TIDMAPH
RNS Number : 6555N
Alliance Pharma PLC
26 September 2023
For immediate release 26 September 2023
ALLIANCE PHARMA PLC
("Alliance" or the "Group")
Results for the six months ended 30 June 2023
Board expectations for year-end performance remain unchanged
Alliance Pharma plc (AIM: APH), the international healthcare
group, is pleased to announce its interim results for the six
months ended 30 June 2023 ("the Period"). 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. However, as previously announced, this
was balanced by mixed performance in certain smaller products with
regulatory issues resulting in some manufacturing delays.
In-market demand for Kelo-Cote continues to grow in H2 2023 and
we have extended our distribution agreement which secures our FY
revenue expectations. The underlying business remains strong and
the Board's expectations for Group performance in the full year
remain unchanged.
FINANCIAL SUMMARY
Unaudited six months 2023 2023 2022 2022 Growth Growth
ended June 30 Underlying Reported Underlying Reported underlying reported
(GBPm) (GBPm) (GBPm) (GBPm)
Revenue (see-through
basis)* 82.4 82.4 81.6 81.6 1% 1%
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Revenue (statutory
basis) 81.4 81.4 78.8 78.8 3% 3%
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Gross profit 46.9 46.9 50.6 50.6 -7% -7%
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Profit before taxation 10.3 6.2 19.7 16.5 -48% -62%
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Basic earnings per
share 1.58 0.95 2.90 2.43 -46% -61%
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Free cash flow* 11.0 5.1
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Cash from operations 15.5 8.4
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Net debt* 94.5 102.0
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
Interim dividend
per share 0.0p 0.592p
------------------------ ------------ ---------- ------------ ---------- ------------ ----------
OPERATING AND FINANCIAL HIGHLIGHTS
-- H1 23 revenue growth impacted by Kelo-Cote destocking in
China and temporary manufacturing delays arising from regulatory
issues in certain smaller other consumer and prescription medicine
products which will reverse in H2.
-- In-market demand for Kelo-Cote in China continues to recover,
with market share gains seen in e-commerce channels.
-- Consumer Healthcare see-through revenue* up 1% to GBP59.7m
(H1 22: GBP57.4m) with strong growth in Nizoral offsetting softer
performance in other consumer healthcare brands.
-- Prescription Medicine revenues of GBP22.7m, down 7% CER (H1 21: GBP24.1m).
-- Robust free cash flow of GBP11.0m (H1 22: GBP5.1m) and net
debt decreasing GBP7.5m to GBP94.5m. Group leverage of 2.7x at 30
June 2023 (31 December 2022: 2.6x).
-- Debt refinancing completed with a new 3-year GBP150m
revolving credit facility agreed with two 1-year options to extend
further.
-- Significant revenue step-up expected in H2 23 driving group
leverage below 2.0x by year end.
-- In response to shareholder feedback, the Board has decided to
pause the interim dividend whilst we develop a new dividend policy
with greater focus on reinvestment in the business. The new policy
will be published in the preliminary results in March 2024.
DEVELOPING OUR BUSINESS
-- Nizoral gaining market share as our new Chinese distributor
expands the brand's reach, supported by new marketing campaigns and
refreshed packaging.
-- Amberen returning to growth with unique new product range
extension due to launch in Q4 2023.
-- New TV advertising campaigns launched for Kelo-Cote in the UK
and MacuShield(TM) in Ireland.
-- Significant progress made on brand innovation with further
range enhancement expected in Q4 2023 across the consumer
healthcare portfolio.
-- ERP system successfully rolled out into APAC with China roll-out planned for 2024.
-- All scope 1 & 2 emissions for 2022 offset through carbon
credits bought in 2023. Work has commenced to fit photovoltaic
panels to our headquarters in Chippenham, UK, which is a
significant step towards our goal to become net zero for our scope
1 & 2 emissions by 2030.
Commenting on the results, Peter Butterfield, Chief Executive
Officer of Alliance, said :
"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, which is now fully under our control.
Meanwhile our wider portfolio continues to provide a robust
platform from which to grow our Consumer Healthcare brands.
"The second half of 2023 has got off to an encouraging start as
we have addressed the regulatory issues and recommenced production
of certain products impacted in the first half of the year. Our
Kelo-Cote CBEC distributor has begun to place orders and we have
contractual agreements in place to secure the future orders
required to meet our expectations for full year revenues. We
anticipate strong Group sales growth in H2 as our marketing
campaigns yield benefits and we launch several new products to grow
our market share.
"Our free cash flow is expected to continue to build strongly
for the remainder of 2023, and we will continue to reduce our net
debt and leverage by the end of the year. The Board's expectation
for full year operating performance is unchanged."
* The performance of the Group is assessed using Alternative
Performance Measures ("APMs"), which are measures that are not
defined under IFRS, but are used by management to monitor ongoing
business performance against both shorter term budgets and
forecasts and against the Group's longer term strategic plans. APMs
are defined in note 17.
Specifically, see-through revenue includes all 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.
ANALYST MEETING & WEBCAST
A meeting for analysts will be held at 9.30am this morning, 26
September 2023, at Buchanan, 107 Cheapside, London EC2V 6DN. For
further details, analysts should contact Buchanan at
alliancepharma@buchanan.uk.com .
A live webcast of the analyst meeting will be available at this
link:
https://stream.buchanan.uk.com/broadcast/64d35bfa8964824b00aaa7a0
Following the meeting, a replay of the webcast will be made
available at the investor section of Alliance's website,
https://www.alliancepharmaceuticals.com/investors/
For further information:
Alliance Pharma plc + 44 (0)1249 466966
Head of Investor Relations: Cora McCallum + 44 (0)1249 705168
ir@allianceph.com
Buchanan + 44 (0)20 7466 5000
Mark Court / Sophie Wills / Hannah Ratcliff
alliancepharma@buchanan.uk.com
Numis Securities Limited (Nominated
Adviser and Joint Broker) + 44 (0)20 7260 1000
Nominated Adviser: 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
Trading performance
Overview
The Group delivered see-through(1) revenues of GBP82.4m in the
Period (H1 22: GBP81.6m), up 1% versus the prior period and down 2%
at constant exchange rates ("CER") when including revenue from our
most recent US acquisition (ScarAway and the US rights to
Kelo-Cote). S tatutory revenue was 3% above the prior period at
GBP81.4m (H1 22: GBP78.8m) and up 1% CER.
Revenue summary
Unaudited six months ended 30 June 2023 2022 Growth CER
GBPm GBPm growth
Kelo-Cote franchise 25.6 22.9 12% 6%
----------------------------------------- ------ ------ ------- --------
Amberen 5.9 7.5 -22% -27%
----------------------------------------- ------ ------ ------- --------
Nizoral* 11.1 7.9 41% 40%
----------------------------------------- ------ ------ ------- --------
Other consumer brands 17.2 19.1 -10% -12%
----------------------------------------- ------ ------ ------- --------
Consumer Healthcare 59.7 57.4 4% 1%
----------------------------------------- ------ ------ ------- --------
Prescription Medicines 22.7 24.1 -6% -7%
----------------------------------------- ------ ------ ------- --------
See-through revenue* 82.4 81.6 1% -2%
----------------------------------------- ------ ------ ------- --------
LFL Consumer Healthcare see-through
revenue*, excl. ScarAway 57.1 57.4 -1% -4%
----------------------------------------- ------ ------ ------- --------
LFL see-through revenue*, excluding
ScarAway 79.8 81.6 -2% -5%
----------------------------------------- ------ ------ ------- --------
Statutory revenue - Consumer Healthcare 58.7 54.6 7% 4%
----------------------------------------- ------ ------ ------- --------
Statutory revenue - Group 81.4 78.8 3% 1%
----------------------------------------- ------ ------ ------- --------
LFL Consumer Healthcare statutory
revenue, excluding ScarAway 56.1 54.6 3%
----------------------------------------- ------ ------ ------- --------
LFL Group statutory revenue, excluding
ScarAway 78.8 78.8 0%
----------------------------------------- ------ ------ ------- --------
Consumer Healthcare
Consumer Healthcare revenues of GBP59.7m were up 4% (+1% CER)
versus the prior Period (H1 22: GBP57.4m), benefitting from the US
acquisition (ScarAway and the US rights to Kelo-Cote) in addition
to currency tailwinds. On a statutory basis, reported revenues were
7% above the prior Period at GBP58.7m and up 4% CER.
