A&D Pharma - 1H09 preview, due on 30 July

Romanian pharmaceutical wholesaler and retailer A&D Pharma is expected to post € 4.3m net profit for 1H09 (up from € 1.0m gain in 1H08 and from € 3.3m loss in 2H08) on 30 July 2009 before market open. We expect the company to impress it’s creditors and investors with a strong cost containment during the first six month of the year. While weakening RON to € y/y is expected to place adverse pressure on the company’s gross margin, we believe it will help in lowering the company’s € denominated rent and personnel costs. We also expect a strong control on personnel costs following a recent 10% headcount reduction. We believe good results could be a major trigger for the stock, as it could also reduce the refinancing risk of the company. A refinancing deal should be signed this week since the majority of the company’s debt (€ 60m) matures on 31 July 2009.

A&D Pharma consolidated 1H09 result preview

(in € m)	2H07	1H08	2H08	1H09F	h/h	y/y
Total Sales	226.4	254.1	247.4	246.2	-0.5%	-3.1%
o/w Retail (Sensiblu)	65.4	71.3	83.5	90.8	8.7%	27.4%
o/w Wholesale (Mediplus)	193.4	207.2	217.8	205.3	-5.7%	-0.9%
- Sales & Marketing	48.5	48.0	50.6	55.0	8.7%	14.6%
- Wholesale (classic activities)	145.0	159.2	167.2	150.3	-10.1%	-5.6%
o/w Eliminations	-32.5	-24.4	-53.9	-49.9	-7.4%	104.7%
EBITDA	-0.5	10.7	10.8	14.4	32.4%	34.2%
EBITDA Margin	-0.2%	4.2%	4.4%	5.8%	145bps	162bps
Depreciation and amortisation	3.8	4.0	4.4	4.2	-5.2%	6.1%
Total operating costs	64.4	55.4	56.3	47.9	-14.8%	-13.4%
EBIT	-4.3	6.7	6.4	10.2	58.4%	50.7%
EBIT Margin	-1.9%	2.7%	2.6%	4.1%	153bps	147bps
Adj. EBIT	1.6	6.7	12.6	10.2	-19.5%	50.7%
Adj. EBIT margin	0.7%	2.7%	5.1%	4.1%	-97bps	147bps
Financial gains / (losses)	-15.4	-4.0	-11.2	-5.0	-55.5%	26.2%
Profit before taxation	-19.7	2.8	-4.8	5.2	-207.3%	85.6%
Taxation	0.6	1.8	-1.5	0.8	-153.7%	-54.8%
Net income	-20.3	1.0	-3.3	4.3	-232.5%	354.7%
Net Margin	-8.98%	0.38%	-1.32%	1.76%	308bps	139bps
Earnings per GDR (€)	(0.6100)	0.0286	(0.0982)	0.1301	-232.5%	354.7%