Strong performance in first annual results
Alliance Boots revealed group underlying profits rose 7.4 per cent to£641 million in the year to March 31, in its first set of annual results.

Pro forma adjusted earnings, which the company considers to be its key profit measure, increased 11.5 per cent to£467 million. Pro forma revenue was up 3.6 per cent to£14.6 billion, while trading profit also rose 6.3 per cent to£641 million.

The retailer reported a 'good revenue growth' in its retail division, with trading margin in the UK ahead of management expectations. The Boots-branded health and beauty business increased profits for the first time in five years. It said a large-scale expansion of its Boots pharmacy brand will start shortly.

The health and beauty giant was created last July following a merger of the Boots group and Alliance Unichem, led by deputy chairman Stefano Pessina, who is the major shareholder. He is also leading a£11.1 billion takeover deal with US private equity firm Kohlberg Kravis Roberts (KKR), which was recommended by the board at the end of last month.

The retailer said it has made good progress in saving more than£20 million from the merger and hopes to deliver pre-tax savings of at least£100 million a year by the fourth year.

Alliance Boots chief executive Richard Baker said: 'We have delivered a strong financial performance while executing one of the biggest mergers undertaken in the UK. Across the group, we have seen the positive impact of our pre-merger planning, our new working relationships and our dedicated people all contributing to the good results.

'The results reaffirm our belief that in Alliance Boots we have created a leading international pharmacy-led health and beauty group with attractive prospects and opportunities.'

The wholesale division performed well during the year and the retailer said it reflects the strength of a geographically diverse portfolio. The chain said it successfully implemented the Pfizer sole logistics service contract in the UK and its joint venture in China has been agreed, subject to regulatory approval.

Alliance Boots said it expects the good trading performance it has seen in 2006/2007 to continue in the current financial year.