SHENZHEN, China, March 29, 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 its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2015.

Financial Highlights

For the quarter ended December 31, 2015:


    --  Same store sales increased by 12.5% compared to the fourth quarter of
        2014
    --  Revenue increased by 6.5% to RMB905.2 million (US$139.7 million)
        compared to RMB850.1 million in the fourth quarter of 2014
    --  Net income increased by 11.7% to RMB37.3 million (US$5.8 million)
        compared to net income of RMB33.4 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

For the year ended December 31, 2015:


    --  Same store sales increased by 13.8% compared to 2014
    --  Revenue increased by 9.5% to RMB3,232.4 million (US$499.0 million)
        compared to RMB2,953.3 million in 2014
    --  Net income increased to RMB39.8 million (US$6.1 million) compared to net
        loss of RMB13.8 million in 2014
    --  Basic and diluted income per ADS were RMB0.40 (US$0.06)

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. "

Fourth Quarter Results

During the fourth quarter of 2015, the Company opened 57 new stores and closed 24 stores. As of December 31, 2015, the Company had a total of 1,998 directly operated stores.

Revenue for the fourth quarter of 2015 increased by 6.5% to RMB905.2 million (US$139.7 million) from RMB850.1million for the same period in 2014. Same store sales (for the 1,716 stores opened before December 31, 2013 and which remained in operations as of December 31, 2015) for the fourth quarter of 2015 increased by 12.5% compared to the same period in 2014. The increase in revenue and same store sales was primarily attributable to in-store promotional initiatives and improved average store output.

Fourth quarter revenue contribution by product category was 21.7% from prescription drugs (21.6% for the same period in 2014); 46.9% from over-the-counter ("OTC") drugs (43.2% for the same period in 2014); 9.3%from nutritional supplements (11.6% for the same period in 2014); 4.3%from herbal products (4.2% for the same period in 2014); and 17.8% from convenience and other products (19.4% for the same period in 2014).

Gross profit for the fourth quarter increased to RMB405.0 million (US$62.5 million) from RMB360.9 million for the same period in 2014. Gross margin in the fourth quarter of 2015 was 44.7%, compared with 42.4% for the same period in 2014.

The Company's portfolio of private label products expanded to 2,172 types of products as of December 31, 2015. Sales of private label products represented approximately 12.0% of revenue and 16.3% of gross profit for the fourth quarter of 2015.

Sales, marketing and other operating expenses as a percentage of revenue decreased slightly to 32.7% for the fourth quarter of 2015 from 33.0% for the same period of 2014.

General and administrative expenses as a percentage of revenue were 5.0% for the fourth quarter of 2015, compared to 3.2% for the same period of 2014. This increase was mainly due to the bonus award to certain subsidiaries which have met the performance indicators.

Income from operations in the fourth quarter of 2015 was RMB59.0 million (US$9.1 million) compared with income from operations of RMB50.4 million for the same period in 2014. This increase was mainly due to our revenue growth and improved margin.

Interest income for the fourth quarter of 2015 was RMB1.8 million (US$0.3 million), compared with RMB1.4 million for the same period of 2014.

The Company's income tax expense was RMB23.5 million (US$3.6 million) for the fourth quarter of 2015, compared with RMB17.9 million for the same period in 2014. The effective tax rate for the fourth quarter of 2015 was 38.7%, compared to 34.9% for the same period in 2014. The difference in the effective income tax rate and the PRC statutory tax rate of 25% applicable to our major operating subsidiaries was primarily due to non-deductible expenses and the operating losses from certain loss-making subsidiaries, for which full valuation allowances were made on their deferred tax assets, when compared to the overall results of operation of the Company. Shareholders are reminded that in the PRC, losses in companies which are part of a group are not allowed to be off-set against profits arising from other companies in the same group.

Net income for the fourth quarter of 2015 was RMB37.3 million (US$5.8 million), or RMB0.38(US$0.06) basic and diluted income per ADS, compared to net income of RMB33.4 million, or RMB0.34 basic and diluted income per ADS for the fourth quarter of 2014. As of December 31, 2015, the Company had approximately 197.4 million outstanding ordinary shares. Each ADS represents two ordinary shares of the Company.

