Natural Beauty Announces 2016 Annual Results

Profit before taxup by 15.2% to HK$196.2 million

Enhanced brand equity of NB to support long-term growth

HONG KONG, CHINA - Media OutReach - 29 March 2017 - Natural Beauty Bio-Technology Limited ("Natural Beauty" or the "Group"; HKSE: 00157), the leading professional skin-care, and spa services provider in Greater China, announced today its annual results for the year ended 31 December 2016.

For the year ended 31 December 2016, turnover of the Group decreased by 6.3% to HK$475.2 million year-on-year (2015: HK$506.9 million), mainly attributable to unfavorable currency translation impact. Overall gross profit margin decreased to 74.3%, due to the new PRC Consumption Tax regulations imposed in 2016 and larger promotion discount (2015: 78.4%). As a result of decreased distribution and administrative expenses, profit before tax increased by 15.2% to 196.2 million (2015: HK$170.4 million). Profit for the year increased by 8.5% to HK$148.4 million (2015: HK$136.8 million). Earnings per share were HK7.4 cents (2015: HK6.8 cents). The Board recommended to distribute a final dividend of HK3.27 cents per share(2015: HK2.92 cents) and special final dividend of HK$2.5 cents per share (2015: nil).

In 2016, the Group's turnover in the PRC market decreased marginally by 1.0% in Renminbi. However, due to currency translation impact, the Group's turnover in the PRC market represented in Hong Kong dollars decreased by 7.7% to HK$386.4 million for the year ended 31 December 2016. Turnover for the Taiwan market registered growth of 0.8% to HK$85.7 million. On the other hand, sales in other regions, including Hong Kong, Macau and Malaysia, decreased marginally to HK$3.2 million for the year ended 31 December 2016, accounting for an insignificant 0.7% of the Group's turnover. 

The Group derives its income primarily from its network of distribution channels, including spas and concessionary counters in department stores. As at 31 December 2016, there were 1,069 spas and 13 concessionary counters. A total of 63 new stores were opened and 53 stores were closed during the year ended 31 December 2016.

The Group puts significant emphasis on research and development which allows it to maintain its competitive edge, to continuously improve the quality of its existing products and develop new products. During the year ended 31 December 2016, the Group's flagship NB-1 products generated HK$238 million in sales, accounting for more than 50% of the Group's total product sales. With effective product line rationalization plan, NB-1 successfully launched several new products during the year. Among them, Spa care products strengthened and consolidated the status of Natural Beauty in beauty and spa, while also enhanced brand loyalty. New products, especially NB-1 Plus Brightening and Repair Essence, received good response from franchisees and achieved strong sales of up to HK$36 million since its launch.

Mr. Hsiao Wen-Chung, Chief Executive Officerof the Group said, "Looking ahead, we are confident in the continuous growth of the beauty and personal care market. We will press on with our prudent growth strategy to proactively strengthen our position as a leading skin care brand and spa operator in the Greater China Region while mitigating the escalating rental and labor costs in China. We will encourage people to start their own business at NB and focus on opening more stores in tier 2 and tier 3 cities in the PRC. In addition, adapting to the trend of healthcare industry, we will drive the growth of health supplement products with more marketing and promotional efforts. Channel wise, we will integrate online and offline marketing resources with the aim to establish an "Online To Offline" business model, as well as explore new marketing channels and opportunities for skincare products, such as preventive medical cosmetology and E-business. 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 generate 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 1,000 NB's SPAs and dedicated counters in Greater China.