China Cord Blood Corporation Reports Financial Results for the Second Quarter and First Half of Fiscal 2012 2Q12 Revenue Up 19.1% YOY to RMB98.4 Million

2Q12 Net Income Attributable to Shareholders was RMB23.2 Million

Conference Call to be Held November 29, 2011 at 8:00 am ET

HONG KONG, Nov. 28, 2011 /PRNewswire-Asia-FirstCall/ -- China Cord Blood Corporation (NYSE: CO) ("CCBC" or the "Company"), China's leading provider of cord blood collection, laboratory testing, hematopoietic stem cell processing, and stem cell storage services, today announced its preliminary unaudited financial results for the second quarter and first half of fiscal year 2012 ended September 30, 2011.

Second Quarter of Fiscal 2012 Highlights

  • Revenue for the second quarter of fiscal 2012 increased by 19.1% to RMB98.4 million ($15.4 million) from RMB82.7 million in the prior year period.
  • New subscriber sign-ups and the accumulated subscriber base rose to 13,899 and 212,557, respectively.
  • Gross profit increased by 20.7% to RMB76.7 million ($12.0 million) from RMB63.5 million in the prior year period.
  • Gross margin increased to 77.9% versus 76.8% in the prior year period.
  • Operating income increased by 29.2% to RMB37.7 million ($5.9 million) from RMB29.2 million in the prior year period.
  • Exchange loss of RMB5.0 million ($0.8 million).
  • Net income attributable to shareholders was RMB23.2 million ($3.6 million), compared to RMB22.0 million in the prior year period.

First Half of Fiscal 2012 Highlights

  • Revenue for the first half of fiscal 2012 increased by 20.4% to RMB185.9 million ($29.1 million) from RMB154.4 million in the prior year period.
  • New subscriber sign-ups reached 26,727.
  • Gross profit increased by 22.3% to RMB144.3 million ($22.6 million) from RMB118.0 million in the prior year period.
  • Gross margin was 77.6% compared to 76.4% in the prior year period.
  • Operating income increased by 30.3% to RMB68.5 million ($10.7 million) from RMB52.5 million in the prior year period.
  • Net income attributable to shareholders was RMB63.3 million ($9.9 million) compared to RMB39.6 million in the prior year period.

"Our solid performance in the second quarter demonstrates steady subscriber demand from the Beijing and Guangdong markets, driven by our extensive hospital networks and targeted sales and marketing platforms," stated Ms. Zheng, Chairperson and Chief Executive Officer of CCBC. "As we continue to expand and strengthen our subscriber base, we are pleased to see our accumulated subscriber number rise above the 200,000 mark this quarter to attain yet another key corporate milestone. Such achievement speaks to the effectiveness of our marketing campaigns and our management team's execution capabilities. More importantly, we are encouraged by the positive market response and the robust operating cash flow following our processing fee increase introduced in April 2011. While fiscal year 2012 continues to be a transitional year in light of our new strategy and operational focus, we are pleased to have already added more than 26,000 new subscribers during the first six months of FY2012. The team and I are confident that CCBC will achieve the target for the current fiscal year."

Summary - The Second Quarter and First Half Ended September 30, 2010 and 2011


Three Months Ended


Six Months Ended


September 30,


September 30,


2010


2011


2010


2011

 (in thousands)

RMB


RMB


USD


RMB


RMB


USD

Revenues

82,682


98,433


15,433


154,378


185,891


29,145

Gross Profit

63,528


76,676


12,022


117,972


144,266


22,619

Operating Income

29,194


37,725


5,915


52,549


68,477


10,735

Net Income Attributable to Shareholders  

21,982


23,249


3,644


39,569


63,271


9,919

EPS Attributable to Ordinary Shares












– Basic (RMB/USD)

0.33


0.31


0.05


0.59


0.85


0.13













Revenue Breakdown (%)












Processing Fee

79.4%


74.9%




79.3%


74.5%



Storage Fee

20.6%


25.1%




20.7%


25.5%















New Subscribers (persons)

13,932


13,899




26,112


26,727



Total Accumulated Subscribers (persons)

155,424


212,557




155,424


212,557





Second Quarter Fiscal 2012 Financial Results

REVENUES. Revenues increased by 19.1% to RMB98.4 million ($15.4 million) in the second quarter of fiscal 2012 from RMB82.7 million in the prior year period. The strong revenue growth was driven by consistent high consumer demand and an expanding subscriber base, coupled with a higher processing fee.

