China Cord Blood Corporation Reports Financial Results for the Third Quarter and First Nine Months of Fiscal 2012 3Q12 Revenue Up 4.8% YOY to RMB94.8 Million

3Q12 Net Income Attributable to Shareholders Up 52.5% to RMB39.5 Million

Conference Call to be Held February 28, 2012 at 8:00 am ET

HONG KONG, Feb. 27, 2012 /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 third quarter and first nine months of fiscal year 2012 ended December 31, 2011.

Third Quarter of Fiscal 2012 Highlights

  • Revenues for the third quarter of fiscal 2012 increased by 4.8% to RMB94.8 million ($15.1 million) from RMB90.5 million in the prior year period.
  • New subscriber sign-ups and accumulated subscriber base were 12,861 and 225,418, respectively.
  • Gross profit increased by 5.2% to RMB73.1 million ($11.6 million) from RMB69.5 million for the prior year period.
  • Operating profit decreased by 9.5% to RMB31.5 million ($5.0 million) from RMB34.8 million in the prior year period, as a result of enhanced sales initiatives.
  • Net income attributable to shareholders increased by 52.5% to RMB39.5 million ($6.3 million), from RMB25.9 million in the prior year period.  This includes a tax benefit of RMB7.8 million ($1.2 million) from the Company's Beijing subsidiary and an exchange rate gain of RMB3.5 million ($0.6 million).

First Nine Months of Fiscal 2012 Highlights

  • Revenues for the first nine months of fiscal 2012 increased by 14.6% to RMB280.7 million ($44.6 million) from RMB244.9 million in the prior year period.
  • New subscriber sign-ups reached 39,588.
  • Gross profit increased by 15.9% to RMB217.4 million ($34.5 million) from RMB187.5 million in the prior year period.
  • Operating profit increased by 14.4% to RMB100.0 million ($15.9 million) from RMB87.4 million in the prior year period.
  • Net income attributable to shareholders increased by 57.0% to RMB102.7 million ($16.3 million) from RMB65.4 million in the prior year period.

"We are pleased with the solid performance in this quarter as new subscriber numbers in Beijing and Guangdong remain on track towards our full year target under the newly adopted strategy," stated Ms. Zheng, Chairperson and Chief Executive Officer of CCBC. "As we continue to recruit new subscribers under the more favorable payment option, we are essentially strengthening the Company's cash generating capabilities. The improved cash position will enable us to apply surplus cash to possibly expand our operation base and increase shareholder returns through share buy-back purchases. We have also grown our operating cash flow significantly in the first nine months, which already exceeded the operating cashflow for the full year of fiscal 2011 by a significant margin. Even with our Zhejiang operation at its start up phase, we are proud to note that both our Beijing and Guangdong operations have reported tremendous financial and operational successes."

Summary - The Third Quarter and First Nine Months Ended December 31, 2010 and 2011

 

 

 

 

 

Three Months Ended

Nine Months Ended

 

December 31,

December 31,

 

2010

2011

2010

2011

(in thousands)

RMB

RMB

USD

RMB

RMB

USD

Revenues

90,483

94,821

15,066

244,861

280,712

44,601

Gross Profit

69,514

73,118

11,618

187,486

217,384

34,539

Operating Income

34,841

31,524

5,010

87,390

100,001

15,889

Net Income Attributable to Shareholders

25,875

39,470

6,273

65,444

102,741

16,323

EPS Attributable to Ordinary Shares 
 - Basic and Diluted (RMB/USD)

0.36

0.54

0.09

0.96

1.39

0.22

 

 

 

 

 

 

 

Revenue Breakdown (%)

 

 

 

 

 

 

Processing Fee

79.2%

72.9%

 

79.2%

74.0%

 

Storage Fee

20.8%

27.1%

 

20.8%

26.0%

 

 

 

 

 

 

 

 

New Subscribers (persons)

14,765

12,861

 

40,877

39,588

 

Total Accumulated Subscribers (persons)

