Financial Performance - The company reported revenue of RMB 2,424.4 million for the year ended June 30, 2019, a decrease of 38.8% from RMB 3,968.9 million for the previous eighteen months[14]. - Gross profit was RMB 326.8 million, resulting in a gross margin of 13.5%, down from 16.4% in the previous period[14]. - The operating loss narrowed to RMB 281.6 million from RMB 966.2 million, indicating an improvement in operational efficiency[14]. - Net loss for the year was RMB 267.1 million, compared to RMB 924.8 million in the previous period, reflecting a significant reduction in losses[14]. - The return on equity improved by 32.4 percentage points to -15.4% from -47.8%[14]. - The loss attributable to equity holders was RMB 265.6 million, down from RMB 917.0 million in the previous eighteen months, indicating a strategic transformation despite ongoing economic challenges in Northeast China[24]. - For the fiscal year ending June 30, 2019, the company recorded revenue of RMB 2,424.4 million, a decrease from RMB 3,968.9 million for the eighteen months ending June 30, 2018[56]. - The company reported a loss attributable to owners of RMB 265.6 million for the fiscal year, compared to a loss of RMB 917.0 million for the previous eighteen months[56]. - The overall gross profit margin decreased from 16.4% to 13.5%, primarily due to promotional measures taken to mitigate revenue decline[64]. Retail and Distribution Operations - The retail business recorded sales revenue of RMB 1,096.0 million, a decrease from RMB 1,896.8 million in the previous period[42]. - The distribution business generated sales revenue of RMB 1,328.4 million, down from RMB 2,072.1 million in the previous period[43]. - The total number of retail pharmacies operated by the company decreased to 850 from 917 in the previous year[60]. - The company had approximately 850 retail pharmacies and around 3,800 active distribution customers across Northeast China[8]. - The company closed 67 stores during the year, resulting in a total of 850 stores at the end of the year[42]. - The company has approximately 3,800 active customers in its national distribution network, down from 6,200 in the previous eighteen months[61]. Strategic Initiatives and Future Plans - The company is actively exploring the "Internet+" sector, including online pharmacies and cross-border e-commerce initiatives[9]. - The company plans to extend its upstream ecosystem into traditional Chinese medicine cultivation and plant capsule production[9]. - The company aims to establish a "Health Industry Fund" to support its strategic vision and enhance its ecosystem through financial and capital resources[9]. - The group aims to integrate "Internet + Health" with the physical economy, enhancing collaboration with industry platforms to develop international cooperation in the health sector[24]. - The company is focused on diversifying its product offerings and expanding sales channels to mitigate operational declines in retail distribution[24]. - The group aims to stabilize and optimize its existing retail chain and distribution system, focusing on strategic partnerships and logistics upgrades[87]. - The company plans to develop under-forest Chinese medicinal materials, leveraging government support for the industry[88]. - The group is exploring the "N+" strategy to create new business models and enhance its operational structure[90]. Market Context and Industry Trends - The global pharmaceutical market demand is projected to reach USD 122.49 billion in 2019, with an average compound growth rate of 4% to 5% from 2015 to 2019[27]. - China's pharmaceutical industry revenue reached RMB 2,398.6 billion in 2018, with a year-on-year growth of 12.6%[31]. - In the first half of 2019, China's GDP was RMB 45.09 trillion, growing by 6.3% year-on-year, which is the lowest growth rate since 1990[32]. - The pharmaceutical manufacturing industry's revenue and profit totaled RMB 1.22 trillion and RMB 160.82 billion respectively in the first half of 2019, reflecting year-on-year growth of 8.5% and 9.4%[32]. - The global pharmaceutical market is expected to see significant growth in emerging markets, particularly in Asia, Africa, and Australia, with growth rates between 6.9% and 9.9% from 2014 to 2019[27]. - The pharmaceutical industry is expected to face significant performance pressure due to policies like volume-based procurement, but overall growth is anticipated due to strategic reforms and market demand[36]. Employee and Corporate Governance - As of June 30, 2019, the group employed 5,628 staff, with 99.8% located in mainland China[118]. - The total number of employees decreased from 6,068 in 2018 to 5,628 in 2019, reflecting a reduction of approximately 7.2%[121]. - Employee turnover for the year was 440, compared to 223 in the previous 18 months, indicating