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Daehan New Pharm Co., Ltd. Analysis of Financial Results (January–September 2009)

2009.11.25

Daehan New Pharm Co., Ltd. Analysis of Financial Results (January–September 2009)

1. Increase in Product Sales (Unit: Million KRW)

	Jan–Sep 2009	Jan–Sep 2008	YoY Change
Products	29,054	27,307	1,747 (6.4%)
Merchandise	598	4,644	-4,046 (-87.1%)
Total	29,652	31,951	-2,299 (-7.2%)

- The company discontinued its Avent cosmetics business as of mid-2009.

- As a result, sales of merchandise decreased significantly due to the discontinuation of the business, while product sales increased by 6.4% compared to the same period of the previous year.

2. Significant Improvement in Operating Profit (Unit: Million KRW)

	Jan–Sep 2009	Jan–Sep 2008	YoY Change	Change (%)
Operating Profit	4,215 (14.2%)	1,492 (4.7%)	2,723	182.4%
Non-operating Income	3,614	8,416	-4,802
Non-operating Expenses	5,555	3,887	1,668
Ordinary Profit	2,274 (7.7%)	6,021 (18.8%)	-3,747	-62.2%

(1) Operating profit rose sharply from KRW 1.5 billion (margin 4.7%) in 2008 to KRW 4.2 billion (margin 14.2%) in 2009, an increase of 182% year-on-year.

1) Profit-oriented Management and Rebuilding of Business Model

- Pursued strict profit-oriented management focused on cost reduction and profit maximization.

- Developed a new business model: shifted from direct sales to pharmacies and hospitals to a distribution system through general and exclusive wholesalers, enabling cost savings through shorter logistics cycles and faster collection of accounts receivable, thereby improving liquidity.

2)ion and Concentration of Product Portfolio

- Enhanced sales and profitability by focusing on highly profitable products.

- The number of items decreased from around 400 in 2008 to about 130 high-profit items by the end of September 2009.

3) Cost Reduction

- Company-wide cost-saving measures reduced expenses by approximately KRW 2.4 billion compared to the same period of the previous year.

(2) Ordinary profit recorded KRW 2.3 billion (margin 7.7%) in 2009, down from KRW 6.0 billion (margin 18.8%) in 2008.

(Unit: Million KRW)

	Jan–Sep 2009	Jan–Sep 2008	YoY Change
Foreign Exchange Gains	730	8,294	-7,564
Foreign Exchange Losses	1,210	220	990

- An exchange loss occurred due to the depreciation of the Korean won on the USD 25 million loan receivable.

- Ordinary profit declined by approximately KRW 3.7 billion (62.2%) year-on-year, primarily due to this foreign exchange loss, which was only a book loss without any actual cash outflow.

3. Improvement in Financial Structure

1) Liquidity Enhancement

(Unit: Million KRW)

	End-Sep 2009	End-2008	Remarks
Current Assets	44,593	38,959
Current Liabilities	24,952	34,802
Current Ratio	178.7%	111.9%

- Current ratio improved from 111.9% at the end of September 2008 to 178.7% at the end of September 2009, an increase of 66.8 percentage points.

2) Improvement in Debt Ratio

(Unit: Million KRW)

	End-Sep 2009	End-2008	Remarks
Liabilities	34,148	42,049
Assets	80,731	77,064
Debt Ratio	42.3%	54.6%

- Debt ratio improved from 54.6% at the end of September 2008 to 42.3% at the end of September 2009, a decrease of 12.3 percentage points.

3) Improvement in Asset Composition and Soundness

(Unit: Million KRW)

	End-Sep 2009	End-2008	YoY Change	Remarks
Long-term Loans Receivable	30,993	41,498	-10,505
Total Assets	114,879	119,113	-4,234
Ratio to Total Assets (%)	27.0%	34.8%	-7.9%

- Collected USD 8 million in long-term loans on June 30, 2009, leading to a significant reduction in outstanding long-term receivables.

- Collected USD 750,000 in interest on July 1, 2009.

- The ratio of long-term loans to total assets improved from 34.8% at the end of September 2008 to 27.0% in the current period, a reduction of 7.9 percentage points.

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