OSIM INTERNATIONAL LTD

Transcription

1 OSIM INTERNATIONAL LTD (Incorporated in the Republic of Singapore) (Registration No.: N) ANNOUNCEMENT OF UNAUDITED RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2015 HIGHLIGHTS: ($ million) Q3 15 Q3 14 9M 15 9M 14 Sales % % Operating EBITDA % % Profit before tax % % Profit after tax % % Basic earnings per share 0.8ct 2.1cts 5.5cts 9.9cts Interim dividend per share 1ct 1ct 4cts 4cts Continuing to invest for growth supported by a strong balance sheet Maintaining stable gross margin despite another challenging quarter Interim dividend of 1 cent per share 9 months share buyback of $33 million Cash & Cash Equivalents and Fixed Income Investments as at 30 September 2015: $423 million (net $232 million) 1

2 REVIEW OF PERFORMANCE OF THE GROUP COMMENTARY ON CURRENT YEAR PROSPECTS This has been another challenging quarter where retail sales across the core countries have been soft. This quarter has seen further challenges from gyrating markets and currency turmoil in the region. Despite these challenges, our dominant brand has enabled us to maintain a stable gross margin and cash generative business with cash and cash equivalents growing again in the quarter. We are using our strong balance sheet to invest in new products and continuing our marketing activities. Q3 sales were $142 million and Q3 profit before tax was $10 million. For nine months, we have incurred legal fees of $7 million for TWG Tea legal cases. We have 546 OSIM outlets. China continues to be our No.1 market where we are in 45 cities with 244 outlets. New products including umagic, uinfinity Luxe, udiva, uhip, usqueez Air, utrek and ushape Music have sustained our dominant position in the market. Our GNC outlets are doing well. We have a total of 214 GNC/RichLife outlets in ONI Global and we are growing our sales through new product launches. TWG Tea has 49 outlets. We are targeting to end the year with 52 outlets. The core countries are expected to be challenging but we remain cautiously optimistic on the prospects for the remainder of the year following the launch of umagic in key markets and upcoming planned product launches. During the nine months, we bought back $33 million of shares. The directors are pleased to recommend an interim dividend of 1 cent per share. 2

3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Amounts in Singapore dollars) 3 months ended 30 Sep 9 months ended 30 Sep Note $'000 $'000 $'000 $'000 Revenue 141, , , ,473 Other income 4,146 1,776 10,870 10,611 Changes in inventories of trading goods 5,699 (2,903) 12,925 5,930 Trading goods purchased (45,788) (43,161) (140,753) (156,629) Employee benefits expense (32,713) (31,745) (91,422) (93,199) Depreciation and amortisation expenses (5,816) (5,538) (17,073) (16,363) Other operating expenses (58,056) (54,703) (170,991) (167,544) Interest expenses (1,230) (478) (3,679) (2,240) Interest income 1, ,869 3,238 Share of results of associates ,218 1,032 Profit before taxation 10,038 22,862 56,827 98,309 Taxation D (4,319) (6,712) (16,164) (23,780) Profit for the period 5,719 16,150 40,663 74,529 Other comprehensive income: Items that may be reclassified subsequently to profit or loss Loss on fair value changes of available-for-sale financial asset (3,507) - (3,848) - Foreign currency translation: Net effect of exchange difference during the period (277) 3,535 5,442 (2,105) Other comprehensive income for the period, net of tax (3,784) 3,535 1,594 (2,105) Total comprehensive income for the period 1,935 19,685 42,257 72,424 Profit attributable to: Equity holders of the Company 6,168 16,404 42,146 74,779 Non-controlling interests (449) (254) (1,483) (250) 5,719 16,150 40,663 74,529 Total comprehensive income attributable to: Equity holders of the Company 2,457 19,927 43,809 72,660 Non-controlling interests (522) (242) (1,552) (236) 1,935 19,685 42,257 72,424 Earnings per share (cents) - Basic F Diluted F

