EX-99.1 2 v347501_ex99-1.htm EXHIBIT 99.1

 

 

 

China Cord Blood Corporation Reports Financial Results

for the Fourth Quarter and Full Year of Fiscal 2013

 

4Q13 Added 16,059 New Subscribers

4Q13 Revenue Up 33.3% YOY to RMB133.0 Million

4Q13 Operating Income up 45.6% to RMB50.7Million

Conference Call to be Held June 19, 2013 at 8:00 a.m. ET

 

HONG KONG, China, June 18, 2013 -- 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 fourth quarter and full year of fiscal year 2013 ended March 31, 2013.

 

Fourth Quarter of Fiscal 2013 Highlights

 

·Revenues for the fourth quarter of fiscal 2013 increased by 33.3% to RMB133.0 million ($21.4 million) from RMB99.8 million in the prior year period.
·New subscriber sign-ups reached 16,059.
·Accumulated subscriber base amounted to 311,982, up 30.1% year-over-year.
·Gross profit increased by 38.8% to RMB106.1 million ($17.1 million) from RMB76.4 million in the prior year period.
·Gross margin was 79.8%, an increase from 76.6% in the prior year period.
·Operating income increased by 45.6% to RMB50.7 million ($8.2 million) from RMB34.8 million in the prior year period.
·Interest expense amounted to RMB22.1 million ($3.6 million), compared to RMB0.9 million in the prior year period.
·Net income attributable to the Company was RMB23.0 million ($3.7 million), decreased by 21.2% compared to the prior year period, as a result of increased interest expenses.
·Operating cash inflow for the quarter amounted to RMB155.1 million ($25.0 million).

 

Full Year Fiscal 2013 Highlights

 

·Revenues for the full year fiscal 2013 increased by 38.3% to RMB526.1 million ($84.7 million) from RMB380.5 million in the prior year.
·New subscriber sign-ups reached 72,228 and the accumulated subscriber base expanded to 311,982.
·Gross profit increased by 42.8% to RMB419.5 million ($67.5 million) from RMB293.8 million in the prior year.
·Operating income increased by 55.2% to RMB209.3 million ($33.7 million) from RMB134.8 million in the prior year.
·Interest expense amounted to RMB70.1 million ($11.3 million), compared to RMB3.3 million in the prior year.
·Net income attributable to the Company amounted to RMB112.4 million ($18.1 million), compared to RMB132.0 million in the prior year.
·Operating cash inflow for the full year fiscal 2013 was RMB578.6 million ($93.2 million).

 

“Fiscal 2013 was a fruitful year concluded with eventful accomplishments,” stated Ms. Ting Zheng, Chief Executive Officer of China Cord Blood Corporation. “We successfully added 72,228 new subscribers to our subscriber base, finishing the year by surpassing our original target by more than 12%, and our growing accumulated subscriber base exceeded the three hundred thousand mark at 311,982. These accomplishments were made possible by our years of market cultivation efforts and the “Dragon Year” baby boom. Aside from setting new records of revenue and operating cash flow, we have also raised our investment in both Guangdong and Shandong as we continue to expand our presence in China. In addition, we are pleased that our Beijing subsidiary received AABB Accreditation as our commitment toward high quality standards has been recognized, which motivates us to strive for further quality excellence for our Group as a whole.”

 

 
 

 

 

Summary – The Fourth Quarter and Full Year Ended March 31, 2012 and 2013

 

   Three Months Ended March 31,   Year Ended March 31, 
   2012   2013   2012   2013 
(in thousands)  RMB   RMB   US$   RMB   RMB   US$ 
Revenues   99,778    133,011    21,417    380,490    526,123    84,711 
Gross Profit   76,448    106,104    17,085    293,832    419,502    67,544 
Operating Income   34,842    50,747    8,172    134,843    209,314    33,702 
Net Income Attributable to the Company   29,239    23,028    3,709    131,980    112,447    18,106 
Earnings per Ordinary Shares
 – Basic1 and Diluted (RMB/US$)		   0.40    0.32    0.05    1.79    1.49    0.24 
                               
Revenue Breakdown (%)                              
Processing Fees   74.0%   72.2%        74.0%   75.4%     
Storage Fees   26.0%   27.8%        26.0%   24.6%     
                               
New Subscribers (persons)   14,336    16,059         53,924    72,228      
Total Accumulated Subscribers (persons)   239,754    311,982         239,754    311,982      

 

Summary – Selected Cash Flow Statement Items

 

   Three Months Ended   Year Ended 
   March 31, 2013   March 31, 2013 
(in thousands)  RMB   US$   RMB   US$ 
Net cash provided by operating activities   155,079    24,969    578,632    93,166 
Net cash used in investing activities   (137,297)   (22,106)   (493,717)   (79,494)
Net cash (used in)/provided by financing activities   (2,750)   (443)   618,718    99,620 

 

Fourth Quarter of Fiscal 2013 Financial Results

 

REVENUES. Revenues increased by 33.3% to RMB133.0 million ($21.4 million) in the fourth quarter of fiscal 2013 from RMB99.8 million in the prior year period, driven by increasing new subscriber sign-ups during the quarter, as well as the strong increase in recurring income from our rising accumulated subscriber base.

