Cordlife Group Limited
Annual Report 2016
10
Financial and
Operations Review
To achieve best-in-class quality
assurance as we continue to grow
our customer base and expand
our regional operations, the Group
invested more in training and
development to augment the long-
term effectiveness and efficiency
of our employees, as well as an
increased support base.
OVERVIEW
For FY2016, the Group recorded a pro t before income
tax of S$13.3 million. Revenue for the year increased by
3.5% from S$57.6 million in FY2015 to S$59.6 million for
FY2016, as a result of an increase in client deliveries by
8.8% to 22,956 in FY2016. Higher client deliveries during
the year was driven by growth in the Group’s key markets
in Indonesia, India and the Philippines. This is attributed
to a series of successful marketing efforts to raise brand
awareness of the Group’s cord blood and cord lining
banking as well as diagnostics services. The growth is
also due to the Group’s increased stake in Malaysia’s
largest cord blood bank, Stemlife, from 31.81% to 89.88%.
In line with our commitment to provide quality assurance
to our clients, there was an increase in the cost of quality
and compliance in laboratory practices in the Group. As
a result, gross pro t decreased by 1.4% to S$39.5 million
and gross pro t margin declined 3.3 percentage points
to 66.2% during the year. Owing to our efforts in quality,
Singapore achieved FACT accreditation in FY2016.
Other operating income increased by 26.9% as the Group
received higher grant income from SPRING Singapore
of approximately S$232,000 for the Group’s initiatives in
employee training and development and investments in
information technology infrastructure, as compared to a
grant income of S$37,000 in FY2015.
In FY2016, the Group recorded an overall higher selling
and marketing expense of S$1.4 million as compared to
FY2015. This was partly contributed by the consolidation
of Stemlife, which accounted for approximately S$894,000
of selling and marketing expenses.
During the year, the Group made inroads into more cities
in Indonesia and the Philippines. Enlarged coverage
in these countries, together with increased marketing
efforts to promote greater customer awareness for our
diagnostic services, led to an increase in expenditure
of S$1.1 million. The Group also continued to implement
more educational marketing activities in Singapore
and Hong Kong, which contributed an increase of
approximately S$1.7 million. Through such educational
marketing activities in our key markets, there was
greater engagement with potential clients and expanded
awareness of our service offerings, resulting in increased
client acquisitions.
The Group remains focused on the key strategies to gain
market leadership across more Asian markets as well as to
improve market penetration in the existing markets.
Increase in selling and marketing expenditure was offset
by the decline in advertising expenses of S$2.2 million
in India as compared to FY2015 when the Group spent
S$1.2 million on television commercials as part of the
Group’s through-the-line integrated marketing plan.
The Group recorded 14.6% higher administrative
expenses in the year compared to the previous year.
This included one-off expenses in FY2016 of S$407,000
and S$318,000 in relation to the legal and professional
