Half-yearly Report

LONDON--(BUSINESS WIRE)--

A&D PHARMA HOLDINGS N.V.

FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2010

30% year-on-year growth in EUR denominated consolidated sales

28% year-on-year growth in RON denominated consolidated sales

35% year-on-year increase in EUR denominated EBITDA

45% year-on-year increase in EUR denominated operating profit

BUCHAREST, Romania – 29 July 2010 – A&D Pharma Holdings N.V. (the “Group”, the “Company” or “A&D Pharma”), the Dutch holding company that owns the largest integrated pharmaceutical wholesale, marketing and sales, and retail business in Romania, today announces its reviewed interim condensed financial results for the six months ended 30 June 2010 prepared in accordance with IFRS.

GROUP FINANCIAL HIGHLIGHTS

• EUR* denominated consolidated sales up 30% year-on-year to EUR 303.2 million (H1 2009: EUR 232.9 million)
• RON* denominated consolidated sales up 28% year-on-year to RON 1,257.7 million (H1 2009: RON 985.0 million)
• Slight decrease in consolidated gross margin to 22.2% (H1 2009: 24.7%)
• Operating profit up 45% to EUR 24.7 million (H1 2009: EUR 17.1 million)
• Net profit up 90% to EUR 17.5 million (H1 2009: EUR 9.2 million)
• EBITDA up 35% to EUR 28.0 million (H1 2009: EUR 20.7 million)
• Net Debt¹ improved position to EUR 55.1 million (FY 2009: EUR 61.5 million)

¹ Net Debt is composed of long/short term borrowings and finance lease minus cash

*In order to align the reporting currency with the functional currency of the Group and simplify comparative performance analysis, the Group is reporting consolidated sales both in Romanian Ron and in Euro. The average EUR/RON exchange rate for the first half of 2010 was 4.1482 compared to 4.2293 for the first half of 2009

Robert Popescu, CEO of A&D Pharma, commented: “We are delighted to be reporting another strong set of results in spite of a challenging operating and regulatory climate: a 30% increase in Euro denominated sales to EUR 303.2 million; a healthy consolidated gross margin of 22.2%; a 35% increase in EBITDA to EUR 28.0 million and a 90% increase in net profit highlighting the ability of our robust business model to generate returns in a very difficult business environment.

“We are pleased with the performance of each of our business lines. Our Wholesale division saw a strong increase in hospital market share growth to 20.6%, contributing to an impressive 51% increase in revenue growth to EUR 249.0 million. Streamlined logistics and increased synergies with our retail operation lead to a healthy operating profit of EUR 20.1 million for this division. Our Marketing & Sales division continues to be at the heart of our expansion plans and the Group will continue to benefit from the opportunities it presents. In spite of the restructuring of the division and the reclassification of products, the division generated a healthy operating profit of EUR 1.5 million and a much improved EBITDA margin of 23.6%. Our retail division, Sensiblu, Romania’s largest branded pharmacy chain, generated a 37% increase in revenue growth to EUR 119.5 million and its operating profit quadrupled to reach EUR 6.6 million, thanks to a new management approach focused mainly on profitability, as well as a significant internal reorganisation and optimised business processes.

“We remain cautious about the outlook for the Romanian pharmaceutical market for 2010, particularly in light of the scale of the operational and regulatory challenges facing the industry, a special area of concern being the overall liquidity in the market. However, we continue to believe in its long-term growth prospects and A&D Pharma is very well placed to capture the growth we expect from this market. We are a profitable business, with a robust balance sheet. We strengthened our leading market position in Romania, we optimised the Company’s operating profitability and we have recently announced the expansion of our business into five additional countries in Central Europe through several acquisitions.”

