Group 1 - The core viewpoint of the articles emphasizes a shift in beauty standards among young people in China, advocating for "natural beauty" over the traditional "white, young, and thin" aesthetic [2][3] - A survey conducted by China Youth Daily and Wenjuan.com revealed that 72.4% of young respondents believe "natural beauty" should replace the "white, young, and thin" standard [3][4] - Key characteristics of "healthy beauty" identified by respondents include rosy complexion (63.5%), strong and proportionate body (62.2%), and natural, glowing skin (55.5%) [3][4] Group 2 - The articles highlight the importance of bone health, with experts suggesting that young people should focus on maintaining a healthy lifestyle to prevent conditions like osteoporosis [4][5] - Recommendations from respondents include incorporating bone density, body fat percentage, and muscle mass into health check-ups, with 57.0% supporting this initiative [4][6] - The articles also discuss common misconceptions among young people regarding health and beauty, such as the belief that complete sun protection is necessary and that frequent face masking equates to deep hydration [4][5] Group 3 - Suggestions for promoting a "healthy beauty" lifestyle include organizing outdoor team-building activities by companies, promoting scientific fitness and balanced nutrition in schools and communities, and advocating for diverse beauty standards [6] - The demographic breakdown of the survey respondents shows that 63.7% are female and 36.3% are male, with the majority being born in the 1990s [6]

Core Viewpoint - The 2025 Eastsun Health Natural Beauty AI Technology and Health Industry New Product Strategy Launch Conference emphasizes the integration of AI technology with the beauty industry, aiming to lead a new era of health and beauty through innovative products and strategies [1][2][3]. Group 1: Company Strategy and Vision - Eastsun Health Natural Beauty aims to transition from a beauty industry benchmark to a century-long health ecosystem leader, focusing on the "AI Technology · Beauty Industry · All Health" strategy [3][4]. - The company plans to open 10,000 stores in the next three years as part of its "Centennial Coexistence Plan," emphasizing the importance of both consumer beauty and partner business success [3][4]. Group 2: Product Innovations - The launch of the second-generation NB-1 Diamond Peptide series and exclusive high-end care instruments like INDIBA White Moon reflects the company's commitment to merging beauty services with health management [4][5]. - New product lines include a comprehensive care loop covering facial, body, scalp care, and health foods, aligning with the national "Healthy China 2030" strategy [4][5]. Group 3: Industry Trends and Market Position - The beauty industry is evolving from a "beauty economy" to a "health economy," driven by consumer demand for health management and wellness services [4][6]. - Eastsun Health Natural Beauty is positioned as a leader in the beauty industry, with over 2,000 global stores and a focus on AI and biotechnology to enhance service offerings [3][4]. Group 4: Event Highlights and Engagement - The conference featured expert training sessions aimed at helping over a thousand store operators achieve significant sales milestones, showcasing the company's commitment to partner success [6]. - The event concluded with awards recognizing outstanding contributions within the company, reinforcing a culture of excellence and achievement [7].

Financial Performance - Natural Beauty reported a revenue increase of 15% year-over-year, reaching HKD 1.2 billion for the fiscal year 2024[3]. - The company achieved a net profit margin of 12%, translating to a net profit of HKD 144 million, up from HKD 120 million in the previous year[3]. - Future guidance indicates expected revenue growth of 10-15% for 2025, with a target revenue of HKD 1.32 billion[3]. - The Group's revenue for 2024 increased by 5.2% to HK$353.7 million compared to HK$336.0 million in 2023, primarily driven by an increase in product sales of HK$18.5 million[25]. - Revenue from the PRC market rose by 7.3% from HK$237.8 million in 2023 to HK$255.2 million in 2024, while revenue from the Taiwan market increased by 8.7% to HK$92.1 million[26]. - The Group reported a loss before tax of approximately HK$105.2 million in 2024, compared to a loss of HK$11.9 million in 2023, reflecting a decrease in pre-tax profit margin[57]. - The Group's net loss increased significantly to approximately HK$103.6 million in 2024, compared to a net loss of approximately HK$15.1 million in 2023[65][70]. - The effective tax rate shifted from 27.3% in 2023 to -1.5% in 2024, with income taxation expenses changing from HK$3.2 million to a credit of HK$1.6 million[64][69]. - The Group's gearing ratio increased from 29.9% in 2023 to 43.0% in 2024, indicating a rise in financial leverage[67][72]. - The Group's projected revenue compound annual growth rate (CAGR) is estimated at 16.4% for the upcoming years, up from 14.7% in the previous year[58]. Market Expansion and Product Development - User engagement metrics showed a 20% increase in active users, totaling 500,000 by the end of 2024[3]. - The company plans to launch three new product lines in 2025, focusing on eco-friendly and sustainable beauty solutions[3]. - Market expansion efforts include entering two new Southeast Asian countries, projected to contribute an additional HKD 200 million in revenue[3]. - The company is investing HKD 50 million in R&D for new technologies aimed at enhancing product efficacy and user experience[3]. - A strategic acquisition of a local beauty brand is anticipated to be finalized in Q2 2025, expected to enhance market share by 5%[3]. - The Group launched 12 skincare products and 9 health supplements in 2024, generating HK$43.0 million in sales[88][91]. - The health food series achieved sales of HK$33.7 million in 2024, marking an 86.2% increase from HK$18.1 million in 2023[89][91]. - The company plans