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China Cord Blood Corporation Reports Third Quarter and First Nine Months of Fiscal 2011 Financial Results
Date:2/28/2011

HONG KONG, Feb. 28, 2011 /PRNewswire-Asia-FirstCall/ -- 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 unaudited financial results for the third quarter and first nine months of fiscal year 2011 ended December 31, 2010.

Third Quarter of Fiscal 2011 Highlights

  • Revenue increased 31.3% to RMB90.5 million ($13.7 million).
  • New subscriber sign-ups grew 25.4% to 14,765.
  • Gross profit increased 33.2% to RMB69.5 million ($10.5 million).
  • Gross margin expanded 110 basis points to 76.8%.
  • Operating income increased 38.8% to RMB34.8 million ($5.3 million).
  • Net income attributable to shareholders increased 29.4% to RMB25.9 million ($3.9 million).

  • Nine Months of Fiscal 2011 Highlights

  • Revenue increased 28.4% to RMB244.9 million ($37.1 million).
  • New subscriber sign-ups grew 21.9% to 40,877.
  • Gross profit increased 33.8% to RMB187.5 million ($28.4 million).
  • Gross margin expanded 310 basis points to 76.6%.
  • Operating income increased 20.9% to RMB87.4 million ($13.2 million).
  • Net income attributable to shareholders reached RMB65.4 million ($9.9 million).

  • "We are proud to achieve new revenue, profit and new subscriber records during the third fiscal quarter," said Ms. Ting Zheng, Chairperson and Chief Executive Officer of China Cord Blood Corporation. "Margins continued to expand, driven by growing contribution from recurring storage revenue and successful cost control measures. New subscriber number surpassed the 14,000 mark for the first time. These achievements are a testament to our successful market positioning as well as our effective market development strategy."

    Ms. Zheng further stated, "We have also announced the establishment of our Zhejiang subsidiary. Today, out of the seven authorized regions in China, we now have full access to the Beijing municipality, Guangdong province and Zhejiang province.  With the presence in the above markets and our equity investment in the Shandong cord blood banking operator, our broad market reach makes CCBC the largest and most influential cord blood banking operator in China. We are really excited about reaching such a large addressable marketplace, much of which is untapped."

    Summary – The Quarter and the First Nine Monthsended December31, 2009 and 2010Three Months Ended
    December 31,Nine Months Ended
    December 31,2009

    2010

    2009

    2010RMB('000)

    RMB('000)

    USD('000)

    RMB('000)

    RMB('000)

    USD('000)Revenue

    68,905

    90,483

    13,710

    190,731

    244,861

    37,101Gross Profit

    52,178

    69,514

    10,533

    140,116

    187,486

    28,407Operating Income

    25,093

    34,841

    5,280

    72,292

    87,390

    13,241Net Income Attributable to Shareholders

    20,001

    25,875

    3,920

    33,048

    65,444

    9,916EPS Attributable to Ordinary Shares – Basic (RMB/USD)

    0.31

    0.36

    0.06

    0.44

    0.96

    0.15Revenue Breakdown (%)Processing Fee

    81.6%

    79.2%82.7%

    79.2%Storage Fee

    18.4%

    20.8%17.3%

    20.8%New Subscribers (persons)

    11,771

    14,76533,523

    40,877Accumulated Total Number of Subscribers(persons)

    117,583

    170,189117,583

    170,189Third Quarter Fiscal 2011 Financial ResultsREVENUE. Third quarter revenue increased 31.3% to RMB90.5 million ($13.7 million), up from RMB68.9 million in the same period last year.  Revenue from processing fees increased by 27.5% to RMB71.7 million ($10.9 million) from the prior year period. This reflects 14,765 new subscriber sign-ups this quarter, a 25.4% increase in new subscriber sign-ups from the prior year period. Revenue from storage fees increased 48.1% year-over-year to RMB18.8 million ($2.8 million), as a result of sustained growth in the accumulated subscriber base.  Revenue from storage fee accounted for 20.8% of the total third quarter revenue, compared to 18.4% in the same period last year. Driven by the strong demand from the Beijing and Guangdong markets, the Company's accumulated subscriber base as of December 31, 2010 reached a new record of 170,189, up 44.7% year-over-year.

    GROSS PROFIT. Gross profit in the third quarter increased to RMB69.5 million ($10.5 million), up 33.2% from RMB52.2 million in the same period last year. Gross margin reached a new high by increasing 110 basis points to 76.8% year-over-year, primarily as a result of the rising revenue largely related to rising contribution from storage fees and economies of scale.  

    OPERATING INCOME. Operating income for the third quarter reached RMB34.8 million ($5.3 million), up 38.8% from RMB25.1 million, driven by new subscriber numbers, margin expansion and successful cost control measures. Operating income as a percentage of revenues increased slightly to 38.5%, up 210 basis points year-over-year. Depreciation and amortization expense for the third quarter amounted to RMB5.8 million ($0.9 million).