Excluding the impact of the US acquisition, like-for-like
see-through Consumer Healthcare revenue decreased by 1% to GBP57.1m
(-4% CER).
Kelo-Cote - scar prevention and treatment
Revenues from the Kelo-Cote franchise rose 12% (6% CER) in the
Period to GBP25.6m. Adjusting for the recent acquisition and
currency tailwinds, like-for-like revenues for the Kelo-Cote
franchise declined 4% mainly due to lower order volumes from our
China cross-border e-commerce (CBEC) partner during a period of
destocking.
China remains a significant market for Kelo-Cote. Demand for
domestic (Chinese label) product continues to increase as our
distribution partner opens new retail channels and elective
surgeries resume following a hiatus during COVID lockdowns. Whilst
the recovery in the cross-border channel is slightly behind our
expectations at this stage, our distribution partner remains
confident in the long-term outlook and we have extended our
distribution agreement which secures our full year revenue
expectations, introduces new territories and contains a commitment
to prioritise sea freight over air thereby supporting our ESG
strategy.
At current market demand, we estimate our distributor will have
circa six to eight months of inventory at the year-end. Although
this is higher than they previously communicated to us, it is in
line with historic levels before COVID and we believe this to be an
appropriate stock level given the importance of the brand, the
inherent volatility of a large and complex market such as China;
and our preference for sea freight.
We continue to work with our cross-border distribution partners
to gain further insight into the multiple routes to market for our
product and refine our selling strategy accordingly. The B2C
e-commerce channel continues to progress well, growing 7% in the 12
months to end of July. Kelo-Cote delivered an exceptionally strong
performance in the recent 618 festival in June in China, an online
shopping event on TMALL, similar to the Amazon Prime event in the
UK in November. Over the course of the online promotional period,
Kelo-Cote was the leading scar treatment product and delivered
fourth highest sales in the medical device category.
We remain focused on removing counterfeit product from all
channels. Through working collaboratively with our distributor and
local agencies we have successfully reduced the level of
counterfeit product online below 5%, and we believe we have
eliminated approximately one quarter of counterfeit sellers in a
major offline cosmetics market.
The B2B offline traded market remains challenging. Whilst
Kelo-Cote has delivered strong growth through the online
institutional trading platforms, there is little visibility or
credible market data available to accurately track the development
of this offline market. We continue to work closely with our
Cross-border partner to optimise sales in this channel.
Domestic China demand continues to be strong with record
in-market sales recorded in August.
Outside China, where the scar treatment market is less
developed, we have increased marketing investment to raise consumer
awareness of scar treatment options and to promote Kelo-Cote. Our
first ever outdoor campaign in the UK ran from late February to
early April and delivered a 74% increase in sales in the first four
months of the year versus the prior period. We are delighted that
this campaign was recently recognised as the best Digital Brand
Promotion by the Pharmaceutical Marketing Society. This outdoor
campaign was followed by a TV advertising campaign that ran through
July and August in the UK. Whilst we have yet to fully assess the
impact of the campaign, we have seen 19% increase in volumes sold
in Q2 2023 versus Q1 2023.
Our latest acquisition, the US rights to ScarAway and Kelo-Cote
in March 2022, has created the Group's first fully global brand.
The integration of both assets has gone very smoothly with full
transition completed in just four months and sales remaining
in-line with expectations with scope for further growth and range
extensions. Like-for-like ScarAway sales increased 17% in Q2.
We remain on track to deliver over 20% year on year revenue
growth for the Kelo-Cote franchise this year.
Amberen - vitamin mineral supplement for the relief of menopause
symptoms (US)
Amberen revenues declined 3% 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.
Performance in H1 23 was hampered by a number of industry wide
challenges put in place by Amazon, including a change in billing
for warehouse space and a change in price comparison approach
leading to the removal of the buy box for a short period. In
addition, the perimenopause product was delisted from Amazon for a
few months due to an incorrect application of an algorithm that
screens advertising claims. However, we overcame these issues and
have strengthened the marketing support to mitigate any future
problems. We have now launched Amberen in Canada, generating our
first sales in the region in August, and are on track with our
brand extension plans.
Q4 sees the first of many planned new product range extensions
as we introduce a unique gummy formulation of Amberen for the
relief of the symptoms of menopause. This is the result of in-house
innovation and development (I&D) and is the first gummy in the
category. Feedback from our consumer pilot studies and retailers
was extremely positive and the product will be available on Amazon
and our own DTC platform initially.
We continue to invest in Amberen and remain confident in the
longer-term opportunity that this category provides. Whilst growth
has returned on a like-for-like basis, the Amazon challenges mean
we now anticipate low single-digit growth on a like-for-like basis
in 2023.
Nizoral - medicated anti-dandruff shampoo
Nizoral revenues grew strongly in the Period rising 40% 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 roll-out of our strategic brand plan for Nizoral is now well
underway, with consumer activation campaigns ongoing across a
number of key territories where Nizoral commands a market leading
position, including Australia, South Korea, Thailand and the
Philippines. These campaigns are run in partnership with our local
distributors, as part of a growth strategy centred around consumer
and healthcare professional activation, e-commerce, and I&D. A
new campaign was launched in the top nine cities in China in
September focused on recruiting consumers in the twenties
demographic.
The performance to date provides confidence to reiterate
guidance of high single-digit revenue growth for Nizoral in FY 2023
on a constant currency basis.
Other Consumer Healthcare brands
There was a mixed performance in Other Consumer Healthcare with
regulatory delays in some products impacting stock availability in
H1 23. As a result, Other Consumer Healthcare revenues declined 10%
(12% CER) to GBP17.2m (H1 22: GBP19.1m). Adjusting for the products
that were out-of-stock, underlying other consumer healthcare
revenues increased 7%, above the average growth rate for the wider
consumer healthcare market.
Aloclair(TM) (pain relief for mouth ulcers) revenues were
subject to order phasing, falling back 49% CER to GBP2.3m, as the
re-certification process required by the transition from the
previous Medical Device Directive to the new Medical Device
Regulation took longer than anticipated due to the well documented
backlogs at notified bodies across Europe. Whilst we had built
stock in the market ahead of the transition period, this was
depleted during H1 23 leading to the product becoming out of stock
in some European markets. The re-certification process is now
complete, and manufacturing restarted in August. We anticipate a
more regular ordering process from our distributors in the
mid-term.
Prescription Medicines
Revenues in our larger prescription medicines brands were
encouraging. Hydromol (TM) (an emollient for the treatment of
eczema) delivered revenue growth of 13% CER to GBP4.7m, benefitting
from strong volume growth and a price increase successfully
negotiated towards the end of 2022. Revenues for Forceval (TM) (a
multi-vitamin and mineral supplement) increased 12% CER to GBP3.3m,
as our campaign to raise awareness and educate clinicians regarding
the benefits of our product to support patients with malnutrition
has driven market share gains within the National Health Service
(NHS). We recently celebrated the fiftieth anniversary of Forceval
as a licensed multi-vitamin and mineral supplement available to the
NHS.
Regulatory issues impacted some prescription products with total
Prescription Medicines revenues down 6% to GBP22.7m (H1 22:
GBP24.1m) and down 7% CER. Following a hiatus in regulatory
inspections during COVID, inspections restarted in 2023 and a small
number of API suppliers lost their certificates whilst necessary
remedial actions were implemented. This affected our Flamma
franchise (for the treatment of burns), as well as a number of
smaller products. All of the affected suppliers have now been
re-certified or have firm dates for when manufacturing will
restart, such that all products are expected to back in stock in
the second half of this year. Excluding the impact of the
out-of-stock products, underlying sales grew 4%.
