OREANDA-NEWS. June 9, 2011. OJSC Pharmacy Chain 36.6 [RTS:APTK; MICEX:RU14APTK1007], the leading Russian pharmaceutical retailer, announces unaudited sales and operational results for Q1 2011 according to the management accounts.

Group comment

In view of questions of analysts about the comparability of sales performance of retail segment in 1 Q of 2011 compared with a 1 Q of 2010, Pharmacy Chain 36.6 has decided to issue an additional press release and considers it necessary to report the following:

From 1 January 2011 in accordance with the provisions of the Tax Code, for pharmaceutical organizations to take effect changes restricting the use of a special tax regime – Imputed Earnings Tax (IET) in connection with all the regional retail companies of the Group Pharmacy Chain 36.6 transited to a common tax regime, involving the exclusion of VAT from the Gross Sales.

In accordance with the provisions of the Tax Code, From 1 January 2011, changes restricting utilisation of the special tax regime — Imputed Earnings Tax (IET)  for pharmaceutical organizations taked effect. Thus all regional retail companies of the Group Pharmacy Chain 36.6 were switched to a common tax regime,effecting an exclusion of VAT from the Gross Sales.

For correct comparison of sales in the retail segment of 2011/2010 years, indicators of Sales of 2010 and 2011 hereinafter provided on all companies in comparable terms — Gross Sales including VAT, that, in the opinion of management of Pharmacy Chain 36.6 reflects a correct comparison of the dynamics of sales and average check at pharmacies in 2011 compared to the same period last year.

Net Sales (Sales excluding VAT) of the Group and of the Retail segment of 1 Q 2011, published in the press-release, Pharmacy Chain 36.6 on May 26, 2011, remain unchanged.

Retail

As of the end of Q1 2011 Sales of the Retail unit (including VAT) increased by 15.8% in ruble terms from RUR 4 132,0 mln to RUR 3 569,1 mln in 2010.

As of the end of Q1 2011 Pharmacy Chain 36.6 operated 990 stores in 29 regions of Russia, and there are 10 optics and 20 of optics, located inside pharmacies.

During Q1 2011 6 stores were opened organically and 5 were closed;

Operational data for the retail unit

In Q1 2011 average check (including VAT) stood at RUR 299, in Moscow – RUR 368, an increase of 22% and 16.8% respectively in rouble terms versus Q1 2010..

Like-for-like sales in comparable stores[1]

As of the end of Q1 2011 Pharmacy Chain 36.6 operates 843 comparable stores.

In Q1 2011 L-F-L sales (gross sales, including VAT) growth reached 19.3% and average check growth (including VAT) raised by 22% (from RUR 245 to 299) in these stores as compared to Q1 2010.

Sales per trading sq.m.:

Thanks to the measures taken by the management within 2010 aimed at operational activity efficiency improvement sales per trading sq.m. in L-F-L stores showed an advancing growth in Q1 2011, i.e. 20% versus Q1 2010, indicating positive tendency begun in the second half of 2010.

Private label

In Q1 2011 the private label sales in L- F- L stores reached RUR 379,2 mln (gross sales, including VAT), which represents a more than 43,3 % growth in rouble compared to Q1 2010,

In Q1 2011 a share of private label sales in the total gross turnover (including VAT) reached 9,7% (compared to 8,1% in Q1 2010),

Number of SKUs increased by 24% from 863 at the end of Q1 2010 to 1071 by the end of Q1 2011. Parapharmaceuticals constitute the major part of private label goods assortment; a share of OTC drugs, vitamins and supplements equals to 10% of the private label goods turnover.

[1] Comparable stores are defined as stores:

Opened or acquired 24 months prior to the presented reporting period, and