UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 


 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of June 2014

 

Commission File Number: 001-34541

 

CHINA CORD BLOOD CORPORATION
(Translation of registrant’s name into English)

 

48th Floor, Bank of China Tower
1 Garden Road
Central
Hong Kong S.A.R.

(Address of Principal Executive Offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x

 

Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o

 

No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                            .

 

 

 



 

EXPLANATORY NOTE

 

This Report of Foreign Private Issuer on Form 6-K 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 China Cord Blood Corporation’s (the “Company”) 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 Report on Form 6-K 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’s expectations are as of the date of this Report on Form 6-K, and the Company does not intend to update any of the forward-looking statements after the date of this Report on Form 6-K to confirm these statements to actual results, unless required by law.

 

The forward-looking statements included in this Report on Form 6-K 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 the recent revision on 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 the PRC, as well as general economic conditions; compliance with restrictive debt covenants under the Company’s senior convertible notes; and other relevant risks detailed in the Company’s filings with the Securities and Exchange Commission in the United States.

 

2



 

Results of Operations and Financial Condition

 

Following this cover page are the preliminary unaudited condensed consolidated financial results for the three months and year ended March 31, 2014 of the Company.

 

3



 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2013 and 2014

 

 

 

March 31,

 

March 31,

 

 

 

2013

 

2014

 

 

 

RMB

 

RMB

 

US$

 

 

 

(in thousands except share data)

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

1,494,099

 

1,882,901

 

302,892

 

Accounts receivable, less allowance for doubtful accounts
(March 31, 2013: RMB14,112; March 31, 2014: RMB20,322)

 

73,076

 

95,273

 

15,326

 

Inventories

 

10,265

 

31,583

 

5,080

 

Prepaid expenses and other receivables

 

11,602

 

37,010

 

5,954

 

Debt issuance costs

 

3,678

 

3,616

 

582

 

Deferred tax assets

 

5,454

 

7,664

 

1,233

 

Total current assets

 

1,598,174

 

2,058,047

 

331,067

 

Property, plant and equipment, net

 

468,272

 

626,632

 

100,804

 

Non-current prepayments

 

212,633

 

208,894

 

33,604

 

Non-current accounts receivable, less allowance for doubtful accounts
(March 31, 2013: RMB36,361; March 31, 2014: RMB42,703)

 

249,370

 

225,496

 

36,275

 

Inventories

 

39,730

 

48,385

 

7,783

 

Intangible assets, net

 

125,170

 

120,549

 

19,392

 

Available-for-sale equity securities

 

88,404

 

144,247

 

23,204

 

Other investment

 

189,129

 

189,129

 

30,424

 

Debt issuance costs

 

11,667

 

7,854

 

1,263

 

Deferred tax assets

 

3,727

 

1,789

 

288

 

Total assets

 

2,986,276

 

3,631,022

 

584,104

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Bank loan

 

50,000

 

60,000

 

9,652

 

Accounts payable

 

9,890

 

10,422

 

1,677

 

Accrued expenses and other payables

 

84,006

 

102,559

 

16,498

 

Deferred revenue

 

172,328

 

196,432

 

31,599

 

Amounts due to related parties

 

11,241

 

21,453

 

3,452

 

Income tax payable

 

4,983

 

2,571

 

414

 

Deferred tax liabilities

 

 

3,900

 

627

 

Total current liabilities

 

332,448

 

397,337

 

63,919

 

Convertible notes

 

751,781

 

777,753

 

125,113

 

Non-current deferred revenue

 

530,258

 

823,921

 

132,540

 

Other non-current liabilities

 

107,158

 

164,077

 

26,395

 

Deferred tax liabilities

 

23,168

 

27,938

 

4,494

 

Total liabilities

 

1,744,813

 

2,191,026

 

352,461

 

 

4



 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2013 and 2014 - (continued)

 

 

 

March 31,

 

March 31,

 

 

 

2013

 

2014

 

 

 

RMB

 

RMB

 

US$

 

 

 

(in thousands except share data)

 

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, 2013 and 2014, respectively

 

50

 

50

 

8

 

Additional paid-in capital

 

798,221

 

798,221

 

128,405

 

Treasury stock, at cost
(March 31, 2013 and 2014: 136,899 shares, respectively)

 

(2,815

)

(2,815

)

(453

)

Accumulated other comprehensive income

 

18,256

 

84,263

 