to introduce Exosome Technology into the Taiwan market to meet growing consumer demand, alongside the development of an AI Massage Robot to enhance service precision[99][104]. Sales and Revenue Channels - Product sales accounted for 99.1% of total revenue in 2024, amounting to HK$350.4 million, an increase of 5.6% from HK$331.9 million in 2023[31]. - Sales from e-commerce, TV shopping, and telemarketing channels decreased to HK$37.8 million, down HK$3.7 million from HK$41.5 million in 2023, accounting for 10.7% of total revenue[83][84]. - In 2024, the Group achieved HK$315.8 million in sales from franchised/self-owned spas, an increase of HK$21.3 million from HK$294.5 million in 2023, representing 89.3% of total revenue[82][84]. Corporate Governance - Corporate governance improvements have been made, with the establishment of a new audit committee to enhance financial oversight[3]. - The Board of Directors consists of eight members, including three executive directors, two non-executive directors, and three independent non-executive directors[136]. - The Board met a total of eight times during 2024, exceeding the minimum requirement of four meetings per year[139]. - The company has adopted a code of conduct for securities transactions by directors, which complies with the Model Code, with no reported incidents of non-compliance for the year ended December 31, 2024[154]. - The Company established a Board Independence Evaluation Mechanism to ensure strong independent judgment, with satisfactory results reported for the year[169]. Operational Challenges and Costs - Distribution and selling expenses as a percentage of revenue increased to 48.4% in 2024 from 42.3% in 2023, with total expenses rising by HK$28.8 million to HK$171.0 million[45][51]. - Total administrative expenses increased by HK$14.4 million to HK$80.4 million in 2024, with significant costs in staff and legal fees[46][51]. - Other income and gains decreased by 46.4% from HK$7.9 million in 2023 to HK$4.2 million in 2024, mainly from rental income, interest income, and government grants[44][50]. - The fair value loss on investment properties increased to HK$19.7 million in 2024 from HK$5.8 million in 2023[55]. Strategic Initiatives - The company is implementing a multi-channel sales strategy in Taiwan, focusing on health food and optimizing online brand exposure through live streaming[115][118]. - The company aims to enhance its international competitiveness by investing in high-end intelligent beauty equipment and driving industry upgrades through technological innovation[113]. - The establishment of operation centers in key provinces in the PRC is part of the strategy to strengthen local market penetration[116]. - The company is combining original store expansion mechanisms with a distributor system to enhance precise targeting and team expansion[116]. - The company is committed to enhancing brand building and expanding its comprehensive healthcare business territory by 2025[117].

Financial Performance - Natural Beauty Bio-Technology Limited reported audited annual results for the year ending December 31, 2024[2]. - Revenue for the Group in 2024 increased by 5.2% to HK$353.7 million compared to HK$336.0 million in 2023, driven by an increase in product sales of HK$18.5 million[30]. - Product sales accounted for 99.1% of total revenue in 2024, amounting to HK$350.4 million, representing a 5.6% increase from HK$331.9 million in 2023[36]. - Revenue from the PRC market increased by 7.3% from HK$237.8 million in 2023 to HK$255.2 million in 2024[31]. - Revenue in the Taiwan market rose by 8.7% to HK$92.1 million in 2024, up from HK$84.7 million in 2023[31]. - Revenue from other regions, including Hong Kong and Malaysia, decreased by 52.9% from HK$13.5 million in 2023 to HK$6.4 million in 2024, contributing only 1.8% to total revenue[31]. - Overall gross profit margin decreased from 59.6% in 2023 to 57.2% in 2024 due to changes in the revenue mix of products in the PRC market[32]. - Service income decreased by 19.9% to HK$3.3 million in 2024 compared to HK$4.0 million in 2023[38]. - The Group's operating loss for 2024 is projected to be HK$97.2 million, a significant decline from the previous year's loss of HK$3.7 million[30]. - Return on Equity (ROE) is projected to decline to (23.1%) in 2024 from (2.6%) in 2023[30]. - The Group reported a loss before tax of approximately HK$105.2 million in 2024, compared to a loss of HK$11.9 million in 2023, reflecting a decrease in pre-tax profit margin[62]. - The Group's net loss increased significantly from approximately HK$15.1 million in 2023 to approximately HK$103.6 million in 2024[70][75]. - Cash used in operating activities was approximately HK$13.7 million in 2024, compared to cash generated of HK$21.7 million in 2023[71][76]. - The Group's cash and cash equivalents decreased to approximately HK$109.0 million as of December 31, 2024, down from HK$158.7 million in 2023[71][76]. - The effective tax rate shifted from 27.3% in 2023 to -1.5% in 2024, with income taxation expenses changing from HK$3.2 million to a credit of HK$1.6 million[69][74]. - The Group's gearing ratio increased from 29.9% in 2023 to 43.0% in 2024, indicating a higher level of debt relative to equity[72][76]. - The Group's net cash position deteriorated to HK$-83.2 million in 2024 from HK$-13.1 million in 2023, indicating increased financial strain[73][77]. Product Development and Sales - The company is focusing on new product development, specifically the NB-1 Target Aqua Radiance Energizing Essence series[17]. - In 2024, the Group achieved HK$315.8 million in sales from franchised/self-owned spas, an increase of HK$21.3 million from HK$294.5 million in 2023, representing 89.3% of total revenue[87][89]. - Sales from e-commerce, TV shopping, and telemarketing channels decreased to HK$37.8 million, down HK$3.7 million from HK$41.5 million in 2023, accounting for 10.7% of total revenue[88][89]. - The company launched 12 skincare products and 9 health supplements