-- Expects One-Time Impairment Charge of RMB19.0 million (US$2.7 million)
-- Affirms 2008 Full Year Guidance
SHENYANG, China, Nov. 1 /Xinhua-PRNewswire-FirstCall/ -- 3SBio Inc. (Nasdaq: SSRX) ("3SBio" or "the Company"), a leading biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products primarily in China, announced today that it expects to recognize a one-time impairment charge of approximately RMB19.0 million (US$2.7 million) in the third quarter 2008 and affirmed its 2008 full year guidance.
Preliminary Third Quarter 2008 Selected Unaudited Financial Results
The Company's financial statements for the three months ended September 30, 2008 have not been finalized and are subject to completion of its normal quarter-end closing procedures. Therefore, the preliminary selected unaudited financial data set forth below may be subject to adjustment. As a consequence, actual results could differ materially from the expected results provided.
For the third quarter 2008, 3SBio expects total net revenues of approximately RMB68.2 million (US$10.0 million), representing an increase of 21.6% over the third quarter 2007. For the same period, 3SBio expects to recognize a one-time impairment loss of approximately RMB19.0 million (US$2.7 million). This impairment loss was related to a US$3.0 million aggregate principal amount of Floating Rate Credit Linked Notes due on January 21, 2009 (the "Notes") held by the Company. As a result, net income for the third quarter 2008 is expected to be approximately RMB1.9 million (US$0.3 million), or US$0.01 per ADS.
There are no other similar Notes in the Company's investment portfolio, which is primarily made up of investment grade bonds with an expected aggregate fair market value of approximately RMB58.7 million (US$8.6 million) as of September 30, 2008. In addition, as of the end of the third quarter 2008, the Company had an expected cash balance of approximately RMB675.4 million (US$99.5 million) and generated an expected operating cash flow of approximately RMB43.0 million (US$6.4 million).
Management Commentary and Outlook
In addition, Kevin Teo will return to his role as the Company's Director of Finance, no longer serving as Chief Financial Officer of 3SBio. Mr. Teo will continue to be responsible for the Company's accounting and controlling functions. Mr. Tan will facilitate the search for an experienced and qualified replacement Chief Financial Officer for 3SBio.
Dr. Jing Lou, Chief Executive Officer of 3SBio, commented, "While we continue to benefit from robust growth opportunities and increased demand for our products, we recognize the need to be especially prudent in the current macro environment. We are actively working to better manage our
mark-to-market valuation levels and preserve our treasury and cash assets. We have formed an Investment Advisory Committee and are pleased to welcome Bo Tan to join our efforts in risk management and other initiatives. I am confident that the collaboration between these two parties will better align our investment portfolio allocations for the best interest of our shareholders."
"Despite the one-time impairment charge that adversely affected our bottom-line for the third quarter, 3SBio remains fundamentally strong. On the operational front, we continue to demonstrate market leadership within our core product areas and our pipeline drugs are on track for SFDA submission. From a financial perspective, we continue to deliver top line growth with a strong balance sheet and sufficient free cash flow. As we maintain our strategic focus and execute on our growth initiatives, we are confident in our ability to meet our full year total net revenue guidance of US$34 to US$35 million."
Conference Call
3SBio senior management will host a conference call at 5:00 am (Pacific) / 8:00 am (Eastern) / 9:00 pm (Beijing/Hong Kong) on Monday, November 3, 2008 to discuss details of its pre-earnings announcement. The conference call may be accessed by calling (US) +1 480-629-1990 / (UK) +44 (0) 20 7190 1596 / (HK) +852 3009-5027, Passcode: 3938278. A telephone replay will be available shortly after the call until November 17, 2008 at (US) +1 303 590 3030/ (UK) +44 (0)20 7154 2833, Passcode: 3938278#; and (HK) +852 2287 4304, Passcode: 137110#.
A live webcast of the conference call and replay will be available on the investor relations page of 3SBio's website: http://bbs.3sbio.com/en/News/xShowInfo_nnnn1.aspx?ID=129 .
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on our
year-end financial statements, which could result in significant differences from this unaudited financial information.
Currency Convenience Translation
For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB6.7899 to US$1.00, the noon buying rate for US dollars in effect on September 30, 2008 for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York.
About 3SBio Inc.
3SBio Inc. is a leading, fully integrated biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, primarily in China.
For more information, please visit 3SBio on the web at: http://www.3sbio.com .
Safe Harbor Statement
For more information, please contact:
Investor Contact:
David Chen, COO
3SBio Inc.
Tel: +86-24-2581-1820
Investor Relations (US):
Mahmoud Siddig
Taylor Rafferty
Tel: +1-212-889-4350
Investor Relations (HK):
Ruby Yim
Taylor Rafferty
Tel: +852-3196-3712
Media Contact:
Jason Marshall
Taylor Rafferty
Tel: +1-212-889-4350
