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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.95 | -2.55% | 36.30 | 36.50 | 36.55 | 37.85 | 36.00 | 37.05 | 461,586 | 16:35:10 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pharmaceutical Preparations | 167.42M | 936k | 0.0017 | 214.71 | 197.15M |
TIDMAPH
RNS Number : 9971I
Alliance Pharma PLC
27 March 2018
Hot Features
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27 March 2018
ALLIANCE PHARMA PLC
("Alliance" or the "Group")
Results for the year ended 31 December 2017
Alliance Pharma plc (AIM: APH), the international specialty pharmaceutical company, is pleased to announce its results for the year ended 31 December 2017.
Financial Highlights
-- Revenue up 6% to GBP103.3m (2016: GBP97.5m)
o FX effect approximately GBP2.7m, up 3% on constant currency basis
-- EBITDA* up 3% to GBP26.8m (2016: GBP26.0m) -- Reported pre-tax profit up 28% to GBP28.4m (2016: GBP22.2m)
o Underlying pre-tax profit up 8% to GBP24.0m (2016: GBP22.2m)
-- Reported basic EPS up 58% to 6.10p (2016: 3.85p) including the impact of the Sinclair settlement income and the effect of tax rate changes, primarily in the US
o Underlying adjusted basic EPS* up 10% to 4.06p (2016: 3.69p)
-- Free cash flow* up 67% to GBP21.7m (2016: GBP13.0m) -- Net bank debt* of GBP72.3m (2016: GBP76.1m)
o A reduction in net debt despite the GBP16.0m investment in acquisitions
o Leverage at year end of 2.46 times (Adjusted net debt to EBITDA ratio)
-- Proposed dividend:
o Final dividend up 10% to 0.888p per share (2016: 0.807p)
o Full year dividend up 10% to 1.331p per share (2016: 1.210p)
* For definitions of non IFRS alternative performance measures see note 16
Operational Highlights
-- Strong organic performance, driven by our International Star brands
o Kelo-cote(TM) , our scar reduction brand, grew 34% to GBP13.3m (2016: 10.0m)
o MacuShield(TM) , the No.1 macular pigment supplement recommended by eye experts, grew 38% to GBP7.3m (2016: GBP5.3m)
-- Agreed a settlement in March 2017 with Sinclair, including GBP5.0m cash compensation, in relation to the material reduction of business in Kelo-stretch(TM)
-- Acquisition of Vamousse(TM) in December 2017, adding a third International Star brand and creating a US operation for the Group
-- Acquisition of Ametop(TM) in December 2017 to complement our Bedrock portfolio
-- Now a GBP100m+ revenue business involving operations on three continents, with good progress in Asia Pacific through our distributor network
Commenting on the results, David Cook, Alliance's Chairman, said:
"Following a transformational year in 2016 in which the Sinclair Healthcare Products business was integrated into the Group, the business has delivered strongly in 2017. The strength of cash generation, coupled with the opportunities from our International Star brands, means we are well positioned to pursue growth both organically and through further acquisitions in 2018.
"The year has started well, including the establishment of a US affiliate, and we look forward to leveraging our expanded footprint."
For further information:
Alliance Pharma plc + 44 (0) 1249 466966
John Dawson, Chief Executive
Peter Butterfield, Deputy
Chief Executive Officer
Andrew Franklin, Chief Financial
Officer
www.alliancepharma.co.uk
www.alliancepharma.co.uk
+ 44 (0) 20 7466
Buchanan 5000
Mark Court / Sophie Wills
/ Gemma Mostyn-Owen
+ 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
Alliance Pharma plc is an international specialty pharmaceutical company.
Headquartered in Chippenham, UK, Alliance commenced trading in 1998 and has been listed on AIM since 2003. Alliance has a strong track record of acquiring established niche products and it currently owns or licenses the rights to approximately 90 pharmaceutical and consumer healthcare products. It has sales in more than 100 countries either directly via its affiliates or through its selected network of distributor partners. 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 Review
After another year's strong performance we have exceeded GBP100m of revenue for the first time, marking an important milestone in the development of the Group.
Performance by region
UK and Republic of Ireland
Sales in our largest market grew to GBP56.3m, an increase of 4% on a like-for-like basis, driven primarily by MacuShield, which responded well to increased marketing investment and wider distribution, to achieve sales of GBP6.2m (2016: GBP4.6m). Similarly, Kelo-cote performed well during the year, with our renewed focus on the brand generating 38% growth to GBP0.8m. Sales of Hydromol(TM) remained static at GBP7.0m as the emollient market slowed considerably.
Other highlights include our Local Hero brand Lypsyl(TM) , which grew by 32% to GBP1.2m, as a result of a product refresh and increased marketing effort.
Mainland Europe
In aggregate, the sales in our direct European territories (France, Germany, Switzerland, Austria, Italy, Spain and Portugal) were up 2% to GBP20.6m (decreasing by 4% on a constant currency basis relative to 2016). We saw a strong performance from Kelo-cote of GBP3.2m (2016: GBP1.4m), particularly since we repatriated our distribution agreements in France and Italy, but this was offset by distributor stocking patterns in Spain and Italy, primarily for Aloclair(TM) , as we completed livery changes. We are working to solidify our position in these markets. We will evaluate opportunities to introduce Vamousse where appropriate and continue to analyse further acquisition prospects to leverage our footprint.
International
We were particularly pleased with our sales in our International business, which grew by 13% to GBP26.4m compared with 2016 (7% on a constant currency basis). Asia Pacific was the primary engine of growth, with sales increasing by 35% (28% in constant currency) thanks to robust sales of Kelo-cote and Aloclair through our distribution partners. Our Chinese business saw sales grow by 61% (54% in constant currency), with Kelo-cote the principal driver.
Strategy
Our Buy & Build model continues to perform well, providing growth, profitability and cash generation.
A key part of the model is our portfolio strategy. We segment out our high growth International Star brands as the top priority for promotional investment. These are Kelo-cote, our patented scar reduction product, and MacuShield, our supplement product that replenishes the layer of protective pigment on the macula, a critical region at the back of the eye. MacuShield is the No.1 macula pigment supplement recommended by UK eye experts. Following the acquisition at the end of 2017, we now have a third International Star brand in Vamousse, a novel, naturally based, pesticide-free treatment for headlice. Each of these products has international potential. Their individual marketing strategies are created centrally and adapted locally to suit different therapeutic and cultural approaches to treatment.
