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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.15 | 0.41% | 36.75 | 36.70 | 36.95 | 37.10 | 36.35 | 36.70 | 997,061 | 16:35:09 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pharmaceutical Preparations | 167.42M | 936k | 0.0017 | 215.88 | 198.24M |
TIDMAPH
RNS Number : 3740N
Alliance Pharma PLC
24 September 2019
For immediate release 24 September 2019
ALLIANCE PHARMA PLC
("Alliance" or the "Group")
Interim results for the six months ended 30 June 2019
GOOD REVENUE GROWTH AND STRONG CASH FLOW
Alliance Pharma plc (AIM: APH), the international healthcare group, is pleased to announce its interim results for the six months ended 30 June 2019.
HIGHLIGHTS
-- Revenue on a see-through* basis up 29% at GBP70.3m (up 28% on a constant currency* basis), with like-for-like revenue on a constant currency basis up 10%
o Continued strong revenue growth from International Star brands, led by Kelo-cote(TM)
o Asia Pacific and international distributor business continue to be main growth areas
o Local brands performed in line with expectations
-- Underlying EBITDA* up 34% to GBP18.8m (H1 2018: GBP14.1m) -- Continued strong cash flow, with leverage reduced to 1.95 times -- New banking facilities in place, providing further flexibility
-- Nizoral(TM) transition progressing well; new offices and dedicated team established in Singapore and Shanghai to support this business
-- Interim dividend increased 10% to 0.536p
FINANCIAL SUMMARY
Hot Features
Premium
Unaudited six months ended 2019 2018 (restated**) Growth
30 June GBPm GBPm
Revenue (see-through basis)* 70.3 54.5 29%
----------------------------------- ------- ------------------ -------
Revenue (statutory basis) 66.0 54.5 21%
----------------------------------- ------- ------------------ -------
Gross profit 41.3 32.4 27%
----------------------------------- ------- ------------------ -------
Underlying EBITDA* 18.8 14.1 34%
----------------------------------- ------- ------------------ -------
Underlying profit before taxation 15.2 12.1 25%
----------------------------------- ------- ------------------ -------
Reported profit before taxation 15.2 11.2 35%
----------------------------------- ------- ------------------ -------
Underlying basic earnings
per share 2.34p 2.04p 15%
----------------------------------- ------- ------------------ -------
Reported basic earnings per
share 2.34p 1.90p 23%
----------------------------------- ------- ------------------ -------
Free cash flow* 14.5 10.4 40%
----------------------------------- ------- ------------------ -------
Leverage 1.95 2.33 (31
Dec)
----------------------------------- ------- ------------------ -------
Net debt* 74.1 85.5 (31
Dec)
----------------------------------- ------- ------------------ -------
Interim dividend per share 0.536p 0.487p 10%
----------------------------------- ------- ------------------ -------
* 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 18.
Specifically, see-through revenue includes sales from Nizoral(TM) as if they had been invoiced by Alliance. Under the terms of the transitional services agreement with Johnson & Johnson (J&J), Alliance receives the benefit of the net profit on sales of Nizoral from the date of acquisition up until the product licences in the Asia-Pacific territories transfer from J&J to Alliance, which is expected to occur during 2019 and 2020. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15.
** 2018 comparatives have been restated following the adoption of IFRS 16 Leases and the reclassification of GBP0.3m of costs relating to the Nizoral acquisition.
OUTLOOK
The second half of the year has started well and, based on trading in the year to date, the Board expects full year revenues and underlying trading profit to be in line with its expectations.
Commenting on the interim results, Peter Butterfield, Chief Executive Officer of Alliance, said:
"We continue to see sustained growth from our product portfolio driven by our continued focus on both international growth markets and higher growth, consumer healthcare products. The first half of 2019 has seen us enhance our presence in the Asia Pacific region, to support the transition and ongoing management of Nizoral, and put in place new banking facilities, which will provide further flexibility for the Group to deliver carefully targeted acquisitions over the next few years to complement its organic growth strategy.
"The second half of the year has started well; our strong underlying growth and cash generation, coupled with the enhanced banking facilities, mean we are well positioned to pursue future growth opportunities."
ANALYST MEETING AND WEBCAST
A meeting for analysts will be held at 10.00am this morning at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. Please contact Buchanan for further details on 020 7466 5000 or email alliancepharma@buchanan.uk.com.
To access a live webcast of the analyst presentation, please log on to the following web address several minutes before 10.00am: https://webcasting.buchanan.uk.com/broadcast/5d40296548a6d52f84f6c8b5
A replay of the webcast will be made available at the Investors section of Alliance's website, www.alliancepharmaceuticals.com.
For further information:
Alliance Pharma plc + 44 (0)1249 466966 Peter Butterfield, Chief Executive Officer Andrew Franklin, Chief Financial Officer www.alliancepharma.co.uk Buchanan + 44 (0)20 7466 5000 Mark Court / Sophie Wills / Hannah Ratcliff Numis Securities Limited + 44 (0)20 7260 1000 Nominated Adviser: Freddie Barnfield / Freddie Naylor-Leyland Corporate Broking: James Black Investec Bank plc + 44 (0) 20 7597 5970 Corporate Finance: Daniel Adams / Ed Thomas Corporate Broking: Patrick Robb / Tejas Padalkar
About Alliance
Alliance Pharma plc (AIM: APH) is an international healthcare group, headquartered in the UK with subsidiaries in Europe, the Far East and the US and wide international reach through an extensive network of distributors, generating sales in more than 100 countries.
We currently own or license the rights to more than 90 consumer healthcare products and pharmaceuticals, which are managed on a portfolio basis according to their growth potential. Promotional investment is focused on a small number of brands with significant international or multi-territory reach. The remainder of the portfolio comprises products which are sold in a limited number of local markets and require little or no promotional investment.
Our strategy allows us to deliver good organic growth and to enhance our growth rate through carefully selected acquisitions.
For more information on Alliance, please visit our website: www.alliancepharmaceuticals.com
CHIEF EXECUTIVE'S STATEMENT
Overview
Alliance Pharma's vision is to be a leading international healthcare business built around products that are clinically valuable to patients.
Over the past 4 years, we have been on a transformative journey, significantly increasing the scale of our business, building up our portfolio of International Star brands - a select number of promoted products which are considered to offer significant benefit to patients and have international growth potential - and diversifying our routes to market through a number of key acquisitions.
Our International Star brands, Kelo-cote(TM), Nizoral(TM), MacuShield(TM), Vamousse(TM) and Xonvea(TM) now account for more than 40% of our revenues. As International Stars, these brands benefit from the provision of central strategic oversight, direction and campaign generation, ensuring marketing activities are aligned across all territories whilst allowing for local customisation where appropriate.
We have also successfully diversified our routes to market. In 2015, three quarters of our revenues were derived from prescription medicines; now over half our revenues are generated from consumer healthcare products.
To support this growth, we have broadened our operating capability; from being primarily a UK-centric organisation, we now have a direct presence across Western Europe, the US and the Far East, with additional reach secured through an extensive network of around 100 international distributors.
