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Jintian Pharmaceutical Announces 2013 Annual Results

- M&A and Organic Growth Boost Revenue and Profit
- Distinctive Business Model Drives Substantial Improvement in Profitability


Hong Kong, Mar 21, 2014 - (ACN Newswire) - Jintian Pharmaceutical Group Limited ("Jintian Pharmaceutical" or "the Company", stock code: 2211) is pleased to announce the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2013(the "The Reporting Period").

In 2013, the Company achieved significant growth in both retail and distribution businesses through implementation of effective marketing strategies and smooth integration of newly acquired businesses. During the Reporting Period, the Company recorded revenue of RMB3, 323.5 million, representing an increase of RMB997.2 million or 42.9% as compared with the corresponding period of last year; gross profit of the Company during the Reporting Period was approximately RMB 936.4 million, representing an increase of 71.6% as compared with the corresponding period of last year, of which gross profit from retail business increased significantly by approximately 89.2% to RMB605.2 million, while gross profit from distribution business rose by approximately 46.6% to RMB331.2 million; profit attributable to shareholders was RMB355.1 million, representing an increase of 66.1% as compared with the corresponding period of last year; Diluted earnings per share amounted to RMB0.22, representing an increase of 69.2% as compared with 2012.

The significantly improvement of Jintian Pharmaceutical's profitability is due to the distinctive business model which improved overall gross margin in an all-round way. During the Reporting Period, gross margins of the company reached 28.2%, representing an increase of 4.7 percentage points as compared with that of 2012. Gross margins of retail business in 2013 were 39.1%, representing an increase of 4 percentage points as compared with that of 2012. The rapid growth of retail business segment, high margin products and effective Direct-supply Model are main drivers for the significant growth of gross margin in 2013. Also, in-house training and development center Jintian institute and the membership program, which focuses on promoting customer loyalty, also contribute to the growth of gross margin.

Business Review

For the retail business segment, during the Reporting Period, the Company continued to expand its retail network through organic growth and acquisitive expansion. The Company successfully acquired 192 retail pharmacies and opened 3 new ones. As at 31 December 2013, the Company had 794 retail pharmacies in total. In respect of retail product mix, the Company offers its customers a wide range of pharmaceutical products, healthcare products, medical devices and other personal and family care products at competitive prices.

For the distribution business segment, focusing on high margin products (including licensed products and products with exclusive distribution rights), the Company has established an effective Direct-supply Model and has an extensive nationwide distribution network with large number of end-customers (i.e. third-party retail pharmacies, hospitals and clinics). As at 31 December 2013, revenue and gross profit of high margin products accounted for 32.7% and 57.5% of total revenue and gross profit of distribution business, respectively. The Company had a nationwide distribution network covering approximately 3,800 customers, including approximately 2,600 pharmaceutical retailers, hospitals and clinics and approximately 1,200 distributors.

In addition, during the Reporting Period, the company's member base grew rapidly. And besides the traditional discounts on purchases and membership points, the company's members were also provided with additional value-added services, such as free body check-ups, give-away and affectionate services, which further promoted customer loyalty, increased brand awareness and became a strong driver for our sales revenue.

Future Plan

Looking forward, the Company will continue to focus on our business expansion in North China and explore expansion opportunities in the Greater China Region. The company will further expand our geographical coverage and improve revenue and profitability through business acquisitions. By further deepening the brand of "Jintian Aixin" and expanding the depth and breadth of brands, we will establish the Company's reputation and product awareness. Through continuous diversification of value-added services provided to our members, the Company will expand its member base and keep enhancing the service level. According to market trends and customer preferences, we will also adjust and diversify our retail and distribution product mix and introduce suitable new brands and products under our Direct-supply Model. The launch of online pharmacy and layout of offline pharmacies will be accelerated.

Jin Dongtao, Chairman and executive Director of the company commented, "Jintian Group has an exclusive business model, a model that helps to solve the puzzles in Chinese pharmaceuticals industry. We have featured product portfolio with high gross profit, and our exclusive Direct-supply Model enables us to streamline our supply chain by eliminating and reducing distribution intermediaries which maximizes our profit. We have strong merger and acquisition capacity, through which we are able to purchase and integrate more retail pharmacies to our current net work. Meanwhile, we also promote our brand and product sales through Jintian's particular membership loyalty program. Therefore, we are able to maintain stable and high profit margin while achieving rapid growth in our business model. "





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