China Cord Blood Corporation Reports Financial Results for the Fourth Quarter and Full Year Fiscal 2010
Annual Revenue up 34.4% to RMB 261.5 Million
Fiscal 2010 New Subscribers grew 30.5%
Conference Call to be Held at 8 am ET June 22, 2010
HONG KONG, June 22 /PRNewswire-Asia-FirstCall/ -- China Cord Blood Corporation ("CCBC" or "the Company") (NYSE: CO), China's leading provider of cord blood collection, laboratory testing, hematopoietic stem cell processing, and stem cell storage services, today announced preliminary unaudited financial results for the fourth quarter and full year fiscal 2010.
Highlights
-- Net revenue in the fourth quarter of fiscal 2010 increased 24.6%
year-over-year to RMB70.8 million ($10.4 million) from RMB56.8 million
in the fourth quarter of fiscal 2009.
-- Fourth quarter fiscal 2010 new subscriber sign-ups increased 16.7%
year-over-year to 11,729 subscribers from 10,047 in the fourth quarter
of fiscal 2009.
-- Gross profit for the fourth quarter increased 28.4% to RMB55.7 million
($8.2 million) and gross profit margin increased to 78.7% from 76.4%
last year.
-- R&D expense amounted to RMB5.8 million ($0.9 million).
-- Fourth quarter sales and marketing expense and general administrative
expense together amounted to RMB25.0 million ($3.7 million), compared
to RMB16.8 million in the fourth quarter of fiscal 2009.
-- Operating income for the fourth quarter fiscal 2010 amounted to RMB24.9
million ($3.6 million), similar to the third quarter of fiscal 2010.
-- Net income attributable to shareholders in the fourth quarter of fiscal
2010 amounted to RMB16.1 million ($2.4 million).
-- Net revenue for fiscal 2010 increased 34.4% to RMB261.5 million ($38.3
million) from RMB194.5 million last year.
-- New subscriber sign-ups for fiscal 2010 increased 30.5% to 45,252
subscribers from 34,678 in fiscal 2009 and accumulated number of
subscribers amounted to 129,312 at fiscal year end, up from 84,060 last
year.
-- Net income attributable to shareholders for fiscal 2010 increased to
RMB49.2 million ($7.2 million), up from RMB20.7 million in fiscal 2009.
-- In February 2010, CCBC entered into a Securities Purchase Agreement
("Agreement") to acquire an effective equity interest of 19.92% of Jilu
Stem Cell Engineering Company Limited ("Jilu Stem Cells"), which
operates the exclusive cord blood bank in the Shandong province, of the
PRC. CCBC also has a right of first refusal to increase its ownership
in Jilu Stem Cells. The transaction was completed on May 6, 2010.
-- On June 4, 2010, CCBC announced the underwriting of a renounceable
rights issue offered by Cordlife Limited ("Cordlife"), a company listed
in Australia. Cordlife has operations in Australia, Hong Kong,
Singapore, the Philippines, Indonesia and India, two of the Asian
countries with significant annual birth rates. Pending the allotment
results, CCBC's indirect equity interest in Cordlife may increase
from 16.03% to a maximum of 37.02%. The rights issue is expected to
close on July 19, 2010. CCBC will finance the rights issue internally.
