Strides Pharma Science (STAR) Q4 06/07 earnings summary

Executive summary

• FY2007 consolidated revenue rose 13.75% to Rs.8,648.48 million, while the year ended in a net loss of Rs.501.21 million versus profit of Rs.402.29 million in FY2006.

• Standalone income declined to Rs.4,031.68 million from Rs.4,550.88 million; standalone PAT was a loss of Rs.1,152.14 million versus profit of Rs.361.84 million.

• Results reflected major one-off impairment and restructuring charges, currency effects and revenue reversals; the strategy focused on niche generics, regional partnerships and branded products.

Financial highlights

• Consolidated sales and services were Rs.7,256.12 million versus Rs.7,429.84 million; total income reached Rs.8,648.48 million, including Rs.978.95 million net profit on investment disposal.

• Consolidated EBITDA was Rs.1,168.06 million versus Rs.1,409.56 million; PBT was a loss of Rs.345.69 million after Rs.539.85 million exceptional items.

• Standalone EBITDA fell to Rs.141.69 million from Rs.780.41 million; PAT was a loss of Rs.1,152.14 million after Rs.815.32 million exceptional items.

• Consolidated operating cash flow was Rs.987.01 million versus Rs.1,078.51 million; investing cash outflow was Rs.5,913.93 million, largely reflecting expansion and investment activity.

Outlook and guidance

• FY2008 priorities included regulated-market approvals and supply starts, manufacturing and R&D efficiency, branded prescription/OTC growth, and completing sterile-injectables capacity expansion.

• Supplies into North America were expected to commence in Q2 2008; product approvals and new plants in Brazil and Nigeria were expected to support revenue and profitability.

• Genepharm Australasia transaction was tentatively scheduled to close in the first week of July 2008; combined regional revenues were projected at A$100 million on closing.