in 2024, generating HK$43.0 million in sales[93][96]. - The health food series achieved sales of HK$33.7 million in 2024, marking an 86.2% increase from HK$18.1 million in 2023[94][96]. - Health food sales have nearly doubled year-on-year, injecting strong momentum into the overall business[118]. - The company is implementing a multi-channel sales strategy in Taiwan, focusing on health food sales and enhancing brand exposure through live streaming[120]. Market Expansion and Strategy - Future outlook indicates a commitment to market expansion and potential mergers and acquisitions[4]. - The company plans to deepen market penetration and enhance brand equity in the high-end consumer segment in 2025[98]. - The company plans to introduce Exosome Technology into the Taiwan market to meet growing consumer demand, alongside the development of an AI Massage Robot to enhance service precision[104][109]. - The Group's management revised their marketing strategy in the second half of 2024 to focus on multi-channel and multi-brand approaches in response to intensified competition and changing customer needs[58]. - The company has established a dual-core strategy in the PRC market, successfully attracting ten heavyweight agents for local store expansion[115]. - The establishment of operation centers in key provinces aims to strengthen local market penetration and collaboration with agents[121]. - The brand plans to deepen market penetration and enhance its influence among high-end consumer groups by 2025[101][104]. - Future plans include the proactive deployment of international high-end smart beauty equipment to drive industrial upgrading and enhance market competitiveness[115]. - In 2024, the number of newly opened franchise stores in the PRC is expected to grow by 50% year-on-year[121]. Corporate Governance - Management emphasizes the importance of corporate governance and compliance in their strategic planning[4]. - The company has appointed new representatives and committee members to strengthen its governance structure[6][9]. - The Board of Directors consists of eight members, including three executive directors, two non-executive directors, and three independent non-executive directors[141]. - The Board met a total of eight times during 2024, exceeding the minimum requirement of four meetings per year[144]. - Attendance records indicate that all executive directors attended 100% of the Board meetings, with Dr. Lei Chien and Mr. Lin Chia-Wei attending all meetings[147]. - The Company has adopted a code of conduct for securities transactions by directors, which complies with the Model Code, with no incidents of non-compliance reported for the year ended December 31, 2024[159]. - The Company allows directors to seek independent professional advice at the Company's expense, ensuring compliance with corporate governance guidelines[157]. - The Board ensures that all directors have access to the Chief Legal Counsel and Company Secretary for governance and compliance matters[152]. - The company has confirmed that all directors complied with the required standards of the Model Code throughout the year[160]. - The company has adopted a code of conduct for securities trading by directors, confirming compliance with the standards set forth in the Listing Rules[163]. - The Board of Directors is collectively responsible for directing and supervising the company's affairs, including operational and financial performance monitoring[165]. - The Board reserves major policy matters, strategies, budgets, and material transactions for its decision, ensuring sound internal control and risk management systems are in place[166]. - The Chairperson and Chief Executive Officer roles are separate, with the Chairperson focusing on strategic issues and the CEO responsible for overall operations[170]. - An annual confirmation of independence was received from all independent non-executive directors, ensuring compliance with independence guidelines[173]. - The company established a Board Independence Evaluation Mechanism to ensure strong independent judgment, with satisfactory results from the review conducted during the year[174]. Human Resources and Training - As of December 31, 2024, the Group employed 542 staff, with total remuneration of approximately HK$148.4 million, up from HK$105.2 million in 2023[107][110]. - The company provides training courses for directors, with attendance recorded for professional development[155]. - New directors will receive comprehensive formal and tailored orientation training to explain their responsibilities and regulatory requirements[195]. - The company encourages all directors to participate in continuous professional development to ensure their contributions remain informed and relevant[197]. - All directors and senior management received compliance manuals outlining their principal continuing obligations due to the company's listing on the Main Board of the Stock Exchange[194].

INB 自然美 NATURAL BEAUT Natural Beauty Bio-Technology Limited 自然美生物科技有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock Code 股份代號 : 00157 2024 INTERIM REPORT 中期報告 Mission Statement 我們的使命 Natural Beauty is dedicated to cultivate our staff, customers, students and franchisees to appreciate our education, products and services, which are the mission and belief of the brand and to make modern ladies beautiful, confident and wealthy. 我們致力於使員工、顧客、學員及加盟老師們存著一份感恩的心來到自然 美，學習自然美容術及使 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負 責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部 或任何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 Natural Beauty Bio-Technology Limited 自然美生物科技有限公司 （於開曼群島註冊成立之有限公司） （股份代號：00157） 截至二零二四年六月三十日止六個月之中期業績公告 自 然 美 生 物 科 技 有 限 公 司（「本公司」）董 事 會（「董事會」）欣 然 宣 佈 本 公 司 及 其 附 屬 公 司 截 至 二 零 二 四 年 六 月 三 十 日 止 六 個 月 之 未 經 審 核 綜 合 業 績。本 公 告 載 有 本 公 司 截 至 二 零 二 四 年 六 月 三 十 日 止 年 度 中 期 報 告（「二零二四年中期報告」）全 文， 符合香港聯合交易所有限公司證券上市規則有關中期業績初步公佈隨附資料的 相 關 規 定。本 公 司 二 零 二 四 年 中 期 報 告 的 印 刷 版 將 於 二 零 二 四 年 八 月 寄 發 予 已 選 擇 收 取 印 刷 版 的 ...

