GOLDEN MEDITECH HOLDINGS LTD (TDR) HONG KONG, June 28, 2016 /PRNewswire/ --
For the Year Ended 31
March Change
----------------------
2016 2015%
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Continuing Operations
Revenue 281,558 269,582 4.4
Hospital Management Service Income 59,688 63,442 (5.9)
Medical Insurance Administration Service
Income 5,932 5,845 1.5
Medical Devices and Accessories Sales 210,670 194,406 8.4
Chinese Herbal Medicines Sales 5,268 5,889 (10.6)
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Gross profit 129,068 129,344 (0.2)
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Loss before interest, taxes, depreciation and
amortisation (181,401) (694,798) (73.9)
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Loss attributable to the Company's equity
shareholders (405,561) (863,747) (53.0)
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Basic loss per share (in HK cents) (17.2) (49.6) (65.3)
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Golden Meditech Holdings Limited (SEHK stock code: 00801, TWSE stock code: 910801) ("Golden Meditech" or the "Company", together with its subsidiaries, the "Group"), a leading integrated healthcare enterprise in China, announces today its annual results for the year ended 31 March 2016 (the "Year").
During the Year, the results from continuing operations were in line with management's expectations. The Group's total revenue from continuing operations increased by 4.4% year-on-year to HK$281,558,000, which was mainly driven by the medical devices segment.
Mr. Kam Yuen, Chairman and Chief Executive Officer of the Group, said, "The healthcare services market is growing rapidly in China due to the increasing aging population, the improving living standard in rural areas and the growing income as well as health awareness. Private healthcare enterprises are well positioned to benefit from the deepening of Chinese healthcare reforms, in terms of relatively relaxing and optimising policies. As a leading integrated healthcare enterprise in China, we endeavor to enhance our operating excellence and efficiency by tapping on the potential of each of our business segment, with the view to improve operating performance. In addition, we are committed to integrate our existing resources to ready us for the opportunity arising from the development of bio-medicine and high performance medical device industry. Our strategy is identifying opportunities to invest in the enormous healthcare market. Likewise, our Group will actively explore growth potentials arising from the healthcare value chain in order to create values for our shareholders."
Over the past few years, the Group decided to suspend several potential acquisition opportunities after considering the execution and commercialisation risks of various target projects. The maturing cord blood storage services have gradually gained recognition from international market as well as consumers in China. Consequently, the Company submitted a non-binding privatisation proposal to the board of directors of China Cord Blood Corporation ("CCBC") (the "Proposed Privatisation") in April 2015. The Group desired to increase its exposure in the cord blood storage sector in China. This has been achieved through the acquisitions of all of the 7% senior convertible notes issued by CCBC (the "CCBC CN") and certain number of ordinary shares of CCBC between May 2015 and January 2016. Through the financing from open offer and issuance of promissory notes, the Group paid a total consideration of approximately US$334,454,000 (equivalent to approximately HK$2,608,741,000) for the above-mentioned acquisitions. Accordingly, assuming all the CCBC CN were fully converted, the equity interest in CCBC held by the Company would reach 65.4%.
During the process of the Proposed Privatisation, the Group was approached by Nanjing Xinjiekou Department Store Co., Ltd. ("Nanjing Xinjiekou") in respect of the disposal of its 65.4% fully diluted equity interest in CCBC. In light of meeting Nanjing Xinjiekou's ultimate goal of holding the entire equity interest in CCBC, the Company and Nanjing Xinjiekou further negotiated and agreed that the Company would procure and facilitate the completion of the Proposed Privatisation. In January 2016, the Company entered into a conditional sale and purchase agreement with Nanjing Xinjiekou regarding the disposal of its 65.4% fully diluted equity interest in CCBC to Nanjing Xinjiekou for a total consideration of approximately RMB5,764,000,000 (equivalent to approximately HK$6,917,000,000) (the "Proposed Disposal"). In return, Nanjing Xinjiekou intends to issue 134,336,378 shares to the Group together with a cash payment of approximately RMB3,264,000,000 (equivalent to approximately HK$3,917,000,000). At the same time, the Company also entered into another conditional sale and purchase agreement with Nanjing Xinjiekou, pursuant to which the Group agrees to sell the remaining 34.6% fully diluted equity interest of CCBC to be obtained to Nanjing Xinjiekou, if the Proposed Privatisation is completed, for a total consideration of approximately US$267,076,000 (equivalent to approximately HK$2,083,000,000).