13,555

 

Retained earnings

 

423,420

 

555,323

 

89,331

 

Total equity attributable to China Cord Blood Corporation

 

1,237,132

 

1,435,042

 

230,846

 

Non-controlling interests

 

4,331

 

4,954

 

797

 

Total equity

 

1,241,463

 

1,439,996

 

231,643

 

Total liabilities and equity

 

2,986,276

 

3,631,022

 

584,104

 

 

5



 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months and Year ended March 31, 2013 and 2014

 

 

 

Three months ended March 31,

 

Year ended March 31,

 

 

 

2013

 

2014

 

2013

 

2014

 

 

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(in thousands except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

133,011

 

151,915

 

24,438

 

526,123

 

572,857

 

92,152

 

Direct costs

 

(26,907

)

(27,341

)

(4,398

)

(106,621

)

(106,225

)

(17,088

)

Gross profit

 

106,104

 

124,574

 

20,040

 

419,502

 

466,632

 

75,064

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

(2,249

)

(2,539

)

(408

)

(8,459

)

(9,773

)

(1,572

)

Sales and marketing

 

(26,116

)

(28,415

)

(4,571

)

(93,684

)

(112,689

)

(18,128

)

General and administrative

 

(26,992

)

(29,607

)

(4,763

)

(108,045

)

(112,244

)

(18,056

)

Total operating expenses

 

(55,357

)

(60,561

)

(9,742

)

(210,188

)

(234,706

)

(37,756

)

Operating income

 

50,747

 

64,013

 

10,298

 

209,314

 

231,926

 

37,308

 

Other expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

4,002

 

4,615

 

742

 

15,064

 

16,870

 

2,714

 

Interest expense

 

(22,070

)

(16,990

)

(2,733

)

(70,097

)

(70,075

)

(11,273

)

Exchange (loss)/gain

 

(25

)

329

 

53

 

(984

)

80

 

13

 

Dividend income

 

 

 

 

4,685

 

9,911

 

1,594

 

Others

 

924

 

565

 

91

 

203

 

2,212

 

356

 

Total other expense, net

 

(17,169

)

(11,481

)

(1,847

)

(51,129

)

(41,002

)

(6,596

)

Income before income tax

 

33,578

 

52,532

 

8,451

 

158,185

 

190,924

 

30,712

 

Income tax expense

 

(10,483

)

(12,830

)

(2,064

)

(38,543

)

(58,398

)

(9,394

)

Net income

 

23,095

 

39,702

 

6,387

 

119,642

 

132,526

 

21,318

 

Net income attributable to non-controlling interests

 

(67

)

(163

)

(26

)

(7,195

)

(623

)

(100

)

Net income attributable to China Cord Blood Corporation’s shareholders

 

23,028

 

39,539

 

6,361

 

112,447

 

131,903

 

21,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to ordinary shares

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

0.32

 

0.46

 

0.07

 

1.49

 

1.60

 

0.26

 

- Diluted

 

0.32

 

0.46

 

0.07

 

1.49

 

1.60

 

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,936

 

(3,686

)

(593

)

1,296

 

8,299

 

1,335

 

- Net unrealized gain/(loss) in available-for-sale equity securities, net of nil tax

 

12,023

 

(6,346

)

(1,021

)

(9,120

)

57,708

 

9,283

 

Comprehensive income

 

38,054

 

29,670

 

4,773

 

111,818

 

198,533

 

31,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to non-controlling interests

 

(67

)

(163

)

(26

)

(7,172

)

(623

)

(100

)

Comprehensive income attributable to China Cord Blood Corporation’s shareholders

 

37,987

 

29,507

 

4,747

 

104,646

 

197,910

 

31,836

 

 

6



 

Other Events

 

On June 18, 2014, the Company issued a press release announcing preliminary unaudited condensed consolidated financial results for the three months and year ended March 31, 2014. A copy of the press release is attached as Exhibit 99.1.

 

Exhibits

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release, dated June 18, 2014

 

7



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

CHINA CORD BLOOD CORPORATION

 

 

 

By:

/s/ Albert Chen

 

Name:

Albert Chen

 

Title:

Chief Financial Officer

 

 

Dated: June 18, 2014

 

 

8


 

Exhibit 99.1

 

GRAPHIC

 

China Cord Blood Corporation Reports Financial Results

for the Fourth Quarter and Full Year of Fiscal 2014

 

4Q14 Added 17,136 New Subscribers

4Q14 Revenue Increased to RMB151.9 Million

4Q14 Gross Profit Up 17.4% YOY to RMB124.6 Million

Conference Call to be Held on June 19, 2014 at 8:00 a.m. ET

 

HONG KONG, China, June 18, 2014 — 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 2014 fiscal year ended March 31, 2014.

