Financial results for second fiscal quarter announced by China Cord Blood

China Cord Blood Corporation ("CCBC" or "the Company") (NYSE: CO), China's leading provider of cord blood collection, laboratory testing, hematopoietic stem cell processing, and stem cell storage services, today announced its unaudited financial results for the quarter and six months ended September 30, 2009.

Highlights as of September 30, 2009 -- For the quarter ended September 30, 2009, net revenue increased 30.4% year-over-year to RMB63.9 million (US$9.4 million) from RMB49.0 million. Fiscal year first half net revenue reached RMB121.8 million (US$17.8 million), up 48.7% year-over-year from RMB81.9 million. -- For the quarter ended September 30, 2009, storage fees accounted for 17.4% of total net revenue, up 3.2 percentage points year-over-year from 14.2%. -- The Company had 11,371 new subscribers sign-up during the quarter ended September 30, 2009, up 19.0% from 9,552 in the same period last year. As of September 30, 2009, the total accumulated number of subscribers reached 105,812. -- The Company had an aggregate of 21,752 new subscribers signed up during the first half of fiscal year 2010, up 47.1% year-over-year from 14,789. -- Gross profit for the quarter and six months ended September 30, 2009 amounted to RMB46.3 million (US$6.8 million) and RMB87.9 million (US$12.9 million) respectively, representing gross margins of 72.4% and 72.2%. -- Non-GAAP EBITDA for the quarter and six months ended September 30, 2009 amounted to RMB28.9 million (US$4.2 million) and RMB56.7 million (US$8.3 million) respectively. -- RMB24.1 million (US$3.5 million) operating income was recorded for the quarter ended September 30, 2009 despite the increase in administrative expense. Fiscal year 2010 first half operating income rose 39.9% to RMB47.2 million (US$6.9 million) from RMB33.7 million in the same period last year. -- Quarter ended September 30, 2009, net income attributable to China Cord Blood Corporation shareholders was RMB17.6 million (US$2.6 million). Net income attributable to shareholders for the six months ended September 30, 2009 was RMB13.0 million (US$1.9 million). -- For the quarter ended September 30, 2009, basic EPS and fully diluted EPS attributable to ordinary shares were RMB0.29 (US$0.04) and RMB0.27 (US$0.04), respectively. For the six months ended September 30, 2009, basic EPS and fully diluted EPS attributable to ordinary shares were RMB0.12 (US$0.02) and RMB0.11 (US$0.02), respectively. -- Non-GAAP basic earnings per share attributable to shareholders for the quarter and six months ended September 30, 2009 amounted to RMB0.29 (US$0.04) and RMB0.57 (US$0.08), respectively. Summary - The quarter and six months ended September 30, 2009 and 2008 Three Months Ended Six Months Ended September 30, September 30, 2009 2008 2009 2008 US$ RMB RMB US$ RMB RMB (in thousands except percentage and operating data) Revenue 9,361 63,897 48,988 17,847 121,826 81,935 Gross Profit 6,778 46,265 37,321 12,882 87,938 59,760 Operating Income 3,537 24,144 24,832 6,914 47,199 33,735 Non-GAAP EBITDA 4,237 28,924 26,548 8,308 56,711 37,088 Net Income/(Loss) Attributable to China Cord Blood Corporation Shareholders 2,584 17,639 5,779 1,911 13,047 (12,260) EPS Attributable to Ordinary Shares - Basic 0.04 0.29 (0.01) 0.02 0.12 (0.43) Non-GAAP EPS Attributable to Shareholders - Basic 0.04 0.29 0.10 0.08 0.57 (0.21) Net Revenue Breakdown (%) Processing Fee 82.3% 84.9% 82.7% 83.1% Storage Fee 17.4% 14.2% 16.7% 15.7% Others 0.3% 0.9% 0.6% 1.2% New Subscribers (persons) 11,371 9,552 21,752 14,789 Accumulated Total Number of Subscribers (persons) 105,812 64,171 105,812 64,171

