MindChamps reports cost increases post integration of new centres in H1 results
MindChamps, the Singapore based early education provider with a growing presence in Australia, has reported a fall in margins as increased staffing, administrative, finance and acquisition costs serve to mitigate revenue growth in revenues from fee increases and new centres.
The company reported H1 revenues of S$22.4 million, up from S$13.7 million in the same period last year, a rise of 65 per cent, as the benefits from the acquisition of eight Sydney located centres and fee increases flowed to the top line.
Half year gross profit rose to S$11.8 million, an increase of 41 per cent but gross margins fell from 60.8 per cent in the same period last year to 52.3 per cent this year.
The fall in gross margins has been attributed to an increase in Group centre related wage expenses as the new Australian based acquisitions, which are subjected to regulatory stipulations around ECT and educator ratio requirements unlike other geographic locales in the MindChamps portfolio, were integrated into the Group.
This increase in wage costs also impacted earnings before interest (EBIT) margins which saw similar falls although actual half year EBIT was marginally higher in the period at S$2.2 millon but net profit fell relative to last year as non operating expenses associated with debt servicing and acquisitions jumped in the period.
Net profit for the half year came in at S$0.8 million down from S$1.6 million last year.
Network grows substantially year on year as does Australian exposure
MindChamps now has a total of 82 centres up from 65 last year, an increase of 17 centres or 26 per cent.
27 of these centres are company owned and company operated, with eight in Singapore and 19 in Australia. This compares to seven in Singapore and six in Australia this time last year.
The increase in Australian centres has lifted the contribution to revenues to 46 per cent, up from 24 per cent last year.
The balance of centres are franchise owned and franchise operated. 43 of these centres are located in Singapore with 12 now located outside of Singapore in locations such as Dubai, Philippines, Vietnam, Myanmar and Malaysia.
The Group now serves a total of 5,004 students across it’s network of 82 centres.
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