China Nepstar Chain Drugstore L (NYSE:NPD)

SHENZHEN, China, Aug. 3, 2016 /PRNewswire/ -- China Nepstar Chain Drugstore Ltd. (NPD) ("Nepstar" or the "Company"), a leading retail drugstore chain in China based on the number of directly operated stores, announced today the completion of its merger (the "merger") with Neptunus Global Limited ("Merger Sub"), a wholly-owned subsidiary of China Neptunus Drugstore Holding Ltd. ("Parent"), pursuant to the agreement and plan of merger (the "merger agreement") dated March 16, 2016 by and among Parent, Merger Sub and the Company. As a result of the merger, the Company ceased to be a publicly traded company and became a wholly-owned subsidiary of Parent.

Under the terms of the merger agreement, at the effective time of the merger (the "Effective Time"), each of the Company's ordinary shares, par value $0.0001 per share (each a "Share" and collectively, the "Shares"), including Shares represented by American Depositary Shares, each representing two Shares (each an "ADS" and collectively, the "ADSs"), issued and outstanding immediately prior to the Effective Time, other than (a) Shares (including Shares represented by ADSs) beneficially owned by Parent, Merger Sub or their affiliates, or held by any direct or indirect wholly owned subsidiary of the Company, and (b) Shares owned by shareholders who have validly exercised and have not effectively withdrawn or lost their dissenter rights under Section 238 of the Companies Law of the Cayman Islands (Shares described under (a) and (b) above are collectively referred to herein as the "Excluded Shares") has been cancelled in exchange for the right to receive $1.31 in cash per Share without interest and net of any applicable withholding taxes. For the avoidance of doubt, because each ADS represents two ordinary shares, each ADS issued and outstanding immediately prior to the Effective Time (other than ADSs representing the Excluded Shares) has been cancelled in exchange for the right to receive $2.62 in cash per ADS without interest and net of any applicable withholding taxes (less up to $0.05 per ADS cancellation fees).

As soon as practicable after this announcement, JPMorgan Chase Bank, N.A. (the "ADS Depositary") will call for the surrender of all ADSs (other than any ADS representing the Excluded Shares) for delivery of the merger consideration. Upon the surrender of ADSs, the ADS Depositary will pay to the surrendering holders $2.62 per ADS surrendered in cash without interest and net of any applicable withholding taxes (less up to $0.05 per ADS cancellation fees).

The Company also announced today that it has requested that trading of its ADSs on The New York Stock Exchange ("NYSE") be suspended beginning at the close of business on August 3, 2016 (New York time). The Company requested NYSE to file a notification on Form 25 with the Securities and Exchange Commission (the "SEC") to notify the SEC of the delisting of its ADSs on NYSE and deregistration of the Company's registered securities. The deregistration will become effective in 90 days after the filing of Form 25 or such shorter period as may be determined by the SEC. The Company intends to suspend its reporting obligations under the Securities Exchange Act of 1934, as amended, by filing a Form 15 with the SEC in approximately ten days. The Company's obligations to file with the SEC certain reports and forms, including Form 20-F and Form 6-K, will be suspended immediately as of the filing date of the Form 15 and will terminate once the deregistration becomes effective.

In connection with the merger, Houlihan Lokey (China) Limited is serving as the financial advisor to the Special Committee, Shearman & Sterling LLP is serving as U.S. legal counsel to the Special Committee, and Maples and Calder is serving as Cayman Islands legal counsel to the Special Committee. Cleary Gottlieb Steen & Hamilton LLP is serving as U.S. legal counsel to Mr. Simin Zhang, chairman of the board of directors of the Company (together with Parent and other entities controlled by him, the "Buyer Group"), and Mourant Ozannes is serving as Cayman Islands legal counsel to the Buyer Group.

First Quarter 2016 Financial Results

• Revenue increased by 9.9% to RMB834.3 million (US$129.4 million) compared to RMB759.1 million in the first quarter of 2015
• Basic and diluted earnings per ADS were RMB0.08 (US$0.01) compared to basic and diluted losses per ADS of RMB0.03 in the first quarter of 2015

Ms. Rebecca Yingnan Zhang, Chief Executive Officer of Nepstar, commented, "Our constant efforts on the optimization of our product portfolio and marketing programs have increased both top-line and bottom-line growth in Q1 2016 when compared with the same quarter last year. We continue to drive store traffic through proactive promotional activities and strengthening professional health care services to ensure a better customer experience, which has been successful by increasing store customer transactions and sales and improved customer loyalty."

