TIDMAPH
RNS Number : 5694Q
Alliance Pharma PLC
13 September 2017
For immediate release 13 September 2017
ALLIANCE PHARMA PLC
("Alliance" or the "Company")
Interim Results for the six months ended 30 June 2017
Alliance Pharma plc (AIM: APH), the specialty pharmaceutical
company, is pleased to announce its interim results for the six
months ended 30 June 2017.
Financial Highlights
-- Revenue up 8% to GBP50.3m (H1 2016: GBP46.4m)
o Kelo-cote(TM) up 52% to GBP6.2m (H1 2016: GBP4.1m)
o MacuShield(TM) up 67% to GBP3.4m (H1 2016: GBP2.0m)
-- EBITDA(*) up 3% to GBP13.6m (H1 2016: GBP13.2m)
-- Free cash flow (excluding Sinclair settlement)(*) up GBP9.0m to GBP11.1m (H1 2016: GBP2.1m)
o Working capital normalisation following the Sinclair
Healthcare Products acquisition
-- Leverage (adjusted net debt to EBITDA ratio) of 2.4 times (31 December 2016: 2.8 times)
-- Net debt(*) reduced by GBP12.7m to GBP63.4m (H1 2016: GBP76.1m)
-- Interim dividend up 10% to 0.443p (H1 2016: 0.403p)
(*) See note 15
Operational Highlights
-- Strong growth from our international brands, Kelo-cote and
MacuShield, underlining the exciting potential of these
products
-- Infrastructure and management teams developed and
strengthened, supporting continued growth and acquisitions
-- Strong cash generation with leverage continuing its reduction
profile, on current trends, to 2 times by year-end
Commenting on the results, Andrew Smith, Alliance Pharma's
Chairman, said:
"Following a transformational 2016, the business has performed
well in the first half of 2017. With the integration of the
Sinclair Pharma products now complete we are strategically
positioned for growth and, with leverage levels reducing, we are
now able to pursue bolt-on acquisitions."
Analyst meeting
A meeting for analysts will be held at 11.00am this morning, 13
September 2017, at the offices of Buchanan, 107 Cheapside, London
EC2V 6DN. For further details, please contact Buchanan on 020 7466
5000.
For further information:
+ 44 (0) 1249
Alliance Pharma plc 466966
John Dawson, Chief Executive
Officer
Peter Butterfield, Deputy Chief
Executive Officer
Andrew Franklin, Chief Financial
Officer
www.alliancepharma.co.uk
+ 44 (0) 20 7466
Buchanan 5000
Mark Court / Sophie Cowles
+ 44 (0) 20 7260
Numis Securities Limited 1000
Nominated Adviser: Michael
Meade / Freddie Barnfield
Corporate Broking: James Black
/ Toby Adcock
+44 (0) 20 7597
Investec Bank plc 5970
Corporate Finance: Daniel Adams
/ Ed Thomas
Corporate Broking: Patrick
Robb / Rob Baker
Notes to editors:
About Alliance Pharma
Alliance, founded in 1998, is an international speciality
pharmaceutical company based in Chippenham, Wiltshire, UK. The
Company has sales in more than 100 countries worldwide via direct
sales, joint ventures and a network of distributors. Alliance has a
strong track record of acquiring the rights to established niche
products and it currently owns or licenses the rights to
approximately 90 pharmaceutical and consumer healthcare products.
The Company continues to explore opportunities to expand its
product portfolio.
Alliance joined the AIM market of the London Stock Exchange in
December 2003 and trades under the symbol APH.
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
Trading performance
Sales for the six months ended 30 June 2017 were GBP50.3m, 8%
higher than the same period last year (H1 2016: GBP46.4m).
Underlying profit before tax was GBP11.9m (H1 2016: GBP11.7m) and,
including the Sinclair compensation, the reported profit before tax
was GBP16.9m (H1 2016: GBP11.7m).
Exchange rate movements boosted revenues for the half year by
GBP2.6m (equivalent to 5 percentage points of revenue growth) as
Sterling weakened against both the Euro and the Dollar relative to
the rates for the same period last year. The impact on profit
before tax was significantly lower, due to the greater proportion
of cost of goods and operating costs denominated in these
currencies.
The investment we have made in our international growth brands
has yielded promising results. Sales of Kelo-cote, our scar
reduction product, increased by 52% to reach GBP6.2m (H1 2016:
GBP4.1m) across its markets. MacuShield, for age-related macular
degeneration, also performed well, seeing a 67% increase in
revenues to GBP3.4m (H1 2016: GBP2.0m). This has been driven by a
combination of distribution gains in new territories and growth in
the rates of sale in existing outlets, stimulated by our increased
marketing investment.
Overall, our trading performance has been in line with the
Board's expectations, and sets us up well for the second half of
the year.
Diclectin
As stated in our announcement in July 2017, the Medicine and
Healthcare products Regulatory Agency ("MHRA") did not approve
Diclectin, a treatment for nausea and vomiting of pregnancy, for
the UK which was unexpected. Our regulatory team has now had time
to work with Duchesnay Inc. of Canada ("Duchesnay"), the licensor
and marketing authorisation applicant, to better understand the
approach taken by the MHRA. Whilst the communication between the
MHRA and Duchesnay remains confidential, we believe there are
grounds to re-open discussions. There is no financial impact of
this decision at this time.