We continue to manage this part of our business actively, to
ensure appropriate levels of investment and financial return.
Overall cash generation from this portfolio of niche products
remains good and, coupled with their limited requirement for
promotional investment, this unit continues to play an important
part in our overall business.
Profit and loss account
We continued to manage our direct costs well in the Period.
Around half of our cost base is related to the price we pay for
finished goods, warehousing and distribution with approximately a
quarter relating to labour. The remaining 25% comprises around 15%
of discretionary marketing spend and 10% fixed overheads.
Changes in revenue mix led to a 530 basis point (bp) decline in
gross margin to 56.8% of see-through revenue (H1 22: 62.1%) and a
7% decline in gross profit to GBP46.9m (H1 22: GBP50.6m). Gross
margin relative to statutory revenue was 57.6% (H1 22: 64.3%).
We continued our investment in the business in H1 23, improving
our operating capabilities and marketing effectiveness provided to
a number of our brands, whilst maintaining good cost control
through ensuring a targeted approach to spending. Accordingly,
underlying operating costs (defined as underlying administration
and marketing expenses, excluding depreciation and underlying
amortisation charges) remained broadly in line as a proportion of
revenue to last year at 34.5% (H1 22: 34.4%) of see-through
sales.
This investment was partially offset by a GBP0.5m reduction in
the IFRS 2 share options charge to GBP0.5m for the Period (H1 22:
GBP1.0m).
Net of the increase in operating costs and reduction in the
share options charge, underlying earnings before interest, taxes,
depreciation and amortisation (EBITDA) decreased 16.6% in the
Period to GBP18.0m (H1 22: GBP21.5m), whilst underlying operating
profit (EBIT) decreased by 17.9% to GBP16.3m (H1 22: GBP19.8m). A
similar reduction was seen in reported operating profit, which
decreased by GBP4.4m to GBP12.2m (H1 22: GBP16.6m).
Net finance costs of GBP6.0m include interest charges of GBP4.3m
(H1 22: GBP1.7m) and net exchange losses of GBP1.4m, which
represents a significant movement versus the prior period when we
recorded an exchange gain of GBP1.9m. With an underlying tax charge
of GBP1.8m (H1 22: GBP4.1m) equating to a tax rate of 17.3% (H1 22:
20.8%), underlying basic earnings per share decreased 46% to 1.58p
(H1 22: 2.90p).
Cash generation
Free cash flow in the Period was significantly higher than the
prior period at GBP11.0m (H1 22: GBP5.1m) and net debt decreased
GBP7.5m to GBP94.5m at 30 June 2023 (31 December 2022: GBP102.0m).
Group leverage (as at 30 June 2023) was 2.7x (31 December 2022:
2.6x).
Net working capital outflow in the period of GBP0.9m relates to
an increase in inventories and trade payables, being partially
offset by the timing of receipts from our distributors which
resulted in a strong reduction in trade receivables. Overall, cash
generated from operations was GBP17.2m (H1 22: GBP8.4m), a 105%
increase on the same period last year.
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.
Dividend
We acknowledge the 37.52% vote against the final dividend for
2022 at the recent AGM held in May 2023. As part of a wider
stakeholder engagement the Board has subsequently engaged with
shareholders, representing 60% of the share register, to understand
their views on dividends. In response to their feedback the Board
has decided to pause the interim dividend whilst it develops a new
dividend policy with greater emphasis on reinvestment in the
business to drive growth. Our clear intention is to continue to pay
dividends as we feel this demonstrates strong financial discipline.
Further detail of this new policy will be provided in the
preliminary results statement in March 2024.
Innovation and development (I&D)
We continue to actively invest in our business to maintain
strong organic revenue growth and are committed to spending some
GBP1m-GBP2m per annum on I&D with a view to generating 10% of
net consumer sales from new product innovation in the future. The
investment we have made in our Innovation and Development (I&D)
team is beginning to deliver. We now have a number of projects in
the pipeline, some of which were launched, or will launch, in 2023,
providing potential for significant organic growth in future
years.
Canker-X (pain relief for mouth ulcers) was launched in the US
in January 2023 and is on track to deliver $1m in net revenues in
under 12 months. It has gained good distribution momentum both
online (Amazon) and in bricks and mortar (Walgreens, RiteAid) with
a number of additional retailers interested in stocking the range.
We anticipate annual net sales potential in the low single million
dollars.
Following the successful launch of Kelo-Cote Kids in China in
2022, we launched this product in the UK in an Amazon exclusive in
March 2023. This launch has been supported by digital activity
utilising assets designed for global use. We expect to introduce
the Kids formulation in Germany and the US (under the ScarAway
brand) in Q1 2024.
As previously indicated, we launched Kelo-Cote scar sheets in
the China cross border market on the TMALL flagship store in May
2023 in a strategy designed to generate positive reviews ahead of
the important 618 festival in June. We also launched scar sheets
for the treatment of caesarean section scars in the UK exclusively
with Amazon and have generated promotional content which will be
live on Amazon soon.
Operational and corporate developments
The development of our global ERP platform continued with the
successful roll-out of our system in APAC (ex China). Following
this go-live, the Group now operates a single-instance ERP platform
in the EMEA, US and now APAC (ex China) with the final phase, the
final roll out to our operations in China, planned for next year.
In the Period we also completed various projects to help improve
our ERP Finance and Supply Chain processes and leverage the
efficiency benefits of a single business platform.
In August we successfully completed the refinancing of our
Revolving Credit Facility, which was scheduled to mature in July
2024. The facility was agreed with the Group's existing syndicate
of supportive relationship banks. Through the refinancing we took
the opportunity to resize and reduce the total committed facility
by GBP15m to GBP150m, whilst increasing the Accordion by GBP15m to
GBP65m. The covenants include a net leverage (the ratio of net bank
debt to EBITDA) and interest cover (the ratio of EBITDA to finance
charges) test. The facility is available until August 2026, with
two further one-year extension options.
Our involvement in the appeal against the Competition and
Markets Authority ("CMA") decision regarding anti-competitive
behaviours in relation to four companies has now completed. The
Competition Appeal Tribunal panel will now consider the evidence
presented during the tribunal and we anticipate the Panel to reach
their conclusion by the end of 2023.
Continuing our sustainability journey
We continue to make good progress on our sustainability journey,
publishing our first voluntary stand-alone TCFD report for 2022 in
May 2023. We also created an online sustainability report to
accompany the publication of our Annual Report in March as we
strive to improve further the communication of our sustainability
strategy.
Throughout this year we have focused on developing our social
and governance strategies. We have partnered with the Slave-Free
Alliance (SFA), an independent charity founded in the UK in 2018
that supports organisations that are committed to slave-free
business operations and supply chains. The SFA is a social
enterprise wholly owned by Hope for Justice, an international
charity founded in 2008. Hope for Justice runs prevention
programmes, rescue, advocacy and aftercare services to restore
victims' lives and works with government and organisations to
reform society.
The SFA have provided bespoke workshop-based modern slavery
training to our quality and sourcing chain teams to help these
teams better identify modern slavery "red flags" during quality
audits and supplier site visits.
The SFA has also conducted a gap analysis of our modern slavery
mitigations and policies, and we will be working to implement their
recommendations in H2 23 and beyond.
In addition, this year Alliance has appointed a new e-learning
provider to deliver "gamified", engaging compliance training to our
colleagues, including data protection, unconscious bias, modern
slavery, anti-bribery and corruption and competition awareness
training.
We implemented a partner code of conduct in 2022 and, throughout
this year, have worked to ensure that our Contract Manufacturing
Organisations (CMOs) and distributors agree to comply with our
code. To date 88% of our CMOs have returned a signed code of
conduct and we are aiming to reach 100% by year end.
