Alliance Pharma PLC Interim Results (6555N)

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
	-0.25	-0.74%	33.45	33.40	33.65	33.95	33.40	33.95	714,421	13:57:07

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Pharmaceutical Preparations	167.42M	936k	0.0017	198.53	182.3M

TIDMAPH

RNS Number : 6555N

Alliance Pharma PLC

26 September 2023

 
 For immediate release                                          26 September 2023

ALLIANCE PHARMA PLC

("Alliance" or the "Group")

Results for the six months ended 30 June 2023

Board expectations for year-end performance remain unchanged

Alliance Pharma plc (AIM: APH), the international healthcare group, is pleased to announce its interim results for the six months ended 30 June 2023 ("the Period"). Revenue growth for the Kelo-Cote(TM) franchise and Nizoral(TM) was in line with the Board's expectations and Amberen(TM) revenues returned to growth in Q2 on a like-for-like basis. However, as previously announced, this was balanced by mixed performance in certain smaller products with regulatory issues resulting in some manufacturing delays.

In-market demand for Kelo-Cote continues to grow in H2 2023 and we have extended our distribution agreement which secures our FY revenue expectations. The underlying business remains strong and the Board's expectations for Group performance in the full year remain unchanged.

FINANCIAL SUMMARY

 
 Unaudited six months             2023        2023          2022        2022        Growth      Growth 
  ended June 30             Underlying    Reported    Underlying    Reported    underlying    reported 
                                (GBPm)      (GBPm)        (GBPm)      (GBPm) 
 Revenue (see-through 
  basis)*                         82.4        82.4          81.6        81.6            1%          1% 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Revenue (statutory 
  basis)                          81.4        81.4          78.8        78.8            3%          3% 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Gross profit                     46.9        46.9          50.6        50.6           -7%         -7% 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Profit before taxation           10.3         6.2          19.7        16.5          -48%        -62% 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Basic earnings per 
  share                           1.58        0.95          2.90        2.43          -46%        -61% 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Free cash flow*                              11.0                       5.1 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Cash from operations                         15.5                       8.4 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Net debt*                                    94.5                     102.0 
------------------------  ------------  ----------  ------------  ----------  ------------  ---------- 
 Interim dividend 
  per share                                   0.0p                    0.592p 
------------------------  ------------  ----------  ------------  ----------  ------------  ----------

OPERATING AND FINANCIAL HIGHLIGHTS

-- H1 23 revenue growth impacted by Kelo-Cote destocking in China and temporary manufacturing delays arising from regulatory issues in certain smaller other consumer and prescription medicine products which will reverse in H2.

-- In-market demand for Kelo-Cote in China continues to recover, with market share gains seen in e-commerce channels.

-- Consumer Healthcare see-through revenue* up 1% to GBP59.7m (H1 22: GBP57.4m) with strong growth in Nizoral offsetting softer performance in other consumer healthcare brands.

   --      Prescription Medicine revenues of GBP22.7m, down 7% CER (H1 21: GBP24.1m).

-- Robust free cash flow of GBP11.0m (H1 22: GBP5.1m) and net debt decreasing GBP7.5m to GBP94.5m. Group leverage of 2.7x at 30 June 2023 (31 December 2022: 2.6x).

-- Debt refinancing completed with a new 3-year GBP150m revolving credit facility agreed with two 1-year options to extend further.

-- Significant revenue step-up expected in H2 23 driving group leverage below 2.0x by year end.

-- In response to shareholder feedback, the Board has decided to pause the interim dividend whilst we develop a new dividend policy with greater focus on reinvestment in the business. The new policy will be published in the preliminary results in March 2024.

DEVELOPING OUR BUSINESS

-- Nizoral gaining market share as our new Chinese distributor expands the brand's reach, supported by new marketing campaigns and refreshed packaging.

-- Amberen returning to growth with unique new product range extension due to launch in Q4 2023.

-- New TV advertising campaigns launched for Kelo-Cote in the UK and MacuShield(TM) in Ireland.

-- Significant progress made on brand innovation with further range enhancement expected in Q4 2023 across the consumer healthcare portfolio.

   --      ERP system successfully rolled out into APAC with China roll-out planned for 2024.