Diclectin is a much-needed product as there is no licensed
medicine for treating nausea and vomiting of pregnancy in the UK.
At this stage we expect these discussions to continue well into
2018 and, in the meantime, we will re-direct our commercial
resources to other important growth projects within Alliance.
UK
We generated revenues of GBP25.2m (H1 2016: GBP24.5m),
representing overall growth of 3%.
MacuShield recorded strong sales of GBP2.7m, a 98% increase of
GBP1.3m over H1 2016 (H1 2016: GBP1.4m). The product continues to
benefit from our promotional activities in the ophthalmic and
consumer healthcare arenas.
Hydromol(TM) sales were GBP3.4m, representing a 4% decline
compared with H1 2016, most of which was due to non-availability of
the Hydromol Intensive(TM) presentation, which has recently
returned to supply, although the emollient market has declined
slightly over the past six months.
Our consumer products group (Anbesol(TM), Ashton &
Parsons(TM), and Lypsyl(TM)) achieved sales totalling GBP2.2m, a
decline of 3%, caused by volatility within the buying patterns of
the major retailers. There have been good distribution gains for
Ashton & Parsons Infants' Powders(TM), with new and expanded
listings including, most recently, Morrisons, both in-store and
online. The brand has a sound distribution platform in place ahead
of further promotional campaigns planned for the second half of the
year, which positions it well for future growth. Lypsyl also saw
pleasing growth, following a product redesign and reformulation,
and is beginning to respond to promotional focus. The Board still
believes there to be significant brand value to extract despite the
underinvestment prior to our ownership. The remainder of our UK
portfolio achieved sales of GBP16.9m, showing a small decline of 3%
although sales are expected to improve in the second half of the
year.
Western Europe
Revenues for Western Europe (excluding the UK) showed a modest
improvement to GBP12.6m for the half year (H1 2016: GBP11.7m). In
France, our largest affiliate outside the UK, sales grew 7% to
GBP4.8m, benefiting from a stronger Euro, with sales in local
currency showing a slight (-4%) decline. The sales team has now
started to focus on selling Kelo-cote directly, having repatriated
the distribution agreement from Recordati in March this year. The
DACH (Germany, Austria and Switzerland) region was up 14% in
reportable currency, up 4% in constant currency, and continues to
perform solidly and in line with expectations. Spain and Italy are
predominantly driven by Aloclair(TM), our treatment for mouth
ulcers. Spain ended the first six months significantly ahead, up
18% on a constant currency basis at GBP1.7m, benefiting from
Aloclair, which continues to grow well in market. Kelo-cote also
performed well, driven by sales in Portuguese private hospitals. In
Italy, our smallest affiliate, sales were up 9% in reportable
currency but down 2% on a constant currency basis at GBP1.4m. The
repatriation of Kelo-cote distribution agreements has successfully
taken place in France, Germany and Italy. Overall, the pan-European
structure has now been completed and is well placed for further
acquisitions.
International
The International side of the business performed very well in
the first half, with revenues up 23% in reportable currency and 9%
in constant currency. Strong performances from our lead brand
Kelo-cote in the Asia Pacific region, and in China particularly,
along with our Central European business have more than made up for
a slightly weaker than anticipated performance in the Middle East
and Africa region where the business has been subject to uneven
distributor ordering patterns. The transition of the Sinclair
distributor business has been embedded smoothly into our Paris
office with most distributors now transferred into Alliance. In the
first half of the year we have also taken the opportunity to
re-organise our Chinese business behind our Nutraceuticals
portfolio, which continues to perform well.
Financial review
Group Performance
Sales in the first half of 2017 grew by GBP3.9m (+8%) to
GBP50.3m (H1 2016: GBP46.4m) following the solid performance of our
international growth brands Kelo-cote and MacuShield. The gross
margin achieved of 57.6%, resulting in a gross profit of GBP29.0m,
was 1.6 percentage points higher than the comparative period (H1
2016: 56.0%, GBP26.0m) and reflects an improving sales mix.
Administration and marketing expenses for the half year
increased by GBP2.2m (H1 2017: GBP15.1m, H1 2016: GBP12.9m) and
were broadly in line with spend in the second half of last year (H2
2016: GBP15.9m). The increase on the same period last year is due
to the full-year effect of the ex-Sinclair products' cost base and
increased promotional support given to our key growth brands.
Earnings before interest, taxes, depreciation and amortisation
(EBITDA), defined as Operating Profit excluding non-underlying
items (including share of Joint Venture profit) less Depreciation
and Amortisation, was GBP13.6m (H1 2016: GBP13.2m), representing an
overall margin of 27.1% of sales.
As announced on 21 March 2017, the Group reached agreement with
Sinclair Pharma plc in connection with the material reduction of
business in Kelo-stretch(TM), which was acquired in 2015. The terms
of the compensation agreement were a GBP4.0m cash payment to
Alliance (received in April 2017) and a further GBP1.0m cash
receipt to be paid on or before 30 June 2018. The total
compensation of GBP5.0m is recognised as a non-underlying
exceptional income in the Income Statement.