 

____________________

 

1 The terms of the convertible notes issued to KKR and Golden Meditech provide KKR and Golden Meditech 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 equal to RMB0.00 ($0.00) and RMB0.08 ($0.01) for the three months and year ended March 31, 2013, respectively.

 

 
 

 

 

Revenues generated from storage fees increased to RMB37.0 million ($6.0 million), up 42.3% from RMB26.0 million in the prior year period. As a result of the expanded subscriber base, revenue generated from storage fees as a percentage of total revenues increased to approximately 27.8%, from 26.0% in the prior year period.

 

Revenues generated from processing fees increased to RMB96.0 million ($15.4 million) due to the increase in new subscribers sign-ups. Revenues generated from processing fees accounted for 72.2% of total revenues, compared to 74.0% in the prior year period.

 

GROSS PROFIT. Gross profit for the fourth quarter of fiscal 2013 increased by 38.8% to RMB106.1 million ($17.1 million) with gross margin expanded from 76.6% in the prior year period to 79.8%. Higher gross margin is supported by rising contribution from storage revenues and economies of scale, which exceeded the increase in material and labor costs.

 

OPERATING INCOME. Operating income for the fourth quarter increased 45.6% to RMB50.7 million ($8.2 million) from RMB34.8 million in the prior year period. With the increase in administrative costs largely being contained, the benefit of rising revenue and gross margin expansion helped to fuel the operating margin expansion from 34.9% in the prior period to 38.2%, however the benefit was also partially offset by increased sales and marketing efforts. Depreciation and amortization expenses for the fourth quarter were RMB11.3 million ($1.8 million), compared to RMB7.7 million in the prior year period.

 

Research and Development Expenses. Research and development expenses increased to RMB2.2 million ($0.4 million) compared to RMB2.0 million in the prior year period.

 

Sales and Marketing Expenses. Sales and marketing expenses for the fourth quarter amounted to RMB26.1 million ($4.2 million). As a percentage of revenue, it increased to 19.6% in the fourth quarter of fiscal 2013, compared to 16.6% in the prior year period. The increase in sales and marketing expenses represented more comprehensive marketing efforts and an increase in the Company’s sales force, which was consistent with management’s expectations and sets the stage for the Company’s ongoing market penetration efforts.

 

General and Administrative Expenses. General and administrative expenses were RMB27.0 million ($4.3 million) compared to RMB23.1 million in the prior year period. As a percentage of revenue, it decreased to 20.3% in the fourth quarter of fiscal 2013, compared to 23.1% in the prior year period, which was generally consistent with the general and administrative expenses of the Company in the third quarter of fiscal 2013.

 

OTHER INCOME AND EXPENSES

 

Interest Expense. Interest expense increased to RMB22.1 million ($3.6 million) from RMB0.9 million in the prior year period. The increase was largely attributable to the convertible notes issued to KKR China Healthcare Investment Limited (“KKR”) and Golden Meditech Holdings Limited (“Golden Meditech”). In the fourth quarter of fiscal 2013, interest expense related to the convertible notes amounted to RMB21.2 million ($3.4 million).

 

NET INCOME ATTRIBUTABLE TO THE COMPANY. Income before income tax for the fourth quarter of fiscal 2013 decreased by 12.1% to RMB33.6 million ($5.4 million) due to higher interest expense recorded in the current quarter. As a result, net income attributable to the Company for the fourth quarter of fiscal 2013 was RMB23.0 million ($3.7 million), and decreased from RMB29.2 million in the prior year period. Net margin for the fourth quarter of fiscal 2013 was 17.3%, compared to 29.3% in the prior year period, as a result of higher operating margin offset by higher interest expense incurred for the convertible notes.

 

 
 

 

 

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 equal to RMB0.00 ($0.00) for the fourth quarter of fiscal 2013. Basic and diluted earnings per ordinary share for the fourth quarter of fiscal 2013 were RMB0.32 ($0.05).

 

LIQUIDITY. As of March 31, 2013, the Company had cash and cash equivalents of RMB1,494.1 million ($240.6 million) compared to RMB794.3 million as of March 31, 2012. The Company had total debt of RMB801.8 million ($129.1 million) as of March 31, 2013. Operating cash inflow for the fourth quarter of fiscal 2013 amounted to RMB155.1 million ($25.0 million), representing a significant growth from RMB102.2 million in the prior year period.