    Research and Development expense. Third quarter research and development expense rose to RMB1.9 million ($0.3 million).

    Sales and Marketing expense. Sales and marketing expense increased 20.4% to RMB12.5 million ($1.9 million) as the Company continued to expand its marketing resources to cope with rising demand in Beijing and Guangdong. The Company's direct marketing approach has yielded very favorable results in its target markets, not only achieving a steadily growing penetration rate but also successfully reducing the sales and marketing expense as a percentage of revenue to 13.9%.  

    General Administrative expense. Third quarter general administrative expenses amounted to RMB20.2 million ($3.1 million), up 21.4% year-on-year. General administrative expense as a percentage of revenue decreased to 22.4%, compared to 24.2% during the same period last year. Despite the increase in revenue, general administrative expense remained stable and comparable as an absolute amount to the last two quarters.  Moving forward, the Company believes cost control efforts could lead to further margin expansion.  

    NET INCOME ATTRIBUTABLE TO SHAREHOLDERS. Third quarter net income attributable to shareholders reached RMB25.9 million ($3.9 million).  Net margin for the third quarter of fiscal 2011 rose to a new record of 28.6%. Basic earnings per share for third quarter of fiscal 2011 were RMB0.36 ($0.06).

    NET CASH. As of December 31, 2010, the Company had cash and cash equivalents of RMB548.0 million ($83.0 million), compared to RMB280.8 million as of March 31, 2010. As of December 31, 2010, total borrowing was RMB45.0 million ($6.8 million).

    Ms. Zheng stated, "Our excellent results in the third fiscal quarter demonstrate our success stories in both Beijing and Guangdong. Following the recent formation of our new Zhejiang subsidiary, we are committed to replicating our success in Beijing and Guangdong in this new untapped Zhejiang market."

    "As the exclusive cord blood banking operator in Beijing, Guangdong and Zhejiang, we have access to a market of 1.8 million newborns each year and we see significant room for growth ahead of us," Ms. Zheng further commented. "To deepen our market penetration, we will continue to explore new promotion initiatives by developing and modifying our payment schemes to best fit subscribers' needs and tailor our corporate goals to capitalize on new market opportunities. We strive to maximize shareholder value by delivering solid operational performance, stable and recurring cash flows as well as sustainable earnings growth over the long term. "

    Nine Months Fiscal 2011 Financial ResultsFor first nine months of fiscal 2011, total revenue increased 28.4% to RMB244.9 million ($37.1 million), from RMB190.7 million last year. The increase was largely attributable to the 21.9% increase in new subscribers to 40,877 and the expansion in the accumulated subscriber base to 170,189. During the first nine months, processing fees and storage fees grew 23.0% and 53.9%, respectively. Gross profit in the first nine months of fiscal 2011 increased 33.8% to RMB187.5 million ($28.4 million) from RMB140.1 million in the prior year period.  During the first nine months of fiscal 2011, operating income increased to RMB87.4 million ($13.2 million). Net income attributable to shareholders for the first nine months of fiscal 2011 was RMB65.4 million ($9.9 million). Basic earnings per ordinary share were RMB0.96 ($0.15).

    Conference Call The Company will hold a teleconference at 8:00 p.m. ET on Monday, February 28, 2010 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 following link: http://investor.chinacordbloodcorp.com/playerlink.zhtml?c=206671&s=wm&e=3696924. A replay of the webcast will be accessible two hours after the presentation and available for three weeks at the same URL link above.  Listeners may also access the call by dialing 1-718-354-1231 or 1-866-519-4004 for US callers or +852-2475-0994 for Hong Kong callers, access code: 40003001.

    About China Cord Blood CorporationChina Cord Blood Corporation is the first and largest cord blood banking operator in China in terms of geographical coverage and is 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 StatementThis 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.

    The forward-looking statements included in this press release are subject to risks, uncertainties and assumptions about our businesses and business environments. These statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results of our 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; changing legislation or regulatory environments in the PRC; the acceptance by subscribers of the Company's different pricing and payment options; demographic trends in the regions of the PRC in which the Company is the exclusive licensed cord blood banking operator; labor and personnel relations; 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, as well as general economic conditions; and other relevant risks detailed in the Company's filings with the Securities and Exchange Commission.

