HONG KONG, June 18, 2015 /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 fourth quarter and full year of fiscal 2015 ended March 31, 2015.
Fourth Quarter of Fiscal 2015 Highlights
- Revenues for the fourth quarter of fiscal 2015 increased by 7.3% to RMB163.0 million ($26.3 million) from RMB151.9 million in the prior year period.
- New subscribers and accumulated subscriber base were 15,982 and 441,359, respectively.
- Gross profit increased by 3.2% to RMB128.6 million ($20.7 million) from RMB124.6 million in the prior year period, despite higher raw material costs and depreciation expense.
- Gross margin was 78.9%, compared to 82.0% in the prior year period.
- Operating income amounted to RMB49.5 million ($8.0 million), compared to RMB64.0 million in the prior year period, mainly caused by higher depreciation expense due to the completion of the new facilities and the recognition of share-based compensation expense related to the restricted share units ("RSUs") granted.
- Operating income before depreciation and amortization and share-based compensation expenses was RMB76.6 million ($12.4 million), up 3.7% year-over-year.1
- Interest expense was RMB25.2 million ($4.1 million) compared to RMB17.0 million in the prior year period as no interest expense was capitalized in this period.
- Net income attributable to the Company's shareholders was RMB16.9 million ($2.7 million), compared to RMB39.5 million in the prior year period.
- Operating cash flow for the quarter was RMB146.4 million ($23.6 million).
Full Year of Fiscal 2015 Highlights
- Revenues for the full year of fiscal 2015 increased by 10.9% to RMB635.1 million ($102.5 million) from RMB572.9 million in the prior year.
- New subscribers increased to 64,736 and the accumulated subscriber base increased to 441,359.
- Gross profit increased by 8.1% to RMB504.5 million ($81.4 million) from RMB466.6 million in the prior year.
- Operating income increased by 1.3% to RMB235.0 million ($37.9 million) from RMB231.9 million in the prior year.
- Operating income before depreciation and amortization and share-based compensation expenses was RMB302.1 million ($48.7 million), up 12.3% year-over-year.1
- Interest expense was RMB101.1 million ($16.3 million), compared to RMB70.1 million in the prior year due to the absence of interest expense capitalization.
- Net income attributable to the Company's shareholders was RMB107.3 million ($17.3 million), compared to RMB131.9 million in the prior year.
- Operating cash flow for the full year of fiscal 2015 increased by 11.0% to RMB594.9 million ($96.0 million) from RMB536.0 million in the prior year.
1 See exhibit 3 of this press release for a reconciliation of operating income to exclude the non-cash items related to the depreciation and amortization and share-based compensation expenses to the comparable financial measure prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). |
"Entering into Chinese Year of Sheep, we experienced a noticeable decline of newborn babies in the regions where we operate, which affected our new subscriber number," stated Ms. Ting Zheng, Chief Executive Officer of China Cord Blood Corporation, "We anticipate a decline in new born babies for the remainder of the year. To mitigate the impact, we intend to evaluate new promotional platforms and marketing channels and prudently ramp up our commercialization effort in the Zhejiang market to attract new subscribers."
Summary -- Fourth Quarter and Full Year Ended March 31, 2014 and 2015
Three Months Ended March 31 | Year Ended March 31, | |||||
2014 | 2015 | 2014 | 2015 | |||
(in thousands) | RMB | RMB | US$ | RMB | RMB | US$ |
Revenues | 151,915 | 162,994 | 26,294 | 572,857 | 635,122 | 102,456 |
Gross Profit | 124,574 | 128,554 | 20,738 | 466,632 | 504,511 | 81,386 |
Operating Income | 64,013 | 49,523 | 7,989 | 231,926 | 234,996 | 37,909 |
Depreciation and | 9,808 | 13,024 | 2,101 | 37,065 | 50,609 | 8,164 |
Amortization Expenses | ||||||
Share-based | ||||||
Compensation Expense2 | - | 14,038 | 2,265 | - | 16,535 | 2,667 |
Interest Expense | 16,990 | 25,238 | 4,071 | 70,075 | 101,102 | 16,309 |
Net Income Attributable to the Company's Shareholders | 39,539 | 16,923 | 2,729 | 131,903 | 107,292 | 17,308 |
Earnings per Ordinary Share | 0.46 | 0.23 | 0.04 | 1.60 | 1.36 | 0.22 |
Basic3 and Diluted | ||||||
(RMB/US$) | ||||||
Revenue Breakdown (%) | ||||||
Processing Fees | 71.1% | 66.3% | 70.9% | 67.9% | ||
Storage Fees | 28.9% | 33.7% | 29.1% | 32.1% | ||
New Subscribers (persons) | 17,136 | 15,982 | 64,641 | 64,736 | ||
Total Accumulated Subscribers (persons) | 376,623 | 441,359 | 376,623 | 441,359 | ||
2 Share-based compensation expense relates to the Company's restricted share unit scheme ("RSU Scheme") in which 7,300,000 RSUs were granted to certain executives, directors and key employees during the three months ended December 31, 2014. Out of 7,300,000 RSUs granted, 7,080,000 ordinary shares ("Shares") were then issued and deposited into a trust sponsored and funded by the Company ("Trust"). | ||||||
3 The terms of the convertible notes held by KKR China Healthcare Investment Limited ("KKR"), Cordlife Group Limited ("CGL") and Magnum Opus International Holdings Limited ("Magnum") 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 nil and RMB0.11 ($0.02) per share for the three months and year ended March 31, 2015. | ||||||
Summary -- Selected Cash Flow Statement Items
Three Months Ended March 31, | Year Ended March 31, | ||||||
2014 | 2015 | 2014 | 2015 | ||||
(in thousands) | RMB | RMB | US$ | RMB | RMB | US$ | |
Net cash provided by operating activities | 137,399 | 146,443 | 23,625 | 536,015 | 594,866 | 95,961 | |
Net cash used in investing activities | (9,037) | (4,794) | (774) | (149,883) | (42,431) | (6,845) | |
Net cash provided by financing activities | - | - | - | 2,336 | - | - | |
Fourth Quarter of Fiscal 2015 Financial Results
REVENUES. Revenues increased by 7.3% to RMB163.0 million ($26.3 million) in the fourth quarter of fiscal 2015 from RMB151.9 million in the prior year period, mainly driven by the increased storage revenue.