Summary - The quarter and fiscal year ended March 31, 2010 and 2009
Three Months Ended Fiscal Year Ended
March 31, March 31,
2010 2009 2010 2009
RMB RMB RMB RMB
$('000) ('000) ('000) $('000) ('000) ('000)
Revenue 10,373 70,806 56,807 38,315 261,536 194,537
Gross Profit 8,159 55,691 43,373 28,685 195,806 145,366
Research and
Development (852) (5,816) -- (852) (5,816) --
Operating
Income 3,648 24,901 26,582 14,239 97,193 85,197
Non-GAAP
EBITDA 4,605 31,428 29,256 17,232 117,624 93,743
Net Income
Attributable to
China Cord Blood
Corporation
shareholders 2,363 16,129 20,119 7,204 49,177 20,695
EPS Attributable
to Ordinary
Shares
- Basic ($/RMB) 0.04 0.24 0.25 0.10 0.69 (0.07)
Non-GAAP EPS
Attributable to
shareholders
- Basic ($/RMB) N/A N/A 0.34 0.16 1.12 0.35
Revenue Breakdown (%)
Processing Fee 78.3% 86.8% 81.5% 85.5%
Storage Fee 21.7% 13.2% 18.5% 14.5%
New Subscribers
(persons) 11,729 10,047 45,252 34,678
Accumulated Total
Number of
Subscribers
(persons) 129,312 84,060 129,312 84,060
"Remarkable achievements were made during the fourth quarter and fiscal year 2010," said Ms. Ting Zheng, China Cord Blood Corporation's Chairperson and Chief Executive Officer. "Our listing on the New York Stock Exchange brought us to a new era of growth. During the period, not only did we accomplish a record number of new subscribers, as promised to the investment community, we acquired an equity interest in Jilu Stem Cells, the exclusive operator in the Shandong province. Including Shandong, we now own and partially own three of the six issued licenses in China, and we are the largest cord blood bank operator in China. Beijing, Guangdong and Shandong together have a market size of 2.1 million new born babies per annum or approximately 13% of the total number of new borns in China."
"On June 4, 2010, we agreed to underwrite the rights issue of Cordlife, the largest cord blood bank operator in Southeast Asia with direct presence in India and Indonesia. As the single largest shareholder in Cordlife, we seized this opportunity to raise our ownership in the company. While the transaction is still subject to relevant approvals, we believe Cordlife's current exposure in the Southeast Asia region will add incredible strategic value. Together with Cordlife, we will be the largest global cord blood bank operator in terms of market size and presence. It is our goal to become the largest and most influential cord blood bank operator in China as well as in the Asia Pacific region."
Fourth Quarter Fiscal 2010 Financial Results
Net revenue for the fourth quarter of fiscal 2010 increased 24.6% to RMB70.8 million ($10.4 million) from RMB56.8 million in the fourth quarter of fiscal 2009. Processing fees, representing 78.3% of the total net revenue, increased 12.5% year-over-year to RMB55.5 million ($8.1 million) on the back of a 16.7% increase in new subscribers. Net revenue from storage fees increased 104% year-over-year to RMB15.3 million ($2.2 million) from RMB7.5 million. Total subscriber base as of March 31, 2010 reached 129,312 subscribers, up 53.8% year-over-year. With the increase in total subscriber base, storage fees represented a more material portion of the total revenue mix of 21.7% for the fourth quarter of fiscal 2010 as compared to 13.2% of the total revenue mix for the fourth quarter of fiscal 2009.
For the fourth quarter of fiscal 2010, gross profit increased 28.4% to RMB55.7 million ($8.2 million) from RMB43.4 million in the prior year period, due primarily to rising new subscriber numbers. Gross margin for the fourth quarter of fiscal 2010 increased to 78.7% from 76.4% on the back of economy of scale and favorable change in revenue mix.
Research and development expense amounted to RMB5.8 million ($0.9 million) which consisted of research activities conducted to enhance operating efficiencies, collection and storage technologies, and measures to improve the results in umbilical cord blood stem cells extraction and separation.
Fourth quarter sales and marketing expense and administrative expense together amounted to RMB 25.0 million ($3.7 million) compared to RMB16.8 million for the same period last year. The overall increase was largely attributable to the increase in promotion activities and the scale of operation. The increase in administrative expense was largely attributable to the increase in overhead since our public listing, higher professional fees and the increase in depreciation expense following the establishment of the new Beijing facility in April 2009.
Operating income for the fourth quarter of fiscal 2010 was RMB24.9 million ($3.6 million) compared to RMB26.6 million for the same period last year. Fourth quarter depreciation expense increased to RMB6.3 million ($0.9 million), up from RMB2.4 million last year. Non-GAAP EBITDA in the fourth quarter grew 7.4% to RMB31.4 million ($4.6 million).
Net income attributable to shareholders for the fourth quarter of fiscal 2010 reached to RMB16.1 million ($2.4 million) compared to RMB20.1 million for the prior year period. Net margin for the fourth quarter of fiscal 2010 was 22.8%.
