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									                                                                                    31 July 2006




                   MERGER COMPLETION AND TRADING STATEMENT


Alliance Boots plc today confirms the successful completion of the merger between Boots
Group PLC and Alliance UniChem Plc to form a new international pharmacy-led health and
beauty group.

The Company is also issuing today, as a matter of record, a trading update for Boots The
Chemists for the three months ended 30 June 2006 (see Appendix 1), and the financial
results for Alliance UniChem for the six months ended 30 June 2006 (see Appendix 2),
which had originally been scheduled by Alliance UniChem to be issued on 1 August 2006.

These announcements demonstrate that both businesses are on track. The interim results
for the newly merged Alliance Boots will be announced in November 2006.


Richard Baker, Chief Executive of Alliance Boots, commented:

“I am delighted that we are able to announce the completion of the merger between Alliance
UniChem and Boots to create Europe’s foremost international pharmacy-led health and
beauty group. The union of these two great businesses also establishes a new market
leader in UK pharmacy and provides exciting opportunities for international growth.

“Looking ahead our immediate focus is to commence the delivery of the identified cost
synergies of at least £100 million per annum by the fourth full year. The first stage of this
work has already started and we are confident of delivering £60 million of annualised
savings by the end of the second year.

“The merger will enable us to improve the offering for both our wholesale and retail
customers. While there is a lot of hard work ahead and it will take time to deliver the full
benefits of this merger, we are already making changes for our customers in the UK with a
range of popular Boots products available in 500 Alliance Pharmacies from today.

“I would like to thank everybody involved in the successful completion of the transaction.
Despite the huge additional effort inevitably required by this process our businesses have
remained focused and delivered solid results that keep us on track for the year.

“We have a firm foundation for our future success and we are determined to deliver the
benefits of this to our enlarged group of shareholders in the years to come.”


                                            - Ends -
Richard Baker, Chief Executive and George Fairweather, Group Finance Director, will host a
conference call for analysts at 09.15 BST.

UK dial in number 020 7190 1596
International dial in number +44 20 7190 1596

Quote conference title – Alliance Boots Trading Update


A replay facility will be available for seven days:

UK dial in number 020 8515 2499
International dial in number +44 20 8515 2499
Access number 354854#


For further information, please contact:

 Investor Relations                                   Media
 Gerald Gradwell/Chris Laud                           Donal McCabe
 Tel: +44 (0)20 7797 1700 (until 12.00 pm)            Tel: +44 (0)20 7797 1700 (until 12.00 pm)
 Tel: +44 (0)20 7495 8880 (after 12.00 pm)            Tel: +44 (0)20 7495 8880 (after 12.00 pm)

                                                      Gavin Anderson, Tel: +44 (0)20 7554 1400

                                                      Finsbury, Tel +44 (0)20 7251 3801
Notes to Editors:
1. Alliance Boots is Europe’s foremost international pharmacy-led health and beauty group.

    Geographical coverage:

           Alliance Boots pharmaceutical wholesaling businesses:
            Czech Republic, France, Italy, The Netherlands, Norway, Russia, Spain and the UK.

           Associate pharmaceutical wholesaling interests:
            Egypt, Germany, Portugal, Romania, Switzerland and Turkey.

           Alliance Boots retail healthcare outlets:
            Republic of Ireland, Italy, The Netherlands, Norway, Thailand, and the UK

           Associate retail healthcare outlets:
            Italy and Switzerland.

           Alliance Boots own brand products sold through wholesale and to selected retail partners:
            Canada, Czech Republic, Dubai, Finland, France, Hong Kong, Indonesia, Italy, Kuwait,
            The Netherlands, New Zealand, Norway, Portugal, Romania, Russia, Spain, Switzerland,
            Taiwan, the UK and the USA.

    Scale of business:

           A full-line wholesale and distribution network serving over 125,000* † outlets in 14
            countries from over 380*† depots

           3,000*†‡ retail outlets (2,700*†‡ of which have a pharmacy)
            o 2,600*‡ healthcare outlets in the UK of which:
                - 1,500*‡ community pharmacies
                - 800* destination health and beauty stores
                - 300* other retail outlets, including free standing Boots Opticians practices
            o 400*† pharmacies operating outside the UK

           Market-leading own brand products including “No 7”, “Soltan”, “Botanics” and “Almus”

           Over 100,000*† employees
            * approximate numbers
            †
              including associates where applicable.
            ‡
              prior to the disposal of 96 pharmacies required by the Office of Fair Trading as a condition of the merger.


2. Alliance Boots’ management team offers a strong combination of retail pharmacy, pharmaceutical
   wholesale distribution, acquisition and brand management experience.

3. The “Boots” brand is expected to increase the Group’s appeal to potential partners, customers
   and pharmacists. In addition, the sale of Alliance Boots’ extensive proprietary product range (e.g.
   “No 7”, “Soltan”, “Botanics” and “Almus”) in international markets is expected to provide
   incremental benefits.

4. Alliance Boots has a pipeline of attractive opportunities in new geographical markets for the
   expansion of both our retail pharmacy network and our wholesale and distribution activities. The
   Group’s ability to access new markets and its attractiveness to potential partners are expected to
   be enhanced significantly by the management expertise, internationally recognised brands and
   balance sheet strength.

5. For further information please see the Company’s new website www.allianceboots.com which is
   launched today.
Boots The Chemists
Trading performance for the three months to 30th June 2006


Revenue growth                                  Actual %         Like for Like %



Boots The Chemists                                  3.9%                   3.0%

 -   Health                                         5.9%
 -   Beauty & Toiletries                            3.7%
 -   Lifestyle                                     -1.2%




Sales growth in our Boots The Chemists business in the quarter was 3.9%, 3.0% like for like. Strong
early season sales of sun and hay-fever related products in June contributed around 1.0% of the
growth in the quarter.

Our core health and beauty businesses have continued recent performance trends with Dispensing
items up 5.4% and Beauty up 7.8%.

Gross margin and operating cost performance is in line with plan.

We have introduced the Midnight Pharmacy offer into 13 stores during the quarter and plans are on
track to have 60 stores providing this service by the end of the calendar year. Our programme to
open more stores where customers want to shop continues with 13 new stores opened over the
quarter, including 9 on the edge of town and 3 new healthcentres. Our small stores investment
programme is underway with work in the first 50 stores completed by the end of June.

Boots launched the Boots Health Club in April to bring more of its healthcare expertise directly to
customers and already a million people have signed up, significantly ahead of initial expectations.
Trading update - Alliance UniChem


Overview

In the six months ended 30 June 2006 Alliance UniChem continued to perform strongly, extending its
long established track record of delivering excellent financial performance, with increased profitability
in pharmaceutical wholesaling, retail pharmacy and associate contribution compared to the first half of
last year. This was again achieved largely through the continuation of organic sales growth and an
ongoing focus on margin management, cost control and working capital efficiency.