4 REVIEW OF PERFORMANCE OF THE GROUP Revenue by Region Q3 FY 2015 Q3 FY months FY months FY 2014 Region $m % $m % $m % $m % North Asia 74 52% 80 51% % % South Asia 60 42% 67 42% % % America/Africa/Europe/ Middle East/Oceania 8 6% 11 7% 23 5% 31 6% Total % % % % Today OSIM operates in 23 countries around the world. Q3 sales were $142 million as markets remained soft across the region. The launch of umagic had some positive impact. Profit in Q Profit before tax was $10 million impacted by startup and operational costs at TWG Tea. There were also legal fees relating to TWG Tea legal cases. Profit after tax was $6 million. 4

5 CONSOLIDATED STATEMENT OF CASH FLOW (Amounts in Singapore dollars) 3 months ended 30 Sep 9 months ended 30 Sep $ 000 $ 000 $ 000 $ 000 Cash flows from operating activities Profit before taxation 10,038 22,862 56,827 98,309 Adjustments for: Share of results of associates (298) (475) (1,218) (1,032) Depreciation of fixed assets 3,424 3,154 9,897 9,232 Amortisation of intangible assets 2,392 2,384 7,176 7,131 Loss on disposal of fixed assets Fair value loss / (gain) on short term investments, net (73) (1,140) Reversal of impairment loss on quoted equity shares - - (341) - Write-off of fixed assets Dividend income from quoted equity shares - (152) (20) (304) Interest income (1,917) (942) (4,869) (3,238) Interest expenses 1, ,679 2,240 Provision for warranties Operating cash flows before working capital changes 15,576 27,719 71, ,331 (Increase) / decrease in: Stocks (5,901) 2,946 (13,306) (6,009) Trade debtors 6,211 8,418 9,561 5,982 Other debtors, deposits and prepaid operating expenses (3,222) (4,431) (1,706) (6,557) Increase / (decrease) in: Trade and other creditors and provisions (1,240) (18,303) (8,658) (18,403) Deferred revenue 231 2,694 1,357 3,773 Cash flows generated from operations 11,655 19,043 58,582 90,117 Income tax paid, net of refund (10,270) (4,084) (26,792) (20,315) Net cash flow generated from operating activities 1,385 14,959 31,790 69,802 5

6 CONSOLIDATED STATEMENT OF CASH FLOW (Continued) (Amounts in Singapore dollars) Cash flows from investing activities 3 months ended 30 Sep 9 months ended 30 Sep $ 000 $ 000 $ 000 $ 000 Purchase of fixed assets (3,339) (9,500) (10,233) (16,130) Proceeds from disposal of fixed assets Interest received 1, ,869 3,238 Dividend income from an associated company 693 1, ,209 Dividend income from investment securities Acquisition of intangible assets (31) (162) (169) (327) Investment in an associated company - - (2,574) - Increase in investment securities, net (11,660) (3,090) (9,958) (2,845) Net cash flow used in investing activities (12,420) (10,440) (17,300) (14,531) Cash flows from financing activities Acquisition of non-controlling interests (80) (107) (80) (215) Dividend paid to non-controlling interests - (2,093) (1,018) (2,093) Increase / (decrease) in bills payable to banks 2,463 5,489 2,794 (6,865) Repayment of bank loans (6,030) Repayment of finance lease obligations (3) (3) (10) (10) Purchase of shares (4,246) - (33,449) - Payment for redemption of convertible bonds - (15,614) - (15,614) Proceeds from issuance of convertible bonds (net) - 167, ,970 Dividends paid on ordinary shares (Note B) (7,562) (7,791) (30,759) (29,897) Interest paid (108) (110) (335) (456) Net cash flow (used in) / generated from financing activities (9,536) 147,741 (62,857) 106,790 Net (decrease) / increase in cash and cash equivalents (20,571) 152,260 (48,367) 162,061 Net effect of exchange rates changes 231 3,026 4,959 (2,050) Cash and cash equivalents at beginning of period 404, , , ,347 Cash and cash equivalents at end of period (Note A) 384, , , ,358 6