Business Outlook

"While we gradually complete the planned program for refurbishment of our stores, we will concentrate on the optimization of our marketing tools which will both refresh our branding image efforts whilst meeting our value commitment to our customers. In the near term, we will continue to implement improvement measures with a view to increasing our market share," commented Ms. Zhang.

Fourth Quarter 2015 Financial Results

• Revenue increased by 6.5% to RMB905.2 million (US$139.7 million) compared to RMB850.1 million in the fourth quarter of 2014
• Basic and diluted income per ADS was RMB0.38 (US$0.06) compared to basic and diluted income of RMB0.34 per ADS for the fourth quarter of 2014.

Ms. Rebecca Zhang, Chief Executive Officer of Nepstar, commented, "Our efforts to improve individual store performance have propelled the overall revenue growth and also enabled us to grow our store numbers. Our focus on the optimization of management efficiency, organizational structure and marketing tools has generated profit against rising operating costs. As we regained both top and bottom line growth, we also further optimized product mix and increased store service ability, which has been converted into strengthened customer loyalty and increased average revenue per transaction. "

Business Outlook 

"The market environment for retail chain drugstores remains competitive," commented Ms. Zhang. "Our target is to achieve growth in both revenue and market share through constant efforts on increasing our operating capabilities."

Third Quarter 2015 Financial Results

• Revenue increased by 7.4% to RMB793.0 million (US$124.8 million) compared to the third quarter of 2014
• Net loss for the third quarter of 2015 was RMB2.8 million (US$0.4 million), or RMB0.03 (US$0.004) per basic and diluted ADS compared to net loss of RMB 13.1 million, or RMB0.13 basic and diluted losses per ADS for the third quarter of 2014. As of September 30, 2015, the Company had 197.4 million outstanding ordinary shares.

Ms. Rebecca Zhang, Chief Executive Officer of Nepstar, commented, "Our dedicated efforts on growing store productivity propelled the increase in revenue and same store sales. We continued to optimize the marketing programs and product mix to drive the improvement in gross margin. We will further optimize our management structure to achieve the organizational efficiency from head office to stores.

Business Outlook

"Product mix and store staff will be our two key focuses next. We will strive to improve store image to increase the loyalty with our customers. While keeping the goal of maintaining gross margin, we will continue to optimize product mix and omni-channel marketing campaigns. We are confident that, with continued improvements in performance of each store, we will maintain our growth momentum," Ms. Zhang concluded.

Second Quarter 2015 Financial Results

• Revenue increased by 12.9% to RMB775.1 million (US$125.0 million) compared to RMB686.6 million in the second quarter of 2014
• basic and diluted income per ADS, compared to a net loss of RMB15.9 million, or RMB0.16 basic and diluted losses per ADS for the second quarter of 2014..

Ms. Rebecca Zhang, Chief Executive Officer, commented: "Our accelerated same-store-sales growth propelled the increase in our revenue. We are encouraged by higher store traffic as a result of our effective promotions on pharmaceutical products and professional store service training. While we focus on productivity at the store level, we also managed to achieve better operational efficiency by reducing our general and administrative expenses and constantly optimizing our store management."

Business Outlook

"As we gradually achieve recovery in growth on profit, we will focus on accelerating our organic revenue growth by fine-tuning our store management system and improving our store image to customers," Ms. Zhang concluded.

SHENZHEN, China, August 6, 2015 /PRNewswire/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("Nepstar" or the "Company"), a leading retail drugstore chain in China based on the number of directly operated stores, today announced that the special committee (the "Special Committee") of the Company's board of directors has retained Houlihan Lokey (China) Limited as its financial advisor and Shearman & Sterling LLP as its United States legal counsel in connection with its review and evaluation of the previously announced preliminary non-binding "going private" proposal letter that the Company's board of directors received on July 6, 2015.

The Special Committee is continuing its evaluation of the proposed "going private" transaction. There can be no assurance that any definitive offer will be made, that any definitive agreement will be executed relating to the proposed transaction or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

SHENZHEN, China, July 18, 2015 /PRNewswire/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("Nepstar" or the "Company"), a leading retail drugstore chain in China based on the number of directly operated stores, today announced that its board of directors (the "Board") has formed a special committee consisting of three independent directors (the "Special Committee"), Mr. Barry J. Buttifant, Mr. Alistair Eric MacCallum Laband and Mr. Alan Au, to consider the previously announced preliminary non-binding "going private" proposal letter that the Board received on July 6, 2015. Mr. Barry J. Buttifant will chair the Special Committee. The Special Committee intends to retain independent legal and financial advisors to assist it in this process.

