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29th February 2008
Health Corporation signs milestone export distribution agreement
Health Corporation has signed an export distribution agreement with Melbourne based OTCO Global, covering the company's weight loss products. OTCO has been appointed the exclusive distributor of these products in member countries of the Gulf Cooperation Council (GCC) including Saudi Arabia, Kuwait, UAE and Bahrain.
OTCO Global is a local distributor of dermatological products and exports a wide range of health and beauty products to GCC countries where it is already in negotiations with a variety of pharmacies and retailers.
The contract length is for an initial period of one year and it is anticipated that much of the first year will be trialling the product to better understand local conditions as well as establishing distribution channels.
Health Corporation's uniquely formulated weight loss products were introduced in 2006 and are now available through all 35 stores in the company's franchised pharmacy network, Health Information Pharmacy (HIP).
According to Health Corporation's CEO, Ken Lee,
"The Development of the weight loss products was an important initiative that flowed from our core value of high levels of customer service as well as providing a point of differentiation in the pharmacy market."
"This export and distribution agreement opens up a new distribution channel for the company with excellent medium to long term growth potential. Other export opportunities are also being pursued."
In further commenting on this milestone agreement, Ken Lee said,
"People in some of the oil rich countries are prone to lead sedentary lifestyles because of the intense heat and desert conditions, resulting in obesity now emerging as a significant issue. The weight loss market is still in its infancy, so this is very much a ground floor opportunity for Health Corporation's weight loss program to be taken up in this wealthy region of the world."
29th February 2008
Half year results to 31 December 2007
Health Corporation announces a loss of $897,679 for the six months ended 31 December 2007.
During the reporting period, Health Corporation Limited embarked upon a major restructure of its operations which is now yielding anticipated benefits and the network, operating under the banner of Health Information Pharmacy (HIP), continued to expand outside of NSW.
A significant highlight for the period was the opening of two new stores in the Melbourne suburb of Lilydale and the settlement of two more Victorian store sites. This takes the total number of stores under the HIP banner to 35. One of the new stores located in the Melbourne CBD will become the flagship store for the company's growth in Victoria and is an indicator of a continued push for growth and expansion in all eastern states.
As a result of the restructuring of the business and with the anticipated continued expansion of HIP, the Directors expect that the compnay will transition into profitability on a monthly basis in the June quarter.
The loss was attributable to a marked decline in revenues due to only two new franchise signings during the period, offset by two departures, compared with five (14 for the full year) new signings in the same period in the previous year. The result was also adversely affected by a number of significant accounting write-offs and adjustments for the prior period.
As previously reported, restructuring of the business was recently completed with monthly savings of $50,000 now being realised. The key initiative was to bring in house the delivery of business coaching services to the network. The company is also no longer providing mezzanine finance and the existing loan book is being wound down.
Following the conclusion of the recent operational restructuring, management is now able to focus on expanding the business. During the current quarter, a minimum of 5 new franchises are expected to be signed and exports of the company's weight loss product are due to commence.
Health Corporation continues to work on a number of projects which on completion are likely to make a significant impact to the ongoing success of the business. The company is making good progress and we appreciate the ongoing support and patience of our shareholders during this period of restructure and growth of the business.
Health Corporation CEO, Ken Lee said,
"Whilst we are naturally disappointed with the half year loss, restructuring, controlled expansion of the franchise (HIP) and other initiatives give us good cause for optimism about the future."
Health Corporation (ASX code HEA) company announcements can be read on its listing on the ASX website here.