During the first half of 2019, we enhanced our presence in Singapore and Shanghai through moving to new offices and establishing a dedicated team to support the integration and ongoing management of Nizoral, which we acquired in June 2018.
Trading performance
The Group delivered another strong performance in the first half of 2019 with see-through revenues up 29% to GBP70.3m (H1 2018: GBP54.5m). Like-for-like revenues, excluding acquisitions, were up 10% (on a constant currency basis) on the same period last year to GBP60.3m.
Gross profit increased by 27% to GBP41.3m (H1 2018: GBP32.4m) and, notwithstanding continued planned investment in our International Star brands and developing our business in the Asia Pacific region, an increase in operational leverage resulted in a 34% increase in underlying EBITDA to GBP18.8m (H1 2018: GBP14.1m). As a result of adverse currency movements, the increase in underlying profit before tax was more modest at 25%, with pre-tax profits of GBP15.2m (H1 2018: GBP12.1m).
Nizoral transition
We continue to make good progress with the transition of Nizoral, the medicated anti-dandruff shampoo acquired from J&J for the Asia Pacific region in June 2018. The acquisition included product licences covering 17 Asia Pacific territories in which the brand is registered. The first of these transfers is now underway with completion anticipated in 6 markets in H2 2019, with the remaining transfers being completed in the first half of next year. Under the terms of the transitional services agreement with J&J, we receive the net profit on sales of Nizoral from the date of acquisition up until the point at which the licence in each territory transfers to Alliance.
OPERATIONAL REVIEW
International Star brands
During the first half of 2019, our International Star brands saw strong revenue growth with sales of GBP30.9m (H1 2018: GBP17.3m), up 79% compared with the same period last year and up 21% on a like-for-like basis (excluding Nizoral(TM) and Xonvea(TM)).
Kelo-cote
Kelo-cote, our scar treatment product, delivered another very strong performance, with first half sales up 20% to GBP13.1m (H1 2018: GBP10.9m), primarily due to continued strong demand from the Asia Pacific region.
Going forward, we plan to support the growth of this key brand through further range enhancements and expect to maintain similar levels of marketing support.
Nizoral
Nizoral, the medicated anti-dandruff shampoo acquired from J&J in June 2018, performed slightly below expectations in the first half of 2019, generating see-through sales (under J&J management) of GBP10.0m (H2 2018: GBP10.9m). However, integration and transition activities are progressing well and, as we start to bring the product licences under our control, we will be able to manage the associated commercial relationships much more proactively going forwards.
MacuShield
MacuShield, our eye health supplement continued to perform well, with sales up 27% to GBP4.7m (H1 2018: GBP3.7m), growth coming primarily from the repatriation of a distribution agreement in the Republic of Ireland.
The first half of 2019 saw MacuShield launched in another two territories (Italy and Turkey), with further launches planned for the next 12 months to continue to drive sales growth.
Vamousse
Vamousse, for the prevention and treatment of head lice, delivered another good performance, achieving sales of GBP3.1m in the period, up 15% on the same period last year (H1 2018: GBP2.7m), due to strong performance in its core market, the US.
We continue to evaluate opportunities to introduce Vamousse into new markets with work underway to support launches in another three territories in the coming 12 months.
Xonvea
Prescriptions for Xonvea, for the treatment of nausea and vomiting of pregnancy where conservative management has failed, continue to increase month on month although at a lower rate than originally anticipated. We remain fully committed to the brand and await the forthcoming updated guidelines from The Royal College of Obstetricians and Gynaecologists, which are expected early next year.
Local Brands
Our Local brands comprise a wide portfolio of products that either occupy established therapeutic niches or have strong brand heritage and as such are well established in their local markets without necessarily having wider international potential. Collectively they generate significant profit and cashflow for the business and, as such, represent a key component of our business model. Most of our Local brands occupy well-established niches in their respective market segments and provide stable cashflows with little or no promotional effort.
Revenues generated by our Local brands in the first half of 2019 were in line with management expectations at GBP39.4m, an increase of 6% on the same period last year (H1 2018: GBP37.2m).
Performance by region
Asia Pacific and International Distributors
Our Asia Pacific and international distributor business continued to perform strongly with see-through revenue increasing 90% to GBP27.0m in the first half of 2019 (H1 2018: GBP14.2m) and statutory sales increasing 60% to GBP22.7m. Excluding Nizoral, sales on a like-for-like basis grew 20% driven by strong sales of Oxyplastine and Bio-Taches in the Middle East and Africa and Aloclair in Central and Eastern Europe and Latin America.
UK and Republic of Ireland
Sales in the UK and Republic of Ireland increased by 1% on the same period last year to GBP26.1m (H1 2018: GBP25.7m), with a strong performance from MacuShield (due to the repatriation of a distribution agreement in the Republic of Ireland, offsetting a softer performance of MacuShield in the UK) countering weaker performances from some of our legacy medicine products.
Mainland Europe
Sales in Mainland Europe increased 18% to GBP14.3m in the first half of the year (H1 2018: GBP12.2m), the main driver being France, which saw Kelo-cote sales almost double during this period, from GBP2.4m to GBP4.6m, due to increased export and domestic demand.
Sales across our other European affiliates were broadly unchanged.
US
Our team in Cary, North Carolina, is now fully established and Vamousse continues its strong performance in the US, achieving sales of GBP2.6m in the period, up 22% on the same period last year (H1 2018: GBP2.1m), as the brand continues to take share in the market.
Operations
Medical Device Regulation ("MDR")
We are on track to ensure our technical documentation and processes meet the new requirements of the MDR, which will start to apply from May 2020. The new regulation places greater scrutiny on the technical documentation, product safety and medical device performance through stricter requirements on clinical information and requires enhanced traceability and transparency.
We expect to absorb the costs of operating under MDR without any further impact on margins.
Brexit
As part of our continued readiness for the UK's expected exit from the EU, we will be reinstating the additional inventory levels built up previously to mitigate the possibility of a 'no deal' outcome and the absence of a transition period. All applicable statutory roles are now in place and necessary authorisation transfers completed. We are following the progress of negotiations closely to ensure we have the most up to date information available to allow us to ensure continuity of supply, irrespective of the outcome.
People & infrastructure
Over the past 12 months, the Board has evolved very effectively, with the appointment of two new independent Non-executive Directors. Jo LeCouilliard and Richard Jones joined at the start of 2019 and bring further international business experience and capital markets expertise into the Group, complementing that of our established independent Board members, David Cook and Nigel Clifford.
In June, John Dawson, Non-executive Director, founder and former CEO of Alliance, took the decision to step down from the Company's Board. We would like to take this opportunity to thank John for his invaluable contribution to the development of the Alliance business over the past 23 years.
