UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 6-K/A

(Amendment No. 1)

 

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

 

For the month of December 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 Amendment No. 1 (the “Amendment”) to the Report of Foreign Private Issuer on Form 6-K (the “Original 6-K”), originally furnished by China Cord Blood Corporation (the “Company”) to the Securities and Exchange Commission on November 25, 2014, amends the Original 6-K to include an unaudited condensed consolidated statement of changes in equity, unaudited condensed consolidated statements of cash flows, notes to the unaudited condensed consolidated financial statements and the applicable interactive data file as Exhibit 101, which provides the unaudited condensed consolidated financial statements in XBRL (eXtensible business reporting language), and to provide for the incorporation by reference described below. No other changes have been made to the Original 6-K. This Amendment does not reflect events that may have occurred subsequent to the original submission date and does not modify or update in any way the disclosures made in the Original 6-K.

 

This Amendment and each of the exhibits to this Amendment are hereby incorporated by reference into the registration statements on Form F-3 (No. 333-191121 and No. 333-183143) of the Company.

 

This Amendment 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 Amendment 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 this Amendment is filed, and the Company does not intend to update any of the forward-looking statements after the date this Amendment is filed to conform these statements to actual results, unless required by law.

 

The forward-looking statements included in this Amendment 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 revisions to China’s 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 unaudited condensed consolidated financial results for the three months and six months ended September 30, 2014 of the Company.

 

3



 

China Cord Blood Corporation and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(Amounts expressed in thousands)

 

 

 

 

 

March 31,

 

September 30,

 

 

 

Note

 

2014

 

2014

 

2014

 

 

 

 

 

RMB

 

RMB

 

US$

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

1,882,901

 

2,156,527

 

351,340

 

Accounts receivable, less allowance for doubtful accounts
(March 31, 2014: RMB20,322; September 30, 2014: RMB23,691 (US$3,860))

 

 

 

95,273

 

110,412

 

17,988

 

Inventories

 

 

 

31,583

 

25,611

 

4,172

 

Prepaid expenses and other receivables

 

 

 

37,010

 

16,712

 

2,723

 

Debt issuance costs

 

5

 

3,616

 

3,608

 

588

 

Deferred tax assets

 

 

 

7,664

 

8,578

 

1,398

 

Total current assets

 

 

 

2,058,047

 

2,321,448

 

378,209

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

3

 

626,632

 

616,545

 

100,446

 

Non-current prepayments

 

 

 

208,894

 

208,429

 

33,957

 

Non-current accounts receivable, less allowance for doubtful accounts
(March 31, 2014: RMB42,703; September 30, 2014: RMB48,300 (US$7,869))

 

 

 

225,496

 

211,805

 

34,507

 

Inventories

 

 

 

48,385

 

54,062

 

8,808

 

Intangible assets, net

 

 

 

120,549

 

118,239

 

19,263

 

Available-for-sale equity securities

 

 

 

144,247

 

139,637

 

22,750

 

Other investment

 

 

 

189,129

 

189,129

 

30,813

 

Debt issuance costs

 

5

 

7,854

 

6,028

 

982

 

Deferred tax assets

 

 

 

1,789

 

2,648

 

431

 

Total assets

 

 

 

3,631,022

 

3,867,970

 

630,166

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Bank loan

 

4

 

60,000

 

60,000

 

9,775

 

Accounts payable

 

 

 

10,422

 

15,624

 

2,545

 

Accrued expenses and other payables

 

 

 

102,559

 

77,625

 

12,647

 

Deferred revenue

 

 

 

196,432

 

208,151

 

33,912

 

Amounts due to related parties

 

 

 

21,453

 

22,245

 

3,624

 

Income tax payable

 

 

 

2,571

 

7,202

 

1,173

 

Deferred tax liabilities

 

 

 

3,900

 

6,500

 

1,059

 

Total current liabilities

 

 

 

397,337

 

397,347

 

64,735

 

 

 

 

 

 

 

 

 

 

 

Convertible notes

 

5

 

777,753

 

797,227

 

129,884

 

Non-current deferred revenue

 

 

 

823,921

 

962,574

 

156,822

 

Other non-current liabilities

 

 

 

164,077

 

189,529

 

