Quarterly Results

Financial Statements And Related Announcement - Second Quarter Results

Financials Archive

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Income Statement

Comprehensive Income

Balance Sheet

Review Of Performance

COMPARING 6 MONTHS ENDED 31 DECEMBER 2016 (“HY2017”) AGAINST 6 MONTHS ENDED 31 DECEMBER 2015 (“HY2016”)

Income Statement

Stemlife's financial results for HY2017 have been included in the Group’s financial results for HY2017, while Stemlife’s financial results for the December 2015 was included in the Group’s financial results for HY2016 as Stemlife became a subsidiary of the Group in December 2015.

Revenue

Revenue increased by 2.7% or S$792,000 from HY2016 to HY2017 mainly due to the inclusion of contribution from Stemlife, which became a subsidiary of the Group in December 2015. In HY2017, there was an increase in deliveries to 13,100 from 11,100 in HY2016, which is also largely contributed by Stemlife. Stemlife’s deliveries for HY2017 included cord tissue banking, which is the banking of Wharton’s jelly of the umbilical cord, as a lower priced service offering to cater to the mass audience. There was no such offering in HY2016.

The increase is offset by a decrease in revenue contribution from Singapore and India due to increased discounts given to clients in order to remain competitive in the market.

Cost of sales

Cost of sales increased by 11.6% or S$1.1 million in HY2017 compared to HY2016. The increase in cost of sales was in line with the increase in client deliveries from HY2016 to HY2017.

Gross profit and gross profit margin

Gross profit decreased by 1.7% or S$335,000 and gross profit margin decreased from 66.7% in HY2016 to 63.8% in HY2017.

The drop in gross profit margin was mainly due to the increase in cost of quality and compliance in laboratory practices in order to adhere to best practices and provide the highest quality of service to our clients.

It was also due to lower margin attributable to the newly consolidated subsidiary, Stemlife and the Group’s new offering of cord tissue banking, which is a lower cost option with a lower margin, to cater to the mass audience.

Other operating income

Other operating income increased by approximately S$219,000 mainly due to a SPRING grant of approximately S$126,000 in HY2017 for employee training and development. There was no such grant income in HY2016. There was also an increase in investment income of S$92,000 arising from the short term investments in HY2017 from HY2016.

Selling and marketing expenses

Selling and marketing expenses increased by 8.4% or S$751,000 in HY2017 compared to HY2016. The increase is due to the inclusion of selling and marketing expenses of Stemlife, which became a subsidiary of the Group in December 2015, amounting to S$839,000, as well as an increase in selling and marketing expenses in the Indonesian subsidiary by S$245,000 in order to increase the sales force to capture bigger market share.

This was offset by the decrease in advertising and marketing spend in Singapore by S$400,000 as the Singapore operations adopted more efficient marketing strategies by leveraging on technology to reduce cost drivers.

Administrative expenses

Administrative expenses increased by 12.4% or S$1.0 million in HY2017 compared to HY2016. The increase is due to the inclusion of administrative expenses of Stemlife, which became a subsidiary of the Group in December 2015, amounting to S$1.0 million.

Finance income

Finance income increased by S$848,000 due to the placement of fixed deposits with reputable banks and financial institutions in line with the Group’s cash management policy. Stemlife, which became a subsidiary of the Group in December 2015, accounted for S$325,000 of the increase in finance income.

Finance costs

Finance costs decreased by 12.8% or S$16,000 mainly attributable to lower interest-bearing borrowings as the Group made repayments of S$1,991,000 during HY2017.

Profit before income tax from operations

As a result of the foregoing, our profit before income tax from operations for HY2017 at S$1.4 million is lower than HY2016.

Share of results in associate

Our share of loss in associate was S$76,000 for HY2016. There was no share of results of associate in HY2017 as Stemlife was consolidated as a subsidiary in December 2015.

Fair value changes on financial asset designated at fair value through profit or loss

The Group recorded fair value gain on its investment in China Cord Blood Corporation (“CCBC”) designated at fair value through profit or loss of S$4.5 million in HY2016. The fair value changes are computed based on the changes in CCBC’s last traded price as at 30 June 2015 of US$6.16 (approximately S$8.32 at US$1:S$1.3508) and 30 October 2015, being the date of disposal of the investment in shares (“Sale Shares”), of US$6.37 (approximately S$8.94 at US$1:S$1.4038) for HY2016. The fair value changes were recognised directly in profit or loss.