The Board cautions the Company's shareholders and others considering trading the Company's securities that the Board has recently received the proposal letter and has not had an opportunity to carefully review and evaluate the proposal or make any decision with respect to the Company's response to the proposal. There can be no assurance that any definitive offer will be made, that any definitive agreement will be executed relating to the proposed transaction or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

SHENZHEN, China, July 6, 2015 /PRNewswire/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("Nepstar" or the "Company"), a leading retail drugstore chain in China based on the number of directly operated stores, today announced that its board of directors has received a preliminary non-binding proposal letter, dated July 6, 2015, from Simin Zhang, chairman of the board of directors of the Company, and China Neptunus Drugstore Holding Ltd., an investment vehicle wholly owned by Mr. Zhang("Neptunus Holding", and collectively with Mr. Zhang, the "Buyer Parties"), pursuant to which the Buyer Parties propose to acquire all of the outstanding ordinary shares (the "Shares") and the American Depositary Shares ("ADSs", each representing two Shares) of the Company, in both cases, that are not already beneficially owned by the Buyer Parties and their affiliates at a price of US$1.30 per Share or US$2.60 per ADS, as the case may be, in cash, in a going private transaction(the "Acquisition"), subject to certain conditions.

According to the proposal letter, the Acquisition is intended to be financed with debt or equity capital or a combination thereof. Also according to the proposal letter, on July 3, 2015, New Wave Developments Limited, a wholly owned subsidiary of Neptunus Holding, completed an acquisition of fifty million (50,000,000) Shares from Capital Eagle Global Limited. Furthermore, the proposal letter specifies that the Buyer Parties' proposal constitutes only a preliminary indication of interest, and is subject to negotiation and execution of definitive agreements relating to the proposed transaction. A copy of the proposal letter is attached hereto as Exhibit A.

The Company expects that its board of directors will form a special committee consisting of independent directors (the "Special Committee") to consider this proposal. The Company also expects that the Special Committee will retain financial, legal and other advisors to assist it in its review of the Acquisition.The Company cautions its shareholders and others considering trading its ordinary shares that no decisions have been made with respect to the Company's response to the proposed transaction. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.

• Revenue for the first quarter of 2015 increased by 11.9% to RMB759.1 million (US$122.5million) from RMB678.3 million for the same period in 2014. 
• Basic and diluted losses per ADS were RMB0.03 (US$0.006) compared to basic and diluted losses per ADS of RMB0.18 in the first quarter of 2014

Mr. Simin Zhang, Chairman of Nepstar, commented, "We are pleased to report strong growth in same store sales and revenue, as well as significant improvement in reducing administrative expenses compared to the same period of last year. We have leveraged our store network and increased in-store promotions as well as marketing efforts for pharmaceutical products. Enhancement in our operating efficiencies and cost streamlining also contributed to the growth in sales and revenue as well as improvement in administrative expense reduction as compared to the first quarter of 2014."

Business Outlook  

"We are excited by the momentum in our business development in the first quarter of 2015 and will continue to focus on maintaining growth, managing expenses and improving margins.  We believe that our strong store network, optimized product offerings and proactive steps to improve customer experience and loyalty, will continue to drive store traffic and revenue in the near term," commented Mr. Zhang.

Fourth Quarter 2014 Financial Results

• Revenue increased by 13.4% to RMB850.1 million (US$137.0 million) compared to RMB749.8 million in the fourth quarter of 2013.
• Basic and diluted income per ADS was RMB0.34 (US$0.06) compared to basic and diluted income of RMB0.14 per ADS for the fourth quarter of 2013.

Mr. Fuxiang Zhang, Chief Executive Officer of Nepstar, commented, "Our continuous efforts to streamline business operations, optimize individual store performance, improve product mix and market products proactively through in-store promotions have delivered double-digit growth in revenues and same store sales in the fourth quarter of 2014 compared to the same period in 2013. Both our prescription and OTC pharmaceutical products experienced strong sales in the fourth quarter of 2014. We have achieved top line growth for five consecutive years and strengthened customer relationships in a retail environment that continues to be challenging."