Interest costs in the six-month period reduced to GBP1.5m (H1
2016: GBP1.7m). This is as a result of the reduction in overall net
debt, partially offset by the translation effect of the Euro and US
Dollar denominated interest into a weaker Sterling.
Underlying profit before tax increased to GBP11.9m (H1 2016:
GBP11.7m).
The underlying tax charge for the period of GBP2.6m is based
upon the prevailing tax rates in the relevant countries and equates
to an effective tax rate (ETR) of 21.8%, in line with the Group's
forecasted underlying tax rate of 22%. The ETR for the prior period
of 18.5% had benefited from the planned reduction in the UK
corporation tax rate on our deferred tax balances.
Basic adjusted earnings per share (EPS) for the six months was
1.97p (H1 2016: 2.04p), and including non-underlying items was
2.84p (H1 2016: 2.04p). Adjusting for the Group's underlying ETR of
21.8% in H1 2017, the basic adjusted EPS for the prior period would
have been 1.96p.
Cash flow and net debt
Demonstrating the strongly cash generative nature of the Group,
free cash flow (defined as cash generated from operating activities
excluding non-underlying items less interest, tax and capital
expenditure) generated in the first half was GBP11.1m and a
significant improvement on the same period last year (H1 2016:
GBP2.1m) which was adversely affected by the build-up of working
capital following the Sinclair Healthcare Products acquisition.
Free cash flow in the period was ahead of the cash generated in the
second half of last year of GBP10.9m. As a result, cash and cash
equivalents increased GBP1.8m to GBP9m as at 30 June 2017 (H1 2016:
GBP7.2m).
Inventory was held broadly level with last year at GBP15.2m (H1
2016: GBP15.4m), however we expect a modest increase towards the
end of 2017 as a result of certain strategic inventory builds to
secure supply.
Net debt reduced to GBP63.4m as at 30 June 2017 (31 December
2016: GBP76.1m), due largely to the Group's strong cash generation
as well as the GBP4.0m compensation received from Sinclair and a
foreign exchange benefit of approximately GBP1.0m. Our adjusted net
debt/EBITDA ratio as at 30 June 2017 was 2.4 times (31 December
2016: 2.8 times), against our covenant limit of 2.75 times (31
December 2016: 3.0 times). We continue to anticipate that leverage
will reduce, on current trends, to around 2.0 times by the end of
the year.
The Group has total bank facilities of GBP100m of which GBP55.4m
(31 December 2016: GBP66.5m) remains drawn on the Term Loan with
GBP18.0m (31 December 2016: GBP18.0m) currently utilised from the
Revolving Credit Facility (RCF). In addition to this, the Group
also has access to a GBP4.5m working capital facility, which was
largely undrawn at 30 June 2017, and an additional undrawn GBP25m
facility available with bank approval.
Dividend
In line with our strong cash generation in the first half of
2017, we are making an interim payment of 0.443p (H1 2016: 0.403p).
This represents an increase of 10% on last year's figure while
maintaining dividend cover at 3 times adjusted earnings.
The interim dividend will be paid on 11 January 2018 to
shareholders on the register on 22 December 2017.
Strategy
Our strategy for growth remains two-fold. We drive organic
growth in selected brands via targeted marketing investment and we
seek additional growth from bolt-on acquisitions. This strategy is
in effect a buy and grow strategy.
Our marketing investment concentrates on two International Star
brands, Kelo-cote and MacuShield, which benefit from a global
strategy developed centrally and adapted locally in each market.
Additionally we have national growth brands, known as Local Heroes
which are very important to individual countries and whose
marketing strategy is driven locally.
Kelo-cote
Kelo-cote is our largest and fastest growing brand and has
global reach, now selling in 65 countries. Compared with H1 2016,
sales grew by GBP2.1m to GBP6.2m in the first half of 2017.
Kelo-cote is a silicone gel for the treatment of scars. Silicon
gels are well established as the first line treatment in scar
management. Kelo-cote is the most technically advanced product in
this class and, through its unique patented formula, is the
quickest drying silicone gel on the market. In this fast growing
market this important benefit gives us a competitive advantage that
is appreciated by clinicians and users alike. We have global
rights, outside of the US.
We have recently strengthened our management of the brand by the
appointment of an experienced global marketing head who will focus
on developing both the brand's strategy and relationships with key
global opinion leaders. Alliance was the lead sponsor at this
year's Scar Club conference in Montpellier in June, which was
attended by leaders in the scar management field. We continue to
work on new product development and line extensions for the
Kelo-cote brand to help reinforce its position as a professionally
endorsed specialist product.
The Asia-Pacific region continues to perform well with sales
progressing ahead of expectations, via our network of local
distribution partners, with China, Kelo-cote's largest market,
developing particularly well. In Europe, where we have developed
our own infrastructure in the major EU countries, we are in the
process of repatriating the distribution agreements both to give us
more control over the marketing of the brand and to improve
margins. Discussions are well underway for the launch of the
product into some new markets.
MacuShield
MacuShield is a dietary supplement of macular pigments for
slowing the progression of age-related macular degeneration (AMD).
It can also aid visual performance, improving contrast sensitivity
in situations where there is high glare - such as night driving. It
currently sells in 17 markets and we have global rights, outside of
the Americas and the Caribbean.