Financial Performance - Natural Beauty Bio-Technology Limited reported a revenue of HKD 150 million for the fiscal year ending December 31, 2023, representing a 10% increase compared to the previous year[2]. - The company achieved a net profit of HKD 30 million, which is a 15% increase year-over-year, indicating improved operational efficiency[2]. - Future guidance estimates a revenue growth of 12% for the fiscal year 2024, projecting total revenue to reach HKD 168 million[2]. - The Group's revenue in 2023 increased by 0.04% to HK$336.0 million compared to HK$335.9 million in 2022, primarily driven by a HK$4.7 million increase in product sales, which accounted for 98.8% of total revenue[30]. - Revenue from the PRC market rose by 7.1% from HK$222.0 million in 2022 to HK$237.8 million in 2023, while revenue from the Taiwan market decreased by 17.8% to HK$84.7 million[31]. - Overall gross profit margin improved from 56.3% in 2022 to 59.6% in 2023 due to changes in product revenue mix and enhanced cost management efficiency[32]. - Product sales in 2023 amounted to HK$331.9 million, representing a 1.4% increase from HK$327.3 million in 2022, with a notable 9.4% increase in the PRC market[36]. - Service income decreased by 53.3% to HK$4.0 million in 2023 from HK$8.6 million in 2022, with a significant drop in spa and medical cosmetology service income[41]. - The Group's net loss decreased by 50.4% to approximately HK$15.1 million in 2023 from HK$30.5 million in 2022, with pre-tax profit margin improving from -7.0% to -3.5%[65][62]. - Cash generated from operating activities increased to approximately HK$21.7 million in 2023, compared to HK$11.6 million in 2022[66]. Market Expansion and Strategy - The company is expanding its market presence in Southeast Asia, targeting a 25% increase in market share within the next two years[2]. - The company plans to launch three new product lines in 2024, focusing on organic skincare solutions, which are expected to drive further revenue growth[2]. - A new marketing strategy focusing on digital channels is expected to increase customer engagement by 40% in 2024[2]. - The company is exploring potential acquisition opportunities to strengthen its product portfolio and market position[2]. - The Taiwan market has become a new growth point for franchise channels in 2023, emphasizing health food marketing to generate income for franchise stores[108]. - The company aims to introduce an innovative "compound store" model in 2024, integrating beauty, health food, and high-end daily necessities to boost income[109]. - The franchise network is expected to grow rapidly in 2024 through existing store fission and partnerships with leading agents[110]. Research and Development - Investment in R&D increased by 30% in 2023, totaling HKD 10 million, to enhance product innovation and technology[2]. - The Group holds several patents, including three stem cell patents and plant extraction patents, and is focused on enhancing global research collaboration and technological innovation[93]. - The introduction of the Yam Collagen Firming Series has been a significant breakthrough, featuring a unique blend of triple collagen and collagen peptides, specifically targeting premature aging women[92]. - The new product launches in 2023 included 16 SKUs of new products and 14 SKUs of upgraded products, generating total revenue of HK$31.9 million (RMB29.3 million)[94]. Corporate Governance - The Board of Directors consists of eight members, including three Executive Directors, two Non-executive Directors, and three Independent Non-executive Directors, ensuring a balanced composition[124]. - The Company has adopted a code of conduct for securities transactions that complies with the Model Code, with no reported incidents of non-compliance for the year ended December 31, 2023[142]. - The Company provides training courses for directors to ensure continuous professional development[138]. - The Nomination Committee held four meetings during the year ended December 31, 2023, reviewing the Board Diversity Policy and assessing the independence of Independent Non-executive Directors[184]. - The Company has adopted a Board Diversity Policy to achieve diversity on the Board, reflecting its business strategy[190]. - The Board approved all service contracts for directors for a term of one year commencing January 1, 2024[169]. Workforce and Diversity - As of December 31, 2023, the Group's workforce is approximately 74.3% female, with about 43.8% of senior management roles held by women[193]. - The Board comprises five male Directors and three female Directors, achieving gender diversity and possessing a diverse mix of skills and expertise[192]. - The Company intends to maintain at least one-third of the Group's management roles held by women[193]. - The Director Nomination Policy emphasizes the importance of character, integrity, qualifications, and diversity in selecting candidates for directorship[199].

Employee Compensation and Relations - As of June 30, 2023, the total compensation for employees was approximately HKD 59.4 million, a decrease from HKD 73.5 million for the same period in 2022[1] - The company is committed to maintaining competitive compensation packages and fostering good relationships with employees through training and development programs[1] Capital Expenditures and Assets - Capital expenditures for the six months ended June 30, 2023, amounted to HKD 40.8 million, primarily for the construction of a new factory in Mainland China (HKD 23.6 million) and new store renovations (HKD 17.1 million)[2] - The right-of-use assets were valued at HKD 33.8 million as of June 30, 2023, down from HKD 70 million a year earlier, while lease liabilities decreased to HKD 17.5 million from HKD 23.2 million[3] - The Group's capital expenditure for the first half of 2023 was HK$40.8 million, primarily for new plant construction and store openings[106] Borrowings and Financial Position - The company’s secured bank borrowings amounted to HKD 84.4 million as of June 30, 2023, compared