MindChamps PreSchool (CNE) H1 2023 earnings summary

Executive summary

• H1 2023 revenue rose 11% YoY to $35.2m; profit before tax increased to $8.0m from $1.8m and net profit to $7.3m from $1.6m.

• Performance included $2.94m of gain from corporate transactions, mainly tied to divestments of preschool subsidiaries to franchisees.

Financial highlights

• Gross profit increased 27% to $19.8m; cost of sales fell 5% to $15.4m, while administrative expenses declined 7% to $14.5m.

• Finance expense was steady at $1.1m; income tax expense rose to $0.76m from $0.15m.

• Basic and diluted EPS were 2.94 cents, versus 0.62 cents in H1 2022.

• Total comprehensive income was $6.5m, including a $0.7m currency translation loss, compared with a $0.1m comprehensive loss a year earlier.

Outlook and guidance

• 2023/24 outlook cites healthy recovery from reopened economies and working parents returning to workplaces; higher school fees from FY2023 are intended to cushion operating-cost inflation.

• Strategy remains a shift from company-owned centres toward franchise sales, with focus on Singapore and Australia and expansion into the US and Western Australia.

• Management expects positive operating cash flows for at least the next 12 months; results are seasonal, with preschool enrolments typically lowest early in the calendar year.