In the first half of 2017, sales grew by GBP1.4m to GBP3.4m,
compared with the same period in 2016. MacuShield is at an earlier
phase of its international development with sales in the UK and
Ireland developing well to GBP2.9m, compared with GBP1.7m in the
first half of 2016. In the UK our presence in Boots has increased
with a further 800 stores taking the MacuShield Gold presentation
and better in-store positioning. Our marketing strategy is
two-pronged with our retail and consumer activities run in parallel
with communications to ophthalmologists via our medical sales
team.
MacuShield growth has been further bolstered by good
performances in some of the newer European territories, including
Romania, Serbia and Greece where sales are growing as our
distributors roll out the brand through their respective routes to
market. We have also used our newly formed International team to
negotiate MacuShield into new distributors outside of Europe, and
the first six months of the year have seen three new distributors
signed in Israel, Lebanon and Pakistan, with several others in
discussion.
National growth products (Local Heroes)
As a large part of Alliance's historic growth has been by
acquisition, we have several products that are important in only
one or a limited number of countries and which are not part of our
global strategy. Some of these have growth potential that respond
to marketing investment in an economic way and are managed locally.
Examples are Aloclair in Spain and Italy, Hydromol in the UK and
the UK group of consumer products (Anbesol, Ashton & Parsons
and Lypsyl).
Bedrock
Very important to our strategy is the existence within our
portfolio of a bedrock of well-established products that require
minimal promotional efforts to maintain meaningful sales. These
products constitute approximately 50% of total group revenues and
provide a reliable source of cash flow that can be used for
marketing investment elsewhere in the portfolio, or to fund further
bolt-on acquisitions. These products cover a wide range of therapy
areas as promotional synergies are not a prerequisite.
Acquisitions
In addition to organic growth, bolt-on acquisitions have been
and will continue to be an important source of growth. We acquire
products where we can see a good history of stable sales and
therefore this element of our strategy is relatively low risk. From
larger pharmaceutical companies, we tend to acquire very well
established products that are no longer core to those
organisations. From smaller entrepreneurial companies we tend to
acquire growing products that have been developed, launched and
established, but whose further growth requires a larger
organization with a broader distribution footprint.
Following the integration of the transformational acquisition of
the pharma products from Sinclair Pharma, and as our leverage
levels reduce, we are now in a position to re-commence our activity
of securing bolt-on acquisitions as and when attractive
opportunities arise. Our expanded infrastructure enables us to take
advantage of opportunities across a wider range of territories.
Similarly we shall keep a watch for in-licensing opportunities that
could be exploited via our expanded infrastructure, although these
are less available than bolt-on acquisitions, where several
interesting opportunities are currently under evaluation.
Appointment of Second Broker
As we are now an enlarged group we have appointed a second
broker, Investec Bank plc, to work alongside Numis Securities
Limited, our Nominated Adviser and broker.
People & Infrastructure
Recent promotions, accompanied by the appointment of external
talent, have rounded out the management structure required to
achieve our growth ambition.
Peter Butterfield was appointed Chief Operating Officer in June,
to add to his Deputy CEO duties. The change in role signals a
sharing of responsibilities with CEO John Dawson, who can now focus
more on outward-facing initiatives.
In addition to this and other internal promotions, we made
several key appointments of external candidates. Chris Delafield
joined us from Sanofi as the new Global Marketing Head for
Kelo-cote, Matthew Toms joined as Head of Supply Chain from
Refresco UK, Dr. Verity Rawson joined as Medical Affairs Manager
from Merck, and we have brought our commercial legal function
in-house with the appointment of Chris Chrysanthou from Fladgate
LLP.
Our office infrastructure was completed with the refurbishment
of our Chippenham head office to provide a more effective working
environment.
In 2016 we took the decision to invest in a new enterprise
resource planning system to streamline our processes, which will
bring the legacy Alliance Pharma and Sinclair systems onto a single
integrated platform that will cover all of our financial and supply
chain planning and fulfilment activities. Following a review of
external providers, we selected Microsoft Dynamics as our system of
choice, and it is on target to be operational across the business
in mid-2018.
Charity
We strive to make a contribution to the community and, with our
employees, are strong fundraising supporters, recently raising
GBP30,000 for Sands, the stillbirth and neonatal death charity,
through activities across the Company including sponsored walks and
a 250 mile cycle ride between our Paris and Chippenham offices. We
also have a long established relationship with International Health
Partners, to which we donate products for distribution to health
practitioners in the world's neediest areas.
Outlook
With the physical and management infrastructure we now have in
place and the encouraging financial performance achieved to date
from our targeted investments, we see scope for continued organic
growth. We anticipate that this will be driven by our international
growth brands Kelo-cote and MacuShield as well as our local hero
brands, funded by the cash generated by these and our bedrock
products that require little or no promotional investment. We will
supplement our organic growth with bolt-on acquisitions as and when
suitable candidates arise that will add value to the Group. Our
European footprint, diversified portfolio and strong management
team also provide a sound foundation for attracting in-licensing
opportunities, which we will evaluate alongside product
acquisitions.
We continue to monitor the landscape in relation to Brexit where
we would advocate a frictionless outcome as regards cross-border
trading, medicines regulation, adequate freedom of movement and
access to specialised talent for the Group head office in the UK.
