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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Alliance Pharma Plc | LSE:APH | London | Ordinary Share | GB0031030819 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 32.00 | 31.95 | 32.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pharmaceutical Preparations | 167.42M | 936k | 0.0017 | 188.24 | 172.85M |
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:
Hot Features
Premium
+ 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
IR LFFSLAIIFLID
(END) Dow Jones Newswires
September 13, 2017 02:01 ET (06:01 GMT)
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