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We have achieved growth in profitability for 21 consecutive quarters.
Q1 sales were $173 million +15%. The increase in sales was driven by higher consumer demand for OSIM products like uInfinity, uDivine App, uDiva, uPhoria Warm, uHug, uPixie, uCozy, uRelax, uPebble, uSlender, uShape, nutritional supplements like Taut, Stem C, Zhi , Triflex, Liver Protector and luxury tea like Sakura Tea and Follow Me Tea. TWG Tea became a subsidiary in October 2013 and has also contributed to the sales.
Q1 profit before tax reached a high of $37 million +17%. The better performance was due mainly to an increase in sales and better productivity. The increase in operating expenses was mainly due to increases in wages and rental but our better productivity in sales per outlet resulted in better profits.
We are pleased that the core business of OSIM continued to grow during the year. Our nutritional supplements subsidiary ONI Global also grew profits.
Q1 profit after tax was a record $29 million +15%.
Revenue by Region
Today OSIM operates in 30 countries around the world.
All regions contributed to better sales growth for the quarter and year. South Asia's increased sales were mainly due to the maiden consolidation of TWG Tea's sales.
For the 3 months and year ended 31 March 2014, we had sales growth with a better product mix of massage chairs, massage sofas, foot massagers, head massagers, neck and shoulder massagers, nutritional supplements and luxury tea.
During the quarter, operating EBITDA grew 22% to $42 million due to a better product mix and higher productivity per man per outlet.
3 months net cash flow from operating activities was $20 million, a slight decrease compared with the corresponding period last year. This was due mainly to the faster repayment of creditors to enjoy better terms and more inventory in preparation for launch of new products.
During the quarter, cash flow from investing activities decreased compared with last year due mainly to a small increase in fixed income investments. We invested $1.4 million to open new outlets and upgrade existing outlets (Q1 2013: $1.5 million).
Financing cash outflow increased mainly due to the repayment of a bank loan of $6 million and dividends payment of $7 million.
As at 31 March 2014, the cash and cash equivalents of the Group stood at $265 million. Including fixed income investments of $33 million, total cash & cash equivalents and fixed income investments was $298 million.
Global Network of Outlets
During the year, we increased profitability within existing outlets. We regularly review performance of our outlets and there were selected closures of non-performing outlets.
Total capital expenditure for the quarter was $1.4 million.
As at 31 March 2014, we were in a net cash position of $155 million. Including fixed income investments of $33 million, the total net cash and fixed income investments was $188 million.
Net assets as at 31 March 2013 were $404 million.
As a result of the record performance, the Board is pleased to propose an interim dividend of 1 cent per share.
We have achieved 21 consecutive quarters of profit growth. We are pleased with the record performance and we expect our improvement in productivity and growth in profitability to continue to be driven for a number of years by market leadership, continuous innovation and productive execution.
OSIM is Asia's No1 brand in well being and healthy lifestyle products.
Our product innovation and competitive positioning have enabled us to achieve record profit. We expect to continue to create higher consumer demand for OSIM products like uInfinity, uDivine App, uDiva, uPhoria Warm, uHug, uPixie, uCozy, uRelax, uPebble, uSlender, uShape, nutritional supplements like Taut, Stem C, Zhi, Triflex, Liver Protector and luxury tea like Sakura Tea and Follow Me Tea.
We have 583 OSIM outlets. In China, we are in 45 cities with 269 OSIM outlets. For this year, we are targeting to open 20 to 30 OSIM outlets.
Our 222 GNC outlets are doing well. GNC Taiwan is progressing well. For RichLife, we are continuing to focus on Shanghai for better focus, control and efficiency. There is a total of 242 GNC/RichLife outlets in ONI Global.
TWG Tea has 30 outlets and we are targeting to have about 45 outlets by end of the year.
We have grown our sales and with new product pipeline, we expect our businesses to remain strong in 2014.
The directors are pleased to recommend an interim dividend of 1 cents per share.