Business Outlook

"Now that we have regained momentum in overall revenues and same store sales, we will turn our focus to improving income from operations through continued stringent expenses control and achieving more sustainable growth in sales going forward," commented Mr. Zhang. "Our goal is to expand our market share continuously by leveraging our nationwide network of quality retail drugstores, upgrading promotional campaigns and optimizing our product mix."

SHENZHEN, China, December 30, 2014 /PRNewswire/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("Nepstar" or the "Company"), a leading retail drugstore chain in China based on the number of directly operated stores, today announced that the Company's Board of Directors has authorized a share repurchase program (the "Share Repurchase Program"). Under the terms of the Share Repurchase Program, the Company may repurchase up to $5 million worth of its issued and outstanding American Depositary Shares ("ADSs") from time to time over the next 12 months.

The repurchases will be made on the open market at prevailing market prices or in block trades pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, subject to restrictions relating to volume, price and timing, as well as in privately negotiated transactions or through other means as determined by the Company's management. The timing and extent of any repurchases will depend upon market conditions, the trading price of the ADSs, the nature of other investment opportunities presented to the Company, the Company's cash flows and expected cash flows, general economic conditions, regulatory requirements and other factors.

"We are committed to enhancing shareholder value," commented Mr. Fuxiang Zhang, Nepstar's Chief Executive Officer, "and we believe that given the operational improvements and sales momentum that we gained in the past year, our current share price is undervalued. We are confident in our long-term growth prospects and believe that a share repurchase program will benefit our shareholders."

Third Quarter 2014 Financial Results

• Revenue increased by 8.1% to RMB738.3 million (US$120.3 million) compared to RMB683.2 million in the third quarter of 2013
• Net loss for the third quarter of 2014 was RMB13.1 million (US$2.1 million), or RMB0.13 (US$0.02) basic and diluted loss per ADS, compared to net loss of RMB 4.7 million, or RMB0.05 basic and diluted loss per ADS for the third quarter of 2013.

Mr. Fuxiang Zhang, Chief Executive Officer of China Nepstar, commented. "We are pleased by the continuous momentum in same store sales. Our promotional campaigns for pharmaceutical products are driving growth in sales as well as average transaction value. Moreover, our store optimization strategy has created a network of stores with steadily increasing sales, enabling us to expand top line sales at a consistent pace. Our next goal will be improving gross profit."

Business Outlook 

"As we head into the fourth quarter during which we usually perform well, we anticipate continued growth in the sales of both pharmaceuticals and nutritional products, enabling the improvement of gross profit," commented Mr. Zhang. "Looking ahead, China is gradually trending towards deregulation on pharmaceutical pricing after several years of vigorous implementation of stringent price controls. We believe this trend will be favorable for the healthcare retail sector in general, and we plan to capitalize on opportunities to realign pricing with the growing cost of goods."

Second Quarter 2014 Financial Results

• Revenue increased by 7.5% to RMB686.6 million (US$110.7 million) compared to RMB638.8 million in the second quarter of 2013
• Net loss for the second quarter of 2014 was RMB15.9 million (US$2.6 million), or RMB0.16 (US$0.03) basic and diluted losses per ADS compared to net loss of RMB3.9 million, or RMB0.04 basic and diluted losses per ADS for the second quarter of 2013.

Mr. Fuxiang Zhang, Chief Executive Officer, commented: "Our ongoing efforts to support same store sales and overall revenue growth through promotion of non-prescription products and nutritional supplements continue to deliver results. We increased same store sales by 6.2% and average value per transaction by 14.5% in the second quarter compared to the corresponding period in 2013. However, higher labor cost and lease expense had weighed on our profitability. In response, we began streamlining managerial personnel to reduce costs and improve workflow efficiencies. Looking ahead, we will remain focused on achieving a sustainable balance between top line growth and operational efficiency."

Business Outlook 

"We are taking proactive steps to improve customer experience and further gain loyalty, such as offering free consultations on basic health issues at our stores. We believe our optimized product offerings, continuously improved service, strong store network and customer loyalty program will help us achieve greater economies of scale and improve operational efficiency," Mr. Zhang concluded.

• Revenue increased by 8.1% to RMB678.3 million (US$109.1 million) from RMB627.4 million in the first quarter of 2013
• Net loss for the first quarter of 2014 was RMB18.2million (US$2.9 million), or RMB0.18 (US$0.03) basic and diluted losses per ADS compared to net income of RMB7.1 million, or RMB0.07  basic and diluted earnings per ADS for the first quarter of 2013. As of March 31, 2014, the Company had 197.4 million outstanding ordinary shares.