Revenues generated from processing fees increased to RMB73.7 million ($11.6 million) from RMB65.6 million representing a 12.3% increase from the prior year period, attributable to our upward price adjustment in processing fee.

Revenues generated from storage fees increased to RMB24.7 million ($3.9 million) from RMB17.0 million in the prior year period. Benefiting from a recurring revenue structure, storage fee revenue accounted for 25.1% of the Company's total revenues as compared to 20.6% from the prior year period. The accumulated subscriber base rose 36.8% year-over-year to 212,557, driven by consistent strong demand from the Beijing and Guangdong markets.

GROSS PROFIT. Gross profit for the second quarter increased by 20.7% to RMB76.7 million ($12.0 million) from RMB63.5 million in the prior year period. Depreciation and amortization expenses for the second quarter were RMB7.1 million ($1.1 million). Gross margin steadily edged up to 77.9% from 76.8% in the prior year period.

OPERATING INCOME. Operating income for the second quarter increased 29.2% to RMB37.7 million ($5.9 million) from RMB29.2 million in the prior year period, as a result of economies of scale and successful cost control measures. Operating margin increased to 38.3% from 35.3% in the prior year period.

Research and Development Expenses. Research and development expenses were RMB1.9 million ($0.3 million) compared to RMB1.8 million in the prior year period.

Sales and Marketing Expenses. Sales and marketing expenses increased by 33.3% to RMB15.6 million ($2.4 million) from RMB11.7 million in the prior year period as the Company strengthened its sales force for direct marketing activities as well as other promotional initiatives in the Beijing Municipality and Guangdong Province to further drive demand and deepen market penetration. Sales and marketing expenses accounted for 15.8% of revenues.

General and Administrative Expenses. General and administrative expenses were RMB21.4 million ($3.4 million), compared to RMB20.9 million in the prior year period. General and administrative expenses as a percentage of revenues decreased to 21.8% reflecting effective cost control measures.

OTHER INCOME AND EXPENSES. For the second quarter of fiscal 2012, other net expenses amounted to RMB2.7 million ($0.4 million) as compared to RMB2.5 million net income in the prior year period. This primarily reflects a foreign exchange loss of RMB5.0 million ($0.8 million) during the quarter ended September 2011.

NET INCOME ATTRIBUTABLE TO SHAREHOLDERS. Net income attributable to shareholders for the second quarter of fiscal 2012 was RMB23.2 million ($3.6 million) compared to RMB22.0 million in the prior year period. Net margin for the second quarter of fiscal 2012 was 23.6%. Basic and diluted earnings per share for the second quarter of fiscal 2012 were RMB0.31 ($0.05).

LIQUIDITY. As of September 30, 2011, the Company had cash and cash equivalents of RMB635.7 million ($99.7 million) compared to RMB611.4 million as of March 31, 2011. The Company had bank loan borrowings of RMB45.0 million ($7.1 million) as of September 30, 2011.

First Half Fiscal 2012 Financial Results

For first half of fiscal 2012, total revenue increased 20.4% to RMB185.9 million ($29.1 million) from RMB154.4 million for the prior year period. The increase was largely attributable to the increase of the Company's processing fee to RMB5,800 starting in April of this year, and expansion of the accumulated subscriber base to 212,557 subscribers. Processing fees and storage fees grew 13.3% and 47.7%, respectively. Gross profit for the first half of fiscal 2012 increased 22.3% to RMB144.3 million ($22.6 million) from RMB118.0 million in the prior year period. Operating income increased 30.3% to RMB68.5 million ($10.7 million). Net income attributable to shareholders was RMB63.3 million ($9.9 million). Basic and diluted earnings per share attributable to ordinary shares were RMB0.85 ($0.13).

Ms. Zheng commented, "We believe our accomplishments are truly remarkable. Over the last five years, we have grown our accumulated subscriber base from 23,000 to more than 200,000 through development of the Beijing and Guangdong markets. These two markets together cover an addressable market size of 1.2 million newborns per annum. When we commence operation in Zhejiang, we will raise our addressable market size by another 500,000 newborns per annum to a total of 1.7 million newborns per annum. Through compelling growth drivers including the "One-License-per-Region" policy, the Single Child Policy, the fast-growing economy in China and our optimal location within China's most economically affluent markets, we remain confident in our future growth momentum and the competitive strengths that will drive further growth. As a demonstration of our commitment to enhancing shareholder value, we also continue to carry out our share repurchase program. Since April 1, 2011, we have bought back more than $6 million of shares from the open market. We believe this initiative will increase shareholder value and, more importantly, enable us to reward our long-term shareholders. Going forward, we will continue to actively improve our cost control measures, deepen market penetration in new and developing markets, expand profit margins, enhance marketing and promotional outreach programs, and enlarge our subscriber base, driving strong growth momentum and maximizing returns for our shareholders."

