Skip Navigation

Email This Print This Quarterly Results

Click here to download the complete financials

Financial Statements And Related Announcement For The Year Ended 31 December 2017

Statement of Comprehensive Income for the year ended 31 December 2017:

Balance Sheet

Review of Performance


For the year ended 31 December 2017, the Group recorded revenue of $220.9 million, up 10.0% from the revenue of $200.8 million in FY2016. The full year increase was due to a year on year growth from the Export Segment as well as improvement from Singapore and other markets, offsetting a slowdown in revenue generation from Taiwan. Profit Attributable to Owners of the Parent Company for FY2017 improved 61.0% from $34.6 million in FY2016 to $55.7 million.

Key points to note for the Group’s performance for this reporting period include:

  • With increased contribution from the Export segment which offers a lower Gross Profit Margin compared to the Direct Selling Segment, the Group registered Gross Profit Margin of 69.1% in FY2017 compared to 73.2% for FY2016;
  • Interest Income increased 27.8% in FY2017 due to higher interest from Other Financial Assets, interest bearing funds as well as fixed deposits;
  • Other Operating Income increased 417.5% in 4Q2017 as compared to 4Q2016 due to lower Other Operating Income of $40,000 recorded in 4Q2016 as a result of adjustments made to reflect the actual service fee for FY2016. Other Operating Income increased from $3.7 million in FY2016 to $5.6 million in FY2017, mainly due to higher service fees received from the Group’s Export Agent;
  • Distribution Costs, which comprise of freelance commissions and other sales related expenses, declined 27.0% from $66.4 million in FY2016 to $48.4 million, as a result of lower sales from Direct Selling in FY2017;
  • Administrative Expenses increased by 53.2% for 4Q2017 compared to 4Q2016, mainly due to higher management and staff costs, depreciation as well as higher rental expenses incurred in FY2017 as a result of relocation of our Taipei Regional Centre (“RC”) in 2Q2017. For the full year ended 31 December 2017, Administrative Expenses increased by 7.6%;
  • Finance Costs in FY2017 increased 164.4% due to the full year effect of bank borrowings related to our Tuas facility drawn down since 3Q2016 and the increase in short term borrowings for the financial year;
  • For FY2017, the Group recorded Net Other Losses of $3.7 million mainly attributable to foreign exchange adjustment losses due to translation of cash and cash equivalents and financial assets denominated in US dollars;
  • The Group experienced Income Tax Credit in 4Q2017 of $1.5m due to adequate provision of Income Tax for FY2017 during the first three quarters as well as a tax refund in 4Q2017. For FY2017, the Group incurred Income Tax Expenses of $12.6 million due to certain subsidiaries in the Group being profitable for the year

Revenue by Business Segments

For Quarter: 4Q2017 Vs 4Q2016

For Year-to-Date: 2017 Vs 2016

For 4Q2017, the Group generated $37.6 million of its total revenue from Direct Selling, compared to $45.9 million generated through the same segment in 4Q2016. This decline is mainly attributable to the decline of the Group’s market of Taiwan and Singapore offsetting the improvement from Indonesia and other markets.

Due to the growing market demand for the Group’s proprietary skincare line DR’s Secret, and in anticipation of the long Chinese New Year holidays in February, our China Export Agent placed their orders for the next three to six months in 4Q2017. As a result, revenue from Export Segment increased by 144.5% to $35.1 million for 4Q2017.

For FY2017, Manufacturing/Wholesale segment which makes up 2.1% of the Group’s total revenue maintained a revenue of $4.5 million as compared to $4.7 million in FY2016.

As at 31 December 2017, total membership for the Group’s Direct Selling business increased 2.2% to 490,041 members, when compared to 30 September 2017. Active distributors, which refers to members who have received commission over the last 12 months stands at 8.7% of total membership.

Revenue by Geographical Locations

For Quarter: 4Q2017 Vs 4Q2016

For The Year Ended: 2017 Vs 2016


Overall for FY2017, revenue from Singapore improved by 8.9% to $7.7 million due to positive response from the marketing campaigns conducted during earlier quarters of the year, resulting in an increase of new members.

Management shall engage new and existing members by implementing marketing activities to further encourage network building and launching new products in the coming quarters to continue the market’s steady growth momentum.


In line with management’s expectation, China registered a total revenue of $110.5 million in FY2017 vis-à-vis $57.9 million in FY2016, as demand for DR’s Secret in the existing cities which are represented by DR’s Secret Experience Centres continue to increase.

As mentioned previously, the Group is in preparation for the conversion of the Export segment to Direct Selling which will be carried out in phases and will have minimal impact on the Group’s profitability. Barring any unforeseen circumstances, management is optimistic that China market will continue to contribute positively to the Group moving forward.


Revenue from Taiwan declined 28.5% from $123.0 million in FY2016 to $88.0 million in FY2017. This was due to changes in strategies implemented since the beginning of FY2017, coupled with stiff market competition as well as frequent online discounting. The change in strategies was to focus on improving sales per member as well as to attract more new customers’ membership

On a positive note, revenue increased from $14.9 million in 3Q2017 to $31.3 million in 4Q2017 which represents 110% increase from the previous quarter.


For FY2017, revenue from Indonesia decreased marginally by 2.3% to $5.3 million as compared to FY2016 due to the negative exchange rate movement between IDR and SGD. In local currency terms, the decline was marginal at 1.1%.

