China Cord Blood Corporation Reports First Quarter Fiscal 2015 Financial Results - KTRE.com | Lufkin and Nacogdoches, Texas

China Cord Blood Corporation Reports First Quarter Fiscal 2015 Financial Results

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SOURCE China Cord Blood Corporation

1Q15 Added 15,548 New Subscribers

1Q15 Revenue Up 19.1% YOY to RMB153.3 Million ($24.7 Million)

1Q15 Operating Income Up 31.1%YOY to RMB60.2 Million ($9.7 Million)

Conference Call to be Held August 29, 2014 at 8:00 a.m. ET

HONG KONG, Aug. 28, 2014 /PRNewswire/ -- 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 first quarter of fiscal year 2015 ended June 30, 2014.

First Quarter of Fiscal 2015 Highlights

  • Revenues for the first quarter of fiscal 2015 increased to RMB153.3 million ($24.7 million) from RMB128.7 million in the prior year period.
  • 15,548 new subscribers were added, resulting in an accumulated subscriber base of 392,171.
  • Gross profit increased to RMB123.6 million ($19.9 million) from RMB104.2 million in the prior year period.
  • Gross margin was 80.6%, compared to 81.0% in the prior year period.
  • Operating income increased to RMB60.2 million ($9.7 million), from RMB45.9 million in the prior year period, despite an RMB2.8 million increase in depreciation expense.
  • Interest expense increased to RMB24.9 million ($4.0 million), compared to RMB14.8 million in the prior year period, due to less interest expense capitalization.
  • Net income attributable to the Company's shareholders was RMB29.7 million ($4.8 million), compared to RMB32.9 million in the prior year period.
  • Operating cash flow for the quarter was RMB124.6 million ($20.1 million).

"We began fiscal 2015 with another solid quarter, adding 15,548 new subscribers which represented a modest year-over-year increase," stated Ms. Ting Zheng, Chief Executive Officer of CCBC. "Through the implementation of sound marketing strategies that focus on service quality and premium branding, we continued to seize opportunities in the high-end segment of the market. As the majority of our new subscribers selected the one-time upfront payment option, our cash-flow generation remained robust and consistent."

Ms. Zheng further commented, "With our new facilities in Guangdong and Zhejiang largely completed, we are working through the final stages of their development to ensure they are fully operational as soon as possible. The new processing and storage capacity will effectively resolve our processing bottleneck in Zhejiang and allow us to gradually scale up our operations in this under-penetrated region. The additional capacity will also allow us to further develop and penetrate the Guangdong market, the area in which the majority of our new subscribers in the first quarter are located."

Summary - First Quarter Ended June 30, 2013 and 2014


Three Months Ended

June 30,



2013


2014

(in thousands)

RMB


RMB

US$

Revenues

128,721


153,331

24,716

Gross Profit

104,229


123,555

19,916

Operating Income

45,880


60,167

9,698

Net Income Attributable to the Company's Shareholders

32,906


29,736

4,793

 

Earnings per Ordinary Shares

– Basic[1] and Diluted (RMB/US$)

0.40


0.37

0.06






Revenue Breakdown (%)





Processing Fees

69.5%


69.2%


Storage Fees

30.5%


30.8%







New Subscribers (persons)

15,260


15,548


Total Accumulated Subscribers (persons)

327,242


392,171



[1] The terms of the convertible notes issued to KKR China Healthcare Investment Limited ("KKR") and Golden Meditech Holdings Limited ("Golden Meditech") provide each party with the ability to participate in any excess cash dividend. Therefore, the calculation of basic EPS has taken into consideration the effect of such participating rights of RMB0.04 ($0.01) for the three months ended June 30, 2014.

Summary - Selected Cash Flow Statement Items




Three Months Ended

June 30, 2014

(in thousands)




RMB

US$

Net cash provided by operating activities




124,643

20,091

Net cash used in investing activities




(18,397)

(2,965)

Net cash used in financing activities




-

-

First Quarter of Fiscal 2015 Financial Results

REVENUES. Revenues increased by 19.1% to RMB153.3 million ($24.7 million) in the first quarter of fiscal 2015 from RMB128.7 million in the prior year period. The increase in revenues resulted from solid growth in both processing and storage revenue.

Revenues generated from storage fees increased by 20.1% to RMB47.2 million ($7.6 million), from RMB39.3 million in the prior year period. The increase was mainly due to the steady growth of the Company's accumulated subscriber base, which has expanded to 392,171 as of the end of June 2014. Revenues generated from storage fees as a percentage of total revenues edged up to approximately 30.8%, from 30.5% in the prior year period.

The difference in processing fees between the first quarter of fiscal 2015 and 2014, combined with the year-over-year growth in subscriber number, contributed to the increase in revenues generated from processing fees to RMB106.1 million ($17.1 million) from RMB89.4 million in the prior year period. As a percentage of total revenues, revenues from processing fees accounted for 69.2%, compared to 69.5% in the prior year period.