FINANCIAL SUMMARY (REVIEWED)

(EUR '000)	H1 2010	H1 2009	y-o-y %
Total Sales, out of which	303,189	232,900	+30%
- Wholesale	248,959	164,579
- Marketing & Sales	7,562	24,729
- Retail	119,486	87,080
Eliminations	(72,818)	(43,488)
Operating Profit/(loss), out of which	24,713	17,080	+45%
- Wholesale	20,146	15,352
- Marketing & Sales	1,463	3,051
- Retail	6,551	1,644
Unallocated corporate income and expenses	(3,447)	(2,967)
EBITDA, out of which	28,024	20,710	+35%
- Wholesale	21,323	16,102
- Marketing & Sales	1,782	3,728
- Retail	8,295	3,806
Unallocated corporate income and expenses	(3,376)	(2,926)
Profit/(loss) before tax	19,540	11,725	+67%
Taxation	(2,087)	(2,551)
Net profit for the period	17,453	9,174	+90%

SEGMENTAL AND OPERATING HIGHLIGHTS

Mediplus: includes both Wholesale and Marketing & Sales divisions

• Romania’s leading pharmaceutical wholesaler, supplying products to over 75% of pharmacies across the country
• Increase in average market share to 19.4% for the total pharmaceutical wholesale market (including sales to hospitals and the Marketing & Sales portfolio) for the 6 months ended 30 June 2010, compared to 17.7% for the same period ended 30 June 2009 (source: Cegedim)
• Decrease in EBITDA margin from 10.5% in H1 2009 to 9.0% in H1 2010

Wholesale division

• 51% year-on-year growth in EUR Wholesale revenue to EUR 249.0 million
  (H1 2009: EUR 164.6 million)

• 32% increase in wholesale EBITDA to EUR 21.3 million
  (H1 2009: EUR 16.1 million)

• Operating profit up 31% to EUR 20.1 million (H1 2009: EUR 15.4 million)
• Streamlined logistics processes to maintain same quality of service with less resources
• Strong average market share growth in the hospital market where Mediplus increased its share to 20.6% during the first half of 2010, compared to 12.1% in the first half of 2009 (source: Cegedim). Growth in this segment has been limited as the Romanian authorities initially kept the prescription budget unchanged from 2009. However, since 1 April 2010, prescription prices have been updated, which is expected to benefit this business segment
• Expanded product offering in the non-pharmaceutical segment through new partnerships with L’Oreal and Milupa.

Marketing & Sales division

• Restructuring of the supplier portfolio and reclassification of products between the Wholesale and the Marketing & Sales division resulted in significant
  a. decreases in:

• Revenue to EUR 7.6 million (H1 2009: EUR 24.7 million)
• EBITDA to EUR 1.8 million (H1 2009: EUR 3.7 million)
• Operating profit to EUR 1.5 million (H1 2009: EUR 3.1 million)

b. but significant increases in:

• EBITDA margin to 23.6% (H1 2009: 15.1%)
• Operating profit margin to 19.3% (H1 2009: 12.3%)

• At the centre of the Company’s expansion plans:
  • Flexibility and ability to develop strategic partnerships;
  • A one-stop shop for drug manufacturers;
  • Focusing on higher margin products and value added services such as merchandising and promotion ;
  • Focusing on generating sales from pharmacies rather than sales to pharmacies to build loyalty and repeat orders;
  • Extended portfolio of products to prescription drugs, new dermo-cosmetics, niche over-the-counter medicines and non-pharmaceuticals;
  • Developed new partnerships on regional basis, such as Bristol-Myers Squibb’ OTC division UPSA;
  • New contracts for the marketing and sale of medical devices.
  Sensiblu: Retail
• 37% year-on-year growth in Sensiblu revenue to EUR 119.5 million (H1 2009: EUR 87.1 million)
• EUR 6.6 million operating profit from EUR 1.6 million in H1 2009
• Significant increase in EBITDA to EUR 8.3 million from EUR 3.8 million in H1 2009
• Romania’s largest branded pharmacy chain with a total of 230 outlets as of 30 June 2010
• 32% increase in average monthly turnover per location to EUR 86.7 thousand as of 30 June 2010 compared to EUR 65.8 thousand at 30 June 2009
• Steady number of transactions to 8.0 million for the six months ended 30 June 2010 from 7.9 million transactions in the first half of 2009
• Focus on profitability, optimisation of network operations and processes to strenghten Sensiblu’s position as Romania’s leading branded pharmacy chain
• Average value of non-card transaction increased by 58% year-on-year to EUR 15.5 from EUR 9.8 in the first half of 2009; average value of card transaction increased by 9% in year-on-year to EUR 13.9 in H1 2010 from EUR 12.7 on average in H1 2009.

