Life Pharmacy profit down 1.9pc

Fairfax Media

NOT SO BAD: Life Pharmacy reported a 1.9 percent fall in half year net profit to $1.16 million, with the result reflecting the merger between the company and Pharmacybrands.

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Life Pharmacy reported a 1.9 percent fall in half year net profit to $1.16 million, with the result reflecting the merger between the company and Pharmacybrands.

The merger between the two companies was carried out on September 30, and from a legal perspective was an acquisition by Life Pharmacy of the issued share capital of Pharmacybrands.

But for financial reporting purposes the merger is treated as a reverse acquisition, meaning the results provided today are those of Pharmacybrands.

Life Pharmacy said its net profit for the six months to the end of September included $271,000 in one-off merger-related costs.

Before that the underlying profitability of the Pharmacybrands Group was $1.43m, an increase of $248,000 compared to a year earlier.

Operating revenue for the six months fell 3.6 percent to $6.72m, mainly due to differences in the timing of contributions from suppliers to the group's marketing programme.

During the half year the pre-merged Life Pharmacy business recorded a profit of $190,000, before abnormal costs associated with the merger of $3.19m. That compared with a loss of $415,000 for a year earlier.

The improvement in the underlying profit of the pre-merged Life Pharmacy business was driven by improved profitability in associate stores and a focus on cost savings in the franchise business, the company said.

Had the acquisition happened on April 1, estimated consolidated revenue of the combined organisation would have been $10.5m, with a consolidated profit of $1.35m, before abnormal costs by both companies associated with the merger of $3.46m.

The group operates the Life Pharmacy, Unichem, Amcal and Care Chemist brands, receiving franchise revenue and investing in associate stores.

As part of its integration plan, the company will be changing its name to Pharmacybrands in the second half of this year.

-NZPA