170,189

225,418

 

170,189

225,418

 

 

Summary - Selected Cash Flow Statement Items

 

 

 

 

 

 

 

 

Nine Months Ended

December 31, 2011

(in thousands)

 

 

RMB

USD

Net cash provided by operating activities

 

 

251,641

39,982

Net cash used in investing activities

 

 

(98,512)

(15,652)

Net cash used in financing activities

 

 

(45,369)

(7,208)

Third Quarter Fiscal 2012 Financial Results

REVENUES.  Revenues increased by 4.8% to RMB94.8 million ($15.1 million) in the third quarter of fiscal 2012 from RMB90.5 million for the prior year period, driven by the increase in recurring storage revenue as the Company's accumulated subscriber base continued to expand.

Revenues generated from storage fees increased to RMB25.7 million ($4.1 million), up 36.7% from RMB18.8 million in the prior year period. Revenue from storage fees accounted for 27.1% of total revenues compared to 20.8% in the prior year period. This shift in revenue mix was driven by persistent growth in accumulated subscribers, leading to a broadening base, which increased 32.5% year-over-year to 225,418, as a result of continued strong demand from the Beijing and Guangdong markets.

Revenues generated from processing fees were RMB69.1 million ($11.0 million), compared to RMB71.7 million in the prior year period, as new subscriber sign-ups decreased 12.9% year-over-year. This is consistent with the Company's strategy to encourage uptake for the new payment structure, and the reduction in volume was partially offset by the hike in processing fee that took effect in April 2011.

GROSS PROFIT.  Gross profit for the third quarter of fiscal 2012 increased by 5.2% to RMB73.1 million ($11.6 million) from RMB69.5 million in the prior year period. Gross margin steadily edged up to 77.1% from 76.8% in the prior year period.

OPERATING INCOME.  Operating income for the third quarter decreased 9.5% to RMB31.5 million ($5.0 million) from RMB34.8 million in the prior year period, largely due to the Company's increased investments in sales and marketing activities to ramp up market demand and build upon its ongoing sales force expansion.  Operating margin was 33.2%, compared to 38.5% for the prior year period. Depreciation and amortization expenses for the third quarter were RMB7.4 million ($1.2 million)

  • Research and Development Expenses.  Research and development expenses remained stable at RMB2.0 million ($0.3 million) compared to RMB1.9 million in the prior year period.
  • Sales and Marketing Expenses.  Sales and marketing expenses increased by 35.1% to RMB16.9 million ($2.7 million) from RMB12.5 million in the prior year period as the Company increased investments in promotional initiatives and expanded its sales forces to better penetrate its growing hospital network. Sales and marketing expenses accounted for 17.9% of revenues in the third quarter of fiscal 2012.
  • General and Administrative Expenses.  General and administrative expenses remained roughly in line with previous quarters at RMB22.7 million ($3.6 million), compared to RMB20.2 million in the prior year period. General and administrative expenses as a percentage of revenues represented approximately 24.0%.

NET INCOME ATTRIBUTABLE TO SHAREHOLDERS.  Net income attributable to shareholders for the third quarter of fiscal 2012 increased by 52.5% to RMB39.5 million ($6.3 million) from RMB25.9 million in the prior year period, mainly due to the discrete tax benefit of RMB7.8 million ($1.2 million) from the preferential tax treatment for our Beijing subsidiary, and a RMB3.5 million ($0.6 million) exchange rate gain during the quarter. Under the preferential tax treatment, the Beijing subsidiary is qualified for a reduced tax rate of 15% through December 31, 2013, compared to 25% in previous quarters. Net margin for the third quarter of fiscal 2012 rose to 41.6% from 28.6% in the prior year period. Basic and diluted earnings per share for the third quarter of fiscal 2012 were RMB0.54 ($0.09).

LIQUIDITY.  As of December 31, 2011, the Company had cash and cash equivalents of RMB716.7 million ($113.9 million) compared to RMB611.4 million as of March 31, 2011. The Company had bank loan borrowings of RMB45.0 million ($7.2 million) as of December 31, 2011.

