Silver Base Doubled-Up Its Annual Revenue with Net Profit of HK$130.4 Million

HONG KONG, June 28, 2016 /PRNewswire/ --

Financial Highlights

* Excluding the factor of provision for inventories

Silver Base Group Holdings Limited ("Silver Base" or "the Company", together with its subsidiaries, the "Group"; Stock Code: 0886) today announces its annual results for the year ended 31 March 2016 (the "year under review").

During the year under review, the Group recorded revenue of HK$1,260.2 million (2015: HK$418.9 million), representing an increase of 200.9% as compared to prior year. The profit attributable to ordinary equity holders of the Company was HK$130.4 million (2015: loss of HK$19.1 million). Basic and diluted earnings per ordinary share for the year under review were HK $8.95 cents and $8.84 cents respectively (2015: basic and diluted loss per share HK $1.41 cents).

During the year under review, revenue derived from the PRC market accounted for 43.1% of the Group's total revenue (2015: 57.8%), while revenue from the international market accounted for 56.9 % (2015: 42.2%).

Business Review

The baijiu market experienced an industry-wide growth

During the year under review, China's baijiu industry experienced an industry-wide growth after three years of industrial adjustments. With the impact of restrictions on government official consumption, the recovery of the catering industry indicates that commercial and mass consumptions have already replaced government official consumption as the major part of the catering market. The rationalisation and stability of the prices of the Moutai and Wuliangye products indicate that the consumers accept the current price levels. The Group believes Moutai and Wuliangye products have become the preferred choices of high-end baijiu and both will continue to solidify their leading positions in the market, maintain steady growth and increase their market shares.

Huge opportunity ahead for Wine and Cigarettes business

In 2015, the import of wine to China was approximately 550 million litres in volume, representing a year-on-year growth of approximately 44.6%; and amounted to approximately US$2,030 million, representing a year-on-year growth of approximately 34.3%. Given the strong market data and the warming up of the overall market, the Company will continuously and actively develop the wine business in China.

Strong focus on E-commerce to develop B2B and O2O business

In order to adapt to the current market changes and under the evolvement of internet-based sales channels, the Group has been putting great efforts in developing E-commerce including the establishment of the self-operated chain store "Wine Kingdom", the setting up of distributors and franchised stores, the proposed equity investment in Zhong Jiu Wang for the establishment of an online-offline integrated sales network in 2013 and eventually the establishment of the Group's own e-commerce website.

During the year under review, the Group's proprietary e-commerce website "Wine Kingdom" was officially launched for online business. Given that the Group's e-commerce business delivered strong sales growth and made greater contribution to the Group's revenue. On top of the solid cooperation relationship maintained with all the major e-commerce shopping platforms in the PRC, such as Jingdong Mall, Yihaodian, T-mall, Vip.com, Rongyigou, Shunfeng Heike, Amazon, Hunan Happigo and Anhui Jiajiamall etc., the Group has been vigorously experimenting brand new internet-based business models. The Group believes this kind of highly efficient retail sales solution will bring positive shopping experience to the consumers and will generate satisfactory business results in the coming years.

Outlook and Future Development

Looking ahead, with China's economy entering the "new normal", there will be consumption upgrade and reduction of production capacity in China's baijiu industry which will greatly enhance market concentration. Alongside with the increasingly stringent food safety supervision in the PRC, consumer confidence towards the quality of liquor has also increased, therefore the business environment for high and low-end baijiu will be further improved. The Group will continue to seize the opportunities, and strive to accomplish several missions in the future.

In respect of products, the Group will, with the premise of maintaining the existing product structure, focus on the market situations of the low, middle and high-end products, track the market changes and promptly launch suitable products in accordance with market research and data, with a view to further increase its market shares and broaden its revenue sources.

In respect of channel development, the Group will uphold its tradition of aggressive development over the coming years, and continue to lead at the forefront of the industry. More efforts will be put in the development of new sales channels, same as e-commerce platforms which are more adaptive to commercial customers and end consumers. The Group will also work with the existing e-commerce partners to further explore different in-depth cooperation in order to diversify its sales channels, attract more potential consumers, enhance the market penetration of different types of products of the Group, increase the overall market shares and generate better returns for the shareholders.

In respect of operation management, the Group will continue to strengthen internal control, adopt more prudent financial management and cost control measures, further regulate the operation expenses and maintain healthy financial fundamentals in order to achieve sustainable development and reward shareholders, employees and customers for their continuous support.

In view of the satisfactory results, Chairman of the Group, Mr. Liang Guoxing commented, "We are glad to achieve profit turnaround for the Year under Review. Thanks to the sales for famous liquor markets, such as Wuliangye and Moutai, continues to improve. Further, sales trended up during low season since the first half of the financial year, and has risen beyond expectation heading into traditional high season, which further proven the changing landscape of purchasing seasonality for mass consumption market in China's baijiu and wine industry. Last but not least, the Group's proactive and correct adjustments made to the product mix, sales channels and sales team have grasped the emerging e-commerce business opportunities in due time. As a leading operator in China's baijiu industry and a professional service provider of alcoholic beverage sales platform, on top of maintaining the organic growth of our current baijiu and wine business, we will devote more resources on developing and expanding our e-business in order to embrace the advent of "Internet+" and to revolutionise the traditional business model of wine industry." 

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About Silver Base Group Holdings Limited

Silver Base Group was listed on the main board of The Stock Exchange of Hong Kong Limited on 8 April 2009 (Stock code: 886), a leading distributor of alcoholic beverages in the PRC and the international markets. Except well-known traditional premium Chinese baijiu, Wuliangye and Maotai, the Group also distributes wine from France, Portugal, Italy etc. The Group's self-operating e-commerce platform www.pinhui001.com has formally launched and started operating on 18 August 2015. 

For more details about the Group, please visit www.silverbasegroup.com.