to HKD 92.4 million at the end of 2022[4] - Borrowings increased from HK$ 113,842,000 to HK$ 158,497,000, representing an increase of about 39.2%[180] - Cash and cash equivalents at June 30, 2023, were HK$ 151,387,000, down from HK$ 181,382,000 at the same time last year, a decrease of approximately 16.5%[187] Market Performance and Revenue - The Group's turnover in the PRC market increased by 14.2% to HK$111.5 million for the six months ended June 30, 2023, compared to HK$97.6 million for the same period in 2022[51] - Turnover in the Taiwan market decreased by 33.3% to HK$40.0 million for the six months ended June 30, 2023, down from HK$60.0 million for the same period in 2022[52] - Overall turnover for the Group decreased by 1.3% or HK$2.1 million to HK$161.5 million from HK$163.6 million for the same period in 2022[88] Gross Margin and Profitability - Gross margin of product sales in the PRC market improved to 60.6% for the six months ended June 30, 2023, up from 53.6% in the previous year[51] - The Group's overall gross profit margin increased from 53.5% for the six months ended June 30, 2022, to 58.8% for the six months ended June 30, 2023[89] - The increase in gross profit margin was mainly due to changes in the revenue mix of products bundling in the PRC market[89] Corporate Governance - The Company has fully complied with the corporate governance code provisions throughout the six months ended 30 June 2023[26] - The Board met the requirements of the Listing Rules regarding the appointment of independent non-executive directors throughout the reporting period[34] - The Company recognizes the importance of good corporate governance in enhancing management and preserving shareholder interests[26] Shareholder Information - For the six months ended June 30, 2023, the company reported a substantial shareholder, Eastern Media International Corporation, holding 600,630,280 shares, representing 30.00% of the issued share capital[168] - Another significant shareholder, CHAO Shih-Heng, holds 455,630,196 shares, which is approximately 22.76% of the issued share capital[168] - The company has a total of 445,315,083 shares held by TSAI Yen-Yu, accounting for about 22.24% of the issued share capital[168] Research and Development - The Group is focused on R&D for product upgrades and new technologies, including the NB-1 Aqua Plus and NB-1 Delicate Pore series[63][64] - Collaborations with professional laboratories in Europe, Japan, and Australia are aimed at enhancing R&D capabilities[63] - The Group plans to develop highly effective active ingredients for anti-aging skincare solutions[64] Financial Results and Losses - Loss before tax decreased by 75.0% from HK$25.3 million for the six months ended June 30, 2022 to HK$6.3 million for the six months ended June 30, 2023[135] - Loss for the period decreased by 68.9% from HK$30.2 million for the six months ended June 30, 2022 to HK$9.4 million for the six months ended June 30, 2023[135] - Cash generated from operating activities for the six months ended June 30, 2023 was approximately HK$21.2 million, compared to HK$8.7 million for the six months ended June 30, 2022[135] Other Financial Metrics - Current ratios were 1.46 times as at 31 December 2022 and 1.29 times as at 30 June 2023[135] - Total assets decreased from HK$ 621,532,000 as of December 31, 2022, to HK$ 587,090,000 as of June 30, 2023, representing a decline of approximately 5.5%[180] - Net current assets decreased from HK$ 114,123,000 to HK$ 78,572,000, a decline of approximately 31.1%[180]

[Overall Financial Performance](index=1&type=section&id=Overall%20Financial%20Performance) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The Group's total revenue slightly decreased to **HKD 161.5 million**, while gross profit increased, leading to a significantly narrowed net loss of **HKD 9.406 million** for the period Key Financial Data for H1 2023 | Indicator | H1 2023 (HKD thousands) | H1 2022 (HKD thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 161,511 | 163,591 | -1.3% | | Gross Profit | 94,966 | 87,532 | +8.5% | | Operating Loss | (2,352) | (23,934) | -90.2% | | Loss for the Period | (9,406) | (30,249) | -68.9% | | Basic Loss Per Share | (0.47) HK cents | (1.51) HK cents | -68.9% | - The company did not declare or pay any dividends for the six months ended June 30, 2023, compared to a dividend payment of **HKD 6.006 million** in the same period of 2022[31](index=31&type=chunk)[90](index=90&type=chunk) [Financial Position](index=4&type=section&id=Financial%20Position) As of June 30, 2023, the Group's **total assets were HKD 856 million**, with a **current ratio of 1.29x** and a **debt-to-equity ratio of 28.6%**, reflecting changes in liquidity and leverage Summary of Financial Position (June 30, 2023 vs December 31, 2022) | Item | June 30, 2023 (HKD thousands) | December 31, 2022 (HKD thousands) | | :--- | :--- | :--- | | **Non-current Assets** | 508,518 | 507,409 | | **Current Assets** | 347,739 | 364,900 | | **Total Assets** | 856,257 | 872,309 | | **Current Liabilities** | 269,167 | 250,777 | | **Non-current Liabilities** | 17,437 | 24,070 | | **Total Liabilities** | 286,604 | 274,847 | | **Net Assets** | 569,653 | 597,462 | - The Group's current ratio decreased from **1.46x** at the end of 2022 to **1.29x** as of June 30, 2023[16](index=16&type=chunk) - The Group's debt-to-equity ratio increased from **20.1%** at the end of 2022 to **28.6%** as of June 30, 2023[16](index=16&type=chunk) [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Review](index=15&type=section&id=Financial%20Review) In H1 2023, total turnover slightly decreased to **HKD 161.5 million**, while improved gross margin and controlled expenses significantly narrowed the **loss before tax to HKD 6.3 million** and **loss for the period to HKD 9.4 million** Turnover by Geographical Region (H1 2023) | Region | Turnover (HKD thousands) | Percentage of Total | YoY Change | | :--- | :--- | :--- | :--- | | Mainland China | 111,485 | 69.0% | +14.2% | | Taiwan | 40,039 | 24.8% | -33.3% | | Other | 9,987 | 6.2% | +68.2% | | **Total** | **161,511** | **100.0%** | **-1.3%** | - Overall gross profit margin increased from **53.5%** in the prior period to **58.8%**, primarily due to changes in the product revenue mix in the mainland China market[88](index=88&type=chunk) - Loss before tax significantly decreased by **75.0%** from **HKD 25.3 million** in the prior period to **HKD 6.3 million**[12](index=12&type=chunk) - Loss for the period decreased by **68.9%** from **HKD 30.2 million** in the prior period to **HKD 9.4 million**[13](index=13&type=chunk) [Business Segment Performance](index=16&type=section&id=Business%20Segment%20Performance) Product sales, the core revenue source, remained stable at **HKD 159.7 million**, while service revenue significantly declined by **52.1% to HKD 1.8 million**, primarily due to reduced spa and medical beauty services Turnover by Business Segment (H1 2023) | Business Segment | Turnover (HKD thousands) | Percentage of Total | YoY Change | | :--- | :--- | :--- | :--- | | Products | 159,707 | 98.9% | -0.1% | | Services | 1,804 | 1.1% | -52.1% | | **Total** | **161,511** | **100.0%** | **-1.3%** | [Products](index=16&type=section&id=Products) Product sales, the primary revenue source, remained stable at **HKD 159.7 million**, with **mainland China sales growing 16.6%** offset by a **33.3% decline in Taiwan** - Product sales amounted to **HKD 159.7 million**, accounting for **98.9%** of the Group's total revenue, primarily from the sale of skincare, beauty and essential oil products, health foods, and cosmetics under the "Natural Beauty" brand[3](index=3&type=chunk) Product Segment Sales by Region (H1 2023) | Region | Sales (HKD thousands) | YoY Change | | :--- | :--- | :--- | | Mainland China | 109,985 | +16.6% | | Taiwan | 40,039 | -33.3% | | Other | 9,683 | +76.2% | | **Total** | **159,707** | **-0.1%** | [Services](index=17&type=section&id=Services) Service revenue, primarily from spa and medical beauty services, significantly declined by **52.1% to HKD 1.8 million** in H1 2023, mainly due to reduced spa and medical beauty service revenue - Service revenue decreased by **52.1%** from **HKD 3.8 million** in the prior period to **HKD 1.8 million**[6](index=6&type=chunk) Service Revenue Details (H1 2023) | Service Type | Revenue (HKD thousands) | YoY Change | | :--- | :--- | :--- | | Spa/Medical Beauty Services | 1,728 | -54.0% | | Training Revenue | 1 | -66.7% | | Other | 75 | +100.0% | | **Total** | **1,804** | **-52.1%** | [Geographic Market Performance](index=20&type=section&id=Geographic%20Market%20Performance) Mainland China's turnover grew **14.2% to HKD 111.5 million** with improved gross margin, while Taiwan's turnover declined **33.3% to HKD 40 million** due to channel sales drops - Mainland China market turnover increased by **14.2%** to **HKD 111.5 million**, with product sales gross margin improving from **53.6%** to **60.6%**[20](index=20&type=chunk) - Taiwan market turnover decreased by **33.3%** to **HKD 40 million**, with product gross margin declining from **65.8%** to **60.0%**[21](index=21&type=chunk) [Distribution Channels and Stores](index=21&type=section&id=Distribution%20Channels%20and%20Stores) The Group primarily relies on franchised/self-operated spa centers and counter channels, contributing **86.8% of total turnover**, with the global store count reaching **1,455** (a net increase of **49**), while e-commerce and TV shopping channels saw an **18.7% decline** - Turnover from franchised/self-operated spa centers and counter channels accounted for **86.8%** of the Group's total turnover, reaching **HKD 140.2 million**[23](index=23&type=chunk) - Turnover from e-commerce, TV shopping, and telemarketing channels decreased to **HKD 21.3 million**, accounting for **13.2%** of total turnover[33](index=33&type=chunk) Store Count Changes (As of June 30, 2023) | Region | June 30, 2023 | June 30, 2022 | Net Change | | :--- | :--- | :--- | :--- | | Mainland China | 1,115 | 1,035 | +80 | | Taiwan | 326 | 345 | -19 | | Other | 14 | 26 | -12 | | **Total** | **1,455** | **1,406** | **+49** | - In H1 2023, the Group opened **94** new stores and closed **56** stores[36](index=36&type=chunk) [Operating Expenses](index=18&type=section&id=Operating%20Expenses) In H1 2023, the Group successfully controlled operating costs, with **distribution and selling expenses decreasing 6.0% to HKD 68.9 million** and **administrative expenses decreasing 8.1% to HKD 33 million** - Distribution and selling expenses decreased from **HKD 73.3 million** to **HKD 68.9 million**, with their percentage of turnover decreasing from **44.8%** to **42.6%**[9](index=9&type=chunk) - Administrative expenses decreased by **8.1%** from **HKD 35.9 million** to **HKD 33.0 million**[10](index=10&type=chunk) [Liquidity and Financial Resources](index=19&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2023, the Group held **HKD 151.4 million in cash** and **HKD 163.2 million in bank borrowings**, with **net cash from operations significantly improving to HKD 21.2 million**, though facing foreign exchange risk from RMB and NTD denominated cash Financial Resources Status (June 30, 2023) | Item | Amount (HKD thousands) | | :--- | :--- | | Cash and Cash Equivalents | 151,400 | | Bank Borrowings | 163,200 | | Net Cash Generated from Operating Activities | 21,200 | - The Group's debt-to-equity ratio (total bank borrowings/shareholders' equity) was **28.6%**, and the current ratio was **1.29x**[16](index=16&type=chunk) - Approximately **57.1%** of the Group's bank balances and cash were denominated in RMB and **30.4%** in NTD, exposing the Group to exchange rate fluctuation risks[17](index=17&type=chunk) [Research & Development](index=22&type=section&id=Research%20%26%20Development) The Group prioritizes R&D through two major centers, focusing on product upgrades like the **NB-1 series** and **MicroRNA gene activation technology**, having secured **three stem cell patents** and **one plant extract patent** - The Group has established two R&D bases, the