30,878

 

Deferred tax liabilities

 

 

 

27,938

 

27,331

 

4,453

 

Total liabilities

 

 

 

2,191,026

 

2,374,008

 

386,772

 

 

4



 

China Cord Blood Corporation and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets (Continued)

(Amounts expressed in thousands, except share data)

 

 

 

March 31,

 

September 30,

 

 

 

2014

 

2014

 

2014

 

 

 

RMB

 

RMB

 

US$

 

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 and September 30, 2014, respectively

 

50

 

50

 

8

 

Additional paid-in capital

 

798,221

 

798,221

 

130,046

 

Treasury stock, at cost
(March 31 and September 30, 2014: 136,899 shares, respectively)

 

(2,815

)

(2,815

)

(459

)

Accumulated other comprehensive income

 

84,263

 

81,393

 

13,260

 

Retained earnings

 

555,323

 

612,308

 

99,756

 

Total equity attributable to China Cord Blood Corporation

 

1,435,042

 

1,489,157

 

242,611

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

4,954

 

4,805

 

783

 

 

 

 

 

 

 

 

 

Total equity

 

1,439,996

 

1,493,962

 

243,394

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

3,631,022

 

3,867,970

 

630,166

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

5



 

China Cord Blood Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Comprehensive Income

(Amounts expressed in thousands, except per share data)

 

 

 

 

 

Three months ended September 30,

 

Six months ended September 30,

 

 

 

Note

 

2013

 

2014

 

2013

 

2014

 

 

 

 

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

141,635

 

152,122

 

24,784

 

270,356

 

305,453

 

49,764

 

Direct costs

 

 

 

(27,360

)

(30,348

)

(4,944

)

(51,852

)

(60,124

)

(9,795

)

Gross profit

 

 

 

114,275

 

121,774

 

19,840

 

218,504

 

245,329

 

39,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

 

(2,310

)

(2,330

)

(380

)

(4,833

)

(4,829

)

(787

)

Sales and marketing

 

 

 

(27,633

)

(30,953

)

(5,043

)

(56,057

)

(62,696

)

(10,214

)

General and administrative

 

 

 

(28,042

)

(31,028

)

(5,055

)

(55,444

)

(60,174

)

(9,804

)

Total operating expenses

 

 

 

(57,985

)

(64,311

)

(10,478

)

(116,334

)

(127,699

)

(20,805

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

 

56,290

 

57,463

 

9,362

 

102,170

 

117,630

 

19,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

4,312

 

4,704

 

766

 

8,494

 

8,970

 

1,461

 

Interest expense

 

 

 

(16,461

)

(25,209

)

(4,107

)

(31,219

)

(50,104

)

(8,163

)

Exchange gain/(loss)

 

 

 

69

 

(182

)

(30

)

(55

)

(2

)

 

Dividend income

 

 

 

 

 

 

8,722

 

1,196

 

195

 

Others

 

 

 

514

 

680

 

111

 

1,044

 

1,297

 

211

 

Total other expense, net

 

 

 

(11,566

)

(20,007

)

(3,260

)

(13,014

)

(38,643

)

(6,296

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

 

44,724

 

37,456

 

6,102

 

89,156

 

78,987

 

12,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

6

 

(19,706

)

(10,214

)

(1,664

)

(31,079

)

(22,151

)

(3,609

)

Net income

 

 

 

25,018

 

27,242

 

4,438

 

58,077

 

56,836

 

9,259

 

Net income attributable to non-controlling interests

 

 

 

(114

)

7

 

1

 

(267

)

149

 

24

 

Net income attributable to China Cord Blood Corporation’s shareholders

 

 

 

24,904

 

27,249

 

4,439

 

57,810

 

56,985

 

9,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to ordinary shares

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

 

0.33

 

0.35

 

0.06

 

0.73

 

0.72

 

0.12

 

- Diluted

 

 

 

0.33

 

0.35

 

0.06

 

0.73

 

0.72

 

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

2,789

 

913

 

149

 

9,594

 

1,442

 

235

 

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

 

 

 

59,220

 

(8,818

)

(1,437

)

83,558

 

(4,312

)

(703

)

Comprehensive income

 

 

 

87,027

 