Mr. Fuxiang Zhang, Chief Executive Officer, commented, "We are pleased to report continuing growth in same store sales in the first quarter of 2014. Our focus on non-prescription pharmaceutical and nutritional products and proactive promotions continued to drive the average value per transaction, which was increased by 9.3% as compared to the same period in 2013. We are still challenged by the lower gross profits and increasing operating expenses; however, our product optimization strategy has helped stimulate top line growth, enabling us to focus on profit improvement through cost controls and inventory management."

Business Outlook  

"As we look forward to the remainder of the year, there are some encouraging signs of improvement in our market environment. The National Development and Reform Commission of the People's Republic of China recently announced cancellation of the price ceiling on certain low-cost drugs and initiated the process of re-pricing. The implementation of this new policy may take a few quarters, but we believe these are favorable developments that could restore differentiated pricing for a considerable number of the drugs that we sell and ultimately improve both top and bottom line performance for pharmaceutical products. In the meantime, we plan to start adjusting pricing on certain nutritional products in an effort to improve gross margins," Mr. Zhang concluded.

Fourth Quarter Financial Results

• Revenue for the fourth quarter of 2013 increased by 11.6% to RMB749.8 million (US$123.9 million) from RMB671.9 million recorded for the same period in 2012.
• Basic and diluted earnings per American Depositary Share ("ADS") were RMB0.14 (US$0.02) compared to RMB0.80 reported in the fourth quarter of 2012

Mr. Fuxiang Zhang, Chief Executive Officer, commented, "We are pleased to report that our continued focus on product mix, store transaction efficiency and increasing foot traffic are beginning to deliver results. We have achieved double digit growth in both revenues and same store sales in the fourth quarter of 2013 compared to the same period in 2012 through a combination of strengthening our marketing and promotional efforts, introducing our loyal member reward shopping programs, improving our product range offerings and other proactive marketing strategies. Both of our pharmaceutical products and nutritional supplements products experienced strong sales in the fourth quarter of 2013 compared to the same period in 2012. In general, we have steadily improved sales momentum and strengthened customer relationships throughout the year and in a retail environment that can be challenging."

Business Outlook 

"We believe our wide and varied selection of product offerings, improved retail services and customer loyalty programs, well position the Company for envisaged improvement of the retail pharmacy business in China," Mr. Zhang remarked. "Our objective is to capitalize on our existing extensive store network, customer loyalty to our retail brand and constantly improving product mix, to achieve improved economies of scale and to leverage our operational efficiencies, to thereby improve margins in the long term. However, the immediate outlook in 2014 for retail operations across most sectors in the mainland of China remains challenging."

Third quarter 2013 Financial Results

• Revenue for the third quarter of 2013 increased by 7.7% to RMB683.2 million (US$111.6 million) from RMB634.6 million for the same period in 2012.
• Net loss was RMB4.7 million (US$0.8 million), which represented RMB0.05 (US$0.008) basic and diluted loss per ADS vs. last years RMB 0.018.

Mr. Fuxiang Zhang, Chief Executive Officer of Nepstar, commented, "We are pleased to report that our strategy of strong promotional activities and marketing campaigns resulted in continued momentum in revenue growth. During the third quarter, daily store traffic increased by 11 visits and same store sales grew by 10.5% from the same quarter in 2012. Our higher sales garnered attention internally among store staff, as well as externally from our suppliers who have shown their support. We believe that we are well positioned for the recovery of the retail pharmacy industry in China. While this strategy has had a near-term impact on our gross margin, we believe we will make it up through positive contributions to our market share, customer relationships and long term growth prospects.

Business Outlook 

"Fourth quarter is important for us as winter is the high season for cold-cough medicines and nutritional supplements. We are working hard to maintain same store sales growth and per store transactions. Our focus remains on optimizing product mix and improving margins," Mr. Zhang concluded.