Basic earnings per share and diluted earnings per share for the fourth quarter of fiscal 2010 were RMB0.24 ($0.04) and RMB0.23 ($0.03), respectively. Non-GAAP EPS for the fourth quarter is no longer applicable because all ordinary shares and redeemable shares were exchanged prior to the beginning of the fourth quarter.
As of March 31, 2010, the Company had cash and cash equivalents of RMB280.8 million ($41.1 million), compared to RMB161.4 million as of March 31, 2009.
"With the rising health awareness, the general public is devoting more resources to acquire quality medical care and healthcare services either individually or for other family members," Ms. Ting Zheng further stated. "We will dedicate more resources to enhance market education with a view to entice the rising local demand. In addition, we will continue to explore opportunities to extend our presence in China and the Asia Pacific region to realize our goal of becoming the largest Pan-Asian cord blood bank."
Fiscal 2010 Financial Results
For fiscal 2010, net revenue increased 34.4% to RMB261.5 million ($38.3 million), from RMB194.5 million last year. The increase was largely attributable to the 30.5% increase in new subscriber numbers to 45,252 new subscribers and the expansion in the accumulated subscriber base. During the year, processing fees and storage fees grew 28.2% and 70.9%, respectively. Gross profit in fiscal 2010 increased 34.7% to RMB195.8 million ($28.7 million) from RMB145.4 million in the prior year. In fiscal 2010, operating income increased 14.1% to RMB97.2 million ($14.2 million). Fiscal 2010 net income attributable to shareholders was RMB49.2 million ($7.2 million) compared to RMB20.7 million in the prior year. Basic earnings per share and diluted earnings per share attributable to ordinary shares were RMB0.69 ($0.10) and RMB0.66 ($0.10), respectively. Non-GAAP EBITDA increased 25.5% to RMB117.6 million ($17.2 million) and non-GAAP EPS also increased to RMB1.12 ($0.16) from RMB0.35 in the fiscal 2009.
Financial Outlook
During fiscal 2011, the Company expects that growth momentum in terms of new subscribers will continue and the total number of new subscribers will not be less than 58,000 new subscribers which would translate into at least a 30% increase in net revenue. Management also expects the accumulated total number of subscribers will be at least 187,000 at the end of fiscal 2011.
Conference Call
The Company will hold a teleconference at 8 a.m. ET on Tuesday, June 22, 2010 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 following link: http://phx.corporate-ir.net/playerlink.zhtml?c=206671&s=wm&e=3126984 . 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, with the conference access id: 79227376.
About China Cord Blood Corporation
China Cord Blood Corporation is the first and the largest cord blood banking operator in China in terms of geographical coverage and is the only cord blood bank operator with access to multiple licenses (i.e., Beijing, Guangdong and Shandong). Under current PRC government regulations, only one licensed cord blood bank operator is permitted to operate in each licensed region and only six licenses have been issued 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 .
Non-GAAP Disclosure
Non-GAAP basic earnings attributable to shareholders ("Non-GAAP EPS") represents a pro forma adjustment to the number of ordinary shares outstanding for all periods to reflect the conversion of certain redeemable shares into ordinary shares in June 2009. This is effected by adding income attributable to redeemable noncontrolling interest back to GAAP net income attributable to shareholders and divides by pro forma weighted average ordinary shares issued and outstanding. Pro forma weighted average ordinary shares issued and outstanding is the sum of weighted average ordinary shares issued and outstanding and assumes all redeemable shares are exchanged into ordinary shares at the beginning of the period.
Non-GAAP EBITDA represents operating income excluding acquired intangible assets amortization expense and depreciation expense. We have presented EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. Management uses EBITDA as a measurement tool for evaluating our actual operating performance compared to budget and prior periods. Other companies in our industry may calculate EBITDA differently than we do, for example, basing the determination on net income before net interest expense, income tax expense (benefit), depreciation and amortization. EBITDA is not a measure of performance under generally accepted accounting principles (GAAP) and should not be considered as a substitute for net income prepared in accordance with GAAP.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The non-GAAP measures described by the Company are reconciled to the corresponding GAAP measure in the exhibits below titled "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" and "Reconciliations of non- GAAP EPS to the nearest comparable GAAP measures".
