While the underlying profits of its two businesses are steady the combined Life Pharmacy and Pharmacybrands entity has had to write off more than $3 million due to the merger.

In September Life Pharmacy completed a full takeover of Pharmacybrands shares after more than 90% of Pharmacybrands shareholders accepted its offer and sold their shares in exchange for Life Pharmacy shares.

In its first set of financial results since the merger the company reported under the name Life Pharmacy, but it will be changing its name to Pharmacybrands in the second half of the year.

Due to the timing of the merger the interim results for the six months to September 30 have been recorded under Pharmacybrands, which was classed as the acquiring company under NZIFRS reporting requirements.

The results of the pre-merged Life Pharmacy business were not included in the statement of income.

Pharmacybrands reported a net profit of $1,162,000 for the six months to September 30, down 1.9% from the same period in the previous year after one-off merger costs of $271,000.

During the period the pre-merged Life Pharmacy business recorded a profit of $190,000, compared with a $415,000 loss during the same period last year.

However, this was before recognising abnormal costs associated with the merger of $3,185,000.

These included acquisition costs of $693,000, tax losses of $704,000, integration costs of $646,000 and a provision of $1,142,000 for impaired assets.

The company estimated pro forma accounts for the April-September period would have shown revenue of $10,500,000 with a profit of $1,352,000 before abnormal costs of $3,456,000 associated with the merger. 

Chief executive Alan Wham, who was chief executive of Pharmacybrands before the merger, told NBR he was happy with the results and the merger’s progress.

“The key thing with the merger is that it gives us a critical mass and enables us to find some cost synergies, particularly around the central office.”