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Natural Beauty Announces 2015 Interim Results

Net Profit surged by 163.9% to HK$78.4 million
Declared an interim dividend of HK3.92 cents per share
Strengthen In-Spa operations boosting franchisees' productivity for growth
Natural Beauty Bio-Technology Limited
2015-08-28 11:27 2931

HONG KONG, Aug. 28, 2015 /PRNewswire/ -- Natural Beauty Bio-Technology Limited ("Natural Beauty" or the "Group"; Stock Code: 00157), the leading professional skin-care, and spa services provider in China, announced today its interim results for the six months ended 30 June 2015.

For the six months ended 30 June 2015, turnover of the Group increased by 6.7% to HK$265.1 million (1H2014: HK$248.5 million), driven by an increase in product sales as a result of higher store productivity in Mainland China and Taiwan. Overall gross profit margin improved to 77.9%, as contribution from higher-margin products increased within the Group's sales mix (1H2014: 76.7%). Profit for the period rose 163.9% to HK$78.4 million (1H2014: HK$29.7 million). The growth was mainly attributable to the increase in product sales and other income as well as decrease in income tax expense. Earnings per share were HK3.92 cents (1H2014: HK1.48 cents). The Board declared distribute an interim dividend of HK3.92 cents per share.

Despite the economic growth slowdown in Mainland China, turnover in the Mainland market rose by 7.4% to HK$216.8 million for the six months ended 30 June 2015. The growth was primarily driven by increase in sales of products, mainly due to the continuous expansion in the second phase of "direct-own retail" management system to exercise better control over franchisees in order to drive higher store productivity. During the period under review, gross margin on product sales was up 0.6 percentage point to 80.7%. Turnover for the Taiwan market also registered growth of 4.2% to HK$46.2 million, as the Group adopted door-by-door management via franchisee differentiation to utilize company resources efficiently. Gross margin on product sales was up 0.5 percentage point to 80.5%. The gross margin improvement in both Mainland China and Taiwan was a result of higher sales contribution from higher-margin products such as NB-1 and Bio during the period under review. On the other hand, sales in other regions, including Hong Kong, Macau and Malaysia, decreased by 11.3% to HK$2.1 million for the six months ended 30 June 2015, accounting for an insignificant 0.8% of the Group's turnover.  

The Group derives its income principally from its network of distribution channels, including spas and concessionary counters in department stores. As at 30 June 2015, there were 1,098 spas and 14 concessionary counters. In order to rationalize channels, 277 franchised spas which refused to fulfill 2015 contract were closed and a total of 11 new stores were opened during the review period.

For the first half of 2015, average sales per store in Mainland China grew 24.0% to HK$227,000 while average sales per store in Taiwan up by 8.5% to HK$178,000.

The Group puts significant emphasis on discovering the insights of consumer needs. During the six months ended 30 June 2015, sales volume of the Group's flagship NB-1 product family increased by 17% year-on-year to 191,395 sets/bottles, and generated HK$114.2 million in sales, accounting for more than 40% of the Group's total product sales during the period.

Despite the weakening momentum in economic growth in Mainland China, growing household incomes and increasing pursuit of personal well-being have led to healthy acceleration of sales in the beauty and personal care market. The beauty and personal care market in Mainland China is expected to enjoy a healthy compound annual growth rate in value sales over the next few years.

Ms. Karen Chang, Chief Executive Officer of the Group said, "Looking ahead, we will press on with our prudent growth strategy to sustain the growth momentum in view of the increasingly fierce competition in the beauty and personal care market. We will continue to expand 'direct-own retail' management system with an aim to boost the franchisees' productivity as our major growth driver in the near future and effectively allocate management and marketing resources by categories. In addition, the establishment of the Natural Beauty Business School will provide systematic training to our franchisees so as to further enhance their service quality. We will focus on trade marketing to drive sell-through and recruit new consumers and continue to drive celebrity influence to consumer level. We strive to strengthen our competitive edges by implementing the aforesaid strategies and proactively strengthening the position of Natural Beauty as a leading skin care brand and spa operator in the Greater China Region, bringing satisfactory returns to our shareholders."

About Natural Beauty Bio-Technology Limited

Natural Beauty is a leading beauty and spa services and products provider in Greater China. The Group principally offers tailor-made beauty and skin care solutions through its trained professional beauticians. The Group is engaged in research and development, manufacture and sale of skin care, aroma-therapeutic and beauty products, marketed under the brandname "NB®". The products are distributed through a distribution network of over 1,100 NB's SPAs and dedicated counters in Greater China.

For further information, please contact:

iPR Ogilvy & Mather
Natalie Tam / Juliana Li 
Tel: +852-2136-6182 / +852-2169-0467 
Fax: +852-3170-6606
Email: naturalbeauty@iprogilvy.com

Source: Natural Beauty Bio-Technology Limited
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