In the second half of the year, the strategy implemented by the management continued its momentum, resulting in a 10.7% increase in revenue to $1.7 million for 4Q2017 from $1.5 million in 4Q2016.


Revenue from Other Markets increased by 34.5% in the current quarter as compared to the same period last year primarily due to the increase in revenue from Hong Kong, Vietnam, Korea and Malaysia, offsetting decline from Philippines and Thailand.

Financial Position and Cash Flow

Non-current assets of the Group decreased from $26.8 million as at 31 December 2016 to $23.0 million as at 31 December 2017, mainly due to depreciation of Property, Plant and Equipment and Non-Current Other Assets, amortisation of Intangible Assets and the reclassification of certain financial assets to current assets.

Inventory decreased from $43.0 million as at 31 December 2016 to $28.0 million as at 31 December 2017 due to higher orders from our Export Agent in 4Q2017 as well as control on the inventory levels as the Group has sufficient buffer to sustain growth moving forward.

In line with higher revenue generated from the Export Segment, Trade and Other Receivables increased from $23.4 million as at 31 December 2016 to $45.1 million as at 31 December 2017.

Other Assets decreased from $12.1 million as at 31 December 2016 to $6.3 million as at 31 December 2017 mainly due to lower deposits paid to suppliers in line with the decreased orders made to suppliers as the Group currently maintains a sufficient level of inventory.

Total Other Financial Assets increased from $2.0 million as at 31 December 2016 to $10.9 million as at 31 December 2017 mainly due to increased investment in quoted securities.

Trade and Other Payables increased by $2.0 million to $45.9 million as at 31 December 2017 mainly due to increase in accruals of staff and management incentive offsetting decrease in accruals of commissions due to lower sales from Direct Selling segment.

Other Liabilities were maintained at $1.0 million as at 31 December 2017 vis-à-vis 31 December 2016.

Income Tax Payable decreased from $16.5 million as at 31 December 2016 to $10.8 million as at 31 December 2017 due to settlements of Income Tax Payable during the year as well as lower Income Tax Payable from one of our subsidiaries.

As at 31 December 2017, the Group generated net cash flow from operating activities of $57.2 million. Net cash flow used in investing activities of $11.7 million was mainly due to increase in other financial assets during the year. Net cash flows used in financing activities in FY2017 of $20.1 million was mainly due to dividends paid during the year.

As at 31 December 2017, the Group maintained a strong balance sheet and working capital position, with approximately $82.2 million of cash and cash equivalents.


As management expects growth momentum to continue from the Group’s business in China, barring unforeseen circumstances, management expects improvement in both top and bottom line for FY2018 when compared to FY2017.

Factors that may affect the Group’s performance in the next reporting period and for the next 12 months are as follows:

  • To set the Group’s growth path moving forward, management constantly explores M&A opportunities. In the course of assessing these opportunities, regardless of success or not, professional fees and other related expenses may be incurred;
  • Compared to the last financial year, management expects higher Administrative Expenses due to increase in management and staff to cater to business growth, and depreciation expenses related to the Group’s Tuas manufacturing facility and our Changsha RC which was officially opened in 4Q2017;
  • To ensure that Tuas facilities’ manufacturing capacity is sufficient to meet the Group’s future needs, Alteration and Additional works has to be undertaken to the current building. Professional fees and depreciation as well as other related expenses may be incurred moving forward;
  • As the strategies implemented in Taiwan are not expected to gain traction any sooner, management expects sales to be stable for the market in FY2018, led primarily by events and campaigns to be held in 2H2018. Despite this, Taiwan still remains to be the Group’s second largest market and most profitable subsidiary;
  • As previously announced, conversion of the Export business to Direct Selling shall be implemented in phases. Management expects first phase conversion to commence during the first half of FY2018. Revenue from the Export Segment may decline during the course of conversion, as the Group will concurrently export to the Export Agent and our China subsidiary;
  • As Export Agent had placed their orders for the next three to six months in 4Q2017, there is a possibility that 1Q2018 may be weaker than 1Q2017;
  • For 1H2018, exports to China may be categorised as China Wholesale as we will be importing China orders through our China subsidiary, Best World (China) Pharmaceutical Co., Ltd (formerly known as Best World (Zhejiang) Pharmaceutical Co., Ltd.);
  • Upon full conversion of the Export Business to Direct Selling, some or all of the following items, amongst others may be affected:

    1. Increase in Revenue and Gross Profit as a result of revenue recognition at a price higher than export price;
    2. Decline in Other Operating Income due to lower service fees that the Group will be receiving from the Group’s Export Agent; and
    3. Increase in Distribution Expenses mainly attributable to commissions paid to distributors.

  • The Group’s effort to widen the coverage of our direct selling license beyond Hangzhou to include other cities generating substantial sales is proceeding as planned. The expansion application has already commenced since 3Q2016 and shall cover key cities of at least 7 provinces to be approved by the end of FY2018; and
  • Currency fluctuation against the SGD may positively or negatively impact the Group’s performance. Management will undertake measures to mitigate any currency risks the Group is exposed to.

Other ongoing factors that affect the Group include, timeline required for product registration in various markets, natural disasters, local direct selling regulations, product registration regulations and market competition.

Click here to download the complete financials