Pharmacy Chain 36.6 Reports Restated 2007 Results
OREANDA-NEWS. On 08 May 2009 OJSC Pharmacy Chain 36.6 [RTS:APTK; MICEX:RU14APTK1007] the leading Russian pharmaceutical retailer announced restated 2007 financial results prepared in accordance with the International Financial Reporting Standards (IFRS).
Highlights of restated accounts of full year 2007 after restatement:
Consolidated Sales remained unchanged at USD 871.1 mln;
Consolidated Gross profit decreased by USD 13.0 mln from previously reported USD 277.5 to USD 264.5 mln;
Consolidated EBITDA decreased to –USD 30.8 mln from previously reported -USD 7.0 mln.
Consolidated Net loss increased by USD 21.9 to -USD 121.3 mln ( of which –USD 124.0 mln is from continued operations and USD 2.7 mln is from discontinued) from previously reported -USD 99.4 mln.
2007 accounts restatement relates exceptionally to Retail segment and does not change accounts of other Group reporting segments. As previously stated, Retail segment experienced significant problems with the consistency of 2007 accounting data which was partly a result of difficulties encountered by the Group while implementing the new ERP system in 2007.
In 2008 management performed a thorough review of its debtors and creditors’ ledgers as well as reconciliations of certain other accounts including VAT and inventory. The results of such review have led the Group’s management to conclude that recoverability of certain types of its assets was not properly analyzed in the year ended 31 December 2007 and the appropriate allowances were not properly recorded in the consolidated financial statements. In addition, various accounts were not properly reconciled in the prior year.
The following prior period errors were discovered by management during the reporting period:
Inaccurate valuation of inventory balance which resulted in overstatement of inventories by USD 2 943 thousand as of 31 December 2007;
Inaccurate calculation of impairment allowance for advances paid and VAT recoverable which resulted in overstatement of other receivables and prepaid expenses by USD 18 556 thousand as of 31 December 2007;
Inaccurate measurement of other accounts payable and taxes payable which resulted in understatement of other payables by USD 2 227 thousand and taxes payable by USD 739 thousand as of 31 December 2007;
Inaccurate calculation of carrying amount of property, plant and equipment resulting in an overstatement of property, plant and equipment balance by USD 350 thousand as of 31 December 2007;
Inaccurate calculation of deferred income tax as of 31 December 2007 resulting from prior period errors described above;
Inaccurate valuation of trade accounts payable which resulted understatement in the amount of USD 595 thousand;
The Group has changed the reporting of 2007 consolidated results to continued and discontinued operations to reflect the fact of disposal of it’s medical services business which took place in May 2008.
As a result, the consolidated financial statements for the year ended 31 December 2007 have been restated from the amounts previously reported. All changes have been posted to Q4 2007.
Retail highlights of full year 2007:
Profit and Loss items
Additional charge to Cost of goods sold of USD 13.0 mln previously reported as B/S item;
Additional charge to SG&A expenses of USD 10.7 mln previously reported as B/S item;
Decrease of Profit tax charge to the extent of deferred tax effect from the above mentioned corrections by USD 1.8 mln.
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