We have also introduced an employee code of conduct, which
includes a section on our speak up policy. To support this, we have
engaged Safecall, an independent reporting helpline to allow
colleagues and external partners to raise concerns anonymously from
over 100 countries. The service is operational for 24 hours a day,
seven days a week, and available in over 60 languages.
In August we commenced work to install photovoltaic panels on
the roof of our award-winning headquarters in Chippenham, UK. This
program of work also includes the installation of a new, more
efficient substation and electric vehicle charging points. The work
is expected to complete in January 2024, allowing us to generate
our own electricity, which is a significant step towards our goal
to become net zero for our scope 1 & 2 emissions by 2030.
Furthermore, we have purchased carbon credits to offset the scope 1
and 2 carbon emissions we generated in 2022. We have deliberately
selected carbon offset projects which align with our sustainability
development goals, focusing on reforestation projects that also
include local community education and support.
For further detail, please see the Sustainability section of our
website.
Board changes
As previously announced, and in line with good corporate
governance, David Cook stepped down as Alliance's Chair following
the AGM in May 2023. David served on the Board for nine years and
was replaced by Jo LeCouilliard, an Independent Non-executive
Director of Alliance. Jo joined the Alliance Board on 1 January
2019, bringing more than 25 years of international healthcare
management experience through her career at GlaxoSmithKline where,
amongst other roles, she headed the US vaccines business and the
Asia Pacific Pharmaceuticals business.
In February 2023 we welcomed Jeyan Heper to the Alliance Board
as an executive in the newly created role of Chief Operating
Officer. Jeyan has a strong track record of strategic leadership in
the international consumer health market, overseeing a number of
global programs and driving growth in flagship brands. In his
career spanning more than 25 years Jeyan has held senior executive
roles at Procter & Gamble, Danone Group and Ansell's sexual
wellness global business, before it was spun-out to become
Lifestyles Healthcare, a private equity/pharma-owned company where
Jeyan became CEO.
Jeyan is helping to bolster the Group's operational
capabilities, identify growth opportunities, and help drive the
Company's strategy to expand its consumer health presence through
leveraging his experience of e-commerce in China and the US, and
improving operational effectiveness.
The Board was strengthened further by the appointment of Martin
Sutherland as an additional Independent Non-Executive Director in
February 2023. Martin is a senior executive with over 30 years'
experience in global businesses and is currently a Non-Executive
Director at Forterra plc and Non-executive Chair of Logiq
Consulting Ltd. Prior to this, Martin was CEO of De La Rue PLC.
Martin has a proven track record of delivering growth through new
product innovation, market diversification and international
expansion.
Martin's experience brings a new perspective to complement the
strong consumer healthcare knowledge already present on the
board.
Current trading and outlook
The second half of 2023 has got off to an encouraging start with
trading in-line with expectations. We anticipate strong growth in
H2 as Kelo-Cote revenues continue to build, we recommence supply of
products that have been out of stock and launch new product
innovation. The Board's expectation for Group year-end performance
remains unchanged.
Peter Butterfield Andrew Franklin
Chief Executive Officer Chief Financial Officer
26 September 2023 26 September 2023
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2023
Unaudited Unaudited
Six months ended 30 Six months ended 30
June 2023 June 2022
==================================== ====================================
Underlying Non-Underlying Total Underlying Non-Underlying Total
Note GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
(Note (Note
6) 6)
====================================== ========== ============== ======== ========== ============== ========
Revenue 4 81,398 - 81,398 78,765 - 78,765
Cost of sales (34,536) - (34,536) (28,127) - (28,127)
====================================== ========== ============== ======== ========== ============== ========
Gross profit 46,862 - 46,862 50,638 - 50,638
====================================== ========== ============== ======== ========== ============== ========
Operating expenses
Administration and marketing
expenses (29,177) (1,000) (30,177) (28,820) 369 (28,451)
Amortisation of intangible
assets 6 (948) (3,082) (4,030) (948) (3,619) (4,567)
Share-based employee
remuneration (460) - (460) (1,048) - (1,048)
Operating profit 16,277 (4,082) 12,195 19,822 (3,250) 16,572
====================================== ========== ============== ======== ========== ============== ========
Finance costs
Interest payable and
similar charges 5 (4,600) - (4,600) (2,023) - (2,023)
Finance income 5 (1,359) - (1,359) 1,933 - 1,933
================================== ========== ============== ======== ========== ============== ========
Net finance costs (5,959) - (5,959) (90) - (90)
====================================== ========== ============== ======== ========== ============== ========
Profit before taxation 10,318 (4,082) 6,236 19,732 (3,250) 16,482
====================================== ========== ============== ======== ========== ============== ========
Taxation 7 (1,784) 657 (1,127) (4,102) 724 (3,378)
================================== ========== ============== ======== ========== ============== ========
Profit for the period attributable
to equity shareholders 8,534 (3,425) 5,109 15,630 (2,526) 13,104
====================================== ========== ============== ======== ========== ============== ========
Earnings per share
Basic (pence) 9 1.58 0.95 2.90 2.43
Diluted (pence) 9 1.58 0.94 2.86 2.40
================================== ========== ============== ======== ========== ============== ========
All of the activities of the Group are classified as
continuing.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Unaudited Unaudited
Six months Six months
ended ended
30 June 2023 30 June 2022
GBP000s GBP000s
========================================== ============= =============
Profit for the period 5,109 13,104
Other comprehensive income
Items that may be reclassified to profit
or loss:
Foreign exchange forward contracts - cash
flow hedge (gross) (32) (1,593)
Foreign exchange forward contracts - cash
flow hedge (deferred tax) 8 398
Foreign exchange translation differences
(gross) (9,185) 14,253
Foreign exchange translation differences
(deferred tax) 2,296 (3,563)
========================================== ============= =============
Total comprehensive income for the period (1,804) 22,599
========================================== ============= =============
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 30 June 2023
Audited
Unaudited 31 December
30 June 2023 2022
Note GBP000s GBP000s
================================== ==== ============= ============
Assets
Non-current assets
Goodwill and intangible
assets 10 409,552 421,630
Property, plant and equipment 11 5,308 5,578
Deferred tax asset 3,689 4,117
Derivative financial instruments - 17
Other non-current assets 513 588
================================== ==== ============= ============
419,062 431,930
Current assets
Inventories 27,096 24,286
Trade and other receivables 12 41,069 49,324
Derivative financial instruments 381 157
Cash and cash equivalents 26,112 31,714
================================== ==== ============= ============
Total current assets 94,658 105,481
================================== ==== ============= ============
Total assets 513,720 537,411
================================== ==== ============= ============
Equity
Ordinary share capital 5,401 5,400
Share premium account 151,683 151,650
Share option reserve 10,801 10,141
Other reserve (329) (329)
Cash flow hedging reserve 107 131
Translation reserve 5,541 12,430
Retained earnings 103,755 108,238
================================== ==== ============= ============
Total equity 276,959 287,661
================================== ==== ============= ============
Liabilities
Non-current liabilities
Loans and borrowings 15 120,638 133,744
Other liabilities 14 3,266 3,415
Derivatives financial instruments 57 -
Deferred tax liability 63,770 65,569
================================== ==== ============= ============
Total non-current liabilities 187,731 202,728
================================== ==== ============= ============
Current liabilities
Corporation tax 2,112 2,984
Trade and other payables 13 32,015 35,616
Provisions 16 8,326 8,422
Derivative financial instruments 182 -
Dividend payable 8 6,395 -
================================== ==== ============= ============
Total current liabilities 49,030 47,022
================================== ==== ============= ============
Total liabilities 236,761 249,750
================================== ==== ============= ============
Total equity and liabilities 513,720 537,411
================================== ==== ============= ============
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Cash
Ordinary Share Share flow
Share Premium Option Other Hedging Translation Retained Total
Capital account reserve reserve reserve reserve earnings Equity