Vamousse is of special strategic relevance in that it was developed in the US, where it records over 80% of its current sales. Acquiring Vamousse has enabled us to establish a low-risk entry into the world's largest healthcare market with immediate profitability. This will undoubtedly allow us to benefit from further opportunities as we establish ourselves in this major market. Vamousse also has good UK sales, and the brand fits neatly into our existing UK OTC portfolio.
As well as our International Stars, we have several Local Heroes which are national growth brands that excel in one or two markets without necessarily having broader global potential. Examples are Hydromol, our UK dermatology brand; Aloclair, our brand for mouth ulcers that performs very well in Italy and Spain; and Oxyplastine(TM) , a well-known nappy rash product in France and francophone Africa.
Of fundamental importance for providing profitability and cash contribution are our numerous Bedrock products. This part of the portfolio contains around 70 of our 90 brands and provides around 50% of our sales, providing a sustainable base for the business. These products are very well established in market niches and need minimal promotional support. Our Bedrock products were recently boosted by the acquisition of Ametop from Smith & Nephew in December 2017. Ametop is a well-established and widely used local anaesthetic gel, used on the skin prior to injections or cannulations.
We continue to work with the Medicines and Healthcare products Regulatory Agency (MHRA) on Diclectin(TM) , a treatment for nausea and vomiting of pregnancy. We in-licensed the product from the Canadian group, Duchesnay Inc., for the UK in 2015 and for a further nine European territories in 2016. Working with Duchesnay, we believe that we are making good progress in resolving some of the issues initially expressed by the regulator in July 2017. We expect to have more clarity on the regulatory position within the next few months. There are currently no licensed treatments for nausea and vomiting of pregnancy in the UK, highlighting a clear unmet medical need. If approved, Diclectin would represent a sizeable mid-term opportunity, once the initial marketing investments have paid back.
Over and above our organic growth opportunities, we will continue to look for good bolt-on acquisitions that will further enhance our growth. Our ability to conclude such acquisitions is facilitated by our strong cash generation and our falling debt leverage position, as outlined in our financial review. Our ability to integrate acquisitions has been finely honed through 35 deals in the past 20 years.
Operations
Our new enterprise resource planning system, Microsoft AX, is anticipated to be operational by the end of 2018. By bringing several legacy systems onto a single platform that will handle all our financial and supply chain planning and fulfilment activities, this will streamline our processes and provide a scalable platform as we pursue further growth.
We continue to keep a close eye on the unfolding situation with regards to Brexit. Many of our licences for medicines were granted on a national basis, so will remain unaffected. However, we are taking proactive steps to ensure that our regulatory, pharmacovigilance and quality functions can continue to operate effectively in the post Brexit environment. The presence of our European affiliates affords us a good degree of optionality in this respect and we expect minimal changes to our operational cost base as a result.
Working in conjunction with our contract manufacturers, we are also well advanced in our preparations to upgrade our product packs and distribution systems to comply with the forthcoming obligations of the EU Falsified Medicines Directive legislation (FMD), which is designed to prevent counterfeit medicines reaching patients.
People
At Board level, Peter Butterfield was appointed Chief Operating Officer in June 2017, to add to his duties as Deputy Chief Executive. This shift in responsibilities has allowed John Dawson to be able to focus more on outward-facing initiatives, and Peter to continue the transition to CEO. In March we announced that following this planned transition period, Peter will step into the CEO role from the 1 May 2018 and John will become a Non-executive Director. Peter has almost 20 years of commercial and operational healthcare experience, the last eight being spent at Alliance. The Chairman, Andrew Smith, stepped down from the Board on 1 March 2018, and was succeeded by David Cook, who has been a Non-executive Director of the Company for almost four years.
We thank Andrew for his valuable contribution to the Company over the past eleven years that has seen our underlying PBT grow from GBP0.5m to GBP24.0m and our market capitalisation from GBP22m to GBP320m.
To complement our internal promotions, during the year we appointed several external candidates to round out the Group's capabilities. These included Amanda Sicvol, our General Manager for the US market, who joined Alliance Pharma with the acquisition of Vamousse; Chris Delafield, who joined us from Sanofi as the new Global Marketing Head for Kelo-cote; and Chris Chrysanthou, who joined us from Fladgate LLP to create our own in-house commercial legal function.
The performance of the business is built upon the hard work of our valued employees, and we wish to thank all our people for their dedication and contributions to the success of the Group. In addition to our ongoing investment in training and development, in the last couple of years we have enhanced our working environments, with significant refurbishment of our offices in Chippenham, as well as new offices in Madrid, Singapore, and - most recently - in the United States with the establishment of Alliance Pharma Inc. in Cary, North Carolina.
We are delighted to report that in our most recent survey, we received our highest ever rating on employee engagement and look forward to continuing our efforts to make Alliance a great place to work and an employer of choice.
Financial review
Group performance
The Group achieved a strong financial performance with revenue increasing 6% to GBP103.3m (2016: GBP97.5m) and underlying profit before tax increasing 8% to GBP24.0m (2016: GBP22.2m).
The Group's revenue was enhanced by approximately GBP2.7m due to the weakening of Sterling, primarily against the Euro and US Dollar. However, the effect on operating profits was much lower at approximately GBP0.3m due to the natural Euro hedge that exists, whereby Euro-denominated movements in sales are matched by corresponding movements in Euro-denominated cost of goods and operating costs.
Gross profit increased at a faster rate than revenue, increasing 8% to GBP59.0m (2016: GBP54.8m), resulting in a gross margin up 0.8% for the year to 57.1% (2016: 56.3%). The increase in margin percentage resulted from the performance of our International Star growth brands, Kelo-cote and MacuShield, and we expect this trend to continue in 2018.
As planned, the Group increased investment in sales and marketing during 2017, focusing on our International Stars to support sales growth; this additional spend resulted in an increase in administration and marketing costs (excl. depreciation and amortisation) of GBP2.4m to GBP30.8m, representing 29.8% of sales. The IFRS2 share options charge also increased from GBP0.7m to GBP1.5m following the increased number of employees resulting from the Sinclair acquisition.