-- All scope 1 & 2 emissions for 2022 offset through carbon credits bought in 2023. Work has commenced to fit photovoltaic panels to our headquarters in Chippenham, UK, which is a significant step towards our goal to become net zero for our scope 1 & 2 emissions by 2030.

Commenting on the results, Peter Butterfield, Chief Executive Officer of Alliance, said :

"We are encouraged by the recovery in China and the significant market share gains made by Kelo-Cote, along with the excellent progress of Nizoral, which is now fully under our control. Meanwhile our wider portfolio continues to provide a robust platform from which to grow our Consumer Healthcare brands.

"The second half of 2023 has got off to an encouraging start as we have addressed the regulatory issues and recommenced production of certain products impacted in the first half of the year. Our Kelo-Cote CBEC distributor has begun to place orders and we have contractual agreements in place to secure the future orders required to meet our expectations for full year revenues. We anticipate strong Group sales growth in H2 as our marketing campaigns yield benefits and we launch several new products to grow our market share.

"Our free cash flow is expected to continue to build strongly for the remainder of 2023, and we will continue to reduce our net debt and leverage by the end of the year. The Board's expectation for full year operating performance is unchanged."

* The performance of the Group is assessed using Alternative Performance Measures ("APMs"), which are measures that are not defined under IFRS, but are used by management to monitor ongoing business performance against both shorter term budgets and forecasts and against the Group's longer term strategic plans. APMs are defined in note 17.

Specifically, see-through revenue includes all sales from Nizoral(TM) as if they had been invoiced by Alliance as principal. For statutory accounting purposes the product margin relating to Nizoral sales made on an agency basis is included within Revenue, in line with IFRS 15.

ANALYST MEETING & WEBCAST

A meeting for analysts will be held at 9.30am this morning, 26 September 2023, at Buchanan, 107 Cheapside, London EC2V 6DN. For further details, analysts should contact Buchanan at alliancepharma@buchanan.uk.com .

A live webcast of the analyst meeting will be available at this link:

https://stream.buchanan.uk.com/broadcast/64d35bfa8964824b00aaa7a0

Following the meeting, a replay of the webcast will be made available at the investor section of Alliance's website, https://www.alliancepharmaceuticals.com/investors/

For further information:

 
 Alliance Pharma plc                             + 44 (0)1249 466966 
 Head of Investor Relations: Cora McCallum       + 44 (0)1249 705168 
 ir@allianceph.com 
 
 Buchanan                                       + 44 (0)20 7466 5000 
 Mark Court / Sophie Wills / Hannah Ratcliff 
 alliancepharma@buchanan.uk.com 
 
 Numis Securities Limited (Nominated 
  Adviser and Joint Broker)                     + 44 (0)20 7260 1000 
 Nominated Adviser: Freddie Barnfield 
  / Duncan Monteith / Sher Shah 
 
 
                                       + 44 (0) 20 7597 
 Investec Bank plc (Joint Broker)                  5970 
 Patrick Robb / Maria Gomez de Olea

About Alliance

Alliance Pharma plc (AIM: APH) is a growing consumer healthcare company. Our purpose is to empower people to make a positive difference to their health and wellbeing by making our trusted and proven brands available around the world.

We deliver organic growth through investing in our priority brands and channels, in related innovation, and through selective geographic expansion to increase the reach of our brands. Periodically, we may look to enhance our organic growth through selective, complementary acquisitions.

Headquartered in the UK, the Group employs around 285 people based in locations across Europe, North America, and the Asia Pacific region. By outsourcing our manufacturing and logistics we remain asset-light and focused on maximising the value we can bring, both to our stakeholders and to our brands.

For more information on Alliance, please visit our website: www.alliancepharmaceuticals.com

Trading performance

Overview

The Group delivered see-through(1) revenues of GBP82.4m in the Period (H1 22: GBP81.6m), up 1% versus the prior period and down 2% at constant exchange rates ("CER") when including revenue from our most recent US acquisition (ScarAway and the US rights to Kelo-Cote). S tatutory revenue was 3% above the prior period at GBP81.4m (H1 22: GBP78.8m) and up 1% CER.