First Nine Months Fiscal 2012 Financial Results

For first nine months of fiscal 2012, total revenues increased 14.6% to RMB280.7 million ($44.6 million) from RMB244.9 million in the prior year period. The increase was largely attributable to the processing fee increase effective from April 2011 and the expansion of the Company's accumulated subscriber base to 225,418 subscribers. During the first nine months, processing fees and storage fees grew by 7.1% and 43.6%, respectively. Gross profit for the first nine months of fiscal 2012 increased 15.9% to RMB217.4 million ($34.5 million) from RMB187.5 million in the prior year period. Operating income increased by 14.4% to RMB100.0 million ($15.9 million). Net income attributable to shareholders rose to RMB102.7 million ($16.3 million), reflecting contributions from the discrete tax benefits from the Beijing and Guangdong subsidiaries. Basic and diluted earnings per share attributable to ordinary shares were both RMB1.39 ($0.22).

Ms. Zheng further commented, "Under the 'One License Per Region' policy, CCBC continues to be the largest and strongest player in the industry and strives to deepen market penetration in the Beijing and Guangdong markets, which together cover an addressable market of 1.2 million newborns per annum. We are actively pursuing the commercialization process within the affluent Zhejiang market, which will enable us to add an additional 500,000 newborns per annum to our addressable market. Our enhanced strength in cash flow generating capability will not only enable us to reward our shareholders in the long run, but also facilitate our plans to further expand in the Asia Pacific region."

Conference Call

The Company will host a conference call at 8:00 a.m. ET on Tuesday, February 28, 2012 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: 44773603.

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 December 31, 2011 were made at the noon buying rate of RMB6.2939 to $1.00 on December 31, 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.
Mr. Rob Koepp
Tel: (+86) 10-6583-7516

Ms. Wen Lei Zheng:
Tel: (+86) 10-6583-7510
U.S. Tel: (646) 405-5185

EXHIBIT 1

 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31 and December 31, 2011

 

 

March 31,

 

December 31,

 

2011

 

2011

 

RMB

 

RMB

 

US$

 

(in thousands except share data)

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

611,387

 

716,724

 

113,876

Accounts receivable, less allowance for doubtful accounts

 

 

 

 

 

  (March 31, 2011: RMB11,850; December 31, 2011: RMB13,873)

77,402

 

79,898

 

12,695

Inventories

6,729

 

9,115

 

1,448

Prepaid expenses and other receivables

9,982

 

12,110

 

1,924

Trading securities

-

 

335

 

53

Deferred tax assets

5,373

 

4,927

 

783

Total current assets

710,873

 

823,109

 

130,779

Property, plant and equipment, net

250,348

 

245,011

 

38,928

Non-current prepayments

5,752

 

6,179

 

982

Non-current accounts receivable, less allowance for doubtful accounts

 

 

 

 

 

  (March 31, 2011: RMB28,106; December 31, 2011: RMB36,154)

240,952

 

254,421

 

40,424

Inventories

31,600

 

33,142

 

5,266

Intangible assets, net

134,412

 

130,947

 

20,805

Available-for-sale equity securities

52,733

 

10,721

 

1,703

Other investments

134,363

 

163,971

 

26,052

Deferred tax assets

2,565

 

4,429

 

704

Total assets

1,563,598

 

1,671,930

 

265,643

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Current liabilities

 

 

 

 

 

Bank loan

45,000

 

45,000

 

7,150

Accounts payable

5,046

 

9,893

 

1,572

Accrued expenses and other payables

106,731

 

27,365

 

4,348

Deferred revenue

82,319

 

91,325

 

14,510

Amounts due to related parties

360

 

-

 

-

Income tax payable

11,156

 

4,917

 

781

Total current liabilities

250,612

 

178,500

 

28,361

Deferred revenue

162,668

 