"We completed the second quarter with encouraging results," said Ms. Ting Zheng, China Cord Blood Corporation's chairperson and chief executive officer. "As our prior efforts in cultivating the two markets are just starting to bear fruits, it is a great joy to see strong demand in both Beijing municipality and Guangdong province. China's one child policy, rising public awareness of umbilical cord blood stem cells and our effective marketing and promotion strategies are important elements which contributed to our successful market penetration. As the exclusive operator in the Beijing municipality and Guangdong province, we continue to see growth in our local markets thanks to the large addressable market size and their severe under penetration. Following the commencement of our new Beijing storage facility and Guangdong storage facility, we are well equipped to capture the opportunities present in these existing two markets."

Ms. Zheng continued, "Our recent listing on the New York Stock Exchange marks a new era in our corporate history. It is a recognition of our company's achievements as well as our team's dedicated effort. The listing platform offers access and tools for growth, and with our proven execution capabilities, together form a solid foundation and paves the way for the next phase of corporate development. As China's first and largest cord blood bank operator, we will continue to leverage on our industry expertise and first mover advantage to seize opportunities arising in China and the Asia Pacific region."

Financial Results for the Second Fiscal Quarter Ended September 30, 2009

Revenue

Net revenue for the quarter ended September 30, 2009 increased 30.4% year-over-year to RMB63.9 million (US$9.4 million) from RMB49.0 million. Net revenue generated from processing fees recorded a 26.5% increase year-over-year to RMB52.6 million (US$7.7 million) due in part to the 11,371 new subscribers signed up during the quarter, which increased from 9,552 new subscribers for the same period last year. Net revenue from storage fees increased 60.1% to RMB11.1 million (US$1.6 million) as our total subscriber base continued to expand. The total accumulated number of subscribers reached 105,812 as of September 30, 2009, up from 64,171 subscribers as of September 30, 2008. For the quarter ended September 30, 2009, processing fees and storage fees accounted for 82.3% and 17.4% of total net revenue, respectively, compared to 84.9% and 14.2% for the same period last year.

Gross Profit

Gross profit reached RMB46.3 million (US$6.8 million), up from RMB37.3 million for the same period last year, representing a gross margin of 72.4%. Gross margin was 3.8 percentage points lower year-over-year following the commencement of the new Beijing storage facility and the new Guangdong storage facility which came on line in April 2009 and September 2008, respectively. Direct cost for the quarter ended September 30, 2009 was RMB17.6 million (US$2.6 million) which was higher than the RMB11.7 million for the same period last year mainly due to the increase in overhead after the new facilities commenced operation.

Sales and Marketing Expense

Despite the ongoing marketing effort, management continued to tightly monitor sales and marketing expense. Sales and marketing expense as a percentage of net revenue declined from 15.1% last year to 14.8% for the quarter ended September 30, 2009. Total sales and marketing expense for the quarter ended September 30, 2009 was RMB9.5 million (US$1.4 million), an increase of 28.3% from RMB7.4 million for the same period last year.

General and Administrative Expense

To cope with the rising demand and better serve our existing markets, new storage facilities were constructed which boosted total capacity more than six fold, and as a result, in conjunction with work force expansion, total administrative expense for the quarter ended September 30, 2009 increased to RMB12.7 million (US$1.9 million) compared to RMB5.1 million for the same period last year.

Operating Income

Operating income for the quarter ended September 30, 2009 was RMB24.1 million (US$3.5 million) compared to RMB24.8 million for the same period last year because the increase in net revenue was offset by the increase in administrative expense. Operating margin for the quarter ended September 30, 2009 was 37.8%.

Earnings Before Interest, Taxes, Depreciation and Amortization ("non-GAAP EBITDA")

Non-GAAP EBITDA for the quarter ended September 30, 2009 was RMB28.9 million (US$4.2 million), a slight increase of 8.9% year-over-year, translating into a non-GAAP EBITDA margin of 45.3%.