Earnings before interest, taxes, depreciation and amortisation (EBITDA), as per note 16, increased by 3% to GBP26.8m (2016: GBP26.0m). Excluding the IFRS2 share options charge, EBIDTA increased by 6% to GBP28.2m (2016: GBP26.7m), maintaining its ratio of 27% of sales.
Finance cost
Finance costs reduced by GBP1.6m on the prior year to GBP1.8m (2016: GBP3.4m), due to a reduction in overall gross debt and a release of GBP0.6m estimated deferred consideration (2016: GBP0.8m charge).
The average interest charge on gross debt during the year was 2.96%.
Taxation
The total tax credit for the year of GBP0.5m (2016: GBP4.1m tax charge) is due to several events occurring in 2017: the enacted reduction in Corporate Income Taxes in the US and France reducing our deferred tax balances relating to intangible assets held in these jurisdictions, and the GBP5.0m compensation from Sinclair in respect of Kelo-Stretch. As detailed in note 16, excluding the impact of these events and the residual impact of the UK tax rate reduction results in a revised underlying tax charge of GBP4.8m, representing an effective tax rate (ETR) of 19.8%. This revised ETR is in line with expectations and better reflects the Group's underlying ETR for the foreseeable future.
Sinclair settlement
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, acquired in 2015. The terms of the compensation agreement were a GBP4.0m cash payment to Alliance (received in April 2017) and a deferred cash payment of a further GBP1.0m to be paid on or before 30 June 2018.
Net compensation of GBP4.4m is recognised as non-underlying exceptional income in the Income Statement, representing the GBP5.0m settlement net of an impairment charge for Kelo-Stretch and associated costs totalling GBP0.6m.
Earnings per share
Reported basic earnings per share increased 58% to 6.10p (2016: 3.85p) due primarily to the Sinclair settlement and the impact of the reduction in the US tax rate.
Adjusting underlying basic earnings per share to exclude non-underlying items and the effect of tax rate changes, this metric increased by 10% to 4.06p (2016: 3.69p). The increase reflects the Group's higher underlying profit after tax and is the measure used by the Board and Management in assessing earnings performance.
Intangible assets
Intangible assets increased by GBP13.8m to GBP278.6m (2016: GBP264.8m) due to the acquisition of the worldwide rights to Ametop announced on 1 December 2017 for $7.5m (GBP5.6m); the acquisition of the worldwide rights to Vamousse announced on 28 December 2017 for estimated consideration of $15.5m (GBP11.6m); and GBP0.5m of development costs; less foreign exchange adjustments of GBP3.4m; and also less the GBP0.5m impairment for Kelo-Stretch described above.
Cash flow and net debt
Demonstrating the strong cash generation of the Group, free cash flow (defined as cash generated from operating activities (excluding non-underlying items) less interest, tax and capital expenditure) increased 67% in 2017 to GBP21.7m (2016: GBP13.0m).
The increase is driven by the trading strength of the Group and the stabilising of working capital in 2017 following its build-up in 2016 after the Sinclair acquisition.
The Group's strong underlying cash generation, together with the GBP4.0m settlement claim receipt from Sinclair, resulted in a reduction in the Group's net debt to GBP72.3m as at 31 December 2017 (31 December 2016: GBP76.1m) despite the GBP16.0m investment in acquisitions.
Consequently, adjusted net debt/EBITDA leverage fell to 2.46 times (2016: 2.83 times) against our covenant limit of 3.0 times (31 December 2016: 3.0 times). As announced in December, we renegotiated our banking covenants, and our net debt to EBITDA covenant has been relaxed from 2.5x to 3.0x for the life of the agreement through to December 2020. Excluding the acquisitions completed in December 2017, our leverage at 31 December 2017 would have been 2.06 times.
Based on current business performance and excluding any acquisitions we may make during the year, we expect leverage to continue to reduce during 2018 to below 2.0 times by the end of the 2018 financial year.
The Group has total bank facilities of GBP100.0m of which GBP50.3m (31 December 2016: GBP66.5m) was drawn on the Term Loan with GBP34.0m (31 December 2016: GBP18.0m) utilised from the Revolving Credit Facility. In addition to this, the Group also has access to a GBP4.5m working capital facility, which was undrawn at 31 December 2017, and an additional undrawn GBP25.0m facility available with bank approval.
Dividend
The Directors propose to maintain the progressive dividend policy and are recommending a final payment of 0.888p per ordinary share to give a total for the year of 1.331p. This represents an increase of 10% on 2016.
The final dividend, subject to approval at the Company's AGM on 24 May 2018, will be paid on 11 July 2018 to shareholders on the register on 15 June 2018.
The level of dividend cover in 2017 remained prudent at over three times. The total dividend payment for the 2017 financial year will be GBP6.3m, including the GBP2.1m interim payment.
Outlook
We ended the year strongly, with good levels of organic growth complemented by the two acquisitions made at the close of the financial year. We see exciting prospects for our newly acquired brand Vamousse, which alongside Kelo-cote and MacuShield increases the growth capacity of the International Star section of our portfolio.
Our geographic operations have been greatly enhanced by the creation of our new affiliate in the US, the world's largest healthcare market, where in the medium term we anticipate finding further good opportunities.
Our strong cash generation and access to debt capital give us firepower to make further acquisitions, in line with our proven strategy, and should we achieve a favourable regulatory outcome in relation to Diclectin, this would further enhance our growth prospects.
We are now a business with more than GBP100m of revenues, an international geographical presence and a strong, capable and ambitious management team. We have the scale and infrastructure in place for further growth and we look forward to the future with great confidence.
