Pharmacybrands

By Dan Stratful

Friday 4th November 2011

Pharmacybrands (NZX: PHB ) is New Zealand’s only listed retail pharmacy group and comprises the Unichem, Amcal, Life Pharmacy, Radius and Care Chemist brands. In total the company represents 303 retail outlets operating throughout New Zealand including 135 Unichem Pharmacies, 79 Amcal Pharmacies, 28 Life Pharmacies, 2 Life Outlet stores, 27 Care Chemist Pharmacies and 34 Radius Pharmacies. Of the 303 retail outlets, the company has an ownership interest in 68 associate pharmacies and two 50/50 joint venture outlet stores.

PHB has been in M&A mode with the September 2009 merger of Life Pharmacy and Pharmacybrands, acquisitions of further Unichem and Amcal pharmacies and the recent acquisition of Radius Pharmacy and Radius Medical. The Radius acquisitions were funded by new bank borrowings of $26 million, a placement to PHB’s 2 cornerstone shareholders and a share purchase plan to minority shareholders, both priced at 45c per new share.

The Radius companies achieved unaudited EBIT of $5.6 million in the year to 31 March 2011 and PHB expects these earnings will be maintained in the current year to 31 March 2012, as it looks to integrate the Radius companies into the group.

PHB itself reported a profitable year in the year to 31 March 2011 with revenue from ordinary activities up 34% to $22 million and net profit of $5.1 million up 46%. No dividend was paid as the company chose to reduce debt after making the acquisitions.

As NZ’s only listed retail pharmacist, PHB may appeal to health conscious investors and its latest full year results were satisfactory. Any further growth will come from more acquisitions of pharmacies and other healthcare providers.

Status: HOLD

PHB shares last traded at 66c.

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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