There is uncertainty at this early stage of negotiation, however
our balanced revenue base, pan-European infrastructure and
nationally held EU licences will ensure our ability to trade in the
EU market of the future.
Having delivered results in this period in line with
expectations, and having a sound platform in place, we look forward
to the second half and beyond with confidence.
Unaudited Consolidated Income Statement
For the six months ended 30 June 2017
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
(See Note
below)
Underlying Non-Underlying Total Total
GBP000s GBP000s GBP000s GBP000s
(Note
Note 5)
---------------------------------- ---- ------------ ---------------- ----------- -----------
Revenue 50,310 - 50,310 46,372
Cost of sales (21,331) - (21,331) (20,392)
---------------------------------- ---- ------------ ---------------- ----------- -----------
Gross profit 28,979 - 28,979 25,980
---------------------------------- ---- ------------ ---------------- ----------- -----------
Operating expenses
Administration and marketing
expenses (15,101) - (15,101) (12,946)
Share-based employee remuneration (704) - (704) (404)
Share of Joint Venture
profits 92 - 92 343
---------------------------------- ---- ------------ ---------------- ----------- -----------
(15,713) - (15,713) (13,007)
---------------------------------- ---- ------------ ---------------- ----------- -----------
Operating profit excluding
exceptional item 13,266 - 13,266 12,973
Exceptional compensation
income - 5,000 5,000 -
Operating profit 13,266 5,000 18,266 12,973
Finance costs
Interest payable and similar
charges 4 (1,516) - (1,516) (1,660)
Finance income 4 145 - 145 429
(1,371) - (1,371) (1,231)
---------------------------------- ---- ------------ ---------------- ----------- -----------
Profit before taxation 11,895 5,000 16,895 11,742
Taxation 6 (2,595) (850) (3,445) (2,169)
---------------------------------- ---- ------------ ---------------- ----------- -----------
Profit for the year attributable
to equity shareholders 9,300 4,150 13,450 9,573
---------------------------------- ---- ------------ ---------------- ----------- -----------
Earnings per share
Basic (pence) 11 1.97 2.84 2.04
Diluted (pence) 11 1.95 2.82 2.02
---------------------------------- ---- ------------ ---------------- ----------- -----------
Note: The results for 2016 all relate to underlying trading
performance
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
Unaudited
Unaudited Six months
Six months ended
ended 30 June
30 June 2017 2016
GBP 000s GBP 000s
Profit for the period 13,450 9,573
Other comprehensive income
Items that may be reclassified
to profit or loss:
Interest rate swaps -
cash flow hedge 158 (509)
Deferred tax on interest
rate swaps (32) 102
Foreign exchange translation
differences (939) 1,129
Total comprehensive income
for the period 12,637 10,295
---------------------------------- -------------- ------------
Unaudited Consolidated Balance Sheet
As at 30 June 2017
Unaudited Audited
30 June 2017 31 December
2016
Note GBP000s GBP000s
------------------------ ---- ------------- ------------
Assets
Non-current assets
Intangible assets 7 262,769 264,833
Property, plant
and equipment 2,564 1,806
Joint Venture
investment 1,650 1,464
Joint Venture
receivable 1,462 1,462
Deferred tax
asset 1,648 1,709
Other non-current
assets 202 180
------------------------ ---- ------------- ------------
270,295 271,454
Current assets
Inventories 15,181 15,356
Trade and other
receivables 8 24,339 26,706
Cash and cash
equivalents 9,006 7,221
------------------------ ---- ------------- ------------
48,526 49,283
------------------------ ---- ------------- ------------
Total assets 318,821 320,737
------------------------ ---- ------------- ------------
Equity
Ordinary share
capital 4,743 4,726
Share premium
account 110,083 109,594
Share option
reserve 4,010 3,306
Reverse takeover
reserve (329) (329)
Other reserve (193) (319)
Translation reserve 1,169 2,108
Retained earnings 67,902 60,177
------------------------ ---- ------------- ------------
Total equity 187,385 179,263
Liabilities
Non-current liabilities
Long term financial
liabilities 13 46,635 57,554
Other liabilities 10 1,826 1,817
Deferred tax
liability 32,376 31,442
Derivative financial
instruments 227 384
------------------------ ---- ------------- ------------
81,064 91,197
Current liabilities
Financial liabilities 13 25,819 25,782
Corporation tax 3,343 2,543
Trade and other
payables 9 21,210 21,952
------------------------ ---- ------------- ------------
50,372 50,277
Total liabilities 131,436 141,474
------------------------ ---- ------------- ------------
Total equity
and liabilities 318,821 320,737
------------------------ ---- ------------- ------------
Unaudited Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
Unaudited
Unaudited Six months
Six months ended
ended 30 June
30 June 2017 2016
GBP 000s GBP 000s
Operating activities
Result for the period
before tax 16,895 11,742
Interest payable 1,516 1,660
Other finance income (145) (429)
Exceptional income (5,000) -
Depreciation of property,
plant and equipment 226 181
Amortisation of intangible
assets 157 84
Share-based employee
remuneration 704 404
Change in inventories 175 (3,306)
Change in investments (92) (343)
Change in trade and other
receivables 3,392 (11,088)
Change in trade and other
payables (2,853) 7,429
Tax paid (1,370) (2,101)
Cash flows from operating
activities 13,605 4,233
-------------- ------------
Investing activities
Interest received 54 54
Deferred contingent consideration
on acquisitions (1,714) (4,503)
Development costs capitalised (265) (46)
Purchase of property,
plant and equipment (984) (325)
Purchase of other non-current
assets - (203)
Settlement income 4,000 -
Loan to Joint Venture (25) -