GROSS PROFIT. Gross profit for the first quarter of fiscal 2015 increased by 18.5% to RMB123.6 million ($19.9 million). Gross margin decreased slightly to 80.6% from 81.0% in the prior year period primarily due to increased material costs.

OPERATING INCOME. Operating income for the first quarter of fiscal 2015 increased to RMB60.2 million ($9.7 million), resulting in an operating margin of 39.2%, which is a 3.6% improvement from 35.6% in the prior year period. Depreciation and amortization expenses for the first quarter were RMB11.4 million ($1.8 million), compared to RMB8.6 million in the prior year period.

Research and Development Expenses. Research and development expenses remained stable at RMB2.5 million ($0.4 million).

Sales and Marketing Expenses. During the quarter, the Company's sales and marketing expenses increased to RMB31.7 million ($5.1 million) from RMB28.4 million in the prior year period. However, as a percentage of revenues, sales and marketing expenses decreased to 20.7% from 22.1%. The improvement is a result of the Company's focus on resource allocation and sales efficiency while further penetrating markets across the Company's operating regions. While the new facilities in Zhejiang are expected to be operational in the near future, management continues to carefully plan and execute its marketing strategy and ensure that expenses are kept in check in that region.

General and Administrative Expenses. General and administrative expenses increased to RMB29.1 million ($4.7 million) from RMB27.4 million in the prior year period. This increase was primarily due to increased depreciation expenses and administrative overhead stemming from preparation for the full commercial launch of the Company's new facilities. However as a percentage of revenues, G&A expenses decreased to 19.0% from 21.3%, as the overall increase in revenues exceeded the rise in depreciation and administrative expenses.

OTHER INCOME AND EXPENSES

Interest Expense. Interest expense incurred in the three months ended June 30, 2014 amounted to RMB24.9 million ($4.0 million), which primarily relates to the Company's outstanding convertible notes. For the prior year period, interest expense was RMB14.8 million due to the RMB8.5 million capitalization of interest expense for the construction of the Company's new facilities in Zhejiang and Guangdong.

Other. For the first quarter of fiscal 2015, the Company recorded dividend income of RMB1.2 million ($0.2 million), which was derived from the Company's equity investment in Cordlife Group Limited ("Cordlife"). During the first quarter of fiscal 2014, the Company received dividend income of RMB8.7 million from its equity investments in both the Shandong Cord Blood Bank and Cordlife.  

NET INCOME ATTRIBUTABLE TO THE COMPANY'S SHAREHOLDERS. Profit before tax for the first quarter of fiscal 2015 decreased by 6.5% to RMB41.5 million ($6.7 million). The Company's improved operating income was offset by the increase in interest expense and decrease in dividend income. As a result, net income attributable to the Company's shareholders for the first quarter of fiscal 2015 decreased by 9.6% to RMB29.7 million ($4.8 million).

EARNINGS PER SHARE. The terms of the convertible notes issued to KKR and Golden Meditech provide each party with the ability to participate in any Excess Cash Dividend[2]. Therefore, the calculation of basic and diluted EPS has taken into consideration the effect of such participating rights of RMB0.04 ($0.01) for the first quarter of fiscal 2015. Basic and diluted earnings per ordinary share for the first quarter of fiscal 2015 were RMB0.37 ($0.06).

[2] "Excess Cash Dividend" means any cash dividend to holders of shares that, together with all other cash dividends previously paid to holders of shares in the same financial year, exceeds, on a per share basis, an amount equal to the interest that has accrued and shall accrue at 7% in such financial year divided by the number of shares into which the note is convertible at the conversion price then in effect on the relevant record date.

LIQUIDITY. As of June 30, 2014, the Company had cash and cash equivalents of RMB1,989.5 million ($320.7 million) compared to RMB1,882.9 million as of March 31, 2014. The Company had total debt of RMB848.0 million ($136.7 million) as of June 30, 2014. Operating cash inflow for the first quarter of fiscal 2015 amounted to RMB124.6 million ($20.1 million).

Conference Call

The Company will host a conference call at 8:00 a.m. ET on Friday, August 29, 2014 to discuss its financial performance and give a brief overview of 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 1-631-514-2526 or 1-855-298-3404 for US callers or +852-5808-3202 for Hong Kong callers, access code: 1856118.

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 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 conform 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 and any other jurisdiction in which the Company conducts its operations; changing legislation or regulatory environments (including revisions to China's One Child Policy) in the PRC and any other jurisdiction in which the Company conducts its operations; 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; the existence of a significant shareholder able to influence and direct the corporate policies of the Company; 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; compliance with restrictive debt covenants under our senior convertible notes; and other relevant risks detailed in the Company's filings with the Securities and Exchange Commission in the United States.

