— Turnover increased by 15.1% to HK$505.8 million
— Profit before taxation up by 40% to HK$116.3 million and Net Profit up by 22.3% to HK$71.5 million
— Strengthen In Spa operations yielding strong same store productivity drove the growth
HONG KONG, March 31, 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 mainland China, announced today its annual results for the year ended 31 December 2014.
For the year ended 31 December 2014, turnover of the Group grew 15.1% to HK$505.8 million year-on-year (2013: HK$439.4 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 76.9%, as contribution from higher-margin products increased within the Group’s sales mix (2013: 75.8%). Profit for the year increased by 22.3% to HK$71.5 million (2013: HK$58.5 million). Earnings per share were HK3.6 cents (2013: HK2.9 cents). The Board recommended to distribute a final dividend of HK3.188 cents per share.
Despite the economic growth slowdown in mainland China, turnover in the mainland China market rose by 16.9% to HK$420.3 million for the year ended 31 December 2014. The growth was primarily driven by increase in sales of products, mainly due to the pilot-testing of "direct-own retail" management system to exercise better control over franchisees in order to drive higher store productivity. During the year under review, gross margin of this segment was up 1.8 percentage points to 78.7%. Turnover for the Taiwan market also registered growth of 7.9% to HK$80.6 million, as the Group adopted door-by-door management via franchisee differentiation to utilize company resources efficiently. Gross margin of this segment expanded 4.7 percentage points to 67.7%. 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 lower promotion discounts during the year under review. On the other hand, sales in other regions, including Hong Kong, Macau and Malaysia, decreased by 8.5% to HK$4.8 million for the year ended 31 December 2014, accounting for an insignificant 0.9% 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 31 December 2014, there were 1,364 spas and 14 concessionary counters. A total of 35 new stores were opened and 74 stores were closed during the year ended 31 December 2014.
During the year under review, average sales per store in mainland China grew 21.5% while average sales per store in Taiwan rose by 15.2%.
The Group puts significant emphasis on discovering the insights of consumer needs. During the year ended 31 December 2014, the Group’s flagship NB-1 products generated HK$217 million in sales, accounting for more than 40% of the Group’s total product sales during the year. With effective product line rationalization plan, NB-1 Revital series was successfully re-launched as home care product line in order to boost product sales and enhance brand loyalty. Among which, NB-1 Revital Sleeping Mask was well-received by customers in product efficacy.
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 while mitigating the escalating rental and labor cost pressure in mainland China. We will continuously implement "direct-own retail" management system with an aim to boost the franchisees’ productivity as our major growth driver in near future. We will enhance our operational efficiency by streamlining organizational structure, implementing a more integrated go-to-market process and improving cost-control measures. We will also focus our marketing and promotional efforts to drive more sell-through by franchisees. Leveraging our position as a leading skin care brand and spa operator in the Greater China Region, we strive to strengthen our competitive edges by implementing the aforesaid strategies, so as to satisfactory returns for 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 1,300 NB’s SPAs and dedicated counters in Greater China.
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