19,337

 

3,150

 

151,229

 

53,966

 

8,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to non-controlling interests

 

 

 

(114

)

7

 

1

 

(267

)

149

 

24

 

Comprehensive income attributable to China Cord Blood Corporation’s shareholders

 

 

 

86,913

 

19,344

 

3,151

 

150,962

 

54,115

 

8,815

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

6



 

China Cord Blood Corporation and Subsidiaries

Unaudited Condensed Consolidated Statement of Changes in Equity

(Amounts expressed in thousands, except share data)

 

 

 

China Cord Blood Corporation shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Share capital

 

Additional

 

Treasury stock

 

other

 

 

 

Non-

 

 

 

 

 

No. of

 

 

 

paid-in

 

No. of

 

 

 

comprehensive

 

Retained

 

controlling

 

Total

 

 

 

shares

 

Amount

 

capital

 

shares

 

Amount

 

income

 

earnings

 

interests

 

equity

 

 

 

 

 

RMB

 

RMB

 

 

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of April 1, 2014

 

73,140,147

 

50

 

798,221

 

(136,899

)

(2,815

)

84,263

 

555,323

 

4,954

 

1,439,996

 

Net income

 

 

 

 

 

 

 

56,985

 

(149

)

56,836

 

Other comprehensive income

 

 

 

 

 

 

(2,870

)

 

 

(2,870

)

Balance as of September 30, 2014

 

73,140,147

 

50

 

798,221

 

(136,899

)

(2,815

)

81,393

 

612,308

 

4,805

 

1,493,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of September 30, 2014 - US$

 

 

 

$

8

 

$

130,046

 

 

 

$

(459

)

$

13,260

 

$

99,756

 

$

783

 

$

243,394

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

7



 

China Cord Blood Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(Amounts expressed in thousands)

 

 

 

Six months ended September 30,

 

 

 

2013

 

2014

 

2014

 

 

 

RMB

 

RMB

 

US$

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net cash provided by operating activities

 

229,623

 

295,691

 

48,174

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(57,069

)

(22,407

)

(3,651

)

Proceeds from disposal of property, plant and equipment

 

178

 

12

 

2

 

Net cash used in investing activities

 

(56,891

)

(22,395

)

(3,649

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayments of bank loan

 

(50,000

)

(60,000

)

(9,775

)

Proceeds from bank loan

 

60,000

 

60,000

 

9,775

 

Payments for repurchase of shares

 

(4,422

)

 

 

Payments for debt issuance costs

 

(3,242

)

 

 

Net cash provided by financing activities

 

2,336

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign currency exchange rate change on cash and cash equivalents

 

213

 

330

 

54

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

175,281

 

273,626

 

44,579

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,494,099

 

1,882,901

 

306,761

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

1,669,380

 

2,156,527

 

351,340

 

 

 

 

 

 

 

 

 

Non-cash investing activities:

 

 

 

 

 

 

 

Payable for property, plant and equipment

 

14,789

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

Cash paid for income taxes

 

30,888

 

23,680

 

3,858

 

Cash refund for income taxes

 

 

18,279

 

2,978

 

Cash paid for interest, net of capitalized interest

 

51,670

 

28,268

 

4,605

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

8



 

Notes to the unaudited condensed consolidated financial statements

(Amounts expressed in thousands, except share data)

 

1                                         Principal activities and basis of presentation

 

(a)                                 Principal activities

 

China Cord Blood Corporation (the “Company”) and its subsidiaries (collectively the “Group”) are principally engaged in the provision of umbilical cord blood storage and ancillary services in the People’s Republic of China (the “PRC”). As of September 30, 2014, the Group has three operating cord blood banks in the Beijing municipality, the Guangdong province and the Zhejiang province, the PRC. The Company’s shares are listed on the New York Stock Exchange.

 

The Group provides cord blood testing, processing and storage services under the direction of subscribers for a cord blood processing fee and a storage fee. The Group also tests, processes and stores donated cord blood, and provides matching services to the public for a fee.

 

(b)                                 Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The condensed consolidated balance sheet as of March 31, 2014 was derived from the audited consolidated financial statements of the Company. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the March 31, 2014 audited consolidated financial statements of the Company included in the Company’s annual report on Form 20-F for the year ended March 31, 2014.