Revenue summary

 
 Unaudited six months ended 30 June         2023    2022    Growth     CER 
                                             GBPm    GBPm             growth 
            Kelo-Cote franchise             25.6    22.9       12%        6% 
-----------------------------------------  ------  ------  -------  -------- 
            Amberen                          5.9     7.5      -22%      -27% 
-----------------------------------------  ------  ------  -------  -------- 
            Nizoral*                        11.1     7.9       41%       40% 
-----------------------------------------  ------  ------  -------  -------- 
            Other consumer brands           17.2    19.1      -10%      -12% 
-----------------------------------------  ------  ------  -------  -------- 
    Consumer Healthcare                     59.7    57.4        4%        1% 
-----------------------------------------  ------  ------  -------  -------- 
    Prescription Medicines                  22.7    24.1       -6%       -7% 
-----------------------------------------  ------  ------  -------  -------- 
 See-through revenue*                       82.4    81.6        1%       -2% 
-----------------------------------------  ------  ------  -------  -------- 
 LFL Consumer Healthcare see-through 
  revenue*, excl. ScarAway                  57.1    57.4       -1%       -4% 
-----------------------------------------  ------  ------  -------  -------- 
 LFL see-through revenue*, excluding 
  ScarAway                                  79.8    81.6       -2%       -5% 
-----------------------------------------  ------  ------  -------  -------- 
 
 Statutory revenue - Consumer Healthcare    58.7    54.6        7%        4% 
-----------------------------------------  ------  ------  -------  -------- 
 Statutory revenue - Group                  81.4    78.8        3%        1% 
-----------------------------------------  ------  ------  -------  -------- 
 LFL Consumer Healthcare statutory 
  revenue, excluding ScarAway               56.1    54.6        3% 
-----------------------------------------  ------  ------  -------  -------- 
 LFL Group statutory revenue, excluding 
  ScarAway                                  78.8    78.8        0% 
-----------------------------------------  ------  ------  -------  --------

Consumer Healthcare

Consumer Healthcare revenues of GBP59.7m were up 4% (+1% CER) versus the prior Period (H1 22: GBP57.4m), benefitting from the US acquisition (ScarAway and the US rights to Kelo-Cote) in addition to currency tailwinds. On a statutory basis, reported revenues were 7% above the prior Period at GBP58.7m and up 4% CER.

Excluding the impact of the US acquisition, like-for-like see-through Consumer Healthcare revenue decreased by 1% to GBP57.1m (-4% CER).

Kelo-Cote - scar prevention and treatment

Revenues from the Kelo-Cote franchise rose 12% (6% CER) in the Period to GBP25.6m. Adjusting for the recent acquisition and currency tailwinds, like-for-like revenues for the Kelo-Cote franchise declined 4% mainly due to lower order volumes from our China cross-border e-commerce (CBEC) partner during a period of destocking.

China remains a significant market for Kelo-Cote. Demand for domestic (Chinese label) product continues to increase as our distribution partner opens new retail channels and elective surgeries resume following a hiatus during COVID lockdowns. Whilst the recovery in the cross-border channel is slightly behind our expectations at this stage, our distribution partner remains confident in the long-term outlook and we have extended our distribution agreement which secures our full year revenue expectations, introduces new territories and contains a commitment to prioritise sea freight over air thereby supporting our ESG strategy.

At current market demand, we estimate our distributor will have circa six to eight months of inventory at the year-end. Although this is higher than they previously communicated to us, it is in line with historic levels before COVID and we believe this to be an appropriate stock level given the importance of the brand, the inherent volatility of a large and complex market such as China; and our preference for sea freight.

We continue to work with our cross-border distribution partners to gain further insight into the multiple routes to market for our product and refine our selling strategy accordingly. The B2C e-commerce channel continues to progress well, growing 7% in the 12 months to end of July. Kelo-Cote delivered an exceptionally strong performance in the recent 618 festival in June in China, an online shopping event on TMALL, similar to the Amazon Prime event in the UK in November. Over the course of the online promotional period, Kelo-Cote was the leading scar treatment product and delivered fourth highest sales in the medical device category.

We remain focused on removing counterfeit product from all channels. Through working collaboratively with our distributor and local agencies we have successfully reduced the level of counterfeit product online below 5%, and we believe we have eliminated approximately one quarter of counterfeit sellers in a major offline cosmetics market.