an increase in turnover[121]. - The group provided 162 training sessions through the Jintian Business School, with a total of 8,916 participants in the current year[130]. - The group adheres to local labor laws, ensuring compliance with minimum wage and paid leave regulations[120]. - The group has not reported any employee fatalities or injuries related to work during the year[126]. - The group emphasizes employee well-being by offering flexible leave and organizing activities to relieve stress[125]. - The group ensures that all business conduct adheres to ethical standards, including health and safety regulations[123]. Environmental and Social Responsibility - The company aims to reduce greenhouse gas emissions by minimizing business travel and promoting alternative communication methods such as video conferencing[106]. - The company collaborates with five pharmaceutical manufacturers to ensure compliance with environmental regulations and promote energy-saving practices[106]. - The company emphasizes green office practices, including encouraging paperless operations and setting air conditioning to 25 degrees Celsius[115]. - The company has implemented a logistics warehouse construction project to enhance operational efficiency and reduce environmental impact[116]. - The company has established policies to promote resource conservation, including energy and water-saving measures[114]. - The group is committed to corporate social responsibility and sustainable development, integrating business growth with community engagement[141]. - The group actively participates in community activities and promotes the "Love China" public welfare brand[145]. Stock Options and Shareholder Information - The company issued a total of 300,000,000 stock options to 50 eligible participants, representing approximately 9.87% of the total issued shares[55]. - The company has granted a total of 500,000 stock options under the stock option plan to each of Zheng Shuangqing, Jiang Suhui, and Zou Haiyan, allowing them to subscribe for 500,000 shares upon exercise[187]. - The stock option plan was approved on November 18, 2013, and modified on December 20, 2018, with a validity period until November 17, 2023, lasting ten years[186]. - The total number of stock options granted under the stock option plan cannot exceed 10% of the total issued shares as of the resolution date[189]. - The beneficial owner, Jin Dongtao, holds 562,014,953 shares, representing 15.66% of the total shareholding[183]. - The company aims to attract skilled and experienced personnel through the stock option plan to encourage their retention and contribution to future development[186]. - The maximum number of shares that may be issued upon the exercise of all outstanding stock options under the plan cannot exceed 30% of the issued shares as per listing rules[190]. - The total number of stock options granted under the stock option plan is 500,000,000, with 200,000,000 options unexercised at the beginning of the year and 300,000,000 options granted during the year[192].

Financial Performance - Revenue for the six months ended December 31, 2018, was RMB 1,368.9 million, representing a 1.6% increase compared to RMB 1,348.0 million in the same period of 2017[8]. - Gross profit decreased to RMB 187.7 million, down 8.2% from RMB 204.4 million year-on-year, resulting in a gross margin of 13.7%, a decline of 1.5 percentage points[8]. - Operating loss improved significantly to RMB (123.5) million from RMB (475.0) million, reflecting a 351.5 million improvement[8]. - Net loss for the period was RMB (114.5) million, compared to RMB (474.3) million in the previous year, marking a 359.8 million improvement[8]. - The overall revenue for the group was RMB 1,368.9 million, an increase of 1.6% compared to RMB 1,348.0 million in the same period last year[35]. - The group recorded a loss attributable to owners of RMB 112.0 million, significantly reduced from a loss of RMB 470.8 million in the same period last year[35]. - Retail business sales revenue decreased from RMB 642.1 million in the same period last year to RMB 635.1 million, a decline of 1.1%[21]. - Distribution business sales revenue increased from RMB 705.9 million in the same period last year to RMB 733.8 million, an increase of 4.0%[22]. - The company reported a basic and diluted loss per share of RMB 3.68 for the six months ended December 31, 2018, compared to RMB 16.47 in the same period of 2017[77]. - The company reported a net cash outflow from operating activities of RMB 168,212 thousand for the six months ended December 31, 2018, compared to RMB 17,864 thousand for the same period in 2017, indicating a significant increase in cash usage[81]. - The company experienced a total comprehensive loss of RMB 117,491 thousand for the six months ended December 31, 