Analysts expect sale of AAH arm

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The Independent Online
AAH, the UK's largest drugs wholesaler, is expected to sell its builders' merchanting business, which no longer fits with the rest of the group.

Analysts expect the company, which yesterday announced a small drop in profits to pounds 37.3m before tax in the year to 31 March, to dispose of the division, which accounted for just 5 per cent of trading profits.

Bill Revell, the chief executive, declined to comment on the future of the division but said: 'Everything is for sale at a price.'

UK pharmaceutical wholesaling contributed pounds 22.8m, down from pounds 19.6m, or more than half group trading profits. The result was helped by the absorption of Medicopharma's wholesaling business.

Mr Revell said prospects would be boosted if more hospitals gave up bulk buying and switched instead to purchasing supplies from distributors who can make small deliveries as needed.

The British Association of Pharmaceutical Wholesalers has estimated that this would cut the hospital drugs bill by pounds 150m a year. Mr Revell estimates that similar savings are possible on surgical supplies.

Group sales rose 12 per cent to pounds 1.4bn. Pre-exceptional profits rose 15.7 per cent to pounds 41.9m. Pre-tax profits in 1992 were boosted by a pounds 6.6m exceptional profit on the sale of Weevsown, without which 1993 taxable profits would have risen 16 per cent.

The final dividend is up 5 per cent to 11.5p a share, taking the total for the year to 17.3p, up by 5.8 per cent. Earnings per share rose by 3 per cent, under FRS3, the latest accounting standard. The shares rose 14p to 517p.

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