Golden Meditech Announces FY2016/2017 Annual Results

HONG KONG, June 28, 2017 /PRNewswire/ --

Golden Meditech Holdings Limited (SEHK stock code: 00801, TWSE stock code: 910801) (“Golden Meditech” or the “Company”, together with its subsidiaries, the “Group”), a leading integrated healthcare enterprise in China, announces today its annual results for the year ended 31 March 2017 (the “Year” or “FY2016/2017").

During the Year, the results from continuing operations were in line with the management’s expectations. The Group’s total revenue from continuing operations was HK$230,666,000, decreased by 18.1% year-on-year. Of which, revenue from the healthcare services segment and the medical devices segment accounted for 28.2% and 69.7% (FY2015/201623.3% and 74.8%) of the Group’s total revenue from continuing operations, respectively. The decline in total revenue from continuing operations was mainly attributable to the 23.7% year-on-year decrease in medical devices revenue. Notably, income from hospital management services, one of the Group’s key growth focuses, increased by 1.3% year-on-year (FY2015/2016: a decrease of 5.9% year-on-year). Hospital management services income as a % of total revenue from continuing operations showed an upward trend and reached 26.2% (FY2015/2016: 21.2%). The management believes that the accelerating growth of hospital management business will drive the Group’s future development.

Operating loss from continuing operations was HK$312,168,000, increased by 17.7% year-on-year, primarily due to the increased costs incurred for the startup operation of Sunbow O&G Hospital and an accrual of directors’ retirement benefits of HK$35,150,000. Loss attributable to equity shareholders of the Company from continuing operations was HK$436,770,000, increased by 7.7% year-on-year. Increase was attributable to the substantial increase in finance costs and the recognition of impairment loss on goodwill of HK$294,995,000 during the Year, such increase was partially offset by the reversal of impairment loss on investment in Fortress of HK$734,525,000.

The Group recorded loss attributable to the Company’s equity shareholders (including continuing operations and discontinuing operation) of HK$147,121,000, decreased by 78.6% year-on-year; basic loss per share was 5.0 HK cents, decreased by 82.8% year-on-year.

Mr. Kam Yuen, Chairman and Chief Executive Officer of the Group, said, “The PRC government encourages the emerging industries of strategic importance to carry out industry upgrade and structure optimisation, which benefits the further development of healthcare market in China. We will seize these opportunities and optimise our business structure, hoping to accelerate our growth.”

The Company submitted a non-binding privatisation proposal to the board of directors of China Cord Blood Corporation (“CCBC”) (the “Proposed Privatisation”) in April 2015. During the process of the Proposed Privatisation, the Group was approached by Nanjing Xinjiekou Department Store Co., Ltd. (“NJXB”) in respect of the disposal of its 65.4% fully-diluted equity interest in CCBC. However, NJXB decided to withdraw the application for the China Securities Regulatory Commission’s approval of its acquisition of CCBC shares in August 2016, due to the uncertainty in the regulatory policy at that time regarding significant asset restructuring of listed companies in the PRC. Subsequently in September 2016, Sanpower Group Limited *(“Sanpower”), the substantial shareholder of NJXB, paid the Company an earnest money of RMB300,000,000 (equivalent to approximately HK$348,867,000 at the date of receipt) to secure alternative arrangements for the sale and purchase of CCBC shares. In December 2016, both the Company and Nanjing Yingpeng Huikang Medical Industry Investment Partnership (Limited Partnership)* reached an agreement on the disposal of the Company’s entire 65.4% fully-diluted equity interest in CCBC for a total cash consideration of RMB5,764,000,000 (equivalent to approximately HK$6,398,000,000) (the “Disposal”). The Disposal was approved by the Company’s shareholders on 22 March 2017. Mr. Kam Yuen added, “The Disposal not only enables the Group to realise its investment in the business, resulting in sound returns to the shareholders, but also demonstrates the Group’s outstanding capabilities in exploring, cultivating and growing high-potential investment projects in the healthcare sector.”

To date, the Disposal has yet to be completed. Meanwhile, the Company terminated the Proposed Privatisation upon receiving a termination letter from CCBC on 13 April 2017.

The Company made a full impairment provision of approximately HK$760 million against its investment in Fortress (a former associate of the Group) in the fiscal year 2014/2015. The Group is committed to maximising returns for its shareholders. Through several negotiations, the Company entered into settlement agreements with each of PAG Asia I LP and its assignee PAGAC Fortress Holding I Limited and Sanpower (the “Fortress Settlement Agreement” and “Sanpower Settlement Agreement”). According to the Fortress Settlement Agreement, the Group was authorised to recover an outstanding amount of approximately US$250 million (equivalent to approximately HK$1.95 billion) from Sanpower (the “Fortress Unsettled Sum”). In return, the Group agreed to pay PAGAC US$180 million (equivalent to approximately HK$1.40 billion) by three instalments within 18 months. Pursuant to the Sanpower Settlement Agreement, Sanpower agreed to pay the Group US$300 million (equivalent to approximately HK$2.34 billion) by five instalments within 36 months as the final settlement to resolve the claim in relation to Fortress Unsettled Sum. These two settlement agreements were approved by the shareholders on 16 January 2017 and were expected to bring cash of approximately US$120 million (equivalent to approximately HK$936 million) to the Group, which exceeded the abovementioned impairment provision of HK$760 million. During the Year, the Group recognised a reversal of impairment loss on its investment in Fortress of approximately $735 million, as a result of the Fortress Settlement Agreement and Sanpower Settlement Agreement.

Mr. Kam Yuen continued, “The Group is still undergoing business upgrade and optimisation. In addition, through collaborations with The University of Texas at MD Anderson Cancer Center and a renowned oncologist in the U.S.A., the Group builds up a solid foundation for future development in autoimmune disease therapies and precision medicines therapies.”

As the Disposal has yet to be completed during the Year, the Board did not recommend the payment of a final dividend in respect of the year ended 31 March 2017.

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