The B2B offline traded market remains challenging. Whilst Kelo-Cote has delivered strong growth through the online institutional trading platforms, there is little visibility or credible market data available to accurately track the development of this offline market. We continue to work closely with our Cross-border partner to optimise sales in this channel.

Domestic China demand continues to be strong with record in-market sales recorded in August.

Outside China, where the scar treatment market is less developed, we have increased marketing investment to raise consumer awareness of scar treatment options and to promote Kelo-Cote. Our first ever outdoor campaign in the UK ran from late February to early April and delivered a 74% increase in sales in the first four months of the year versus the prior period. We are delighted that this campaign was recently recognised as the best Digital Brand Promotion by the Pharmaceutical Marketing Society. This outdoor campaign was followed by a TV advertising campaign that ran through July and August in the UK. Whilst we have yet to fully assess the impact of the campaign, we have seen 19% increase in volumes sold in Q2 2023 versus Q1 2023.

Our latest acquisition, the US rights to ScarAway and Kelo-Cote in March 2022, has created the Group's first fully global brand. The integration of both assets has gone very smoothly with full transition completed in just four months and sales remaining in-line with expectations with scope for further growth and range extensions. Like-for-like ScarAway sales increased 17% in Q2.

We remain on track to deliver over 20% year on year revenue growth for the Kelo-Cote franchise this year.

Amberen - vitamin mineral supplement for the relief of menopause symptoms (US)

Amberen revenues declined 3% CER in the Period, on a like-for-like basis excluding sales from a leading discount store account that was lost in 2022 and have returned to growth in Q2 on the same basis. On a reported basis, Amberen sales were GBP5.9m in the Period (H1 22: GBP7.5m). Alliance is continuing to invest in transitioning Amberen towards the higher growth e-commerce channel and refreshing its marketing campaign and packaging to accelerate this transition.

Performance in H1 23 was hampered by a number of industry wide challenges put in place by Amazon, including a change in billing for warehouse space and a change in price comparison approach leading to the removal of the buy box for a short period. In addition, the perimenopause product was delisted from Amazon for a few months due to an incorrect application of an algorithm that screens advertising claims. However, we overcame these issues and have strengthened the marketing support to mitigate any future problems. We have now launched Amberen in Canada, generating our first sales in the region in August, and are on track with our brand extension plans.

Q4 sees the first of many planned new product range extensions as we introduce a unique gummy formulation of Amberen for the relief of the symptoms of menopause. This is the result of in-house innovation and development (I&D) and is the first gummy in the category. Feedback from our consumer pilot studies and retailers was extremely positive and the product will be available on Amazon and our own DTC platform initially.

We continue to invest in Amberen and remain confident in the longer-term opportunity that this category provides. Whilst growth has returned on a like-for-like basis, the Amazon challenges mean we now anticipate low single-digit growth on a like-for-like basis in 2023.

Nizoral - medicated anti-dandruff shampoo

Nizoral revenues grew strongly in the Period rising 40% CER to GBP11.1m (H1 22: GBP7.9m), reflecting both market share and distribution gains, and the timing of orders in the prior period. Adjusting for the delayed order in June 2022, underlying Nizoral growth was in the low double digits. Our new Chinese distributor has created strong growth opportunities through expanding the brand's reach, supported by our new marketing initiatives and the introduction of updated packaging.

The roll-out of our strategic brand plan for Nizoral is now well underway, with consumer activation campaigns ongoing across a number of key territories where Nizoral commands a market leading position, including Australia, South Korea, Thailand and the Philippines. These campaigns are run in partnership with our local distributors, as part of a growth strategy centred around consumer and healthcare professional activation, e-commerce, and I&D. A new campaign was launched in the top nine cities in China in September focused on recruiting consumers in the twenties demographic.

The performance to date provides confidence to reiterate guidance of high single-digit revenue growth for Nizoral in FY 2023 on a constant currency basis.

Other Consumer Healthcare brands

There was a mixed performance in Other Consumer Healthcare with regulatory delays in some products impacting stock availability in H1 23. As a result, Other Consumer Healthcare revenues declined 10% (12% CER) to GBP17.2m (H1 22: GBP19.1m). Adjusting for the products that were out-of-stock, underlying other consumer healthcare revenues increased 7%, above the average growth rate for the wider consumer healthcare market.