Alliance currently employs more than 220 people in 10 locations around the world; all committed to the successful delivery of Alliance's vision. During the first half of the year we scaled up our operations in Asia Pacific, moving to new offices in Singapore and Shanghai, and completing the recruitment of several new posts to support the transition and ongoing management of Nizoral. Our resourcing requirements will continue to evolve as the business grows and diversifies, generating requirements for additional specialist or local market expertise.
ERP implementation
We are currently midway through the User Acceptance Testing phase of our Enterprise Resource Planning ("ERP") project. This phase is progressing well, and we expect the testing cycle to conclude by the end of 2019, enabling the system to become operational during the first half of 2020. The implementation of this system is expected to deliver significant business benefits, allowing us to drive our operational leverage through standardisation of processes and increased visibility of performance metrics, whilst also giving us the scale-up capability needed to accommodate future growth and any acquisitions.
Current trading and outlook
The second half of the year has started well and, based on trading in the year to date, the Board expects full year revenues and underlying trading profit to be in line with its expectations.
Strategically, the priorities for the Group continue to be the delivery of organic growth, primarily from our International Star brands; progressing with the transition of Nizoral; and continuing to support Xonvea in its important post-launch phase.
The combination of good organic growth and strong cashflows means the business will to continue to de-lever over the remainder of the year, leaving us well placed to pursue future growth opportunities.
FINANCIAL REVIEW
Summary underlying income statement
Unaudited six months ended 30 June 2019 2018 Growth
GBPm (restated**)
GBPm
Revenue (see-through basis)* 70.3 54.5 29%
------------------------------------- ------- -------------- -------
Revenue (statutory basis) 66.0 54.5 21%
------------------------------------- ------- -------------- -------
Gross profit 41.3 32.4 27%
------------------------------------- ------- -------------- -------
Operating expenses (22.5) (18.7) 20%
------------------------------------- ------- -------------- -------
Underlying EBITDA* 18.8 14.1 34%
------------------------------------- ------- -------------- -------
Depreciation & amortisation (1.1) (0.8) 45%
------------------------------------- ------- -------------- -------
Underlying EBIT* 17.7 13.3 33%
------------------------------------- ------- -------------- -------
Finance costs (2.5) (1.1) 123%
------------------------------------- ------- -------------- -------
Underlying profit before taxation 15.2 12.1 25%
------------------------------------- ------- -------------- -------
Underlying basic earnings per share 2.34p 2.04p 15%
------------------------------------- ------- -------------- -------
Interim dividend per share 0.536p 0.487p 10%
------------------------------------- ------- -------------- -------
* 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 18.
Specifically, see-through revenue includes sales from Nizoral(TM) as if they had been invoiced by Alliance. Under the terms of the transitional services agreement with Johnson & Johnson (J&J), Alliance receives the benefit of the net profit on sales of Nizoral from the date of acquisition up until the product licences in the Asia-Pacific territories transfer from J&J to Alliance, which is expected to occur during 2019 and 2020. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15.
Underlying profitability metrics are presented as we believe this provides investors with useful information about the performance of the business. For 2019, there were no non-underlying items and underlying results were the same as total results; for 2018, underlying results exclude GBP1.5m of profit on the disposal of the Group's interest in Unigreg Limited and a GBP2.5m impairment charge in relation to the Group's interest in Synthasia International Co. Ltd. In 2018, legal and due diligence costs of GBP0.3m relating to the Nizoral acquisition were presented as a non-underlying item. Following subsequent review these have been capitalised as part of the Nizoral intangible cost (note 8). The unaudited results have been restated to reflect this change in treatment. Further detail can be found in note 3.
** 2018 comparatives have been restated following the adoption of IFRS 16 Leases and the reclassification of GBP0.3m of costs relating to the Nizoral acquisition.
The Group delivered an encouraging financial performance in the first half of 2019, with see-through revenues increasing 29% to GBP70.3m and statutory revenues increasing 21% to GBP66.0m (H1 2018: GBP54.5m), due to continued healthy revenue growth from our International Star brands, in particular Kelo-cote, and the inclusion of post-acquisition revenues from Nizoral. Underlying profit before taxation increased by 25% to GBP15.2m (H1 2018: GBP12.1m).
Group revenues benefited by approximately GBP0.6m versus the same period last year due to the weakening of Sterling, primarily against the US Dollar. However, the natural hedge that exists within the Alliance business between the US Dollar and Sterling meant that the effect on operating profits was much smaller, due to the associated increase in cost of goods and operating costs denominated in US Dollars.
Gross profit increased by 27% to GBP41.3m (H1 2018: GBP32.4m), resulting in a 0.8% reduction in gross margin as a percentage of see-through revenues to 58.8% (H1 2018: 59.6%), due to the lower margin delivered by Nizoral, under J&J management.
Operating costs (defined as excluding depreciation and amortisation and the IFRS2 share options charge) increased by GBP3.9m to GBP21.7m , due to the transitional service fees payable to J&J in connection with Nizoral and the scale up of our operations in Asia Pacific, to support the integration and ongoing management of this product. As a percentage of sales, operating costs represented 30.9% of see-through sales (H1 2018: 33.7%). Sales and marketing expenditure continued to increase during the first half of 2019 as planned, to support the sales growth of our International Star brands.
Taking account of the planned increase in operating costs, underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 34% to GBP18.8m (H1 2018: GBP14.1m).
Finance costs
Finance costs increased by GBP1.4m on the prior period to GBP2.5m (H1 2018: GBP1.1m), primarily due to currency movements - in the first half of 2018, the Group benefited from exchange gains of GBP0.3m, whilst in the first half of 2019, there was an adverse impact from currency movements of GBP0.2m, coupled with a GBP0.4m loss on derivatives.
The average interest charge on gross debt during the period was 3.12%.
Taxation
The total tax charge for the period was GBP3.0m (H1 2018: GBP2.1m), equating to an effective tax rate of 19.9% (H1 2018: 18.9%). Excluding non-underlying items, which generated a tax credit of GBP0.3m in H1 2018, the underlying tax charge for 2018 was GBP2.4m, representing an effective tax rate (ETR) of 19.9%.
Earnings per share
Underlying basic earnings per share, the measure used by the Board in assessing earnings performance, was 2.34p, an increase of 15% on the corresponding period last year (H1 2018: 2.04p), reflecting the increase in the Group's underlying profit after tax.
Reported basic earnings per share increased by 23% to 2.34p (H1 2018: 1.90p) due to non-underlying items reducing earnings in 2018.
Dividend
The Board remains committed to a progressive dividend policy and is recommending an interim dividend payment of 0.536p per share, which represents an increase of 10% on 2018.
The level of dividend cover in the first half of 2019 remained ample at more than three times. The interim dividend payment for 2019 will be GBP2.8m (H1 2018: GBP2.5m) and will be paid on 10 January 2020 to shareholders on the register on 20 December 2019.
Balance sheet
Intangible assets remained largely unchanged at GBP335.0m (31 December 2018: GBP335.2m).
