Kingworld Medicines Announces 2012 Annual Results

TurnoverRose 2.9% to Approx. RMB706 Million

Gross Profit for the YearIncreased to Approx. RMB164 Million

HONG KONG, March 26, 2013 /PRNewswire/ --

Fully Utilized Competitive Advantages of Its Own Brands

Maintained Continued Growth in Product Market Share

Further ExpandedChannel and Terminal Sales

Optimized Stable Distribution network

Kingworld Medicines Group Limited ("Kingworld Medicines" or the "Company", together with its subsidiaries, the "Group", Stock code: 01110), a distributor of renowned branded imported pharmaceutical and healthcare products in the PRC, announces its annual results for the year ended 31 December 2012 (the "year under review").

During the year under review, the turnover of the Group was approximately RMB705,519,000 (2011: RMB685,562,000), representing an increase of approximately 2.9% as compared with last year. Gross profit was approximately RMB163,845,000 (2011: RMB160,832,000), representing an increase of 1.9% over last year. Gross profit margin was 23.2% and remained flat with 23.5% in 2011. Profit for the year ended 31 December 2012 rose to RMB48,535,000 (2011: RMB51,031,000). Earnings per share amounted to RMB7.80 cents (2011: RMB8.20 cents). The board of directors recommends the payment of a final dividend of HK2.90 cents per ordinary share for the year ended 31 December 2012 (2011: HK4.04 cents).

Mr. Zhao Li Sheng, Chairman and Executive Director of Kingworld Medicines, said, "In 2012, the pharmaceutical market in China faced significant changes, with a number of policies related to the pharmaceutical industry successively promulgated and implemented. As the urbanization process became more in-depth and well developed, the consumer demand for high-quality imported health products has been experiencing rapid increase. Moreover, the total investments by the PRC government in health services surged notably, which will further expand the pharmaceutical market in China and encourage rapid growth in the total output and total profit of the pharmaceutical industry, thus bringing impetus together with business opportunities to the Group."

During the year under review, the Group actively adjusted the structure of its products in order to maintain the market share of leading products, as well as speedily explored the market of new products and strategically enhanced the sales of selected product categories. By leveraging on the advantages of end-user terminals and "Kingworld Health Family", the Group proactively implemented precise marketing strategies nationwide, and further expanded the market share of its key products. Hence, the turnover and profit of the Group as a whole remained relatively steady.

Through optimization of administration of product categories, distribution network and key drug store chain end-user terminal network, as well as strict control over pricing of retail end-users, the Group stabilized the market share of its leading product, Nin Jiom Chuan Bei Pei Pa Koa. At the same time, the Group has listed Nin Jiom Pei Pa Candies as its key product under development during the year under review, and more flavours were added to Nin Jiom Pei Pa Candies product series, fully fulfilling consumer demand for cough relieving products. For the year ended 31 December 2012, the sales amount and profit of cough relieving product series from distribution and end-user terminal network have recorded an increase. Among which, the sales of Nin Jiom Chuan Bei Pei Pa Candies increased significantly by 65% as compared with the same period in 2011, which laid a solid foundation for the overall growth of "cough relieving medications".

Taiko Seirogan is one of the Group's key products. Benefitted from the integration of channels in Guangdong and Fujian last year, advertising for sales of products and coverage in third party terminals, stable sales was achieved which amounted to RMB56,551,000. During the year under review, the Group created a new specification of Taiko Seirogan of 200 tablets, which formed a series with multiple specifications of "50 tablets +100 tablets +200 tablets" that can satisfy different needs of individuals, family, business units or private clinics for the product.

In response to the medical reform in China, the Group has implemented sales and marketing strategies for the "medication for external use category" including Imada Red Flower Oil, Flying Eagle Wood Lok Medicated Oil and Mentholatum menthol cream, maintaining the comprehensive strength and competitive advantages for its business development. For the year ended 31 December 2012, the sales of Imada Red Flower Oil amounted to RMB20,495,000, demonstrating the penetrating influence of the brand. Flying Eagle Wood Lok Medicated Oil, another pillar product of the Group, obtained the one-time import approval in July 2012 and was well received by both new and loyal customers. Flying Eagle Wood Lok Medicated Oil rapidly recorded a sales of RMB17,109,000 within just five months after sales has been resumed.