Financial highlights - six months ended 30 June 2006

Revenue                                                                                                up 2.2% to £4,718.7 million

Revenue including share of associates’ revenue                                                          up 4.3% to £5,786.7 million

Operating profit(1)                                                                                      up 11.4% to £135.8 million
                         (1)
Operating profit               including share of associates’ operating profit                           up 11.1% to £169.4 million

Adjusted profit for the period attributable to equity shareholders(2)                                    up 14.1% to £100.5 million

Adjusted diluted earnings per share (2)                                                                      up 14.3% to 27.9 pence

Diluted earnings per share (3)                                                                             down 8.3% to 26.6 pence
(1)
      Operating profit comprises profit from operations before share of associates’ post tax earnings and exceptional items as classified
      by Alliance UniChem (comprising costs in relation to the merger, profit on disposal of businesses and profit on disposal of
      investments)
(2)
      Excludes exceptional items and IAS 39 timing differences
(3)
      Includes exceptional items and IAS 39 timing differences - in the current period exceptional costs in relation to the merger were
      £4.1 million net of tax and IAS 39 timing differences were a cost of £0.9 million net of tax, in the prior period exceptional gains on
      the disposal of businesses and investments totalled £14.1 million net of tax, and IAS 39 timing differences were an income of
      £2.4 million net of tax

A glossary of key terms is provided at the end of this announcement
Markets

Alliance UniChem estimates that its wholesale markets grew, by around 3.5% in value on a constant
currency basis compared to the first half of last year, this growth being weighted on the basis of
Alliance UniChem’s wholesale revenue. This compares with Alliance UniChem’s previously published
overall estimated market growth of 2.5% for the full year. Alliance UniChem is now forecasting growth
of around 2% for the full year, higher first half growth being expected to be more than offset by lower
growth in the second half in the UK and in Alliance UniChem’s Southern European markets.

The growth in the market from the introduction of higher priced new pharmaceuticals has continued to
be partially offset by growth in market penetration of lower priced generic drugs. In the first half of the
year Alliance UniChem has estimated that generics comprised around 22% of its total wholesale
market in volume terms, weighted on the basis of its wholesale volumes, this percentage typically
being significantly higher in its markets in Northern Europe than in Southern Europe. Compared to
the first half of last year, penetration of generics grew in all markets in which Alliance UniChem
operates.

Alliance UniChem estimates that the overall level of parallel trade in Europe was broadly in line with
the level in the first half of last year with manufacturers continuing to seek ways to curtail these
activities.

Retail pharmacy markets, weighted on the basis of Alliance UniChem’s retail revenue, grew, Alliance
UniChem estimated, by around 4% in value on a constant currency basis compared with the first half
of last year. This is in line with Alliance UniChem’s previously published and current forecast for
overall retail market growth for the full year.


Corporate developments

In March Alliance UniChem entered the Russian market through the acquisition of a 96% controlling
stake in the parent company of Apteka Holding ZAO, the fifth largest pharmaceutical wholesaler in
Russia. Apteka reported sales of approximately £115 million in the year ended 31 March 2005 and
operates a network of 20 depots across the country. The consideration for the stake was
approximately £18 million with, in addition, approximately £10 million of net debt assumed.

In April Hedef Alliance, Alliance UniChem’s Turkish-based associate, exercised its option to acquire
control and majority ownership of its associate, UCP, a leading pharmaceutical wholesaler in Egypt.
UCP’s sales in the year ended 30 June 2006 were approximately £192 million. In June, ANZAG,
Alliance UniChem’s German-based associate, acquired 60% of Farmexpert, the third largest
pharmaceutical wholesaler in Romania.

Following these three transactions, at 30 June 2006 Alliance UniChem had owned or associate
wholesaling interests in 14 countries.

In July Alliance UniChem reached an agreement to acquire the UK short-line pharmaceutical
wholesale business of Cardinal Health for approximately £43 million. The business, which operates
under a number of trading names, generated sales of £205 million in the year ended 30 June 2005
and employs around 440 people. This transaction, which is conditional upon receiving regulatory
approval, is expected to be completed by the end of the year.

During the first half of 2006 Alliance UniChem also added a net 15 pharmacies to its portfolio. This
brought Alliance UniChem’s retail portfolio to 1,303 pharmacies at 30 June 2006, including 123
operated by associates.
Divisional highlights
for the six months ended 30 June 2006



                                                                                      Growth over first
                                                                                       half of last year

                                                          Operating                          Operating
                                              Revenue        profit*         Revenue            profit*
                                               £million    £million               %                 %

   Wholesale - Northern Europe                 1,552.9          49.3             +9.0              +9.6

                 - Southern Europe             2,922.3          35.1              -2.5             +0.6

   Intra-segment                                 (34.6)             -              n/a                 -

   Wholesale                                   4,440.6          84.4             +0.9              +5.6

   Retail                                       706.5           62.2            +11.5             +16.7

   Corporate                                         -         (10.8)                   -           n/a

   Intra-group                                  (428.4)            -               n/a                 -

   Group                                       4,718.7        135.8              +2.2             +11.4

   Share of associates’ revenue and
   operating profit                            1,068.0          33.6            +15.1              +9.8

   Total                                       5,786.7        169.4              +4.3             +11.1



   * Operating profit for the Group comprises profit from operations before share of associates’
     post tax earnings and exceptional items as classified by Alliance UniChem (comprising costs
     in relation to the merger, profit on disposal of businesses and profit on disposal of
     investments)



Wholesale

Alliance UniChem’s wholesale division performed well in the first half of the year.

Revenue totalled £4,440.6 million, an increase of 0.9% on the first half of last year, operating profits
increasing by 5.6% to £84.4 million. Overall operating margins increased by eight basis points.
Adjusting for acquisitions and disposals, on a constant currency basis, like for like sales increased by
1.4%, like for like operating profits increased by 9.0% and like for like operating margins increased by
13 basis points.


Wholesale - Northern Europe

Operating profit in the Northern Europe geographical area of Alliance UniChem’s wholesale division
totalled £49.3 million, an increase of 9.6% on the first half of last year, on revenue up 9.0% to
£1,552.9 million. Operating margins increased by one basis point to 3.17%. Adjusting for
acquisitions and disposals, on a constant currency basis, like for like sales increased by 4.9%, like for
like operating profits increased by 8.2% and like for like operating margins increased by ten basis
points.
In the UK revenue increased by 2.1% to £912.1 million, like for like sales increasing by the same
percentage, sales growth being held back by the loss of a large customer following its purchase by a
competitor. This compared to a market which Alliance UniChem estimated increased in value by
around 2.5%, growth being higher than the full year forecast previously published due to the timing of
regulatory changes.

During the first half of the year a minor restructuring was carried out, principally in the UK wholesale
head office at Chessington where headcount was reduced by 14%. This has led to greater
efficiencies, functional best practice and an even greater focus on core activities within the business.

The continued growth of “Almus”, the Group’s exclusive range of generic drugs, is providing sourcing
benefits aimed at offsetting the impact of patent expiries. Sales volumes were up by nearly 30%
compared to the first half of last year, the Almus range in the UK comprising around 150 products at
30 June 2006. Alliance UniChem’s full year forecast for market growth in the UK in value terms in
2006 is around 2%, which is higher than previously forecast due to delays in certain generic product
availability following patent expiries.

In The Netherlands revenue increased by 10.8% to £358.3 million, sales increasing by 10.4% on a
like for like constant currency basis. This compares to a market which Alliance UniChem estimated
grew in value by around 6.5%. The development of the Kring branded virtual chain of pharmacies
operated by independent customers and Alliance Apotheek, our own pharmacy chain, has continued
during the first half of the year. Just under 300 pharmacies are now members of the Kring
programme. A customer loyalty card programme will be introduced in Kring in the autumn. Operating
profits increased on the first half of last year due to enhanced trading activities, while margins
declined as a result of higher customer discounts. Alliance UniChem’s full year forecast for market
growth in The Netherlands in 2006 in value terms is around 6%.