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
==================================== ======== ======== ======== ======== ============ ========= ========
Balance 1 January
2023 (audited) 5,400 151,650 10,141 (329) 131 12,430 108,238 287,661
============================= ===== ======== ======== ======== ======== ============ ========= ========
Issue of shares 1 33 - - - - - 34
Dividend paid/payable - - - - - - (9,592) (9,592)
Share options charge
(including deferred
tax) - - 660 - - - - 660
============================= ===== ======== ======== ======== ======== ============ ========= ========
Transactions with
owners 1 33 660 - - - (9,592) (8,898)
============================= ===== ======== ======== ======== ======== ============ ========= ========
Profit for the period - - - - - - 5,109 5,109
============================= ===== ======== ======== ======== ======== ============ ========= ========
Other comprehensive income
============================================== ======== ======== ======== ============ ========= ========
Foreign exchange forward
contracts - cash flow
hedge (net of deferred
tax) - - - - (24) - - (24)
Foreign exchange translation
differences - - - - - (6,889) - (6,889)
============================= ===== ======== ======== ======== ======== ============ ========= ========
Total comprehensive
income for the period - - - - (24) (6,889) 5,109 (1,804)
============================= ===== ======== ======== ======== ======== ============ ========= ========
Balance 30 June 2023
(unaudited) 5,401 151,683 10,801 (329) 107 5,541 103,755 276,959
============================= ===== ======== ======== ======== ======== ============ ========= ========
Cash
Ordinary Share Share flow
Share Premium Option Other Hedging Translation Retained Total
Capital account reserve reserve reserve reserve earnings Equity
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
==================================== ======== ======== ======== ======== ============ ========= ========
Balance 1 January
2022 (audited) 5,382 151,328 10,058 (329) 48 (419) 116,418 282,486
============================= ===== ======== ======== ======== ======== ============ ========= ========
Issue of shares 15 275 - - - - - 290
Dividend paid - - - - - - (9,116) (9,116)
Share options charge
(including deferred
tax) - - 670 - - - - 670
============================= ===== ======== ======== ======== ======== ============ ========= ========
Transactions with
owners 15 275 670 - - - (9,116) (8,156)
============================= ===== ======== ======== ======== ======== ============ ========= ========
Profit for the period - - - - - - 13,104 13,104
============================= ===== ======== ======== ======== ======== ============ ========= ========
Other comprehensive income
============================================== ======== ======== ======== ============ ========= ========
Foreign exchange forward
contracts - cash flow
hedge (net of deferred
tax) - - - - (1,195) - - (1,195)
Foreign exchange translation
differences - - - - - 10,690 - 10,690
============================= ===== ======== ======== ======== ======== ============ ========= ========
Total comprehensive
income for the period - - - - (1,195) 10,690 13,104 22,599
============================= ===== ======== ======== ======== ======== ============ ========= ========
Balance 30 June 2022
(unaudited) 5,397 151,603 10,728 (329) (1,147) 10,271 120,406 296,929
============================= ===== ======== ======== ======== ======== ============ ========= ========
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2023
Unaudited
Unaudited Six months
Six months ended
ended 30 June
30 June 2023 2022
Note GBP000s GBP000s
========================================== ==== ============= ===========
Operating activities
Profit for the period before tax 6,236 16,482
Interest payable and similar charges 5 4,600 2,023
Foreign exchange (gain)/loss 5 1,359 (1,933)
Amortisation of intangible assets 10 4,030 4,567
Depreciation of property, plant
and equipment 11 733 765
Share-based employee remuneration 460 1,048
Change in inventories (2,810) (959)
Change in trade and other receivables 8,330 (14,415)
Change in trade and other payables (5,694) 850
========================================== ==== ============= ===========
Cash generated from operations 17,244 8,428
========================================== ==== ============= ===========
Tax paid (1,786) (1,081)
========================================== ==== ============= ===========
Cash flows from operating activities 15,458 7,347
========================================== ==== ============= ===========
Investing activities
Acquisitions and deferred consideration (207) (15,480)
Purchase of intangible assets 10 - (219)
Purchase of property, plant and
equipment 11 (199) (333)
Net cash used in investing activities (406) (16,032)
========================================== ==== ============= ===========
Financing activities
Interest paid and similar charges (4,299) (1,706)
Loan issue costs 15 (100)
Proceeds from exercise of share
options 34 290
Capital lease payments (442) (478)
Dividend paid 8 (3,197) (3,030)
Proceeds from borrowing 15 - 14,925
Repayment of borrowings 15 (12,000) (1,261)
========================================== ==== ============= ===========
Net cash used in financing activities (20,004) 8,740
========================================== ==== ============= ===========
Net movement in cash and cash equivalents (4,952) 55
========================================== ==== ============= ===========
Cash and cash equivalents at beginning
of period 31,714 29,061
========================================== ==== ============= ===========
Effects of exchange rate movements (650) 264
========================================== ==== ============= ===========
Cash and cash equivalents at end
of period 26,112 29,380
========================================== ==== ============= ===========
NOTES TO THE HALF YEAR REPORT
For the six months ended 30 June 2023
1. General information
Alliance Pharma plc ('the Company') and its subsidiaries
(together 'the Group') acquire, market, and distribute consumer
healthcare products and prescription medicines. The Company is a
public limited company, limited by shares, registered,
incorporated, and domiciled in England and Wales in the UK. The
address of its registered office is Avonbridge House, Bath Road,
Chippenham, Wiltshire, SN15 2BB.
The Company is listed on the London Stock Exchange, Alternative
Investment Market ('AIM').
The information in these financial statements does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006 and is unaudited. These financial statements
have been prepared in accordance with the AIM rules, and IAS 34 has
not been adopted. A copy of the Group's statutory accounts for the
year ended 31 December 2022, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 ('Adopted IFRS'), has been
delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified and did not contain statements under
section 498 (2) or section 498 (3) of the Companies Act 2006.
These consolidated financial statements for the six-month period
ended 30 June 2023 have been approved for issue by the Board of
Directors on 26 September 2023.
2. Going concern
On 15 August 2023, the Group agreed a new GBP150m fully
Revolving Credit Facility ('RCF'), together with a GBP65m
accordion. The facility was agreed with its existing syndicate of
lenders, replacing the previous RCF which ran through to July 2024.
This new facility is available until August 2026, with two further
one-year extension options.
The RCF is drawn in short to medium-term tranches of debt which
are repayable within 12 months of draw-down. These tranches of debt
can be rolled over provided certain conditions are met, including
covenant compliance. The Group considers that it is highly unlikely
it would be unable to exercise its right to roll over the debt.
This due to mitigating actions it could take to maintain compliance
with these conditions, including future covenant requirements, even
in downside scenarios.
The Directors have prepared cash flow forecasts for a period of
12 months from the date of approval of these financial statements
(the going concern period). These indicate that the Group will have
sufficient funds, given the RCF financing available, to meet its
liabilities as they fall due for that period. Also, the Directors
have considered the sensitivity of cash flow forecasts to severe
downside scenarios, including a reasonably possible downside
scenario which models severe disruption to CBEC sales resulting in
a decline in EBITDA against budget of over 30%. Even in this severe
scenario, the forecasts indicate that the Group will have
sufficient funds to meet its liabilities as they fall due, and will
continue to comply with its loan covenants, throughout the forecast
period.
Consequently, the Directors are confident that the Group will
have sufficient funds to continue to meet its liabilities as they
fall due for at least 12 months from the date of approval of the
financial statements and have therefore determined it is
appropriate to adopt the going concern basis in preparing the
financial statements.
3. Accounting policies
Judgements and estimates
The principal judgements and estimates made in this period are
the same as those published by the Group in the 31 December 2022
Annual Report, which is available on the Group's website:
www.alliancepharmaceuticals.com.
