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"Remarkable achievements were made during the fourth quarter and fiscalyear 2010," said Ms. Ting Zheng, China Cord Blood Corporation's Chairpersonand Chief Executive Officer. "Our listing on the New York Stock Exchangebrought us to a new era of growth. During the period, not only did weaccomplish a record number of new subscribers, as promised to the investmentcommunity, we acquired an equity interest in Jilu Stem Cells, the exclusiveoperator in the Shandong province. Including Shandong, we now own andpartially own three of the six issued licenses in China, and we are thelargest cord blood bank operator in China. Beijing, Guangdong and Shandongtogether have a market size of 2.1 million new born babies per annum orapproximately 13% of the total number of new borns in China."
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"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 inIndia and Indonesia. As the single largest shareholder in Cordlife, we seizedthis opportunity to raise our ownership in the company. While the transactionis still subject to relevant approvals, we believe Cordlife's current exposurein the Southeast Asia region will add incredible strategic value. Togetherwith Cordlife, we will be the largest global cord blood bank operator in termsof market size and presence. It is our goal to become the largest and mostinfluential cord blood bank operator in China as well as in the Asia Pacificregion."
Fourth Quarter Fiscal 2010 Financial Results
Net revenue for the fourth quarter of fiscal 2010 increased 24.6% toRMB70.8 million ($10.4 million) from RMB56.8 million in the fourth quarter offiscal 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 backof a 16.7% increase in new subscribers. Net revenue from storage feesincreased 104% year-over-year to RMB15.3 million ($2.2 million) from RMB7.5million. Total subscriber base as of March 31, 2010 reached 129,312subscribers, up 53.8% year-over-year. With the increase in total subscriberbase, storage fees represented a more material portion of the total revenuemix of 21.7% for the fourth quarter of fiscal 2010 as compared to 13.2% of thetotal revenue mix for the fourth quarter of fiscal 2009.
For the fourth quarter of fiscal 2010, gross profit increased 28.4% toRMB55.7 million ($8.2 million) from RMB43.4 million in the prior year period,due primarily to rising new subscriber numbers. Gross margin for the fourthquarter of fiscal 2010 increased to 78.7% from 76.4% on the back of economy ofscale 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 operatingefficiencies, collection and storage technologies, and measures to improve theresults in umbilical cord blood stem cells extraction and separation.
Fourth quarter sales and marketing expense and administrative expensetogether amounted to RMB 25.0 million ($3.7 million) compared to RMB16.8million for the same period last year. The overall increase was largelyattributable to the increase in promotion activities and the scale ofoperation. The increase in administrative expense was largely attributable tothe increase in overhead since our public listing, higher professional feesand the increase in depreciation expense following the establishment of thenew 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 grew7.4% to RMB31.4 million ($4.6 million).
Net income attributable to shareholders for the fourth quarter of fiscal2010 reached to RMB16.1 million ($2.4 million) compared to RMB20.1 million forthe prior year period. Net margin for the fourth quarter of fiscal 2010 was22.8%.
Basic earnings per share and diluted earnings per share for the fourthquarter 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 allordinary shares and redeemable shares were exchanged prior to the beginning ofthe fourth quarter.
As of March 31, 2010, the Company had cash and cash equivalents ofRMB280.8 million ($41.1 million), compared to RMB161.4 million as of March 31,2009.
