Real Nutriceutical : Nutri Announces 2016 Interim Results, Stable Performance with Gross Profit Margin Maintained a Healthy Level - Expand E-commerce Platform and Develop Healthcare Apps

• Sales of the core amino acid products, and health and nutritional supplement products

  decreased by 44.2% year on year to RMB418.5 million

• Sales of health drinks decreased by 49.2% year on year to RMB107.5 million.

• Sales of pharmaceutical products decreased by 4.4% year on year to RMB123.3 million.

  Continued to expand sales and distribution network.

• Health and nutritional supplement products were sold through over 80,000 third-party retail outlets in China.

• Pharmaceutical products were sold to over 800 hospitals nationwide.

• Set up about 20 new Real Nutri Health Stores, the number of Real Nutri Health Stores reached more than 200, contributing revenue of about RMB30.7 million, which accounted for 4.7% of the total revenue. The registered members of Real Nutri Health Club was about 400,000.

  Seize the opportunity in E-commerce to further develop O2O business model

• Internet direct sales business contributed revenue of RMB8.2 million, which accounted for about 1.3% of the total revenue.

• Signed a strategic agreement with e-commerce operator www.LGWCN.com, to jointly build a new model of customized health service.

• Launched the "Health Butler" App.

  Strong financial strength.

• Cash on hand of RMB2,440 million.

• Gearing ratio was 8.6%.

(30 August 2016 - Hong Kong) Real Nutriceutical Group Limited ("Real Nutri"; stock code: 2010) today announced the interim results of Real Nutri and its subsidiaries (the ''Group'') for the six months ended 30 June 2016 (the "Period").

Financial Summary

The Group's revenue decreased by 40.5% year on year to RMB649.2 million for the first six months ended 30 June 2016 due to the slowdown in China's economy and consumer market. Net profit decreased by 72.5% year on year to RMB67.9 million. The overall gross profit margin continued to stand at healthy level but slightly decreased to 64.5% from the 67.1% in the first half of 2015 due to higher production costs in the first half of 2016 and the change in sales mix. Net profit decreased by RMB178.6 million mainly because gross profit decreased by RMB313.0 million, but advertising expenses decreased by RMB59.4 million and taxation decreased by RMB71.7 million.

During the Period, all business units of the Group recorded decreases in sales due to the macro-economic and market environment. Sales of the Group's core health and nutritional supplement products decreased by 44.2% year on year to RMB418.5 million as the sales of the amino acid tablets and liquid product decreased considerably. Meanwhile, sales of health drinks decreased by 49.2% year on year to RMB107.5 million. Sales of pharmaceutical products decreased by 4.4% year on year to RMB123.3 million.

The Board of Directors does not propose the payment of interim dividend for the six months ended 30 June 2016 (1H 2015: HK3.0 cents per share).

Business Review

During the Period, to cope with the more difficult business environment, the Group strategically developed new sales networks and maintained its market penetration. As at 30 June 2016, the Group's health and nutritional supplement products were sold through over 80,000 third-party retail outlets. The Group continued to develop the sales network for health and nutritional supplement products including retail outlets and pharmacies as well as increased the number of new retail outlets for health drinks. The Group's pharmaceutical products were sold to over 800 hospitals nationwide. During the Period, the Group set up about 20 new Real Nutri Health Stores in the cities like Hubei, Xiamen, Quanzhou and Suzhou. As at 30 June 2016, the number of Real Nutri Health Stores was over 200 and these stores together contributed revenue of about RMB30.7 million, which accounted for 4.7% of the Group's total revenue in the Period. The registered members of Real Nutri Health Club was about 400,000.

Besides expanding traditional market, the Group also strategically developed online sales business to meet the latest market trends and demand. The Group's health supplement products were sold through famous online shopping platforms, including Tmall and JD.Com. The Group's internet direct sales business contributed revenue of RMB8.2 million, which accounted for 1.3% of the total revenue during the Period. The Group developed a new sales channel in WeChat Mall in 2015 and conducted word-of-mouth marketing through WeChat mobile social network to explore the huge business opportunities on an internet-enabled social platform. Besides, the Group signed a strategic agreement with e-commerce operator www.LGWCN.com ("LGWCN.com"), to jointly build a new model of customized health service. LGWCN.com currently works with over 1,000 offline stores in China with over 10 million members. The Group aspires to provide consumers and members with a brand new "Internet and Mega Healthcare" experience through the close collaboration with LGWCN.com. During the Period, the Group also launched "Health Butler", the mobile phone software application ("App") to provide the valued members with health indicators recording services and free consultations by healthcare experts in order to significantly enhance the member services' professional standards.