Consolidated Income Statement
Year ended Year ended
31 December 31 December
2017 2016
-------------------- ---- ------------
Non-Underlying Non-Underlying
(note (note
Underlying 4) Total Underlying 4) Total
Note GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Revenue 2 103,315 - 103,315 97,492 - 97,492
Cost of sales (44,354) - (44,354) (42,643) - (42,643)
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Gross profit 58,961 - 58,961 54,849 - 54,849
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Operating expenses
Administration and
marketing expenses (31,706) - (31,706) (28,842) - (28,842)
Share-based employee
remuneration (1,453) - (1,453) (696) - (696)
Share of Joint
Venture
profits 19 - 19 299 - 299
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
(33,140) - (33,140) (29,239) - (29,239)
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Operating profit
excluding
exceptional
item
Net exceptional 25,821 - 25,821 25,610 - 25,610
compensation
income 4 - 4,356 4,356 - - -
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Operating profit 25,821 4,356 30,177 25,610 - 25,610
Finance costs
Interest payable
and similar charges 5 (3,064) - (3,064) (3,355) - (3,355)
Change in deferred
consideration 5 618 - 618 (840) - (840)
Finance income 5 638 - 638 804 - 804
(1,808) - (1,808) (3,391) - (3,391)
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Profit before
taxation 3 24,013 4,356 28,369 22,219 - 22,219
Taxation 6 1,305 (764) 541 (4,127) - (4,127)
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Profit for the year
attributable to
equity
shareholders 25,318 3,592 28,910 18,092 - 18,092
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
Earnings per share
Basic (pence) 5.34 6.10 3.85 3.85
Diluted (pence) 5.28 6.03 3.82 3.82
-------------------- ---- ------------ ---------------- ------------ ------------ ---------------- ------------
All of the activities of the Group are classed as continuing.
Consolidated Statement of Comprehensive Income
Year ended Year ended
31 December 31 December
2017 2016
GBP000s GBP000s
---------------------------------- ------------- -------------
Profit for the year 28,910 18,092
Other comprehensive income
Items that may be reclassified
to profit or loss
Net foreign exchange (loss)/gain
on investment in foreign
subsidiaries (net of hedged
items) (1,718) 2,076
Interest rate swaps - cash
flow hedge (net of deferred
tax) 202 (221)
Total comprehensive income
for the year 27,394 19,947
------------------------------------ ------------- -------------
Consolidated Balance Sheet
31 December 31 December
2017 2016
Note GBP000s GBP000s
----------------------------- ---- ----------- -----------
Assets
Non-current assets
Goodwill and intangible
assets 7 278,623 264,833
Property, plant and
equipment 3,377 1,806
Joint Venture investment 1,483 1,464
Joint Venture receivable 1,462 1,462
Deferred tax asset 2,174 1,709
Other non-current
assets 229 180
287,348 271,454
Current assets
Inventories 8 14,248 15,356
Trade and other receivables 9 23,695 26,706
Cash and cash equivalents 10 11,184 7,221
49,127 49,283
Total assets 336,475 320,737
----------------------------- ---- ----------- -----------
Equity
Ordinary share capital 4,750 4,726
Share premium account 110,252 109,594
Share option reserve 5,073 3,306
Reverse takeover reserve (329) (329)
Other reserve (117) (319)
Translation reserve 390 2,108
Retained earnings 83,358 60,177
----------------------------- ---- ----------- -----------
Total equity 203,377 179,263
Liabilities
Non-current liabilities
Loans and borrowings 12 41,780 57,554
Other liabilities 13 3,525 1,817
Deferred tax liability 26,920 31,442
Derivative financial
instruments 63 384
----------------------------- ---- ----------- -----------
72,288 91,197
Current liabilities
Loans and borrowings 12 41,719 25,782
Corporation tax 2,436 2,543
Trade and other payables 11 16,576 21,952
Derivative financial
instruments 79 -
60,810 50,277
Total liabilities 133,098 141,474
Total equity and liabilities 336,475 320,737
----------------------------- ---- ----------- -----------
Consolidated Statement of Changes in Equity
Ordinary Share Reverse Share
share premium takeover Other Translation option Retained Total
capital account reserve reserve reserve reserve earnings equity
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance 1 January
2016 4,682 108,308 (329) (98) 32 2,610 47,237 162,442
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Issue of shares 44 - - - - - - 44
Share premium - 1,286 - - - - - 1,286
Dividend paid - - - - - - (5,152) (5,152)
Share options
charge - - - - - 696 - 696
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Transactions
with owners 44 1,286 - - - 696 (5,152) (3,126)
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Profit for the
period - - - - - - 18,092 18,092
Other comprehensive
income
Interest rate
swaps - cash
flow hedge (net
of deferred tax) - - - (221) - - - (221)
Foreign exchange
translation differences - - - - 2,076 - - 2,076
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Total comprehensive
income for the
period - - - (221) 2,076 - 18,092 19,947
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Balance 31 December
2016 4,726 109,594 (329) (319) 2,108 3,306 60,177 179,263
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Balance 1 January
2017 4,726 109,594 (329) (319) 2,108 3,306 60,177 179,263
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Issue of shares 24 - - - - - - 24
Share premium - 658 - - - - - 658
Dividend paid - - - - - - (5,729) (5,729)
Share options
charge (including
deferred tax) - - - - - 1,767 - 1,767
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Transactions
with owners 24 658 - - - 1,767 (5,729) (3,280)
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Profit for the
period - - - - - - 28,910 28,910
Other comprehensive
income
Interest rate
swaps - cash
flow hedge (net
of deferred tax) - - - 202 - - - 202
Foreign exchange
translation differences - - - - (1,718) - - (1,718)
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Total comprehensive
income for the
period - - - 202 (1,718) - 28,910 27,394
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Balance 31 December
2017 4,750 110,252 (329) (117) 390 5,073 83,358 203,377
-------------------------- --------- --------- ---------- --------- ------------ --------- ---------- --------
Consolidated Cash Flow Statement
Year ended Year ended
31 December 31 December
2017 2016
Note GBP000s GBP000s
---------------------------------- ---- ------------ ---------------
Cash flows from operating
activities
Cash generated from operations 14 30,311 19,957
Tax paid (3,728) (3,032)
Cash flows from operating
activities 26,583 16,925
---------------------------------- ---- ------------ ---------------
Investing activities
Interest received 104 111
Dividend received - 300
Investment in subsidiary - -
Development costs capitalised 7 (459) (266)
Purchase of property, plant
and equipment (2,236) (1,130)
Loan to Joint Venture 154 (1,018)
Exceptional compensation
income 4 4,000 -
Consideration on acquisitions (15,314) (1,289)
Deferred contingent consideration
on acquisitions (2,161) (4,737)
---------------------------------- ---- ------------ ---------------
Net cash from investing
activities (15,912) (8,029)
---------------------------------- ---- ------------ ---------------
Financing activities
Interest paid and similar
charges (2,678) (2,822)
Loan issue costs - (326)
Proceeds from exercise
of share options 682 1,330
Dividend paid (5,729) (5,152)
Receipt from borrowings 16,000 8,000
Repayment of borrowings (14,730) (6,495)
Net cash received from
financing activities (6,455) (5,465)
---------------------------------- ---- ------------ ---------------
Net movement in cash and
cash equivalents 4,216 3,431
---------------------------------- ---- ------------ ---------------
Cash and cash equivalents
at 1 January 2017 7,221 3,198
Exchange (loss)/gain on
cash and cash equivalents (253) 592
---------------------------------- ---- ------------ ---------------
Cash and cash equivalents
at 31 December 2017 10 11,184 7,221
---------------------------------- ---- ------------ ---------------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 31 December 2017 or 31 December 2016. The auditors reported on those accounts; their report was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for the year ended 31 December 2017 have not yet been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2016 were delivered to the Registrar of Companies on 14 June 2017.
