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What Investors Need to Know About Mindchamps Preschool Ltd’s Q1 2018 Results

Listed in late 2017, Mindchamps Preschool Ltd (SGX:CNE) operates premium preschool centres in Singapore. Its classes revolve around neuroscientist Professor Emeritus Allan Snyder’s research on the three minds model of education: the champion mind, the creative mind, and the learning mind.

Recently, the group announced its financial results for the first quarter of 2018. Here are some key takeaways:

1. Revenue for the reporting period surged 36% to S$6 million from S$4.4 million. Gross profit, likewise, increased by 31% to S$3.4 million.

2. The revenue growth was largely due to an increase in the number of enrolled students following the acquisition of four preschool centres in Sydney, Australia, in November 2017.

3. However, despite the strong top line numbers, operating profit fell 18% to S$0.65 million from S$0.8 million due to higher administrative expenses, which rose by a whopping 62%.

4. The group reported an overall net profit of S$0.32 million, down 57% from the corresponding period last year. Earnings per share, consequently, fell 63% to 0.14 Singapore cents per share.

5. The group ended the quarter with 51 franchisee-owned and franchisee-operated (FOFO) centres in operation, with another 114 FOFO centres yet to be established. In total, franchise segment generated S$1.35 million in revenue, marginally up from the corresponding period last year. Revenue generated from company-owned centres increased 50% to S$4.66 million, due to the acquisition of the four centres in Australia.

6. The group maintained a robust balance sheet with S$35.8 million in cash and just S$6.4 million in debt.

7. At the end of the quarter, it had a net asset value of S$56.3 million, and net asset value per share was 23.32 Singapore cents per share.

8. In line with its lower profits, the group’s cash generated from operations decreased to just S$51,000 from S$1.1 million.

9. In April, MindChamps entered into a joint venture agreement to start the “MindChamps Preschool Global Fund” to establish and acquire preschools globally under the “MindChamps” brand name. Together with the MindChamps “PreSchool China Fund”, the group hopes to expand its global footprint.

10. At the time of writing, shares of MindChamps exchanged hands at S$0.72 per piece.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Jeremy Chia doesn’t own shares in any companies mentioned.