7 CONSOLIDATED STATEMENT OF CASH FLOW (Continued) (Amounts in Singapore dollars) Note A: Cash and cash equivalents Cash and cash equivalents included in the consolidated statement of cash flow comprise the following balance sheet amounts: 30-Sep Sep-14 $ 000 $ 000 Cash and bank balances 86, ,667 Fixed deposits 297, , , ,358 Note B: Dividend paid on ordinary shares During the 9 months ended 30 September 2015, the paid dividend of $30,759,000 (30 September 2014: $29,897,000), of which $7,743,000 (30 September 2014: $7,227,000) was declared out of profits in the previous year ended 31 December 2014, and $23,016,000 (30 September 2014: $22,670,000) was declared in the current year. 7

8 REVIEW OF PERFORMANCE OF THE GROUP ( CASH FLOW ) Cash Flow 3 months cash flow generated from operations $12 million. During the quarter, we invested $3.3 million to open new outlets, upgrade existing outlets and expand TWG Tea outlets in Singapore and North Asia. Net cash outflow used in financing activities increased mainly due to purchase of shares of $4 million in Q As at 30 September 2015, cash and cash equivalents of the stood at $384 million. Including fixed income investments of $39 million, total cash & cash equivalents and fixed income investments were $423 million. Global Network of Outlets Region 30-Sep Jun Mar Dec Sep-14 North Asia South Asia America/Africa/Europe/ Middle East/Oceania Total OSIM Outlets GNC/RichLife Outlets TWG Tea outlets Total We monitor continuously the performance of our outlets. Total capital expenditure for the quarter was $3.3 million. 8

9 BALANCE SHEET (Amounts in Singapore dollars) Company 30-Sep Dec Sep Dec-14 Note $ 000 $ 000 $ 000 $ 000 Assets Non-current assets Fixed assets 33,147 31,370 1,872 2,469 Investment properties 5,024 5, Subisidiaries , ,762 Associates 22,222 18,411 5,231 2,657 Intangible assets 173, , Deferred tax assets 7,314 4, Long-term investments 23,918 15,264 23,918 15,264 Long-term receivables 11,556 10,172 1, Current assets 276, , , ,096 Stocks 84,568 71,644 5,894 5,205 Trade debtors 33,106 42,637 2,768 4,276 Other debtors, deposits and prepaid operating expenses 13,220 14,977 5,532 3,286 Due from associates 1,252 2,793 1,252 2,793 Due from subsidiaries - - 4,595 10,112 Short-term investments 26,707 28,838 26,707 28,838 Fixed deposits 297, , , ,729 Cash and bank balances 86, ,234 37,938 58, , , , ,216 Total assets 819, , , ,312 Equity and liabilities Current liabilities Trade and other creditors and provisions 71,906 83,489 15,975 25,542 Deferred revenue 5,555 4, Due to associates 24,963 21,085 15,318 16,686 Due to subsidiaries ,559 Dividend payable 15,087 7,744 15,087 7,744 Provision for income tax 17,045 24,416 3,944 6,184 Obligations under finance leases B current portion Bills payable to banks (unsecured) B 19,945 17,152 19,945 17, , ,101 70,773 79,867 Net current assets 388, , , ,349 9

10 BALANCE SHEET (Continued) (Amounts in Singapore dollars) Company 30-Sep Dec Sep Dec-14 Note $ 000 $ 000 $ 000 $ 000 Non-current liabilities Liability component of convertible bonds (unsecured) B 171, , , ,259 Obligations under finance leases non-current portion B Provision for pension benefits 2,629 2, Deferred tax liabilities 29,344 33, , , , ,867 Total liabilities 358, , , ,734 Net assets 461, , , ,578 Equity attributable to equity holders of the Company Share capital A 114, , , ,459 Treasury shares A (45,482) (12,033) (45,482) (12,033) Equity component of convertible bonds Accumulated profits 311, , , ,065 Enterprise expansion funds Capital reserves 28,460 28,460 23,112 23,112 Fair value adjustment reserve (3,507) 341 (3,507) 341 Revaluation reserve 2,724 2, Discount on purchase of noncontrolling interests' (NCIs') shares 2,093 2, Foreign currency translation reserve (435) (5,947) , , , ,578 Non-controlling interests 50,969 53, Total equity 461, , , ,578 Total equity and liabilities 819, , , ,312 10