268,499

 

42,660

Other non-current liabilities

30,036

 

52,329

 

8,314

Deferred tax liabilities

26,890

 

25,115

 

3,990

Total liabilities

470,206

 

524,443

 

83,325

 

 

 

 

 

 

EQUITY

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

Ordinary shares

 

 

 

 

 

- US$0.0001 par value, 250,000,000 shares authorized, 75,406,875 shares

 

 

 

 

 

and 73,196,547 shares issued and outstanding as of March 31, 2011 and

 

 

 

 

 

December 31, 2011, respectively

52

 

50

 

8

Additional paid-in capital

910,316

 

866,581

 

137,686

Accumulated other comprehensive loss

(18,580)

 

(31,344)

 

(4,980)

Retained earnings

178,993

 

281,734

 

44,763

Total shareholders' equity

1,070,781

 

1,117,021

 

177,477

Noncontrolling interests

22,611

 

30,466

 

4,841

Total equity

1,093,392

 

1,147,487

 

182,318

Total liabilities and equity

1,563,598

 

1,671,930

 

265,643

 

 

 

 

 

 

EXHIBIT 2

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months and Nine Months Ended December, 2010 and 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31,

 

Nine months ended December 31,

 

2010

 

2011

 

2010

 

2011

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

(in thousands except per share)

Revenues

90,483

 

94,821

 

15,066

 

244,861

 

280,712

 

44,601

Direct costs

(20,969)

 

(21,703)

 

(3,448)

 

(57,375)

 

(63,328)

 

(10,062)

Gross profit

69,514

 

73,118

 

11,618

 

187,486

 

217,384

 

34,539

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Research and development

(1,906)

 

(1,953)

 

(310)

 

(5,243)

 

(5,662)

 

(900)

Sales and marketing

(12,536)

 

(16,930)

 

(2,690)

 

(34,310)

 

(45,111)

 

(7,167)

General and administrative

(20,231)

 

(22,711)

 

(3,608)

 

(60,543)

 

(66,610)

 

(10,583)

Total operating expenses

(34,673)

 

(41,594)

 

(6,608)

 

(100,096)

 

(117,383)

 

(18,650)

Operating income

34,841

 

31,524

 

5,010

 

87,390

 

100,001

 

15,889

Other income, net

 

 

 

 

 

 

 

 

 

 

 

Interest income

2,333

 

3,570

 

567

 

6,371

 

10,021

 

1,592

Interest expense

(671)

 

(741)

 

(118)

 

(1,949)

 

(2,391)

 

(380)

Exchange (loss)/ gain

(43)

 

3,484

 

554

 

547

 

(1,376)

 

(219)

Dividend income

-

 

-

 

-

 

-

 

7,217

 

1,147

Others

219

 

(411)

 

(65)

 

1,109

 

(86)

 

(14)

Total other income, net

1,838

 

5,902

 

938

 

6,078

 

13,385

 

2,126

Income before income tax

36,679

 

37,426

 

5,948

 

93,468

 

113,386

 

18,015

Income tax (expense)/ credit

(8,840)

 

4,273

 

679

 

(23,062)

 

(3,037)

 

(483)

Net income

27,839

 

41,699

 

6,627

 

70,406

 

110,349

 

17,532

Income attributable to noncontrolling

 

 

 

 

 

 

 

 

 

 

 

  interests

(1,964)

 

(2,229)

 

(354)

 

(4,962)

 

(7,608)

 

(1,209)

Net income attributable to

 

 

 

 

 

 

 

 

 

 

 

 shareholders

25,875

 

39,470

 

6,273

 

65,444

 

102,741

 

16,323

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Attributable to ordinary shares

 

 

 

 

 

 

 

 

 

 

 

-Basic

0.36

 

0.54

 

0.09

 

0.96

 

1.39

 

0.22

-Diluted

0.36

 

0.54

 

0.09

 

0.96

 

1.39

 

0.22

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE China Cord Blood Corporation



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