Net Income Attributable To China Cord Blood Corporation Shareholders

Net income attributable to shareholders for the quarter ended September 30, 2009 increased to RMB17.6 million (US$2.6 million), up from RMB5.8 million for the same period of 2008. Net income attributable to shareholders margin for the quarter ended September 30, 2009 was 27.6%, up from 11.8%. Basic earnings per share and fully diluted earnings per share attributable to ordinary shares for the quarter ended September 30, 2009 were RMB0.29 (US$0.04) and RMB0.27 (US$0.04), respectively.

Non-GAAP basic earnings attributable to shareholders for the September 30, 2009 quarter amounted to RMB0.29 (US$0.04), up from RMB0.10 for the same period last year.

Other Selected Data

As of September 30, 2009, the Company had total cash and cash equivalents of RMB247.8 million (US$36.3 million) as compared to RMB161.4 million as of March 31, 2009. As of September 30, 2009, the Company had a balance on short-term loans of RMB45.0 million (US$6.6 million).

As of September 30, 2009, non-current inventories were RMB26.9 million (US$3.9 million) compared to RMB26.1 million as of March 31, 2009. Thirteen units of donated cord blood stem cells were used for treatment during the quarter ended September 30, 2009.

For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB6.8262 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of Wednesday, September 30, 2009. No presentation is made that the RMB amounts could have been or could be converted into U.S. dollars at that rate or at any other certain rate on September 30, 2009 or at any other dates.

Financial Results for the Six Months Ended September 30, 2009

Revenue

Fiscal year 2010 first half net revenue amounted to RMB121.8 million (US$17.8 million), an increase of 48.7% year-over-year from RMB81.9 million. During this period, 21,752 new subscribers signed up for our services, an increase of 47.1% year-over-year from 14,789.

Gross Profit

Backed by the increase in subscriber numbers, gross profit for the six months ended September 30, 2009 amounted to RMB87.9 million (US$12.9 million), an increase of 47.2% from RMB59.8 million for the same period last year. Fiscal year 2010 first half gross margin was 72.2%, similar to 72.9% for the same period last year.

Operating Income

Fiscal year 2010 first half operating income increased 39.9% year-over-year to RMB47.2 million (US$6.9 million). Operating margin decreased by 2.5 percentage points to 38.7% which was largely attributable to the increase in overhead following the storage capacity and work force expansion.

Net Income Attributable to Shareholders

Net income attributable to China Cord Blood Corporation shareholders for the six months ended September 30, 2009 was RMB13.0 million (US$1.9 million), compared to a loss of RMB12.3 million last year. During the six months ended September 30, 2008, total write-off and impairment loss amounted to RMB37.3 million and RMB21.6 million (US$3.2 million) for the six months ended September 30, 2009.

Earnings Per Share

Fiscal year 2010 first half basic earnings per share and fully diluted earnings per share attributable to ordinary shares were RMB0.12 (US$0.02) and RMB0.11 (US$0.02), respectively.

Earnings Before Interest, Taxes, Depreciation and Amortization ("non-GAAP EBITDA")

For the six months ended September 30, 2009, the Company recorded non-GAAP EBITDA of RMB56.7 million (US$8.3 million), up from RMB37.1 million same period last year.

Non-GAAP Earnings Per Share

Non-GAAP basic earnings attributable to shareholders for the six months ended September 30, 2009 amounted to RMB0.57 (US$0.08) comparing to a loss of RMB0.21 same period last year.

Business Outlook for Fiscal Year 2010

The Company expects the total number of new subscribers for fiscal year 2010 will increase by approximately 30% year-over-year or no less than 45,000 new subscribers, which transpires into no less than 30% increase in total net revenue. Accumulated total number of subscribers will be at least 129,000 by March 31, 2010. With intention in geographic expansion, the Company continues to pursue active discussions with several existing licensees and license applicants in certain other regions for potential acquisitions.

The Company's practice is to provide guidance on a full year basis only. Such expectations reflect the Company's current and preliminary views, which is subject to change.

SOURCE China Cord Blood Corporation