2018, compared to a comprehensive loss of RMB 465,725 thousand for the same period in 2017, showing an improvement in financial performance[81]. Liquidity and Financial Position - The current ratio decreased to 5.0 from 5.4, indicating a slight decline in liquidity[8]. - As of December 31, 2018, the group had unencumbered cash and cash equivalents totaling RMB 756.9 million, down from RMB 929.2 million as of June 30, 2018[52]. - The total assets as of December 31, 2018, were RMB 2,091,188 thousand, down from RMB 2,229,330 thousand as of June 30, 2018, reflecting a decrease of approximately 6.2%[71]. - Total liabilities decreased slightly to RMB 289,774 thousand as of December 31, 2018, from RMB 291,955 thousand as of June 30, 2018, a reduction of about 0.7%[73]. - The company had no interest-bearing bank borrowings as of December 31, 2018, consistent with the previous period[56]. - The company had a total equity of RMB 1,801,414 thousand as of December 31, 2018, down from RMB 2,735,927 thousand as of December 31, 2017, reflecting a decrease in shareholder value[79]. Operational Efficiency - Accounts receivable turnover days increased to 27.5 days from 23.1 days, suggesting a longer collection period[8]. - Inventory turnover days improved to 46.6 days from 57.2 days, indicating better inventory management[8]. - The group closed 44 non-strategic stores during the period, resulting in a total of 873 stores, including 603 strategic stores[21]. - The group operates 1,252 brand products, including 607 authorized brands and 645 products with exclusive distribution rights[25]. - The group has established five large-scale logistics distribution centers, enhancing its distribution system across Northeast China[26]. - The total expenses for the six months ended December 31, 2018, were RMB 1,501,462,000, down from RMB 1,818,839,000 in the same period of 2017, reflecting a decrease of 17.4%[161]. Strategic Initiatives - The company plans to adapt to government policies affecting the healthcare market, including the inclusion of 17 cancer drugs in the national medical insurance list[15]. - The pharmaceutical industry is facing pressures from healthcare cost control and price reductions, impacting growth rates[15]. - The company is focusing on enhancing its product offerings and expanding its market presence in response to regulatory changes and industry trends[15]. - The company aims to explore structural transformation and upgrades focusing on three strategies: "Partner+" strategy, "N+" strategy, and "Logistics Upgrade" strategy[69]. - The company plans to focus on market expansion and new product development to enhance revenue streams in the upcoming periods[75]. Employee and Management - The total employee benefits expense for the group was RMB 153.8 million, compared to RMB 175.2 million for the six months ended December 31, 2017[60]. - The group has 5,789 full-time employees as of December 31, 2018, down from 6,161 as of December 31, 2017[60]. - The total remuneration for key management personnel for the six months ended December 31, 2018, was RMB 1,320,000, down from RMB 3,118,000 in 2017, indicating a reduction of 57.7%[175]. - The company has implemented measures to enhance employee productivity, including performance evaluations linked to compensation[60]. Shareholder Information - The company has a significant shareholder, Mr. Jin Dongtao, who holds 804,600,135 shares, representing 26.46% of the total shares[184]. - The company granted a total of 200,000,000 share options to 20 eligible participants, including four executive directors, under its share option scheme[184]. - The company has a share option plan that aims to attract skilled personnel and incentivize employees to contribute to the group's future development, valid until November 17, 2023[192]. - The company’s major shareholders include Credit Suisse Trust Limited, which holds 804,600,135 shares, representing 26.46%[187]. - The stock option plan was approved by shareholders at the annual general meeting on December 20, 2018[196]. Financial Reporting Standards - The company adopted new and revised International Financial Reporting Standards (IFRS) effective from July 1, 2018, with no significant impact on accounting policies or financial figures presented for the current and prior periods[90]. - Under IFRS 9, financial assets are classified and measured at amortized cost or fair value, with a focus on expected credit losses rather than incurred losses[93]. - The adoption of IFRS 15 requires more extensive disclosures in the financial statements, although it did not significantly affect revenue recognition[99]. - The company faces various financial risks, including foreign exchange risk, credit risk, liquidity risk, and interest rate risk, which are detailed in the annual financial statements[103].