Chairperson's Statement

On behalf of the Board of Directors (the “Board”) of Modern Beauty Salon Holdings Limited (the “Company”), I am pleased to present the audited financial report of the Company and its subsidiaries (the “Group”) for the financial year ended 31 March 2016 (“FY2016” or the “year under review”).

Business Review
During FY2016, the retail sales in Hong Kong showed significant decline due to the unstable internal and external business environment. Our business in Hong Kong was inevitably affected but to a lesser extent leveraging on our long-term commitment to excellent service management and quality assurance. Revenue of the Group amounted to approximately HK$775.4 million. Our customers in Hong Kong amounted up to a total of approximately 396,000 during the year under review, representing an encouraging growth of 5.3% as compared to approximately 376,000 in FY2015.

While we continue to provide comprehensive high quality beauty, slimming and facial services (wedding photography services have also been provided since 2013), we manage to take further steps to launch electronic sales platform via an O2O mobile app which enables customers to make bookings on their phones and serves as a marketing media to advertise our latest services and promotion campaign to achieve higher promotion and advertising efficiency. Also, we have launched a B2C online product sales platform during the year under review so that our products can be sold directly to customers making online orders.

During the year under review, we offer a number of innovative and sophisticated beauty, slimming and anti-ageing treatments and machineries, such as Venus Legacy™ machine which facilitates breakthrough skin tightening and cellulite reduction treatment by using variable radio frequencies with vacuum technology to intensify the treatment process and allow for deeper (and safe) penetration of the skin, together with a built-in cooling system to keep the skin cool.

We also continue our consistent cost control policy by integrating various of the Group’s service centres in Hong Kong through renewing leases, merging and leasing of other premises when the lease terms expired. We achieve remarkable results in this regard as the total capital expenditure of the Group during the year under review was approximately HK$20.8 million, as compared to HK$31.6 million for the same period last year.

OUTLOOK
With a much anticipated slowdown of economy in Mainland China and the persistently unstable economic performances in Hong Kong, the retail and consumption sentiment have been adversely affected, which in turn affect the performance of beauty and wellness services industry and its product sales. Nonetheless, we have strived to control the operating costs and adopt prudent business strategy. On the other hand, we are looking for other business opportunities in other region and countries. During the year under review, we have successfully distributed our joint venture partner “Advanced Natural” products in the Kingdom of Saudi Arabia with further developments to follow.

In addition to our core businesses of slimming and beauty services, the Group shall pay special emphasis to developing our retail networks for various branded products and raise our brand recognition through business projects.

APPRECIATION
During FY2016, the Group was able to obtain a distinguishable financial position despite economic uncertainties. On behalf of the Board, I would like to express my sincere gratitude to the management team and staff for their hard work and dedication. My grateful appreciation also extends to our business partners, customers as well as shareholders for their loyal support to the Group. I look forward to contributing to the Modern Beauty’s success in establishing its leading position in the beauty service industry in Asia alongside with your support and participation.

Dr Tsang Yue Joyce,MH
Chairperson and Chief Executive Officer
Chinese People's Political Consultative Conference of Hunan Province Comitee Member
Grateful Heart Charitable Founder and Chairperson
Beauty Expert International College Founder and Chairperson
International CICA Association of Esthetics Honorary President
Carnation Women's Association Honorary President
The Chinese Manufacturer's of Sub. Committee Chairman,Other Services