Healthzone Ltd Announces Acquisition of Natural Health and Beauty Brands, Further Brand Development and Retail Growth

SYDNEY, June 9, 2011 /PRNewswire/ -- Australia's leading natural products distributor, franchise retailer and producer of health, beauty and natural products, Healthzone Limited (ASX: HZL. OTCQX: HLTZY), today announced the acquisition of the privately-held Australian natural and organic skincare company Forte Brands.  The company also announced the development of new brand products and retail growth of company stores and Healthy Life China.

Healthzone acquires natural health and beauty brands

Healthzone Ltd has reached agreement, subject to standard contractual terms being finalised, to acquire the majority shareholding of the privately-held Australian natural and organic skincare company Forte Brands. The Company confirms that the acquisition is EPS accretive consistent with Healthzone's acquisition principles and is scheduled to complete prior to the 30 June 2011.  The consideration remains commercially sensitive, with premature disclosure possibly prejudicing other negotiations in which the Company is presently engaged. The acquisition will be funded from cash reserves and proposed newly issued script.

Forte Brands develops and markets natural and organic skincare under the brand names of Trelivings and Evodia. These brands are established and have been well recognized for more than 25 years and are currently sold through major department stores David Jones and Myer as well as pharmacies, health and gift stores throughout Australia, New Zealand and Asia.

This acquisition incorporates the transfer of Forte's product portfolio and experienced natural skincare team to Healthzone's Sydney Head Office. The vendor, who will retain a minority percentage of the business, will be joining Healthzone to continue the development and growth of the Trelivings and Evodia brands in a natural and organic skincare market that is currently growing up to 17% annually internationally.

"The acquisition of Forte Brands provides Healthzone with an increasing platform of well recognised quality natural skincare products and qualified, experienced people. This is a robust addition to our distribution business from which to develop further our existing high margin natural skincare brands of BOD and Natural Alternative into many new markets." said Mr Roach. "The newly acquired brands are extremely scalable in our current retail and distribution networks and rapidly expanding international markets, and are complementary to our current stable of skincare brands."

Brands Development

In support of the strategy to convert low margin distributed products to high margin own brand products Healthzone is currently expanding the Healthy Life and Natural Alternative nutritional supplement ranges. The company announced that there are 42 new Healthy Life nutritional supplements and more than 50 new Natural Alternative nutritional supplements being launched in the first half of FY2012 in local and expanding Asian markets.

An advanced 'East meets West' nutritional supplement range of more than 50 products, that combine ancient and modern traditional Chinese medicines with popular Western herbs and vitamins, forms the basis of a range of branded products that will soon be available through Healthzone in markets both in Australia and Asia, empowered by Eu Yan Sang scientific research and high quality potent herbal content.  

In addition, a new sports nutrition powder range of 12 products has been completed and will further support Healthzone's margin growth strategy as well as provide for a new and exclusive health food only sports nutrition brand for the health channel in Australia.

During the transition from higher revenue low margin products to high margin own brand products there will be a short-term reduction in top line revenues. The reduction will normalise into FY2012 with increasing forecast revenues and higher margins from the existing ranges and new own brand proprietary products currently being acquired, developed and launched in Australia and expanding Asian markets, supported by Healthy Life and alliance partner stores.

Retail Growth

Healthzone now operates 30 company owned stores with the recent addition of Healthy Life Burwood, Helensvale and Hurstville to the Australian network. With the successful vertical integration of retail, wholesale and own brand product margins Healthzone intends to increase the Australian company owned store operation by up to a further 30 sites during FY2012 through new store openings and acquisition of independent and competitor branded stores for conversion to Healthy Life. These initiatives are in support of the previously announced 200 Healthy Life store target by the end of 2012 and will further enhance the Companies increased higher margin revenue growth strategy.

Healthy Life China continues to be a major focus as a vehicle for own brand product growth and development in the Asia market. A recent restructure of the China retail business model is supported by the relocation of Executive Director Mr Michael Wu from Sydney to China to drive the accelerated expansion strategy through organic growth and acquisition of existing retail. An existing network of 47 retail stores in East China is currently under diligence review for acquisition and conversion to Healthy Life in support of the target for 100 Healthy Life China stores by December 2012.

About Healthzone Limited

Healthzone Ltd operates a portfolio of distribution, consumer product and retail business and is the largest operator in the Australian Wellness sector with significant and growing Asian and China wellness market interests. Each business provides immediate opportunities for earnings growth through business development and integration. Healthzone's businesses are comprised of three principal activities: Health and Beauty distribution; Health and Beauty Products; and Health Food Retail. For further information please visit www.healthzone.com.au.

SOURCE Healthzone Limited

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