FIRST QUARTERLY RESULTS ANNOUNCEMENT FOR THE THREE MONTHS ENDED 31 MARCH 2012

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Jilin Province Huinan Changlong Bio-pharmacy Company Limited

(a joint stock limited company incorporated in the People's Republic of China)

(Stock Code: 8049)

FIRST QUARTERLY RESULTS ANNOUNCEMENT FOR THE THREE MONTHS ENDED 31 MARCH 2012

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE")

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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement, for which the directors of Jilin Province Huinan Changlong Bio-pharmacy

Company Limited (the "Directors") collectively and individually accept full responsibility,

includes par ticulars given in compliance with the Rules Gover ning the Listing of Securities on GEM (the "GEM Listing Rules") for the purpose of giving information with regard to Jilin Province Huinan Changlong Bio-phar macy Company Limited and its subsidiary ("the Group"). The directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this announcement

is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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FIRST QUARTERLY REPORT (UNAUDITED)

FOR THE THREE MONTHS ENDED 31 MARCH 2012

CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)

The Board of Directors (the "Board") of Jilin Province Huinan Changlong Biopharmacy Company Limited ("the Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the three months ended 31 March 2012 together with the comparative unaudited figures for the corresponding periods in 2011 as follows:
For the three months ended 31 March

	Notes	2012 RMB'000		2011 RMB'000
Turnover	3	68,034		45,123
Cost of sales		(10,266)		(5,156)
Gross profit		57,768		39,967
Other revenue		6,402		293
Distribution and selling costs		(48,880)		(22,312)
Administrative expenses		(4,768)		(1,607)
Profit from operations		10,522		16,341
Finance costs		0		0
Profit before taxation		10,522		16,341
Taxation	5	(1,578)		(2,451)
Profit attributable to equity holders of the Company		8,944		13,890
Earnings per share - Basic	6	1.60 cents		2.48 cents

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NOTES:

1. ORGANISATION AND OPERATIONS

The Company was established as a state-owned enterprise in the People's Republic of China (the "PRC") in 1989. On 29 December 1995, under the relevant provisions of the Company Law of the PRC, the Company was re-organized from a state-owned enterprise to a limited liability company. On 16 August 1996, with the approval of the Economic Restructuring Commission of Jilin Province, the Company was further converted into a joint stock limited company. On
20 April 1999, the Company made a bonus issue from capitalisation of retained profits at the proportion of one bonus share for every two existing shares. The Company's H shares were listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited on 24 May
2001.
The Group is principally engaged in the manufacture and distribution of biochemical medicines in the PRC under the brand names of Changlong and Shendi. There were no changes in the nature of the Group's principal activities during the period ended 31 March 2012.

2. BASIS OF PREPARATION

The unaudited consolidated results of the Group have been prepared under the historical cost convention as modified for the revaluation of financial instruments which have been measured at fair value, and in accordance with Hong Kong Financial Reporting Standards ("HKFRS") and Hong Kong Accounting Standards ("HKAS") (collectively "HKFRSs"), accounting principles generally accepted in Hong Kong, the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the "GEM Listing Rules").
The accounting policies adopted in preparing the unaudited consolidated results for the three months ended 31 March 2012 are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2011.
The condensed consolidated results for the three months ended 31 March 2012 are unaudited and have been reviewed by the audit committee of the Company.

3. TURNOVER

The Group's turnover comprises the invoiced value of merchandise sold net of value-added tax and after allowances for returns and discounts.

4. SEGMENTAL INFORMATION

The Group has only one business segment which is in the manufacture and distribution of biochemical medicines in the PRC. During the period ended 31 March 2012, turnover of the Group is generated entirely from sales in the PRC and all identifiable assets of the Group are located in PRC. Accordingly, no business or geographical segmental analysis is presented.
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5. TAXATION

Unaudited
For the three months ended 31 March
2012 2011
RMB'000 RMB'000
The charge comprises
PRC income tax 1,578 2,451
The PRC income tax is computed according to the relevant laws and regulations in the PRC. On
24 July, 2009, the Company was accredited as a "National New and High-tech Enterprise" by the Jilin Provincial Science and Technology Bureau (????????) and is entitled to a reduced PRC Enterprise Income tax rate of 15% for the three months ended 31 March 2012 (2011: 15%).

