OREANDA-NEWS. April 22, 2011. OJSC Pharmacy Chain 36.6 [RTS:APTK; MICEX:RU14APTK1007], the leading Russian pharmaceutical retailer, announces unaudited sales and operational results according to the management accounts.

Group sales1

Group’s consolidated sales reached RUR 5 764.2 mln in Q4 2010 versus RUR 5 025.6 mln in Q4 2010, a 14.7% increase in ruble terms y-o-y;

Pharmacy Retail Sales reached RUR 4 069.4 mln versus RUR 3 618.4 mln in Q4 2010, a 12.5% increase in ruble terms y-o-y;

Sales of finished goods of the production unit Veropharm increased by 23.8% in Q4 2010 in ruble terms and reached RUR 1 461.1 mln versus RUR 1 179.9 mln in Q4 2009.

Group’s consolidated sales reached RUR 20 381.1 mln in FY 2010 versus RUR 21 061.5 mln in FY 2011, a 3.2% decrease in ruble terms y-o-y;

Pharmacy Retail Sales reached RUR 14 207.5 mln in FY 2010 versus RUR 15 984.8 mln in FY 2009, a 11.1% decrease in ruble terms y-o-y;

Sales of finished goods of the production unit Veropharm increased by 22.7% in ruble terms in FY 2010 and reached RUR 5 395.1 mln versus RUR 4 395.2 mln in FY 2009;

Non-core businesses increased by 4% in Q4 2010 and by 5.2.% in FY 2010 in ruble terms compared to the relative periods of 2009.

Valeria Solok, Chief Executive Officer of the Management Company “Pharmacy Chain 36.6”:

“Thanks to the properly chosen strategy for 2010, intended for the Company’s profitability and the pharmacies’ operational efficiency improvement as well as at our customers’ return by means of the sound pricing and marketing policy; and due to the progressive increase of the private label goods share in the total turnover, the Company demonstrated a considerable retail sales growth in Q4 2010 for the first time in the course of the economic crisis and the following recovery period (since Q4 2008). A positive retail sales growth had also a favourable effect on the optimistic consolidated revenue dynamics in the same period. In 2011 the Company aims at the gradual chain expansion and the strengthening of the growth tendencies.”

Retail

As of the end of Q4 2010 Pharmacy Chain 36.6 operated 989 stores in 29 regions of Russia.

During Q4 2010 8 stores were opened organically and 16 were closed;

As of the end of Q4 2010 Pharmacy Chain 36.6 operated 9 stand-alone optical outlets and 21 additional optical departments within pharmacies.

As of the end of Q4 2010 Pharmacy Chain 36.6 operated 19 ELC stores, 2 of which were opened within Q4 2010.

Early Learning Center revenue consolidated by the Group (which is 50% of the total revenue) reached RUR 222.3 mln in FY 2010, a 19.5% growth in ruble terms versus FY 2009 (RUR 186 mln).

Operational data for the retail unit

In Q4 2010 average check across the network stood at RUR 285, in Moscow – RUR 390, an increase of 16.3% and 12.7% respectively in ruble terms versus Q4 2009.

In 2010 average check across the network stood at RUR 255, in Moscow – RUR 358, an increase of 8.2% and 5.9% respectively in ruble terms versus FY 2009.

Like-for-like sales in comparable stores2

As of the end of Q4 2010 the Company operates 868 comparable stores.

L-F-L sales growth reached 11.5% and average check growth equalled to 7.4% in these stores as compared to Q4 2009.

2010 demonstrated a progressive tendency of a gradual rehabilitation of the number of purchases (number of receipts) in L-F-L stores compared to 2009 and the traffic growth in December 2010 versus the same period of 2009 was the most positive within a year of 2010.

Thanks to the taken by the management measures within 2010 aimed at operational efficiency improvement, including maximum possible stock–out elimination, allocation of more shelf area to private label goods as well as promotion and advertising campaigns, sales per trading sq.m. in L-F-L stores showed a 17% growth in Q4 2010 versus the previous quarter of 2010, indicating the positive tendency strengthening begun in Q3 2010.

Private label

In Q4 2010 the private label sales reached RUR 347 mln (in comparable stores), which represents a 32.9 % growth in ruble terms compared to Q4 2009.

In 2010 the private label sales reached RUR 1 167 mln (in comparable stores), which represents a 11.9% growth in ruble terms compared to 2009.

In Q4 2010 a share of private label sales in the total turnover reached 9.5% (compared to 7.9% in Q4 2009) due to the launch of 212 new SKUs within 2010 and promotion programme of the private label goods.

Number of SKUs increased by 21% from 821 at the end of Q4 2009 to 1012 by the end of Q4 2010. Parapharmaceuticals constitute the major part of private label goods assortment; a share of OTC drugs, vitamins and supplements equals to 9% of the private label goods turnover.

In 2011 the Company planes a consistent growth of private label SKUs number (up to 1600 SKUs) as well as a private label goods share increase both in the total turnover (up to 13.3%) and within every product category and subcategory and in every geographical region. The Company anticipates that favourable market environment, increasing demand for the private label goods together with the launch of new products will contribute significantly to the retail profitability in the current year.

The cornerstone of the Company’s retail business development strategy in 2011 will be the strengthening of the positive tendencies of 2010, i.e.:

providing further customers’ traffic and loyalty improvement;

sales growth of highly marginal goods, including parapharmaceuticals, active cosmetics and private label goods, aimed at total retail business gross margin increase;

transaction costs reduction

intended for the sustained control of the Company’s profit through building-up of quality administration instruments.

The current 2011 year is a year of adjustment of business procedures and processes, allowing the Company to implement its commercial strategy from the headquarters down to every pharmacy and providing a fast and flexible reaction of the business system, as a whole.

1 Hereinafter – these financial indicators may vary from the consolidated financial reporting prepared in accordance with IFRS.

2 Comparable stores are defined as stores:

Opened or acquired 24 months prior to the presented reporting period, and not closed in the presented reporting period.