In the fourth quarter of 2015, net cash inflow provided by operating activities was RMB52.3million (US$8.1 million), compared to net cash inflow of RMB44.1 million for the same period in 2014.

Fiscal Year 2015 Financial Results

In 2015, the Company opened 168 new stores and closed 150 stores. As of December 31, 2015, Nepstar had a total of 1,998 stores in operations.

Total revenue for 2015 increased to RMB3,232.4 million (US$499.0 million) from RMB2,953.3 million in 2014. Same store sales (for the 1,716 operating stores opened before December 31, 2013 and which remained in operations as of December 31, 2015) for 2015 increased by 13.8% compared to 2014. The increase in revenue and same store sales was driven by the closure of underperforming stores and our efforts in improving sales performance.

In 2015, revenue contribution from prescription drugs was 22.9%, OTC drugs was 43.3%, nutritional supplements was 11.2%, herbal products was 4.5% and convenience and other products was 18.1%. Revenue from private label products accounted for 13.8% of total revenue and 20.1% of gross profit, respectively.

Gross profit was RMB1,347.8 million (US$208.1 million) for 2015 compared to RMB1,230.5 million in 2014. Gross margin was 41.7% in 2015, compared to 41.7% in 2014.

Total operating expenses decreased to 39.5% of total revenue in 2015, compared to 41.4% recorded in 2014. Income from operations was RMB61.7 million (US$9.5 million) for 2015, compared to loss from operations of RMB2.9 million for 2014.

Interest income for 2015 was RMB6.5 million (US$1.0million), compared to RMB7.2 million in 2014. Dividend income from cost method investments was RMB3.9 million (US$0.6million) for 2015, compared to RMB5.9 million in 2014. Other income was RMB1.0 million (US$0.2 million) in 2015, compared to RMB3.1 million in 2014.

The Company's effective tax rate was 45.5% in 2015, compared to 208.4% in 2014. The Company's income tax expense was RMB33.3 million (US$5.1 million) for 2015, compared to RMB26.5 million in 2014. The difference in the effective income tax rate and the PRC statutory tax rate of 25% applicable to our major operating subsidiaries was primarily due to non-deductible expenses and the operating losses from certain loss-making subsidiaries, for which full valuation allowances were made on their deferred tax assets, when compared to the overall results of operation of the Company. Shareholders are reminded that in the PRC, losses in companies which are part of a group are not allowed to be off-set against profits arising from other companies in the same group.

Net income was RMB39.8 million (US$6.1 million) for 2015, which represented RMB0.40 (US$0.06) basic and diluted income per ADS, compared to a net loss of RMB13.8 million in 2014, which represented RMB0.14 basic and diluted loss per ADS.

Net cash inflows from operating activities were RMB143.6 million (US$22.2 million) for 2015, compared with cash outflows of RMB58.7 million recorded in 2014. The improvement in net cash inflows was primarily due to the revenue growth, improved margins and improved efficiency in working capital management.

As of December 31, 2015, the Company's total cash, cash equivalents, bank deposits and restricted cash were RMB365.7 million (US$56.5 million) and its shareholders' equity was RMB871.4 million (US$134.5 million), compared to RMB316.9 million and RMB831.6 million, respectively, as of December 31, 2014.

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."

Conference Call Information

The Company will host a conference call, to be simultaneously webcasted, on Tuesday, March 29, 2016 at 8:00 a.m. Eastern Time / 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-9210 (North America) or +1-201-689-8049 (International) approximately five minutes before the call start time. A live web cast of the conference call will be available on the Nepstar website at http://www.nepstar.cn.

A replay of the call will be available shortly after the conclusion of the conference call through April 5, 2016 at 11:59 p.m. Eastern Time. An archived web cast of the conference call will be available on the Nepstar website at http://www.nepstar.cn. Interested parties may access the replay by dialing +1-877-660-6853 (North America) or +1-201-612-7415 (International) and entering conference ID number 13632972.