6. EARNINGS PER SHARE

The calculation of basic earnings per share for the three months ended 31 March 2012 is
based on the unaudited profit attributable to equity holders of the Company of approximately RMB8,944,000 (2011: RMB13,890,000) and the weighted average of 560,250,000 shares (2011: 560,250,000 shares).
Diluted earnings per share is not presented as there were no dilutive potential shares in existence during the periods ended 31 March 2012 and 2011.

7. DIVIDENDS

The Board does not recommend the payment of an interim dividend for the three months ended
31 March 2012. (2011: Nil).

8. RESERVES

Other than as disclosed below, there was no movement in reserves of the Group for the three
months ended 31 March 2012 and 31 March 2011.
Retained Profits
RMB'000
As at 1 January 2011 (Audited) 151,249
Net profit for the three months ended 31 March 2011 (Unaudited) 13,890
As at 31 March 2011 (Unaudited) 165,139
As at 1 January 2012 (Audited) 202,142
Net profit for the three months ended 31 March 2012 (Unaudited) 8,944
As at 31 March 2012 (Unaudited) 211,086
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BUSINESS REVIEW AND PROSPECTS

OPERATING RESULTS

For the three months ended 31 March 2012, the Group reported a turnover of approximately RMB68,034,000, representing an increase of approximately RMB22,911,000 as compared with the same period last year. Profit attributable to equity holders of the Company for the three months ended
31 March 2012 was RMB8,944,000, representing a decrease of 55% from RMB13,890,000 for the corresponding period in 2011. Basic earning per share was RMB1.6 cents.
Turnover increased for approximately RMB22,911,000 as compared with the same period last year mainly contributed by the increase in the sale of Hai Kun Shen Xi and Fu Fang Huo Nao Shu capsule.
The gross profit margin for the three months ended 31 March 2012 was approximately 85%, representing a 3% decrease as compared to that of 88% for the period ended 31 March 2011. The reason for the increase of gross profit margin was mainly due to a change of product sales mix whereby the sale of products with higher margin had increased. The Board believes that there were no significant fluctuation for the production and material cost.
The distribution and selling costs as a percentage of turnover was 71.8% in 2012. This represented a 22.8% increase from 49% when compared to the same period last year. Administrative expenses increase from RMB1,607,000 for the three months ended 31 March 2011 to RMB4,768,000 for the same period in 2012. This increase in distribution and selling costs and increase in administrative expenses did not exceed the Group's monthly budget and were in line with the Group's expectation during the strategic planning for 2012.

Production Facilities

In 2011, in addition to optimizing the existing production facilities for unlocking their full potential, we have established a new production line for solid dosage which is in strict compliance with the new GMP standard in the Huinan economic development zone, so as to satisfy the rapid and ever-growing demand for dominant species with a view to achieving better results for popular products.
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LIQUIDITY AND FINANCIAL RESOURCES

The Group has maintained a sound financial position during this period. As at 31 March 2012, the Group had cash and bank balances amounted to RMB74,922,000 (2011: RMB82,055,000). As at 31 March 2012, the Group had unaudited consolidated net asset value of approximately RMB351,451,000 (2011: RMB312,514,000).
For the three months ended 31 March 2012 and 2011, the Group generated revenue and incurred costs mainly in Hong Kong dollars and Renminbi. The Directors consider the impact on foreign exchange exposure of the Group is minimal.

GEARING RATIO

The Group's gearing ratio as at 31 March 2012 was 2.01% (as at 31 March 2011: 2.14%), which was calculated by dividing the amount of bank borrowings of the Group as at 31 March 2012 by total assets as at 31 March 2012 and then multiplied by 100%.

DIRECTORS' AND SUPERVISORS' INTERESTS IN SHARES

As at 31 March 2012, the interests and short positions of the Directors, supervisors and chief executives of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the minimum standards of dealing by directors as referred to in Rule 5.46 to 5.67 of the GEM Listing Rules were as follows:

Long positions in shares

	Type of		Number of	Percentage of Domestic	Percentage of total registered
Director	Interests	Capacity	Domestic Shares	Shares	Share Capital
Zhang Hong	Personal	Beneficial owner	101,937,000	26.29	18.19
Zhang Xiao Guang	Personal	Beneficial owner	42,315,000	10.91	7.55
Wu Guo Wen	Personal	Beneficial owner	900,000	0.232	0.161
Chen Qi Ming	Personal	Beneficial owner	300,000	0.077	0.054

Save as disclosed above, as at 31 March 2012, none of the Directors, supervisors and chief executives of the Company has any interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the minimum standards of dealing by directors as referred to in Rule
5.46 to 5.67 of the GEM Listing Rules.
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DIRECTORS' RIGHTS TO ACQUIRE SHARES

Apart from as disclosed under the headings "Directors' and Supervisors' interests in shares" above, at no time during the period were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any director, supervisor and chief executives or their respective spouses or children under 18 years of age, or were any such rights exercised by them; or was the Company, its holding company, or any of its subsidiaries a party to any arrangement to enable the directors, supervisors and chief executives to acquire such rights in any other body corporate.