The Group disposed of its financial asset designated at fair value through profit or loss on 30 October 2015. As a result, there is no such fair value changes in HY2017.

Fair value changes on derivative

On 10 November 2014, the Company and Magnum completed the acquisition of a 7% senior convertible note (the “Convertible Note”) due 3 October 2017 issued by CCBC to Golden Meditech Holdings Limited in the principal amount of US$50 million (the “CGL Acquisition”). The Company and Magnum also entered into a facility agreement pursuant to which the Company agreed to lend Magnum funds in an aggregate amount of US$46,500,000.

The Group recorded fair value gain on derivative for HY2016 of approximately S$2.5 million.

The Group disposed of its Convertible Note on 13 November 2015. As a result, there is no such fair value changes on derivative in HY2017.

Exchange differences

Due to strengthening of the US$ against the S$, unrealised foreign exchange gain of approximately S$6.0 million was recognised on the Magnum Loan and the Convertible Note for HY2016. No such exchange differences was recognised for HY2017.

Gain on sale of shares

In HY2016, the Group recognised the gain on the sale of the Sale Shares of S$151,000. The gain on the sale was computed based on the difference between the disposal price per Sale Share of US$6.40 (approximately S$8.98 at US$1:S$1.4038) and CCBC’s last traded share price as at the date of disposal on 30 October 2015 of US$6.37 (approximately S$8.94 at US$1:S$1.4038). No such gain on sale of shares was recognised for HY2017.

Gain on sale of convertible bond

Upon completion of the disposal of the Convertible Note on 13 November 2015, the Group recognised the gain on the sale of the Convertible Note of S$5.0 million in HY2016. No such gain on sale of convertible bond was recognised in HY2017.

Remeasurement loss on previously held equity interest in subsidiary

The Group recognised a loss of S$1.6 million as a result of measuring at fair value its 31.81% equity interest in Stemlife held before the business combination as at 31 December 2015. No such remeasurement loss was recognised for HY2017.

Note repurchase expense

On 16 December 2015, the Company announced that it had repurchased S$47,000,000 in principal amount of the Notes, which resulted in note repurchase expenses of S$1.8 million for HY2016. The Notes were repurchased at market value which was at a premium to the principal amount.

On 13 October 2016, the Group announced the commencement of consent solicitation exercise (the “Exercise”) in relation to the Notes. The Exercise was to seek approval to include a call option (the “Call Option”) and replace the ratio of EBITDA to interest expense with a new financial covenant requiring the Company to ensure that, for so long as the Notes remains outstanding, unencumbered cash and cash equivalents will not at any time be less than S$75,000,000. This was approved at the meeting of the Noteholders on 4 November 2016. The Group incurred fees of S$0.6 million in relation to the Exercise for HY2017.

To reduce its debt-servicing obligations, the Group also exercised the Call Option and redeemed the remaining aggregate outstanding S$68,250,000 in principal amount of the Notes on 9 December 2016 at a premium to the principal amount. This resulted in additional expenses of S$1.5 million for HY2017.

As a result of the foregoing, note repurchase expenses increased from S$1.8 million in HY2016 to S$2.1 million in HY2017.

Finance income

Finance income of approximately S$3.8 million was recognised for HY2016 on the Magnum Loan and the Convertible Note. No such finance income was recognised for HY2017.

Finance costs

Finance costs of approximately S$1.8 million was recognised on the Notes for HY2017 (HY2016: S$3.4 million). The decrease was due to the repurchase of S$51,750,000 in principal amount of the Notes on 16 December 2015, 6 January 2016 and 28 January 2016.

Tax

In HY2017, non-operational finance costs and note repurchase expense were not deductible. In HY2016, the share of results of associate was reported net of tax and fair value changes on financial asset designated at fair value through profit or loss, fair value changes on derivative, gain on sale of shares, gain on sale of convertible bond, remeasurement loss on previously held equity interest in subsidiary, note repurchase expense, non-operational finance income and costs and exchange differences were not taxable.

Adjusting for these non-taxable items, the effective tax rate for HY2017 was 25.2%, compared to an effective tax rate for HY2016 of 19.4%. The increase in effective tax rate in HY2017 was due to under-provision of income tax in HY2016 of S$167,000, deferred tax asset not recognised on tax losses and increased profit contribution by subsidiaries in tax regimes with higher tax rates in HY2017. The increase was offset by the reversal of overprovision of income tax of S$277,000 in Singapore in HY2017.