In the Czech Republic revenue increased by 18.5% to £124.9 million, sales increasing by 12.2% on a
constant currency basis compared to a market which Alliance UniChem estimated declined by around
1%. The market was weaker than Alliance UniChem had previously forecast due to further action by
the Ministry of Health to cap total healthcare expenditure on prescriptions which caused uncertainty
amongst doctors as to what quantity of drugs they could prescribe. Further market share gains were
made in the independent retail pharmacy sector, reflecting the business’s strong positioning in this
part of the market. Market share in the hospital sector also recovered. Operating margins and profits
increased in the business due to the increase in sales and tight cost control. Alliance UniChem’s full
year forecast for market growth in the Czech Republic in value terms in 2006 is around 3%, expected
growth being higher in the second half of the year mainly due to an increase in the cap on prescription
expenditure.

In Norway revenue increased by 7.7% to £110.3 million, sales increasing by 4.9% on a constant
currency basis which compares to a market which Alliance UniChem estimated grew in value by
around 3%. Increased synergies from running the Norwegian retail and wholesale businesses more
closely resulted in higher gross margins, costs being held at the same level as in the first half of last
year. These factors led to increased operating margins and profits. Alliance UniChem’s full year
forecast for market growth in Norway in value terms in 2006 remains unchanged at around 4%.

In Russia revenue totalled £47.3 million from the date of acquisition in late March, sales in the second
quarter increasing by 34% compared with the second quarter of last year. Market growth compared
with the second quarter of last year is estimated by Alliance UniChem to be around 12%. The head
office and adjacent warehouses of Apteka are in the process of being relocated to larger, more
modern facilities in Moscow. This will enable the business to increase productivity and provide extra
capacity to meet increasing demand for medicines. Operating margins were lower by comparison to
other Alliance UniChem businesses in Northern Europe reflecting local market conditions.


Wholesale - Southern Europe

Operating profit in the Southern Europe geographical area of Alliance UniChem’s wholesale division
totalled £35.1 million, an increase of 0.6% on the first half of last year on revenue down 2.5% to
£2,922.3 million. Operating margins increased by four basis points to 1.20%. Adjusting for
acquisitions and disposals, including Alliance Farmacêutica in Portugal as an associate from the end
of June 2005, on a constant currency basis like for like sales increased by 0.1%, like for like operating
profit increased by 10.2% and like for like margins increased by 11 basis points.
In France revenue decreased by 0.2% to £1,904.5 million. Sales declined by 0.2% on a like for like
constant currency basis which was lower than Alliance UniChem’s estimate of market growth of
around 0.5% in the wholesaling sector. Alliance UniChem estimated that the total market grew in
value by around 3%, the proportion of products which manufacturers sell and distribute direct to
pharmacies continuing to increase other than for generics where
wholesalers are winning market share.

As previously highlighted, regulatory changes were implemented in the first quarter of the year which
targeted a reduction in overall healthcare expenditure of approximately £3.7 billion over a three year
forward period on a cumulative basis. The pharmaceutical wholesaling market is being impacted by a
15 - 19% reduction in the price of all generics and branded pharmaceuticals for which a generic
exists, the delisting of products, lower reimbursement rates for certain products and larger pack sizes
with lower percentage margins. Other than the larger pack sizes, these measures have now all been
implemented. As a result, Alliance UniChem’s full year forecast for market growth in France in value
terms in 2006 will be around 1%, which is lower than previously anticipated as some of these price
reductions were implemented earlier than expected.

In January 2006 the French government implemented a new law which limits the amount of “off
invoice” discounts that businesses can give to customers. The effect of this general law on the
pharmaceutical industry has been to cap unofficial discounts manufacturers give to pharmacies on
direct sales at a maximum of 20% of the invoice net price. This has held back the rate of growth in
direct sales with direct sales of generics declining during the period.

Direct sales are continuing to play an increasing role in the French market. To counter the increase of
direct sales, a number of actions have been taken including the roll out of a more competitive
generics offer developed in partnership with key suppliers and the launch in France in April of
“Almus”, Alliance UniChem’s exclusive range of generic drugs. As a result, generics sales increased
by over 20% on the first half of last year at a time when growth in the generic share of the total market
was modest. New commercial terms were introduced which are designed to incentivise customers to
buy a greater proportion of their requirements from their full line wholesaler while giving the
wholesaler a better margin mix and thus enabling the business to be more competitive when
compared to direct sales offerings. During the first half a number of additional services were offered
to pharmacy members of the Alphega virtual chain, including the development of the Alphega buying
platform. Other actions included the continuous development of services offered to manufacturers,
including pre-wholesaling, transfer order facilities and contract sales forces.

Like for like operating profit in France increased mainly as a result of gross margin improvements. As
the impact of the various regulatory changes has become clearer, a review has been carried out to
determine what changes should be made to the services offered to customers to ensure that the
business remains competitive at a time of relatively modest market growth. This review, which is in
the process of being finalised, is likely to result in some restructuring of the warehouse and
distribution network which may commence in the latter part of the year.

In Italy revenue increased by 3.7% to £481.5 million, sales increasing by 1.7% on a like for like
constant currency basis. This compares with a market which Alliance UniChem estimated increased
by around 4.5% in value. Operating margins and profits were lower than in the first half of last year
mainly as a result of strong competition in certain regions. Good progress continues to be made in
establishing the virtual chain of pharmacies in Italy. By the half year end 143 pharmacies had joined,
with a further 60 signed up to join shortly. In May “Almus” was also launched in the Italian market
which was ahead of schedule. During the first half of the year one new depot was opened, replacing
two existing depots in the same region. These changes are part of an ongoing programme to improve
efficiency and enhance our commercial offering.

At the end of June the Italian government put forward to parliament a bill containing various
regulations relating to the distribution and pricing of drugs and the ownership and operation of retail
pharmacies. This potentially could result in some withdrawal of restrictions on the ownership of retail
pharmacies. Alliance UniChem’s full year forecast for market growth in Italy in value terms in 2006 is
around 2.5%, growth in the second half of the year being expected to be much lower due to further
price cuts in July.

In Spain total revenue increased by 23.2% to £534.7 million, a decrease of 0.4% on a like for like
constant currency basis. This compares with a market which Alliance UniChem estimated grew by
around 5.5% in value, Alliance UniChem’s growth being lower mainly due to aggressive local
competition from wholesalers seeking to compensate for lower export profit opportunities. Overall,
operating margins and profits increased compared to the first half of last year on a like for like basis,
mainly as a result of improved domestic gross margins. During the half year the integration of
Farmacen and CERFC was largely completed, two depots being closed, common IT systems being
introduced and administration centralised. Alliance UniChem continues to work closely with a number
of major manufacturers to develop a range of specific services in Spain designed to meet their
respective objectives. Alliance UniChem’s full year forecast for market growth in Spain in value terms
in 2006 is around 1.5%, the market being expected to decline in the second half of the year mainly
due to the full impact of price reductions in the first half of the year. In July the new “Medicine Act”
was approved by parliament. This comprehensive act contains a number of measures relating to the
distribution and pricing of medicines as previously reported.

Wholesale revenue of £1.6 million in Portugal was from Alliance UniChem’s wholly owned Portuguese
Alloga business.


Retail

Alliance UniChem’s retail pharmacy division continued to perform strongly during the first half of the
year. Revenues totalled £706.5 million, an increase of 11.5% on the first half of last year, operating
profits increasing by 16.7% to £62.2 million. Operating margins increased by 39 basis points to
8.80% as a result of further improvements in Norway and The Netherlands. On a constant currency
basis, revenue increased by 11.0% and operating profits by 16.5%, like for like sales increasing by
4.5%.