 

Fiscal 2014 Fourth Quarter Highlights

 

·                  Revenues for the fourth quarter of fiscal 2014 increased to RMB151.9 million ($24.4 million) from RMB133.0 million in the prior year period.

·                  New subscriber sign-ups and accumulated subscriber base reached 17,136 and 376,623, respectively.

·                  Gross profit increased to RMB124.6 million ($20.0 million) from RMB106.1 million in the prior year period.

·                  Operating income amounted to RMB64.0 million ($10.3 million), up from RMB50.7 million in the prior year period.

·                  Interest expense decreased to RMB17.0 million ($2.7 million), compared to RMB22.1 million in the prior year period, due to interest expense capitalization.

·                  Net income attributable to the Company’s shareholders was RMB39.5 million ($6.4 million), compared to RMB23.0 million in the prior year period.

·                  Operating cash flow for the quarter was RMB137.4 million ($22.1 million).

 

Fiscal 2014 Full Year Highlights

 

·                  Revenues for the full year of fiscal 2014 increased to RMB572.9 million ($92.2 million) from RMB526.1 million in the prior year.

·                  New subscriber sign-ups reached 64,641 and accumulated subscriber base expanded to 376,623.

·                  Gross profit increased 11.2% year-over-year to RMB466.6 million ($75.1 million).

·                  Operating income increased 10.8% year-over-year to RMB231.9 million ($37.3 million).

·                  Interest expense was RMB70.1 million ($11.3 million), similar to the prior year.

·                  Net income attributable to the Company’s shareholders increased 17.3% to RMB131.9 million ($21.2 million), up from RMB112.4 million in the prior year.

·                  Operating cash flow for the full year of fiscal 2014 was RMB536.0 million ($86.2 million).

 

“Although fiscal 2014 was heavily affected by the drop in the number of newborns following the Dragon year, our team’s dedicated effort resulted in more than 17,000 new subscribers in the fourth quarter,” stated Ms. Ting Zheng, Chief Executive Officer of China Cord Blood Corporation.

 

“The geographical breakdown and payment mix of our new subscribers in the fourth quarter were comparable to previous quarters, resulting in a consistent level of cash flow. We continue to focus on sales and service efficiency to strengthen our market reputation. Heading into fiscal 2015, as our new facilities in Guangdong and Zhejiang become operational, we expect to increase our penetration in these regions, deepen our market reach and expand our overall leadership position in China’s cord blood banking industry.”

 



 

GRAPHIC

 

Fourth Quarter and Full Year Summary Ended March 31, 2013 and 2014

 

 

 

Three Months Ended
March 31,

 

Year Ended
March 31,

 

 

 

2013

 

2014

 

2013

 

2014

 

(in thousands)

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Revenues

 

133,011

 

151,915

 

24,438

 

526,123

 

572,857

 

92,152

 

Gross Profit

 

106,104

 

124,574

 

20,040

 

419,502

 

466,632

 

75,064

 

Operating Income

 

50,747

 

64,013

 

10,298

 

209,314

 

231,926

 

37,308

 

Net Income Attributable to the Company’s Shareholders

 

23,028

 

39,539

 

6,361

 

112,447

 

131,903

 

21,218

 

Earnings per Ordinary Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic1 and Diluted (RMB/US$)

 

0.32

 

0.46

 

0.07

 

1.49

 

1.60

 

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Breakdown (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Processing Fees

 

72.2

%

71.1

%

 

 

75.4

%

70.9

%

 

 

Storage Fees

 

27.8

%

28.9

%

 

 

24.6

%

29.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Subscribers (persons)

 

16,059

 

17,136

 

 

 

72,228

 

64,641

 

 

 

Total Accumulated Subscribers (persons)

 

311,982

 

376,623

 

 

 

311,982

 

376,623

 

 

 

 

Summary — Selected Cash Flow Statement Items

 

 

 

Three Months Ended

 

Year Ended

 

 

 

March 31, 2014

 

March 31, 2014

 

(in thousands)

 

RMB

 

