10 June 2008

for the period ended 31 March 2008

Alliance Boots, the pharmacy-led health and beauty group, has today published its 2007/08 Annual Review and Consolidated Financial Statements for the period ended 31 March 2008. The Annual Review is attached and both documents are available in full on the Group's website at: www.allianceboots.com open link in a new window.

Alliance Boots has produced an excellent set of financial results in what is our first full financial year since the merger, which includes nine months of trading as a private company.

Highlights

  • Excellent financial performance
  • Health & Beauty Division
    - good revenue growth with substantial increase in trading margin
    - biggest expansion of Boots pharmacy brand underway - UK integration programme accelerated
  • Pharmaceutical Wholesale Division
    - performed well in particularly difficult market conditions
    - continuing to win logistics service contracts from pharmaceutical manufacturers
    - service offering expanded through acquisition of Central Homecare just after year end
  • Completed entry into China through wholesale joint venture
  • Strong cash generation from operations

Group financial highlights - pro forma*

Revenue

up 4.8% to £15,304 million

Revenue including share of revenue of associates and joint ventures

up 6.3% to £17,788 million

EBITDA1

up 17.9% to £1,027 million

EBITDA including share of EBITDA of associates and joint ventures

up 17.8% to £1,119 million

Trading profit2

up 20.3% to £771 million

Trading profit including share of trading profit of associates and joint ventures

up 20.1% to £854 million

Cash generated from operations3

up 29.9% to £1,152 million

* The Annual Review and Consolidated Financial Statements have been published by Alliance Boots GmbH, a new Group holding company recently established in Switzerland. To assist in understanding the performance of the Group, pro forma financial information has been prepared to show the results from continuing operations of the Group as if the two former groups (Alliance UniChem and Boots Group) had always been combined and the acquisition of Alliance Boots plc by AB Acquisitions Limited had taken place prior to 31 March 2006. The pro forma revenue and profit statement for continuing operations has been prepared on an adjusted basis, which means before exceptional items and amortisation of customer relationships and brands.
1 EBITDA comprises trading profit before depreciation and amortisation.
2 Trading profit comprises profit from operations before exceptional items, amortisation of customer relationships and brands, and share of post tax earnings of associates and joint ventures.
3 Cash generated from operations excludes cash outflows relating to the merger of the two former groups and the acquisition of Alliance Boots plc by AB Acquisitions Limited.

Stefano Pessina, Executive Chairman said:

"These results demonstrate that Alliance Boots has made good progress and delivered an excellent financial performance. We are investing significantly in the Group for the long term and I am confident that we are on track to build the world's leading pharmacy-led health and beauty group.

"Since our year end, the Group has continued to perform well, reflecting the underlying strength of our two core business activities and the markets in which we operate. We remain confident about our prospects for the year ahead, despite the weaker outlook for overall consumer spending in the UK, as the benefits of refocusing our management efforts continue to enhance the performance of our businesses."

For further enquiries, contact:

Alliance Boots
Gerald Gradwell, Director of Investor Relations Tel: 020 7495 8880

Gavin Anderson & Company
Richard Constant Tel: 020 7554 1400

Pro forma financial results

Divisional highlights
for the year ended 31 March 2008

 

 

 

Year on year growth

 

 

Revenue

£million

Trading profit

£million

Revenue

 

Trading

profit

Health & Beauty

6,848

603

+4.2%

+20.1%

Pharmaceutical Wholesale1

9,562

206

+5.8%

+15.7%

Contract Manufacturing & Corporate Costs

105

(38)

+22.1%

 

Intra-group

(1,211)

-

 

 

Group2

15,304

771

+4.8%

+20.3%

Share of revenue & trading profit of associates and joint ventures

2,484

83

+17.3%

+18.6%

 

17,788

854

+6.3%

+20.1%

1 Own brand exports are included in the results of the Pharmaceutical Wholesale Division, having previously been separately reported. Comparatives have been restated to reflect this management change.
2 Group trading profit comprises profit from operations before exceptional items, amortisation of customer relationships and brands, and share of post tax earnings of associates and joint ventures.

Alliance Boots has delivered an excellent set of financial results in our first full financial year since the merger, which included nine months of operating under private ownership. The Health & Beauty Division delivered good revenue growth while at the same time substantially increasing its trading margin. The Pharmaceutical Wholesale Division also performed well in what were particularly difficult market conditions in many countries.

Revenue increased year on year by 4.8% to £15,304 million, like for like revenue increasing by 1.9%. Trading profit (which comprises profit from operations before exceptional items, amortisation of customer relationships and brands, and share of post tax earnings of associates and joint ventures) increased by 20.3% to £771 million and EBITDA on the same basis by 17.9% to £1,027 million. For associates and joint ventures our share of post tax earnings before exceptional items increased by 22.4% to £60 million. Total EBITDA, including our share of EBITDA of associates and joint ventures, increased by 17.8% to £1,119 million.

Cash generated by operations was strong during the year, including a net working capital inflow of £183 million. This has enabled us to fund investment to grow our businesses. We invested £285 million of cash on capital expenditure, a large proportion of which was spent on upgrading retail stores and on logistics. In addition, £184 million of cash was invested in new acquisitions, associates and joint ventures, including £138 million for the purchase of 108 pharmacies in the UK and £41 million on our new wholesale joint venture in China. Net borrowings at the year end were £8,746 million and shareholders' equity was £4,013 million.

Following the move to private ownership in June 2007, we have been able to dedicate much of our efforts on accelerating the transformation of our Group to further improve performance.

Our primary focus has been on delivering previously announced and newly identified cost savings, commencing the integration of Boots and Alliance Pharmacy in the UK including the re-branding of our community pharmacies, progressing opportunities to develop Boots outside the UK and expanding our pharmaceutical wholesaling operations, both internationally and in related business areas, ensuring that we continue to meet customer expectations in terms of products and service.

During the year we delivered £68 million of merger cost savings, primarily from harmonised buying prices and reduced corporate costs, and remain on track with the longer term project to streamline our combined distribution network. This means that we have already reached our initial goal of achieving 60% of our £100 million per annum target merger cost synergies by 31 July 2008 and we still expect to achieve the overall target by July 2010.

Alliance Boots 2007/08 Annual Review as a word document -(140 KB) open link in a new window

Alliance Boots 2007/08 Annual Review as a PDF -(87 KB) open link in a new window

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