2. Segmental reporting
Operating segments
The Group is engaged in a single business activity of pharmaceuticals. The Group's pharmaceutical business consists of the marketing and sales of acquired products. The Group's Board of Directors ("the Board") is the Group's Chief Operating Decision Maker ("CODM"), as defined by IFRS 8, and all significant operating decisions are taken by the Board. In assessing performance, the Board reviews financial information on an integrated basis for the Group, substantially in the form of, and on the same basis as, the Group's IFRS financial statements.
Geographical information
The following revenue information is based on the geographical location of the customer:
Year ended
Year ended 31 December 31 December
2017 2016
GBP000s GBP000s
United Kingdom 52,355 49,411
Rest of Europe 29,982 29,006
Rest of the World 20,978 19,075
-------------------- ----------------------------------------------------------------- ------------
103,315 97,492
------------------ ----------------------------------------------------------------- ------------
Non-current assets are located within the United Kingdom, France, Italy and the United States of America.
Major customers
During the year there were 2 customers who separately comprised 10% or more of revenue (year ended 31 December 2016: 1).
Year ended 31 December Year ended 31
2017 December 2016
GBP000s GBP000s
Major customer
1 22,542 17,660
Major customer
2 10,597 9,406
33,139 27,066
--------------- ------------------------------------------------------- --------------
3. Profit before taxation
Profit before taxation is stated after charging/(crediting):
Year ended
31 December Year ended 31
2017 December 2016
GBP000 GBP000
---------------------------------------- ------------------- --------------
Fees payable to the Company's
auditor for the audit of the Company's
annual accounts 26 25
Fees payable by the Group to the
Company's auditor for other services:
- The audit of the financial statements
of subsidiaries 105 103
- Corporate finance services (either
proposed or entered into) by or
on behalf of the Company or any
of its associates 57 -
Amortisation of intangible assets 276 92
Impairment of intangible assets 507 -
Share options charge 1,453 696
Depreciation of plant, property
and equipment 657 337
Operating lease rentals - land
and buildings 769 518
Research and development 169 91
Gain on foreign exchange transactions (534) (693)
---------------------------------------- ------------------- --------------
4. Non-underlying and exceptional items
Non-underlying items are those significant items which the Directors consider, by their nature, are not related to the normal trading activities of the Group. They are therefore separately disclosed as their significant, non-recurring nature does not allow a true understanding of the Group's underlying financial performance. Exceptional items, including settlements and impairments of intangible assets, are also shown as non-underlying items. The non-underlying and exceptional items relate to the following:
Year ended Year ended
31 December 31 December
2017 2016
GBP000s GBP000s
------------------------------------- ------------ ------------
Exceptional compensation income 5,000 -
Associated costs (137) -
Associated impairment of intangibles (507) -
Net exceptional compensation income
before taxation 4,356 -
------------------------------------- ------------ ------------
In March 2017, the Group reached a settlement agreement with Sinclair Pharma plc, in connection with the material reduction of business in Kelo-stretch, which was acquired in 2015. The terms of the agreement included a sum of GBP5.0m of which GBP4.0m was paid in 2017 and GBP1.0m is due on or before 30 June 2018. This settlement less associated costs and impairment (note 7) are shown as exceptional items.
5. Finance costs
Year ended
31 December Year ended 31
2017 December 2016
GBP000s GBP000s
---------------------------------------------------------- ------------ --------------
Interest payable and similar charges
On loans and overdrafts (2,719) (2,868)
Amortised finance issue costs (303) (358)
Notional interest (42) (129)
---------------------------------------------------------- ------------ --------------
(3,064) (3,355)
Change in fair value of deferred consideration 618 (840)
---------------------------------------------------------- ------------ --------------
Finance income
Interest income 104 111
Other finance income - foreign exchange movements 534 693
638 804
Finance costs - net (1,808) (3,391)
---------------------------------------------------------- ------------ --------------
Notional interest relates to the unwinding of the deferred consideration on the Macuhealth acquisition. The current year decrease in deferred consideration relates to changes in the original estimated amounts payable for the acquisitions of MacuVision and Nutraceutical brands. The previous year increase related to a change in the original estimated amount payable for the Macuvision acquisition. These changes are caused by differences in trading performance compared to acquisition forecasts.
6. Taxation
Analysis of the (credit)/charge for the period is as follows:
Year ended Year ended
31 December 31 December
2017 2016
GBP000s GBP000s
---------------------------------------- ----------------- ------------
Corporation tax
In respect of current period 3,573 3,552
Adjustment in respect of prior
periods 44 32
3,617 3,584
Deferred tax
Origination and reversal of temporary
differences (5,101) 539
Adjustment in respect of prior
periods 943 4
---------------------------------------- ----------------- ------------
Taxation (credit)/charge (541) 4,127
---------------------------------------- ----------------- ------------
The difference between the total tax (credit)/charge above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:
Year ended
31 December Year ended 31
2017 December 2016
GBP000s GBP000s
--------------------------------------- ------------ --------------
Profit before taxation 28,369 22,219
--------------------------------------- ------------ --------------
Profit before taxation multiplied
by standard rate of corporation
tax in the United Kingdom of 19.25%
(2016: 20.00%) 5,461 4,444
Effect of:
Non-deductible expenses 145 376
Non-taxable income (1,216) (60)
Adjustment in respect of prior periods 987 36
Impact of reduction in UK tax rate
on deferred tax (101) (755)
Impact of reduction in US and French
tax rate on deferred tax (5,958) -
Differing tax rates on overseas
earnings 182 205
Share options (15) (133)
Other differences and Foreign exchange (26) 14 --------------------------------------- ------------ -------------- Total taxation (541) 4,127 --------------------------------------- ------------ --------------
Changes to the UK corporation tax rate were announced in Finance Act (No 2) 2015 and Finance Act 2016, reducing the UK's main rate to 17% from 1 April 2020. As the change was substantively enacted at the balance sheet date the effect is included in these financial statements.