 

Full Year Fiscal 2013 Financial Results

 

For the full year fiscal year 2013, total revenues increased by 38.3% to RMB526.1 million ($84.7 million) from RMB380.5 million in the prior year. The increase was largely attributable to the significant increase in new subscribers during the “Dragon Year” baby boom and the expansion of the Company’s accumulated subscriber base to 311,982 subscribers. Similarly, revenues related to processing fees and storage fees grew by 40.9% and 30.8%, respectively. Gross profit increased by 42.8% to RMB419.5 million ($67.5 million) from RMB293.8 million in the prior year, and operating income increased by 55.2% to RMB209.3 million ($33.7 million) from RMB134.8 million in the prior year. Interest expense increased to RMB70.1 million ($11.3 million) from RMB3.3 million in the prior year, and the increase was largely attributable to the convertible notes issuances during fiscal 2013. As such, income before income tax grew 4.3% to RMB158.2 million ($25.5 million), from RMB151.6 million in the prior year. Income tax expense was lower in fiscal 2012 because the Company recorded a tax write-back due to the High and New Technology Enterprise tax status of both Beijing and Guangdong subsidiaries during fiscal 2012, no such write-back was recorded during fiscal 2013. Combining the effects of higher interest expense and lack of tax write-back in fiscal 2013, net income attributable to the Company for the fiscal 2013 amounted to RMB112.4 million ($18.1 million). Basic and diluted earnings per share attributable to ordinary shares were RMB1.49 ($0.24). The calculation of basic and diluted earnings per share has taken into consideration the effect of the participating rights in any Excess Cash Dividend2 of RMB0.08 ($0.01) for fiscal 2013. Net cash provided by operating activities for full year of fiscal 2013 was RMB578.6 million ($93.2 million), up from RMB353.9 million in the prior year due to higher adoption rates regarding upfront payment option and the increase in new subscriber sign-ups.

 

Ms. Zheng stated, “Moving away from the Year of the Dragon and entering fiscal 2014, we expect to experience both challenges and opportunities.  As the Chinese market gradually resumes lower normalized birth trends, we anticipate some near-term pressure to subscriber growth rates.  Consequently, our near-term priority is to penetrate the Guangdong market by adding new storage capacity in the region and accelerating the development and renovation process with respect to the new Zhejiang storage facility.” 

 

“As the Company is a premium cord blood banking operator, consistent with our pricing strategy to date and pursuit of high quality standings, we have decided to readjust our prices by increasing the processing fee to RMB6,800 from RMB5,800 and gross annual payment to RMB980 from RMB620 across Beijing municipality, Guangdong province and Zhejiang province.  This initiative will allow us to maximize profitability and offset rising production costs.  We remain dedicated to our China expansion strategy by deepening our penetration into our local territories while also pursuing new opportunities in other regions of China where we do not currently serve.  We continue to build on our favorable market position and industry trend to better serve the needs of our customers and drive improved performance for our shareholders.” Ms. Zheng concluded.

 

____________________

 

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.

 

 
 

 

 

Conference Call

 

The Company will host a conference call at 8:00 a.m. ET on Wednesday, June 19, 2013 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: 73748995.

 

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 of this press release, and the Company does not intend to update any of the forward-looking statements after the date of this press release 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 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 March 31, 2013 were made at the noon buying rate of RMB6.2108 to $1.00 on March 29, 2013 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, 2012 and 2013

 

   March 31,   March 31, 
   2012   2013 
   RMB   RMB   US$ 
   (in thousands except share data) 
             
ASSETS               
Current assets               
Cash and cash equivalents   794,311    1,494,099    240,565 
Accounts receivable, less allowance for doubtful accounts
     (March 31, 2012: RMB13,916; March 31, 2013: RMB14,112)		   79,012    73,076    11,766 
Inventories   6,666    10,265    1,652 
Prepaid expenses and other receivables   11,561    11,602    1,868 
Trading securities   354    -    - 
Debt issuance costs   -    3,678    592 
Deferred tax assets   5,268    5,454    878 
Total current assets   897,172    1,598,174    257,321 
Property, plant and equipment, net   267,862    468,272    75,397 
Non-current prepayments   2,863    212,633    34,236 
Non-current accounts receivable, less allowance for doubtful accounts
     (March 31, 2012: RMB38,628; March 31, 2013: RMB36,361)		   254,236    249,370    40,152 
Inventories   34,651    39,730    6,396 
Intangible assets, net   129,791    125,170    20,154 
Available-for-sale equity securities   98,199    88,404    14,234 
Other investment   134,363    189,129    30,452 
Debt issuance costs   -    11,667    1,879 
Deferred tax assets   5,013    3,727    600 
Total assets   1,824,150    2,986,276    480,821 
                
