Ozner Water International : Net profit of Ozner Water for six month ended 2016 significantly increases by 4 times; Plans to establish nationwide experience stores in the year

Net profit ofOznerWater for six month ended 2016significantly increases by 4 times

Plans to establish nationwide experience stores in the year

Highlights

Ø Revenue of the Ozner increased 24.7% to approximately RMB422.8 million, primarily attributable to the increase in revenue from water purification servicesØ Gross profit increased 21.4% to approximately RMB253.0 million, primarily due to increase in revenue from water purification services and increase in number of new distributorsØ Profit attributable to owners of the parentsignificantly increased by 4 times to RMB161.5 million, net profit margin increased 28.8 ppt to 38.2%Ø Currently commenced operations of 245 experience stores. It is expected that approximately 500 experience stores will be established nationwide at the end of 2016Ø The number of distributors increased by 620 to 4,268 as at 30 June 2016 as compared with that as at 31 December 2015

Financial Highlights

* Excluding fair value gains on derivative component of convertible bonds and share option expense

(18August 2016 - Hong Kong ) Ozner Water International Holding Limited ('Ozner Water' or 'the Company', HKEx stock code: 2014) and its subsidiaries ('Ozner'）announced its results for the six month ended 30 June 2016. During the period, Ozner recorded revenue of approximately RMB422.8 million (6 month ended 30 June 2015: approximately RMB339.0 million), which is primarily attributable to the increase in revenue from water purification services. Gross profit recorded approximately RMB253.0 million (6 month ended 30 June 2015: approximately RMB208.4 million).

Profit for the period attributable to owners of the parent significantly increased by approximately 4 times to RMB161.5 million (6 month ended 30 June 2015: approximately RMB31.8 million). If excluding fair value gains on derivative component of convertible bonds and share option expense, adjusted net profit for the period amounted to RMB86.1 (6 month ended 30 June 2015: approximately RMB76.6 million).

Business Review

In the face of the rapidly changing and highly challenging economic environment, the Group has taken

a proactive stance towards reform and strived to maintain a business model with development potential.

In addition, the Group spared no effort in upgrading services and management standards, and providing safe, healthy and speedy water purification services to clients.

Water purification services business

Revenue from water purification services increased by 28.2% to RMB382.2 million (6 month ended 30 June 2015: approximately RMB298.2 million). During the Period, Ozner has achieved considerable progress in building the distribution and service network, which has covered more than a thousand cities/towns in China with the number of high-value distributors increased from 3,648 to 4,268 as compared with 31 December 2015.

Leveraging on effective B2C marketing strategies in household market, Ozner is committed to build a 'micro-Ozner', a platform which rely on the synergy between 'online platform + offline experience stores'. For the six months ended 30 June 2016, Ozner recorded an encouraging increase in household market. Meanwhile, Ozner has commenced operations of 245 experience stores.

Air sanitization services business

Revenue generated from air sanitization services and other services decreased by 8.4% to RMB37.4 million (6 month ended 30 June 2015: approximately RMB40.8 million).The decrease was primarily due to the decrease in number of the ongoing projects. Currently, Ozner's air purification only dedicates to provide solutions and services in high-end medical industries.

Ozner has engaged in air sanitisation business of projects such as operation rooms and ICU (intensive care unit) in major medical institutions, and aerospace for over ten years, accumulating a wealth of experience and technology. Ozner has introduced two household air purifiers model, which are highly recognized by the market during the promotion period.

Development Strategy

Looking forward into the second half of the year, Ozner will continue to engage in brand and channel building. We will push forward the following strategies to further expand our business:

1. Consolidating our leadership in the field of corporate water purification and increasing penetration in the household market

Ozner will be committed to consolidating its leadership in the field of corporate water purification and continuing to leverage on the synergy between ''iFamily APP'' online platform and offline 'experience stores'' to increase penetration in the household market. To achieve this goal, Ozner will adopt the following strategies:

(1) Continuous and stable growth of the distributor network with focus on the development of medium to large corporate customers

Distributor network has always been a crucial channel for brand and sales development. During the period, Ozner actively acquired corporate customers of medium to large chain enterprises, utility institutions and schools, including China Mobile Limited (stock code: 941), China Unicom (Hong Kong) Limited (stock code: 762), China Telecom Corporation Limited (stock code: 728), BMW Brilliance Automotive Ltd. (華晨寶馬汽車有限公司), China Resources Vanguard Company Limited and Ruanying Biaisi (Dalian) Company Limited (軟銀芘愛思（大連）有限公司) under SoftBank Corporation of Japan, etc. We will continue to focus on developing medium to large corporate customers in the future.

(2) Jointly establishing ''online + offline'' micro-Ozner operation system with distributors for future development

Ozner has maintained leading position in the corporate market and accumulated a large number of potential customers in household market. With the strong appeal of Ozner's 'experience stores' and its increasingly mature membership platform for online user brought about by the B2C strategy featuring 'five major channels' launched by the Group since 2015, each 'experience store' will be a meeting point of Ozner's online and offline initiatives. These stores will, on one hand, be the physical portals of our Internet marketing campaigns and on the other hand, the outlets where millions of Ozner's online members can experience and consume Ozner's products.

Ozner has started the joint establishment of offline experience channels with distributors, and completed the first pilot operation of experience stores and franchised stores in 2015, while achieved a good brand effect and sales result. It is expected that around 500 experience stores will be established nationwide in 2016.

2. Internet + smart water purification service platform －'HoYo Services Home (浩優服務家)'

'HoYo Services Home' relies on a self-established warehousing, logistics and post-sales system and aims at integrating and standardizing post-sales services in the industry. Currently, users can place their orders through the newly launched 'HoYo Services Home' mobile terminal APP, which adopts a model similar to DiDi and Uber, while the post-service staff will receive the orders through the mobile terminal APP. After receiving the services, the users can rate and comment on our service. The satisfactory volume of orders placed through the APP and the users' evaluation mechanism have largely have largely motivated the post-service staff and enhanced their efficiency and satisfaction.

As at 30 June 2016, ''HoYo Services Home'' has covered more than a thousand cities/towns in China and successfully attracted numerous well-known water purifier and third-party appliances post-sales service platform to join.

3. Increase the marketing efforts in air sanitisation products

For the corporate market, we will continue to focus on engaging high-quality corporate customers in medical healthcare industries due to their larger scale, stable cash flow, strong performance capability and huge profit margin. For the household market, Ozner will utilize our existing channels and target at the changes in market demand to effectively develop the household market for air sanitisation products.

4. Carefully exploring suitable targets for merger and acquisition against the market downturn

Despite the market demand in household appliances industry being affected by the uncertainties in the domestic macroeconomic development, we believe that adversity always begets opportunity and the market downturn would indeed create potential opportunities for development. Ozner will carefully look for business targets, including domestic medium to small enterprises of environmental appliances industry with rapid growth, of which water purifier will be given the first priority. We will further expand our business and enlarge customer base by way of collaboration and investment to increase earnings and deliver more returns to our shareholders.

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About Ozner Water International Limited

Ozner's two business lines include water purification and air purification. Different from the traditional one-time sales mode, Ozner adopted a revolutionary business model, which provides water purification service while charging annual rental. It relies on Internet of Things and advanced water purification technology. Ozner has established a directly managed service team, the network of which covers over 1,000 counties/cities in China. Meanwhile, Ozner's air purification dedicates to provide solutions and services in medical industries.

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