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Kidicorp Full Year Result

Kidicorp Full Year Result May 30 2007

The Directors of Kidicorp Limited (NZX:KID) report earnings slightly ahead of that advised to the market in February this year.

The audited full year EBITDA was $3.7 million compared with $3.6 million reported to the NZX in February and compares with $4.0 million last year.

Financial results for the year ended March 31 2007
Total Revenue $44.8 m
EBITDA $3.7m
Operating profit $665,000
After tax profit $47,000

Tax expense for the year amounted to $618,000. Amortisation of childcare licences for the year totalled almost $1 million and is not available as a setoff against assessable profits.

Chairman, Richard Waddel says, "We are disappointed with the current year's profit. While we did better than the February projections, we had originally anticipated a much better result. The major contributing factor to this 7.5 % decrease on last year was rising employment costs and a serious shortage of qualified teachers as we and the sector strived to meet the government's then deadline for centres to achieve not less than 50 per cent of registered teachers in all centres. This deadline was extended at the last minute by the Minister.

In our sector with employment costs representing such a significant part of our total revenues even a small movement in wage costs can have a large impact on profitability, " added Mr Waddel.

"The substantial increase in employment costs was not able to be recovered. As many centres had not had a fee increase in over a year, management have since implemented an across the board fees increases and put in place review dates to ensure that fees keep track with employment costs for the future. We are also confident that systems have been put in place to address the current staffing situation," Mr Waddel ended.

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Business Performance

Chief Executive, Wayne Wright says, "I am confident that we will correct this decline in profitability as a result of the fee increases, increased demand for childcare and also the expected increase in occupancy with the start of the Government's 20 free hour initiative in July".

During the year the company increased the number of licensed spaces by 11% to 3,750 spaces.

Kidicorp now owns and operates 78 early childhood centres through New Zealand under 35 different local brand names with more than 5,500 children enrolled.

The company employs over 1,500 people, including over 1,000 teachers and with the professional services provided by the company, in addition to educating children, we are also one of the largest providers of new teachers into the early childhood pool.

Professional Development

Kidicorp has just completed 7 regional conferences throughout New Zealand for over 550 staff. Over the past year at least another 350 staff have undertaken individual Professional Development to meet their own personal and professional goals. Kidicorp is committed to supporting the ongoing learning of teachers to ensure quality outcomes for the children who attend their centres.

Highlights from 2007

One of the big developments in the past year was the company's purchase of six Montessori pre-schools in Dunedin, Wellington and Auckland. As a result of the success of these centres the company has immediate plans to expand the Montessori concept into a further four centres.

In March the Prime Minister, the Rt Honourable Helen Clark opened the first Kidicorp Children's Campus in Manukau. This high profile site houses the Kidicorp regional office and has two facilities for two licenses of 50 pre-schoolers as well as space for 40 in the after school programme. The Centre also boasts a full size gymnasium.

Identifying an opportunity to provide additional services to families and to work with the Government and its 'Choices for Living, Caring and Working' initiative, Kidicorp launched a School's Out programme in major centres. School's Out offers primary and intermediate age children before school and after school care plus homework support as well as school holiday programmes.

Adds Wayne Wright, "We discovered that once children left us and went to school there were very few reliable and convenient places for their parents to use for before or after school care. Parents are delighted with the addition since it provides continuity for their children on leaving a Kidicorp centre and parents know and trust us.

In the first quarter of this financial year a further 300 spaces already under development or contracted for will have been added to the total licenced number with further additions of centres in most regions already underway. A major growth area during the upcoming year will be in the Bay of Plenty.

Since March, Kidicorp has acquired centres in the Bay of Plenty townships of Waihi and Katikati and the purchase of a centre in Whakatane is due for settlement in July. New centres currently being built in Papamoa and Rotorua are due for completion during the year. The company has also contracted to acquire a new site in central Tauranga. These additions will add a further 400 pre-school spaces and 100 School's Out places in the Bay area during the current year.

"It's been a tough year for the sector as everyone struggled to find qualified teachers. This will continue to be a stretch as the next deadline looms however with every year we help in the development of another great team of teachers who do a marvellous job helping children reach their learning potential," ended Mr Wright.

ENDS

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