Dear Shareholders,

Profarma Distribuidora de Produtos Farmacêuticos S.A., submits to the appreciation of its shareholders, the Management's Report and the correspondent Individual and consolidated Corporate Financial Statement, followed up by independent auditors approval, referred to the exercise which ended on December 31, 2009 and 2008, prepared in accordance with the accounting practices adopted in Brazil, containing all technical pronouncements of the Accounting Pronouncements Committee – CPC and the norms of the Brazilian Security Commission – CVM for 2009. New pronouncements issued in 2009 will be applied in the 2010 financial statements.

Profarma’s non-accounting information have not been revised by the external auditors.


At the beginning of 2009, the uncertainties caused by the world crisis, led to a cautious start of year. As of the third quarter, the year was marked with the first recovery signs in the international market, as a result of the expressive resources performed by the governments at the end of 2008 and through 2009.

In 2009, Profarma consolidated in its results the effects of the actions which were initiated in 2008 and developed throughout this year, strengthening its competitive advantages and financial solidity. In a year which was marked by uncertainties generated by the international crisis, Profarma opted for valuing its financial resources in face of a more conservative market, strategically positioned with its main focus on improving its profitability and cash generation.

As a result, the net profit of the Company grew 68.0% in relation to the previous year reaching R$53.2 million, representing a net margin of 2.1%, the biggest one in the past seven years. Consequently, Profarma will distribute R$8.6 million of dividends, or R$0.26 per share, representing an increase of 136.4% in relation with the previous year, when the relation was of R$0.11 per share.

It is important to state the cash operating generation record of the Company of R$80.2 million, mainly due to the Company’s cash cycle reduction in 13.1 days, reaching 52.7 days and also due to the 40.7% EBITDA increase of the Company, reaching an EBITDA margin of 4.3%, the biggest one registered in the past seven years. This way the Company was able to reduce its net debt/EBITDA ratio in 43.8% reaching 1.1x, leaving a 1.9x position at the end of 2008.

In 2009 Profarma’s gross operating revenue reached R$3.0 billion, an increment of 3.4% in relation to the previous year, with highlights to the Central West and Southeast regions showing growths of 14.5% and 5.5%, respectively.

With the fast economical recovery of the Country regarding the financial crisis, BM&FBovespa index showed an 82.7% valorization in 2009. Profarma’s shares ended the year quoted at R$16.55, with an increase of 212.3% in comparison with the one registered at the beginning of the year, overcoming the main BM&FBovespa index in 129.6 percentage points.

For 2010, the forecast for the Country is positive, once Brazil has already started its growth retake in 2009, as seen in the credit improvement, interest rate reduction, and unemployment rate reduction. Such basis sustain good projections, such as the GDP increasing up to 5.5%, leaving behind a year that probably ended in a negative growth rate.

In this scenario, Profarma’s main focus on results allied to a long-term vision supported by current practical and objective attitudes, will be of great importance in order to continue to consolidate its position in the Brazilian pharmaceutical distribution sector.

We credit our employees for making the greatest contribution towards the excellent results achieved. We thank them and our shareholders, customers and suppliers for the support and confidence they have given us.

Sammy Birmarcker
Chief Executive Officer