SINGAPORE - MindChamps PreSchool's net profit dived 74 per cent to $323,000 in its second quarter ended June 30, from $1.3 million for the year-ago period.
This came amid a surge in expenses stemming from a series of acquisitions of preschool centres in 2018 and 2019.
Earnings per share (EPS) for Q2 stood at 0.13 cent, or one-quarter of the year-ago EPS of 0.52 cent, the mainboard-listed provider of premium preschools reported during the midday break on Wednesday (Aug 7).
Revenue jumped 64 per cent year on year to $12.5 million for the quarter, up from $7.6 million. This was mainly because of an increase in school fees, due to the higher number of enrolled students resulting from the acquisitions.
MindChamps' company-owned, company-operated centres grew to 27 globally as at June 30, more than double the 13 centres a year ago.
Cost of sales also doubled to $6 million during the quarter, up from $2.8 million a year ago, due to higher academic staff costs incurred from the increased number of academic staff after the acquisitions.
Operating administrative expenses surged by 43 per cent to $5.6 million, partly because of a $1.2 million increase in administrative costs at the newly acquired centres, such as for rental, utilities, depreciation, amortisation, repairs and maintenance, and other day-to-day running costs. Staff costs also increased by about $500,000 due to the higher number of staff to support the group's overseas expansion.
No dividend was declared for the quarter, as MindChamps said it intends to reinvest the profits generated for the current financial period. The company recently declared and paid a final cash dividend of 1.34 Singapore cents per share for the fiscal year ended Dec 31, 2018.
In June, MindChamps said it will buy a childcare centre in Buangkok from the franchisee for $3.2 million.
Before that, the company announced in April that it will buy eight more preschool centres in Sydney, Australia, for nearly A$40.8 million ($38 million). It also recently opened its first MindChamps preschool centre in Malaysia.
Mr David Chiem, founder, chief executive officer and executive chairman of MindChamps, said on Wednesday: "When expanding into new markets, we take great care to invest in the right resources and strategies which will set us up for strong medium and then exponential long-term growth."
For the six months to June 30, net profit shrank 54 per cent to $742,000 from $1.6 million a year ago, although revenue surged 65 per cent to $22.5 million.
EPS for the half year more than halved to 0.31 cent, from 0.66 cent a year ago.
MindChamp shares were trading at 59.5 cents, down 0.5 cent or 0.833 per cent, as at 1.23pm on Wednesday, after the results were released.
Singapore Press Holdings, which publishes The Straits Times, is a MindChamps shareholder.