Financial Statements And Related Announcement - Full Yearly Results

Financials Archive

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Condensed interim consolidated statement of profit or loss and other comprehensive income

Condensed interim statements of financial position

Review Of Performance

COMPARING 6 MONTHS ENDED 31 DECEMBER 2024 ("2H2024") AGAINST 6 MONTHS ENDED 31 DECEMBER 2023 ("2H2023")

Income Statement

Revenue

Revenue decreased by 32.0% or S$8.8 million from S$27.4 million in 2H2023 to S$18.7 million in 2H2024, comprising a 33.7% decline in revenue contributed by the banking business unit ("Banking revenue"), from S$25.3 million in 2H2023 to S$16.7 million in 2H2024. The decrease in Banking revenue was mainly due to a 25.0% decrease in new samples processed and stored from 8,800 in 2H2023 to 6,600 in 2H2024, largely attributed to Singapore and India. The decrease is also due to the additional financial impact of the Refund/Waiver for High-Risk Tanks of S$0.7 million recorded in 2H2024. The decrease was partially offset by an increase in new samples processed in Hong Kong.

During 2H2024, the Group's Singapore operations continued to be suspended until 14 September 2024. From 15 September 2024 to 13 January 2025, it was allowed to resume its cord blood banking service operations in a controlled manner with the limit of not more than 30 new cord blood units per month to collect, test, process and/or store.

The diagnostics business unit ("Diagnostics revenue") decreased by 11.6% or S$0.3 million from S$2.2 million in 2H2023 to S$1.9 million in 2H2024, largely due to the decrease in testing volume in Singapore.

Gross profit and gross profit margin

Gross profit decreased from S$18.2 million in 2H2023 to S$10.3 million in 2H2024 mainly due to the decrease in new samples processed and stored and the additional financial impact of the Refund/Waiver for High-Risk Tanks of S$0.7 million recorded in 2H2024. The gross profit margin decreased to 55.4% in 2H2024 as compared to 66.2% in 2H2023. The Group's Singapore operations continued to incur fixed running costs in 2H2024 as the suspension of Singapore's operations remained until 14 September 2024 and subsequent resumption of its cord blood banking business in a controlled manner.

Other operating income

The decrease in other income of approximately S$0.4 million in 2H2024 compared to 2H2023 was mainly due to the decrease in talent funding received in Hong Kong and no reversal of overaccrual of expenses in prior year in India.

Selling and marketing expenses

Selling and marketing expenses decreased by 25.9% or S$2.6 million in 2H2024 compared to 2H2023, mainly due to the suspension of operations in Singapore until 14 September 2024.

Administrative expenses

Administrative expenses increased by 12.5% or S$1.2 million in 2H2024 compared to 2H2023, mainly due to an increase of approximately S$1.3 million in impairment loss on trade receivables, S$0.6 million in legal and professional fees and consultancy fees and $0.5 million for staff costs. A significant portion of the increase in professional fees and consultancy fees were attributable to services in relation to regulatory investigations and third party claims. This is partially offset by a decrease of S$0.3 million in directors fees, an once off refund received of $0.5 million for development expenses previously paid as certain milestones of the project were not met and lower share-based compensation expenses of $0.4 million due to expiry of share grant plan if FY2024.

Finance income

Finance income decreased by S$0.1 million from 2H2023 to 2H2024 mainly due to the lower average deposit rate for 2H2024 as compared to 2H2023 and a decrease in funds placed in fixed deposits.

Finance costs

Finance costs relate to lease liabilities amounted to S$85,000 (2H2023: S$133,000). The decrease was mainly due to decrease in lease liabilities recognised in 2H2024 as compared to 2H2023.

(Loss)/profit before income tax from operations

As a result of the foregoing, the Group incurred a loss before income tax from operations of S$6.4 million for 2H2024 as compared to a profit before income tax of S$0.5 million for 2H2023.

Fair value gain on investment properties

In 2H2024, the Group recognised fair value gain of S$0.2 million (2H2023: S$0.3 million) on its investment properties held in Singapore and Malaysia.

Share of profit of associate

In 2H2024, the Group recognised the share of profit of associate of S$1.0 million compared to S$0.7 million recognised in 2H2023.

Tax

In 2H2024 and 2H2023, fair value gain on investment properties was not taxable.

Under-provision of tax in respect of prior years of S$330,000 for 2H2024 mainly comprises underprovision of corporate income tax of S$212,000 and S$166,000 in Singapore and Philippines respectively, offset by an over-provision of deferred tax liability for prior years of S$58,000 in Indonesia.

