaisi, Adec’s director, said last month that the capital would need a further 60,000 school places over the next five years to keep pace with demand.
“There is definitely a shortage of school places, even though Adec and the Knowledge and Human Development Authority are building their schools as fast as they can,” said Judith Finnemore, a consultant at Focal Point Educational Consultancy in Al Ain and a former head teacher.
Big education companies such as Gems benefit from economies of scale, which allows them to outspend their rivals on marketing, Mrs Finnemore said. “They realise that in order to get bums on seats they must market far and wide,” she said.
Such schools are also better able to absorb the costs imposed by frequent changes to education regulations, said Mrs Finnemore.
Economic diversification and growth have driven rapid increases in the population and put pressure on existing schools and other facilities, Faisal Durrani, the head of research at Cluttons, said in December. “You need more of pretty much everything,” schools included,” he said.
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Updated: June 15, 2015 04:00 AM