Working capital
There was a GBP2.2m reduction in inventories in the period, as the planned increase in inventory in preparation for the Falsified Medicines Directive, which came into effect in February 2019, and the original Brexit deadline, in March 2019, unwound, and inventory levels returned to normal again. We plan to re-build inventory levels during Q3 in readiness for the UK's expected exit from the EU.
Receivables reduced by GBP1.7m in the period, due to the timing of trade-related cash receipts and total payables increased by GBP1.2m.
Cash flow and net debt
Underlying free cash flow was strong at GBP14.5m (H1 2018: GBP10.4m), leading to an GBP11.7m reduction in net debt in the period to GBP74.1m at 30 June 2019 (31 December 2018: GBP85.8m).
As a result of this strong cash generation, leverage (adjusted net debt / EBITDA) fell to 1.95 times at the end of June 2019 (31 December 2018: 2.33 times) and we expect to see a further reduction in leverage in the second half of the year.
Treasury and capital management
The Group's operations are financed by retained earnings and bank borrowings, with additional equity being raised on a periodic basis to finance larger acquisitions. Borrowings are denominated in Sterling, Euro and US Dollars.
The Group manages its exposure to currency fluctuations on translation by managing currencies at Group level using bank accounts denominated in its primary trading currencies (Sterling, Euro and US dollars) and forward contracts.
On 2 July 2019, the Group agreed a new GBP165m fully Revolving Credit Facility, together with a GBP50m accordion, with an enlarged syndicate of lenders on improved terms, replacing the existing facility which ran through to December 2020. This new facility is available until July 2023, with a one-year extension option, and provides further flexibility for the Group to deliver carefully targeted acquisitions over the next few years to complement its organic growth strategy.
Unaudited Consolidated Income Statement
For the six months ended 30 June 2019
Unaudited Six months Unaudited Six months
ended 30 June 2019 ended 30 June 2018
-------------------------------------------- ----------------------------------------
Underlying Non-Underlying Total
Underlying Non-Underlying Total GBP000s GBP000s GBP000s
Note GBP000s GBP000s GBP000s restated restated restated
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Revenue 4 66,007 - 66,007 54,455 - 54,455
Cost of sales (24,691) - (24,691) (22,021) - (22,021)
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Gross profit 41,316 - 41,316 32,434 - 32,434
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Operating expenses
Administration and
marketing
expenses (22,793) - (22,793) (18,603) - (18,603)
Share-based employee
remuneration (855) - (855) (571) - (571)
Share of Joint Venture
profits - - - 13 - 13
Profit on disposal of
Unigreg Joint Venture 6 - - - - 1,508 1,508
Impairment and
write-down
of Synthasia Joint
Venture
Assets 6 - - - - (2,460) (2,460)
Operating profit 17,668 - 17,668 13,273 (952) 12,321
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Finance costs
Interest payable and
similar charges 5 (2,521) - (2,521) (1,499) - (1,499)
Finance income 5 13 - 13 373 - 373
(2,508) - (2,508) (1,126) - (1,126)
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Profit before taxation 15,160 - 15,160 12,147 (952) 11,195
Taxation 7 (3,018) - (3,018) (2,417) 299 (2,118)
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Profit for the period
attributable to equity
shareholders 12,142 - 12,142 9,730 (653) 9,077
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Earnings per share
Basic (pence) 13 2.34 2.34 2.04 1.90
Diluted (pence) 13 2.30 2.30 1.98 1.85
------------------------ ---- ------------ -------------- -------------- ------------ -------------- ----------
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2019
Unaudited Six months
Six months ended
ended 30 June 2018
30 June 2019 GBP 000s
GBP000s restated
Profit for the period 12,142 9,077
Other comprehensive income
Items that may be reclassified
to profit or loss:
Interest rate swaps - cash flow
hedge (83) 92
Deferred tax on interest rate
swaps 14 (16)
Foreign exchange translation
differences 224 323
Total comprehensive income for
the period 12,297 9,476
------------------------------------ -------------- ---------------
Unaudited Consolidated Balance Sheet
As at 30 June 2019
Audited
Unaudited 31 December
30 June 2019 2018
Note GBP000s GBP000s
----------------------------- ---- ------------------------------------------------------- -------------
Assets
Non-current assets
Goodwill and intangible
assets 8 335,006 335,243
Property, plant and
equipment 9 9,978 7,594
Deferred tax asset 1,814 1,845
Other non-current
assets 132 180
346,930 344,862
Current assets
Inventories 16,459 18,706
Trade and other receivables 10 27,406 29,148
Cash and cash equivalents 16,468 10,893
------------------------------ ---- ------------------------------------------------------- -------------
60,333 58,747
----------------------------- ---- ------------------------------------------------------- -------------
Total assets 407,263 403,609
------------------------------ ---- ------------------------------------------------------- -------------
Equity
Ordinary share Capital 5,199 5,182
Share premium account 145,017 144,639
Share option reserve 6,772 6,121
Other reserve (329) (329)
Cashflow Hedging Reserve (73) (4)
Translation reserve 1,715 1,491
Retained earnings 99,645 95,099
------------------------------ ---- ------------------------------------------------------- -------------
Total equity 257,946 252,199
------------------------------ ---- ------------------------------------------------------- -------------
Liabilities
Non-current liabilities
Loans and borrowings 15 23,504 28,667
Other liabilities 12 2,842 2,352
Deferred tax liability 28,721 28,663
Derivative financial
instruments 88 5
------------------------------ ---- ------------------------------------------------------- -------------
55,155 59,687
Current liabilities
Loans and borrowing 15 67,047 68,035
Corporation tax 3,315 1,457
Trade and other payables 11 23,424 22,231
Derivative financial
instruments 376 -
------------------------------ ---- ------------------------------------------------------- -------------
94,162 91,723
----------------------------- ---- ------------------------------------------------------- -------------
Total liabilities 149,317 151,410
------------------------------ ---- ------------------------------------------------------- ------------- Total equity and liabilities 407,263 403,609 ------------------------------ ---- ------------------------------------------------------- -------------
Unaudited Consolidated Statement of Cash Flows
For the six months ended 30 June 2019
Unaudited Unaudited
Six months Six months
ended ended
30 June 2019 30 June 2018
GBP 000s GBP 000s
Note restated
Operating activities
Profit for the period before tax 15,160 11,195
Interest payable and similar charges 5 2,521 1,499
Finance income 5 (13) (373)
Profit on disposal of Unigreg Joint
Venture 6 - (1,508)
Impairment and write down of Synthasia
Joint Venture assets 6 - 2,460
Depreciation of property, plant and
equipment 9 745 666
Amortisation and impairment of intangible
assets 8 391 118
Share-based employee remuneration 855 571
Change in inventories 2,247 (2,098)
Share of post-tax Joint Venture profits - (13)
Change in trade and other receivables 1,743 (1,810)
Change in trade and other payables (4,467) 4,440
------------------------------------------- ----- --------------------------------- --------------
Cash generated from operations 19,182 15,147
------------------------------------------- ----- --------------------------------- --------------
Tax paid (1,283) (2,363)
