TIDMAPH
RNS Number : 2929G
Alliance Pharma PLC
18 July 2023
For immediate release 18 July 2023
ALLIANCE PHARMA
("Alliance", "Company" or the "Group")
Half Year Trading Update
Strong growth in Kelo-Cote in-market sales
Board's expectations for Group's FY operating performance
unchanged
Alliance Pharma plc (AIM: APH), the international healthcare
group, announces its trading update for the six months ended 30
June 2023 (the "Period"), ahead of the expected announcement of the
Group's interim results on 19 September 2023.
Summary
The Group delivered see-through(1) revenues of GBP82.4m in the
Period (H1 22: GBP81.6m), up 1.1% versus the prior period and down
1.7% at constant exchange rates ("CER") including revenue from our
most recent US acquisition (ScarAway(TM) and the US rights to
Kelo-Cote(TM)). Whilst the first half had a mixed performance with
regulatory issues resulting in some manufacturing delays in certain
smaller products, revenue growth for the Kelo-Cote(TM) franchise
and Nizoral(TM) was in line with the Board's expectations, and
Amberen(TM) revenues returned to growth in Q2 on a like-for-like
basis. Importantly in-market demand for Kelo-Cote continues to grow
strongly and the Board's expectations for Group operating
performance in the full year remains unchanged.
Kelo-Cote
Demand for Kelo-Cote in the China cross-border market continues
to recover in-line with our expectations. The scar-treatment
category increased 10% in the first four months of 2023 (the latest
available data), with Kelo-Cote in-market revenues increasing 23%.
Kelo-Cote now has 29% value share of the China cross-border market
YTD, up 450bp on the prior period. The China domestic market is
also demonstrating strong growth, up 8% in the first four months of
the year, and with Kelo-Cote in-market revenues up 31%.
Group revenues from the total Kelo-Cote franchise grew 6.2% CER
to GBP25.6m (H1 22: GBP22.9m) in the Period, including our US
acquisition which is growing in line with expectations. As
previously reported the destocking at our China cross-border
distributor, which continued through much of H1 23, meant that
like-for-like Kelo-Cote revenues were down 4.1% CER. With this
destocking now substantially complete, together with increasing
in-market demand, we have strong expectations for revenues in H2,
driving revenue growth above 20% for the full year.
Nizoral
Nizoral revenues grew strongly in the Period rising 40.4% CER to
GBP11.1m (H1 22: GBP7.9m), reflecting both market share and
distribution gains and the timing of orders in the prior period.
Adjusting for the delayed order in June 2022, underlying Nizoral
growth was in the low double digits. Our new Chinese distributor
has created strong growth opportunities through expanding the
brand's reach, supported by our new marketing initiatives and the
introduction of updated packaging. The performance to date provides
confidence to reiterate guidance of high single digit revenue
growth for Nizoral in FY 2023.
Amberen
Amberen revenues declined 3.6% CER in the Period, on a
like-for-like basis excluding sales from a leading discount store
account that was lost in 2022 and have returned to growth in Q2 on
the same basis. On a reported basis, Amberen sales were GBP5.9m in
the Period (H1 22: GBP7.5m). Alliance is continuing to invest in
transitioning Amberen towards the higher growth e-commerce channel
and refreshing its marketing campaign and packaging to accelerate
this transition. We continue to anticipate double-digit revenue
growth on a like-for-like basis in FY 2023.
Other products
There was a mixed performance in Other Consumer Healthcare with
regulatory challenges in some products impacting stock availability
in H1 23. As a result, other Consumer Healthcare sales declined
10.0% (11.9% CER) to GBP17.2m (H1 22: GBP19.0m) and total Consumer
Healthcare revenues for the Period were GBP59.7m (H1 22: GBP57.4m),
up 3.9% on the prior year (up 0.5% CER). Regulatory issues also
impacted some prescription medicines with sales down 5.7% (6.9%
CER) to GBP22.7m (H1 22: GBP24.1m). These regulatory issues in both
Other Consumer and prescription medicines have been addressed,
which we expect to drive positive momentum in H2.
Cash and debt
Free cash flow in the Period was GBP5.7m higher than the prior
period at GBP10.8m (H1 22: GBP5.1m) and net debt decreased GBP7.5m
to GBP94.5m at 30 June 2023 (31 December 2022: GBP102.0m). Group
leverage(2) (as at 30 June 2023) is expected to be approximately
2.7x (31 December 2022: 2.6x).
We continue to expect Group revenues, including the Kelo-Cote
franchise, to build throughout H2, driving strong gross margin
improvement and substantial EBITDA expansion, underpinning the
Board's expectations of a strong second half performance. Net debt
and Group leverage are both expected to fall materially in H2,
reflecting the Group's strong cash generation, and Group leverage
is expected to be below 2.0x by the end of the year.
Peter Butterfield, Chief Executive Officer of Alliance,
commented :
"I am pleased to be back in the business full time and to be
focused on driving the Company's growth through the implementation
of our long-term strategy. We are encouraged by the recovery in
China and the significant market share gains made by Kelo-Cote,
along with the excellent progress of Nizoral. Meanwhile our wider
portfolio continues to provide a robust platform from which to grow
our Consumer Healthcare brands.
"Our free cash flow is expected to continue to build strongly
throughout 2023, which we anticipate will reduce our net debt and
leverage by the end of the year. The Board's expectation for full
year operating performance is unchanged."
(1) See-through revenue includes sales from Nizoral(TM) as if
they had been invoiced by Alliance as principal. For statutory
accounting purposes the product margin relating to Nizoral sales
made on an agency basis is included within Revenue, in line with
IFRS 15.
(2) Adjusted net debt / enlarged Group EBITDA, calculated using
pro forma EBITDA on a trailing 12-month basis.
For further information:
Alliance Pharma plc + 44 (0)1249 466966
Cora McCallum, Head of Investor Relations
& Corporate Communications + 44 (0)1249 705168
ir@allianceph.com
+ 44 (0)20 7466
Buchanan 5000
Mark Court / Hannah Ratcliff
alliancepharma@buchanan.uk.com
Numis Securities Limited (Nominated Adviser + 44 (0)20 7260
and Joint Broker) 1000
Freddie Barnfield / Duncan Monteith / Sher
Shah
+ 44 (0)20 7597
Investec Bank plc (Joint Broker) 5970
Patrick Robb / Maria Gomez de Olea
About Alliance
Alliance Pharma plc (AIM: APH) is a growing consumer healthcare
company. Our purpose is to empower people to make a positive
difference to their health and wellbeing by making our trusted and
proven brands available around the world.
We deliver organic growth through investing in our priority
brands and channels, in related innovation, and through selective
geographic expansion to increase the reach of our brands.
Periodically, we may look to enhance our organic growth through
selective, complementary acquisitions.
Headquartered in the UK, the Group employs around 285 people
based in locations across Europe, North America, and the Asia
Pacific region. By outsourcing our manufacturing and logistics we
remain asset-light and focused on maximising the value we can
bring, both to our stakeholders and to our brands.
For more information on Alliance, please visit our website :
www.alliancepharmaceuticals.com
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