Net cash used in investing
activities 1,066 (5,023)
-------------- ------------
Financing activities
Interest paid and similar
charges (1,557) (1,353)
Loan issue costs - (280)
Proceeds from exercise
of share options 506 26
Dividend paid (1,904) (1,714)
Receipt from borrowings - 4,500
Repayment of borrowings (10,136) (3,000)
Net cash used in financing
activities (13,091) (1,821)
-------------- ------------
Net movement in cash
and cash equivalents 1,580 (2,611)
Cash and cash equivalents
at beginning of period 7,221 3,198
Effects of exchange rate
movements 205 1,049
Cash and cash equivalents
at end of period 9,006 1,636
============== ============
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
Ordinary Share Share Reverse Translation
Share Premium Option takeover Other Reserve Retained Total
capital account reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP GBP
000s 000s 000s 000s 000s 000s 000s 000s
Balance 1
January
2016
(audited) 4,682 108,308 2,610 (329) (98) 32 47,237 162,442
--------------- --------- --------- --------- --------- --------- ------------------------- --------- --------
Issue of
shares 2 24 - - - - - 26
Dividend
payable/paid - - - - - - (5,151) (5,151)
Share options
charge - - 404 - - - - 404
--------------- --------- --------- --------- --------- --------- ------------------------- --------- --------
Transactions
with owners 2 24 404 - - - (5,151) (4,721)
--------------- --------- --------- --------- --------- --------- ------------------------- --------- --------
Profit for the
period - - - - - - 9,573 9,573
Other
comprehensive
income
Interest rate
swaps - cash
flow hedge - - - - (509) - - (509)
Deferred tax
on interest
rate
swaps - - - - 102 - - 102
Foreign
exchange
translation
differences - - - - - 1,129 - 1,129
Total
comprehensive
income for
the
period - - - - (407) 1,129 9,573 10,295
Balance 30
June
2016
(unaudited) 4,684 108,332 3,014 (329) (505) 1,161 51,659 168,016
--------------- --------- --------- --------- --------- --------- ------------------------- --------- --------
Balance 1
January
2017
(audited) 4,726 109,594 3,306 (329) (319) 2,108 60,177 179,263
--------------- --------- --------- --------- --------- --------- ------------------------- --------- --------
Issue of
shares 17 489 - - - - - 506
Dividend
payable/paid - - - - - - (5,725) (5,725)
Share options
charge - - 704 - - - - 704
--------------- --------- --------- --------- --------- --------- ------------------------- --------- --------
Transactions
with owners 17 489 704 - - - (5,725) (4,515)
Profit for the
period - - - - - - 13,450 13,450
Other
comprehensive
income
Interest rate
swaps - cash
flow hedge - - - - 158 - - 158
Deferred tax
on interest
rate
swaps - - - - (32) - - (32)
Foreign
exchange
translation
differences - - - - - (939) - (939)
Total
comprehensive
income for
the
period - - - - 126 (939) 13,450 12,637
Balance 30
June
2017
(unaudited) 4,743 110,083 4,010 (329) (193) 1,169 67,902 187,385
--------------- --------- --------- --------- --------- --------- ------------------------- --------- --------
Notes to the Half Yearly Report
For the six months ended 30 June 2017
1. Nature of operations
Alliance Pharma plc ("the Company") and its subsidiaries
(together "the Group") acquire, market and distribute
pharmaceutical products. The company is a public limited company
incorporated and domiciled in England. 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).
2. General information
The information in these financial statements does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006 and is un-audited. 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
period ended 31 December 2016, prepared under International
Financial Reporting Standards as adopted by the European Union, 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.
This interim financial report for the six-month period ended 30
June 2017 (including comparatives for the six months ended 30 June
2016) was approved by the Board of Directors on 11 September
2017.
The current rate of cash generation by the Group comfortably
exceeds the capital and debt servicing needs of the business
(though there cannot, of course, be absolute certainty that the
rate of cash generation will be maintained). The Board remains
confident that all the bank covenants will continue to be met for
at least the next 12 months. The Group has a GBP4.5m Working
Capital Facility of which GBP4.1m is undrawn at the balance sheet
date and which the Board believes should comfortably satisfy the
Group's working capital needs for at least the next 12 months.
3. Accounting policies
The same accounting policies and methods of computation are
followed in the interim financial report as published by the
company in its 31 December 2016 Annual Report. The Annual report is
available on the company's website alliancepharmaceuticals.com.
4. Finance costs
Unaudited
Unaudited Six months
Six months ended
ended 30 June 2016
30 June
2017 2015
GBP000s GBP000s
------------------------------- ----------- -------------
Interest payable and similar
charges
On loans and overdrafts (1,421) (1,397)
Amortised finance issue
costs (179) (177)
Notional interest 84 (86)
------------------------------- ----------- -------------
Interest payable and similar
charges (1,516) (1,660)
------------------------------- ----------- -------------
Interest income 54 54
Other finance income -
Foreign exchange movements 91 375
------------------------------- ----------- -------------
Finance Income 145 429
------------------------------- ----------- -------------
Finance costs - net (1,371) (1,231)
=============================== =========== =============
Notional interest relates to the unwinding of the deferred
consideration on the MacuVision acquisition.