------------------------------------------- ----- --------------------------------- --------------
Cash flows from operating activities 17,899 12,784
------------------------------------------- ----- --------------------------------- --------------
Investing activities
Interest received 5 13 39
Development costs capitalised 8 (8) (25)
Purchase of property, plant and equipment (1,680) (940)
Exceptional compensation income - 1,000
Net proceeds from disposal of Unigreg
Joint Venture 6 - 2,196
Loan to Joint Venture 6 - 1,426
Consideration on acquisition 8 - (60,000)
------------------------------------------- ----- --------------------------------- --------------
Net cash used in investing activities (1,675) (56,304)
------------------------------------------- ----- --------------------------------- --------------
Financing activities
Interest paid and similar charges (1,721) (1,454)
Loan issue costs - (197)
Net proceeds from issue of shares - 32,845
Proceeds from exercise of share options 395 815
Capital lease payments (375) (291)
Dividend paid 14 (2,524) (2,104)
Receipt from borrowings - 28,000
Repayment of borrowings 15 (6,359) (10,813)
------------------------------------------- ----- --------------------------------- --------------
Net cash (used in)/received from
financing activities (10,584) 46,801
------------------------------------------- ----- --------------------------------- --------------
Net movement in cash and cash equivalents 5,640 3,281
Cash and cash equivalents at beginning
of period 10,893 11,184
Effects of exchange rate movements (65) 14
------------------------------------------- ----- --------------------------------- --------------
Cash and cash equivalents at end
of period 16,468 14,479
------------------------------------------- ----- --------------------------------- --------------
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 30 June 2019
Share Retained
Ordinary Share Option Other Cash flow earnings Total
Share Premium reserve Reserve Hedging Translation GBP equity
Capital account GBP GBP reserve reserve 000s GBP
GBP 000s GBP 000s 000s 000s GBP 000s GBP 000s restated 000s
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Balance 1 January
2018 (audited) 4,750 110,252 5,073 (329) (117) (390) 83,089 203,108
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Issue of shares 400 33,259 - - - - - 33,659
Dividend
payable/paid - - - - - - (6,340) (6,340)
Share options charge
(including deferred
tax) - - 1,500 - - - - 1,500
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Transactions with
owners 400 33,259 1,500 - - - (6,340) 28,819
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Profit for the
period - - - - - - 9,077 9,077
Other comprehensive
income
Interest rate swaps
- cash flow hedge - - - - 92 - - 92
Deferred tax on
interest
rate swaps - - - - (16) - - (16)
Foreign exchange
translation
differences - - - - - 323 - 323
Total comprehensive
income for the
period - - - - 76 323 9,077 9,476
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Balance 30 June 2018
(unaudited) 5,150 143,511 6,573 (329) (41) 713 85,826 241,403
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Balance 1 January
2019 (audited) 5,182 144,639 6,121 (329) (4) 1,491 95,009 252,199
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Issue of shares 17 378 - - - - - 395
Dividend
payable/paid - - - - - - (7,596) (7,596)
Share options charge
(including deferred
tax) - - 651 - - - - 651
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Transactions with
owners 17 378 651 - - - (7,596) (6,550)
--------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- -------- Profit for the period - - - - - - 12,142 12,142 Other comprehensive income Interest rate swaps - cash flow hedge - - - - (83) - - (83) Deferred tax on interest rate swaps - - - - 14 - - 14 Foreign exchange translation differences - - - - - 224 - 224 Total comprehensive income for the period - - - - (69) 224 12,142 12,297 Balance 30 June 2019(unaudited) 5,199 145,017 6,772 (329) (73) 1,715 99,645 257,946 --------------------- ---------- ---------- --------- --------- ---------- ------------- ---------- --------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
1. Nature of operations
Alliance Pharma plc ("the Company") and its subsidiaries (together "the Group") acquire, market and distribute pharmaceutical and other medical products. The Company is a public limited company, limited by shares, incorporated and domiciled in England. The address of its registered office is Avonbridge House, Bath Road, Chippenham, Wiltshire, SN15 2BB.
The Company is listed on the London Stock Exchange, Alternative Investment Market (AIM).
2. General information
The information in these financial statements does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and is unaudited. These financial statements have been prepared in accordance with the AIM rules, and IAS 34 has not been adopted. A copy of the Group's statutory accounts for the year ended 31 December 2018, prepared under International Financial Reporting Standards as adopted by the European Union, has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain statements under section 498(2) or section 498(3) of the Companies Act 2006.
The financial statements for the six-month period ended 30 June 2019 (including restated comparatives for the six months ended 30 June 2018) was approved by the Board of Directors on 23 September 2019.
The current rate of cash generation by the Group comfortably exceeds the capital and debt servicing needs of the business. The Board remains confident that all the bank covenants will continue to be met and the Group will be able to meet its working capital needs for at least the next 12 months.
After making enquiries, the Directors have formed a judgement that there is reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing these financial statements.
3. Accounting policies
The Group applies, for the first time, IFRS 16 Leases in these unaudited interim financial statements. The impact of this change in accounting policy is described below.
IFRS 16 Leases was adopted for the first time by the Group for the period beginning 1 January 2018. The new standard requires lessees to recognise a lease liability reflecting future lease payments and a 'right-of-use' asset for virtually all lease contracts, excluding certain short-term leases and leases of low-value assets. The Group has applied the retrospective approach which restates comparative information as if IFRS 16 has always applied.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17. These liabilities were measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate. The weighted average incremental borrowing rate applied to the lease liabilities is 3.0%. The associated right-of-use assets for leases have been measured on a retrospective basis.
In the unaudited prior period results associated legal and due diligence costs of GBP307,000 relating to the Nizoral acquisition were presented as a non-underlying item in administration and marketing expenses. Following subsequent review, and as presented in the 31 December 2018 Annual Report, these have been capitalised as part of the Nizoral intangible asset held within Brands and distribution rights. The unaudited prior period results have been restated to reflect this change in accounting treatment.
Remaining accounting policies applied in these financial statements are as published by the Group in the 31 December 2018 Annual Report. The Annual Report is available on the Group's website alliancepharmaceuticals.com.
Notes to the Half Yearly Report
For the six months ended 30 June 2019
3. Accounting policies (continued) 3.1 Impact on the financial statements
As a result of the adoption of IFRS 16 and the Nizoral adjustment prior period comparatives have been restated.