Aloclair(TM) (pain relief for mouth ulcers) revenues were subject to order phasing, falling back 49% CER to GBP2.3m, as the re-certification process required by the transition from the previous Medical Device Directive to the new Medical Device Regulation took longer than anticipated due to the well documented backlogs at notified bodies across Europe. Whilst we had built stock in the market ahead of the transition period, this was depleted during H1 23 leading to the product becoming out of stock in some European markets. The re-certification process is now complete, and manufacturing restarted in August. We anticipate a more regular ordering process from our distributors in the mid-term.

Prescription Medicines

Revenues in our larger prescription medicines brands were encouraging. Hydromol (TM) (an emollient for the treatment of eczema) delivered revenue growth of 13% CER to GBP4.7m, benefitting from strong volume growth and a price increase successfully negotiated towards the end of 2022. Revenues for Forceval (TM) (a multi-vitamin and mineral supplement) increased 12% CER to GBP3.3m, as our campaign to raise awareness and educate clinicians regarding the benefits of our product to support patients with malnutrition has driven market share gains within the National Health Service (NHS). We recently celebrated the fiftieth anniversary of Forceval as a licensed multi-vitamin and mineral supplement available to the NHS.

Regulatory issues impacted some prescription products with total Prescription Medicines revenues down 6% to GBP22.7m (H1 22: GBP24.1m) and down 7% CER. Following a hiatus in regulatory inspections during COVID, inspections restarted in 2023 and a small number of API suppliers lost their certificates whilst necessary remedial actions were implemented. This affected our Flamma franchise (for the treatment of burns), as well as a number of smaller products. All of the affected suppliers have now been re-certified or have firm dates for when manufacturing will restart, such that all products are expected to back in stock in the second half of this year. Excluding the impact of the out-of-stock products, underlying sales grew 4%.

We continue to manage this part of our business actively, to ensure appropriate levels of investment and financial return. Overall cash generation from this portfolio of niche products remains good and, coupled with their limited requirement for promotional investment, this unit continues to play an important part in our overall business.

Profit and loss account

We continued to manage our direct costs well in the Period. Around half of our cost base is related to the price we pay for finished goods, warehousing and distribution with approximately a quarter relating to labour. The remaining 25% comprises around 15% of discretionary marketing spend and 10% fixed overheads.

Changes in revenue mix led to a 530 basis point (bp) decline in gross margin to 56.8% of see-through revenue (H1 22: 62.1%) and a 7% decline in gross profit to GBP46.9m (H1 22: GBP50.6m). Gross margin relative to statutory revenue was 57.6% (H1 22: 64.3%).

We continued our investment in the business in H1 23, improving our operating capabilities and marketing effectiveness provided to a number of our brands, whilst maintaining good cost control through ensuring a targeted approach to spending. Accordingly, underlying operating costs (defined as underlying administration and marketing expenses, excluding depreciation and underlying amortisation charges) remained broadly in line as a proportion of revenue to last year at 34.5% (H1 22: 34.4%) of see-through sales.

This investment was partially offset by a GBP0.5m reduction in the IFRS 2 share options charge to GBP0.5m for the Period (H1 22: GBP1.0m).

Net of the increase in operating costs and reduction in the share options charge, underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased 16.6% in the Period to GBP18.0m (H1 22: GBP21.5m), whilst underlying operating profit (EBIT) decreased by 17.9% to GBP16.3m (H1 22: GBP19.8m). A similar reduction was seen in reported operating profit, which decreased by GBP4.4m to GBP12.2m (H1 22: GBP16.6m).

Net finance costs of GBP6.0m include interest charges of GBP4.3m (H1 22: GBP1.7m) and net exchange losses of GBP1.4m, which represents a significant movement versus the prior period when we recorded an exchange gain of GBP1.9m. With an underlying tax charge of GBP1.8m (H1 22: GBP4.1m) equating to a tax rate of 17.3% (H1 22: 20.8%), underlying basic earnings per share decreased 46% to 1.58p (H1 22: 2.90p).

Cash generation

Free cash flow in the Period was significantly higher than the prior period at GBP11.0m (H1 22: GBP5.1m) and net debt decreased GBP7.5m to GBP94.5m at 30 June 2023 (31 December 2022: GBP102.0m). Group leverage (as at 30 June 2023) was 2.7x (31 December 2022: 2.6x).

