January 11, 2007

Alliance Boots plc, the international pharmacy-led health and beauty group, today updates on trading for its third quarter (the three months ended 31 December 2006).

Revenue growth over the comparable period last year:

  Total Like for like
Retail Division    
UK +2.5% +1.5%
International +5.3% +2.7%
Total +2.7% +1.6%
Wholesale Division    
Northern Europe +14.3% +2.9%
Southern Europe -0.1% +0.8%
Total +5.1% +1.6%

All comments and comparative figures in this announcement are made on the basis of pro forma figures for the comparative period as if the two former groups had always been combined. Like for like revenue growth is on a constant currency basis.

Commenting today, Alliance Boots Chief Executive Richard Baker said:

"The Group performed well during the quarter and remains on track. Total and like for like revenue grew in both divisions which, combined with our good margin management, reinforces our confidence for the full year."


In the UK we performed strongly in both revenue and trading margin, in what has been a highly competitive market.

Like for like revenue in the UK grew by 1.5%. The calendar quarter contained one fewer Saturday and one additional Sunday compared to the prior year. This change in days reduced like for like revenue by 0.7%, the impact of which will reverse in the fourth quarter. The expected adjustments to the reimbursement rate in relation to generic prescription medicines in the UK, which came into effect at the beginning of October 2006, reduced underlying revenue growth by approximately 1.2% over the comparative period last year. This impact is entirely attributable to our dispensing activities.

Our Health & Beauty business delivered another record third quarter revenue increase, supported by the "Gorgeous" advertising campaign. Trading margin increased due to better buying, less discounting and promotional activity, and a higher proportion of exclusive and own brand seasonal products.

In the Health category in the UK we saw continued growth in dispensing volumes, growth in the value of these sales being lower, as anticipated, as a result of the adjustments to the generics reimbursement rate.

In the Beauty & Toiletries category, where we have leading market positions and brands, cosmetics and fragrances performed particularly strongly. This was a key contributor to our biggest ever trading week in the run-up to Christmas for UK Retail.

In the Lifestyle category (which includes seasonal and electrical beauty products), good seasonal gift sales combined with more selective buying, tight stock control and a good start to the post-Christmas sale, has resulted in us entering the new calendar year with seasonal inventories in line with our expectations.

Our international retail businesses traded in line with our expectations during the quarter.


Revenue in our Wholesale Division grew, in what remain competitive markets. Government price cuts and the trend towards the increased use of generic medicines reduced total market value growth, but had no impact on volumes.

In Northern Europe our businesses performed in line with our expectations. Revenue growth benefited from the acquisitions of Cordia Healthcare in the UK and Apteka in Russia, and increased intra-group sales to our Health & Beauty business.

In Southern Europe our businesses have similarly performed in line with our expectations. In France the anticipated government action to contain healthcare expenditure has now been confirmed which will result in an additional €35 million healthcare tax for 2006 allocated between all pharmaceutical wholesalers and distributors. During the quarter the restructuring of our French warehouse network has continued in line with plan.

Corporate development

The programme to comply with the undertaking given to the Office of Fair Trading at the time they approved the merger is well underway. Of the 96 pharmacies in the UK identified for disposal, conditional contracts have been signed to sell 89.

                                                    - Ends -

Richard Baker, Chief Executive, and George Fairweather, Group Finance Director, will host a conference call for analysts at 08.00 GMT.

UK dial in number 020 8515 2301
International dial in number +44 20 8515 2301

Quote conference title - Alliance Boots Q3 Trading Update

A replay facility will be available for seven days:

UK dial in number 020 7190 5901
International dial in number +44 20 7190 5901
Access number 134786#

For further information, please contact:

Investor Relations
Gerald Gradwell/Chris Laud
Tel: +44 (0)20 7138 1118

Donal McCabe
Tel: +44 (0)20 7138 1164

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