Consolidated Income Statement
Six months Effect Six months
ended 30 of Nizoral Effect ended 30
June 2018 acquisition of June 2018
before adjustments costs IFRS 16 post adjustments
GBP000s GBP000s adjustments GBP000s
GBP000s
----------------------------------- -------------------- ------------- ------------- ------------------
Revenue 54,455 - - 54,455
Cost of sales (22,021) - - (22,021)
----------------------------------- -------------------- ------------- ------------- ------------------
Gross profit 32,434 - - 32,434
----------------------------------- -------------------- ------------- ------------- ------------------
Operating expenses
Administration and marketing
expenses (18,945) 307 35 (18,603)
Share-based employee remuneration (571) - - (571)
Share of Joint Venture profits 13 - - 13
Profit on disposal of Unigreg
Joint Venture 1,508 - - 1,508
Impairment and write-down
of Synthasia Joint Venture
Assets (2,460) - - (2,460)
----------------------------------- -------------------- ------------- ------------- ------------------
Operating profit 11,979 307 35 12,321
----------------------------------- -------------------- ------------- ------------- ------------------
Finance costs
Interest payable and similar
charges (1,464) - (35) (1,499)
Finance income 373 - - 373
(1,091) - (35) (1,126)
----------------------------------- -------------------- ------------- ------------- ------------------
Profit before taxation 10,888 307 - 11,195
Taxation (2,059) (59) - (2,118)
----------------------------------- -------------------- ------------- ------------- ------------------
Profit for the period attributable
to equity shareholders 8,829 248 - 9,077
----------------------------------- -------------------- ------------- ------------- ------------------
Earnings per share
Basic (pence) 1.85 1.90
Diluted (pence) 1.80 1.85
----------------------------------- -------------------- ------------- ------------- ------------------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
3. Accounting policies (continued) 3.1 Impact on the financial statements (continued)
Summary Consolidated Balance Sheet
Effect of
30 June Nizoral Effect of 30 June
2018 before acquisition IFRS 16 2018 post
adjustments costs adjustments adjustments
GBP000s GBP000's GBP000s GBP000s
----------------------------- ------------- ------------- ------------- -------------
Assets
Non-current assets
Goodwill and intangible
assets 339,476 307 - 339,783
Property, plant and
equipment 3,907 - 2,142 6,049
Other non-current
assets 3,278 - - 3,278
346,661 307 2,142 349,110
Current assets 53,592 - - 53,592
Total assets 400,253 307 2,142 402,702
------------------------------- ------------- ------------- ------------- -------------
Equity
Other equity reserves 155,577 - - 155,577
Retained earnings 85,847 248 (269) 85,826
------------------------------- ------------- ------------- ------------- -------------
Total equity 241,424 248 (269) 241,403
Liabilities
Non-current liabilities
Other non-current
liabilities 33,749 - - 33,749
Deferred tax liability 27,608 59 - 27,667
Other liabilities 3,624 - 2,035 5,659
64,981 59 2,035 67,075
Current liabilities
Other current liabilities 67,047 - - 67,047
Corporation tax 1,549 - - 1,549
Trade and other payables 25,252 - 376 25,628
93,848 - 376 94,224
Total liabilities 158,829 59 2,411 161,299
Total equity and liabilities 400,253 307 2,142 402,702
------------------------------- ------------- ------------- ------------- -------------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
3. Accounting policies (continued) 3.1 Impact on the financial statements (continued)
Summary Consolidated Cashflow statement
Six months
Six months Effect Effect ended
ended 30 of Nizoral of 30 June
June 2018 acquisition IFRS 16 2018 post
before adjustments costs adjustments adjustments
Cash flows from operating activities GBP000s GBP000s GBP000s GBP 000s
------------------------------------- ------------------- ------------ ------------ -------------
Profit after taxation 10,888 307 - 11,195
Interest payable and similar
charges 1,464 - 35 1,499
Nizoral acquisition costs 307 (307) - -
Depreciation of property, plant
and equipment 410 - 256 666
Other adjusting items 1,787 - - 1,787
Cash generated from operations 14,856 - 291 15,147
------------------------------------- ------------------- ------------ ------------ -------------
Tax paid (2,363) - - (2,363)
------------ -------------
Cash flows received from operating
activities 12,493 - 291 12,784
------------------------------------- ------------------- ------------ ------------ -------------
Cash flows used in investing
activities (56,304) - - (56,304)
------------------------------------- ------------------- ------------ ------------ -------------
Financing activities
Capital lease payments - - (291) (291)
Other financing cashflows 47,092 - - 47,092
Net cash received from financing
activities 47,092 - (291) 46,801
------------------------------------- ------------------- ------------ ------------ -------------
Net movement in cash and cash
equivalents 3,281 - - 3,281
------------------------------------- ------------------- ------------ ------------ -------------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
4. Revenue
Unaudited Unaudited
Six months Six months
ended ended
Revenue information By Brand 30 June 2019 30 June 2018
GBP000s GBP000s
-------------------------------- -------------- --------------
International Star
brands:
Kelo-cote 13,143 10,919
Nizoral * 5,702 -
MacuShield 4,666 3,667
Vamousse 3,080 2,683
Xonvea - -
-------------------------------- -------------- --------------
26,591 17,269
Local brands:
Aloclair 4,371 3,505
Flamma Franchise 3,856 4,005
Hydromol 3,356 3,455
Oxyplastine 2,078 1,057
Forceval 2,048 1,811
Optiflo 1,503 1,354
Ashton & Parsons 1,207 1,128
Ametop 1,002 1,098
Other local brands 19,995 19,773
--------------------------------- -------------- --------------
39,416 37,186
-------------------------------- -------------- --------------
Total Revenue 66,007 54,455
--------------------------------- -------------- --------------
Unaudited Unaudited
Six months Six months
ended Ended
Revenue information By Geography 30 June 2019 30 June 2018
GBP000s GBP000s
----------------------------------- ------------------------ --------------
UK and Republic
of Ireland 26,122 25,744
Mainland Europe 14,323 12,181
International including
USA 25,562 16,530
------------------------------------ ------------------------ --------------
Total Revenue 66,007 54,455
------------------------------------ ------------------------ --------------
*Nizoral is shown on a net profit basis in statutory revenue. Nizoral revenue presented on a see-through income statement basis is included as an alternative performance measure in Note 18.
Notes to the Half Yearly Report
For the six months ended 30 June 2019
5. Finance costs
Unaudited
Six months Unaudited
ended Six months
30 June ended
2019 30 June 2018
GBP000s GBP000s
restated
-------------------------------------- ----------- -------------
On loans and overdrafts (1,634) (1,285)
Amortised finance issue costs (233) (152)
Unwinding of discount on deferred and
contingent consideration - (27)
Net fair value losses on derivatives (377) -
Net exchange losses (234) -
Interest on lease liabilities (43) (35)
-------------------------------------- ----------- ------------- Interest payable and similar charges (2,521) (1,499) -------------------------------------- ----------- ------------- Interest income 13 39 Net exchange gain - 334 -------------------------------------- ----------- ------------- Finance Income 13 373 -------------------------------------- ----------- ------------- Net Finance costs (2,508) (1,126) -------------------------------------- ----------- -------------
The unwinding of discount on deferred and contingent consideration in the prior period is in respect of amounts payable from the Macuhealth and Vamousse acquisitions.