 

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of September 30, 2014, the results of operations for the three and six months ended September 30, 2013 and 2014, and cash flows for the six months ended September 30, 2013 and 2014 have been made.

 

For the convenience of the readers, certain amounts as of and for the three and six months ended September 30, 2014 included in the accompanying unaudited condensed consolidated financial statements have been translated into U.S. dollars at the rate of US$1.00 = RMB6.1380, being the spot exchange rate of U.S. dollars in effect on September 30, 2014 for cable transfers in RMB per U.S. dollar as certified for customs purposes by the Federal Reserve, the central bank of the United States of America. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at that rate or at any other rate on September 30, 2014 or at any other date.

 

9



 

2                                         Summary of significant accounting policies

 

(a)                                 Principles of consolidation

 

The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its majority-owned subsidiaries. For consolidated subsidiaries where the Company’s ownership is less than 100%, the outside shareholders’ interests are shown as non-controlling interests. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has no involvement with variable interest entities.

 

(b)                                 Use of estimates

 

The preparation of the consolidated financial statements, in accordance with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the establishment of the selling prices of multiple deliverables in revenue arrangements, the estimation of direct costs for the provision of donated cord blood for transplantation and research, the useful lives of property, plant and equipment and intangible assets, the valuation of property, plant and equipment, intangible assets and investment securities, the valuation allowances for receivables and deferred tax assets and the realizability of inventories.

 

3                                         Property, plant and equipment, net

 

Property, plant and equipment, net consist of the following:

 

 

 

March 31,

 

September 30,

 

 

 

2014

 

2014

 

2014

 

 

 

RMB

 

RMB

 

US$

 

 

 

 

 

 

 

 

 

Buildings

 

578,513

 

580,960

 

94,649

 

Leasehold improvements

 

14,864

 

14,864

 

2,422

 

Machineries

 

118,449

 

133,208

 

21,702

 

Motor vehicles

 

14,885

 

15,272

 

2,488

 

Furniture, fixtures and office equipment

 

35,433

 

38,558

 

6,282

 

Construction-in-progress

 

9,684

 

893

 

145

 

 

 

771,828

 

783,755

 

127,688

 

Less: Accumulated depreciation

 

(145,196

)

(167,210

)

(27,242

)

Total property, plant and equipment, net

 

626,632

 

616,545

 

100,446

 

 

Depreciation expense related to property, plant and equipment for the three months ended September 30, 2013 and 2014 was RMB7,560 and RMB12,146 (US$1,979), respectively. Depreciation expense related to property, plant and equipment for the six months ended September 30, 2013 and 2014 was RMB14,998 and RMB22,398 (US$3,649), respectively.

 

As of March 31, 2014 and September 30, 2014, buildings with carrying value of RMB114,570 and RMB111,052 (US$18,093) were collateralized for a short-term bank loan of RMB60,000 and RMB60,000 (US$9,775) (see Note 4), respectively.

 

10



 

4                                         Bank loan

 

On August 12, 2013, the Group borrowed RMB60,000 from Hangzhou Bank for one year. The loan bears a monthly fixed interest rate at 0.6%. The Group repaid the bank loan in full on August 11, 2014.

 

On August 25, 2014, the Group borrowed RMB60,000 (US$9,775) from Hangzhou Bank for one year. The loan bears a monthly fixed interest rate at 0.6%.

 

The bank loans are denominated in RMB and are collateralized by certain buildings of the Group (see Note 3).

 

5                                         Convertible notes

 

The carrying amount of the convertible notes to KKR China Healthcare Investment Limited (“KKRCHIL”) (the “KKR Note”) and to Golden Meditech Holdings Limited (“GMHL”), which is a major shareholder of the Company, (the “GM Note”) (collectively the “Notes”), is summarized in the following table:

 

 

 

March 31,

 

September 30,

 

 

 

2014

 

2014

 

2014

 

 

 

RMB

 

RMB

 

US$

 

 

 

 

 

 

 

 

 

Principal amount of the KKR Note

 

403,315

 

401,950

 

65,486

 

Principal amount of the GM Note

 

310,302

 

309,192

 

50,373

 

Cumulative interest payable

 

64,136

 

86,085

 

14,025

 

Carrying amount

 

777,753

 

797,227

 

129,884

 

 

The Company accrued interest on the Notes based on the guaranteed 12% internal rate of return per annum. The difference between the accrued interest rate of 12% and the coupon rate of 7% of the Notes is recorded in convertible notes in the unaudited condensed consolidated balance sheets. Debt issuance costs capitalized in connection with the issuance of the Notes are amortized from the date the Notes were issued to the earliest date the holders of the Notes can demand payment, which is five years.