Natural Beauty Biotech R&D Center and the EHS-NTU Industry-Academia Collaboration Center, and collaborates with professional laboratories in Europe, Japan, and Australia[37](index=37&type=chunk) - R&D focuses include upgrading the classic **NB-1 series** products, introducing **MicroRNA gene activation technology**, and researching the anti-aging effects of retinol[38](index=38&type=chunk) - The company has obtained **three stem cell patents** and **one plant extract patent**, and continues to invest in the development of its own intellectual property[39](index=39&type=chunk) [Future Outlook](index=24&type=section&id=Future%20Outlook) The Group plans to leverage parent company resources to expand into new channels like B2B and duty-free, strengthen live streamer collaborations and health food promotion in Taiwan, and accelerate franchise expansion in mainland China through a new B2B team - The company will continue to utilize EHS International resources to vigorously expand into new channels such as **B2B**, **duty-free**, and **distributors**, while consolidating existing channels (franchise chains, TV shopping, e-commerce)[47](index=47&type=chunk) - Taiwan market strategy: Collaborate with live streamers, promote health foods, and generate revenue for franchised stores[48](index=48&type=chunk) - Mainland China market strategy: Establish a **B2B team** to develop new channels, increase advertising to attract franchises, and focus on promoting health supplements to achieve cross-selling[48](index=48&type=chunk) [Notes to the Financial Statements](index=6&type=section&id=Notes%20to%20the%20Financial%20Statements) [3. Segment Information](index=7&type=section&id=3.%20Segment%20Information) The Group operates in three geographical segments, with **mainland China recording a loss of HKD 9.3 million** and **Taiwan and other regions showing profits**, while **87.7% of non-current assets are in mainland China** Segment Results (For the six months ended June 30, 2023) | Segment | External Revenue (HKD thousands) | Segment (Loss)/Profit (HKD thousands) | | :--- | :--- | :--- | | Mainland China | 111,485 | (9,271) | | Taiwan | 40,039 | 3,120 | | Other | 9,987 | 2,471 | | **Total** | **161,511** | **(3,680)** | Non-current Assets by Region (June 30, 2023) | Region | Non-current Assets (HKD thousands) | | :--- | :--- | | Mainland China | 433,965 | | Taiwan | 59,213 | | Other | 1,858 | | **Consolidated Total** | **495,036** | [4. Revenue](index=9&type=section&id=4.%20Revenue) All Group revenue is contract-based, with **product sales contributing HKD 159.7 million** and **mainland China being the largest regional source at HKD 111.5 million (69% of total)** Revenue Breakdown (For the six months ended June 30, 2023) | Category | Revenue (HKD thousands) | | :--- | :--- | | **By Product/Service** | | | Product Sales | 159,707 | | Service Revenue | 1,804 | | **By Major Region** | | | Mainland China | 111,485 | | Taiwan | 40,039 | | Other | 9,987 | | **Total** | **161,511** | [6. Income Tax Expense](index=11&type=section&id=6.%20Income%20Tax%20Expense) In H1 2023, the Group's **income tax expense was HKD 3.1 million**, lower than the prior period, primarily from operations in **mainland China (25% tax rate)** and **Taiwan (20% tax rate)** Composition of Income Tax Expense (H1 2023) | Item | Amount (HKD thousands) | | :--- | :--- | | Current Tax - China | 1,740 | | Current Tax - Taiwan | 665 | | Current Tax - Malaysia | 4 | | Withholding Tax | 80 | | Deferred Tax | 607 | | **Total** | **3,096** | [8. Loss Per Share](index=12&type=section&id=8.%20Loss%20Per%20Share) For the six months ended June 30, 2023, **basic loss per share significantly narrowed to HKD 0.47 cents**, with no diluted loss per share presented due to the absence of potential ordinary shares - Basic loss per share is calculated based on the loss for the period attributable to owners of the company of approximately **HKD 9,406,000** and the weighted average number of ordinary shares outstanding of approximately **2,002,100,932** shares[31](index=31&type=chunk) - Diluted loss per share was not presented as the company had no outstanding potential ordinary shares during the period[84](index=84&type=chunk) [Corporate Governance and Other Information](index=25&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance](index=25&type=section&id=Corporate%20Governance) The company maintains high corporate governance standards, with established committees and full compliance with the **Corporate Governance Code** throughout the reporting period - The Board has established an **Audit Committee**, **Executive Committee**, **Remuneration Committee**, and **Nomination Committee** to safeguard and enhance shareholders' interests[50](index=50&type=chunk) - The Board believes that the company has fully complied with all code provisions of the **Corporate Governance Code** throughout the six months ended June 30, 2023[56](index=56&type=chunk) - The interim financial statements have been reviewed by the **Audit Committee** and by the company's auditor, **RSM Hong Kong**, in accordance with Hong Kong Standard on Review Engagements[51](index=51&type=chunk) [Other Disclosures](index=27&type=section&id=Other%20Disclosures) For the six months ended June 30, 2023, the company did not engage in any **purchase, sale, or redemption of its listed securities**, and no **interim dividend** was declared - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[58](index=58&type=chunk) - The company did not declare an interim dividend for the six months ended June 30, 2023[59](index=59&type=chunk)