Non-underlying items
Amortisation and impairment charges for intangible assets
relating to goodwill and brand and distribution rights are included
as non-underlying items. The revaluation of deferred tax balances
following substantial tax legislation changes are also included as
non-underlying items. The Directors believe that this
classification of underlying and non-underlying items, when
considered together with total statutory results, provides
investors, analysts and other stakeholders with helpful
complementary information to better understand the financial
performance and position of the Group from period to period, and
allows the Group's performance to be more easily compared against
the majority of its peer companies. These measures are also used by
management for planning and reporting purposes. They may not be
directly comparable with similarly described measures used by other
companies. For further detail, please refer to note 6.
3. Accounting policies (continued)
Other accounting policies
The remaining accounting policies applied in these interim
financial statements are the same as those published by the Group
in the 31 December 2022 Annual Report. The Annual Report is
available on the Group's website.
4. Revenue
Unaudited Unaudited
Six months Six months
ended 30 ended 30
June 2023 June 2022
Revenue information by brand GBP000s GBP000s
=========================================== =========== ===========
Consumer healthcare brands:
Kelo-cote franchise 25,587 22,948
Amberen 5,855 7,536
Nizoral* 10,068 5,133
MacuShield 4,189 4,628
Aloclair 2,258 4,233
Vamousse 2,227 2,417
Other Consumer healthcare brands 8,477 7,745
=========================================== =========== ===========
Total Revenue - Consumer healthcare brands 58,661 54,640
=========================================== =========== ===========
Prescription medicines:
Hydromol 4,661 4,116
Flamma Franchise 2,939 3,115
Forceval 3,270 2,908
Other Prescription medicines 11,867 13,986
=========================================== =========== ===========
Total Revenue - Prescription medicines 22,737 24,125
=========================================== =========== ===========
Total Revenue 81,398 78,765
=========================================== =========== ===========
Unaudited
Six months Unaudited
ended Six months
30 June ended 30
2023 June 2022
Revenue information by geography GBP000s GBP000s
====================================== =========== ===========
Europe, Middle East and Africa (EMEA) 36,661 40,607
Asia Pacific and China (APAC) 29,986 24,554
Americas (AMER) 14,751 13,604
====================================== =========== ===========
Total Revenue 81,398 78,765
====================================== =========== ===========
* Nizoral is shown on a net profit basis in statutory revenue.
Nizoral revenue presented on a see-through income statement basis
is included as an alternative performance measure in note 17.
5. Finance costs
Unaudited Unaudited
Six months Six months
ended 30 ended 30
June 2023 June 2022
GBP000s GBP000s
===================================== =========== ===========
On loans and overdrafts (4,222) (1,662)
Amortised finance issue costs (321) (314)
Interest on lease liabilities (57) (47)
===================================== =========== ===========
Interest payable and similar charges (4,600) (2,023)
===================================== =========== ===========
Interest income - -
Net exchange gain/(loss) (1,359) 1,933
===================================== =========== ===========
Finance income/(costs) (1,359) 1,933
===================================== =========== ===========
Net finance costs (5,959) (90)
===================================== =========== ===========
6. Non-underlying items
The Group presents a number of non-IFRS measures which exclude
the impact of significant non-underlying items. This is to allow
investors to understand the underlying trading performance of the
Group and can exclude items such as: amortisation and impairment of
acquired intangible assets; restructuring costs; gains or losses on
disposal; remeasurement and accounting for the passage of time in
respect of contingent considerations; and the revaluation of
deferred tax balances following substantial tax legislation
changes. This assessment requires judgement to be applied by the
Directors as to which transactions are non-underlying and whether
this classification enhances the understanding of the users of the
financial statements.
Unaudited Unaudited
Six months Six months
ended 30 ended 30
June 2023 June 2022
GBP000s GBP000s
=========================================== =========== ===========
Amortisation of intangible assets 3,082 3,619
ScarAway acquisition costs - (369)
Other non-underlying costs 1,000 -
=========================================== =========== ===========
Total non-underlying items before taxation 4,082 3,250
=========================================== =========== ===========
Non-underlying taxation (657) (724)
=========================================== =========== ===========
Total non-underlying items after taxation 3,425 2,526
=========================================== =========== ===========
Amortisation of intangible assets
The amortisation costs of acquired intangible assets are a
significant item considered unrelated to trading performance and,
as such, have been presented as non-underlying. This classification
is in line with the majority of peer companies of the Group.
ScarAway acquisition costs
ScarAway acquisition costs relate to capitalised professional
fees in relation to the ScarAway acquisition which completed in
March 2022. These costs were incurred in 2021 as non-underlying
costs and capitalised in 2022 post-completion.
Other non-underlying costs
Other non-underlying costs relate to one-off legal and
professional costs.
7. Taxation
Analysis of charge for the period is as follows:
Unaudited Unaudited
Six months ended 30 Six months ended 30
June 2023 June 2022
============= ==================================== ====================================
Non-Underlying Non-Underlying
GBP000s GBP000s
Underlying (Note Total Underlying (Note Total
GBP000s 6) GBP000s GBP000s 6) GBP000s
============== ========== ============== ======== ========== ============== ========
Corporation
tax 914 - 914 2,684 - 2,684
Deferred tax 870 (657) 213 1,418 (724) 694
============== ========== ============== ======== ========== ============== ========
Taxation 1,784 (657) 1,127 4,102 (724) 3,378
============== ========== ============== ======== ========== ============== ========
The difference between the total tax charge and the amount
calculated by applying the standard rate of UK corporation tax to
profit before tax is as follows:
Unaudited
Unaudited Six months
Six months ended
ended 30 30 June
June 2023 2022
GBP000s GBP000s
======================= ============ ============
Profit before taxation 6,236 16,482
======================= ============ ============
Profit before taxation multiplied by standard
rate of corporation tax in the United Kingdom
at 23.5% (2022: 19%) 1,465 3,132
Effects of:
Non-deductible expenses and non-taxable income 321 (70)
Non-underlying amortisation and impairment 107 113
Differences between current and deferred tax
rate (note 6) 75 114
Different tax rates on overseas earnings (130) 89
Foreign exchange (711) -
=============================================== ===== =====
Total tax charge 1,127 3,378
=============================================== ===== =====
8. Dividends
In response to shareholder feedback, the Board has decided to
pause the interim dividend whilst we develop a new dividend policy
with greater focus on reinvestment in the business. The new policy
will be published with the preliminary results in March 2024.
Six months
ended
30 June
2023
Pence/share GBP000s
============================================= ============ ==========
Amounts recognised as distributions to shareholders
in 2023
=========================================================== ==========
Interim dividend for the 2022 financial year 0.592 3,197
Final dividend for the 2022 financial year 1.184 6,395
============================================= ============ ==========
9,592
============================================= ============ ==========
The interim dividend for 2022 was paid on 19 January 2023. The
final dividend for 2022 was paid on 17 July 2023.
Six months
ended
30 June
2022
Pence/share GBP000s
============================================= ============ ==========
Amounts recognised as distributions to shareholders
in 2022
=========================================================== ==========
Interim dividend for the 2021 financial year 0.563 3,030
Final dividend for the 2021 financial year 1.128 6,086
============================================= ============ ==========
9,116
============================================= ============ ==========
The interim dividend for 2021 was paid on 7 January 2022. The
final dividend for 2021 was paid on 8 July 2022.
9. Earnings per share ('EPS')
Basic EPS is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of Ordinary
Shares outstanding during the period. For diluted EPS, the weighted
average number of Ordinary Shares in issue is adjusted to assume
conversion of all dilutive potential Ordinary Shares.