US$

 

RMB

 

US$

 

Net cash provided by operating activities

 

137,399

 

22,103

 

536,015

 

86,226

 

Net cash used in investing activities

 

(9,037

)

(1,454

)

(149,883

)

(24,111

)

Net cash provided by financing activities

 

 

 

2,336

 

376

 

 

Fourth Quarter of Fiscal 2014 Financial Results

 

REVENUES. Revenues increased 14.2% to RMB151.9 million ($24.4 million) in the fourth quarter of fiscal 2014 from RMB133.0 million in the prior year period, driven mainly by increased pricing implemented since April 2013, the addition of new subscribers, and the increased contribution of storage revenue from the Company’s expanded accumulated subscriber base.

 

Revenues generated from storage fees increased to RMB44.0 million ($7.1 million), up from RMB37.0 million in the prior year period. As a result of the expanded subscriber base, revenue from storage fees, as a percentage of total revenue, increased to 28.9%.

 

Revenues generated from processing fees in the fourth quarter were RMB107.9 million ($17.3 million), up from RMB96.0 million in the prior year period due to higher pricing and an increase of new subscribers. 17,136 new subscribers were recorded during the fourth quarter of fiscal 2014, representing a 6.7% year-over-year increase. Revenues generated from processing fees accounted for 71.1% of total revenues, compared to 72.2% in the prior year period.

 


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 RMB0.08 ($0.01) and RMB0.21 ($0.03) for the three months and year ended March 31, 2014, respectively.

 



 

GRAPHIC

 

GROSS PROFIT. Gross profit for the fourth quarter of fiscal 2014 amounted to RMB124.6 million ($20.0 million) from RMB106.1 million in the prior year period. Gross margin stood at 82.0%, as the Company benefitted from increased storage revenue as a percent of the overall revenue and from economies of scale.

 

OPERATING INCOME. Operating income for the fourth quarter was RMB64.0 million ($10.3 million), compared to RMB50.7 million in the prior year period. Operating margin increased to 42.1% from 38.2% in the prior year period. The increase was mainly due to higher gross profit, offset in part by an increase in operating expenses. Depreciation and amortization expenses for the fourth quarter were RMB9.8 million ($1.6 million).

 

Research and Development Expenses. Research and development expenses amounted to RMB2.5 million ($0.4 million).

 

Sales and Marketing Expenses. Sales and marketing expenses for the fourth quarter amounted to RMB28.4 million ($4.6 million), compared to RMB26.1 million in the prior year period. The increase in sales and marketing expenses is in-line with the overall increase in sales activities. But as a percentage of revenue, 2014 fourth quarter sales and marketing expenses decreased to 18.7% from 19.6% in the prior year period, and remained the same as the third quarter of fiscal 2014.

 

General and Administrative Expenses. General and administrative expenses increased modestly to RMB29.6 million ($4.8 million), from RMB27.0 million in the prior year period. However as a percentage of revenue, general and administrative expenses were 19.5%, down from 20.3% in the prior year period.

 

OTHER INCOME AND EXPENSES

 

Interest Expense. Interest expense decreased to RMB17.0 million ($2.7 million) from RMB22.1 million in the prior year period. The decrease was largely attributable to the increase in the capitalization of interest expense for the Company’s construction of new facilities. Interest expense capitalized in the fourth quarter of fiscal 2014 amounted to RMB7.0 million ($1.1 million), compared to RMB1.3 million in the prior year period.

 

NET INCOME ATTRIBUTABLE TO THE COMPANY’S SHAREHOLDERS. Due primarily to the increase in operating income and the reduction in interest expense, net income attributable to the Company’s shareholders for the fourth quarter of fiscal 2014 increased to RMB39.5 million ($6.4 million) from RMB23.0 million in the prior year period. Net margin for the fourth quarter of fiscal 2014 stood at 26.0%.

 

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 Dividend2. Therefore, the calculation of basic and diluted EPS incorporates the effect of such participating rights of RMB0.08 ($0.01). Basic and diluted earnings per ordinary share for the fourth quarter of fiscal 2014 were RMB0.46 ($0.07).

 


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.

 



 

GRAPHIC

 

LIQUIDITY. As of March 31, 2014, the Company had cash and cash equivalents of RMB1,882.9 million ($302.9 million) compared to RMB1,494.1 million as of March 31, 2013. The Company had total debt of RMB837.8 million ($134.8 million) as of March 31, 2014. Operating cash flow for the quarter amounted to RMB137.4 million ($22.1 million).