The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to its historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to the supplemental information used by management in its financial and operational decision making.
Safe Harbor Statement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, performance and results of operations, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
This announcement contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars as of and for the fourth quarter and full year fiscal 2010 were made at the noon buying rate of RMB6.8258 to $1.00 on March 31, 2010 in the City of New York for cable transfers in Renminbi per US dollar as certified for customs purposes by the Federal Reserve Bank of New York. China Cord Blood Corporation makes no representation that the Renminbi or US dollar amounts referred to in this press release could have been or could be converted into US dollars or Renminbi, at any particular rate or at all.
For more information, please contact:
China Cord Blood Corporation
Ms. Joeling Law
Phone: +852-3605-8180
Email: [email protected]
Integrated Corporate Relations, Inc.
In New York:
Ashley M. Ammon or Christine Duan
Phone: +1-646-277-1227
In Beijing:
Wei-Jung Yang
Phone: +86-10-6599-7968
Exhibit 1
CHINA CORD BLOOD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2010 and 2009
March 31, March 31,
2010 2009
US$ RMB RMB
(in thousands except redemption
value and number of shares)
ASSETS
Current assets
Cash and cash equivalents 41,143 280,835 161,406
Accounts receivable, less
allowance for doubtful accounts
(March 31, 2010: RMB8,016; March
31, 2009: RMB6,170) 8,988 61,349 49,763
Inventories 743 5,070 6,501
Prepaid expenses and other receivables 1,925 13,137 7,978
Deferred tax assets 504 3,443 1,846
Total current assets 53,303 363,834 227,494
Property, plant and equipment, net 36,698 250,491 236,740
Non-current prepayments 22,142 151,138 27,184
Non-current accounts receivable,
less allowance for doubtful accounts
(March 31, 2010: RMB9,181; March 31,
2009: RMB2,222) 25,913 176,874 91,761
Inventories 4,342 29,637 26,069
Intangible asset, net 3,853 26,297 27,268
Available-for-sale equity securities 7,102 48,475 26,242
Deferred reverse recapitalization costs -- -- 33,633
Deferred tax assets 42 288 --
Total assets 153,395 1,047,034 696,391
LIABILITIES
Current liabilities
Bank loan 6,593 45,000 --
Accounts payable 793 5,410 5,128
Accrued expenses and other payables 3,293 22,475 19,269
Deferred revenue 5,285 36,074 18,351
Amounts due to related parties 436 2,977 --
Income tax payable 600 4,098 4,321
Total current liabilities 17,000 116,034 47,069
Deferred revenue 13,647 93,155 74,231
Other non-current liabilities 2,341 15,978 13,551
Deferred tax liabilities 331 2,259 4,017
Total liabilities 33,319 227,426 138,868
Commitments and contingencies
Redeemable ordinary shares of China
Cord Blood Services Corporation
US$0.0001 par value, 14,614,140
shares issued and outstanding as of
March 31, 2009 (redemption value of
US$51,088,745 as of March 31, 2009) -- -- 386,577
EQUITY
China Cord Blood Corporation
shareholders' equity
Ordinary shares
- US$0.0001 par value, 250,000,000
shares authorized, 43,237,100 shares
and 66,743,693 shares issued and
outstanding as of March 31, 2009
and 2010, respectively 7 46 34
Additional paid-in capital 105,384 719,329 140,745
Accumulated other comprehensive
income/(loss) 325 2,221 (19,319)
Retained earnings 12,789 87,290 44,082
Total China Cord Blood Corporation
shareholders' equity 118,505 808,886 165,542
Noncontrolling interests 1,571 10,722 5,404
Total equity 120,076 819,608 170,946
Total liabilities, redeemable
ordinary shares and equity 153,395 1,047,034 696,391
Exhibit 2
