Strong growth in Asia is continuing for health and wellness product manufacturer New Image Group, but the strength of the New Zealand dollar against key market currencies, coupled with new market development costs has impacted net profit after tax in the group's first half.

New Image (NZX: NEW) has reported an unaudited half-year to December 2009 (NPAT) profit of NZ $3.6 million on the back of steady revenues of NZ$40.1 million. For the same time the previous year the company reported profit of $5.6 million and revenues of $40.9 million.

Chief Executive Stephen Lyttelton says the company remains in a strong cash position to continue growth in existing and new markets and has shareholder funds of $23.0 million at the end of the half.

A fully imputed interim dividend of 1 cent per share (increased from 0.5 cps for the same period the previous year) is to be paid on April 23.

Mr Lyttelton says the star of last year's results, Malaysia, was pipped for group top growth spot this time by Taiwan, which reported HY10 sales at $15.4 million. That is 31.6% ahead of the $11.7 million sales in the same period the previous year. In local currency sales were 43.5% ahead. In Malaysia half year direct sales revenues were $18.3 million, down 16.4% on HY09 at $21.9 million. However, in local currency, the revenues were only 7.5% behind the comparative period.

New Image's sleep-enhancing milk product trial with bio-technology company, Somnaceutics, is in the final product development phase, following market feed-back from Taiwan. Trial results from the company's established Taiwanese direct selling channel are expected for full assessment in the middle of this year.

The group is continuing with its plan for a main board listing of the company's Malaysian subsidiary in the first half of calendar 2011, with the company maintaining a majority shareholding. OSK Investment Bank Berhad, a Kuala Lumpur-based investment bank, has been appointed as the adviser for the proposed listing. The listing will widen the company's exposure to Asian investors, especially in Malaysia, and to also allow New Image distributors in the region to invest directly in a Malaysian-listed vehicle.

Mr Lyttelton says development of other markets in Asia is continuing. Container loads of the group's main product, Alpha Lipid Lifeline, are being shipped direct to Jakarta, Indonesia and New Image anticipates this country will become the next multi-million dollar market.

In Thailand, Cambodia and Vietnam the corporate legal structures for operating have been put established awaiting product registration approvals.

The company's colostrum beverage, COL+, launched in Singapore in October to explore an opportunity of marketing in the FMCG channel, added $1.7 million to HY10 pre-tax expenditure. Trading results to date have not met targets and it has been decided to stop marketing in the FMCG channel. Mr Lyttelton says New Image retains confidence in both the product and the manufacturing process. Strategies to maximize the value of the company's COL+ investment are being investigated, including interest shown for bulk sales at wholesale to established FMCG distributors and from potential investors.

The company's infant formula sales programme in Hong Kong and Mainland China has achieved modest sales and the group has now received a licence to allow the marketing of infant formula into Mainland China.