11 REVIEW OF PERFORMANCE OF THE GROUP ( BALANCE SHEET ) Strengthened Balance Sheet Net Cash Position As at 30 September 2015, we were in a net cash position of $193 million. Including fixed income investments of $39 million, the total net cash and fixed income investments was $232 million. Net assets as at 30 September 2015 were $462 million. The Board is pleased to propose an interim dividend of 1 cent per share. 11

12 STATEMENTS OF CHANGES IN EQUITY (Amounts in Singapore dollars) Attributable to equity holders of the Company 2015 Equity component Discount on Foreign of Enterprise purchase of Fair value currency Non- Share Treasury convertible Accumulated expansion Capital Revaluation NCIs' adjustment translation controlling Total capital shares bonds profits funds reserves reserve shares reserve reserve Total interests equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 July ,459 (41,236) , ,460 2,724 2,142 - (231) 435,068 51, ,587 Profit for the period , ,168 (449) 5,719 Other comprehensive income Foreign currency translation (204) (204) (73) (277) Loss on fair value changes of availablefor-sale financial asset Other comprehensive income for the period Total comprehensive income for the period Contributions by and distributions to equity holders (3,507) - (3,507) - (3,507) (3,507) (204) (3,711) (73) (3,784) , (3,507) (204) 2,457 (522) 1,935 Purchase of treasury shares - (4,246) (4,246) - (4,246) Dividend on ordinary shares (22,649) (22,649) - (22,649) Total contributions by and distributions to equity holders - (4,246) - (22,649) (26,895) - (26,895) 12

13 STATEMENTS OF CHANGES IN EQUITY (Continued) (Amounts in Singapore dollars) Attributable to equity holders of the Company 2015 (cont'd) Equity component Discount on Foreign of Enterprise purchase of Fair value currency Non- Share Treasury convertible Accumulated expansion Capital Revaluation NCIs' adjustment translation controlling Total capital shares bonds profits funds reserves reserve shares reserve reserve Total interests equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Changes in ownership interests in subsidiaries that do not result in a loss of control Discount on purchase of NCIs' shares (49) - - (49) - (49) Acquisition of NCI (28) (28) Total changes in ownership interests in subsidiaries that do not result in a (49) - - (49) (28) (77) loss of control Total transactions with equity holders - (4,246) - (22,649) (49) - - (26,944) (28) (26,972) in their capacity as equity holders At 30 September ,459 (45,482) , ,460 2,724 2,093 (3,507) (435) 410,581 50, ,550 13

14 STATEMENTS OF CHANGES IN EQUITY (Continued) (Amounts in Singapore dollars) Attributable to equity holders of the Company 2014 Equity component of convertible Premium on purchase of NCIs' Foreign currency translation Enterprise Fair value Non- Share Treasury Accumulated expansion Capital Revaluation adjustment controlling Total capital shares bonds profits funds reserves reserve shares reserve reserve Total interests equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 July ,427 (31) , ,976 2,724 2, (12,799) 429,780 55, ,518 Profit for the period , ,404 (254) 16,150 Other comprehensive income Foreign currency translation ,523 3, ,535 Other comprehensive income for the period ,523 3, ,535 Total comprehensive income for the period , ,523 19,927 (242) 19,685 Contributions by and distributions to equity holders Redemption of convertible bonds - - (484) Issue of convertible bonds - - 1, ,180-1,180 New shares issued pursuant to convertible bonds conversion 1,032 - (32) ,000-1,000 Dividend on ordinary shares (23,374) (23,374) - (23,374) Dividend to NCI (2,093) (2,093) Total contributions by and distributions to equity holders 1, (23,374) (21,194) (2,093) (23,287) 14