In the UK revenue increased by 12.2% to £499.2 million. Like for like sales increased by 5.8% in
value compared to a market which Alliance UniChem estimated grew by around 3.5%. Total National
Health Service income increased by 13.0%, total dispensing volume increasing by 9.2%. This
compares with a prescription market which Alliance UniChem estimated grew in volume terms by
around 4.5%. Operating margins were in line with the first half of last year, increased gross margins
from further growth in income from patient and manufacturer services being offset by higher
pharmacy and head office payroll costs which were mainly for administering these services.

Increased patient service income resulted from the pharmacy contract in England and Wales which
began in April 2005 and introduced a change in remuneration from purely dispensing based fees to
include remuneration for Essential and Advanced services. The principal Advanced service has
continued to be Medicine Use Reviews designed to help patients use medicines more effectively and
improve the clinical and cost effectiveness of prescribed medicines. During the first half of the year,
Alliance Pharmacy carried out approximately 25,400 Medicine Use Reviews in England and Wales
which equates to around 35 per pharmacy. This compared with just over 9,000 reviews in the last
nine months of 2005 following their introduction in April 2005. The Department of Health raised the
upper limit for the provision of this service in England from the beginning of January 2006 from 200 to
250 reviews per pharmacy per annum.

The new contract for Scotland which came into effect in April 2006 is being introduced in phases as
previously expected but is formulated differently to the one for England and Wales. The contract in
Scotland, when fully implemented, will comprise four services. The Minor Ailment Service which
became fully operational at the beginning of July enables patients who do not pay for prescriptions
and who have registered at their community pharmacy for this service to have common minor
ailments treated by their pharmacist with a prescription for OTC medicines on the National Health
Service without the need for them to visit their doctor. Up until the end of June Alliance Pharmacy,
which has 166 pharmacies in Scotland, had just under 45,000 patients registered with them for this
service. Funding is in the form of a fee per pharmacy based on the number of registered patients.
Additional funding is also paid on an annual fee basis for a Public Health Service. The additional two
services, which are expected to be introduced possibly some time next year, are an Acute Medication
Service for the dispensing of acute prescriptions and a Chronic Medication Service comprising
medicine use reviews. No date for implementation of a new contract in Northern Ireland has yet been
announced although negotiations over this contract have now commenced.

Four central dispensaries were opened by Alliance Pharmacy in the UK in the first half of the year
bringing the total to 12 at 30 June 2006, three of which dispense high volumes of acute and repeat
prescriptions in a highly efficient way to local pharmacies. The changes being introduced by the
Department of Health, including the introduction of electronic prescriptions, mean that Alliance
UniChem sees an increasing role for such central dispensaries over the coming years, thereby freeing
up community-based pharmacists to spend an increasing proportion of time providing services and
advice to their patients, in addition to dispensing acute prescriptions.

In addition during the first half of the year Alliance Pharmacy established three pilot sites to test the
introduction of electronic prescriptions. This links with the new dispensing systems which were
installed in a further 251 pharmacies during the first half of the year, bringing the total to 294 with the
new software at 30 June 2006. Full roll out of this NHS funded programme is on schedule for
completion by the end of 2006. The National Health Service is planning for electronic prescriptions to
be fully operational across all pharmacies in England by the end of 2007, the introduction being
planned in phases. The initial service, which Alliance Pharmacy intends to have approved and
deployed into all its pharmacies in England in the second half of this year, will enable pharmacies to
scan barcodes on paper prescriptions printed by doctors. This service, coupled with smart cards
issued by Primary Care Trusts to individual pharmacists who are registered users of the new system,
will enable pharmacies to claim an allowance of £200 per month for running the system. Once the
vast majority of doctors and pharmacies have the new system operational, printed bar-coded
prescriptions will be superseded by electronically transferred prescriptions from the doctor to the
patient’s nominated pharmacy.

During the first half of the year, nine pharmacies were refitted, seven of which included consultation
areas for the first time, and nine were relocated, of which two were into health centre developments.
This refit programme has been put on hold temporarily while further retail format development work is
carried out to refine the community pharmacy concept. Private consultation areas were installed into
a further 62 pharmacies on a standalone basis, the number of pharmacies with private consultation
areas totalling 581 at 30 June 2006. A net ten pharmacies were added in the first half, of which one
was a new opening in Blyth, Northumberland where the licence was granted on the basis that the
pharmacy operates for a minimum of 100 hours per week. The total UK chain, as at 30 June 2006,
comprised 964 pharmacies and 52 other healthcare related retail outlets.

Alliance UniChem’s full year forecast for retail pharmacy market growth in value terms in the UK in
2006 is around 4% which is unchanged from its previously published forecast.

In Norway revenue increased by 8.4% to £128.0 million, an increase of 5.6% on a constant currency
basis. Like for like constant currency sales increased by 1.0%. This compares with a market which
Alliance UniChem estimated grew in value by around 4%. The total number of pharmacies in Norway
has continued to increase, newer openings taking market share from existing outlets. During the first
half of the year three pharmacies were opened and four relocated, which brought the pharmacy chain
to 123 at 30 June 2006. In addition, four pharmacies were refitted and a further two retail outlets
which sell specialist surgical products were acquired, bringing the total number of other healthcare
related retail outlets to seven. In March Alliance Apotek’s hard work and dedication to customer
service was recognised once again as it was voted the top pharmacy chain in Norway in a national
customer loyalty survey by the Norwegian School of Management for the second year running.

Operating margins and profits increased compared to the first half of last year as a result of a further
strengthening of commercial activities and increasing synergies from running the retail and wholesale
businesses together. Alliance UniChem’s full year forecast for retail pharmacy market growth in
Norway in value terms in 2006 is around 4.5%.

In The Netherlands revenue increased by 14.7% to £67.1 million, an increase of 14.9% on a constant
currency basis. Like for like constant currency sales increased by 2.7%. This compares with a
market which we estimate grew in value by around 6.5%. The total number of pharmacies in The
Netherlands continued to increase. During the first half of the year two pharmacies were acquired
and one relocated, taking the chain size to 73 at 30 June 2006. Operating margins increased
compared to the first half of last year, mainly as a result of improved gross margins. Alliance
UniChem’s full year forecast for retail pharmacy market growth in The Netherlands in value terms in
2006 is around 4%.

In Italy revenue increased by 0.8% to £12.2 million, like for like sales increasing by 0.8% on a
constant currency basis. This compares with a national market which Alliance UniChem estimated
increased in value by around 3%, growth in the regions in which Alliance UniChem’s pharmacies
operate being estimated to be more in line with the growth in like for like sales. No pharmacies were
acquired during the first half of the year, leaving a total of 28 at 30 June 2006, including eight in
associate businesses. During the first half of the year one pharmacy was refitted. Operating profit
was lower than in the first half of last year due to lower gross margins following various regulatory
changes. Alliance UniChem’s full year forecast for retail pharmacy market growth in Italy in value
terms in 2006 is around 2.5%.

Through other associate retail businesses, Alliance UniChem operated 123 pharmacies and five other
healthcare related retail outlets at 30 June 2006, the net number of pharmacies being the same as at
the beginning of the year.


Corporate

Alliance UniChem’s corporate costs totalled £10.8 million, a £0.5 million decrease on the first half of
last year due to a lower level of non-recurring costs.


Associates

Overall performance from Alliance UniChem’s associate businesses continued to be strong
throughout the first half of the year.