Conference Call

The Company will host a conference call at 8:00 a.m. ET on Tuesday, November 29, 2011 to discuss its financial performance and give a brief overview of the Company's recent developments, followed by a question and answer session. Interested parties may access the audio webcast through the Company's IR website at http://ir.chinacordbloodcorp.com. A replay of the webcast will be accessible two hours after the presentation and available for three weeks at the same URL link above. Listeners may also access the call by dialing 1-718-354-1231 or 1-866-519-4004 for US callers or +852-2475-0994 for Hong Kong callers, access code: 20456843.

About China Cord Blood Corporation

China Cord Blood Corporation is the first and largest umbilical cord blood banking operator in China in terms of geographical coverage and is the only cord blood banking operator with multiple licenses. Under current PRC government regulations, only one licensed cord blood banking operator is permitted to operate in each licensed region and only seven licenses have been authorized as of today. China Cord Blood Corporation provides cord blood collection, laboratory testing, hematopoietic stem cell processing and stem cell storage services. For more information, please visit our website at http://www.chinacordbloodcorp.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the Company's future financial performance. The Company has attempted to identify forward-looking statements by terminology including "anticipates", "believes", "expects", "can", "continue", "could", "estimates", "intends", "may", "plans", "potential", "predict", "should" or "will" or the negative of these terms or other comparable terminology. These statements are only predictions, uncertainties and other factors may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. The information in this press release is not intended to project future performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company does not guarantee future results, levels of activity, performance or achievements. The Company expectations are as of the date this press release is issued, and the Company does not intend to update any of the forward-looking statements after the date this press release is issued to confirm these statements to actual results, unless required by law.

The forward-looking statements included in this press release are subject to risks, uncertainties and assumptions about the Company's businesses and business environments. These statements reflect the Company's current views with respect to future events and are not a guarantee of future performance. Actual results of the Company's operations may differ materially from information contained in the forward-looking statements as a result of risk factors some of which include, among other things: continued compliance with government regulations regarding cord blood banking in the People's Republic of China, or PRC; changing legislation or regulatory environments in the PRC; the acceptance by subscribers of the Company's different pricing and payment options and reaction to the introduction of the Company's premium-quality pricing strategy; demographic trends in the regions of the PRC in which the Company is the exclusive licensed cord blood banking operator; labor and personnel relations; credit risks affecting the Company's revenue and profitability; changes in the healthcare industry, including those which may result in the use of stem cell therapies becoming redundant or obsolete; the Company's ability to effectively manage its growth, including implementing effective controls and procedures and attracting and retaining key management and personnel; changing interpretations of generally accepted accounting principles; the availability of capital resources, including in the form of capital markets financing opportunities, in light of industry developments affecting issuers that have pursued a "reverse merger" with an operating company based in China, as well as general economic conditions; and other relevant risks detailed in the Company's filings with the Securities and Exchange Commission.

This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars as of and for the periods ending September 30, 2011 were made at the noon buying rate of RMB6.3780 to $1.00 on September 30, 2011 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. China Cord Blood Corporation makes no representation that the Renminbi or U.S. dollar amounts referred to in this press release could have been or could be converted into U.S. dollars or Renminbi, at any particular rate or at all.

For more information, please contact:

China Cord Blood Corporation
Ms. Joeling Law
Tel: (+852) 3605-8180
Email: ir@chinacordbloodcorp.com

ICR, Inc.
In New York: Ashley Ammon De Simone: 1-646-277-1227
In Beijing: Wen Lei Zheng: +86-10-6583-7510

EXHIBIT 1


CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31 and September 30, 2011


March 31,


September 30,


2011


2011


RMB


RMB


US$


(in thousands except share data)







ASSETS






Current assets






Cash and cash equivalents

611,387


635,698


99,670

Accounts receivable, less allowance for doubtful accounts






(March 31, 2011: RMB11,850; September 30, 2011: RMB12,097)