"With the rising health awareness, the general public is devoting moreresources to acquire quality medical care and healthcare services eitherindividually or for other family members," Ms. Ting Zheng further stated. "Wewill dedicate more resources to enhance market education with a view to enticethe rising local demand. In addition, we will continue to exploreopportunities to extend our presence in China and the Asia Pacific region torealize 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 ($38.3million), from RMB194.5 million last year. The increase was largelyattributable to the 30.5% increase in new subscriber numbers to 45,252 newsubscribers and the expansion in the accumulated subscriber base. During theyear, 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 incomeincreased 14.1% to RMB97.2 million ($14.2 million). Fiscal 2010 net incomeattributable to shareholders was RMB49.2 million ($7.2 million) compared toRMB20.7 million in the prior year. Basic earnings per share and dilutedearnings per share attributable to ordinary shares were RMB0.69 ($0.10) andRMB0.66 ($0.10), respectively. Non-GAAP EBITDA increased 25.5% to RMB117.6million ($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 ofnew subscribers will continue and the total number of new subscribers will notbe less than 58,000 new subscribers which would translate into at least a 30%increase in net revenue. Management also expects the accumulated total numberof 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 theCompany'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 . Areplay of the webcast will be accessible two hours after the presentation andavailable for three weeks at the same URL link above. Listeners may alsoaccess 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 bloodbanking operator in China in terms of geographical coverage and is the onlycord blood bank operator with access to multiple licenses (i.e., Beijing,Guangdong and Shandong). Under current PRC government regulations, only onelicensed cord blood bank operator is permitted to operate in each licensedregion and only six licenses have been issued as of today. China Cord BloodCorporation provides cord blood collection, laboratory testing, hematopoieticstem 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 outstandingfor all periods to reflect the conversion of certain redeemable shares intoordinary shares in June 2009. This is effected by adding income attributableto redeemable noncontrolling interest back to GAAP net income attributable toshareholders and divides by pro forma weighted average ordinary shares issuedand outstanding. Pro forma weighted average ordinary shares issued andoutstanding is the sum of weighted average ordinary shares issued andoutstanding and assumes all redeemable shares are exchanged into ordinaryshares at the beginning of the period.
Non-GAAP EBITDA represents operating income excluding acquired intangibleassets amortization expense and depreciation expense. We have presented EBITDAbecause we consider it an important supplemental measure of our performanceand believe it is frequently used by analysts, investors and other interestedparties in the evaluation of companies in our industry. Management uses EBITDAas a measurement tool for evaluating our actual operating performance comparedto budget and prior periods. Other companies in our industry may calculateEBITDA differently than we do, for example, basing the determination on netincome before net interest expense, income tax expense (benefit), depreciationand amortization. EBITDA is not a measure of performance under generallyaccepted accounting principles (GAAP) and should not be considered as asubstitute for net income prepared in accordance with GAAP.
The presentation of these non-GAAP financial measures is not intended tobe considered in isolation or as a substitute for the financial informationprepared and presented in accordance with GAAP. The non-GAAP measuresdescribed by the Company are reconciled to the corresponding GAAP measure inthe exhibits below titled "Reconciliations of non-GAAP results of operationsmeasures 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 providemeaningful supplemental information regarding its performance and liquidity.The Company believes that both management and investors benefit from referringto these non-GAAP financial measures in assessing its performance and whenplanning and forecasting future periods. These non-GAAP financial measuresalso facilitate management's internal comparisons to its historicalperformance and liquidity. The Company believes these non-GAAP financialmeasures are useful to investors in allowing for greater transparency withrespect to the supplemental information used by management in its financialand operational decision making.
Safe Harbor Statement
This press release contains forward-looking statements as defined by thePrivate Securities Litigation Reform Act of 1995. Forward-looking statementsinclude statements concerning plans, objectives, goals, strategies, futureevents, performance and results of operations, and underlying assumptions andother statements that are other than statements of historical facts. Thesestatements are subject to uncertainties and risks including, but not limitedto, product and service demand and acceptance, changes in technology, economicconditions, the impact of competition and pricing, government regulation, andother risks contained in statements filed from time to time with theSecurities and Exchange Commission. All such forward-looking statements,whether written or oral, and whether made by or on behalf of the company, areexpressly qualified by the cautionary statements and any other cautionarystatements which may accompany the forward-looking statements. In addition,the company disclaims any obligation to update any forward-looking statementsto reflect events or circumstances after the date hereof.
This announcement contains translations of certain Renminbi amounts intoUS dollars at specified rates solely for the convenience of readers. Unlessotherwise noted, all translations from Renminbi to US dollars as of and forthe fourth quarter and full year fiscal 2010 were made at the noon buying rateof RMB6.8258 to $1.00 on March 31, 2010 in the City of New York for cabletransfers in Renminbi per US dollar as certified for customs purposes by theFederal Reserve Bank of New York. China Cord Blood Corporation makes norepresentation that the Renminbi or US dollar amounts referred to in thispress release could have been or could be converted into US dollars orRenminbi, at any particular rate or at all.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
SOURCE China Cord Blood Corporation