15 STATEMENTS OF CHANGES IN EQUITY (Continued) (Amounts in Singapore dollars) Attributable to equity holders of the Company 2014 (cont'd) Equity component of convertible Premium on purchase of NCIs' Foreign currency translation Enterprise Fair value Non- Share Treasury Accumulated expansion Capital Revaluation adjustment controlling Total capital shares bonds profits funds reserves reserve shares reserve reserve Total interests equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Changes in ownership interests in subsidiaries that do not result in a loss of control Premium on purchase of NCIs' shares (52) - - (52) - (52) Acquisition of NCIs' shares (55) (55) Total changes in ownership interests in subsidiaries that do not result in a loss of control Total transactions with equity holders in their capacity as equity holders (52) - - (52) (55) (107) 1, (23,374) (52) - - (21,246) (2,148) (23,394) At 30 September ,459 (31) 1, , ,460 2,724 2, (9,276) 428,461 53, ,809 15

16 STATEMENTS OF CHANGES IN EQUITY (Continued) (Amounts in Singapore dollars) 2015 Company Share capital Treasury shares Equity component of convertible Accumulated bonds profits Capital reserves Fair value adjustment reserve Total equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 July ,459 (41,236) ,995 23, ,964 Profit for the year , ,484 Other comprehensive income Loss on fair value changes of availablefor-sale financial asset Other comprehensive income for the year Total comprehensive income for the year (3,507) (3,507) (3,507) (3,507) ,484 - (3,507) 34,977 Contributions by and distributions to equity holders Dividend on ordinary shares (22,649) - - (22,649) Purchase of treasury shares - (4,246) (4,246) Total transactions with equity holders in their capacity as equity holders - (4,246) - (22,649) - - (26,895) At 30 September ,459 (45,482) ,830 23,112 (3,507) 263, Company Share capital Treasury shares Equity component of convertible Accumulated bonds profits Capital reserves Fair value adjustment reserve Total equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 July ,427 (31) ,932 22, ,813 Profit for the year , ,908 Contributions by and distributions to equity holders Redemption of convertible bonds - - (484) Issue of convertible bonds - - 1, ,180 New shares issued pursuant to convertible bonds conversion 1,032 - (32) ,000 Dividend on ordinary shares (23,374) - - (23,374) Total transactions with equity holders in their capacity as equity holders 1, (23,374) (21,194) At 30 September ,459 (31) 1, ,466 23, ,527 16

17 NOTES TO THE FINANCIAL STATEMENTS (Amounts in Singapore dollars) A. SHARE CAPITAL (i) Share capital and Company and Company Issued and fully paid At beginning of period New shares issued pursuant to convertible bonds conversion 3 months ended 30 Sep 3 months ended 30 Sep Number of ordinary shares Issued and fully paid up ( 000) ($ 000) 779, , , , ,032 At end of period 779, , , ,459 (ii) Treasury shares and Company and Company 9 months ended 30 Sep 9 months ended 30 Sep Number of treasury shares ( 000) ($ 000) At beginning of period (6,260) (25) (12,033) (31) Acquired during the financial period (19,348) - (33,449) - At end of period (25,608) (25) (45,482) (31) and Company and Company 9 months ended 30 Sep 9 months ended 30 Sep Number of shares excluding treasury shares Issued and fully paid Share capital ( 000) 779, ,152 ($ 000) 114, ,459 Less: Treasury shares held (25,608) (25) (45,482) (31) Share capital excluding treasury shares 753, ,127 68, ,428 As at 30 September 2015, total number of issued shares excluding treasury shares was 753,544,000 (31 December 2014: 772,892,000). 17

18 NOTES TO THE FINANCIAL STATEMENTS (Continued) B. GROUP BORROWINGS AND DEBT SECURITIES Amount repayable in one year or less, or on demand Company 30-Sep Dec Sep Dec-14 $'000 $'000 $'000 $'000 Obligations under finance lease (secured) Bills payable to banks (unsecured) 19,945 17,152 19,945 17,152 19,961 17,170 19,945 17,152 Amount repayable after one year Obligations under finance lease (secured) Liability component of convertible bonds (unsecured) 171, , , , , , , ,259 As at 30 September 2015, the outstanding number of convertible debt securities that may be issued as shares was 48,226,950 (31 December 2014: 48,226,950) at a conversion price of S$3.525 (31 December 2014: S$3.525). 18