6. Non-underlying items
Unaudited
Six months Unaudited
ended Six months
30 June ended
2019 30 June 2018
GBP000s GBP000s
restated
----------------------------------------- -------------- -------------
Unigreg Joint Venture profit on disposal - 1,508
Impairment and write down of Synthasia
Joint Venture assets - (2,460)
Total non-underlying items before
taxation - (952)
----------------------------------------- -------------- -------------
In April 2018 the Group sold its 60% interest in Unigreg Limited to its joint venture partner, Pacific Glory Development Limited, for a consideration of GBP2.9m. The Group profit on disposal was GBP1.5m net of fees.
In May 2018 the Group was notified that the import licence partner was not going to receive the required approval to import Suprememil, the infant milk formula brand owned by Synthasia. Following subsequent discussions with the import licence partner and Synthasia management, the Board concluded to fully impair the joint venture investment of GBP0.3m and to fully provide for the associated receivables balances of GBP2.2m. This generated a non-cash, non-underlying impairment charge and receivables provision of GBP2.5m.
In the unaudited prior period results associated legal and due diligence costs of GBP307,000 relating to the Nizoral acquisition were presented as a non-underlying item in administration and marketing expenses. Following subsequent review, and as presented in the 31 December 2018 Annual Report, these have been capitalised as part of the Nizoral intangible asset held within Brands and distribution rights. The unaudited prior period results have been restated to reflect this change in accounting treatment.
Notes to the Half Yearly Report
For the six months ended 30 June 2019
7. Taxation
Analysis of charge for the period is as follows:
Unaudited
Unaudited Six months
Six months ended ended
30 June 2019 30 June 2018
GBP 000s GBP 000s
restated
----------------- ------------------- ---------------
Corporation tax 2,916 1,668
Deferred tax 102 450
----------------- ------------------- ---------------
Taxation 3,018 2,118
----------------- ------------------- ---------------
8. Goodwill and Intangible assets
Brands
and distribution Development Assets under
Goodwill rights costs development Total
GBP 000s GBP 000s GBP 000s GBP 000s GBP 000s
Cost
At 1 January 2019 (audited) 16,565 328,092 768 1,000 346,425
Additions - - 8 - 8
Exchange adjustments - 146 - - 146
At 30 June 2019 (unaudited) 16,565 328,238 776 1,000 346,579
--------------------------------- ------------- ----------------- ----------- ------------ --------
Amortisation
At 1 January 2019 (audited) - 11,182 - - 11,182
Underlying impairment
for the period - 284 - - 284
Amortisation for the
period - 107 - - 107
At 30 June 2019 (unaudited) - 11,573 - - 11,573
--------------------------------- ------------- ----------------- ----------- ------------ --------
Net book amount
At 30 June 2019 (unaudited) 16,565 316,665 776 1,000 335,006
--------------------------------- ------------- ----------------- ----------- ------------ --------
At 1 January 2019 (audited) 16,565 316,910 768 1,000 335,243
--------------------------------- ------------- ----------------- ----------- ------------ --------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
9. Property, plant and equipment
Computer Fixtures, Plant & Right of
software fitting machinery use Total
and equipment and equipment Lease assets
The Group GBP000s GBP000s GBP000s GBP000s GBP000s
---------------------------- -------------- -------------- ----------- -------------- -------
Cost
At 1 January 2019 (audited) 5,327 2,036 14 3,964 11,341
Additions 1,289 387 - 1,453 3,129
Disposal (1) (2) - (1,957) (1,960)
At 30 June 2019 (Unaudited) 6,615 2,421 14 3,460 12,510
---------------------------- -------------- -------------- ----------- -------------- -------
Depreciation
At 1 January 2019 (audited) 1,074 836 - 1,837 3,747
Provided in the period 186 157 2 400 745
Disposal (1) (2) - (1,957) (1,960)
At 30 June 2019 (Unaudited) 1,259 991 2 280 2,532
---------------------------- -------------- -------------- ----------- -------------- -------
Net book amount
At 30 June 2019 (Unaudited) 5,356 1,430 12 3,180 9,978
---------------------------- -------------- -------------- ----------- -------------- -------
At 1 January 2019 (audited) 4,253 1,200 14 2,127 7,594
---------------------------- -------------- -------------- ----------- -------------- -------
10. Trade and other receivables
Unaudited Audited
30 June 2019 31 December 2018
GBP 000s GBP 000s
-------------------------------- --------------- -------------------
Trade receivables 21,880 23,407
Other receivables 1,285 1,083
Prepayments and accrued income 4,241 4,658
27,406 29,148
-------------------------------- --------------- -------------------
11. Trade and other payables
Unaudited Audited
30 June 2019 31 December 2018
GBP 000s GBP 000s
--------------------------------- --------------- -------------------
Trade payables 7,345 8,978
Other taxes and social security
costs 1,136 1,808
Accruals and deferred income 7,801 7,777
Dividend Payable 5,072 2,524
Other payables 540 197
Contingent consideration 500 500
Lease liabilities 1,030 447
--------------------------------- --------------- -------------------
23,424 22,231
--------------------------------- --------------- -------------------
12. Other non-current liabilities
Unaudited Audited
30 June 2019 31 December 2018
GBP 000s GBP 000s
------------------------------- --------------- -------------------
Lease Liabilities 2,467 1,972
Other non-current liabilities 375 380
------------------------------- --------------- -------------------
2,842 2,352
------------------------------- --------------- -------------------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
13. Earnings per share (EPS)
Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.
A reconciliation of the weighted average number of ordinary shares used in the measures is given below:
Six months Six months
ended ended
30 June 2019 30 June 2018
Weighted average Weighted average
number of shares number of shares
000s 000s
----------------- ------------------ ------------------
For basic EPS 518,516 477,676
Share options 10,019 13,561
----------------- ------------------ ------------------
For diluted EPS 528,535 491,237
----------------- ------------------ ------------------
Six months
to 30 June Six months to
2019 30 June 2018
GBP000s GBP 000
Restated
-------------------------------- ------------ --------------
Earnings for basic and diluted
EPS 12,142 9,077
Non-underlying items - 653
-------------------------------- ------------ --------------
Earnings for underlying basic
and diluted EPS 12,142 9,730
-------------------------------- ------------ --------------
The resulting EPS measures are:
Six months Six months to
to 30 June 2018
30 June 2019 Pence
Pence Restated
Basic EPS 2.34 1.90
---------------------- --------------- --------------
Diluted EPS 2.30 1.85
---------------------- --------------- --------------
Adjusted basic EPS 2.34 2.04
---------------------- --------------- --------------
Adjusted diluted EPS 2.30 1.98
---------------------- --------------- --------------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
14. Dividends
Six months
ended
30 June
2019
Pence/share GBP 000s
------------------------------------ ----------- ----------
Amounts recognised as distributions
to owners in the year
Interim dividend for the
prior financial year 0.487 2,524
Final dividend for the prior
financial year 0.977 5,072
-------------------------------------- ----------- ----------
7,596
------------------------------------ ----------- ----------
The interim dividend for 2018: (GBP0.487 pence per share) was paid on 10 January 2019. The final dividend for 2018 was approved by the Board of Directors on 22 March 2019 and subsequently by the shareholders at the Annual General Meeting on 23 May 2019. Following these approvals, final dividend has been included as a liability as at 30 June 2019 and was paid on 11 July 2019 to shareholders who were on the register of members at 14 June 2019.