A reconciliation of the weighted average number of Ordinary
Shares used in the measures is given below:
Weighted average number
of shares 000s
================ =========================
Six months
Six months ended
ended 30 June
30 June 2023 2022
================ ============= ==========
For basic EPS 540,039 539,077
Share options 1,537 7,846
================ ============= ==========
For diluted EPS 541,576 546,923
================ ============= ==========
Six months
Six months to
to 30 June
30 June 2023 2022
GBP000s GBP000s
========================================== ============= ==========
Earnings for basic and diluted EPS 5,109 13,104
Non-underlying items (note 6) 3,425 2,526
========================================== ============= ==========
Earnings for underlying basic and diluted
EPS 8,534 15,630
========================================== ============= ==========
The resulting EPS measures are:
Six months
Six months to
to 30 June
30 June 2023 2022
Pence Pence
======================= ============== ===========
Basic EPS 0.95 2.43
======================= ============== ===========
Diluted EPS 0.94 2.40
======================= ============== ===========
Underlying basic EPS 1.58 2.90
======================= ============== ===========
Underlying diluted EPS 1.58 2.86
======================= ============== ===========
10. Goodwill and intangible assets
Consumer Prescription
Healthcare Medicines
brands and brands and
Goodwill distribution distribution Computer
GBP000s rights rights software Total
GBP000s GBP000s GBP000s GBP000s
============================ ========== ============= ============= ========== ========
Cost
At 1 January 2023 (audited) 34,626 291,762 152,691 15,292 494,371
Exchange adjustments (463) (6,999) (586) - (8,048)
============================ ========== ============= ============= ========== ========
At 30 June 2023 (unaudited) 34,163 284,763 152,105 15,292 486,323
============================ ========== ============= ============= ========== ========
Amortisation and impairment
At 1 January 2023 (audited) 13,096 9,575 46,744 3,326 72,741
Amortisation for the
period (note 6) - 79 3,003 948 4,030
============================ ========== ============= ============= ========== ========
At 30 June 2023 (unaudited) 13,096 9,654 49,747 4,274 76,771
============================ ========== ============= ============= ========== ========
Net book amount
At 30 June 2023 (unaudited) 21,067 275,109 102,358 11,018 409,552
============================ ========== ============= ============= ========== ========
At 1 January 2023 (audited) 21,530 282,187 105,947 11,966 421,630
============================ ========== ============= ============= ========== ========
11. Property, plant and equipment
Computer Fixtures, Right-of-use
software fittings Plant lease
and equipment and equipment & machinery assets Total
The Group GBP000s GBP000s GBP000s GBP000s GBP000s
============================ ============== ============== ============ ============ =========
Cost
At 1 January 2023 (audited) 2,199 3,944 74 5,230 11,447
Additions 27 172 - 425 624
Effect of movements in
exchange rates (53) (25) - (222) (300)
Disposals - - - (265) (265)
At 30 June 2023 (unaudited) 2,173 4,091 74 5,168 11,506
============================ ============== ============== ============ ============ =========
Depreciation
At 1 January 2023 (audited) 1,857 2,200 49 1,763 5,869
Provided in the period 76 267 5 385 733
Disposals - - - (265) (265)
Effect of movements in
exchange rates (46) (15) - (78) (139)
============================ ============== ============== ============ ============ =========
At 30 June 2023 (unaudited) 1,887 2,452 54 1,805 6,198
============================ ============== ============== ============ ============ =========
Net book amount ,
At 30 June 2023 (unaudited) 286 1,639 20 3,363 5,308
============================ ============== ============== ============ ============ =========
At 1 January 2023 (audited) 342 1,744 25 3,467 5,578
============================ ============== ============== ============ ============ =========
12. Trade and other receivables
Unaudited Audited
30 June 31 December
2023 2022
GBP000s GBP000s
================== ========== =============
Trade receivables 36,259 44,764
Other receivables 2,637 2,775
Prepayments 1,819 1,094
Accrued income 354 691
================== ========== =============
41,069 49,324
================== ========== =============
13. Trade and other payables
Unaudited Audited
30 June 31 December
2023 2022
GBP000s GBP000s
====================================== ========== =============
Trade payables 14,118 18,567
Other taxes and social security costs 1,074 1,546
Accruals and deferred income 15,389 13,972
Other payables 716 918
Lease liabilities 718 613
====================================== ========== =============
32,015 35,616
====================================== ========== =============
14. Other non-current liabilities
Unaudited Audited
30 June 31 December
2023 2022
GBP000s GBP000s
============================== ========== =============
Lease liabilities 3,070 3,219
Other non-current liabilities 196 196
============================== ========== =============
3,266 3,415
============================== ========== =============
15. Loans and borrowings
On 15 August 2023, the Group agreed a new GBP150m fully
Revolving Credit Facility, together with a GBP65m accordion. The
facility was agreed with its existing syndicate of lenders,
replacing the previous RCF which ran through to July 2024. This new
facility is available until August 2026, with two further one-year
extension options. This has been classified as a non-current
liability.
The bank facility is secured by a fixed and floating charge over
the Company's and Group's assets registered with Companies
House.
The Group also has access to an overdraft facility of GBP2m.
Movements in borrowings are analysed as follows:
GBP000s
========================================= ========
At 1 January 2023 (audited) 133,744
Net repayment of borrowings (12,000)
Prepaid arrangement fees (100)
Amortisation of prepaid arrangement fees 321
Exchange movements* (1,327)
========================================= ========
At 30 June 2023 (unaudited) 120,638
========================================= ========
* Exchange movements on loans and borrowings with effective net
investment hedges are reported in other comprehensive income and
accumulated in the translation reserve.
The Group's debt is provided on a floating interest rate
basis.
The interest rate exposure of the financial liabilities of the
Group at the period end was:
Unaudited Audited
30 June 31 December
2023 2022
Floating rate interest exposure GBP000s GBP000s
======================================== ========== =============
Bank loans - Sterling denominated 96,817 96,817
Bank loans - US Dollar denominated 17,115 30,261
Bank loans - Euro denominated 6,807 6,987
======================================== ========== =============
Total financial liabilities 120,739 134,065
======================================== ========== =============
Unamortised issue costs (101) (321)
======================================== ========== =============
Net book value of financial liabilities 120,638 133,744
======================================== ========== =============
16. Provisions
Restructuring
CMA provision provision Total
The Group GBP000s GBP000s GBP000s
============================ ============= ============= =========
Cost
At 1 January 2023 (audited) 7,900 522 8,422
Utilised during the period - (82) (82)
Exchange differences - (14) (14)
At 30 June 2023 (unaudited) 7,900 426 8,326
============================ ============= ============= =========
On 23 May 2019 the UK's Competition and Markets Authority
('CMA') issued a Statement of Objection alleging anti-competitive
agreement involving the Group and certain other pharmaceutical
companies in relation to the sale of prescription prochlorperazine.
Prochlorperazine is one of the Group's smaller products and had
peak sales in 2015 of GBP1.9m and sales of GBP0.1m in 2022.
On 3 February 2022, the CMA announced its finding that four
companies, including Alliance, had infringed competition law (the
"Infringement Decision"). The Alliance Board fundamentally disagree
with the CMA's finding.
The Group believes that it has a strong case and has appealed
the CMA's decision, and the proposed fine of GBP7.9m. The appeal
has now been heard at the Competition Appeal Tribunal with those
proceedings closing on 4 August 2023. The Group hopes that a
verdict will be delivered during 2023, although it may be
later.
Despite its Appeal, the Directors believe that, as a result of
the Infringement Decision, a provision of GBP7.9m should continue
to be recorded at 30 June 2023 (31 December 2022: GBP7.9m).
This reflects the amount of the proposed fine communicated by
the CMA, and therefore, notwithstanding the Directors' belief as to
the merits of the grounds on which it has appealed the CMA
decision, the Directors consider this to be the appropriate
position given that, in the event that the Group's appeal proved to
be unsuccessful, the ultimate level of the fine cannot be greater
than this. In addition, in the event that the Group's appeal were
to prove to be unsuccessful, the Directors have presented what they
consider to be strong grounds upon which the amount of the fine
could be reduced. However, as this is a matter which cannot be
predicted with certainty at this time the Directors believe that
the most appropriate course of action is to include the maximum
potential amount of the fine.
