OREANDA-NEWS. February 28, 2012. OJSC Pharmacy Chain 36.6 [RTS:APTK;MICEX:RU14APTK1007] — the leading Russian pharmaceutical retailer announces unaudited 9M 2011 financial results prepared in accordance with the International Financial Reporting Standards (IFRS).

9M 2011 group highlights

Consolidated EBITDA from ongoing operations increased by 23,2% and reached RUR 1 307.4 mln versus RUR 1 061.0 mln in the relative period of 2010;

Group revenue (net) from ongoing operations increased by 7.4% and reached RUR 15 693.1 mln, in Q3 2011 revenue (net) from ongoing operations increased by 0.3% and reached RUR 4 882,3;

Gross profit from ongoing operations increased by 15.3% to RUR 6 862.7 mln versus the relative period of 2010;

Gross profit margin from ongoing operations in 9M 2011 increased up to 43.7% compared to 40.7% in the same period of 2010;

Group underlying Net loss from ongoing operations before minority interest and loss on early loan repayment reached RUR 63.3 mln compared to the net loss of RUR 420.4 mln in 9M 2010;

As of the end of 9M 2011 Pharmacy Chain 36.6 operated 996 stores, 19 ELC stores, 10 stand-alone optical outlets and 19 additional optical departments within pharmacies.

Group consolidated financial results

Retail unit

Revenue

Net sales of the Retail unit in 9M 2011 increased by 4.3% from RUR 10 138.1 mln to RUR 10 571.5 mln.

In Q3 2011 net sales reached RUR 3 306.9 mln versus RUR 3 412.6 mln in Q3 2010.

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 have taken effect. Thus all regional retail companies of the Group Pharmacy Chain 36.6 have switched to a common tax regime, effecting an exclusion of VAT from the Gross Sales. In order to provide comparable statistics of sales performance of retail segment in 2011 versus 2010, hereinafter in this part of the press-release Sales figures are given in Gross Sales including VAT.

As of the end of 9M 2011 Gross sales of the Retail Unit (including VAT) grew up by 11.7% versus 9M 2010.

Like-for-like[1] gross sales in 9M 2011 increased by 13.7% in ruble terms compared to the relative period of 2010. Average check (including VAT) in like-for-like stores increased by 22.3% and reached RUR 303 in 9M 2011.

Gross profit and gross margin

In 9M 2011 Gross profit in the Retail unit increased by 14.4% and reached RUR 3 476.7 mln versus RUR 3 039.9 mln in 9M 2010. Gross profit margin increased by 2.9% and reached 32.9% versus 30.0 % in 9M 2010. Gross profit margin growth is a result of increase of high-marginal products (parapharmaceutical and private label goods) share in the total turnover.

Selling, general and administrative expenses (SG&A)

In 9M 2011 selling, general and administrative expenses increased by 9.9% in ruble terms and reached RUR 3 581.2 mln versus RUR 3 259.0 mln in the same period of 2010. SG&A growth in absolute values reflected a considerable tax pressure boost on wage fund 2011 (an increase of social tax rates since 2011).

Trade accounts payable

As of the end of 9M 2011 trade accounts payable increased by 7.1% and reached RUR 3 129.0 mln compared to those as of the beginning of 2011.

Inventory

By the end of 9M 2011 inventory average turnover period grew up to 77 days versus 76 days as of the end of 9M 2010.

In absolute terms, inventory also decreased by 3.7% and reached RUR 2 538.0 compared to the same period of 2010 mln.

Other businesses

VEROPHARM

For the latest update on 9M 2011 performance please refer to the official press-release of the company as of December 28th, 2011.

ELC

Early Learning Center revenue consolidated by the Group (which is 50% of the total revenue) increased by 31.6% and reached RUR 174.5mln, versus RUR 132.6 mln in the same period of 2010.

In 2010 year 7 new ELC stores were opened in Moscow, sales of these stores result in significant revenue growth in 2011 year.

As of the end of 9M 2011 ELC Net loss equaled to RUR 3.6 mln compared to RUR 0.4 mln in H1 2010.

As of the end of 9M 2011, the unit operated 19 stores.

Group financial debt

As of the 30th of September 2011 Group Financial Debt increased by 19.2% and reached RUR 11 125.6 mln versus RUR 9 334.9 mln as of the beginning of 2011.

As of the end of 9M 2011 Group Financial Net Debt (after deduction of monetary funds remains in the accounts) equaled to RUR 10 761.7 mln.

As of the 30th of September 2011 the Retail and Corporate units debt equaled to RUR 10 199.0 mln, including 97% of the debt denominated in RUR; Veropharm debt stood at RUR 926.5 mln, which is 100% denominated in RUR.

Group financial costs

Consolidated financial costs in 9M 2011 increased by 21.9% and reached RUR 1 066.0 mln versus the same period of 2010.

Investments

In 9M 2011 the Group invested in fixed and intangible assets RUR 430.4 mln, out of which retail investments equaled to RUR 113.5 mln.

Veropharm investments reached RUR 315.2mln.

ELC investments reached RUR 1.7 mln.

Group net profit

Group Net profit from ongoing operations before loss on early repayment reached RUR 272.2 mln in 9M 2011 compared to the net loss of RUR 370.2 mln in the same period of 2010.

Group underlying Net loss from ongoing operations (before minority interest) in 9M 2011 reached RUR 551.8 mln versus RUR 420.4 mln in the same period of 2010. Net group loss increase is due to the early loan repayment commission paid to the Consortium of Investors[2] in Q2 2011.

[1] The L-F-L reporting is executed for a selection of comparable stores, which are:

opened or acquired 24 months prior to the current reporting period, and

not closed in the current reporting period.

The L-F-L stores equaled to 815 units as of the end of 9M 2011.

[2] At the 2nd of June 2011 Moscow bank of Sberbank opened to OJSC Pharmacy Chain 36.6 nonrevolving credit line with a limit of RUR 4 150 bln for the period of 5 years. The above funds were used for the repayment of the loan due to Consortium of investors denominated in US Dollars.