The proposed interim dividend for the current financial year has not been recognised as a liability as at 30 June 2019. This is in accordance with IAS 10 Events After the Balance Sheet Date.
Six months
ended
30 June
2018
Pence/share GBP 000s
------------------------------------ ----------- ----------
Amounts recognised as distributions
to owners in the year
Interim dividend for the
prior financial year 0.443 2,104
Final dividend for the prior
financial year 0.888 4,236
-------------------------------------- ----------- ----------
6,340
------------------------------------ ----------- ----------
The interim dividend for 2017: (GBP0.443 pence per share) was paid on 11 January 2018. The final dividend for 2017: (GBP0.888 pence per share) was paid on 11 July 2018.
15. Loans and borrowings
Movements in borrowings are analysed as follows:
GBP 000s
At 1 January 2019 (audited) 96,702
-------------------------------------------------- -----------
Repayment of borrowings (6,359)
Amortisation of prepaid arrangement fees 233
Exchange movements (25)
-------------------------------------------------- -----------
At 30 June 2019 (unaudited) 90,551
-------------------------------------------------- -----------
The carrying amount of the group's borrowings are denominated in the following currencies:
Unaudited
30 June Audited
2019 31 December 2018
GBP 000s GBP 000s
------------------ ----------- -------------------
GBP 61,987 66,187
USD 13,158 15,197
EUR 16,072 16,216
Loan issue costs (666) (898)
------------------ ----------- -------------------
90,551 96,702
------------------ ----------- -------------------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
16. Post balance sheet events
On 2 July 2019, the Group agreed a new GBP165m fully Revolving Credit Facility, together with a GBP50m accordion, with an enlarged syndicate of lenders on improved terms, replacing the existing facility which ran through to December 2020. This new facility is available until July 2023, with a one-year extension option, and provides further flexibility for the Group to deliver carefully targeted acquisitions over the next few years to complement its organic growth strategy.
17. 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.
On 23 May 2019 the UK's Competition and Markets Authority ("CMA") issued a Statement of Objection alleging anti-competitive agreements against the Group and certain other pharmaceutical companies in relation to the sale of prescription prochlorperazine. Prochlorperazine is one of the Group's smaller products and had peak sales in 2015 of GBP1.9m and sales of less than GBP0.2m in 2018.
The Group confirms that it has had no involvement in the pricing or distribution of prochlorperazine since 2013, when it was out-licensed by the Group. Prior to 2013, prochlorperazine was marketed directly by the Group.
The Group has reviewed the CMA Statement of Objection in detail and is working with the CMA to resolve its alleged objections.
The Group's assessment as at 23 September 2019, based on currently available information, is that there are no matters for which a provision is required (31 December 2018: 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.
Notes to the Half Yearly Report
For the six months ended 30 June 2019
18. Alternative performance measures
The performance of the Group is assessed using Alternative Performance Measures (APMs). The Group's results are presented both before and after non-underlying items. Adjusted profitability measures are presented excluding non-underlying items as we believe this provides both management and investors with useful additional information about the Group's performance and aids a more effective comparison of the Group's trading performance from one period to the next and with similar businesses.
In addition, the Group's results are described using certain other measures that are not defined under IFRS and are therefore considered to be APMs. These measures are used by management to monitor on-going business performance against both shorter term budgets and forecasts but also against the Groups longer term strategic plans.
APMs used to explain and monitor Group performance:
Reconciliation
Measure Definition to GAAP measure
Underlying Earnings before interest, tax and non-underlying Note A below
EBIT and items (EBIT), then depreciation, amortisation
EBITDA and underlying impairment (EBITDA).
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 cash generated Note B below
flow from operations less cash payments made
for financing costs, capital expenditure
and tax.
--------------------------------------------------- -----------------
Net debt Net debt is defined as the group's gross Note C below
bank debt position net of finance issue
costs and cash.
--------------------------------------------------- -----------------
See-through Under the terms of the transitional services Note D below
income statement agreement with J&J, Alliance receives
the benefit of the net profit on sales
of Nizoral from the date of acquisition
up until the product licences in the Asia-Pacific
territories transfer from J&J to Alliance,
which is expected to occur during 2019
and 2020. The net profit arising in the
six months ended 30 June 2019 has been
recognised as part of statutory revenue.
The see-through income statement recognises
the underlying sales and cost of sales
which give rise to the net profit, as
management consider this to be a more
meaningful representation of the underlying
performance of the business, and to reflect
the way in which it is managed.
--------------------------------------------------- -----------------
Notes to the Half Yearly Report
For the six months ended 30 June 2019
18. Alternative performance measures (continued)
A. Underlying EBIT and EBITDA Unaudited Unaudited
Six months Six months
ended ended
30 June 2019 30 June 2018
GBP000s GBP000s
Reconciliation of Underlying
EBIT and EBITDA restated
Profit before tax 15,160 11,195
Non-underlying items - 952
Financing costs (note 5) 2,508 1,126
------------------------------- -------------------------------------- -------------
Underlying EBIT 17,668 13,273
------------------------------- -------------------------------------- -------------
Depreciation (note 9) 745 666
Amortisation and impairment
(note 8) 391 118
------------------------------- -------------------------------------- -------------
Underlying EBITDA 18,804 14,057
------------------------------- -------------------------------------- -------------
B. Free cash flow Unaudited Unaudited
Six months Six months
ended ended
30 June 2019 30 June 2018
GBP000s GBP000s
Reconciliation of free cash
flow restated
Cash generated from operations 19,182 15,147
Financing costs (1,721) (1,454)
Capital expenditure (1,680) (940)
Tax paid (1,283) (2,363)
-------------------------------- ------------- -------------
Free cash flow 14,498 10,390
-------------------------------- ------------- -------------
C. Net debt
Audited
Unaudited 31 December
30 June 2019 2018
Reconciliation of net debt GBP000s GBP000s
Loans and borrowings - current (67,047) (68,035)
Loans and borrowings - non-current (23,504) (28,667)
Cash and cash equivalents 16,468 10,893
Net debt (74,083) (85,809)
------------------------------------ ------------- -------------
D. See-through income statement
Unaudited
Unaudited six months
six months ended 30
ended 30 June June 2019
2019 statutory See-through see-through
values adjustment values
GBP000s GBP000s GBP000s
-------------------- --------------- ------------------------ ------------
Revenue 66,007 4,270 70,277
Cost of sales (24,691) (4,270) (28,961)
-------------------- --------------- ------------------------ ------------
Gross profit 41,316 - 41,316
-------------------- --------------- ------------------------ ------------
Gross profit margin 62.6% - 58.8%
-------------------- --------------- ------------------------ ------------
There is no impact from the see-through adjustment on income statement lines below gross profit.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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