COMPARING 3 MONTHS ENDED 31 DECEMBER 2016 (“2Q2017”) AGAINST 3 MONTHS ENDED 31 DECEMBER 2015 (“2Q2016”)

Income Statement

Stemlife's financial results for 2Q2017 have been included in the Group’s financial results for 2Q2017, while Stemlife’s financial results for the December 2015 was included in the Group’s financial results for 2Q2016 as Stemlife became a subsidiary of the Group in December 2015.

Revenue

Revenue increased by 4.7% or S$682,000 from S$14.6 million in 2Q2016 to S$15.2 million in 2Q2017 mainly due to the inclusion of contribution from Stemlife, which became a subsidiary of the Group in December 2015. In 2Q2017, there was an increase in deliveries to 6,700 from 5,900 in 2Q2016, which is also largely contributed by Stemlife. Stemlife’s deliveries from 2Q2017 included cord tissue banking, which is banking of Wharton’s jelly of the umbilical cord, as a lower priced service offering to cater to the mass audience. There was no such offering in 2Q2016.

The increase is offset by a decrease in revenue contribution from Singapore due to increased discounts given to clients in order to remain competitive in the market.

Cost of sales

Cost of sales increased by 10.9% or S$556,000 in 2Q2017 compared to 2Q2016, in line with increase in client deliveries.

Gross profit and gross profit margin

Gross profit increased by 1.3% or S$126,000 and gross profit margin decreased from 64.9% in 2Q2016 to 62.8% in 2Q2017.

The drop in gross profit margin was mainly due to the increase in cost of quality and compliance in laboratory practices in order to adhere to best practices and provide the highest quality of service to our clients.

It was also due to lower margin attributable to the newly consolidated subsidiary, Stemlife and the Group’s new offering of cord tissue banking, which is a lower cost option with a lower margin, to cater to the mass audience.

Other operating income

Other operating income increased by 61.7% or S$95,000 due to increase in investment income from short term investments of S$92,000 in 2Q2017 compared to 2Q2016.

Selling and marketing expenses

Selling and marketing expenses increased by 4.5% or S$210,000 in 2Q2017 compared to 2Q2016. The increase is due to the inclusion of selling and marketing expense of Stemlife, which became a subsidiary of the Group in December 2015, amounting to S$359,000 and an increase in selling and marketing expenses in the Indonesian subsidiary by S$127,000 in order to increase the sales force to capture bigger market share.

This was offset by the decrease in advertising and marketing spend in Singapore by S$346,000 as the Singapore operations adopted more efficient marketing strategies by leveraging on technology to reduce cost drivers.

Administrative expenses

Administrative expenses increased by 9.3% or S$404,000 in 2Q2017 compared to 2Q2016. The increase is due to the inclusion of administrative expenses of Stemlife, which became a subsidiary of the Group in December 2015, amounting to S$447,000. There was also an increase in staff-related costs in order for the Group to maintain quality and sufficient support as the Group expands its operations and customer base.

The increase was offset by an increase in foreign exchange gains of S$537,000 in 2Q2017 compared to 2Q2016 which is mainly due to the appreciation of US$ against S$ for the Group’s bank balances held in US$.

Finance income

Finance income increased by S$295,000 due to the placement of fixed deposits with reputable banks and financial institutions in line with the Group’s cash management policy. Stemlife, which became a subsidiary of the Group in December 2015, accounted for S$121,000 of the increase in finance income.

Finance costs

Finance costs decreased by 51.5% or S$35,000 mainly attributable to lower interest bearing borrowings as the Group made principal repayments of S$1,991,000 in HY2017.

Profit before income tax from operations

As a result of the foregoing, our profit before income tax from operations for 2Q2017 at S$0.6 million is slightly lower than 2Q2016.

Share of results of associate

Our share of loss in associate was S$136,000 for 2Q2016. There was no share of results of associate in 2Q2017 as Stemlife was consolidated as a subsidiary in December 2015.

Fair value changes on financial asset designated at fair value through profit or loss

The Group recorded fair value gain on its investment in CCBC designated at fair value through profit or loss of S$2,455,000 in 2Q2016. The fair value changes are computed based on the changes in CCBC’s last traded price as at 30 September 2015 of US$6.02 (approximately S$8.61 at US$1:S$1.4297) and 30 October 2015, being the date of disposal of the Sale Shares, of US$6.37 (approximately S$8.94 at US$1:S$1.4038) for 2Q2016. The fair value changes are recognised directly in profit or loss.