During 2017 US and French tax reform were both substantively enacted. The deferred tax rates applied to US and French timing differences have hence changed from 35.0% to 24.0% and from 33.3% to 25.0% respectively.
To exclude the impact of tax rate changes and non-underlying tax charges the Group has calculated "adjusted underlying effective tax rate" as an alternative performance measure in note 16.
7. Goodwill and intangible assets
Brands Assets
and distribution Development under
Goodwill rights costs development Total
The Group GBP000s GBP000s GBP000s GBP000 GBP000s
---------------------------- --------- ------------------ ----------- ------------- -------
Cost
At 1 January 2017 16,197 249,376 704 2,500 268,777
Additions 368 17,193 459 - 18,020
Transfer - 438 (438) - -
Exchange adjustments - (3,447) - - (3,447)
At 31 December 2017 16,565 263,560 725 2,500 283,350
---------------------------- --------- ------------------ ----------- ------------- -------
Amortisation and impairment
At 1 January 2017 - 3,944 - - 3,944
Impairment for the year - 507 - - 507
Amortisation for the year - 276 - - 276
At 31 December 2017 - 4,727 - - 4,727
---------------------------- --------- ------------------ ----------- ------------- -------
Net book amount
At 31 December 2017 16,565 258,833 725 2,500 278,623
---------------------------- --------- ------------------ ----------- ------------- -------
At 1 January 2017 16,197 245,432 704 2,500 264,833
---------------------------- --------- ------------------ ----------- ------------- -------
Goodwill and the majority of brands and distribution rights are considered to have indefinite useful economic lives and are therefore subject to an impairment review at least annually.
Brands and distribution rights
Key judgement - useful economic lives
Applying indefinite lives to certain acquired brands is appropriate due to the stable long-term nature of the business and the enduring nature of the brands. These brands are assessed on acquisition to ensure they meet set criteria including an established and stable sales history.
Where distribution rights are deemed to have a finite life they are amortised accordingly. Amortisation is included in administration and marketing expenses. The remainder of the distribution rights have no defined time period or there is evidence to support the renewal of distribution rights without disproportionate cost. These assets are therefore treated the same as acquired brands.
It is the opinion of the Directors that the indefinite life assets meet the criteria set out in IAS 38. This assessment is made on an asset by asset basis taking into account:
-- How long the brand has been established in the market and subsequent resilience to economic and social changes;
-- Stability of the industry in which the brand is used; -- Potential obsolescence or erosion of sales; -- Barriers to entry; -- Whether sufficient marketing promotional resourcing is available; and -- Dependency on other assets with defined useful economic lives.
Certain brands were acquired with patent protection, which lasts for a finite period of time. It is the opinion of the Directors that these patents do not provide any incremental value to the value of the brand and therefore no separate value has been placed on these patents. This assessment is based on a view of future profitability after patent expiry and past experience with similar brands.
Development costs
Capitalised costs relate to clinical development and regulatory plans expected to be commercialised in future.
Goodwill
The net book value of brand and distribution rights and goodwill which are considered to have indefinite useful lives are allocated to CGUs in the following table. Goodwill relating to the acquisition of certain assets and businesses from Sinclair IS Pharma plc is allocated to the group of related product CGUs. Other Goodwill amounts are allocated to the product CGU with which they were originally acquired.
Year ended 31 December 2017 Brands and distribution
Goodwill rights Total
GBP000s GBP000s GBP000s
-------------------------------- ---------------- ----------------------- --------------
Menadiol, Vitamin E & Others 598 12,876 13,474
Forceval, Amantadine & Others - 12,931 12,931
Vamousse - 11,596 11,596
MacuShield 1,748 8,740 10,488
Nu-Seals - 9,100 9,100
SkinSafe, Dansac & Others 1,849 8,043 9,892
Timodine & Buccastem - 7,697 7,697
Syntometrine (excluding
UK) - 7,527 7,527
Ametop - 5,575 5,575
Others 1,147 31,462 32,609
Products acquired from Sinclair
-------------------------------- ---------------- ----------------------- --------------
Kelo-cote (non EU, excluding
US) - 40,842 40,842
Oxyplastine, Fazol & Others - 26,158 26,158
Haemopressin, Optiflo &
Others - 25,000 25,000
Kelo-cote (EU) - 17,800 17,800
Flamma Franchise - 17,400 17,400
Aloclair - 14,000 14,000
Goodwill 11,223 - 11,223
-------------------------------- ---------------- ----------------------- --------------
16,565 256,747 273,312
-------------------------------- ---------------- ----------------------- --------------
Recent acquisitions
The following acquisition activities took place in the year:
On 1 December 2017, the Group acquired the worldwide rights to Ametop from global medical technology business Smith & Nephew for a consideration of US$7.5m (GBP5.6m).
On 28 December 2017, the Group acquired the worldwide rights to Vamousse from TyraTech Inc for an initial cash consideration of US$13.0m (GBP9.7m) and deferred contingent consideration of between US $nil and U$4.5m. Up to US$2.0m of this the deferred consideration is payable in 2020, and up to US$2.5m is payable in 2021, both dependent on the revenue growth of Vamousse. An estimated amount of US$2.5m (GBP1.9m) based on forecast sales is included in the Vamousse intangible addition and other non-current liabilities. Separate cash consideration of US$0.5m (GBP0.4m) was paid for inventories acquired (note 8).