Alliance UniChem’s share of associates’ post tax earnings was £22.7 million, a 20.1% increase on the
first half of last year, its share of profits from operations increasing by 9.8% to £33.6 million and its
share of revenue by 15.1% to £1,068.0 million. Adjusting for changes in associate interests, including
Alliance Farmacêutica in Portugal as an associate from the end of June 2005,on a constant currency
basis like for like earnings increased by 9.1%, like for like operating profits by 2.3% and like for like
revenues by 5.5%. The underlying tax rate on associates’ earnings was 21.2%, a decrease of 12.1
percentage points on the first half of last year. This was mainly due to a retrospective reduction in the
Turkish corporate tax rate from 30% to 20% from 1 January 2006 which favourably impacted Hedef
Alliance’s earnings by around £1.5 million, this being offset by a corresponding increase in the
Group’s UK deferred tax charge in respect of unremitted associate’s earnings taxed at below the
standard UK tax rate.

Hedef Alliance contributed £12.2 million to Alliance UniChem’s earnings, an increase of 13.6% on the
first half of last year on a constant currency basis. Excluding the reduction in the Turkish corporate
tax rate, underlying earnings were at the same level as in the first half of last year, higher sales and
the benefit of having no inflation accounting monetary loss adjustment being offset by increased
interest costs mainly due to higher trade debtor levels. During the first half there was a net reduction
of one depot in Turkey, bringing the total number of depots at the half year end to 98, of which 67 are
satellites. In April Hedef Alliance exercised its option to acquire control and majority ownership of its
associate, UCP in Egypt.

Alliance UniChem’s share of earnings from associates other than Hedef increased by 25.0% in total to
£10.5 million. These include its share of earnings from Galenica in Switzerland and ANZAG in
Germany, both of which are quoted companies, and its wholesale associate in Portugal. Adjusting for
changes in associate interests, on a constant currency basis like for like earnings from these other
associates increased by 3.6%. In June, ANZAG acquired 60% of Farmexpert, the third largest
pharmaceutical wholesaler in Romania.


Exceptional items

Exceptional items, which are items classified by Alliance UniChem as exceptional in nature, totalled
£4.1 million of charges net of tax, compared to £14.1 million of net gains after tax in the first half of
last year. In the first half the exceptional items related to costs associated with Alliance UniChem’s
merger with Boots. In the first half of the previous year the exceptional items related to profits on
disposal of businesses and investments.


Net finance costs

Alliance UniChem’s net finance costs were £23.0 million in the first half of 2006. Excluding IAS 39
timing differences from hedging interest rate and currency exposures (comprising
£1.3 million of losses which were mainly due to the weakening of the US Dollar versus the Euro),
underlying net finance costs were £21.7 million, a 19.2% increase on the comparable figure for the
first half of last year. The underlying increase was almost all due to higher Euro interest rates.
Interest cover, which Alliance UniChem defines as operating profit before exceptional items divided by
underlying net finance costs, was 6.3 times, compared to 6.7 times in the first half of last year.


Tax

Alliance UniChem’s underlying rate of tax, defined as the underlying tax charge (i.e. excluding tax on
exceptional items and IAS 39 timing differences), expressed as a percentage of operating profit net of
underlying net finance costs, was 31.6%. This was 1.4 percentage points lower than in the first half of
last year, mainly as a result of recognition of foreign tax credits. This was partially offset by an
increase in Alliance UniChem’s deferred tax charge in respect of unremitted associates’ earnings from
Hedef Alliance following the reduction in the Turkish corporate tax rate where there is a compensatory
benefit in the associates’ results.


Cash flow

Alliance UniChem has continued its well established track record of generating free cash flow to fund
investment in growth.

Net cash generated by operations was £222.4 million compared to £48.5 million in the first half of last
year. Working capital net inflow was £79.6 million, which compares with an outflow of £93.3 million in
the first half of last year. £54.2 million of this relative improvement was a timing difference on UK
prescription receipts, as a result of 1 July falling on a weekend this year in which case the payment is
made on the previous working day. Adjusting for this timing difference, underlying year on year trade
working capital efficiency improvements, on a 30 June balance sheet basis, totalled approximately
£80 million.

Cash inflow from lower inventories in the first half was £13.1 million, inventory levels at 30 June
increasing year on year by 0.6 days. Cash inflow from lower receivables was £54.0 million, trade
receivables at 30 June reducing year on year by 4.3 days, of which 1.9 days was the timing difference
in UK prescription receipts. Cash inflow from higher payables was £12.5 million, trade payable days
increasing year on year by 1.0 day.

The net cash outflow on acquisitions and disposals of businesses and associates was
£52.0 million, including £13.8 million of borrowings acquired with businesses. The principal cash
outflow within this net number was £29.0 million, including borrowings acquired and expenses, for the
acquisition of a 96% controlling stake in the parent company of Apteka Holding ZAO, the fifth largest
pharmaceutical wholesaler in Russia.

Net capital expenditure was £33.3 million of which £23.4 million was for growth and efficiency
projects. These included investment in wholesale and retail systems, and relocating, re-fitting and
upgrading of retail pharmacies.

Other investments (net) of £20.8 million mainly comprised £22.1 million of net expenditure on
acquiring shares in Alliance UniChem Plc for the 1992 Employee Trust.


Shareholders’ equity

Alliance UniChem shareholders’ equity at 30 June 2006 totalled £1,199.3 million, compared to
£1,173.8 million at the end of last year and £1,114.4 million at 30 June 2005.


Financial position

At 30 June 2006 net borrowings (which Alliance UniChem defines as borrowings, net of cash and
cash equivalents and derivative financial instruments) were £752.4 million, which was £27.2 million
lower than at the beginning of the year.
Pensions

Alliance UniChem’s total retirement benefit obligations, before tax adjustments, at 30 June 2006 were
£39.9 million compared to £69.1 million at 31 December 2005. The decrease in the gross obligations
is principally due to increases in both long dated bond yields used to discount estimates of future
pension obligations and contributions to the scheme. The total pension charge against profit before
tax (excluding associates) was £9.3 million, an increase of £1.1 million on the first half of last year.
Group income statement
for the six months ended 30 June 2006

                                                                                 2006          2005            2005
                                                                          Six months     Six months          Year to
                                                                           to 30 June    to 30 June     31 December
                                                                   Note       £million       £million       £million
Revenue including share of associates’ revenue                             5,786.7       5,547.1        11,136.5
Less: share of associates’ revenue                                        (1,068.0)       (927.8)       (1,965.3)
Revenue                                                              3     4,718.7       4,619.3         9,171.2

Operating profit including share of associates’ operating profit              169.4         152.5           331.8
Less: share of associates’ operating profit                                   (33.6)        (30.6)          (70.8)
Operating profit                                                              135.8         121.9           261.0
Costs in relation to the merger                                                (4.9)            -            (3.8)
Share of associates’ post tax earnings                               4         22.7          18.9            45.3
Profit on disposal of businesses                                     5            -           9.1             7.8
Profit on disposal of investments                                    6            -           2.1             2.1
Profit from operations                                               3        153.6         152.0           312.4
Finance income                                                                  4.9           8.2            13.2
Finance costs                                                                 (27.9)        (22.9)          (46.7)
Profit before tax                                                             130.6         137.3           278.9
Tax                                                                  7        (34.8)        (32.4)          (67.6)
Profit for the period                                                          95.8         104.9           211.3


Attributable to:
Equity shareholders                                                             95.5        104.6           210.7
Minority interests                                                               0.3          0.3             0.6
                                                                                95.8        104.9           211.3

Earnings per share                                                   8
Basic                                                                           26.9p         29.3p           58.9p
Diluted                                                                         26.6p         29.0p           58.3p

Dividends per share                                                                 -           6.9p          20.5p