Notes to the Half Yearly Report (continued)
For the six months ended 30 June 2017
5. Non-underlying item
In March 2017, the Group reached agreement with Sinclair Pharma
plc, in connection with the material reduction of business in
Kelo-stretch, acquired in 2015. The terms of the agreement was a
GBP4.0m cash payment (received in April 2017) and a further GBP1m
to be paid on or before 30 June 2018, together with all remaining
rights to Flammacerium (US) with immediate effect.
The total compensation of GBP5 million has been treated as a
non-underlying exceptional income in these financial
statements.
The associated non-underlying tax charge relates to the deferred
tax impact of the reduction in intangibles tax relief in future
years arising from the reduction in consideration paid for
Kelo-stretch.
6. Taxation
Analysis of charge for the period is as follows:
Unaudited
Six months Unaudited
ended Six months
30 June ended
2017 30 June 2016
GBP 000s GBP 000s
Corporation tax
In respect of current
period 2,450 2,046
2,450 2,046
Deferred tax 995 123
--------------------------
Taxation 3,445 2,169
========================== ============= ===============
7. Intangible assets
Brands Assets
and distribution Development under
Goodwill rights costs development Total
GBP 000s GBP 000s GBP 000s GBP 000s GBP
000s
Cost
At 1 January
2017 (audited) 16,197 249,376 704 2,500 268,777
Additions - - 265 - 265
Transfer In/(Out) - 438 (438) - -
Exchange adjustments - (2,172) - - (2,172)
At 30 June 2017
(unaudited) 16,197 247,642 531 2,500 266,870
---------------------- ------------- ----------------- ----------- ------------ -------
Amortisation
At 1 January
2017 (audited) - 3,944 - - 3,944
Amortisation
for the period - 157 - - 157
At 30 June 2017
(unaudited) - 4,101 - - 4,101
---------------------- ------------- ----------------- ----------- ------------ -------
Net book amount
At 30 June 2017
(unaudited) 16,197 243,541 531 2,500 262,769
---------------------- ------------- ----------------- ----------- ------------ -------
At 1 January
2017 (audited) 16,197 245,432 704 2,500 264,833
---------------------- ------------- ----------------- ----------- ------------ -------
Notes to the Half Yearly Report (continued)
For the six months ended 30 June 2017
8. Trade and other receivables
Unaudited Audited
30 June 31 December
2017 2016
GBP 000s GBP 000s
Trade receivables 19,218 20,530
Other receivables 1,327 1,788
Prepayments and accrued
income 1,491 2,110
Amounts owed by Joint
Venture 2,303 2,278
24,339 26,706
=========== ==============
9. Trade and other payables
Unaudited Audited
30 June 31 December
2017 2016
GBP 000s GBP 000s
Trade payables 5,473 5,655
Other taxes and social
security costs 374 1,030
Accruals and deferred
income 9,037 11,125
Other payables 1,181 1,120
Deferred consideration 1,324 3,022
Dividend payable 3,821 -
----------- --------------
21,210 21,952
=========== ==============
10. Other non-current liabilities
Unaudited Audited
30 June 31 December
2017 2016
GBP 000s GBP 000s
Deferred consideration 1,609 1,609
Other non-current liabilities 217 208
1,826 1,817
=========== ==============
11. 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 year. 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:
Six months Six months
ended ended
30 June 2017 30 June 2016
Weighted average Weighted average
number of number of
shares 000s shares 000s
----------------- ----------------- -----------------
For basic EPS 472,900 468,297
Share options 4,338 6,329
For diluted EPS 477,238 474,626
----------------- ----------------- -----------------
Notes to the Half Yearly Report (continued)
For the six months ended 30 June 2017
11. Earnings per share (EPS) (continued)
Six months
to Six months
30 June to
2017 30 June 2016
GBP 000s GBP 000s
----------------------------- ----------- --------------
Earnings for basic and
diluted EPS 13,450 9,573
Non-underlying: Exceptional
items (4,150) -
----------------------------- ----------- --------------
Adjusted EPS 9,300 9,573
----------------------------- ----------- --------------
The resulting EPS measures are:
Six months
to Six months
30 June to
2017 30 June 2016
Pence Pence
Basic EPS 2.84 2.04
---------------------- ----------- --------------
Diluted EPS 2.82 2.02
---------------------- ----------- --------------
Adjusted basic EPS 1.97 2.04
---------------------- ----------- --------------
Adjusted diluted EPS 1.95 2.02
---------------------- ----------- --------------
12. Dividends
Six months Six months
ended ended
30 June 2017 30 June 2016
GBP Pence/share
Pence/share 000s GBP 000s
Amounts recognised
as distributions to
owners in the year
Interim dividend for
the prior financial
year 0.403 1,904 0.366 1,714
Final dividend for
the prior financial
year 0.807 3,821 0.734 3,438
--------------------- ------------ ----- ------- -------
5,725 5,152
--------------------- ------------ ----- ------- -------
The final dividend for the prior financial year was approved by
the Board of Directors on 27 March 2017 and subsequently by the
shareholders at the Annual General Meeting on 25 May 2017. This
dividend has been included as a liability as at 30 June 2017, in
accordance with IAS 10 Events After the Balance Sheet Date, and was
paid on 12 July 2017 to shareholders who were on the register of
members at 16 June 2017.
