Ozner Water announces results for six months ended 2017

Highlights

• Revenue of Ozner increased approximately 34.4% y-o-y to approximately RMB568.4 million, primarily attributable to the increase in revenue from water purification services

• Adjusted profit for the period for the six months ended 30 June 2017 increased by 6.8% to RMB91.9 million

• The accumulated installation increased from approximately 1.27 million units as at 31 December 2016 to approximately 1.47 million units as at 30 June 2017, representing an increase of 201 thousand units.

• The number of high-value distributors increased by approximately 780 to approximately 5,760 as at 30 June 2017 from 4,980 as at 31 December 2016

Financial Highlights

* Excluding fair value gains on derivative component of convertible bonds and share option expense

HONG KONG, CHINA - Media OutReach - 23 August 2017 - Ozner Water International Holding Limited ("Ozner Water" or "the Company", HKSE: 2014) and its subsidiaries ("Ozner"）announced its results for the six month ended 30 June 2017. During the period, Ozner recorded revenue of approximately RMB568.4 million (6 month ended 30 June 2016: approximately RMB422.8 million), which is primarily attributable to the increase in revenue from water purification services. Gross profit recorded approximately RMB311.7 million (6 month ended 30 June 2016: approximately RMB253.0 million).

Profit for the period attributable to equity holders was RMB67.09 million (6 month ended 30 June 2016: approximately RMB161.5 million). If excluding fair value gains on derivative component of convertible bonds, exchange difference, share option expense and Amortised costs of liability component of convertible bonds, adjusted net profit for the period amounted to approximately RMB91.9 million (6 month ended 30 June 2016: approximately RMB86.1 million).

Water purification services business

During the period, revenue from water purification services increased by 39.5 % to approximately RMB533.1 million (same period in 2016: approximately RMB382.2 million), primarily due to the increase in the accumulated number of water purification machines installed to approximately 1.47 million units (end of 2016: approximately 1.27 million units) and increase in the number of new distributors. The Group sold and leased a total of approximately 201 thousand units of new water purification machines. Such new machines were mainly household models, which were contributed by the effort of the Group in the household markets through mobile applications platform and public WeChat account as well as drawing on other resources such as ''smart products'', ''public non-profit water bars'', ''experience stores'' and ''brand collaboration''. During the period, we expanded our sales and marketing team and distributors to penetrated the household market.

The Group has taken a proactive stance towards reform and strived to maintain a business model with development potential. In addition, the Group spared no effort in upgrading services and management standards, and providing safe, healthy and speedy water purification services to clients. During the period, Ozner has achieved considerable progress in building the distribution and service network, which has covered more than a thousand cities/towns in China with the number of high-value distributors increased from 4,980 as at 31 December 2016 to 5,760 as at 30 June 2017.

Air sanitization services business

During the period, revenue generated from air sanitization and other services decreased by 13.3% to approximately RMB35.3 million (same period in 2016: approximately RMB40.6 million). The decrease was primarily due to the decrease in number of the ongoing projects. Currently, the Group only focuses on corporate customers in medical healthcare industries and household customers market.

Selling and Distribution Expenses

For the six months ended 30 June 2016 and 2017, our selling and distribution expenses were RMB84.4 million and approximately RMB130.2 million respectively, representing 20.0% and 22.9% of the revenue of the respective periods, which was a increase of 35.2% or RMB45.8 million from the six months ended 30 June 2016 to the six months ended 30 June 2017. Such increase was primarily due to increase in salary and welfare expenses amounting to RMB38.2 million and traveling expenses amounting to RMB8.2 million. Such increase was in relation to increase of headcount of sales and marketing department for promotion and capturing the business growth in household market.

Development Strategy

Looking forward into the second half of the year, we are fully motivated and confident. We will continue to engage in brand and strategies building, which will lay a sound foundation for Ozner's future development. We will push forward the following strategies to further expand our business and create more value for shareholders of the Company.

Sticking to Strategic Direction and Adjusting Tactics with Flexibility in Practices

As early as the beginning of 2017, Ozner Water has conducted brand new strategic deployment targeting the entire year and launched three-year strategies for 2017--2019. It further specified the user-oriented platform operational strategy that obtains consecutive service income. Under the guidance of platform development strategies, the Group will uphold resources-sharing idea in depth and export resources covering the entire industry chain to each system and partner, such as technique research and development, capital finance and production and manufacturing. Each segment will secure market increments to the greatest extent based on respective conditions via flexible and free development methods for channels.

Meanwhile, leveraging on the super flow entries generated from Ozner Services Home, not only we can achieve a virtuous eco-cycle from market, product research and development to service by making user requirements directly access to the rear, but also take it as a core to support each business segment's development, which enables the service to create continuous values. As for ground sale channels and service systems, the Group will focus on promoting the ''Partners'' operational strategy, which will enormously raise the market expansion enthusiasm of our partners to share the resources with Ozner for a win-win market. Ozner is no longer a purely manufacturing enterprise, and it is going to develop into a strategic operational platform integrating resources, services and management.

In the future, Ozner Water will spare no effort to become a remarkable enterprise by upholding the principles of ''Capital Support'', ''Technical Support'', ''Team Support'', ''Model Support'' and ''Channel Support'' to provide comprehensive platform services for each system and its partners, to speed up the model export as well as actively seize the market.

About Ozner Water International Limited

OZNER's two business lines include water purification and air purification. Different from the traditional one-time sales mode, Ozner Water adopted a revolutionary business model, which provides water purification service while charging annual rental, providing a unique advantage in the market. The Group's self-operated services system covered over 1,300 cities, counties and townships nationwide, and constructed relevant logistics and warehousing facilities to ensure efficient service and high renewal rate. Ozner Water originates the "cloud water purification technology", which enables the Group to remotely manage the water purifiers by mobile phone network. This technology reminds customers and the after-sale staff the issues of purifier's filter expiration and purifier failure. In addition, the Company uses CRM system in its customer service center in headquarter to maintain customer relationship and convey customers' need timely, while Ozner Water's air purification dedicates to provide solutions and services in the field of healthcare, foods and electronics.