More kids equal better earnings

More children through the door, better Government support and tighter cost control lie behind a jump in profits for childcare company Kidicorp.

The Tauranga-based company yesterday reported profit after tax of $1.12 million for the six months ended September, up from $28,000 for the same period last year. Revenue was up from $12.04 million to $13.89 million.

Chief executive Wayne Wright said the profit was driven by an occupancy rate of 85 per cent, up from 80 per cent in March - equivalent to more than 100 places - while overheads remained relatively constant.

"You get to a critical mass point and, from there on, you have a disproportionate percentage of profitability out of your income."

Wright said "one-off" costs during the past 18 months to develop infrastructure, buildings and personnel systems were also no longer impacting on financial results.

The third boost was a Government that "stepped up to the plate" in March with more funding for centres employing qualified teachers.

Kidicorp's share price jumped 33 per cent to 16c on news of the profit.

Although the second half is generally slower because of summer holidays, Wright says expansion plans will help maintain profit levels.

The company has agreed to buy 21 centres managed for the First Steps Childcare Trust, increasing the number of licensed places by nearly half to 3158 children at 68 centres nationwide.

Wright says another 500 spaces will be introduced during the next six months. But any further expansion will be achieved through organic growth rather than acquisition.

"We've been an acquisition company to build critical mass, now we're an internal growth company to produce results," he said.

The push for growth has until now seen shareholders take a back seat. "Now I'm trying to be a lot more diligent in making [sure] everybody gets their piece."