All activities relate to continuing operations.
Group statement of recognised income and expense
for the six months ended 30 June 2006
                                                                  2006          2005            2005
                                                           Six months     Six months         Year to
                                                            to 30 June    to 30 June     31 December
                                                               £million       £million       £million
Currency net investments
- currency translation differences                              (17.1)           1.6           (5.8)
- related deferred tax credit                                       -            0.2              -
- currency translation differences on minority interests            -           (0.5)          (0.1)
Defined benefit pension schemes
- actuarial gain/(loss)                                          16.7         (18.2)          (18.8)
- related deferred tax (charge)/credit                           (5.5)          5.6             6.0
Net gains on cash flow and net investment hedges
- fair value change deferred in equity                            0.5           (3.2)          15.3
- related deferred tax (charge)/credit                           (0.4)           0.2            0.3
- transferred to income statement (net of tax)                    1.2            2.4            4.9
Available-for-sale investments
- (losses)/gains on revaluation deferred in equity               (4.9)         5.3             9.7
- related deferred tax credit/(charge)                            0.4         (0.8)           (0.8)
- transferred to income statement                                   -         (2.1)           (2.1)
Income and expense recognised directly in equity                 (9.1)        (9.5)            8.6
Profit for the period                                            95.8        104.9           211.3
Total recognised income and expense for the period               86.7         95.4           219.9

Attributable to:
Equity shareholders                                              86.4          95.6          219.4
Minority interests                                                0.3          (0.2)           0.5
                                                                 86.7          95.4          219.9



Reconciliation of movements in total equity
for the six months ended 30 June 2006
                                                                  2006          2005            2005
                                                           Six months     Six months          Year to
                                                            to 30 June    to 30 June     31 December
                                                               £million       £million       £million
At 1 January                                                1,184.8       1,038.7         1,038.7
Total recognised income and expense for the period             86.7          95.4           219.9
Share-based compensation
- charged to income statement                                     2.5           1.8             5.3
- related deferred tax credit                                     2.8           0.3               -
Utilisation of accrual for long-term incentive plan                 -           0.3               -
Dividends paid                                                  (48.7)        (43.5)          (68.7)
Shares issued
- share options exercised                                         -           0.8             2.1
- dividends                                                       -          22.0            22.0
Fair value of option to acquire minority interests                -             -            (4.3)
Exercise of option to acquire minority interests                4.3             -               -
Net (cost)/proceeds of own shares (purchased)/sold            (22.1)          8.7           (30.6)
Minority interests acquired                                    (0.5)            -               -
Minority interests in businesses acquired                       0.2           0.4             0.4
Net currency translation recycled on business disposals           -           0.1               -
At end of period                                            1,210.0       1,125.0         1,184.8
Group balance sheet
as at 30 June 2006

                                                        2006         2005           2005
                                                     30 June      30 June    31 December
                                                     £million     £million       £million
Assets
Non-current assets
Goodwill                                             257.9        218.5         232.1
Intangible assets                                    830.1        802.5         819.3
Property, plant and equipment                        356.8        324.0         350.0
Investments in associates                            391.1        348.9         394.5
Available-for-sale investments                        42.9         43.2          48.4
Deferred tax assets                                    0.7         20.2           9.2
Trade and other receivables                           26.9         23.5          27.2
Derivative financial instruments                       0.3            -           3.5
                                                   1,906.7      1,780.8       1,884.2
Current assets
Inventories                                          699.2        639.3         670.5
Trade and other receivables                        1,410.4      1,416.7       1,424.7
Cash and cash equivalents                            339.6        104.1         133.5
Derivative financial instruments                       2.0            -           0.6
                                                   2,451.2      2,160.1       2,229.3
Non-current assets classified as held for sale           -         11.7             -
Total assets                                       4,357.9      3,952.6       4,113.5
Liabilities
Current liabilities
Financial liabilities
- borrowings                                         (231.7)      (204.2)      (216.4)
- financing linked to securitisation                 (393.7)      (285.7)      (289.4)
Derivative financial instruments                      (13.1)           -        (12.2)
Trade and other payables                           (1,446.6)    (1,303.1)    (1,383.5)
Current corporate tax liabilities                     (46.0)       (38.6)       (42.6)
                                                   (2,131.1)    (1,831.6)    (1,944.1)
Net current assets                                    320.1        328.5        285.2
Non-current liabilities
Financial liabilities
- borrowings                                         (728.0)     (606.3)        (605.2)
- financing linked to securitisation                      -      (101.0)        (103.3)
Derivative financial instruments                     (121.5)      (89.8)         (83.4)
Deferred tax liabilities                             (127.4)     (124.5)        (123.6)
Retirement benefit obligations                        (39.9)      (68.9)         (69.1)
                                                   (1,016.8)     (990.5)        (984.6)
Liabilities directly associated with non-current
assets classified as held for sale                       -         (5.5)            -
Net assets                                         1,210.0      1,125.0       1,184.8

Equity
Share capital                                         36.2         36.1          36.2
Share premium                                        509.4        508.2         509.4
Employee share trusts                                (63.3)        (5.7)        (45.1)
Retained earnings                                    707.8        563.4         648.1
Translation reserve                                  (14.4)        10.3           2.7
Hedging reserve                                       15.1         (7.3)         13.8
Available-for-sale revaluation reserve                 5.8          5.9          10.3
Other reserves                                         2.7          3.5          (1.6)
Shareholders’ equity                               1,199.3      1,114.4       1,173.8
Minority interests                                    10.7         10.6          11.0
Total equity                                       1,210.0      1,125.0       1,184.8
Group cash flow statement
for the six months ended 30 June 2006

                                                                              2006          2005            2005
                                                                       Six months     Six months          Year to
                                                                        to 30 June    to 30 June     31 December
                                                                Note       £million       £million       £million
Cash generated by operations                                     9a        222.4           48.5          275.1
Tax paid                                                                   (24.9)         (25.4)         (59.2)
Interest paid                                                              (25.0)         (21.2)         (45.2)
Net cash from operating activities                                         172.5            1.9          170.7
Net cash (used in)/from investing activities                     9b        (61.3)          34.6          (45.1)
Net cash from/(used in) financing activities                     9c         72.8          (89.2)        (162.2)
Net increase/(decrease) in cash and cash equivalents in
the period                                                                 184.0          (52.7)         (36.6)
Cash and cash equivalents at 1 January                                     (10.8)          19.8           19.8
Currency translation differences                                            (0.5)           4.9            6.0
Cash and cash equivalents at end of period                                 172.7          (28.0)         (10.8)

Set out below is a reconciliation of the net increase/(decrease) in cash and cash equivalents to the
(increase)/decrease in net borrowings. Net borrowings are defined by the Group as borrowings net of
cash and cash equivalents and derivative financial instruments.

                                                                              2006          2005            2005
                                                                       Six months     Six months         Year to
                                                                        to 30 June    to 30 June     31 December
                                                                Note       £million       £million       £million
Increase/(decrease) in cash and cash equivalents                           184.0          (52.7)          (36.6)
Cash and cash equivalents (inflow)/outflow from
(increase)/decrease in debt and lease financing                  10       (142.9)          77.7            87.0
Decrease in net borrowings resulting from cash flows                        41.1           25.0            50.4
Borrowings acquired with businesses                                        (13.8)         (38.8)          (38.8)
                                                                            27.3          (13.8)           11.6
Currency translation differences and fair value adjustments
on financial instruments                                                    (0.1)         45.7            36.9
Decrease in net borrowings in the period                                    27.2          31.9            48.5
Net borrowings at 1 January                                               (779.6)       (828.1)         (828.1)
Net borrowings at end of period                                  11       (752.4)       (796.2)         (779.6)
Notes to the financial information
for the six months ended 30 June 2006

(1) BASIS OF PREPARATION
The interim financial information of Alliance UniChem Plc was approved by the directors of Alliance
UniChem Plc and Alliance Boots plc on 31 July 2006. This information has been prepared on the
same basis as that included in the Alliance UniChem Plc 2005 Annual Report. As stated in the
Prospectus issued by Boots Group PLC to its shareholders on 5 June 2006, the accounting policies of
Alliance UniChem Plc are not significantly different from those in the Annual Report of Boots Group
PLC for the year ended 31 March 2006. The interim financial information does not include costs
incurred after 30 June 2006 that only crystallised on completion of the merger between Boots Group
PLC and Alliance UniChem Plc.