The Company's accumulated subscriber base expanded to 441,359 by the end of March 2015, which resulted in a 25.0% increase in storage fee revenues to RMB55.0 million ($8.9 million) in the fourth quarter of fiscal 2015 from RMB44.0 million in the prior year period. As a percentage of total revenues, storage fees accounted for 33.7%, compared to 28.9% in the prior year period.
Revenues generated from processing fees and other services in the fourth quarter were RMB108.0 million ($17.4 million), up from RMB107.9 million in the prior year period. Revenues generated from processing fees accounted for 66.3% of total revenues, compared to 71.1% in the prior year period.
GROSS PROFIT. Gross profit for the fourth quarter of fiscal 2015 amounted to RMB128.6 million ($20.7 million), a 3.2% increase from RMB124.6 million in the prior year period. Gross margin was 78.9%, compared to 82.0% in the prior year period, due to higher depreciation expense and raw material costs.
OPERATING INCOME. Operating income for the fourth quarter was RMB49.5 million ($8.0 million) compared to RMB64.0 million in the prior year period, mainly due to higher depreciation expense and the recognition of share-based compensation expense. Operating margin was 30.4%, compared to 42.1% in the prior year period. Depreciation and amortization expenses for the fourth quarter were RMB13.0 million ($2.1 million), compared to RMB9.8 million in the prior year period. Share-based compensation expense related to the Company's RSUs which were granted in December 2014 pursuant to the Company's RSU Scheme amounted to RMB14.0 million ($2.3 million) for the March quarter, whereas no such expense was incurred in the prior year period. Operating income before depreciation and amortization and share-based compensation expenses totaled RMB76.6 million ($12.4 million), up 3.7% compared to the prior year period.4
4 See exhibit 3 of this press release for a reconciliation of operating income to exclude the non-cash items related to the depreciation and amortization and share-based compensation expenses to the comparable financial measure prepared in accordance with U.S. GAAP. |
Research and Development Expenses. Research and development expenses, which have been stable in recent quarters, were RMB2.7 million ($0.4 million).
Sales and Marketing Expenses. Sales and marketing expenses for the fourth quarter amounted to RMB35.0 million ($5.6 million), compared to RMB28.4 million in the prior year period. As a percentage of revenue, sales and marketing expenses were 21.4%, as compared to 18.7% in the prior year period. The increase in sales and marketing expenses is mainly due to the recognition of share-based compensation expenses in the current quarter whereas no such expense incurred in the prior year period. Excluding such effect, sales and marketing expenses, as a percentage of revenue, increased marginally.
General and Administrative Expenses. General and administrative expenses for the fourth quarter were RMB41.4 million ($6.7 million), compared to RMB29.6 million in the prior year period. As a percentage of revenue, general and administrative expenses were 25.4%. Increased depreciation expense and the recognition of share-based compensation expense since December 2014 is the principle cause of the increase.
OTHER INCOME AND EXPENSES.
Interest Expense. Interest expense was mainly related to the Company's outstanding convertible notes. In the March quarter, the Company incurred interest expense of RMB25.2 million ($4.1 million), with no capitalization. For the prior year period, interest expense was RMB17.0 million as RMB7.0 million of interest expense was capitalized in relation to the construction of new facilities, which were completed as of March 31, 2014 and no interest expense was capitalized after that.
NET INCOME ATTRIBUTABLE TO THE COMPANY'S SHAREHOLDERS. Due to the decrease in operating income and higher interest expense, income before income tax for the fourth quarter decreased year-over-year to RMB29.0 million ($4.7 million) from RMB52.5 million. Net income attributable to the Company's shareholders for the fourth quarter of fiscal 2015 amounted to RMB16.9 million ($2.7 million), compared to RMB39.5 million in the prior year period. Net margin for the fourth quarter of fiscal 2015 was 10.4%.
EARNINGS PER SHARE.
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