In 2H2023, over-provision of tax in respect of prior years of S$361,000 mainly comprises underprovision of deferred tax asset of S$244,000 in Philippines and an over-provision of corporate income tax of S$212,000 in Singapore, offset by an under-provision of corporate income tax of S$72,000 and S$21,000 in Philippines and Indonesia respectively.

Adjusting for the foregoing, the Group recorded higher tax expenses in 2H2024 mainly due to higher tax assessment in Indonesia, Malaysia, Hong Kong and Philippines.

COMPARING 12 MONTHS ENDED 31 DECEMBER 2024 ("FY2024") AGAINST 12 MONTHS ENDED 31 DECEMBER 2023 ("FY2023")

Income Statement

Revenue

Revenue decreased by 50.0% or S$27.9 million from S$55.7 million in FY2023 to S$27.8 million in FY2024. The decrease in revenue comprised a 53.3% or S$27.3 million decrease in Banking revenue from S$51.3 million in FY2023 to S$23.9 million in FY2024.

In FY2024, the financial impact of the Refund/Waiver for High-Risk Tanks resulted in a revenue reversal of approximately S$10.4 million, which included the recognition of S$0.6 million in contract liabilities relating to future storage obligations for affected clients. Consequently, the Group recorded revenue of approximately S$27.8 million in FY2024.

Excluding the reversal, the Group's revenue for FY2024 would have been approximately S$38.2 million, a decline of 31.4% year-on-year ("yoy") from S$55.7 million in FY2023, mainly contributed by the suspension of the Group's Singapore operations.

Adjusting for the revenue reversal from the Refund/Waiver for High-Risk Tanks, the banking business unit ("Banking revenue") decreased by 33.1% from S$51.3 million in FY2023 to S$34.3 million in FY2024. This was mainly due to a 31.6% decrease in new samples processed and stored from 17,700 in FY2023 to 12,100 in FY2024. The decline in new samples processed and stored is mainly contributed by Singapore, as well as India, Malaysia and Indonesia, as the publicity surrounding the suspension of the Group's Singapore operations had adversely affected customer sentiment, even though operations of the overseas subsidiaries have not been directly impacted.

From 15 September 2024 to 13 January 2025, the Group's Singapore operations was allowed to resume its cord blood banking service operations in a controlled manner with the limit of not more than 30 new cord blood units per month to collect, test, process and/or store.

Diagnostics revenue decreased by 12.2% or S$0.5 million from FY2023 to FY2024 largely due to the decrease in testing volume in Singapore and Indonesia.

Gross profit and gross profit margin

Gross profit decreased from S$37.3 million in FY2023 to S$11.7 million in FY2024 mainly due to the decrease in new samples processed and stored. Excluding the financial impact of the refunds of approximately S$10.4 million, the gross profit in FY2024 would have been approximately S$22.1 million, a decline of 40.8% yoy from S$37.3 million in FY2023 and gross profit margin would have been 57.9% in FY2024 as compared to 66.9% in FY2023. This is largely attributed to the suspension of Singapore's operations, as Singapore continued to incur fixed running costs in FY2024. The suspension was lifted on 14 September 2024 and from 15 September 2024 to 13 January 2025, the Group's Singapore operations was allowed to resume its cord blood banking service operations in a controlled manner with the limit of not more than 30 new cord blood units per month to collect, test, process and/or store.

Other operating income

Other operating income decreased by approximately S$0.2 million in FY2024 compared to FY2023. The decrease was mainly due to the reversal of over-accrual of expense in prior years in India. There is no reversal of over-accrual of expenses for India in FY2024.

Selling and marketing expenses

Selling and marketing expenses decreased by 24.0% or S$4.6 million in FY2024 compared to FY2023, mainly due to the suspension of operations in Singapore.

Administrative expenses

Administrative expenses for FY2024 of S$21.2 million increased by 12.0% or S$2.3 million compared to FY2023 of S$19.0 million. This is mainly due due to an increase of approximately S$1.5 million in impairment loss on trade receivables, S$1.4 million in legal and professional fees. A significant portion of the increase in professional fees was attributed to services in relation to regulatory investigations and third party claims. This is partially offset by an once off refund received of $0.5 million for development expenses previously paid as certain milestones of the project were not met and lower share-based compensation expenses of $0.5 million due to expiry of share grant plan.

Finance income

Finance income comprises interest income from deposits, short-term investments and note receivable of S$3.4 million and remained comparable to that of FY2023.

Finance costs

Finance costs relate to lease liabilities which amounted to S$0.2 million (FY2023: S$0.3 million). The decrease was largely due to a decrease in lease liabilities recognised in FY2024 as compared to FY2023.

Profit before income tax from operations

As a result of the foregoing, the Group incurred a loss before income tax from operations of S$20.6 million for FY2024 as compared to a profit before income tax of S$2.7 million for FY2023.

