SAB Saratoga Investment Corp

Mexico City, Mexico, July 28, 2010.  Grupo Casa Saba (“Saba”, “GCS”, “the Company” or “the Group”), one of the leading Mexican distributors of pharmaceutical products, health and beauty aids, personal care and consumer goods, general merchandise, publications and other products announces its consolidated financial and operating results for the second quarter of 2010.

QUARTERLY EARNINGS

During the second quarter of 2010, GCS’s sales reached $7,587.32 million, a slight increase of 0.11%.

SALES BY DIVISION

PRIVATE PHARMA

Quarterly sales in our main division, Private Pharma, decreased 0.87% versus 2Q09.  This decrease was primarily the result of the higher level of sales reported by this division during the second quarter of 2009 due to the outbreak of the AH1N1 virus, which affected various states within the country during the months of April and May of that year and which had a positive effect on our sales.
 
As a result, Private Pharma represented 84.36% of the Group’s total sales, 84 basis points lower than the participation that it had in 2Q09.

GOVERNMENT PHARMA

Sales in our Government Pharma division declined 6.72% compared to the second quarter of 2009, primarily as a result of lower sales to PEMEX and ISSEMYM.  It is worth mentioning that, in the case of PEMEX, the decrease was related to a reduction in subrogation contracts while that of ISSEMYM was related to a decline in demand on behalf of this institution.

As a result, this division went from representing 3.81% of total sales in 2Q09 to 3.55% during the same period of 2010.

HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHER

Sales in our Health, Beauty, Consumer Goods, General Merchandise and Other division rose 2.93% compared to the second quarter of 2009. This increase was the result of an increase in offers and promotions that stimulated the demand for these products in the marketplace.

This division represented 8.86% of GCS’s total sales in 2Q10, 24 b.p. higher than in 2Q09, when it accounted for 8.62%.

PUBLICATIONS

During the quarter sales from Citem, our Publication distribution division, increased 35.97% compared to 2Q09. This growth was due to an increase in sales of specialty titles related to the World Cup that took place in South Africa as well as the recuperation of various publishers.

The significant growth reported by this division enabled it to increase its participation as a percentage of the Group’s total sales, from 2.38% in 2Q09 to 3.23% in the second quarter of 2010.

                                                                  Division                               % of Sales
                                              Private Pharma                             84.36%
                                          Government Pharma                          3.55%
                                Health, Beauty, Consumer Goods,
                                  General Merchandise and Other                  8.86%
                                                Publications                                3.23%

                                                   TOTAL                                   100.00%

GROSS INCOME

During the second quarter of the year, Grupo Casa Saba’s gross income grew 0.74% versus the same period of the previous year to reach $838.75 million pesos.  This increase was primarily due to a reduction in the cost of sales of the merchandise sold as a percentage of net sales.  As such, the company’s gross margin was 11.05%, 6 basis points higher than the 10.99% margin reported in 2Q09.

OPERATING EXPENSES

GCS maintained strict control over its costs and expenses during the quarter.  As a result, the Group’s operating expenses reached $569.28 million in 2Q10, a decline of 2.77% compared to the second quarter of 2009.

Operating expenses as a percentage of total sales decreased 23 b.p., from 7.73% in 2Q09 to 7.50% during the second quarter of 2010, due to the reduction in operating expenses and the increase in sales.

OPERATING INCOME

Quarterly operating income was $269.47 million, 9.05% higher than the $247.12 million reported in 2Q09.  The growth was the result of higher sales and lower operating costs.

OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION

Operating income plus depreciation and amortization for 2Q10 was $284.08 million pesos, an increase of 5.26% compared to 2Q09.  Depreciation and amortization for the period was $14.61 million, 35.81% lower than it was during the second quarter of 2009.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents at the end of the second quarter of 2010 was $470.58 million, an increase of 136.29% compared to the same period of 2009.

COMPREHENSIVE COST OF FINANCING

During the quarter, GCS’s comprehensive cost of financing (CCF) reached $79.46 million, 35.53% higher than the CCF reported during 2Q09. This was primarily due to an increase in the amount of interest paid.

OTHER EXPENSES (INCOME)

During the second quarter of 2010, the Company reported an income of $13.87 million in other expenses (income), 513.28% higher than the income reported during the same period of 2009. It is worth mentioning that the expenses (income) from this line item were derived from activities that are distinct from the company’s everyday business operations.

TAX PROVISIONS

Tax provisions were $37.84 million during the second quarter of 2010, 13.44% less than the $43.72 million reported during 2Q09.  All of the provisions this quarter were related entirely to income tax payments.

NET INCOME

GCS’s net income for the second quarter was $166.03 million pesos, an increase of 12.93% compared to the same quarter of 2009. This was primarily due to the decrease in operating expenses as well as the decline in the Company’s tax provisions during the period.

Consequently, the net margin for the period was 2.19%, 25 basis points higher than the 1.94% net margin registered during the second quarter of the previous year.

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WORKING CAPITAL

During the second quarter of 2010, our accounts receivable days increased by 10.1 days from 2Q09 to reach 77.9 days.  In addition, our accounts payable days declined 1.70 days versus 2Q09, to reach 50.3 days.  Finally, our inventory days were 61.0 days, 6.0 more days than we had during the same period of 2009.

The 265.4 million shares issued by Grupo Casa Saba are listed on the Mexican Stock Exchange and its ADRs on the New York Stock Exchange, both under the symbol “SAB”. One ADR equals 10 ordinary shares.

Grupo Casa Saba is one of the leading distributors of pharmaceutical products, beauty, personal care and consumer goods, general merchandise, publications and other goods in Mexico. With more than 115 years of experience, the Company distributes to the majority of pharmacies, chains, self-service and convenience stores, as well as other specialized national chains.

As a precautionary note to investors, except for the historic information contained herein, certain topics discussed in this document constitute forward-looking statements. Such topics imply risks and uncertainties, including the economic conditions in Mexico and other countries in which Grupo Casa Saba operates, as well as variations in the value of the Mexican peso as compared with the US dollar.

Contacts:
GRUPO CASA SABA                                     IR Communications:
Sandra Yatsko                                               Jesús Martínez Rojas
+52 (55) 5284-6672                                        +52 (55) 5644-1247
syatsko@casasaba.com                                 jesus@irandpr.com