SHENZHEN, China, Nov. 26, 2013 /PRNewswire-FirstCall/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("Nepstar" or the "Company"), the largest retail drugstore chain in China based on the number of directly operated stores, today announced that the Board of Directors has declared an annual cash dividend of US$0.32 per American Depositary Share (ADS), which represents a total value to shareholders of approximately US$31.59 million. The distribution of the dividend is conditional upon the approval of the relevant PRC government authorities. The annual dividend is payable before or around January 24, 2014 to shareholders of record as of the close of business on December 20, 2013

Second Quarter2013 Financial Results

• Revenue increased to RMB638.8 million (US$104.1 million) compared with RMB617.6 million for second quarter 2012
• Loss from operations was RMB1.0 million (US$0.2 million), compared with income from operations of RMB 3.9 million for the second quarter 2012.
• Net loss for the second quarter of 2013 was RMB3.9 million (US$0.6 million), which represented RMB0.04 (US$0.01) basic and diluted loss per ADS. Net income for the second quarter of 2012 was RMB2.5 million, which represented RMB0.02 basic and diluted earnings per ADS.

Mr. Fuxiang Zhang, Chief Executive Officer of Nepstar, commented, "During the second quarter, we adopted a more proactive marketing strategy to propel growth in revenue and to improve our store productivity. As a result, our average daily store traffic increased by eleven visits and same store sales grew by 8.6%, with fewer operating stores compared with the second quarter of 2012. While this promotional strategy has impacted our near-term gross margin and profitability, we believe the longer-term benefit of increased store traffic and participation in our loyalty programs will provide sustainable growth in margin over time and will ultimately enhance our competitiveness."

Business Outlook 

"Going forward, our focus remains on optimization of our product mix and maintaining momentum in store traffic and sales to stabilize and regain growth in margin and profitability," Mr. Zhang concluded. "Looking to the second half of the year, we expect same store sales and also the daily store traffic growth to continue."

• Revenue increased to RMB627.4 million (US$101.0 million) from RMB625.8 million in the first quarter of 2012
• Net income increased slightly to RMB7.1million (US$1.1 million) from RMB7.0 million in the first quarter of 2012
• Basic and diluted earnings per American depositary share ("ADS") were RMB0.07 (US$0.01), the same as in the first quarter of 2012

"We are pleased to see continuing same store sales growth in the first quarter of 2013, compared with the same period of 2012," Mr. Fuxiang Zhang, Chief Executive Officer, commented. "Our focus on increasing store efficiencies and maximizing customer transactions per visit, enabled the Company to maintain top line growth momentum, even given a lower store count. In the current competitive market environment, we strive to broaden and optimize our product portfolio. We believe that our dedication to product line development and optimization has provided a solid foundation for the company to stabilize its gross margins over time."

Business Outlook  

"The ongoing avian flu epidemic in the second quarter of 2013 has clearly caused more visits of customers to the Company drugstores for preventive medications. Fever reducing and detoxicating drugs in our pharmaceutical category contributed to be the strong growth category in same store sales, in second quarter-to-date as compared with the same period in 2012," Mr. Zhang remarked. "We continue to execute our strategy of focusing on store productivity and cost control."

Financial Highlights

• Revenue increased by 1.8% to RMB617.6 million (US$97.2 million), compared to RMB606.6 million in second quarter 2011
• Same store sales increased by 7.8% over the same period of 2011
• Income from operations was RMB3.9 million (US$0.6 million), compared to RMB8.2 million in second quarter 2011
• Net income in the second quarter of 2012 was RMB2.5 million (US$0.4 million), which represented RMB0.02(US$0.004) basic and diluted earnings per ADS. In comparison, the net income in the same period of 2011 wasRMB6.5 million, which represented RMB0.06 basic and diluted earnings per ADS.

Mr. Fuxiang Zhang, Chief Executive Officer, commented, "We are pleased to maintain same store sales growth of 7.8% in such a challenging quarter. In the second quarter, the industry experienced an unexpected loss of consumer confidence in pharmaceuticals and nutritional supplements in capsule forms caused by the nation wide publicity of chromium contamination scandal. In addition, in certain key cities like Dalian, local governments started to impose more severe restrictions on the carrying and selling of non-pharmaceutical products by designated insurance reimbursement stores. Meanwhile we closed 97 underperforming stores in the second quarter. Nevertheless, as a result of our ongoing optimization to the existing product portfolio, we are optimistic about our continued revenue growth. Our pharmaceutical categories, both prescription and over-the-counter ("OTC") drugs, grew over 10% during the quarter on the same store basis, year over year."

Business Outlook

"Looking to the second half of the year, we expect same store sales growth to continue. We also expect less underperforming store reorganization being necessary compared to the first half of the year. Our goal remains to enhance our product offerings and services to our customers. While we continue to build our portfolio of pharmaceuticals and nutritional products, we are actively optimizing our convenience and other product portfolio to increase store traffic. We plan to drive sales of non-pharmaceutical categories through more proactive marketing campaigns and therefore we expect more contribution from the convenience and other products in the second half of the year. We are focused on improving our bottom-line and maintaining strong operating cash flow," stated Mr. Zhang.