LIABILITIES               
Current liabilities               
Bank loan   45,000    50,000    8,050 
Accounts payable   6,343    9,890    1,592 
Accrued expenses and other payables   33,351    84,006    13,527 
Deferred revenue   106,110    172,328    27,747 
Amounts due to related parties   360    11,241    1,810 
Income tax payable   5,943    4,983    802 
Total current liabilities   197,107    332,448    53,528 
Convertible notes   -    751,781    121,044 
Non-current deferred revenue   306,534    530,258    85,377 
Other non-current liabilities   60,420    107,158    17,254 
Deferred tax liabilities   24,462    23,168    3,730 
Total liabilities   588,523    1,744,813    280,933 

 

 
 

 

 

EXHIBIT 1 (continued)

 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2012 and 2013 - (continued)

 

   March 31,   March 31, 
   2012   2013 
   RMB   RMB   US$ 
   (in thousands except share data) 
             
EQUITY               
Shareholders’ equity               
Ordinary shares               

- US$0.0001 par value, 250,000,000 shares authorized, 73,140,147 shares issued

  and outstanding as of March 31, 2012 and 73,140,147 shares issued and

  73,003,248 shares outstanding as of March 31, 2013

   50    50    8 
Additional paid-in capital   865,654    798,221    128,522 
Treasury stock, at cost (March 31, 2012: nil; March 31, 2013: 136,899 shares)   -    (2,815)   (453)
Accumulated other comprehensive income   26,057    18,256    2,939 
Retained earnings   310,973    423,420    68,175 
Total shareholders’ equity   1,202,734    1,237,132    199,191 
Non-controlling interests   32,893    4,331    697 
Total equity   1,235,627    1,241,463    199,888 
Total liabilities and equity   1,824,150    2,986,276    480,821 

 

 
 

 

 

EXHIBIT 2

 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months and Year ended March 31, 2012 and 2013

 

   Three months ended March 31,   Year ended March 31, 
   2012   2013   2012   2013 
   RMB   RMB   US$   RMB   RMB   US$ 
   (in thousands except share data) 
                         
Revenues   99,778    133,011    21,417    380,490    526,123    84,711 
Direct costs   (23,330)   (26,907)   (4,332)   (86,658)   (106,621)   (17,167)
Gross profit   76,448    106,104    17,085    293,832    419,502    67,544 
Operating expenses                              
Research and development   (1,953)   (2,249)   (362)   (7,615)   (8,459)   (1,362)
Sales and marketing   (16,567)   (26,116)   (4,205)   (61,678)   (93,684)   (15,084)
General and administrative   (23,086)   (26,992)   (4,346)   (89,696)   (108,045)   (17,396)
Total operating expenses   (41,606)   (55,357)   (8,913)   (158,989)   (210,188)   (33,842)
Operating income   34,842    50,747    8,172    134,843    209,314    33,702 
Other income/(expense), net                              
Interest income   3,411    4,002    644    13,432    15,064    2,425 
Interest expense   (896)   (22,070)   (3,553)   (3,287)   (70,097)   (11,286)
Exchange gain/(loss)   33    (25)   (4)   (1,343)   (984)   (158)
Dividend income   -    -    -    7,217    4,685    754 
Others   823    924    149    737    203    33 
Total other income/(expense), net   3,371    (17,169)   (2,764)   16,756    (51,129)   (8,232)
Income before income tax   38,213    33,578    5,408    151,599    158,185    25,470 
Income tax expense   (6,597)   (10,483)   (1,688)   (9,634)   (38,543)   (6,206)
Net income   31,616    23,095    3,720    141,965    119,642    19,264 
Net income attributable to non-controlling interests   (2,377)   (67)   (11)   (9,985)   (7,195)   (1,158)
Net income attributable to the Company   29,239    23,028    3,709    131,980    112,447    18,106 
                               
Net income per share:                              
Attributable to ordinary shares                              
- Basic   0.40    0.32    0.05    1.79    1.49    0.24 
- Diluted   0.40    0.32    0.05    1.79    1.49    0.24 
                               
Other comprehensive income                              

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

   (604)   2,936    473    (1,653)   1,296    209 

- Net unrealized gain/(loss) in available-for-sale equity

  securities, net of nil tax

   58,055　    12,023    1,936　    46,587　    (9,120)　    (1,468)　 
Comprehensive income   89,067    38,054　    6,129　    186,899    111,818    18,005 
                              
Comprehensive income attributable to non-controlling                              

interests

   (2,427)   (67)   (11)   (10,282)   (7,172)   (1,155)　 
Comprehensive income attributable to the Company   86,640    37,987    6,118    176,617    104,646    16,850