 

In November 2014, GMHL completed the sale of the GM Note of US$50,000 in aggregate principal amount to Magnum Opus International Holdings Limited (“Magnum”), which is controlled by the Company’s chairman, and Cordlife Group Limited (“CGL”), for a total consideration of US$88,090. As a result, GMHL caused the Company to issue the note of US$25,000 in aggregate principal amount to each of Magnum and CGL. The GM Note was simultaneously cancelled. The Company, Magnum and CGL agreed to be bound by the terms of the registration rights agreement as though Magnum and CGL were original parties thereto.

 

Interest relating to the Notes was recognized as follows:

 

 

 

Three months ended September 30,

 

Six months ended September 30,

 

 

 

2013

 

2014

 

2013

 

2014

 

 

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KKR Note interest incurred

 

12,190

 

13,488

 

2,197

 

24,320

 

26,638

 

4,340

 

GM Note interest incurred

 

9,496

 

9,843

 

1,604

 

18,827

 

19,587

 

3,191

 

Amortization of debt issuance costs

 

912

 

912

 

149

 

1,819

 

1,814

 

295

 

Notes related interest cost capitalized

 

(6,600

)

 

 

(14,789

)

 

 

Total interest expense

 

15,998

 

24,243

 

3,950

 

30,177

 

48,039

 

7,826

 

 

11



 

6                                         Income tax

 

The Company’s PRC subsidiaries are subject to PRC statutory income tax rate of 25% unless otherwise specified.

 

In February 2012, Beijing Jiachenhong Biological Technologies Co., Ltd. (“Beijing Jiachenhong”) received approval from the tax authority on the renewal of its High and New Technology Enterprise (“HNTE”) status which entitled it to the preferential income tax rate of 15% effective retroactively from January 1, 2011 to December 31, 2013. Subject to reapplication, Beijing Jiachenhong’s HNTE status will enable it to the preferential income tax rate of 15% from January 1, 2014 to December 31, 2016. Management believes that Beijing Jiachenhong meets all the criteria required in connection with the reapplication of HNTE status and therefore applied 15% when recognizing current tax.

 

In June 2011, Guangzhou Municipality Tianhe Nuoya Bio-engineering Co., Ltd. (“Guangzhou Nuoya”) received approval from the tax authority that it qualified as a HNTE which entitled it to the preferential income tax rate of 15% effective retrospectively from January 1, 2010 to December 31, 2012. In April 2014, Guangzhou Nuoya received approval from the tax authority on the renewal of its HNTE status which entitled it to the preferential income tax rate of 15% effective retroactively from January 1, 2013 to December 31, 2015.

 

The new Enterprise Income Tax law and its implementation rules impose a withholding tax at 10%, unless reduced by a tax treaty or agreement, for dividends receivable by non-PRC-resident enterprises from PRC-resident enterprises in respect of earnings accumulated beginning on January 1, 2008. During the period ended September 30, 2013, withholding tax of RMB6,000 was levied on dividends distributed by the Company’s PRC subsidiary to the holding company outside the PRC. As of March 31, 2014 and September 30, 2014, the Company has provided RMB3,900 and RMB6,500 (US$1,059), respectively, for withholding income tax on a portion of the undistributed earnings of its PRC subsidiaries according to management’s reinvestment plan. No income taxes were provided for the remaining undistributed earnings which are intended to be reinvested indefinitely in the PRC. As of September 30, 2014, such unremitted earnings that may be subject to the withholding tax amounted to RMB844,481 (US$137,582) and the related unrecognized deferred tax liability was RMB84,448 (US$13,758).

