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MindChamps full-year profit down 15% as costs, expenses offset higher revenue

MINDCHAMPS PreSchool's full-year net profit declined 15 per cent as higher cost of sales and operating expenses offset a 24 per cent rise in revenue.

For the year ended Dec 31, net profit attributable to equity holders fell to S$4.6 million, down from S$5.4 million for the year-ago period. Earnings per share stood at 2.45 Singapore cents for FY17, as compared to 2.99 Singapore cents in the previous year.

No dividend has been recommended for the current financial period, while a one-tier tax exempt interim dividend of S$10.10 per share was declared for FY16, before the group's initial public offering (IPO) on Nov 24 last year.

This dividend amounts to about 2.8 Singapore cents per share after adjusting for its share split, where each of the company's shares were sub-divided into 360 shares, effected on Nov 9.

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For FY17, cost of sales rose by 28 per cent to S$7.7 million from last year, mainly due to higher academic staff costs incurred by the centres.

In addition, operating administrative expenses increased by 39 per cent to S$9.7 million for FY17, while operating marketing expenses rose 56 per cent to S$600,000 from the year-ago period.

This increase in marketing expenses was in line with the scaling up of its operations, and the branding of its overseas business, MindChamps said.

Accordingly, the group's revenue for FY17 rose 24 per cent to S$22.8 million, from S$18.4 million in the preceding year.

This was mainly attributed to a gain of S$3.2 million in school fees, resulting from increased student enrollment following the group's acquisitions. In FY16, MindChamps acquired two preschool centres, namely in Zhongshan Park and Serangoon.

This was followed by the commencement of operations of MindChamps PreSchool @ Leisure Park Kallang in January 2017, and the acquisition of four preschool businesses in Australia in November last year.

In addition, a gain of about S$600,000 in royalty fees due to more franchisee-owned-franchisee-operated centres, and an increase in school fees also boosted revenue for FY17, MindChamps said.

Separately, the group on Thursday also announced that it has completed the acquisition of all the shares in MindChamps PreSchool @ Woodlands. The group on Monday said that it would buy over the branch for S$1.31 million, and that the purchase price would be wholly satisfied in cash from its IPO proceeds.

Looking ahead, the group has plans to expand in China, Myanmar and Vietnam. On Feb 15, MindChamps entered into a joint venture agreement with Hong Kong-listed China First Capital Group to establish a China Preschool Fund.

The fund is targeting to raise an initial tranche of US$200 million and MindChamps expects to receive future income streams from the fund, including franchise income and royalty fees among others.

As at 10.54am on Thursday, shares in MindChamps PreSchool were trading 0.7 per cent, or 0.5 Singapore cent lower to S$0.75 apiece.