CHINA CORD BLOOD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Year Ended March 31, 2010 and 2009
Three months ended March 31, Year ended March 31,
2010 2009 2010 2009
US$ RMB RMB US$ RMB RMB
(in thousands except per share)
Revenues 10,373 70,806 56,807 38,315 261,536 194,537
Direct costs (2,214) (15,115) (13,434) (9,630) (65,730) (49,171)
Gross profit 8,159 55,691 43,373 28,685 195,806 145,366
Operating
expenses
Research and
development (852) (5,816) -- (852) (5,816) --
Sales and
marketing (1,839) (12,553) (7,186) (5,784) (39,480) (28,868)
General and
admini-
strative (1,820) (12,421) (9,605) (7,810) (53,317) (31,301)
Total
operating
expenses (4,511) (30,790) (16,791) (14,446) (98,613) (60,169)
Operating
income 3,648 24,901 26,582 14,239 97,193 85,197
Other
(expense)/
income, net
Interest income 200 1,365 845 939 6,411 3,638
Interest expense (91) (619) -- (356) (2,431) --
Exchange loss (149) (1,020) (163) (61) (417) (351)
Write-off of
deferred
offering and
deferred
reverse
recapital-
ization costs -- -- -- (3,159) (21,566) (9,473)
Impairment loss
on available-
for-sale equity
securities -- -- -- -- -- (37,426)
Others 22 148 51 69 473 714
Total other
(expense)/
income, net (18) (126) 733 (2,568) (17,530) (42,898)
Income before
income tax 3,630 24,775 27,315 11,671 79,663 42,299
Income tax
expense (1,055) (7,199) (6,044) (3,629) (24,770) (17,854)
Net income 2,575 17,576 21,271 8,042 54,893 24,445
Income
attributable
to redeemable
noncontrolling
interests -- -- -- (51) (347) --
Income
attributable
to noncon-
trolling
interests (212) (1,447) (1,152) (787) (5,369) (3,750)
Net income
attributable
to China Cord
Blood Corporation
shareholders 2,363 16,129 20,119 7,204 49,177 20,695
Net income/
(loss) per share:
Attributable to
ordinary shares
-Basic 0.04 0.24 0.25 0.10 0.69 (0.07)
-Diluted 0.03 0.23 0.24 0.10 0.66 (0.07)
Attributable to
redeemable
ordinary shares
-Basic N/A N/A 0.65 0.34 2.30 1.63
-Diluted N/A N/A 0.64 0.33 2.27 1.63
Exhibit 3
CHINA CORD BLOOD CORPORATION
Reconciliations of non-GAAP results of operations measures to the
nearest comparable GAAP measures
Three Three Three Fiscal Fiscal Fiscal
months months months Year Year Year
Ended Ended Ended Ended Ended Ended
Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31,
2010 2010 2009 2010 2010 2009
US$ RMB RMB US$ RMB RMB
('000) ('000) ('000) ('000) ('000) ('000)
GAAP Operating
Income 3,648 24,901 26,582 14,239 97,193 85,197
Depreciation 921 6,284 2,431 2,851 19,460 7,575
Amortization 36 243 243 142 971 971
Non -GAAP EBITDA 4,605 31,428 29,256 17,232 117,624 93,743
Exhibit 4
CHINA CORD BLOOD CORPORATION
Reconciliations of non-GAAP EPS to the nearest comparable GAAP measures
3 Months Fiscal Fiscal
Ended Year Year
March 2009 2010 2009
NUMERATOR (RMB'000)
GAAP net income attributable to
China Cord Blood Corporation
shareholders 20,119 49,177 20,695
Pro forma adjustments
Income attributable to redeemable
noncontrolling interest -- 347 --
Write-off of deferred reverse
recapitalization costs -- 21,566 --
Non-GAAP net income attributable to 20,119 71,090 20,695
shareholders
DENOMINATOR ('000 shares)
Weighted average ordinary shares
issued and outstanding 43,237 58,855 43,237
Add:
Issue of ordinary shares upon share
exchange with ordinary shareholders
of China Cord Blood Services
Corporation in June 2009 12,476 3,110 12,476
Add:
Issue of ordinary shares for
redeemable share exchange
in Aug 2009 3,506 1,290 3,506
Pro forma weighted average ordinary
shares issued and outstanding 59,219 63,255 59,219
Non-GAAP basic earnings attributable to
shareholders (RMB) 0.34 1.12 0.35
Non-GAAP basic earnings attributable to
shareholders (US$) 0.05 0.16 0.05
SOURCE China Cord Blood Corporation
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