New Image confirms record revenues, profitability

Media Release: August 27, 2009

New Image confirms record revenues and profitability with bright outlook

Health and well-being company New Image Group Limited is looking to float its Malaysian subsidiary on the stock exchange in that country next year.

Graeme Clegg, the founding chairman, says that would enable New Image distributors in the region to invest in the Malaysian-listed vehicle.

Malaysia is a bright star for New Image’s direct selling business. New Image reported to the New Zealand Stock Exchange today full year revenues for Malaysia of $56.3 million were 578% ahead of the previous year.

This growth has required larger facilities and a new 850sq m regional office in Kuala Lumpur was opened in July. Mr Clegg says more than a dozen of New Image’s distributors in Malaysia were earning in excess of NZ$500,000 a year, with the top distributor earning NZ$1 million.

New Image reported a record net profit after tax (NPAT) of $15.5 million for the year to the end of June 2009. This compares with NPAT of $2.2 million for 2008 and comes from a substantial lift in revenues to $98.4 million (FY08 $39.1million).

Mr Clegg says the board is confident that, assuming no unforeseen trading circumstance, New Image can look forward to a good increase in revenue and market activity in the coming year.

The board declared an ordinary dividend of one cent per share, with a payment date in December 2009, making a total of 1.5 cps for the year

Chief Executive Stephen Lyttelton says apart from Malaysia, New Image has had strong growth in Taiwan, where revenues showed a 38.4% growth for the year to $28.1 million. A third office opened in Taiwan in June.

New operating offices were also opened in South Africa and Japan during the year and New Image will be pursuing opportunities in Thailand, Vietnam, South Korea and India over the next 12 months.

The company is producing a new infant formula range, ImmunoMilk, for New Image’s 60% owned Golden Dairy joint venture in Hong Kong and is packing other infant formula for customers in China.

A second plant has recently been commissioned at Penrose to produce New Image’s new COL+ product. This “daily 100ml liquid colostrum shot” is manufactured utilising a high technology process developed by Fonterra and commercialized by New Image through an exclusive manufacturing licence agreement.

COL+ will launch internationally on October 1 through selected FMCG retail outlets in Singapore. Hong Kong will follow. Mr Lyttelton says the planned launch of COL+ in New Zealand has been phased due to the strong demand from those markets.

New Image Group ended the financial year with $22.1 million cash reserves and no bank debt. FY09 capital expenditure for the new COL+ plant in Penrose was funded out of group cash flow.

The company’s financial position strengthened through FY09, with a significantly improved equity ratio at year end compared to FY08, lifting from 34% to 60%. New Image’s EBITDA/revenue ratio for the 2009 year rose to 23.1%, compared with 8.7% the prior year.

During the year, 9.2 million new shares were issued, including 5 million shares placed with a major New Zealand institutional investor.

With a market capitalization of $145 million at today’s date, New Image is now placed in the top 50 NZX-listed companies.

The Annual General Meeting of the company will take place in Auckland on Thursday, October 22, 2009.

ENDS

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