To maintain the brand's competitiveness, the Group continued to optimize its marketing strategy and strengthen efforts in both online and offline promotion of products. Apart from cooperating closely with online operators, the Group continuously updated health regimen and marketing news on its official website, Weibo and WeChat to boost its publicity online. For the health drink business, the Group held over 150 promotional activities for concentrated amino acids essence drink "U-Energy", including complimentary health drinks sessions, products' roadshows and theme promotion activities. The Group also sponsored a number of major events to increase brand awareness. The Group's medicine business unit held over 100 promotional seminars and took part in a number of major medical conferences.

In addition to in-house product development, the Group also collaborated with professional research institutions in the development and launch of new products. During the Period, the Group launched a number of quality health supplement products, including Xuelian Ashayi Tablets, Rainworm Protein GABA Tablets, Real Nutri Slimming Tea and Agaricus Blazei ß-glucan Complex. The Group also launched a new infant milk formula from France under the "Real Nutri「瑞兒牛萃」" brand in the first

quarter of 2016. For the medicine business, the Group entered into a technology transfer agreement with Jiangsu Ruinian Qianjin Pharmaceutical Company Limited, a connected person of the Company, to acquire the technologies and know-how of pharmaceutical products, namely, telmisartan tablets,

licorzine granules and apironolactone tablets in June 2016. The technologies acquired would enrich the product portfolio of the Group and enhance the operational efficiency of the pharmaceutical products manufacturing and sales business of the Group in China.

In the first half of 2016, the Group made capital investment of approximately RMB109.2 million to install facilities and equipment at its various production bases, including capital expenditures on its health supplement production base in Wuxi, pharmaceutical production base in Nanjing, and a raw material plantation base in Suzhou.

Future Plans & Prospects

The Group will persist with best endeavor to develop all various businesses, it will adopt a prudent approach in expanding its sales network and exploring new sales regions in order to maintain its leading position in the amino acids health supplements industry. The Group will reinforce the operational management of Real Nutri Health Stores to enhance the professional training for staff and optimize the premium services for members for better stores' cost efficiency. The Group plans to open about 10 new Real Nutri Health Stores in the second half of 2016. For the health drinks business, the Group will offer promotional discounts and launch grand gift box packages during major festivals, and will gradually expand its sales network and coverage in major cities, to continuously build brand recognition for its "U-Energy" amino acids beverage product. With the above initiatives, the Group will be well prepared for another breakthrough of the health drinks business to the next level.

For the products, The Group will continuously strengthen its product portfolio with amino acids as the core, and launches of diverse new health supplement products of superb quality. In the second half of 2016, the Group plans to launch a number of new health supplement products, including Rose Peptide Drink, Vitamin C Effervescent Tablet, and Full-Nutrition Meal Shake, Osteoid Collagen Drink, as well as the health drink product U-Amino Acid Coffee. In addition, the Group will adopt new initiatives by leveraging on popular social media platforms and developing mobile phones healthcare Apps.

The Group is actively seeking acquisition opportunities to scale up its businesses. It signed a memorandum of understanding in January 2015 for the proposed acquisition of Shenzhen City Ailire Investment Consulting Company Limited ("Ailire"), and also signed a strategic cooperation agreement in May 2015 with Shenzhen China Associate (Group) Co., Ltd and Ailire to jointly develop China's health supplements market. The proposed acquisition, if realized, can bring synergies in generating extra sales of high-margin health supplements products, expanding its membership base and the quick lifting of Real Nutri's brand awareness in southern China consumer market. The Group aims to complete the proposed acquisition in 2016.

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About Real Nutri

Real Nutri is the leading brand in the amino acids health supplement market in China. Our diversified product portfolio spans a health industry spectrum, including nutritional supplements and general health food, health drinks and pharmaceuticals. Our Amino Acids Tablets have been selected as the official gift to the PRC National Assemblies which comprises the annual general meetings of the PRC National People's Congress and the Chinese People's Political Consultative Conference. We sell our health supplements and general health food products to an extensive network of regional and local distributors in China. As at 30 June 2016, our health supplements and general health food products were sold through the third party's retail network at over 80,000 sales points, including supermarkets, hypermarkets and retail pharmacies. Pharmaceutical products were sold to over 800 hospitals nationwide.

For further information, please contact:

Gary Li / Louise Ye / Joseph Zhou

Tel: (852) 3170 6753 / 3920 7654 / 3920 7649

Fax: (852) 3170 6606

Email: realnutri@iprogilvy.com