About China Nepstar Chain Drugstore Ltd.

China Nepstar Chain Drugstore Ltd. (NYSE: NPD) is a leading retail drugstore chain in China. As of December 31, 2015, the Company had 1,998 directly operated stores across 70 cities, one headquarter distribution center and 15 regional distribution centers in China. Nepstar uses directly operated stores, centralized procurement and a network of distribution centers to provide its customers with high-quality, professional and convenient pharmaceutical products and services and a wide variety of other merchandise, including OTC drugs, nutritional supplements, herbal products, personal care products, family care products, and convenience products. Nepstar's strategy of centralized procurement, competitive pricing, customer loyalty programs and private label offerings has enabled it to capitalize on the continuing economic growth in China and take advantage of the demographic trend in China to achieve a strong brand and leading market position. For further information, please go to http://www.nepstar.cn.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release and the Company's strategic operational plans and business outlook, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Exchange Rate Information

The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars were calculated at the certified exchange rate of US$1.00 = RMB6.4778 on December 31, 2015 as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate or at any other date. The percentages stated are calculated based on RMB amounts.

Contacts

Zixin Shao
China Nepstar Chain Drugstore Ltd.
Chief Financial Officer
+86-755-2641-4065
ir@nepstar.cn

(Tables Follow)




                                                                  China Nepstar Chain Drugstore Ltd.

                                                  Unaudited Condensed Consolidated Statements of Comprehensive Income

                                                            (amounts in thousands - except per-share data)


                                                                                                        Three-month period ended           Year ended

                                                                                                              December 31,                December 31,


                                                                                                        2014          2015         2015           2014            2015          2015

                                                                                                      RMB          RMB         USD          RMB            RMB           USD


    Revenue                                                                                          850,146       905,249      139,746      2,953,314       3,232,446       499,004

    Cost of goods sold                                                                             (489,260)    (500,243)    (77,224)   (1,722,792)    (1,884,625)    (290,936)
                                                                                                    --------      --------      -------     ----------      ----------      --------

    Gross profit                                                                                     360,886       405,006       62,522      1,230,522       1,347,821       208,068


    Sales, marketing and other                                                                     (280,205)    (295,919)    (45,682)   (1,098,000)    (1,142,918)    (176,436)
        operating expenses

    General and administrative expenses                                                             (27,324)     (45,210)     (6,979)     (125,577)      (133,749)     (20,648)

    Impairment losses of property                                                                    (2,955)      (4,890)       (755)       (9,877)        (9,445)      (1,458)
        and equipment

    Income/(loss) from operations                                                                     50,402        58,987        9,106        (2,932)         61,709         9,526

    Interest income                                                                                    1,355         1,756          271          7,234           6,515         1,006

    Dividend income from cost method                                                                       -            -           -         5,852           3,903           603
        investments

    Other income                                                                                         126             -           -         3,082           1,007           155

    Other loss                                                                                         (535)            -           -         (535)              -            -

    Income before income tax expense                                                                  51,348        60,743        9,377         12,701          73,134        11,290


    Income tax expense                                                                              (17,916)     (23,485)     (3,625)      (26,472)       (33,308)      (5,142)


    Net income/(loss) attributable to                                                                 33,432        37,258        5,752       (13,771)         39,826         6,148
        China Nepstar Chain Drugstore Ltd.
                                                                                                                                                                            ===


    Basic earnings / (loss) per ordinary share                                                          0.17          0.19         0.03         (0.07)           0.20          0.03

    Basic earnings / (loss) per ADS                                                                     0.34          0.38         0.06         (0.14)           0.40          0.06

    Diluted earnings / (loss) per ordinary share                                                        0.17          0.19         0.03         (0.07)           0.20          0.03

    Diluted earnings / (loss) per ADS                                                                   0.34          0.38         0.06         (0.14)           0.40          0.06


    Other comprehensive income, net of tax:

    Foreign currency translation adjustments                                                              23          (29)         (4)         (123)           (88)         (13)
                                                                                                         ---           ---          ---           ----             ---           ---

    Comprehensive income / (loss) attributable to                                                     33,455        37,229        5,748       (13,894)         39,738         6,135
        China Nepstar Chain Drugstore Ltd.
                                                                                                                                                                            ===


                                                                    China Nepstar Chain Drugstore Ltd.