Net working capital outflow in the period of GBP0.9m relates to an increase in inventories and trade payables, being partially offset by the timing of receipts from our distributors which resulted in a strong reduction in trade receivables. Overall, cash generated from operations was GBP17.2m (H1 22: GBP8.4m), a 105% increase on the same period last year.

We continue to expect Group revenues, including the Kelo-Cote franchise, to build throughout H2, driving strong gross margin improvement and substantial EBITDA expansion, underpinning the Board's expectations of a strong second half performance. Net debt and Group leverage are both expected to fall materially in H2, reflecting the Group's strong cash generation, and Group leverage is expected to be below 2.0x by the end of the year.

Dividend

We acknowledge the 37.52% vote against the final dividend for 2022 at the recent AGM held in May 2023. As part of a wider stakeholder engagement the Board has subsequently engaged with shareholders, representing 60% of the share register, to understand their views on dividends. In response to their feedback the Board has decided to pause the interim dividend whilst it develops a new dividend policy with greater emphasis on reinvestment in the business to drive growth. Our clear intention is to continue to pay dividends as we feel this demonstrates strong financial discipline. Further detail of this new policy will be provided in the preliminary results statement in March 2024.

Innovation and development (I&D)

We continue to actively invest in our business to maintain strong organic revenue growth and are committed to spending some GBP1m-GBP2m per annum on I&D with a view to generating 10% of net consumer sales from new product innovation in the future. The investment we have made in our Innovation and Development (I&D) team is beginning to deliver. We now have a number of projects in the pipeline, some of which were launched, or will launch, in 2023, providing potential for significant organic growth in future years.

Canker-X (pain relief for mouth ulcers) was launched in the US in January 2023 and is on track to deliver $1m in net revenues in under 12 months. It has gained good distribution momentum both online (Amazon) and in bricks and mortar (Walgreens, RiteAid) with a number of additional retailers interested in stocking the range. We anticipate annual net sales potential in the low single million dollars.

Following the successful launch of Kelo-Cote Kids in China in 2022, we launched this product in the UK in an Amazon exclusive in March 2023. This launch has been supported by digital activity utilising assets designed for global use. We expect to introduce the Kids formulation in Germany and the US (under the ScarAway brand) in Q1 2024.

As previously indicated, we launched Kelo-Cote scar sheets in the China cross border market on the TMALL flagship store in May 2023 in a strategy designed to generate positive reviews ahead of the important 618 festival in June. We also launched scar sheets for the treatment of caesarean section scars in the UK exclusively with Amazon and have generated promotional content which will be live on Amazon soon.

Operational and corporate developments

The development of our global ERP platform continued with the successful roll-out of our system in APAC (ex China). Following this go-live, the Group now operates a single-instance ERP platform in the EMEA, US and now APAC (ex China) with the final phase, the final roll out to our operations in China, planned for next year. In the Period we also completed various projects to help improve our ERP Finance and Supply Chain processes and leverage the efficiency benefits of a single business platform.

In August we successfully completed the refinancing of our Revolving Credit Facility, which was scheduled to mature in July 2024. The facility was agreed with the Group's existing syndicate of supportive relationship banks. Through the refinancing we took the opportunity to resize and reduce the total committed facility by GBP15m to GBP150m, whilst increasing the Accordion by GBP15m to GBP65m. The covenants include a net leverage (the ratio of net bank debt to EBITDA) and interest cover (the ratio of EBITDA to finance charges) test. The facility is available until August 2026, with two further one-year extension options.

Our involvement in the appeal against the Competition and Markets Authority ("CMA") decision regarding anti-competitive behaviours in relation to four companies has now completed. The Competition Appeal Tribunal panel will now consider the evidence presented during the tribunal and we anticipate the Panel to reach their conclusion by the end of 2023.

Continuing our sustainability journey

We continue to make good progress on our sustainability journey, publishing our first voluntary stand-alone TCFD report for 2022 in May 2023. We also created an online sustainability report to accompany the publication of our Annual Report in March as we strive to improve further the communication of our sustainability strategy.