Romanian Market

• GDP is estimated to be down 3% in 2010 (source: European Bank for Reconstruction and Development)
• 19% year-on-year increase in the pharmaceutical market in EUR PPP (Pharmacy Purchase Prices) to EUR 1.30 billion in H1 2010 from EUR 1.09 billion in H1 2009 (source: Cegedim)
• Main regulatory developments:
  • The regulatory environment has remained difficult in the first half of 2010. The drug price methodology remains unchanged so that on 1 April 2010, the price of imported drug prices in RON were recomputed at a fixed rate of RON/EUR 4.25 RON/USD 3.06, RON/CHF 2.80. The carriage and insurance paid (“CIP”) price remains unchanged to a minimum level from a list of 12 countries selected by the Government.
  • Therapeutic reference pricing (TRP) was introduced for acute diseases and will be changed for chronic diseases starting from September 2010.
  • The norms for implementation of a “claw-back” mechanism were approved at the end of June 2010 whereby the owner of a subsidised drug’s marketing and commercial rights will pay the State a percentage of the turnover achieved with all prescription products. The mechanism will be applied retroactively starting from January 2010.
  • In April 2010, the General Framework for Health Assistance in the National Health System approved limitations relating to prescriptions issued by family doctors, and these limitations came into effect from 1 July 2010. The State will also organise national tenders relating to the distribution of injectable oncological drugs, which will be made available in hospital pharmacies only.
  • From 1 July 2010, VAT has increased from 19% to 24% for other products than prescriptions. For prescription drugs, VAT will remain unchanged at 9%.

OTHER INFORMATION

The Group will host a conference call for investors and analysts at 12:00 pm (Bucharest) / 11:00 am (CET) / 10:00 am (UK) today. To participate in today’s conference call, please register online at http://client.sharedvalue.net/adpharma/hy2010.

The number for the conference call will be available upon registration.

For further information, please visit www.adpharma.com or contact:
A&D Pharma Investor Relations Mugur Postoroanca Tel: [phone] [e-mail]	A&D Pharma Romanian Press Relations Veronica Burlacu Tel: [phone] [e-mail]
Shared Value Limited Investor & Media Relations Nicolas Duperrier / Mark Walter Tel. [phone] [e-mail]

ABOUT A&D PHARMA

A&D Pharma Holdings N.V. is the Dutch holding company of A&D Pharma Holdings S.R.L., the leading pharmaceutical wholesale, marketing and sales services and retail business in Romania. Founded in 1994, the Group owns Romania’s leading pharmaceutical wholesale, sales and marketing services for CHC and Rx products network “Mediplus”, and Romania’s largest national branded chain of pharmacies “Sensiblu”.

The Group’s consolidated sales increased at a compound annual rate of 34% between 2003 and 2009, amounting to EUR 514.3 million for the twelve months ended 31 December 2009. A&D Pharma’s shares have been traded in the form of Global Depositary Receipts (“GDRs”) on the regulated market of the London Stock Exchange since October 2006 under the symbol 'ADPH'.

This release is not an offer for sale of the GDRs of A&D Pharma, or any other of its securities, in the United States or in any jurisdiction where any offer, sale or solicitation in respect of such securities is not permitted. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended, or in any jurisdiction where such offer or sale is not permitted.

Certain statements made in this release are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements.