77,402


81,144


12,722

Inventories

6,729


10,879


1,706

Prepaid expenses and other receivables

9,982


12,274


1,925

Trading securities

-


332


52

Amounts due from related parties

-


360


56

Income tax recoverable

-


3,979


624

Deferred tax assets

5,373


4,786


750

Total current assets

710,873


749,452


117,505

Property, plant and equipment, net

250,348


243,316


38,149

Non-current prepayments

5,752


8,649


1,356

Non-current accounts receivable, less allowance for doubtful accounts






(March 31, 2011: RMB28,106; September 30, 2011: RMB31,903)

240,952


253,689


39,776

Inventories

31,600


32,808


5,144

Intangible assets, net

134,412


132,102


20,712

Available-for-sale equity securities

52,733


10,681


1,675

Other investments

134,363


164,047


25,721

Deferred tax assets

2,565


3,438


539

Total assets

1,563,598


1,598,182


250,577







LIABILITIES






Current liabilities






Bank loan

45,000


45,000


7,056

Accounts payable

5,046


8,646


1,356

Accrued expenses and other payables

106,731


31,722


4,973

Deferred revenue

82,319


87,152


13,664

Amounts due to related parties

360


-


-

Income tax payable

11,156


8,719


1,367

Total current liabilities

250,612


181,239


28,416

Deferred revenue

162,668


233,872


36,669

Other non-current liabilities

30,036


44,337


6,952

Deferred tax liabilities

26,890


25,672


4,025

Total liabilities

470,206


485,120


76,062







EQUITY






Shareholders' equity






Ordinary shares






- US$0.0001 par value, 250,000,000 shares authorized, 75,406,875 shares
   and 73,638,115 shares issued and outstanding as of March 31, 2011 and
   September 30, 2011, respectively

52


50


8

Additional paid-in capital

910,316


873,535


136,961

Accumulated other comprehensive loss

(18,580)


(31,003)


(4,861)

Retained earnings

178,993


242,264


37,983

Total shareholders' equity

1,070,781


1,084,846


170,091

Noncontrolling interests

22,611


28,216


4,424

Total equity

1,093,392


1,113,062


174,515

Total liabilities and equity

1,563,598


1,598,182


250,577










EXHIBIT 2


CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months and Six Months Ended September 30, 2010 and 2011














Three months ended September 30,


Six months ended September 30,


2010


2011


2010


2011


RMB


RMB


US$


RMB


RMB


US$


(in thousands except per share)

Revenues

82,682


98,433


15,433


154,378


185,891


29,145

Direct costs

(19,154)


(21,757)


(3,411)


(36,406)


(41,625)


(6,526)

Gross profit

63,528


76,676


12,022


117,972


144,266


22,619

Operating expenses












Research and development

(1,794)


(1,932)


(303)


(3,337)


(3,709)


(582)

Sales and marketing

(11,684)


(15,575)


(2,442)


(21,774)


(28,181)


(4,418)

General and administrative

(20,856)


(21,444)


(3,362)


(40,312)


(43,899)


(6,884)

Total operating expenses

(34,334)


(38,951)


(6,107)


(65,423)


(75,789)


(11,884)

Operating income

29,194


37,725


5,915


52,549


68,477


10,735

Other income/(expense), net












Interest income

1,587


3,312


519


4,038


6,451


1,011

Interest expense

(672)


(1,190)


(187)


(1,278)


(1,650)


(259)

Exchange gain/(loss)

827


(4,956)


(777)


590


(4,860)


(762)

Dividend income

-


-


-


-


7,217


1,132

Others

774


111


17


890


325


51

Total other income/(expense), net

2,516


(2,723)


(428)


4,240


7,483


1,173

Income before income tax

31,710


35,002


5,487


56,789


75,960


11,908

Income tax expense

(8,112)


(9,093)


(1,426)


(14,222)


(7,310)


(1,146)

Net income

23,598


25,909


4,061


42,567


68,650


10,762

Income attributable to noncontrolling












interests

(1,616)


(2,660)


(417)


(2,998)


(5,379)


(843)

Net income attributable to












shareholders

21,982


23,249


3,644


39,569


63,271


9,919













Net income per share:












Attributable to ordinary shares












-Basic

0.33


0.31


0.05


0.59


0.85


0.13

-Diluted

0.33


0.31


0.05


0.58


0.85


0.13
















SOURCE China Cord Blood Corporation



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