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MindChamps Q3 net profit plunges by 73.1% to S$300,000 on expansion-related costs

MAINBOARD-LISTED early childhood education player MindChamps PreSchool saw third-quarter earnings plummet on surging expenses, despite a swell in turnover from new pre-schools in its stable.

Net profit for the three months to Sept 30 fell by 73.1 per cent year on year, to S$300,000, according to results released on Thursday night.

MindChamps, which is 20 per cent-owned by The Business Times publisher Singapore Press Holdings, was sorely hit by not just a drop in interest income, but also a hike in administrative expenses - which almost doubled, to S$7.33 million - and finance costs.

The expenditure eroded the gains from a 70 per cent jump in revenue, to S$15.6 million, that had come on the back of higher income from school fees with the acquisition of new centres.

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Earnings per share stood at 0.12 Singapore cent, against 0.46 Singapore cent before.

MindChamps disclosed in its financial statements that the higher administrative expenses involved rents, utilities, maintenance and other day-to-day running costs from the new acquisitions, while part of the increase in non-operating finance expenses was attributed to servicing the acquisition loans.

For the nine months, net profit was down by 61.6 per cent to S$1.04 million, even as revenue grew by 66.8 per cent to S$38.1 million.

The company added in its outlook statement that a share purchase and subscription agreement with a Singapore franchisee on Nov 1 is not expected to have any material negative impact on the consolidated earnings and net tangible assets per share for the year to Dec 31.

No dividend was recommended for the quarter, unchanged from the year before, with the company saying that it planned to re-invest the profits from the current financial period.

MindChamps closed flat at S$0.55, before the results were released.