Revenue Performance - The Group's total revenue decreased by 31.1% from HK$487.8 million in 2021 to HK$335.9 million in 2022, primarily due to a reduction in product sales by HK$144.5 million[23]. - Product sales accounted for 97.4% of the Group's total revenue in 2022, amounting to HK$327.3 million, a decrease of 30.6% compared to HK$471.8 million in 2021[26]. - Revenue from the PRC market decreased by 18.7% to HK$214.2 million in 2022 from HK$263.7 million in 2021, while revenue from the Taiwan market fell by 49.3% to HK$103.1 million from HK$203.2 million[26]. - The Group's total revenue decreased by 46.2% in 2022 to HK$8.589 million from HK$15.972 million in 2021[29]. - Revenue in the PRC market fell by 20.4% to HK$222.0 million in 2022 compared to HK$279.0 million in 2021, primarily due to decreased product sales[29]. - Revenue in the Taiwan market decreased by 49.3% to HK$103.1 million in 2022 from HK$203.2 million in 2021, impacted by COVID-19 policies[30]. - Revenue from other regions, including Hong Kong, Malaysia, and Macau, increased by 92.8% from HK$5.6 million in 2021 to HK$10.8 million in 2022, but still represented only 3.2% of the Group's total revenue[22]. - The income from e-commerce, TV shopping, and telemarketing channels decreased by HK$101 million to HK$45.4 million in 2022, representing 13.5% of the Group's total revenue[95]. Gross Margin and Profitability - The overall gross margin decreased from 62.7% in 2021 to 56.3% in 2022, attributed to changes in product revenue mix and the impact of COVID-19 policies in mainland China and Taiwan[24]. - Gross margin on product sales in the PRC decreased from 61.6% in 2021 to 55.9% in 2022[29]. - Gross profit margin on product sales in Taiwan decreased from 68.1% in 2021 to 63.6% in 2022[30]. - The Group's profit before tax turned to a loss of approximately HK$23.5 million in 2022, compared to a profit of HK$48.5 million in 2021, with the pre-tax profit margin decreasing to -7.0%[61]. - The Group's net loss for 2022 was approximately HK$30.5 million, a decrease of 186.4% compared to a net profit of approximately HK$35.3 million in 2021[87]. - The Group reported a pre-tax loss of HK$23.5 million in 2022, a decline of 148.6% from a profit of HK$48.5 million in 2021[86]. Expenses and Cost Management - Distribution and selling expenses as a percentage of the Group's revenue increased to 41.5% in 2022 from 37.2% in 2021[35]. - Total distribution and selling expenses decreased by HK$42.3 million to HK$139.3 million in 2022 from HK$181.6 million in 2021[35]. - Staff costs related to distribution work decreased by HK$7.0 million to HK$73.3 million in 2022[35]. - Total administrative expenses decreased by HK$15.0 million to HK$68.6 million in 2022, with significant reductions in staff costs and other operational expenses[82]. - Other expenses and losses decreased from HK$3.1 million in 2021 to HK$2.5 million in 2022, reflecting improved cost management[83]. Strategic Initiatives - The Group remains focused on enhancing its product offerings and expanding its market presence despite recent challenges[26]. - The Group's strategy includes stimulating franchisee sales through the establishment of self-owned spas in strategic locations[26]. - As of December 31, 2022, the Group operated two self-owned spas in the PRC and one in Malaysia, aiming to establish these as model outlets to attract franchisees[26]. - The Group's strategy includes two share incentive plans aimed at aligning management interests with the Group's growth and performance[68]. Operational Developments - The Group opened 140 new stores and closed 76 stores during the year ended December 31, 2022, compared to 255 new openings and 119 closures in 2021[76]. - As of December 31, 2022, the Group operated 1,408 spas and 9 concessionary counters, with 1,405 being franchised[97]. - The Group's capital expenditure in 2022 was HK$44.3 million, primarily for new plant construction in the PRC (HK$29.3 million) and store renovations and equipment (HK$13.1 million)[109]. - In October 2022, the Group launched a new brand called B.U.T. ESSE, generating HK$1.2 million in revenue[104]. Financial Position - The Group's secured bank borrowings as of December 31, 2022, amounted to HK$92.4 million, down from HK$102.4 million in 2021[65]. - Total assets as of 2022 were HK$872.3 million, a decrease from HK$930.4 million in 2021[60]. - The Group's return on equity (ROE) was -5.1% in 2022, down from 5.4% in 2021[60]. - The Group's liquidity position remains strong, with no material contingent liabilities as of December 31, 2022[87]. - Cash generated from operating activities in 2022 was approximately HK$11.6 million, down from HK$44.6 million in 2021[87]. - As of December 31, 2022, the Group had cash and cash equivalents of approximately HK$160.6 million, compared to HK$184.5 million as of December 31, 2021[87]. - The Group's gearing ratios increased from 14.8% in 2021 to 20.1% in 2022[87]. Governance and Compliance - The Audit Committee held six meetings during the year ended December 31, 2022, reviewing the annual performance for the year ended December 31, 2021, and the interim performance for the six months ended June 30, 2022[144]. - The company has a whistle-blowing policy as part of the employee handbook to address potential misconduct[143]. - The risk management and internal control systems are designed to manage risks rather than eliminate them, providing reasonable assurance against material misstatements[154]. - The company conducted annual self-assessments to confirm compliance with control policies across all departments[158]. - The Company confirmed the effectiveness of its risk management and internal control systems as of December 31, 2022[187]. - The Company is committed to maintaining high standards of business integrity and transparency, with a strict anti-corruption policy in place[159]. - The Company has adopted an anti-corruption policy to strictly prohibit any form of fraud or bribery, ensuring high standards of business integrity and transparency[186]. Shareholder Relations - The Company emphasizes the importance of effective communication with shareholders for good investor relations and timely disclosure of information[197]. - There is a dedicated section of "Shareholder Services" on the Company's website to provide comprehensive information related to shareholders[192]. - The Company has optimized the planning and procedures of general meetings to ensure all Directors can attend and participate[199].