Natural Beauty Announces 2013 Annual Results

HONG KONG, March 27, 2014 /PRNewswire/ -- Natural Beauty Bio-Technology Limited ("Natural Beauty" or the "Group"; Stock Code: 00157), the leading professional skin-care, spa services and beauty training provider in China, announced today its annual results for the year ended 31 December 2013.

During the year under review, turnover of the Group decreased by 9.1% to HK$439.4 million compared with HK$483.4 million in 2012. The decline was mainly due to decline in product sales of HK$45.4 million, largely influenced by the weak consumer market in Taiwan, and rationalization of the franchised spas in China. Profit for the year decreased by 50.9% from HK$119.1 million in 2012 to HK$58.5 million in 2013. Profit for the year would have dropped by 34.7% if all non-cash stock option expenses and reversal were excluded in both years, from HK$91.1 million in 2012 to HK$59.5 million in 2013. Earnings per share were 2.90 HK cents as compared to 6.0 HK cents in 2012. The Board recommended to distribute a final dividend of 1.63 HK cents per share.

Turnover in the PRC market decreased by 5.3% from HK$379.6 million in 2012 to HK$359.5 million in 2013, whereas turnover in the Taiwan market declined from HK$97.5 million in 2012 to HK$74.7 million in 2013. Sales in other regions, including Hong Kong, Malaysia and Macau, decreased by 16.5% from HK$6.3 million in 2012 to HK$5.3 million in 2013. Contributions of these regions to the Group's turnover remained insignificant, which accounted for 1.2% only. The Group's overall gross profit margin declined from 78.6% in 2012 to 75.8% in 2013. This is because of various reasons, including the inventory write-off for collagen drinks, lower counter mix for high-margin products, increasing product cost due to new packaging, and increased depreciation from the renovated self-owned spa.

The Group derives its income principally from its network of distribution channels, including spas and concessionary counters at department stores. As at 31 December 2013, there were 1,403 spas and 30 concessionary counters, of these, 1,399 were franchised spas, 4 spas and 18 concessionary counters were directly operated by the Group. Group-wide, a total of 46 new stores were opened and 111 stores were closed during 2013. Average sales per store decreased from HK$321,000 in 2012 to HK$302,000 in 2013.

Cash generated from operating activities in 2013 was approximately HK$108.3 million (HK$59.5 million in 2012). The increase was mainly due to the increase in working capital (decrease in inventory). As at 31 December 2013, the Group had bank balances and cash of approximately HK$507.4 million (HK$432.4 million as at 31 December 2012) with no external bank borrowing. With the cash and bank balances in hand, the Group's liquidity position remains strong and it has sufficient financial resources to finance its commitments and to meet its working capital requirements.

Ms. Karen Chang, Chief Executive Officer of the Group said, "We have established a 5-year turnaround plan to make Natural Beauty as the Trend Setter, the industry leader. As we are into the 2nd year of our transformation, we will continue to pursue a prudent growth strategy focusing on increasing the productivity of our existing franchisees, by building up direct management model and assisting in sell through to maintain their healthy inventory level. We will also revamp our brand image via empowering celebrity influence as we have signed up Nicky Wu to be our spokesperson for our annual event 'Quest for Natural Beauty Woman' to reinterpretate our slogan 'nature is the beauty' so we can communicate better with younger consumers."

She added, "The PRC government's continued plan for urbanization and household income growth should continue to fuel the long-term growth of China's domestic consumption which will be positive for the consumer market. Although results in short term are expected to remain volatile, we will continue to strengthen our position as a leading skin care brand and spa operator in the Greater China Region, and strive to bring better returns for our shareholders."

Source: Natural Beauty Bio-Technology Limited