The Group disposed of its financial asset designated at fair value through profit or loss on 30 October 2015. As a result, there is no such fair value changes in 2Q2017.

Fair value changes on derivative

On 10 November 2014, the Company and Magnum completed the acquisition of the Convertible Note. The Company and Magnum also entered into a facility agreement pursuant to which the Company agreed to lend Magnum funds in an aggregate amount of US$46,500,000.

The Group recorded fair value gain on derivative for 2Q2016 of approximately S$7.3 million.

The Group disposed of its Convertible Note on 13 November 2015. As a result, there is no such fair value changes on derivative in 2Q2017.

Exchange differences

Due to the weakening of the US$ against the S$, unrealised foreign exchange loss of approximately S$1,869,000 was recognised on the Magnum Loan and the Convertible Bond for 2Q2016. No such exchange differences was recognised for 2Q2017.

Gain on sale of shares

In 2Q2016, the Group recognised the gain on the sale of the Sale Shares of S$151,000. The gain on the sale was computed based on the difference between the disposal price per Sale Share of US$6.40 (approximately S$8.98 at US$1:S$1.4038) and CCBC’s last traded share price as at the date of disposal on 30 October 2015 of US$6.37 (approximately S$8.94 at US$1:S$1.4038). No such gain on sale of shares was recognised for 2Q2017.

Gain on sale of convertible bond

Upon completion of the disposal of the Convertible Note on 13 November 2015, the Group recognised the gain on the sale of the Convertible Note of S$5,012,000 in 2Q2016. No such gain on sale of convertible bond was recognised in 2Q2017.

Remeasurement loss on previously held equity interest in subsidiary

The Group recognised a loss of S$1,594,000 for 2Q2016 as a result of measuring at fair value its 31.81% equity interest in Stemlife held before the business combination as at 31 December 2015. No such remeasurement loss was recognised for 2Q2017.

Note repurchase expense

On 16 December 2015, the Company announced that it had repurchased S$47,000,000 in principal amount of the Notes, which resulted in an increase in finance expenses of S$1,839,000 for 2Q2016. The Notes were repurchased at market value which was at a premium to the principal amount.

On 13 October 2016, the Company announced the commencement of consent solicitation exercise (the “Exercise”) in relation to the Notes. The Exercise was to seek approval to include a call option (the “Call Option”) and replace the ratio of EBITDA to interest expense with a new financial covenant requiring the Company to ensure that, for so long as the Notes remains outstanding, unencumbered cash and cash equivalents will not at any time be less than S$75,000,000. This was approved at the meeting of the Noteholders on 4 November 2016. The Group incurred fees of S$0.6 million in relation to the Exercise for 2Q2017.

To reduce its debt-servicing obligations, the Group also exercised the Call Option and redeemed the remaining aggregate outstanding S$68,250,000 in principal amount of the Notes on 9 December 2016 at a premium to the principal amount. This resulted in additional expenses of S$1.5 million for 2Q2017.

As a result of the foregoing, note repurchase expenses increased from S$1.8 million in 2Q2016 to S$2.1 million in 2Q2017.

Finance income

Finance income of approximately S$1,127,000 was recognised for 2Q2016 on the Magnum Loan and the Convertible Note. No such finance income was recognised for 2Q2017.

Finance costs

Finance costs of approximately S$786,000 was recognised on the Notes for the 2Q2017 (2Q2016: S$1.6 million). The decrease was due to the repurchase of S$51,750,000 in principal amount of the Notes on 16 December 2015, 6 January 2016 and 28 January 2016.

Tax

In 2Q2017, non-operational finance costs and note repurchase expense were not deductible. In 2Q2016, the share of results of associate was reported net of tax and fair value changes on financial asset designated at fair value through profit or loss, fair value changes on derivative, gain on sale of shares, gain on sale of convertible bond, remeasurement loss on previously held equity interest in subsidiary, note repurchase expense, non-operational finance income and costs and exchange differences were not taxable.