In respect of Vamousse, the amounts included in the consolidated statement of comprehensive income since 28 December 2017 are revenues of GBP0.1m and gross profit of GBP0.1m. Had the transaction occurred 1 January 2017 estimated contribution to Group revenues would have been GBP4.9m and gross profit of GBP3.4m, based on the prior year financial results.
In the prior year the following acquisition activities took place:
On 27 October 2016, the Group secured the distribution rights on additional territories for MacuShield. The consideration recognised in relation to this was GBP2.3m and the distribution rights are for a period of ten years which the balance is therefore being amortised over.
On 12 September 2016 the Group in-licensed Diclectin for a further nine European territories, following the UK in-license acquired in 2015. The total amount paid to Duchesnay for all territories was GBP1.5m with a further GBP1.0m payable to Duchesnay on successful licence applications; the total GBP2.5m is included within assets under development and the GBP1.0m deferred consideration is included within liabilities. The amount included within assets under development will be amortised when the product is ready for launch.
As stated in our announcement in July 2017, the Medicine and Healthcare products Regulatory Agency ("MHRA") did not approve Diclectin 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 objections of the MHRA. Whilst the communication between the MHRA and Duchesnay remains confidential, we believe that good progress is being made in resolving some of the issues initially expressed by the regulator. Diclectin is a much needed product as there is no licensed medicine for treating nausea and vomiting of pregnancy in the UK.
Duchesnay, the licence applicant, has since re-opened discussions with the regulator 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 (GBP1.5m) are fully refundable and the deferred consideration (GBP1.0m) would be cancelled resulting in no net financial impact in the Income Statement.
8. Inventories
31 December 31 December
2017 2016
GBP000s GBP000s
----------------------------- ----------- -----------
Finished goods and materials 16,077 17,632
Inventory provision (1,829) (2,276)
----------------------------- ----------- -----------
14,248 15,356
----------------------------- ----------- -----------
Inventory costs expensed through the income statement during the year were GBP36,575,000 (2016: GBP35,897,000). During the year GBP442,000 (2016: GBP792,000) was recognised as an expense relating to the write-down of inventories to net realisable value.
On 1 December 2017, the Group acquired the worldwide rights to Ametop from global medical technology business Smith & Nephew (note 7). As part of this acquisition GBP0.3m inventories were acquired.
On 28 December 2017, the Group acquired the worldwide rights to Vamousse from TyraTech Inc (note 7). As part of this acquisition GBP0.4m inventories were acquired.
9. Trade and other receivables
31 December 31 December
2017 2016
GBP000s GBP000s
------------------------------- ----------- -----------
Trade receivables 17,347 20,530
Other receivables 1,759 1,788
Prepayments and accrued income 2,465 2,110
Amounts owed by Joint Venture 2,124 2,278
23,695 26,706
------------------------------- ----------- -----------
The ageing of trade receivables of the Group at 31 December is detailed below:
31 December 31 December
2017 2016
GBP000s GBP000s
--------------------------- ----------- -----------
Not past due 15,479 13,948
Due 30-31 December 782 3,465
Past due 3 days to 91 days 511 1,947
Past 91 days 575 1,170
17,347 20,530
--------------------------- ----------- -----------
Trade and other receivables are stated net of estimated allowances for doubtful debts. As at 31 December 2017, trade and other receivables of GBP254,000 (2016: GBP123,000) were past due and impaired.
Our policy requires customers to pay us in accordance with agreed payment terms. Depending on the geographical location, our settlement terms are generally due within 30 or 60 days from the end of the month of sale and do not bear any effective interest rate.
10. Cash and cash equivalents
31 December 31 December
2017 2016
GBP000s GBP000s
------------------------- ----------- -----------
Cash at bank and in hand 11,184 7,221
------------------------- ----------- -----------
11. Trade and other payables
31 December 31 December
2017 2016
GBP000s GBP000s
-------------------------------- ----------- -----------
Trade payables 6,662 5,655
Other taxes and social security
costs 326 1,030
Accruals and deferred income 8,159 11,125
Other payables 776 1,120
Deferred consideration 653 3,022
16,576 21,952
-------------------------------- ----------- -----------
Deferred consideration of GBP0.2m (2016: GBP0.5m) relates to an agreement with MacuHealth to guarantee supply of MacuShield API and secure additional territories to be able to distribute in.
Deferred contingent consideration of GBP0.5m (2016: GBP0.5m) relates to the Licence and Supply Agreement for the product Diclectin with Duchesnay Inc. and is payable in 2018 if the relevant licensing applications are approved (note 7).
Deferred contingent consideration of GBPnil (2016: GBP1.8m) relates to the acquisition of MacuVision Europe Limited which took place on 2 February 2015.
Deferred contingent consideration of GBPnil (2016: GBP0.5m) relates to the acquisition of the rights to five Nutraceutical brands from Sinopharm Nutraceuticals (Shanghai) Co Ltd which took place on 16 September 2015.
12. Loans and borrowings
31 December 31 December
2017 2016
Current GBP000s GBP000s
------------------------------- ----------- -----------
Bank loans due within one year
or on demand:
Secured 42,000 26,000
Finance issue costs (281) (218)
41,719 25,782
------------------------------- ----------- -----------
31 December 31 December
2017 2016
Non-current GBP000s GBP000s
------------------------------- ----------- -----------
Bank loans due within one year
or on demand:
Secured 42,338 58,478
Finance issue costs (558) (924)
41,780 57,554
------------------------------- ----------- -----------
The bank facility is secured by a fixed and floating charge over the Group's assets.
13. Other non-current liabilities
31 December 31 December
2017 2016
GBP000s GBP000s
------------------------------ ----------- -----------
Deferred consideration 3,251 1,609
Other non-current liabilities 274 208
3,525 1,817
------------------------------ ----------- -----------
Deferred contingent consideration of GBP0.5m (2016: GBP0.5m) relates to the Licence and Supply Agreement for the product Diclectin with Duchesnay Inc. and is payable during 2019 if the relevant licensing applications are approved (note 7).
Deferred consideration of GBP0.9m (2016: GBP1.1m) relates to a MacuHealth agreement to guarantee supply of MacuShield API and extend the territories in which MacuShield can be sold and is payable over 7 years.