                                                             Unaudited Condensed Consolidated Balance Sheets

                                                                          (amounts in thousands)


                                                                                                                        As of            As of

                                                              December 31,                                   December 31,

                                                                                                                      2014         2015      2015

                                                                                                                 RMB           RMB       USD

    ASSETS

    Current assets

    Cash and cash equivalents                                                                                      252,174      356,599    55,049

    Short-term bank time deposits                                                                                   24,000        9,000     1,389

    Long-term bank time deposits due within one year                                                                 3,256            -        -

    Restricted cash                                                                                                 37,423          124        19

    Accounts receivable, net of allowance for doubtful accounts                                                    136,568      157,153    24,260

    Bills receivable                                                                                                   400            -        -

    Amounts due from related parties                                                                                 3,366        4,893       755

    Prepaid expenses, deposits and other current assets                                                            245,254      217,216    33,532

    Inventories                                                                                                    546,312      574,344    88,664

    Deferred tax assets                                                                                              2,038        6,802     1,050
                                                                                                                     -----        -----     -----

    Total current assets                                                                                         1,250,791    1,326,131   204,718
                                                                                                                 ---------    ---------   -------


    Non-current assets

    Property and equipment, net                                                                                    137,750      175,645    27,115

    Rental deposits                                                                                                 42,257       44,740     6,907

    Cost method investments                                                                                         12,638       12,493     1,929

    Intangible assets, net                                                                                           2,509        2,509       387

    Goodwill                                                                                                        51,819       54,425     8,402

    Deferred tax assets                                                                                             16,340        3,745       578

    Other non-current assets                                                                                             -       2,097       324

    Total non-current assets                                                                                       263,313      295,654    45,642
                                                                                                                   -------      -------    ------

    Total Assets                                                                                                 1,514,104    1,621,785   250,360
                                                                                                                 =========    =========   =======




    LIABILITIES AND SHAREHOLDERS' EQUITY


    Current liabilities

    Accounts payable                                                                                               409,428      461,098    71,181

    Amounts due to related parties                                                                                  25,636       23,607     3,644

    Accrued expenses and other payables                                                                            122,236      130,812    20,194

    Deferred income                                                                                                 25,715       28,475     4,396

    Income tax payable                                                                                              25,743       33,013     5,096

    Total current liabilities                                                                                      608,758      677,005   104,511
                                                                                                                   -------      -------   -------


    Non-current liabilities

    Deferred income                                                                                                 15,677       11,626     1,795

    Deferred tax liabilities                                                                                        14,711       19,440     3,001

    Other non-current liabilities                                                                                   43,326       42,344     6,537
                                                                                                                    ------       ------     -----

    Total non-current liabilities                                                                                   73,714       73,410    11,333
                                                                                                                    ------       ------    ------

    Total liabilities                                                                                              682,472      750,415   115,844
                                                                                                                   =======      =======   =======




    Shareholders' equity

    Share capital                                                                                                      158          158        24

    Additional paid-in capital                                                                                     640,341      640,341    98,852

    Accumulated other comprehensive loss                                                                          (41,746)    (41,834)  (6,458)

    Retained earnings                                                                                              232,879      272,705    42,098
                                                                                                                   -------      -------    ------


    Total shareholders' equity                                                                                     831,632      871,370   134,516
                                                                                                                   =======      =======   =======


    Total liabilities and shareholders' equity                                                                   1,514,104    1,621,785   250,360
                                                                                                                 =========    =========   =======

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-nepstar-chain-drugstore-ltd-reports-fourth-quarter-and-fiscal-year-2015-financial-results-300242443.html

SOURCE China Nepstar Chain Drugstore Ltd.