This release should not be construed as the giving of advice or the making of a recommendation and should not be relied on as a basis for any decision or action. In particular, actual results and developments may be materially different from any forecast, opinion or expectation expressed in this presentation and the past performance of the price of securities must not be relied upon as a guide to their future performance.

CONSOLIDATED INCOME STATEMENT (REVIEWED)
	6 months ended 30 June 2010	6 months ended 30 June 2009
Sales	303,189	232,900
Operating costs	(278,476)	(215,820)
Operating profit	24,713	17,080
Financial income	284	1,092
Financial expense	(5,457)	(6,447)
Financial result	(5,173)	(5,355)
Profit before taxation	19,540	11,725
Taxation	(2,087)	(2,551)
Profit for the period	17,453	9,174
Basic and diluted earnings per share	EUR 0.09	EUR 0.05

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (REVIEWED)
	30 June 2010	31 December 2009
Assets
Property, plant and equipment	33,123	32,414
Goodwill and other intangible assets	223,588	230,347
Financial investments	27	71
Advances for future acquisition	17,450	19,759
Long term receivables	4,420	4,812
Deferred tax asset	2,527	1,307
Total non-current assets	281,135	288,710
Inventories	61,180	63,321
Trade receivables	256,967	197,146
Prepayments and other receivables	4,689	3,724
Restricted cash	239	360
Cash and cash equivalents	20,673	15,965
Total current assets	343,748	280,516
Total assets	624,883	569,226
Equity
Share capital	200,000	200,000
Share premium	54,933	54,933
Reserves	(55,985)	(45,232)
Retained earnings	28,826	13,492
Total equity attributable to equity holders of the Company	227,774	223,193
Non-controlling interest	-	-
Total equity	227,774	223,193
Liabilities
Long term borrowings	70,628	74,850
Deferred tax liability	5,910	4,370
Finance lease	3,701	1,106
Total non-current liabilities	80,239	80,326
Accounts payable, accruals and other liabilities	298,449	245,256
Provisions	16,176	16,610
Current tax liability	517	2,006
Finance lease	1,728	1,835
Total current liabilities	316,870	265,707
Total liabilities	397,109	346,033
Total equity and liabilities	624,883	569,226

CONSOLIDATED CASH FLOW (REVIEWED)
	6 months ended 30 June 2010	6 months ended 30 June 2009
Cash flows from operating activities
Profit before taxation	19,540	11,725
Adjustments for:
Depreciation and amortization	3,358	3,768
(Gain)/loss on disposal of tangible and intangible assets	68	(122)
Reversal of impairment losses on property, plant and equipment	(47)	(138)
Interest income	(284)	(1,092)
Interest expense	4,155	1,733
Unrealized foreign exchange loss	651	8,145
Regulatory and tax provisions charge/(reversal)	(465)	646
Operating profit before working capital changes	26,976	24,665
Increase in receivables and prepayments	(60,817)	(37,234)
Decrease/(increase) in inventories	2,141	(2,866)
Increase/(decrease) in trade and other payables	52,916	(2,477)
Changes in working capital	(5,760)	(42,577)
Income tax paid	(2,848)	(686)
Net cash generated/(used) in operating activities	18,368	(18,598)
Cash flows from investing activities
Purchases of property, plant and equipment	(1,254)	(521)
Purchases of intangible assets	(1,048)	(600)
Proceeds from sale of tangible and intangible assets	340	406
Interest received	284	1,172
Net cash generated/(used) in investing activities	(1,678)	457
Cash flow from financing activities
Repayment of borrowings	(10,000)	(1,571)
Proceeds from borrowings	5,000	-
Lease payments	(1,040)	(1,343)
Interest paid	(3,021)	(2,232)
Net cash used in financing activities	(9,061)	(5,146)
Translation effect	(2,921)	(1,502)
Net increase/(decrease) in cash and cash equivalents	4,708	(24,789)
Cash and cash equivalents at the beginning of period	15,965	44,111
Cash and cash equivalents at the end of period	20,673	19,322