Revenue from the franchise segment resulted in a 78% increase in the profit margin.
Best World International’s profits soared 193% YoY to $26.75m in Q2 from $9.13m previously, an announcement revealed. Revenue skyrocketed 197.1% YoY to $98.31m from $33.08m in Q2 2018.
For the first half of the year, profits climbed 148.8% YoY to $37.07m from $14.9m in H1 2018, whilst revenue rose by 163.2% to $151.7m from $57.63m over the same period last year.
The rise was attributed to improved revenue from the direct selling segment and the franchise segment, which only contributed negligibly in H1 2018. Revenue from franchise segment ascended to $61.8m in Q2 from only $0.8m previously.Contribution from the franchise segment in Q2 resulted in a 78% increase in the gross profit margin and made up 60.3% of the group’s total revenue in H1 at $90.1m.
In contrast, profit margin recorded a 27.2% YoY loss in Q2 mainly due to the decrease in operating income, which fell 87.1% YoY to $568,000 in the quarter from $4.4m in Q2 2018 upon upon the group’s transition to the franchise segment. The group also recorded a higher interest income of $384,000 in Q2 when compared to $161,000 last year because of interest earned from higher fixed deposits in financial assets; as well as an increase in distribution costs to $10.6m from $21.8m due to sales-related expenses, higher convention expenses accrued, and higher direct selling commissions.
The group also noted higher administrative expenses of $19.9m in Q2 from $8.8m last year attributed to higher professional fees incurred in certain investments, particularly in China; and a higher income tax expense amounting to $9.1m. As a result of higher corporate tax rates applicable to these profitable subsidiaries, Best World International’s tax rate increased to 25.5% during the quarter.
Revenue from Singapore rose by 52.9% YoY to $2.6m in Q2 from $1.7m in the previous year primarily due to an increase in the number of distributors as well as promotional events.
As at 30 June, Best World International reportedly maintains approximately $195.5m in cash and cash equivalents.
The company directors recommended an interim one tier tax-exempt dividend of $0.012 per share, payable on 28 August.
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