"The Proposed Disposal would bring significant return to the Group," continued Mr. Kam Yuen. "It represents a lucrative opportunity to the Group to realise its investment in the cord blood storage business. Besides, we also consider that having equity interest in Nanjing Xinjiekou would provide an opportunity for the Group to invest in the 'Modern Department Store, Healthcare and Elderly Care' businesses, which will diversify the Group's investments and may bring a more lucrative return to shareholders."
Loss attributable to the Company's equity shareholders from continuing operations was HK$405,561,000, down 53.0% year-on-year. The decrease was mainly attributable to the absence of an one-off impairment provision. The Group recorded a non-cash provision of HK$759,934,000 in relation to its strategic investment in Fortress Group Limited ("Fortress", a former associate of the Group) in FY2014/2015. No such expense was recorded in FY2015/2016.
Excluding the one-off impairment provision, loss attributable to the Company's equity shareholders from continuing operations was approximately HK$244,213,000 in FY2014/2015, representing an increase of HK$161,348,000 year-on-year. Increase was mainly due to: i) the recognition of interest expenses of approximately HK$86,063,000 following the issuance of promissory notes (proceeds was used to acquire additional equity interest in CCBC); ii) professional fees of approximately HK$40,159,000 incurred mainly in relation to the Proposed Privatisation and the Proposed Disposal. Any gain from such disposal will only be recognised once the transaction is completed; and iii) to compensate team members who contributed in various capital transactions up to this date, the Company decided to accrue approximately HK$33,771,000 as special performance bonus.
The board of directors of the Company (the "Board") did not recommend the payment of a final dividend in respect of the year ended 31 March 2016 in light of the ongoing transaction with respect to the disposal of 65.4% equity interest in CCBC. The Group will receive a total cash and share consideration of RMB5.8 billion upon the completion of the Proposed Disposal. Accordingly, the Board will consider the dividend policy when it happens.
Continuing Operations
Healthcare Services Segment
During the Year, healthcare services revenue decreased by 5.3% year-on-year to HK$65,620,000, accounting for 23.3% of total revenue from continuing operations. Revenue generated from hospital management business and medical insurance administration business were HK$59,688,000 and HK$5,932,000 respectively, accounting for 91.0% and 9.0% of healthcare services revenue respectively.
Hospital Management Business. As Beijing Qinghe Hospital ("Qinghe Hospital") obtained its license in late 2015, there was no revenue contribution and that affected the operating performance of Qinghe Hospital. Over the years, leveraging on its well-known brand and sound reputation, Shanghai East International Medical Center ("SEIMC") had achieved a stable development and provided premium healthcare services to the affluent people in Shanghai and the surrounding neighbourhoods. During the Year, SEIMC continued to make revenue contribution to the hospital management business. The management believes the revenue, profit and cash flow of Qinghe Hospital will improve progressively once it is fully operational.
Medical Insurance Administration Business. The Group continued to devote resources to enhance its self-developed intellectualised claim administration system. This fully automated system enables the Group to gain market leadership in the insurance sector, and is widely recognised and accredited by the market and end users. The management expects that the Group will cooperate with more insurance companies once its self-developed medical insurance claim system attains full automation. As a result, the Group will be able to provide convenient and effective services, enhancing its operational efficiency as well as its profitability.
Medical Devices Segment
Medical devices revenue increased by 8.4% year-on-year to HK$210,670,000, accounting for 74.8% of total revenue from continuing operations. In view of the increased competition in the medical devices market, the Group proactively adjusted its marketing strategy and lowered Autologous Blood Recovery System selling price in order to stabilise the sales of medical device consumables. As a result, profit after tax from medical device segment increased marginally by 1.9% year-on-year to HK$43,964,000. With the deepening of the Group's strategic transformation, the medical devices segment will synergise with the healthcare services segment and is expected to continue to be the corner stone contributor to the Group revenue.
Strategic Investments
During the Year, the Chinese herbal medicines business recorded an operating loss of HK$16,046,000. In April 2016, the Group received a possible land resumption request from the local government in Qingpu District of Shanghai and will work closely with the relevant departments regarding the land valuation. The Group expects to strengthen its cash position from future disposal of the land.