If the appeal is unsuccessful, the Group may also be liable for
a proportion of the legal costs of the CMA relating to the appeal
and, depending on the CAT's findings, a potential financial claim
for damages from the UK's National Health Service. The Group has
not recorded a provision in relation to these potential costs or
claims as these amounts cannot be reliably estimated at this
time.
In accordance with IAS 37.92, the Group does not provide further
information on the grounds that this could seriously prejudice the
outcome of the appeal.
The restructuring provision of GBP0.4m at 30 June 2023 (31
December 2022: GBP0.5m) relates to the balance of restructuring
costs in relation to the closure of the Milan office following a
change to the operating model for our direct-to-market business in
Italy.
17. Alternative performance measures
The performance of the Group is assessed using Alternative
Performance Measures ('APMs'). The Group's results are presented
both before and after non-underlying items. Adjusted profitability
measures are presented excluding non-underlying items as we believe
this provides both management and investors with useful additional
information about the Group's performance and aids a more effective
comparison of the Group's trading performance from one period to
the next and with similar businesses. In addition, the Group's
results are described using certain other measures that are not
defined under IFRS and are therefore considered to be APMs. These
measures are used by management to monitor ongoing business
performance against both shorter-term budgets and forecasts but
also against the Group's longer-term strategic plans. APMs used to
explain and monitor Group performance are:
Reconciliation
Measure Definition to GAAP measure
================= ===================================================== ================
Underlying Earnings before interest, tax and non-underlying Note A below
EBIT and items (EBIT also referred to as underlying
EBITDA operating profit), then depreciation, amortisation
and underlying impairment (EBITDA).
Calculated by taking profit before tax and
financing costs, excluding non-underlying
items and adding back depreciation and amortisation.
EBITDA margin is calculated using see-though
revenue.
================= ===================================================== ================
Free cash Free cash flow is defined as cash generated Note B below
flow from operations less cash payments made for
interest payable and similar charges, capital
expenditure and tax.
================= ===================================================== ================
Net debt Net debt is defined as the Group's gross Note C below
bank debt position net of finance issue costs
and cash.
================= ===================================================== ================
Underlying Underlying effective tax rate is calculated Note D below
effective by dividing total taxation for
tax rate the year less impact of tax rate changes
and non-underlying charges,
by the underlying profit before tax for the
year
================= ===================================================== ================
See-through Under the terms of the transitional services Note E below
income statement agreement with certain supply partners, Alliance
receives the benefit of the net profit on
sales of Nizoral from the date of acquisition
up until the product licences in the Asia-Pacific
territories transfer to Alliance. The net
product margin is recognised as part of statutory
revenue.
The see-through income statement recognises
the underlying sales and cost of sales which
give rise to the net product margin, as management
consider this to be a more meaningful representation
of the underlying performance of the business,
and to reflect the way in which it is managed.
================= ===================================================== ================
Constant Like-for-like revenue, impact of acquisitions Note F below
exchange and total see-through revenue stated so that
rate (CER) the portion denominated in non-sterling currencies
revenue is retranslated using foreign exchange rates
from the previous financial year.
================= ===================================================== ================
Like-for-like Like-for-like figures compare financial results Not needed
in one period with those for the previous
period, excluding the impact of acquisitions
and disposals made in either period. For
2022, like-for-like revenue excludes the
impact of ScarAway & Kelo-cote US brand and
distribution rights which were acquired in
March 2022.
================= ===================================================== ================
Operating Defined as underlying administration and Not needed
costs marketing expenses,
excluding depreciation and underlying amortisation
charges.
================= ===================================================== ================
17. Alternative performance measures (continued)
A. Underlying EBIT and EBITDA
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
Reconciliation of Underlying EBIT and EBITDA GBP000s GBP000s
============================================= =========== ===========
Profit before tax 6,236 16,482
Non-underlying items (note 6) 4,082 3,250
Net finance costs (note 5) 5,959 90
============================================= =========== ===========
Underlying EBIT 16,277 19,822
Depreciation (note 11) 733 765
Underlying amortisation (note 10) 948 948
Underlying EBITDA 17,958 21,535
============================================= =========== ===========
B. Free cash flow
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
Reconciliation of free cash flow GBP000s GBP000s
================================= =========== ===========
Cash generated from operations 17,244 8,428
Financing costs (4,299) (1,706)
Capital expenditure (199) (552)
Tax paid (1,786) (1,081)
================================= =========== ===========
Free cash flow 10,960 5,089
================================= =========== ===========
C. Net debt
Unaudited Audited
30 June 31 December
2023 2022
Reconciliation of net debt GBP000s GBP000s
=================================== ========= =============
Loans and borrowings - non-current (120,638) (133,744)
Cash and cash equivalents 26,112 31,714
=================================== ========= =============
Net debt (94,526) (102,030)
=================================== ========= =============
D. Underlying effective tax rate
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
Reconciliation of adjusted underlying effective 2023 2022
tax rate GBP000s GBP000s
================================================ =========== ===========
Total taxation charge for the year (1,127) (3,378)
Non-underlying tax credit (657) (724)
================================================ =========== ===========
Underlying taxation charge for the year (1,784) (4,102)
================================================ =========== ===========
Underlying profit before tax for the year 10,318 19,732
================================================ =========== ===========
Underlying effective tax rate 17.3% 20.8%
================================================ =========== ===========
17. Alternative performance measures (continued)
E. See-through income statement
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2023
statutory See-through see-through
values adjustment values
GBP000s GBP000s GBP000s
==================== =========== =========== ============
Revenue 81,398 1,039 82,437
Cost of sales (34,536) (1,039) (35,575)
==================== =========== =========== ============
Gross profit 46,862 - 46,862
==================== =========== =========== ============
Gross profit margin 57.6% - 56.8%
==================== =========== =========== ============
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2022 2022
statutory See-through see-through
values adjustment values
GBP000s GBP000s GBP000s
==================== =========== =========== ============
Revenue 78,765 2,789 81,554
Cost of sales (28,127) (2,789) (30,916)
==================== =========== =========== ============
Gross profit 50,638 - 50,638
==================== =========== =========== ============
Gross profit margin 64.3% - 62.1%
==================== =========== =========== ============
There is no impact from the see-through adjustment on income
statement lines below gross profit.
F. Constant exchange rate revenue
Unaudited
Six months
Unaudited ended
Six months Foreign 30 June
ended exchange 2023
30 June 2023 impact CER
See-through revenue GBP000s GBP000s GBP000s
---------------------------------------------- ------------- --------- -----------
LFL see-through revenue - Consumer Healthcare
brands 57,104 (1,708) 55,396
LFL see-through revenue - Prescription
Medicines 22,737 (289) 22,448
---------------------------------------------- ------------- --------- -----------
Like-for-like see-through revenue 79,841 (1,997) 77,844
Impact of acquisitions (ScarAway & Kelo-cote
US) 2,596 (245) 2,351
---------------------------------------------- ------------- --------- -----------
See-through revenue (Note E) 82,437 (2,242) 80,195
---------------------------------------------- ------------- --------- -----------
Unaudited
Six months
Unaudited ended
Six months Foreign 30 June
ended exchange 2023
30 June 2023 impact CER
Statutory revenue GBP000s GBP000s GBP000s
--------------------------------------------- ------------- --------- -----------
LFL statutory revenue - Consumer Healthcare
brands 56,065 (1,705) 54,360
LFL statutory revenue - Prescription
Medicines 22,737 (289) 22,448
--------------------------------------------- ------------- --------- -----------
Like-for-like see-through revenue 78,802 (1,994) 76,808
Impact of acquisitions (ScarAway & Kelo-cote
US) 2,596 (245) 2,351
--------------------------------------------- ------------- --------- -----------
Statutory revenue 81,398 (2,239) 79,159
--------------------------------------------- ------------- --------- -----------
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END
IR EQLBLXKLFBBQ
(END) Dow Jones Newswires
September 26, 2023 02:00 ET (06:00 GMT)
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