Natural Food International Announces 2018 Annual Results

Financial
Highlights

	Year ended 31 December /As at 31December
RMB’000	2018	2017	Change
Revenue	1,818,066	1,576,145	+15.4%
Gross profit margin	76.5%	76.3%	+0.2 ppt
Adjusted net profit1	213,001	188,461	+13.0%
Adjusted net profit margin	11.7%	12.0%	-0.3 ppt
Cash and cash equivalents	604,913	227,119	+166.4%
Gearing Ratio	5.0%	30.8%	-25.8 ppts

HONG
KONG, CHINA - Media OutReach - 29 March
2019 – Natural Food International
Holding Limited (“Natural Food International”, the “Company”, together with
its subsidiaries, the “Group”; stock code: 1837.HK), a well-recognised natural health food
company in China, is pleased to announce its annual results for the year ended
31 December 2018 (“the year under review”) today. The Group’s revenue for the
year under review amounted to approximately RMB1,818.1 million (2017: RMB1,576.1 million), representing
an increase of 15.4%. The Board has recommended the payment of a final dividend
of RMB 0.02 per ordinary share.

 

The year of 2018 was a crucial year to
the business development of the Group. The Group successfully listed on the
Main Board of The Stock Exchange of Hong Kong Limited on 12 December 2018.
Meanwhile, the Company continued to expand its business and resulted in a
comprehensive solid growth in the results.

During the year under review, revenue
from online channels increased significantly by 64.0% to RMB339.4 million,
while Revenue from offline channels increased steadily by 8.0% to RMB1,478.7million.

 

Business Review

Rapid increase in product
iterations, remarkable contribution from new products

During the year under review, leveraging its strong R & D
capabilities and market leading position, the Group has launched 42 popular
natural healthy food products, that cater to specific needs of different
consumer groups, such as pregnant women, the elderly and teenagers. The rapid
increase in product iterations has led to an increase in the proportion of new
product revenue contribution. In 2018, revenue of new products contributed
19.7%, 27.9% and 31.6% to revenue by different sales channels, namely, offline
channels, E-commerce platforms and WeChat member store, respectively.
Meanwhile, the number of registered members of the Group has increased to 20.5 million.
Furthermore, to ensure scientific product ingredient ratio and keep the nutritional
balance, the Group jointly launched “Wugu Mofang Grain Nutrition Research
Centre” ( ????????????) with Chinese Nutrition Society ( ??????) in 2018 to
develop reliable natural health food.

 

Continuously improved Market Penetration,
stable sales growth from all channels

The Group’s
sales channels are highly integrated to jointly create the New Retail model and
complement different channels’ advantages. Regarding the offline channels, in
2018, the Group operated 3,895 concessionary counters in supermarkets in 461
cities across China. During the year under review, the Group strengthened and
upgraded channel strategic cooperation with key customers, as well as newly
opened 851 concessionary counters, which increased the offline market
penetration. In addition, the Group conducted store management reform by gradually
implementing the internal partner mechanism, and to revitalized the vitality of
offline business operations.

 

Online
channel performance is remarkable. Revenue from e-commerce platforms, such as
Tmall, JD.com, and Vipshop.com, increased significantly by 66.4% to RMB239.2
million; Revenue WeChat member stores also increased significantly by 58.4% to
RMB100.2 million.

 

International standardized safe production
and supply chain

In 2018, the
Group acquired the FSSC22000 Food Safety Certification System, which
demonstrates that their quality control meets international best standards. The
Company sources high-quality ingredients globally to ensure product quality,
and guarantees safe production and high quality standards through complete
production facilities and optimized production processes, while also reduces
production time.

 

The company
currently owns two production and processing bases with a utilization rate of
approximately 90%. To meet the
increasing demand of natural food in China, in March 2018, the Group commenced
construction of the first phase of its new manufacturing facility in Nansha
County, Guangzhou, China for a manufacturing facility for various kinds of
products. The new production facility has a total gross floor of approximately
60,000 square metres. After the completion of the new manufacturing facility,
the Group’s estimated production capacity will increase to 40,000 tons per
year.

Looking ahead, Mrs.  GUI
Changqing, Chairlady and
Executive Director of Natural Food International
Holding Limited, said,
“The Listing represents a
significant milestone in the development of the Group. Becoming a listed
company strengthens our capital base and enhances our corporate image and brand
recognition. Benefiting from the growing purchasing power and
rising health awareness of Chinese consumers, we remain full of confidence
about our future. The Group will continue to maintain and strengthen its
leading market position and create more values for our shareholders.”

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