For the quarter ended March 31, 2012:

• Revenue increased by 1.3% to RMB625.8 million (US$99.4 million), compared to revenue of RMB618.1 million in first quarter 2011
• Same store sales increased by 4.9% over the same period of 2011
• Income from operations was RMB8.7 million (US$1.4 million) compared to RMB11.8 million in first quarter 2011
• Net income was RMB7.0 million (US$1.1 million) compared to RMB10.6 million for the same period of 2011
• Cash flow from operations was RMB0.9 million (US$0.1 million), compared to RMB1.0 million for the same period of 2011

Mr. Fuxiang Zhang, Chief Executive Officer, commented, "While we are making solid progress in growing same store sales, growing our bottom line is proving to be more challenging. The general business environment remains unfavourable, which we endeavor to navigate by implementing strict cost control measures. Nevertheless, the rising labor and rental costs continue to pose challenges to our cost control efforts. In the first quarter of 2012, we continued to streamline our store network through evaluation of store performance and optimization of product offerings. We believe that by further enhancing efficiencies at the store management level, optimizing product offerings, strengthening customer service and conducting innovative marketing activities, we will gain competitive advantages over our peers."

Business Outlook

"We are working diligently to meet the challenges posed by the macro environment and the ongoing healthcare reform, as we move into the second quarter, which is typically considered a slow season for pharmaceutical retail business in China," stated Mr. Zhang. "In addition, recent news coverage of chromium tainted capsules from certain producers in mainland China may also have a negative impact on overall consumer confidence in pharmaceutical and nutritional products in capsule form. We do, however, remain optimistic in our well-established reputation among consumers as a provider of high quality pharmaceutical products. Therefore, we believe the potential adverse impact of the publicity of such and similar incidents on our business will be substantially less than that of our competitors. Despite the ongoing challenges in the general business environment, we remain confident about our overall strategy. We will continue to carry out product optimization and innovative marketing programs to achieve better operating results."

Fourth Quarter Financial Highlights

For the quarter ended December 31, 2011:

• Same store sales increased by 9.7% as compared to the same period in 2010
• Revenue increased by 4.9% to RMB658.0 million (US$104.5 million), compared to RMB627.1 million in the fourth quarter of 2010
• Net income increased by 4.5% to RMB17.7 million (US$2.8 million), compared to RMB16.9 million in the fourth quarter of 2010
• Net cash-flows from operating activities was RMB30.4 million compared to net cash outflow of RMB0.4 million in the fourth quarter of 2010

Mr. Fuxiang Zhang, Chief Executive Officer, commented, "In an increasingly unpredictable environment due to the ongoing healthcare reform, we have achieved increases in same store sales, revenue and net income in the fourth quarter and for the full year. We are also pleased that the business has continued to generate steady cash-flows from operating activities in 2011. Our efforts in constantly streamlining store operations and optimizing product offerings enabled us to balance the adverse effects of contracting gross margins resulting from government mandated pricing controls on pharmaceuticals and increasing labor and rental costs."

Business Outlook

"Our strategy in 2012 is focused on balancing the challenges and opportunities presented by the ongoing healthcare reform movement and uncertain macroeconomic climate. We are strengthening management over underperforming stores and shutting down stores with no prospects for turnaround. We are improving employee training and incentive programs to help drive sales. We also plan to enhance the image of existing stores and improve overall customer experience with display optimization. We will open new stores cautiously and only consider quality locations for our new stores. We are implementing stricter cost control measures to meet the challenge of rising costs.

"Assuming the continuation of pricing controls on key pharmaceuticals, we plan to further strengthen our healthcare related non-pharmaceutical product categories including nutritional supplements, Traditional Chinese Medicines herbs, and household medical devices. We will also carry on developing our product offerings to include competitively priced, high quality personal care products and daily consumables which we believe will further differentiate our stores from those of our competitors.

"We believe that policy emphasis on the separation of hospitals and pharmacies will drive drug manufacturers to increasingly utilize large chain drugstores like Nepstar to augment their distribution. Overall, we remain optimistic about the long-term prospects of the Company and the consumer healthcare market in China," Mr. Zhang concluded.

