102
CORDLIFE GROUP LIMITED
| ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
15.
FINANCIAL ASSET DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
(CONTINUED)
Consistent with the Strategy, the Group manages risk by setting a lower and upper limit in share price to
dispose of this investment. The fair value of this investment is monitored by the Chief Financial Officer on a
regular basis and reported to the Chief Executive Officer. Changes in fair values of this investment will also
be reported to the board of directors at least on a quarterly basis, and as and when there is a significant
fluctuation (>10%) in the share prices.
As disclosed in Note 42 to the financial statements, the Group has agreed to sell to Golden Meditech Holdings
Limited (“Meditech”) the Group’s interest in CCBC on the terms and subject to the conditions of the conditional
purchase agreement dated 8 May 2015 entered into by the Group and Meditech. In particular, the proposed
sale is subject to the approval by the shareholders of the Group and the shareholders of Meditech.
On 14 September 2015, the Group has obtained shareholders’ approval in an Extraordinary General Meeting
in relation to the proposed sale. As at the date of the authorisation of the financial statements, Meditech has
not held its Extraordinary General Meeting to obtain shareholders’ approval. Management is unable to assess
the probability of Meditech obtaining its shareholders’ approval.
Management’s intention has been to hold the investment for at least the next 12 months. In the event the
proposed sale does not complete, management intends to continue holding the investment for at least the
next 12 months.
As at the date of this financial statements, the fair value of the investment based on the last traded price
as at 23 September 2015 is $64,693,000 (US$45,713,000) (26 September 2014: $46,121,000 (US$36,351,000)).
16.
DERIVATIVE ASSET
Group
Company
2015
2014
2015
2014
$’000
$’000
$’000
$’000
Derivative asset
37,971
–
37,971
–
On 10 November 2014, the Group and Magnum Opus International Holding Limited (“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. Under the terms of the
acquisition, the Group will purchase 50% of the Convertible Note (the “CGL Note”) and Magnum will purchase
the remaining 50% of the Convertible Note. The Group and Magnum also entered into a facility agreement
pursuant to which the Company will lend Magnum funds in an aggregate amount of up to US$46,500,000.
The loan to external party is recognised as non-current loans and receivables at amortised cost (Note 18).
The Convertible Note bears interest at a rate equal to 7% per annum and is payable annually on 3 October in
arrears until the maturity of the Convertible Note.
Under the terms of the CGL Note, the Group may, at any time before the maturity of the CGL Note, convert
the principal amount of the CGL Note into 8,809,020 fully paid shares in CCBC. The conversion price per share
in CCBC under the CGL Note based on the principal amount of US$25 million is US$2
.
838.
The financial instrument was bifurcated into a bond receivable and a conversion option, which were
recognised as non-current loans and receivables at amortised cost (Note 18) and a financial derivative asset
respectively. As at 30 June 2015, the fair value of the derivative asset is $37,971,000 (30 June 2014: $Nil).
Fair value changes on the conversion option is mainly affected by the time to maturity of the bond, the
share price of CCBC as at the reporting date compared to the date of acquisition and the value of the bond
as a function of the cash inflow from the bond at redemption date. Fair value gain on derivative asset of
$12,922,000 (2014: $Nil) is recognised in profit or loss.
Foreign exchange gain on the derivative asset arising from fluctuation in the United States dollar against the
Singapore dollar of $967,000 (2014: $Nil) is recognised in profit or loss.