Fair value gain on investment properties

In FY2024, the Group recognised fair value gain of S$0.2 million (FY2023: S$0.3 million) on its investment properties held in Singapore and Malaysia.

Share of profit of associate

In FY2024, the Group recognised the share of profit of associate of S$1.6 million, which was a 28.3% increase compared to S$1.3 million recognised in FY2023.

Tax

In both FY2024 and FY2023, fair value gain on investment properties was not taxable. Under-provision of tax in respect of prior years of approximately S$330,000 for FY2024 mainly comprises under-provision of corporate income tax of S$212,000 and S$166,000 in Singapore and Philippines respectively, offset by an over-provision of deferred tax liability for prior years of S$58,000 in Indonesia.

In FY2023, the over-provision of tax in respect of prior years of S$603,000 mainly comprises over-provision of corporate tax of S$212,000 and S$145,000 in Singapore and Indonesia respectively, an over-provision of deferred tax liability of S$74,000 in Malaysia and an underprovision of deferred tax asset of S$244,000 in the Philippines, partly offset by an under-provision of corporate income tax of S$72,000 in the Philippines.

Adjusting for the foregoing, the Group recorded a tax credit of S$0.5 million for FY2024 compared to tax expenses of S$1.4 million in FY2023 where there was tax losses not recognised in certain countries as well as an increase in contribution to the profit before tax from countries with higher tax rates.

Balance sheet

Cash and cash equivalents, unpledged and pledged fixed deposits ("fixed deposits"), short-term and long-term investments ("investments")

As at 31 December 2024, the Group maintained a strong balance sheet, with cash and cash equivalents, fixed deposits, investments of S$67.2 million (31 December 2023: S$82.5 million). Investments mainly comprise of short-term investments in money market funds and redeemable convertible note ("RCN") from CellResearch Corporation Pte. Ltd. ("CRC").

The decrease cash and cash equivalents of S$6.9 million from S$18.4 million as at 31 December 2023 to S$11.5 million as at 31 December 2024 was mainly due to cash used in operating activities of S$11.3 million and dividend received from associate of S$0.4 million, offset by the purchase of property, plant and equipment and intangible assets of S$4.3 million.

Net cash used in operating activities comprised mainly operating cash flows before movements in working capital of S$17.5 million, net working capital inflow of S$6.0 million and net interest received of S$1.7 million offset by net income tax paid of S$1.5 million.

Net working capital inflow of approximately S$6.0 million comprised the following:

• increase in trade receivables of approximately S$4.3 million;
• decrease in contract assets of approximately S$4.1 million;
• decrease in other receivables, deposits and prepayments of approximately S$0.2 million;
• increase in inventories of approximately S$125,000;
• increase in trade and other payables of approximately S$3.2 million;
• increase in contract liabilities of approximately S$3.0 million.

The decrease in current and non-current fixed deposits and short-term investments of S$8.4 million is mainly due to the release of fixed deposits in Malaysia that were pledged for a shortterm loan facility and a banker's guarantee issued for an office lease.

Property, plant and equipment

As at 31 December 2024, the Group recorded S$17.0 million on its balance sheet for property, plant and equipment (31 December 2023: S$16.3 million). The increase in property, plant and equipment was due to additions of approximately S$4.2 million, which mainly comprised right-ofuse assets recognised for leased office units in India and Singapore and leasehold improvement made to Hong Kong laboratory and office units, offset by depreciation of S$3.4 million recognised in FY2024.

Investment properties

As at 31 December 2024, the Group recorded S$5.0 million on its balance sheet for investment properties (31 December 2023: S$4.7 million). The increase is mainly due to an uplift in valuations for the Singapore properties.

Intangible assets

Intangible assets comprise client contracts, brand and goodwill acquired in business combinations and computer software.

Deferred tax assets

As at 31 December 2024, the Group recorded deferred tax assets of S$1.7 million. (31 December 2023 : S$0.9 million). The deferred tax assets represent prior year tax losses carried forward as a result of the transitional adjustments arising from the adoption of FRS115 in the Hong Kong subsidiary and unutilised merger and acquisition allowance, relating to acquisitions made by the Company in previous years. The increase is mainly due to deferred tax asset recognised in the Singapore for deductible temporary differences on the provision for refund.

Investment in associate

Investment in associate comprise of a 39.61% stake in TSL through Stemlife Berhad. The increase in investment in associate was due to the recognition of the share of profit of associate of S$1.6 million in FY2024, slightly offset by the dividend received from TSL.

Contract assets, non-current

Non-current contract assets represent all service revenues arising from the performance obligations identified under installment payment plans in the cord blood, cord lining and cord tissue banking contracts that have yet to be billed to clients. Upon billing, the billed amount will be receivable under the same terms as the current trade receivables. As at 31 December 2024, the Group recorded non-current contract assets of S$58.4 million (31 December 2023: S$62.6 million).

