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Financial Information

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Financial Statements And Dividend Announcement For The 9 Months Ended 30 September 2014

Financials Archive

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Profit & Loss 2Q2014

Review Of Performance

Profit before tax of $23 million

Q3 sales were $158 million +3%. TWG Tea became a subsidiary in October 2013. The overall weaker environment, including the loss of sales to Brookstone, has slowed topline sales growth for the group this quarter.

Q3 profit before tax was $23 million. The increase in operating expenses was due to startup and legal costs at TWG Tea, increases in wages and rental has resulted in lower profit.

During Q3, other income fell mainly due to higher foreign exchange losses.

Interest expenses fell due to the conversion of convertible bonds. Share of results of associates is less mainly due to TWG Tea becoming a subsidiary.

Q3 profit after tax was $16 million.

Revenue by Region

Today OSIM operates in 29 countries around the world.

For the 3 months ended 30 September 2014, South Asia sales increased mainly due to consolidation of sales of TWG Tea while sales in other parts of the world was lower due to lower sales to Brookstone.

Positive Cash Flow

3 months net cash flow from operating activities was $15 million.

During the quarter, we invested $4.5 million to open new outlets, upgrade existing outlets and expand development of TWG Tea outlets in North Asia (Q3 2013: $2.3 million). We also invested $5 million in office and warehouse space for own use in Taiwan (Q3 2013: Nil).

Financing cash inflow increased mainly due to the issuance of new convertible bonds.

As at 30 September 2014, the cash and cash equivalents of the Group stood at $427 million. Including fixed income investments of $35 million, total cash & cash equivalents and fixed income investments was $462 million.

Global Network of Outlets

We regularly review performance of our outlets and, during the 9-month period, we opened 9 OSIM outlets and closed 25 non-performing OSIM outlets in China. We have 256 outlets in China.

For OSIM international business, during the year we opened 6 outlets in Australia.

For ONI nutritional supplements, we continue to rationalise RichLife stores.

During the quarter, we opened our first TWG Tea in China at Grand Gateway Shanghai.

Total capital expenditure for the quarter was $9.5 million.

Strengthened Balance Sheet - Net Cash Position

As at 30 September 2014, we were in a net cash position of $237 million. Including fixed income investments of $35 million, the total net cash and fixed income investments was $272 million.

Net assets as at 30 September 2014 were $482 million.

The Board is pleased to propose an interim dividend of 1 cent per share.

Commentary on Current Year Prospects

Following 22 consecutive quarters of record profit and with a strong balance sheet following the recent convertible bond issue, OSIM has embarked on a period of increased investment across the group especially at TWG Tea and OSIM. New TWG Tea outlets have opened with supporting infrastructure including central kitchens, offices, warehouses and employees.

The fundamentals remain positive as OSIM is the dominant brand in healthy lifestyle products in its key 5 countries of China, Taiwan, Hong Kong, Singapore and Malaysia, ONI is progressing steadily, while TWG Tea continues its outlet expansion opening its first outlet in China.

We have 565 OSIM outlets. China continues to be our No.1 market and we are in 45 cities with 256 outlets. New products like uInfinity Luxe, uDiva, uSqueez Air and uShape Music will help us sustain our market leadership position.

Our GNC outlets are doing well. GNC Taiwan is progressing well. There is a total of 231 GNC/RichLife outlets in ONI Global and we are growing our sales through new products.

TWG Tea has 37 outlets. In Q3, we opened new outlets at Taipei 101 and Shanghai Grand Gateway. We are targeting to have about 45 outlets by end of the year. We are creating new lines of luxury tea like Imperial Oolong & Ti Kuan Yin, Iced Teabags and Christmas Collection.

The directors are pleased to recommend an interim dividend of 1 cent per share.

Balance Sheets

Balance Sheet 2Q2014