Life Pharmacy Market Update

Life Pharmacy Market Update

Life Pharmacy Limited (NZX: LPL) today issued a market update under the NZX’s continuous disclosure regulations.

The LPL Board has made the decision to reduce the value of the company’s investment in associates by $6.0 million following an assessment of the last two years trading (including the expected March 07 result) and a review of the latest associate companies directors’ financial forecasts.

This reduction in the books of LPL will take the net assets per share to 0.75 cents per share.

The company is expecting to report a net loss of $0.5 million for the 12 months to 31 March 2007 exclusive of the non cash impairment to investments referred to above. (2006: $1.096 million profit- including a $572k non recurring item)

The Group had enjoyed buoyant Christmas trading and a number of the associates were trading strongly. Christchurch stores at Riccarton, The Palms and Northlands continued to perform to expectations. However it has taken longer than expected to build momentum in new and refurbished stores. A significant improvement at the enlarged and refurbished Queensgate store in Lower Hutt had been expected during the year to March 07 but has yet to come to fruition and the new format discount store, SupaChem at Porirua, has taken some time to become established.

At Sylvia Park, in a staged retail centre development without a full customer offer, sales have been disappointing. Since balance date with the recent opening of stage three, there has been a surge of activity, especially on the weekends which is very pleasing.

One-off head office expenses and write offs have also impacted the result. These related primarily to: establishing the Life Pharmacy loyalty Living Card programme ; the establishment of the Tony Ferguson Weight Management Program™; fully establishing the merchandising and category management function to enhance margins and sales; consultancy costs incurred in the investigation of potential acquisition and growth opportunities; and the closure cost of a standalone Origins store since balance date.

The LPL Board remains committed to growing and investing in the business to achieve scale benefits and to this end positive discussions and negotiations are continuing with potential investors to effect a private placement of shares.

About Life Pharmacy

Life Pharmacy Limited owns the Life Pharmacy brand and holds a 49 percent shareholding in 17 pharmacy companies, representing 16 of the 21 Life Pharmacy stores operating throughout New Zealand. Stores are located in Auckland, Hamilton, Bay of Plenty, Wellington and Christchurch.

ENDS

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