In FY2014/2015, the Company made a full impairment provision of HK$759,934,000 against Fortress. Currently, the Company is actively negotiating with the controlling shareholder of Fortress as well as relevant parties with a view to reach possible settlements and to maximise the recovery of the Group's interest in Fortress. No definite agreements have been reached as of the date of this announcement.
The management determined to dispose of its non-healthcare related investments and received sales proceeds of HK$159,532,000 from such disposal, bringing an investment return of approximately HK$6,900,000 to the Company.
Cord Blood Storage Business - Discontinuing Operation
(HK$'000) For the Year Ended 31 March
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2016 2015
---- ----
Cord Blood Storage Business - Discontinuing Operation
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Revenue 812,944 800,555
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Gross profit 635,261 635,538
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Other income 81,549 26,752
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Selling and administrative expenses (399,989) (338,675)
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Impairment loss on available-for-sale equities securities (10,474) --
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Profit from operations 306,347 323,615
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Finance costs (3,739) (9,070)
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Changes in fair value of financial liabilities at fair value through profit or loss (597,170) (263,976)
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(Loss)/profit before tax (294,562) 50,569
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Income tax expense (62,706) (61,035)
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Loss for the Year from discontinuing operation (357,268) (10,466)
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The Company obtained shareholders' approval for the Proposed Disposal on 15 June 2016. In this connection, the cord blood storage business has been classified as discontinuing operation. The Proposed Disposal is expected to be completed on or before 31 December 2016. Revenue from discontinuing operation was HK$812,944,000, up 1.5% year-on-year. Loss for the Year from discontinuing operation was HK$357,268,000, which was mainly attributable to fair value changes on convertible notes issued by CCBC. Excluding fair value changes on convertible notes, profit for the Year was HK$239,902,000, compared to HK$253,510,000 the year before.
Outlook
Looking ahead, Mr. Kam commented, "Leveraging on our pioneer edge in the healthcare industry, the Group will not only explore viable opportunities and integrate resources along the healthcare value chain, but also optimise the allocation of the Group's resources and diversify its healthcare services business. We believe these strategies will further consolidate the Group's leading position in the integrated healthcare industry."
About Golden Meditech Holdings Limited (SEHK stock code: 00801, TWSE stock code: 910801)
Golden Meditech (www.goldenmeditech.com) is a leading integrated-healthcare enterprise in China. It is a first-mover in China, having established its dominant positions in the medical devices market as well as the healthcare market, thanks to its strengths in innovation and market expertise and the ability to capture emerging market opportunities. Going forward, Golden Meditech will continue to pursue a leading position in China's healthcare industry both through organic growth and strategic expansion.
SEGMENT RESULTS
Information regarding the Group's reportable segments for the periods ended 31 March 2016 and 2015 is set out below:
(HK$'000 ) Continuing Discontinuing Total
Operation
Operations
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Medical Devices Hospital Medical Insurance Chinese Herbal Cord Blood
Management Administration Medicines
Storage
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2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
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Revenue from External
Customers
168,707 175,619 59,688 63,442 5,932 5,845 5,268 5,889 812,944 800,555 1,052,539 1,051,350
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Inter-segment
Revenue 41,963 18,787 -- -- -- -- -- -- -- -- 41,963 18,787
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Reportable Segment
Revenue
210,670 194,406 59,688 63,442 5,932 5,845 5,268 5,889 812,944 800,555 1,094,502 1,070,137
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Reportable Segment
Profit/(Loss)
52,473 58,599 (137,910) (110,844) (37,359) (33,243) (16,046) (32,107) 306,347 323,615 167,505 206,020
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Depreciation and
Amortisation for
the year
8,440 8,560 60,535 49,200 10,305 11,070 21,139 22,101 62,940 64,976 163,359 155,907
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Impairment Loss on
Trade receivables
95 45 894 421 495 -- -- -- 24,830 31,562 26,314 32,028
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Impairment Loss on
Property, Plant and
Equipment
-- -- -- -- -- -- -- 2,884 -- -- -- 2,884
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SOURCE Golden Meditech Holdings Limited