Inventories

As at 31 December 2024, the Group recorded inventories of S$0.9 million (31 December 2023: S$0.8 million).

Prepayments

As at 31 December 2024, the Group recorded prepayments of S$2.9 million (31 December 2023: S$2.2 million). The increase is mainly due to increase in Singapore where there is increase in prepaid booking fees for participation in baby fair and prepaid insurance premiums.

Trade receivables, current

Current trade receivables as at 31 December 2024 was S$25.2 million compared to S$22.7 million as at 31 December 2023.

Other receivables

As at 31 December 2024, the Group recorded other receivables of S$4.2 million (31 December 2023: S$3.2 million). The increase is mainly due to an increase in interest receivable from fixed deposit India and higher insurance experience refund and a once off refund of development expenses as certain milestones for the project were not met in Singapore.

Short-term investments

As at 31 December 2024, the Group recorded short-term investments of S$6.0 million (31 December 2023: S$5.9 million), which comprises of a RCN in the principal amount of S$4.2million from CRC, at the yielding interest rate of three month SIBOR plus 7% per annum payable in arrears, and money market funds held in Malaysia. The RCN was redeemed on 31 December 2024 with 50% of the principal amount repaid in January 2025 and the remaining 50% to be repaid by February 2025. The interest rate at three month SORA plus 7% per annum payable in arrears will computed on the outstanding principal amount until the balance is fully repaid.

Trade and other payables, current and non-current

As at 31 December 2024, the Group recorded current trade and other payables of S$16.3 million (31 December 2023: S$13.2 million) and non-current other payables of S$1.0 million (31 December 2023: S$1.0 million). The increase in current trade and other payables was mainly attributable to Singapore. In FY2024, Singapore has provided a further provision for refunds of S$9.8 million for the High-Risk Tanks which was partially offset by the utilisation of S$6.1 million as a result of the refunds made during FY2024.

Lease liabilities, current and non-current

As of 31 December 2024, the Group recognised lease liabilities of S$2.4 million on property and equipment leases (31 December 2023: S$3.5 million). The decrease in lease liabilities was attributable to the payments made during the year.

Contract liabilities, current and non-current

Contract liabilities represent revenue received in advance for services revenues to be rendered under the various performance obligations identified in the cord blood, cord lining, cord tissue banking and diagnostics contracts. As at 31 December 2024, current and non-current contract liabilities were at S$10.5 million and S$64.4 million respectively (31 December 2023: S$8.9 million and S$62.1 million respectively).

Income tax payable

The Group's income tax payable decreased by S$0.4 million from 31 December 2023 due to tax refund in Indonesia and Hong Kong.

Deferred tax liabilities

As at 31 December 2024, deferred tax liabilities amounted to S$3.8 million (31 December 2023: S$3.7 million), comprising deferred tax liabilities on temporary differences and on intangible assets recognised on business combination.

Commentary

The Group remains confident about the cord blood banking industry's long-term growth potential, buoyed by the ongoing shift towards preventive and precautionary care over curative treatments¹.

Over the past year, the Group has made significant upgrades to its processing and storage facility in Singapore, which include implementing an enhanced laboratory monitoring system to provide 24/7 real-time on-site and remote monitoring of key equipment. The Group has also increased laboratory and technical personnel, strengthened operational protocols, and established a Medical and Technical Advisory Board to provide guidance on best practices.

Reflecting these rectification efforts, Cordlife Singapore was granted approval from the Ministry of Health ("MOH") in August 2024 to resume operations in a controlled manner from 15 September 2024 to 13 January 2025, during which it could not collect, test, process, and/or store more than 30 new cord blood units per month.

Subsequent to FY2024, the Company was issued with the cord blood banking and human tissue banking licences which are effective from 14 January 2025 and are valid for a period of one (1) year.

In view of the foregoing, the Company expects an improvement in the revenue streams to be contributed by the Group's Singapore business. The Group will continue to work closely with industry experts and regulators to strengthen processes even further.

Additionally, the Group will continue to expand its product and service offerings in Asia, enhance its ecosystem with doctors and hospitals in markets where it operates, and step up marketing and education initiatives on clinical applications of stem cells for various healthcare treatments.

The Group remains cautiously optimistic that, barring unforeseen circumstances the Group's financial performance in FY2025 will improve compared to FY2024. However, the pace of recovery could be hampered by uncertainties relating to the contingent liabilities as described in Note 6 and broader economic headwinds. In response, the Group will aim to maintain a strong balance sheet to buffer against economic, market and liability-related uncertainties.