Throughout this year we have focused on developing our social and governance strategies. We have partnered with the Slave-Free Alliance (SFA), an independent charity founded in the UK in 2018 that supports organisations that are committed to slave-free business operations and supply chains. The SFA is a social enterprise wholly owned by Hope for Justice, an international charity founded in 2008. Hope for Justice runs prevention programmes, rescue, advocacy and aftercare services to restore victims' lives and works with government and organisations to reform society.

The SFA have provided bespoke workshop-based modern slavery training to our quality and sourcing chain teams to help these teams better identify modern slavery "red flags" during quality audits and supplier site visits.

The SFA has also conducted a gap analysis of our modern slavery mitigations and policies, and we will be working to implement their recommendations in H2 23 and beyond.

In addition, this year Alliance has appointed a new e-learning provider to deliver "gamified", engaging compliance training to our colleagues, including data protection, unconscious bias, modern slavery, anti-bribery and corruption and competition awareness training.

We implemented a partner code of conduct in 2022 and, throughout this year, have worked to ensure that our Contract Manufacturing Organisations (CMOs) and distributors agree to comply with our code. To date 88% of our CMOs have returned a signed code of conduct and we are aiming to reach 100% by year end.

We have also introduced an employee code of conduct, which includes a section on our speak up policy. To support this, we have engaged Safecall, an independent reporting helpline to allow colleagues and external partners to raise concerns anonymously from over 100 countries. The service is operational for 24 hours a day, seven days a week, and available in over 60 languages.

In August we commenced work to install photovoltaic panels on the roof of our award-winning headquarters in Chippenham, UK. This program of work also includes the installation of a new, more efficient substation and electric vehicle charging points. The work is expected to complete in January 2024, allowing us to generate our own electricity, which is a significant step towards our goal to become net zero for our scope 1 & 2 emissions by 2030. Furthermore, we have purchased carbon credits to offset the scope 1 and 2 carbon emissions we generated in 2022. We have deliberately selected carbon offset projects which align with our sustainability development goals, focusing on reforestation projects that also include local community education and support.

For further detail, please see the Sustainability section of our website.

Board changes

As previously announced, and in line with good corporate governance, David Cook stepped down as Alliance's Chair following the AGM in May 2023. David served on the Board for nine years and was replaced by Jo LeCouilliard, an Independent Non-executive Director of Alliance. Jo joined the Alliance Board on 1 January 2019, bringing more than 25 years of international healthcare management experience through her career at GlaxoSmithKline where, amongst other roles, she headed the US vaccines business and the Asia Pacific Pharmaceuticals business.

In February 2023 we welcomed Jeyan Heper to the Alliance Board as an executive in the newly created role of Chief Operating Officer. Jeyan has a strong track record of strategic leadership in the international consumer health market, overseeing a number of global programs and driving growth in flagship brands. In his career spanning more than 25 years Jeyan has held senior executive roles at Procter & Gamble, Danone Group and Ansell's sexual wellness global business, before it was spun-out to become Lifestyles Healthcare, a private equity/pharma-owned company where Jeyan became CEO.

Jeyan is helping to bolster the Group's operational capabilities, identify growth opportunities, and help drive the Company's strategy to expand its consumer health presence through leveraging his experience of e-commerce in China and the US, and improving operational effectiveness.

The Board was strengthened further by the appointment of Martin Sutherland as an additional Independent Non-Executive Director in February 2023. Martin is a senior executive with over 30 years' experience in global businesses and is currently a Non-Executive Director at Forterra plc and Non-executive Chair of Logiq Consulting Ltd. Prior to this, Martin was CEO of De La Rue PLC. Martin has a proven track record of delivering growth through new product innovation, market diversification and international expansion.

Martin's experience brings a new perspective to complement the strong consumer healthcare knowledge already present on the board.

Current trading and outlook

The second half of 2023 has got off to an encouraging start with trading in-line with expectations. We anticipate strong growth in H2 as Kelo-Cote revenues continue to build, we recommence supply of products that have been out of stock and launch new product innovation. The Board's expectation for Group year-end performance remains unchanged.

   Peter Butterfield                                                 Andrew Franklin 
   Chief Executive Officer                                        Chief Financial Officer 
   26 September 2023                                            26 September 2023

UNAUDITED CONSOLIDATED INCOME STATEMENT