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 June 30, 2014 were made at the noon buying rate of RMB6.2036 to $1.00 on June 30, 2014 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
Investor Relations Department
Tel: (+852) 3605-8180
Email: ir@chinacordbloodcorp.com

ICR, Inc.
Mr. William Zima
Tel: (+86) 10-6583-7511
U.S. Tel: (646) 405-5185
Email: William.Zima@icrinc.com

 

EXHIBIT 1


CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31 and June 30, 2014



March 31,


June 30,


2014


2014


RMB


    RMB


  US$


(in thousands except share data)







ASSETS






Current assets






Cash and cash equivalents

1,882,901


1,989,506


320,702

Accounts receivable, less allowance for doubtful accounts

(March 31, 2014: RMB20,322; June 30, 2014: RMB22,145)

95,273


101,900


16,426

Inventories

31,583


29,008


4,677

Prepaid expenses and other receivables

37,010


27,339


4,407

Debt issuance costs

3,616


3,615


583

Deferred tax assets

7,664


7,948


1,281

Total current assets

2,058,047


2,159,316


348,076

Property, plant and equipment, net

626,632


618,553


99,709

Non-current prepayments

208,894


214,825


34,629

Non-current accounts receivable, less allowance for doubtful
accounts (March 31, 2014: RMB42,703; June 30, 2014:
RMB43,722)

225,496


220,924


35,612

Inventories

48,385


51,256


8,262

Intangible assets, net

120,549


119,394


19,246

Available-for-sale equity securities

144,247


148,711


23,972

Other investment

189,129


189,129


30,487

Debt issuance costs

7,854


6,951


1,120

Deferred tax assets

1,789


1,893


305

Total assets

3,631,022


3,730,952


601,418







LIABILITIES






Current liabilities






Bank loan

60,000


60,000


9,672

Accounts payable

10,422


14,957


2,411

Accrued expenses and other payables

102,559


68,567


11,053

Deferred revenue

196,432


198,717


32,033

Amounts due to related parties

21,453


16,820


2,711

Income tax payable

2,571


1,525


246

Deferred tax liabilities

3,900


5,200


838

Total current liabilities

397,337


365,786


58,964

Convertible notes

777,753


787,988


127,021

Non-current deferred revenue

823,921


897,363


144,652

Other non-current liabilities

164,077


177,551


28,621

Deferred tax liabilities

27,938


27,639


4,455

Total liabilities

2,191,026


2,256,327


363,713


EQUITY






Shareholders' equity of China Cord Blood Corporation






Ordinary shares






- US$0.0001 par value, 250,000,000 shares authorized, 73,140,147
shares issued and 73,003,248 shares outstanding as of March 31 and
June 30, 2014, respectively

50


50


8

Additional paid-in capital

798,221


798,221


128,671

Treasury stock, at cost (March 31 and June 30, 2014: 136,899 shares,
respectively)

 

(2,815)


 

(2,815)


 

(454)

Accumulated other comprehensive income

84,263


89,298


14,395

Retained earnings

555,323


585,059


94,309

Total equity attributable to China Cord Blood Corporation

1,435,042


1,469,813


236,929

Non-controlling interests

4,954


4,812


776

Total equity

1,439,996


1,474,625


237,705

Total liabilities and equity

3,631,022


3,730,952


601,418

 


EXHIBIT 2


CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months ended June 30, 2013 and 2014



Three months ended June 30,


2013


2014


RMB


RMB


US$


(in thousands except share data)







Revenues

128,721


153,331


24,716

Direct costs

(24,492)


(29,776)


(4,800)

Gross profit

104,229


123,555


19,916

Operating expenses






Research and development

(2,523)


(2,499)


(403)

Sales and marketing

(28,424)


(31,743)


(5,117)

General and administrative

(27,402)


(29,146)


(4,698)

Total operating expenses

(58,349)


(63,388)


(10,218)

Operating income

45,880


60,167


9,698

Other expense, net

Interest income

4,182


4,266


688

Interest expense

(14,758)


(24,895)


(4,013)

Exchange (loss)/gain

(124)


180


29

Dividend income

8,722


1,196


193

Others

530


617


99

Total other expense, net

(1,448)


(18,636)


(3,004)

Income before income tax

44,432


41,531


6,694

Income tax expense

(11,373)


(11,937)


(1,924)

Net income

33,059


29,594


4,770

Net income attributable to non-controlling interests

(153)


142


23

Net income attributable to China Cord Blood
  
Corporation's shareholders

32,906


29,736


4,793


Net income per share:

Attributable to ordinary shares

- Basic

0.40


0.37


0.06

- Diluted

0.40


0.37


0.06


Other comprehensive income






- Net effect of foreign currency translation, net of nil tax

6,805


529


85

- Net unrealized gain in available-for-sale equity
securities, net of nil tax

24,338


4,506


726

Comprehensive income

64,202


34,629


5,581







Comprehensive income attributable to non-controlling
interests

(153)


142


23

Comprehensive income attributable to China Cord
Blood Corporation's shareholders

64,049


34,771


5,604

©2012 PR Newswire. All Rights Reserved.

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