Adjusting for these non-taxable items, the effective tax rate for 2Q2017 was 0%, compared to an effective tax rate for 2Q2016 of 17.1%. The decrease in effective tax rate in 2Q2017 is due to a reversal of over-provision of income tax of S$277,000 in Singapore, offset by deferred tax asset not recognised on tax losses and increased profit contribution by subsidiaries in tax regimes with higher tax rates.

Balance sheet

Cash and cash equivalents and fixed deposits

As at 31 December 2016, the Group maintained a strong balance sheet, with cash and cash equivalents, fixed deposits and short-term investments of S$61.3 million (30 June 2016: S$138.1 million).

The decrease in cash and cash equivalents was mainly due to net cash used in financing activities of S$77.6 million, which comprised the repurchase of Notes of S$69.8 million, interest payment on Notes of S$2.1 million and repayment of interest-bearing borrowings of S$2.0 million. The Group also increased its short term investments by S$5.8 million and further acquired the non-controlling interest of Stemlife with consideration of S$3.7 million.

The decrease is offset by the net cash generated from operating activities of S$1.3 million comprising mainly operating cash inflows before movements in working capital of S$1.4 million, offset by net working capital outflow of S$1.4 million, net interest received of S$1.0 million and income tax recovered of S$277,000. In addition, there was a transfer of matured term deposits into its cash and cash equivalents of S$36.0 million.

Net working capital outflow of approximately S$1.4 million was due to the following:

  • increase in trade receivables of approximately S$1.7 million;
    increase in other receivables, deposits and prepayments of approximately S$0.9 million;
  • increase in inventory of approximately S$316,000;
  • decrease in trade and other payables of approximately S$108,000 and
  • increase in deferred revenue of approximately S$1.6 million.

Available-for-sale asset

The Group had purchased approximately 4.2 million ordinary shares of CellResearch Corporation Pte. Ltd. (“CRC”) for S$4.2 million to strengthen the strategic alliance with CRC and to enhance value-add of the Group’s clinical and quality assurance capacity. The ordinary shares are carried at cost less impairment, if any.

Property, plant and equipment

As at 31 December 2016, the Group recorded S$13.2 million on the balance sheet for property, plant and equipment (30 June 2016: S$13.3 million).

Investment properties

As at 31 December 2016, the Group recorded S$9.0 million on the balance sheet for investment properties (30 June 2016: S$9.2 million).

Intangible assets

Intangible assets comprise customer contracts acquired in business combinations and computer software.

Deferred tax asset

As at 31 December 2016, the Group recorded a deferred tax asset of S$220,000 (30 June 2016: $220,000) due to temporary differences.

Trade receivables, non-current

Non-current trade receivables represents cord blood and cord lining banking service revenues receivable under instalment payment plans that have yet to be billed to the customers. Upon billing, the billed amount will be receivable under the same terms as the current trade receivables.

Other receivables, non-current

The Group had subscribed for a Class A Redeemable Convertible Note (“RCN”) maturing 3 years from the issue date in the principal amount of S$4.2 million from CRC. The yielding interest is at a rate of three month SIBOR plus 7% per annum payable annually in arrears. The RCN is carried at cost less impairment, if any.

Fixed deposits, current and non-current

As of 31 December 2016, the Group recorded fixed deposits of S$17.5 million (30 June 2016: S$53.4 million). The decrease was due to the redemption of fixed deposits to redeem the Notes payable.

Short term investments

As of 31 December 2016, the Group recorded short term investments of S$20.6 million (30 June 2016: S$15.0 million). The increase in short term investments was due to the Group placing more short term investments due to favourable interest rates.

Trade receivables, current

As at 31 December 2016, the Group recorded a current trade receivables of S$20.7 million (30 June 2016: $21.0 million).

Other receivables, current

Other receivables include non-trade receivables and interest receivable on the RCN.

Prepayments

Prepayments increased from S$1.7 million as at 30 June 2016 to S$2.6 million as at 31 December 2016 due to an increase in prepayment of insurance premiums for the Group.

Inventories

Inventories increased from S$1.1 million as at 30 June 2016 to S$1.4 million as at 31 December 2016 mainly arising from an increase in inventory balances in Indonesia and the Philippines to support increased operations.

Trade and other payables, current and non-current

As at 31 December 2016, the Group recorded a current and non-current trade and other payables of S$13.6 million (30 June 2016: $13.5 million). Trade and other payables comprise mainly of trade and non-trade payables to third parties, provisions and accrued expenses.