Deferred contingent consideration of GBP1.9m (2016: GBPnil) relates to the acquisition of the worldwide rights to Vamousse from TyraTech Inc. Up to US$2.0m is payable in 2020, and up to US$2.5m is payable in 2021, both dependent on the revenue growth of Vamousse. An estimated amount based on forecast sales is included in the Vamousse intangible and other non-current liabilities.
14. Cash generated from operations
31 December 31 December
2017 2016
GBP000s GBP000s
-------------------------------------- ----------- -----------
Profit for the year 28,910 18,092
Taxation (541) 4,127
Interest payable and similar charges 3,064 3,355
Change in deferred consideration (618) 840
Interest income (104) (111)
Other finance costs (534) (693)
Net exceptional compensation income (4,356) -
Depreciation of property, plant
and equipment 657 337
Amortisation of intangibles 276 92
Change in inventories 1,108 (2,446)
Share of post-tax Joint Venture
profits (19) (299)
Change in trade and other receivables 4,011 (14,116)
Change in trade and other payables (2,996) 10,083
Share based employee remuneration 1,453 696
Cash generated from operations 30,311 19,957
-------------------------------------- ----------- -----------
15. Contingent liabilities
Contingent liabilities are possible obligations that are not probable. The Group operates in a highly regulated sector and in markets and geographies around the world each with differing requirements. As a result, and in the normal course of business, the Group can be subject to a number of regulatory inspections/investigations on an ongoing basis. It is therefore possible that the Group may incur penalties for non-compliance. In addition, a number of the Group's brands and products are subject to pricing and other forms of legal or regulatory restrictions from both governmental/regulatory bodies and also from third parties. Assessments as to whether or not to recognise a provision in respect of these matters are judgemental as the matters are often complex and rely on estimates and assumptions as to future events.
The Group's assessment at 31 December 2017 based on currently available information is that there are no matters for which a provision is required (2016: GBPnil). However, given the inherent uncertainties involved in assessing the outcomes of such matters there can be no assurance regarding the outcome of any ongoing inspections/investigations and the position could change over time as a result of the factors referred to above.
16. 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 ongoing 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 and below
non-underlying items. Calculated
by taking profit before tax and
financing costs, excluding non-underlying
items and adding back depreciation
and amortisation.
------------ ------------------------------------------- ---------------
Free cash Free cash flow is defined as EBITDA Note B
flow less working capital and non-cash below
movements (excluding exceptional
items), tax payments, interest
payments, core capex and other
non-cash movements.
------------ ------------------------------------------- ---------------
Net debt Net debt is defined as the group's Note C
bank debt position net of its below
cash position.
------------ ------------------------------------------- ---------------
Adjusted Adjusted underlying basic EPS Note D
Underlying is calculated by dividing underlying below
basic EPS earnings attributable to ordinary
shareholders less impact of tax
rate changes, by the weighted
average number of shares in issue
during the year.
------------ ------------------------------------------- ---------------
Adjusted Adjusted underlying effective Note E
underlying tax rate is calculated by dividing below
effective total taxation for the year less
tax rate impact of tax rate changes and
non-underlying charges, by the
underlying profit before tax for
the year.
------------ ------------------------------------------- ---------------
A. EBITDA
31 December 31 December
2017 2016
Reconciliation of EBITDA GBP000s GBP000s
------------------------------ ----------- -----------
Profit before tax 28,369 22,219
Non-underlying items (note 4) (4,356) -
Finance costs (note 5) 1,808 3,391
Depreciation 657 337
Amortisation 276 92
EBITDA 26,754 26,039
------------------------------ ----------- -----------
B. Free cash flow
31 December 31 December
2017 2016
Reconciliation of free cash flow GBP000s GBP000s
--------------------------------- ----------- -----------
Cash generated from operations
(note 14) 30,311 19,957
Financing costs (2,678) (2,822)
Capital expenditure (2,236) (1,130)
Tax paid (3,728) (3,032)
Free cash flow 21,669 12,973
--------------------------------- ----------- -----------
C. Net debt
31 December 31 December
2017 2016
Reconciliation of net debt Note GBP000s GBP000s
--------------------------- ---- ----------- -----------
Loans and borrowings -
current 12 (41,719) (25,782)
Loans and borrowings -
non-current 12 (41,780) (57,554)
Cash and cash equivalents 10 11,184 7,221
Net debt (72,315) (76,115)
--------------------------- ---- ----------- -----------
D. Adjusted underlying basic EPS
31 December 31 December
2017 2016
Reconciliation of adjusted underlying
basic EPS GBP000s GBP000s
-------------------------------------- ----------- -----------
Underlying profit for the year 25,318 18,092
Impact of reduction in UK tax rate
on deferred tax (101) (755)
Impact of reduction in US and French
tax rate on deferred tax (5,958) -
-------------------------------------- ----------- -----------
Adjusted underlying profit for
the year 19,259 17,337
-------------------------------------- ----------- -----------
Weighted average number of shares 473,842,765 469,423,814
-------------------------------------- ----------- -----------
Adjusted underlying basic EPS 4.06 3.69
-------------------------------------- ----------- -----------
During 2017 US and French tax reform were both substantively enacted. The deferred tax rates applied to US and French timing differences have hence changed from 35.0% to 24.0% and from 33.3% to 25.0% respectively. This has given rise to GBP6.0m of deferred tax credits during 2017. In 2016 the UK tax rate changed from 18% to 17% giving rise to a GBP0.8m deferred tax credit.
E. Adjusted underlying effective tax rate
31 December 31 December
2017 2016
Reconciliation of adjusted underlying
effective tax rate GBP000s GBP000s
-------------------------------------- ----------- -----------
Total taxation for the year 541 (4,127)
Impact of reduction in UK tax rate
on deferred tax (101) (755)
Impact of reduction in US and French
tax rate on deferred tax (5,958) -
Non-underlying tax charge 764 -
-------------------------------------- ----------- -----------
Adjusted underlying taxation for
the year (4,754) (4,882)
-------------------------------------- ----------- -----------
Underlying profit before tax for
the year 24,013 22,219
-------------------------------------- ----------- -----------
Adjusted underlying effective tax
rate 19.8% 22.0%
-------------------------------------- ----------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCGDXGUDBGIL
(END) Dow Jones Newswires
March 27, 2018 02:01 ET (06:01 GMT)
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