The interim financial information of Alliance UniChem Plc does not constitute statutory accounts as
defined in section 240 Companies Act 1985. The comparative figures for the year ended 31
December 2005 are not statutory financial statements for that financial year but have been extracted
from them. The statutory financial statements for the year ended 31 December 2005, which received
an unqualified audit report from the Group's auditors and did not include a statement under section
237(2) or (3) of the Companies Act 1985, have been filed with the Registrar of Companies.


(2) EXCHANGE RATES
The significant exchange rates relative to Sterling used in the preparation of the financial statements
are as follows:

                                                                    Average                                     Period end
                                         2006          2005           2005
                                  Six months     Six months         Year to           2006          2005              2005
                                   to 30 June    to 30 June     31 December        30 June       30 June       31 December
Euro                                  1.455          1.453           1.460         1.447          1.481             1.452
Czech Koruna                          41.48          43.78           43.63         41.27          44.51             42.27
Norwegian Kroner                      11.55          11.86           11.71         11.51          11.72             11.60
Swiss Franc                           2.274          2.242           2.260         2.266          2.296             2.260
Turkish Lira                          2.445                                        2.938          2.394             2.320
US Dollar                             1.781          1.889           1.830         1.850          1.793             1.719


(3) SEGMENTAL ANALYSIS – PRIMARY SEGMENTS
                                                                   Revenue                            Profit from operations
                                         2006          2005           2005            2006          2005               2005
                                  Six months     Six months         Year to    Six months     Six months            Year to
                                   to 30 June    to 30 June     31 December     to 30 June    to 30 June        31 December
                                      £million       £million       £million       £million       £million          £million
Wholesale - before profit on
                disposal of
                businesses         4,440.6       4,400.8         8,687.3             84.4          79.9            169.6
              - profit on disposal
                of businesses            -             -               -                -           4.6              2.9
Wholesale                          4,440.6       4,400.8         8,687.3             84.4          84.5            172.5
Retail        - before profit on
                disposal of
                businesses           706.5          633.7        1,337.3             62.2          53.3            112.9
              - profit on disposal
                of businesses            -              -              -                -             -              0.4
Retail                               706.5          633.7        1,337.3             62.2          53.3            113.3
Corporate - before costs in
                relation to merger       -                 -              -         (10.8)        (11.3)            (21.5)
              - costs in relation
                to the merger            -              -               -            (4.9)            -              (3.8)
Corporate                                -              -               -           (15.7)        (11.3)            (25.3)
Intra-group                         (428.4)        (415.2)         (853.4)              -             -                 -
Share of associates’ post tax
earnings                                 -                 -                         22.7          18.9              45.3
Profit on disposal of associate
businesses                               -             -                               -           4.5               4.5
Profit on disposal of investments        -             -                               -           2.1               2.1
                                   4,718.7       4,619.3         9,171.2           153.6         152.0             312.4
(4) ASSOCIATES
An analysis of the Group’s share of associates’ post tax earnings is shown below:

                                                                                 2006          2005            2005
                                                                          Six months     Six months         Year to
                                                                           to 30 June    to 30 June     31 December
                                                                              £million       £million       £million
Profit from operations                                                          33.6          30.6           70.8
Finance income                                                                     -           0.3            0.8
Finance costs                                                                   (4.3)         (2.7)          (6.6)
Tax                                                                             (6.2)         (9.4)         (19.8)
Minority interests                                                              (0.4)          0.1            0.1
                                                                                22.7          18.9           45.3


(5) PROFIT ON DISPOSAL OF BUSINESSES
The profit on disposal of businesses for the year ended 31 December 2005 related to the disposal of
the Group’s 50% direct interest in the ordinary share capital of GaleniCare S.A., its 20% direct interest
in the Swiss part of Alloga S.A., 51% of its interest in Alliance UniChem Farmacêutica S.A. and a
number of minor interests. The net profit on these disposals was £7.8 million before tax.


(6) PROFIT ON DISPOSAL OF INVESTMENTS
The profit on disposal of investments for the year ended 31 December 2005 related to the Group’s
investment in Sanacorp Pharmahandel A.G..


(7) TAX
                                                                                 2006          2005            2005
                                                                          Six months     Six months         Year to
                                                                           to 30 June    to 30 June     31 December
                                                                              £million       £million       £million
UK corporation tax                                                              13.1          17.6           31.8
Overseas tax                                                                    14.2          14.5           30.7
Deferred tax                                                                     7.5           0.3            5.1
                                                                                34.8          32.4           67.6

The underlying tax charge, calculated before exceptional items as classified by Alliance UniChem
(comprising costs in relation to the merger, profit on disposal of businesses and profit on disposal of
investments) and IAS 39 timing differences from hedging interest rate and currency exposures,
reconciles to the tax charge in the period as follows:

                                                                                 2006          2005            2005
                                                                          Six months     Six months          Year to
                                                                           to 30 June    to 30 June     31 December
                                                                              £million       £million        £million
Underlying tax                                                                  36.0          34.2           69.7
Tax on
- exceptional items                                                             (0.8)         (2.9)          (3.0)
- IAS 39 timing differences                                                     (0.4)          1.1            0.9
                                                                                34.8          32.4           67.6
 (8) EARNINGS PER SHARE
Earnings per share is calculated by dividing the profit attributable to equity shareholders by the
weighted average number of shares in issue during the period. Diluted earnings per share is
calculated by dividing the profit attributable to equity shareholders by the weighted average number of
shares in issue added to the dilutive potential shares assuming they had all converted to issued
shares at the beginning of the period.

                                                                          2006                                       2005
                                                       Weighted                                   Weighted
                                                         average                                    average
                                                         number        Earnings                      number       Earnings
                                            Profit     of shares      per share         Profit     of shares     per share
                                      six months     six months     six months    six months     six months     six months
                                       to 30 June     to 30 June     to 30 June   to 30 June     to 30 June     to 30 June
                                          £million        million         pence       £million        million        pence
Basic                                       95.5         354.7           26.9        104.6          356.7           29.3
Potentially dilutive share options             -           4.9           (0.3)           -            4.1           (0.3)
Diluted                                     95.5         359.6           26.6        104.6          360.8           29.0

To assist investors in understanding the underlying performance, adjusted earnings per share
amounts are calculated excluding exceptional items as classified by Alliance UniChem (comprising
costs in relation to the merger, profit on disposal of businesses and profit on disposal of investments)
and IAS 39 timing differences from hedging interest rate and currency exposures as follows:

                                                                          2006                                       2005
                                                       Weighted                                   Weighted
                                                         average                                    average
                                                         number        Earnings                      number       Earnings
                                           Profit      of shares      per share         Profit     of shares     per share
                                     six months      six months     six months    six months     six months     six months
                                      to 30 June      to 30 June     to 30 June   to 30 June     to 30 June     to 30 June
                                         £million         million         pence       £million        million        pence
Basic                                     95.5           354.7           26.9        104.6          356.7           29.3
Exceptional items net of tax               4.1               -            1.1        (14.1)             -           (3.9)
IAS 39 timing differences
net of tax                                0.9                -            0.3          (2.4)            -           (0.7)
Adjusted basic                          100.5            354.7           28.3          88.1         356.7           24.7
Potentially dilutive share options          -              4.9           (0.4)            -           4.1           (0.3)
Adjusted diluted                        100.5            359.6           27.9          88.1         360.8           24.4
(9) CASH FLOW STATEMENT
                                                                         2006          2005            2005
                                                                  Six months     Six months          Year to
                                                                   to 30 June    to 30 June     31 December
(a) Cash generated by operations                                      £million       £million        £million
Continuing operations
Profit from operations                                                153.6         152.0            312.4
Share of associates’ post tax earnings                                (22.7)        (18.9)           (45.3)
Profit on disposal of businesses                                          -          (9.1)            (7.8)
Profit on disposal of investments                                         -          (2.1)            (2.1)
Depreciation and amortisation                                          22.5          21.6             41.6
Share-based compensation charge                                         2.5           1.8              5.3
Profit on disposal of property, plant and equipment                       -          (0.9)            (1.0)
Decrease in inventories                                                13.1          31.9             17.3
Decrease/(increase) in receivables                                     54.0         (54.2)           (11.6)
Increase/(decrease) in payables                                        12.5         (71.0)           (30.2)
Decrease in retirement benefit obligations                            (13.1)         (2.6)            (3.5)
                                                                      222.4          48.5            275.1

(b) Net cash (used in)/from investing activities
Acquisition of businesses                                             (44.0)         (98.4)         (136.7)
Net cash/(overdrafts) of businesses acquired                            4.2          (11.6)          (15.0)
Disposal of businesses                                                  5.4           48.2            44.5
Net (cash)/overdrafts of businesses disposed                           (2.6)          67.0            66.2
Purchase of investments in associates                                  (1.2)         (10.0)          (11.8)
Disposal of investments in associates                                     -            8.6             8.7
Repayment of capital by associate                                         -              -             2.8
Loans repaid by associates                                                -           41.4            41.4
Dividends from associates                                               6.8           15.9            16.1
Purchase of property, plant and equipment and intangible assets       (36.0)         (39.5)          (82.5)
Disposal of property, plant and equipment                               2.7            2.0             6.7
Interest received                                                       3.4            4.4             7.1
Proceeds from available-for-sale investments                              -            6.6             7.4
                                                                      (61.3)          34.6           (45.1)

(c) Net cash from/(used in) financing activities
Interest element of finance lease obligations                          (0.6)          (0.6)           (1.0)
Dividend paid to equity shareholders                                  (48.4)         (21.5)          (46.4)
Dividends paid to minority interests                                   (0.3)             -            (0.3)
Proceeds from borrowings                                              154.2           15.3            17.1
Repayment of borrowings                                               (10.6)         (92.1)         (102.2)
Repayment of capital element of finance lease obligations              (0.7)          (0.9)           (1.9)
Proceeds from shares issued                                               -            1.1             2.1
Other investments (net)                                               (20.8)           9.5           (29.6)
                                                                       72.8          (89.2)         (162.2)
(10) ANALYSIS OF NET BORROWINGS
                                                                                     2006            2005             2005
Cash and cash equivalents (inflow)/outflow from                               Six months       Six months           Year to
                                                                               to 30 June      to 30 June      31 December
(increase)/decrease in debt and lease financing                                   £million         £million         £million
Proceeds from borrowings                                                         (154.2)           (15.3)           (17.1)
Repayment of borrowings                                                            10.6             92.1            102.2
Repayment of capital element of finance lease obligations                           0.7              0.9              1.9
                                                                                 (142.9)            77.7             87.0


(11) ANALYSIS OF MOVEMENT IN NET BORROWINGS

                                                             Borrowings      Borrowings
                                                     Cash         within           within      Derivative
                                                 and cash        current     non-current         financial             Net
                                               equivalents     liabilities     liabilities   instruments       borrowings
                                                  £million      £million         £million         £million        £million
At 1 January 2006                                  133.5        (216.4)         (605.2)           (91.5)          (779.6)
Increase/(decrease) in cash and cash
equivalents                                        206.3          (22.3)              -                  -         184.0
(Increase)/decrease in borrowings                      -           11.3         (154.2)                  -        (142.9)
Borrowings acquired with businesses                    -              -          (13.8)                  -         (13.8)
Other non-cash movements                               -           (3.4)           3.4                   -            -
Currency translation differences and fair
value adjustments on financial instruments          (0.2)         (0.9)           41.8           (40.8)             (0.1)
At 30 June 2006                                    339.6        (231.7)         (728.0)         (132.3)           (752.4)

In the cash flow statement, cash and cash equivalents include bank overdrafts which are classified
within borrowings within current liabilities in the balance sheet and amounted to £166.9 million
compared to £144.3 million as at 31 December 2005.


(12) NET CASH (OUTFLOW)/INFLOW ON ACQUISITIONS AND DISPOSALS
An analysis of the net cash (outflow)/inflow on acquisitions and disposals of businesses, associates
and available-for-sale investments in the period is shown below:

                                                                                    2006            2005             2005
                                                                             Six months       Six months           Year to
                                                                              to 30 June      to 30 June      31 December
                                                                                 £million         £million         £million
Acquisition of businesses                                                         (44.0)          (98.4)          (136.7)
Net cash/(overdrafts) of businesses acquired                                        4.2           (11.6)           (15.0)
Disposal of businesses                                                              5.4            48.2             44.5
Net (cash)/overdrafts of businesses disposed                                       (2.6)           67.0             66.2
Purchase of investments in associates                                              (1.2)          (10.0)           (11.8)
Disposal of investments in associates                                                 -             8.6              8.7
Loans repaid by associates                                                            -            41.4             41.4
Proceeds from available-for-sale investments                                          -             6.6              7.4
Borrowings acquired with businesses                                               (13.8)          (38.8)           (38.8)
                                                                                  (52.0)           13.0            (34.1)
Glossary of key terms
Adjusted diluted earnings per share
Diluted earnings per share adjusted to exclude exceptional items and IAS 39 timing differences, both
net of tax.

Adjusted profit for the period
Profit for the period adjusted to exclude exceptional items and IAS 39 timing differences, both net of
tax.

Exceptional items
Items classified by Alliance UniChem as exceptional in nature. In the reporting periods these
comprise costs in relation to the merger, profit on disposal of businesses and profit on disposal of
investments.

IAS 39 timing differences
Derivative financial instruments are used to hedge interest rate and currency exposures. IAS 39
dictates whether changes in the fair value of these instruments can be matched in the income
statement by changes in the fair value of the item being hedged. Where they cannot be matched, or
do not fully match, the unmatched amount represents a timing difference that will reverse over the life
of the financial instruments.

Net borrowings
Borrowings, net of cash and cash equivalents and derivative financial instruments.

Net finance costs
Finance costs net of finance income.

Operating margins
Operating profit expressed as a percentage of revenue.

Operating profit
Profit from operations before share of associates’ post tax earnings and exceptional items.

Trade working capital efficiency
The movement in monetary terms of improvements in working capital days over a period.

Underlying net finance costs
Net finance costs adjusted to exclude IAS 39 timing differences.

Underlying rate of tax
The underlying tax charge expressed as a percentage of operating profit net of underlying net finance
costs.

Underlying tax charge
The tax charge excluding tax on exceptional items and IAS 39 timing differences.

								
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