Third Quarter 2011 Results

Second Quarter 2011 Results

Revenue increased by 7.3% to RMB606.6 million (US$93.8 million), compared to revenue of RMB565.2 million in the second quarter of 2010.

Net income for the second quarter of 2011 was RMB6.5 million (US$1.0 million), which represented RMB0.06 (US$0.01) basic and diluted earnings per American depositary share ("ADS"). This compares to a net loss of RMB13.4 million, which represented RMB0.12 (US$0.02)  basic and diluted loss per ADS in the same period in 2010.

First Quarter Results:

• Revenue increased by 9.0% to RMB618.1 million (US$94.4 million), compared to revenue of RMB567.2 million in first quarter 2010
• Same store sales increased by 8.9% over the prior year's period
• Income from operations was RMB11.8 million (US$1.8 million) compared to a loss of RMB4.2 million in first quarter 2010
• Net income in the first quarter of 2011 was RMB10.6 million (US$1.6 million), which represented RMB0.10 (US$0.02) basic and diluted earnings per American depositary share ("ADS"). This compares to net income of RMB2.6 million, which represented RMB0.02 basic and diluted earnings per ADS in the same period of 2010.

Mr. Jason Wu, Chief Executive Officer of Nepstar, commented, "We are pleased to share the positive progress of our strategic transition to a neighborhood store for one-stop pharmacy and convenience shopping. New merchandise in our convenience products category has contributed to the increase of sales by 8.9% on a same store basis, despite ongoing government pricing controls over some of our core pharmaceutical products.

We expect to continue to generate positive operating cash flow in 2011. We believe that our current levels of cash and cash flows from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months.

As we expect the retail pharmaceutical market in China to continue to grow, we plan to continue expanding our drugstore network and centralizing our procurement, which we expect to result in better pricing terms from our suppliers. We will further refine our product selection to include a greater percentage of high gross margin products. As a result, we expect to generate a greater amount of revenue, income from operations and cash flows. However, we may need additional cash resources in the future if we experience changed business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions.

Financial Highlights for the Quarter Ended September 30, 2010:

• Revenue was RMB597 million (US$89 million), reflecting a 7.3% increase compared to revenue of RMB556 million in the third quarter of 2009

• Gross margin was 49.8%, compared to 49.6% in the third quarter of 2009

• Income from operation was RMB14 million (US$2 million), compared to a loss of RMB13 million in the second quarter of 2010 and a loss of RMB4 million in the first quarter of 2010

• Net income in the third quarter of 2010 was RMB10 million (US$1.6 million), which represented RMB0.10(US$0.01)basic earnings per American depositary share ("ADS"), and RMB0.10(US$0.01) diluted earnings per ADS. This compares to net income ofRMB37 million, which representedRMB0.36 basic earnings per ADS and RMB0.35 diluted earnings per ADS in the same period of 2009

• Net cash flow from operations was RMB38 million (US$6 million)

Mr. Jason Wu, Acting Chief Executive Officer of Nepstar, commented, "We are encouraged by the improvement in same store sales growth over the course of the third quarter, as we continue our transformation into a hybrid of pharmacy and convenience store. We believe this shift in strategy will be key to offsetting pressure on pharmacy revenues due to ongoing government reform initiatives and the imposition of price caps on drug manufacturers and retailers. This product driven strategy is also expected to compensate for increases in labor and rental costs across the regions in which we operate. Since the beginning of the year 2010, we have added nearly 370 new SKUs (Stock Keeping Unit) and these newly introduced high turnover convenience products accounted for approximately 10% of the revenue we generated for the nine-month period ended September 30, 2010. We are focused on optimizing our product mix to drive new customer acquisition, increasing sales among our existing loyal customer base, and maximizing operating efficiencies."

Business Outlook

"We remain cautiously optimistic as we continue to implement our strategic transition," commented Mr. Wu. "As we expand our product range by adding more high turnover convenience products, we are also upgrading logistics support, improving store space management and adopting a more proactive marketing approach to attract new customers. In Northern China, we have seen improvement in same store sales, but need to enhance margins. In Southern China, sales and margins are both experiencing steady growth. In Eastern and Central China, we achieved solid margin expansion, but still need to improve same store sales. We believe that the entire transformation process will continue to involve tremendous planning, testing and execution in the near term, but will be rewarding in the long run. We continue to leverage our established store footprint, proven central procurement program, and advanced IT systems to execute our strategy. We believe that the strong foundation we have built over the past decade will make our transition successful."