INTERESTS DISCLOSEABLE UNDER THE SFO AND SUBSTANTIAL SHAREHOLDERS

As at 31 March 2012, the following persons (other than the Directors, supervisors and chief executives of the Company) had interests and short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

Long positions in shares
Name of	Capacity/	Number of	Percentage of Domestic	Percentage of total registered
shareholder	Nature of Interest	Domestic Shares	Shares	share capital
Huinan County SAB (Note)	Beneficial owner	81,975,000	21.14	14.63

Note: Apart from the equity interest in the Company, Huinan County SAB does not have any direct or indirect interest in the Company, including representation in the Board of Directors.

Save as disclosed above, as at 31 March 2012, the Directors were not aware of any other person (other than the Directors, supervisors and chief executives of the Company) who had interests and short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

COMPETING INTEREST

During the period under review, none of the Directors or the management shareholders, significant shareholders or substantial shareholders (as defined in the GEM Listing Rules) of the Company had any interest in any business, which competes or may compete with the business of the Group.
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CODE OF CONDUCT REGARDING SECURITIES TRANSACTIONS BY DIRECTORS

During the period ended 31 March 2012, the Company has adopted a code of conduct regarding securities transactions by directors on terms no less than the required standard of dealings as set out in rules 5.48 to 5.67 of the GEM Listing Rules. The Company has also made specific enquiry of all Directors and the Company was not aware of any non-compliance with the required standard of dealings and its code of conduct regarding securities transactions by Directors.

COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE PRACTICES

In the opinion of the Board, the Company has complied with the code provisions in the Code on Corporate Governance Practice (the "Code") as set out in the Appendix 15 of the GEM Listing Rules throughout the period ended 31 March 2012 subject to the deviations disclosed hereof.

BOARD OF DIRECTORS

Under the code provision A.2.1, the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Mr. Zhang Hong assumes the role of both the chairman and the chief executive officer of the Company. The Board is of the view that this has not compromised accountability and independent decision making for the following reasons:
- the Audit Committee composes exclusively of independent non-executive directors;
- the independent non-executive directors have free and direct access to the Company's external auditors and independent professional advice when considered necessary.
Mr. Zhang Hong, the chairman, is a substantial shareholder of the Company and has considerable industry experience. He is motivated to contribute to the growth and profitability of the Group. The Board is of the view that it is in the best interests of the Group to have an executive chairman so that the Board can have the benefit of a chairman who is knowledgeable about the business of the Group and is most capable to guide discussions and brief the Board in a timely manner on pertinent issues and developments to facilitate open dialogue between the Board and the management.
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AUDIT COMMITTEE

The Company set up an audit committee (the "Committee") on 24 May 2001 with written terms of reference in compliance with the requirements as set out in Rules 5.28 and 5.29 of the GEM Listing Rules. The primary duties of the Committee are to review and provide supervision over the financial reporting procedures and internal control system of the Group.
The committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters, including a review of the unaudited results of the Group for the period ended 31 March 2012.

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES

During the three months ended 31 March 2012, neither the Company nor its subsidiaries purchased, sold or redeemed any of the Company's listed shares.
By order of the Board Zhang Hong Chairman
Jilin, the PRC
15 May 2012

As at the date hereof, the executive directors of the Company are Mr. Zhang Hong, Mr. Zhang Xiao Guang, Mr. Tian Xin Guo, Mr. Chen Qi Ming, Mr. Wu Guo Wen, Mr. Zhao Bao Gang; the independent non-executive directors of the Company are Mr. Shen Yu Xiang, Mr. Xue Chang Qing and Mr. Yan Li Jin.

This announcement will remain on the "Latest Company Announcements" page on the GEM Website at www.hkgem.com for at least 7 days from the date of its posting.

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