Notes to the Half Yearly Report (continued)
For the six months ended 30 June 2017
13. Borrowings
Movements in borrowings are analysed as follows:
Six months
ended
30 June 2017
GBP 000s
At 1 January 2017 (audited) 83,336
------------------------------------- ---------------------------------
Repayment of borrowings (10,136)
Amortisation of prepaid arrangement
fees 179
Exchange movements (925)
------------------------------------- ---------------------------------
At 30 June 2017 (unaudited) 72,454
===================================== =================================
The carrying amount of the group's borrowings are denominated in
the following currencies:
Unaudited Audited
30 June 31 December
2017 2016
GBP 000s GBP 000s
GBP 38,128 42,508
USD 19,500 26,585
EUR 15,789 15,385
Loan issue costs (963) (1,142)
72,454 83,336
=========== ==============
14. Post balance sheet events
As stated in our announcement in July 2017, the Medicine and
Healthcare products Regulatory Agency ("MHRA") did not approve
Diclectin for the UK, a treatment for nausea and vomiting of
pregnancy which was unexpected. Our regulatory team has now had
time to work with Duchesnay Inc. of Canada ("Duchesnay"), the
licensor and marketing authorisation applicant, to better
understand the objections of the MHRA. Whilst the communication
between the MHRA and Duchesnay remains confidential, we believe
there are grounds to re-open discussions.. Diclectin is a much
needed product as there is no licensed medicine for treating nausea
and vomiting of pregnancy in the UK. At this stage we expect these
discussions to continue well into 2018 and, in the meantime, we
will re-direct our commercial resources to other important growth
projects within the company.
The Group in-licensed Diclectin for the UK in 2015 and for a
further nine European territories in 2016. The total amount paid to
Duchesnay for all territories was GBP1.5 million with a further
GBP1.0 million payable to Duchesnay on successful licence
applications; the total GBP2.5m is included within intangible fixed
assets and the GBP1.0m deferred consideration is included within
liabilities.
Duchesnay, the licence applicant, has notified the regulator
that it wants to re-open discussions and the Board has concluded
that it continues to be appropriate to retain the intangible asset
(and the associated deferred consideration) whilst this review is
underway. In the event the licence for Diclectin is not approved,
the amounts paid to Duchesnay (GBP1.5 million) are fully refundable
and the deferred consideration (GBP1.0 million) would be cancelled
resulting in no net financial impact in the Income Statement.
Notes to the Half Yearly Report (continued)
For the six months ended 30 June 2017
15. 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 exceptional and non-underlying items. Adjusted
profitability measures are presented excluding exceptional and
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 on-going business performance against both shorter term
budgets and forecasts but also against the groups longer term
strategic plans.
APMs used to explain and monitor group performance:
Reconciliation
to GAAP
Measure Definition measure
--------- -------------------------------------- ---------------
EBITDA Earnings before interest, tax, Note A
depreciation, amortisation below
and non-underlying items. Calculated
by taking profit before tax
and financing costs, excluding
non-underlying items and adding
back depreciation and amortisation.
--------- -------------------------------------- ---------------
Free Free cash flow is defined as Note B
cash EBITDA less working capital below
flow and non-cash movements (excluding
exceptional items), tax payments,
interest payments, core capex
and other non-cash movements.
--------- -------------------------------------- ---------------
Net debt Net debt is defined as the Note C
group's bank debt position below
net of its cash position.
--------- -------------------------------------- ---------------
A. EBITDA Unaudited
Unaudited Six months
Six months ended
ended 30 June
30 June 2017 2016
Reconciliation of EBITDA GBP000s GBP000s
Profit before tax 16,895 11,742
Exceptional item (note
5) (5,000) -
Financing costs (note
4) 1,371 1,231
Depreciation 226 181
Amortisation 157 84
-------------------------- ------------- -----------
Total 13,649 13,238
-------------------------- ------------- -----------
B. Free cash flow Unaudited
Unaudited Six months
Six months ended
ended 30 June
30 June 2017 2016
Reconciliation of free
cash flow GBP000s GBP000s
Cash generated from
operations 14,975 6,334
Financing costs (1,557) (1,633)
Capital expenditure (984) (528)
Tax paid (1,370) (2,101)
------------------------ ------------- -----------
11,064 2,072
----------------------- ------------- -----------
Notes to the Half Yearly Report (continued)
For the six months ended 30 June 2017
11. Alternative performance measures (continued)
C. Net debt Audited
Unaudited 31 December
30 June 2017 2016
Reconciliation of net
debt GBP000s GBP000s
Loans and borrowings
- current 13 (25,819) (25,782)
Loans and borrowings
- non-current 13 (46,635) (57,554)
Cash and cash equivalents 9,006 7,221
(63,448) (76,115)
-------------------------- ------------- ------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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