19 NOTES TO THE FINANCIAL STATEMENTS (Continued) C. NET ASSETS VALUE PER SHARE Company 30-Sep Dec Sep Dec-14 Net assets value per share based on existing issued share capital as at end of respective period / year 53 cents 56 cents 34 cents 30 cents D. TAXATION This comprises: 3 months ended 30 Sep 9 months ended 30 Sep $'000 $'000 $'000 $'000 Current tax - Current period 6,927 6,206 22,615 25,230 Deferred tax - Movement in temporary differences (2,601) 513 (6,783) (1,731) - (Over) / under provision in respect of previous period (7) (7) Income tax expenses recognised in profit or loss 4,319 6,712 16,164 23,780 E. INTERESTED PERSON TRANSACTIONS Aggregate value of all interested person transactions conducted under shareholder's mandate pursuant to Rule 920 (excluding transactions < $100,000) 9 months ended 30 Sep $'000 $'000 Sales FK Marketing Ltd

20 NOTES TO FINANCIAL STATEMENTS (Continued) F. EARNINGS PER SHARE The weighted average number of ordinary shares is determined as follows: Basic earnings per share: 3 months ended 30 Sep 9 months ended 30 Sep No. of shares No. of shares No. of shares No. of shares ('000) ('000) ('000) ('000) Weighted average number of shares used in calculation of basic earnings per share 755, , , ,494 Basic earnings per share (cents) Diluted earnings per share: Weighted average number of shares used in calculation of basic earnings per share 755, , , ,494 Effects of dilution: - Share options Convertible bonds - * 21,996 - * 29,509 Weighted average number of shares used in calculation of diluted earnings per share 755, , , ,006 Diluted earnings per share (cents) * Convertible bonds were not included in the calculation of diluted earnings per share because they are antidilutive for the period presented. Adjusted profit used for calculation of diluted earnings per share: 3 months ended 30 Sep 9 months ended 30 Sep $'000 $'000 $'000 $'000 Profit attributable to equity holders 6,168 16,404 42,146 74,779 Add: Interest expense for convertible bonds ,784 Adjusted profit used for calculation of diluted earnings per share 6,168 16,771 42,146 76,563 20

21 NOTES TO FINANCIAL STATEMENTS (Continued) G. DIVIDENDS Details of the dividend for present year are appended below: (i) Present Year Name of Dividend: Dividend Rate Date Payable 1 st Interim 1 cent per ordinary share 8 July nd Interim 2 cents per ordinary share 7 October rd Interim 1 cent per ordinary share 6 January 2016 Dividend Type: Cash (ii) Previous corresponding year Name of Dividend: Dividend Rate Date Paid 1 st Interim 1 cent per ordinary share 24 July nd Interim 2 cents per ordinary share 2 October rd Interim 1 cent per ordinary share 8 January 2015 (iii) Book Closure Date for Interim Dividend The Share Transfer Books and Register of Members of OSIM International Ltd ( the Company ) will be closed on 5pm, 30 December (iv) Date Payable The 3 rd interim dividend will be paid on 6 January

22 NOTES TO FINANCIAL STATEMENTS (Continued) H. USE OF PROCEEDS The proceeds of S$167,970,000 (net) from the issue of Convertible Bonds due 2019 have been utilised as follows: $'000 Net proceeds of the Convertible Bonds 167,970 Balance of proceeds as at 1 July ,123 Finance Strategic Acquisitions (10,913) Use of proceeds during the period (10,913) Balance of proceeds as at 30 September ,210 22

23 ACCOUNTING POLICIES The has applied the same accounting policies and methods of computation in the preparation of financial statements for the current reporting period compared with the audited financial statements as at 31 December 2014, except for the adoption of the Financial Reporting Standards (FRS) and INT FRS that are mandatory for financial years beginning on or after 1 January The adoption of these FRS and INT FRS has no significant impact on the financial statements. AUDIT The figures have not been audited or reviewed by the Company s auditor. 23

24 CONFIRMATION BY THE BOARD We, Ron Sim and Peter Lee, being two directors of OSIM International Ltd (the Company), do hereby confirm on behalf of the directors of the Company that, to the best of our knowledge, nothing has come to the attention of the Board of Directors of the Company which may render the 3 rd quarter 2015 financial results to be false or misleading. 24