 

Full Year Fiscal 2014 Financial Results

 

For the 2014 fiscal year, total revenues increased 8.9% to RMB572.9 million ($92.2 million) from RMB526.1 million in the prior year. The increase was largely attributable to the implementation of higher service fees and the expansion of the Company’s accumulated subscriber base to 376,623 subscribers, which outweighed the impact of the decrease in new subscriber numbers after the Dragon year. Revenues from processing fees increased slightly by 2.4% but storage fees grew by 28.7%. Gross profit increased 11.2% to RMB466.6 million ($75.1 million) from RMB419.5 million in the prior year. Operating income increased 10.8% to RMB231.9 million ($37.3 million) from RMB209.3 million in the prior year. Net income attributable to the Company’s shareholders totaled RMB131.9 million ($21.2 million). Basic and diluted earnings per share attributable to ordinary shares were RMB1.60 ($0.26). Net cash provided by operating activities for the full year of fiscal 2014 was RMB536.0 million ($86.2 million), compared to RMB578.6 million in fiscal 2013.

 

Conference Call

 

The Company will host a conference call at 8:00 a.m. ET on Thursday, June 19, 2014 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 conference call 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: 1106709.

 

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 confirm these statements to actual results, unless required by law.

 



 

GRAPHIC

 

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 the recent revision on 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 March 31, 2014 were made at the noon buying rate of RMB6.2164 to $1.00 on March 31, 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: [email protected]

 

ICR, Inc.

Mr. William Zima

Tel: (+86) 10-6583-7511

U.S. Tel: (646) 405-5185

Email: [email protected]

 



 

GRAPHIC

 

EXHIBIT 1

 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2013 and 2014

 

 

 

March 31,

 

March 31,

 

 

 

2013

 

2014

 

 

 

RMB

 

RMB

 

US$

 

 

 

(in thousands except share data)

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

1,494,099

 

1,882,901

 

302,892

 

Accounts receivable, less allowance for doubtful accounts
(March 31, 2013: RMB14,112; March 31, 2014: RMB20,322)

 

73,076

 

95,273

 

15,326

 

Inventories

 

10,265

 

31,583

 

5,080

 

Prepaid expenses and other receivables

 

11,602

 

37,010

 

5,954

 

Debt issuance costs

 

3,678

 

3,616

 

582

 

Deferred tax assets

 

5,454

 

7,664

 

1,233

 

Total current assets

 

1,598,174

 

2,058,047

 

331,067

 

Property, plant and equipment, net

 

468,272

 

626,632

 

100,804

 

Non-current prepayments

 

212,633

 

208,894

 

33,604

 

Non-current accounts receivable, less allowance for doubtful accounts
(March 31, 2013: RMB36,361; March 31, 2014: RMB42,703)

 

249,370

 

225,496

 

36,275

 

Inventories

 

39,730

 

48,385

 

7,783

 

Intangible assets, net

 

125,170

 

120,549

 

19,392

 

Available-for-sale equity securities

 

88,404

 

144,247

 

23,204

 

Other investment

 

189,129

 

189,129

 

30,424

 

Debt issuance costs

 

11,667

 

7,854

 

1,263

 

Deferred tax assets

 

3,727

 

1,789

 

288

 

Total assets

 

2,986,276

 

3,631,022

 

584,104

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Bank loan

 

50,000

 

60,000

 

9,652

 

Accounts payable

 

9,890

 

10,422

 

1,677

 

Accrued expenses and other payables

 

84,006

 

102,559

 

16,498

 

Deferred revenue

 

172,328

 

196,432

 

31,599

 

Amounts due to related parties

 

11,241

 

21,453

 

3,452

 

Income tax payable

 

4,983

 

2,571

 

414

 

Deferred tax liabilities

 

 

3,900

 

627

 

Total current liabilities

 

332,448

 

397,337

 

63,919

 

Convertible notes

 

751,781

 

777,753

 

125,113

 

Non-current deferred revenue

 

530,258

 

823,921

 

132,540

 

Other non-current liabilities

 

107,158

 

164,077

 

26,395

 

Deferred tax liabilities

 

23,168

 

27,938

 

4,494

 

Total liabilities

 

1,744,813

 

2,191,026

 

352,461

 

 



 

GRAPHIC

 