    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 third quarter and first nine months of fiscal 2011 were made at the noon buying rate of RMB6.600 to $1.00 on December 31, 2010 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 CorporationMs. Joeling LawTel: (+852) 3605-8180Email: ir@chinacordbloodcorp.com ICR, LLCIn New York: Ashley M. Ammon: 1-646-277-1227In Beijing: Wen Lei Zheng: +86-10-6583-7510Exhibit 1CHINA CORD BLOOD CORPORATIONUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSAs of March 31 and December 31, 2010 March 31,
    2010

    December 31,
    2010RMB

    RMB

    US$(in thousands except share data)ASSETSCurrent assetsCash and cash equivalents

    280,835

    548,017

    83,033Accounts receivable, less allowance for doubtful accounts
      (March 31, 2010: RMB8,016; December 31, 2010: RMB9,935)

    61,349

    66,797

    10,121Inventories

    5,070

    10,139

    1,536Prepaid expenses and other receivables

    13,137

    13,256

    2,008Deferred tax assets

    3,443

    4,542

    688Total current assets363,834

    642,751

    97,386Property, plant and equipment, net

    250,491

    251,372

    38,087Non-current prepayments

    151,138

    6,076

    921Non-current accounts receivable, less allowance for doubtful accounts
      (March 31, 2010: RMB9,181; December 31, 2010: RMB22,310)

    176,874

    226,973

    34,390Inventories

    29,637

    31,537

    4,778Intangible asset, net

    26,297

    25,569

    3,874Available-for-sale equity securities

    48,475

    50,763

    7,691Other investment

    -

    135,528

    20,535Deferred tax assets

    288

    1,209

    183Total assets1,047,034

    1,371,778

    207,845LIABILITIESCurrent liabilitiesBank loan

    45,000

    45,000

    6,818Accounts payable

    5,410

    9,569

    1,450Accrued expenses and other payables

    22,475

    21,715

    3,290Deferred revenue

    36,074

    58,242

    8,825Amounts due to related parties

    2,977

    682

    103Income tax payable

    4,098

    8,023

    1,216Total current liabilities116,034

    143,231

    21,702Deferred revenue

    93,155

    138,328

    20,959Other non-current liabilities

    15,978

    25,121

    3,806Deferred tax liabilities

    2,259

    -

    -Total liabilities  227,426

    306,680

    46,467EQUITYShareholders' equityOrdinary shares - US$0.0001 par value, 250,000,000 shares authorized, 66,743,693 shares and 75,406,875 shares issued and outstanding as of March 31 and December 31, 2010, respectively

    46

    52

    8Additional paid-in capital

    719,329

    910,316

    137,927Accumulated other comprehensive income/(loss)

    2,221

    (18,992)

    (2,878)Retained earnings

    87,290

    152,734

    23,141Total shareholders' equity 808,886

    1,044,110

    158,198Noncontrolling interests10,722

    20,988

    3,180Total equity819,608

    1,065,098

    161,378Total liabilities and equity1,047,034

    1,371,778

    207,845Exhibit 2CHINA CORD BLOOD CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFor the Three Months and Nine Months Ended December 31, 2009 and 2010Three months ended December 31,

    Nine months ended December 31,2009

    2010

    2009

    2010RMB

    RMB

    US$

    RMB

    RMB

    US$(in thousands except per share)Revenues

    68,905

    90,483

    13,710

    190,731

    244,861

    37,101Direct costs

    (16,727)

    (20,969)

    (3,177)

    (50,615)

    (57,375)

    (8,694)Gross profit52,178

    69,514

    10,533

    140,116

    187,486

    28,407Operating expensesResearch and development

    -

    (1,906)

    (289)

    -

    (5,243)

    (794)Sales and marketing

    (10,416)

    (12,536)

    (1,899)

    (26,928)

    (34,310)

    (5,198)General and administrative

    (16,669)

    (20,231)

    (3,065)

    (40,896)

    (60,543)

    (9,174)Total operating expenses

    (27,085)

    (34,673)

    (5,253)

    (67,824)

    (100,096)

    (15,166)Operating income25,093

    34,841

    5,280

    72,292

    87,390

    13,241Other income, netInterest income

    2,292

    2,333

    353

    5,047

    6,371

    965Interest expense

    (695)

    (671)

    (102)

    (1,812)

    (1,949)

    (295)Exchange gain/(loss)

    39

    (43)

    (7)

    602

    547

    83Write-off of deferred reverse  capitalization costs

    -

    -

    -

    (21,566)

    -

    -Others

    (51)

    219

    33

    326

    1,109

    168Total other income/(expense), net

    1,585

    1,838

    277

    (17,403)

    6,078

    921Income before income tax

    26,678

    36,679

    5,557

    54,889

    93,468

    14,162Income tax expense

    (5,431)

    (8,840)

    (1,339)

    (17,572)

    (23,062)

    (3,494)Net income21,247

    27,839

    4,218

    37,317

    70,406

    10,668Income attributable to noncontrolling  interests

    (1,246)

    (1,964)

    (298)

    (3,922)

    (4,962)

    (752)Income attributable to redeemable  noncontrolling interests

    -

    -

    -

    (347)

    -

    -Net income attributable to shareholders20,001

    25,875

    3,920

    33,048

    65,444

    9,916Net income per share:Attributable to ordinary shares -Basic

    0.31

    0.36

    0.06

    0.44

    0.96

    0.15 -Diluted

    0.29

    0.36

    0.06

    0.42

    0.96

    0.15
    '/>"/>

    SOURCE China Cord Blood Corporation
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