In order to further strengthen the promotion and marketing of the branded products under the Group, and to further enhance its corporate and brand image, the Group exercised stricter control over the selection of premises for the product display booths under the name of "Kingworld Health Family", and conducted refinement and optimization over the product display booths at different provinces and cities in China. In the first half of 2012, the Group removed or relocated those underperforming product display booths. On the other hand, the Group focused on developing those stores with apparent advantages, and gradually expanded the cooperation with existing end-user terminals with high traffic flow and good sales in stand-alone stores. Quality of promotion activities was improved to raise the sales of products at the product display booths. For the year 31 December 2012, there were a total of 2,643 product display booths set up by the Group under the name of "Kingworld Health Family". Besides, the Group has proactively developed extensive cooperation with leading national and regional pharmaceutical enterprises, at the same time it also placed a lot of emphasis in the versatile cooperation with top 100 drug store chains in China, which mainly engaged in the provision of chain services to mid-to-high end consumers. As at 31 December 2012, the Group's major drug store chain amounted to 468 customers with a total of 10,317 stores.

In the future, the Group is planning to enrich its medical device based health supplies product lines, like the Disney-franchised "Disney's Gold 100" Band-Aids product range, and introduce cooling gel pads and pain-relieving bandages. The Group will also expand the retail market and develop the hospital market by implementing a diversified operating strategy, increasing the market share of non-pharmaceutical product sales in retail drug stores, including well-being products, health food, health supplies and medical devices, etc. Moreover, the Group will continue to enter into agreements with national chains and to reinforce its partnership through the portfolio sales of products. The group will continue to reinforce the development of Nin Jiom Chuan Bei Pei Pa Koa, Taiko Seirogan and Imada Red Flower Oil distributed in the urban hospital markets in Eastern and Southern China regions, particularly in the county-level hospital market and private clinics.

Through the diversification in the management of product categories, the group strives to raise the sales of several key products, further reinforcing their market share and leading position. In terms of distribution network, apart from creating an official "Kingworld Health Family" e-Business platform, the Group developed the brand distribution sites through close cooperation with online drug stores websites, and established distribution channels on third-party e-business platforms like t-Mall and 360buy. The development of the above new pharmaceutical e-Business platforms will provide tremendous boost in the rapid development of the Group's non-prescriptive drugs, well-being food and health food. In addition, the Group created a new sales model by tapping into the tourist market and collaborating with various travel agents in creating the "Kingworld Health Family Safety Pack" that meets the sight-seeing and health requirement of travelers. Meanwhile, the introduction and mixing of product lines according to the needs of major consumers created a direct sales business model.

Commenting on the future, Mr. Zhao Li Sheng concluded, "The Group has devised a five-year plan for Kingworld Medicines together with renowned strategic experts in the pharmaceutical industry in China. The Group will leverage on its solid foundation, fully utilize the competitive edges of its own brands to build new operation models, consolidating the multi-level health care product brand image, as well as capture opportunities in the industry to accelerate the Group's growth rate. Looking forward, we will continue to optimize the management of the Group's product categories, actively expand new distribution network and create new e-Business platforms, fully satisfying different consumer needs for pharmaceutical products and health products in China, in order to propel the long term and stable development of the business of Kingworld Medicines and maximize the return for our shareholders."

About Kingworld Medicines Group Limited

Kingworld Medicines Group Limited is principally engaged in the distribution of branded imported pharmaceutical and healthcare products in the PRC. The Group ranked among the top 100 importers of its kind in China in 2010 based on imported value. The Group managed a portfolio of 60 products under 10 different functional categories which are manufactured in Japan, Canada, Hong Kong, Taiwan, Thailand and the PRC and sourced from 13 different suppliers. Many of which are established brand names including Nin Jiom Pei Pa Koa, Taiko Seirogan, Kawai Liver Oil Drop series, Flying Eagle Wood Lok Medicated Oil, Imada Red Flower Oil, Kyushin Pill and Mentholatum series.

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