EXHIBIT 1 (continued)

 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2013 and 2014 - (continued)

 

 

 

March 31,

 

March 31,

 

 

 

2013

 

2014

 

 

 

RMB

 

RMB

 

US$

 

 

 

(in thousands except share data)

 

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, 2013 and 2014, respectively

 

50

 

50

 

8

 

Additional paid-in capital

 

798,221

 

798,221

 

128,405

 

Treasury stock, at cost
(March 31, 2013 and 2014: 136,899 shares, respectively)

 

(2,815

)

(2,815

)

(453

)

Accumulated other comprehensive income

 

18,256

 

84,263

 

13,555

 

Retained earnings

 

423,420

 

555,323

 

89,331

 

Total equity attributable to China Cord Blood Corporation

 

1,237,132

 

1,435,042

 

230,846

 

Non-controlling interests

 

4,331

 

4,954

 

797

 

Total equity

 

1,241,463

 

1,439,996

 

231,643

 

Total liabilities and equity

 

2,986,276

 

3,631,022

 

584,104

 

 



 

GRAPHIC

 

EXHIBIT 2

 

CHINA CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months and Year ended March 31, 2013 and 2014

 

 

 

Three months ended March 31,

 

Year ended March 31,

 

 

 

2013

 

2014

 

2013

 

2014

 

 

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(in thousands except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

133,011

 

151,915

 

24,438

 

526,123

 

572,857

 

92,152

 

Direct costs

 

(26,907

)

(27,341

)

(4,398

)

(106,621

)

(106,225

)

(17,088

)

Gross profit

 

106,104

 

124,574

 

20,040

 

419,502

 

466,632

 

75,064

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

(2,249

)

(2,539

)

(408

)

(8,459

)

(9,773

)

(1,572

)

Sales and marketing

 

(26,116

)

(28,415

)

(4,571

)

(93,684

)

(112,689

)

(18,128

)

General and administrative

 

(26,992

)

(29,607

)

(4,763

)

(108,045

)

(112,244

)

(18,056

)

Total operating expenses

 

(55,357

)

(60,561

)

(9,742

)

(210,188

)

(234,706

)

(37,756

)

Operating income

 

50,747

 

64,013

 

10,298

 

209,314

 

231,926

 

37,308

 

Other expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

4,002

 

4,615

 

742

 

15,064

 

16,870

 

2,714

 

Interest expense

 

(22,070

)

(16,990

)

(2,733

)

(70,097

)

(70,075

)

(11,273

)

Exchange (loss)/gain

 

(25

)

329

 

53

 

(984

)

80

 

13

 

Dividend income

 

 

 

 

4,685

 

9,911

 

1,594

 

Others

 

924

 

565

 

91

 

203

 

2,212

 

356

 

Total other expense, net

 

(17,169

)

(11,481

)

(1,847

)

(51,129

)

(41,002

)

(6,596

)

Income before income tax

 

33,578

 

52,532

 

8,451

 

158,185

 

190,924

 

30,712

 

Income tax expense

 

(10,483

)

(12,830

)

(2,064

)

(38,543

)

(58,398

)

(9,394

)

Net income

 

23,095

 

39,702

 

6,387

 

119,642

 

132,526

 

21,318

 

Net income attributable to non-controlling interests

 

(67

)

(163

)

(26

)

(7,195

)

(623

)

(100

)

Net income attributable to China Cord Blood Corporation’s shareholders

 

23,028

 

39,539

 

6,361

 

112,447

 

131,903

 

21,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to ordinary shares

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

0.32

 

0.46

 

0.07

 

1.49

 

1.60

 

0.26

 

- Diluted

 

0.32

 

0.46

 

0.07

 

1.49

 

1.60

 

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,936

 

(3,686

)

(593

)

1,296

 

8,299

 

1,335

 

- Net unrealized gain/(loss) in available-for-sale equity securities, net of nil tax

 

12,023

 

(6,346

)

(1,021

)

(9,120

)

57,708

 

9,283

 

Comprehensive income

 

38,054

 

29,670

 

4,773

 

111,818

 

198,533

 

31,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to non-controlling interests

 

(67

)

(163

)

(26

)

(7,172

)

(623

)

(100

)

Comprehensive income attributable to China Cord Blood Corporation’s shareholders

 

37,987

 

29,507

 

4,747

 

104,646

 

197,910

 

31,836