Insurance contract liabilities

Insurance contract liabilities represent outstanding claim liabilities and liabilities for expected future claims to be incurred as a result of the Group entering into insurance arrangement with customers during the year.

Deferred revenue, current and non-current

Deferred revenue represents revenue received in advance for services to be rendered under cord blood and cord lining banking contracts.

Tax payable

Tax payable increased from S$0.6 million as at 30 June 2016 to S$1.1 million as at 31 December 2016 due to increase profit contribution from countries in tax regimes with higher tax rates.

Interest-bearing borrowings, current and non-current

Interest-bearing borrowings decreased by S$2.0 million from S$10.9 million as at 30 June 2016 to S$8.9 million as at 31 December 2016 due to repayments made during the financial period.

Notes payable

The Notes are carried at amortised cost using the effective interest rate and are classified as “Notes Payable” on the balance sheet. As at 31 December 2016, all the outstanding Notes were redeemed (30 June 2016: S$67.4 million).

Commentary

The Group remains cautiously optimistic about the market potential of its core business. The global stem cell banking market is expected to grow at a compound annual growth rate of 20.2% from 2016 to reach US$3.96 billion in 2021 on the back of increasing awareness regarding storage of cord blood and tissue stem cells, high growth potential of emerging economies, and increasing use of stem cells in the field of therapeutics.1

Capitalising on these growth opportunities, the Group remains focused on its key strategies to reinforce its core competencies to unlock network value and expand through both scale and scope, whilst rationalising its business operations to drive both top and bottom line growth.

Focus on core competencies

The Group’s value to its clients lies in being a trusted provider of consumer healthcare products and services, especially to the mother and child segment.

In November 2016, the Group’s majority-owned Hong Kong and India subsidiaries, Hong Kong Screening Centre Limited (“HKSC”) and Cordlife Sciences (India) Pvt. Ltd. (“Cordlife India”), consecutively received accreditation from the College of American Pathologists (“CAP”). CAP accreditation is the gold standard for laboratory management and processes, which focuses on key areas such as reliability, correctness and quality care and underscores the Group’s quality management system and competence.

The Group continuously strives for excellence in quality, professionalism and technical expertise, whilst enhancing other key areas of competency such as marketing, customer service and product innovation.

Unlocking network value and synergies

The Group has identified and begun efforts to deepen its engagement with its existing network of stakeholders and partners – parents, doctors, other healthcare professionals and healthcare institutions, to understand their needs and create greater awareness within members of this network of the possible potential of the new products and services that benefit them. These efforts have started to gain traction in the Group’s key growth markets such as the Philippines and Indonesia.

Rationalisation of business operations

The Group continues to drive cost efficiencies by rationalising various business operations, whilst staying true to its mission to deliver the highest level of quality standards to its clients. Some of the initiatives are to explore cost effective marketing efforts which include the intensification of the use of digital and social media platforms and to rely on technology to reduce cost drivers. This has translated into lower advertising and marketing costs in its Singapore market.

As part of the Group’s efforts to improve its operational efficiencies, it has also substantially reduced its financial leverage through a full redemption and cancellation of the remaining aggregate outstanding S$68,250,000 in principal amount of the Notes. The Group also continues to ensure continuous improvement within the organisation through the attraction of right talents to develop new service lines as well as new capabilities.

Expansion through scale and scope

Beyond its recent expansion into Myanmar, the Group continues to be on the lookout for the next break in other fast-growing markets to expand its geographical footprint.

On 10 November 2016 and 17 November 2016, the Group announced that it had served a a notice on the board of directors of Stemlife of its intention to make a voluntary takeover offer to acquire all the remaining ordinary shares of Stemlife not already owned by the Company, representing approximately 10.12% of the issued and paid-up capital of Stemlife. At the close of the Offer on 31 January 2017, the Group obtained a further 8.83% interest from the noncontrolling interest in Stemlife to arrive at a total interest in Stemlife of approximately 98.71%. Pursuant to Subsection 223(1) of the Capital Markets and Services Act, 2007 of Malaysia, the Company acquired a further 0.04% interest in Stemlife to arrive at the total interest in Stemlife of approximately 98.75% as at 13 February 2017.

In addition, the Group will continue to build on its product and service offerings with more diagnostics related services.

Barring any unforeseen circumstances and excluding non-core finance costs, note repurchase expenses and any other one-off items, the Group expects its core business to remain profitable for FY2017.