 

The Company’s effective income tax rates for the three months ended September 30, 2013 and 2014 were 44.1% and 27.3%, and were 34.9% and 28.0% for the six months ended September 30, 2013 and 2014, respectively. The effective income tax rates for the three and six months ended September 30, 2013 and 2014 differ from the PRC statutory income tax rate of 25% primarily due to the effect of Beijing Jiachenhong and Guangzhou Nuoya’s preferential tax treatments, which is offset by the effect of non-PRC entities not being subject to income tax, and the effect of withholding tax.

 

As of and for the six months ended September 30, 2014, the Company did not have any material unrecognized tax benefits and thus no interest and penalties related to unrecognized tax benefits were recorded. In addition, the Company does not expect that the amount of unrecognized tax benefits will change significantly within the next twelve months.

 

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7                                         Net income per share

 

The following table sets forth the computation of basic net income per share and diluted net income per share for the three and six months ended September 30, 2013 and 2014 respectively:

 

 

 

 

 

Three months ended September 30,

 

 

 

Note

 

2013

 

2014

 

2014

 

 

 

 

 

RMB

 

RMB

 

US$

 

Numerator:

 

 

 

 

 

 

 

 

 

Net income attributable to the Company’s shareholders

 

 

 

24,904

 

27,249

 

4,439

 

Earnings allocated to participating convertible notes

 

(i)

 

(722

)

(1,638

)

(267

)

Net income for basic and diluted net income per share

 

 

 

24,182

 

25,611

 

4,172

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average ordinary shares outstanding for basic and diluted net income per share

 

 

 

73,003,248

 

73,003,248

 

73,003,248

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to ordinary shares:

 

 

 

 

 

 

 

 

 

- Basic

 

 

 

0.33

 

0.35

 

0.06

 

- Diluted

 

(ii)

 

0.33

 

0.35

 

0.06

 

 

 

 

 

 

Six months ended September 30,

 

 

 

Note

 

2013

 

2014

 

2014

 

 

 

 

 

RMB

 

RMB

 

US$

 

Numerator:

 

 

 

 

 

 

 

 

 

Net income attributable to the Company’s shareholders

 

 

 

57,810

 

56,985

 

9,283

 

Earnings allocated to participating convertible notes

 

(i)

 

(4,417

)

(4,246

)

(692

)

Net income for basic and diluted net income per share

 

 

 

53,393

 

52,739

 

8,591

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average ordinary shares outstanding for basic and diluted net income per share

 

 

 

73,003,248

 

73,003,248

 

73,003,248

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to ordinary shares:

 

 

 

 

 

 

 

 

 

- Basic

 

 

 

0.73

 

0.72

 

0.12

 

- Diluted

 

(ii)

 

0.73

 

0.72

 

0.12

 

 

Notes:

 

(i)                                     The KKR Note and GM Note provide KKRCHIL and GMHL with the ability to participate in any excess cash dividend. 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% coupon interest rate in such financial year divided by the number of shares into which the Notes are convertible at the conversion price then in effect on the relevant record date. Therefore, net income attributable to the Company’s shareholders is reduced by such allocated earnings to participating convertible notes for each reporting period in both basic and diluted net income per share computation.

 

(ii)                                  During the three and six months ended September 30, 2013 and 2014, the Company had potentially dilutive ordinary shares of 40,521,495 respectively, representing shares issuable upon conversion of the Notes (see Note 5). Such potentially dilutive ordinary shares were excluded from diluted net income per share computation because their effects would have been anti-dilutive.

 

13



 

Other Events

 

On November 25, 2014, the Company issued a press release announcing preliminary unaudited condensed consolidated financial results for the three months and six months ended September 30, 2014. A copy of the press release is attached as Exhibit 99.1.

 

Exhibits

 

Exhibit No.

 

Description

99.1 *

 

Press Release, dated November 25, 2014

101.INS XBRL

 

Instance Document

101.SCH XBRL

 

Taxonomy Extension Schema Document

101.CAL XBRL

 

Taxonomy Extension Calculation Linkbase Document

101.LAB XBRL

 

Taxonomy Extension Label Linkbase Document

101.PRE XBRL

 

Taxonomy Extension Presentation Linkbase Document

 

* Previously filed

 

14



 

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: December 12, 2014

 

 

15