Alliance Pharma PLC Interim Results (3767M)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Alliance Pharma Plc	LSE:APH	London	Ordinary Share	GB0031030819	ORD 1P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	35.00	35.10	35.25				0.00	01:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Pharmaceutical Preparations	167.42M	936k	0.0017	206.76	189.86M

TIDMAPH

RNS Number : 3767M

Alliance Pharma PLC

21 September 2021

 
 For immediate release                                             21 September 2021

ALLIANCE PHARMA PLC

("Alliance" or the "Group")

Interim results for the six months ended 30 June 2021

Strong growth from Consumer Healthcare brands and integration of Amberen complete

Full year outlook in line with market expectations

Alliance Pharma plc (AIM: APH), the international healthcare group, announces its interim results for the six months ended 30 June 2021 (the "Period").

HIGHLIGHTS

-- The Group traded strongly in the Period with an excellent performance from Kelo-cote(TM), an uplift in revenue from Prescription Medicines and a significant contribution from recently acquired Amberen(TM)

-- See-through revenue in total up 24% (+28% on a constant currency basis ("CCY")) to GBP80.9m; like-for-like ("LFL") see-through revenue, which excludes Amberen, up 9% (+12% CCY); statutory revenue up 27% to GBP78.6m (H1 2020 GBP61.7m)

o Strong performance from Consumer Healthcare brands, with see-through revenue up 30% overall (+35% CCY)

-- Kelo-cote revenue up 54% (+62% CCY)

-- LFL Consumer Healthcare revenue up 8% (+12% CCY)

o Prescription Medicines revenue up 12% (+12% CCY)

-- Underlying gross margin up 4.7 % to 63.8% of see-through revenue (H1 2020: 59.1%), reflecting favourable changes in product mix; statutory gross margin up 3.1% to 65.6% (H1 2020: 62.5%)

-- Underlying profit before tax up 24% to GBP20.1m (H1 2020: GBP16.3m); reported profit before tax GBP16.5m (H1 2020: GBP0.6m)

-- Free cash flow GBP6.5m (H1 2020: GBP10.5m), reflecting the expected reversal of favourable working capital movements in Q4 2020 and the timing of sales within the Period

-- Leverage reduced to 2.21 times from 2.43 times at December 2020 and expected to fall below 2.0 times by the end of the year

   --      Amberen integration complete and trading in line with management expectations 
   --      Interim dividend payment of 0.563p, up 5% (interim dividend 2020: 0.536p)

REVENUE SUMMARY

 
 Unaudited six months ended            H1 2021   H1 2020   Growth   CCY growth 
  30 June                                GBPm      GBPm 
            Kelo-cote                   21.9      14.2       +54%         +62% 
------------------------------------  --------  --------  -------  ----------- 
            Amberen                      9.5        -           -            - 
------------------------------------  --------  --------  -------  ----------- 
            Nizoral*                     9.0       9.8        -8%          -7% 
------------------------------------  --------  --------  -------  ----------- 
            Other consumer brands       16.4      19.8       -17% 
------------------------------------  --------  --------  -------  ----------- 
    Consumer Healthcare                 56.8      43.8       +30%         +35% 
------------------------------------  --------  --------  -------  ----------- 
    Prescription Medicines              24.1      21.5       +12%         +12% 
------------------------------------  --------  --------  -------  ----------- 
 See-through revenue*                   80.9      65.3       +24%         +28% 
------------------------------------  --------  --------  -------  ----------- 
 LFL Consumer Healthcare revenue, 
  excluding Amberen                     47.3      43.8        +8%         +12% 
------------------------------------  --------  --------  -------  ----------- 
 LFL see-through revenue, excluding 
  Amberen                               71.4      65.3        +9%         +12% 
------------------------------------  --------  --------  -------  -----------

FINANCIAL SUMMARY

 
 Unaudited six months ended           H1 2021    H1 2020    Growth 
  30 June                               GBPm       GBPm 
 See-through Revenue*                  80.9       65.3        +24% 
-----------------------------------  --------  ----------  ------- 
 Statutory Revenue                     78.6       61.7        +27% 
-----------------------------------  --------  ----------  ------- 
 Gross profit                          51.6       38.6        +34% 
-----------------------------------  --------  ----------  ------- 
 Underlying EBITDA*                    22.8       18.1        +26% 
-----------------------------------  --------  ----------  ------- 
 Underlying profit before taxation     20.1       16.3        +24% 
-----------------------------------  --------  ----------  ------- 
 Reported profit before taxation       16.5        0.6 
-----------------------------------  --------  ----------  ------- 
 Underlying basic earnings per 
  share                                2.99p      2.45p       +22% 
-----------------------------------  --------  ----------  ------- 
 Reported basic earnings per 
  share                                1.54p     (0.33)p 
-----------------------------------  --------  ----------  ------- 
 Free cash flow*                        6.5       10.5        -38% 
-----------------------------------  --------  ----------  ------- 
 Leverage                              2.21x    2.43x (31 
                                                   Dec) 
-----------------------------------  --------  ----------  ------- 
 Net debt*                             105.4    109.4 (31 
                                                   Dec) 
-----------------------------------  --------  ----------  ------- 
 Interim dividend per share           0.563p     0.536p        +5% 
-----------------------------------  --------  ----------  -------

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

Specifically, see-through revenue includes 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 each of the Asia-Pacific territories transfer from J&J to Alliance. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15.

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

"The Group has delivered another strong performance in the first half of 2021, with the uplift in revenue from our enlarged Consumer Healthcare business flowing through to pre-tax profits. We expect this core part of our business to continue to grow strongly during the remainder of the year, led by Kelo-cote and Amberen.

"We were very pleased with the first half performance from Amberen, which was acquired in December 2020 and has traded in line with our expectations. With the integration of the brand into our US-based operations now complete, we can focus on maximising the value of this key brand.

"Trading for the remainder of the financial year remains in line with market expectations. We expect the combination of positive trading and working capital movements to result in Group leverage falling below 2.0x by the end of the year."

WEBCAST & ANALYST Q&A CALL

A pre-recorded presentation of the half year results, by Peter Butterfield, Chief Executive Officer, and Andrew Franklin, Chief Financial Officer, will be available at 7.05am today at the investor section of Alliance's website, https://www.alliancepharmaceuticals.com/investors/

and at https://webcasting.buchanan.uk.com/broadcast/6127786112f0cb436ea67ef8

A Q&A call for analysts will be held at 10.00am today; analysts who require joining details should contact Buchanan at alliancepharma@buchanan.uk.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 
  / Duncan Monteith 
 Corporate Broking: James Black 
 
 
 Investec Bank plc                  + 44 (0) 20 7597 5970 
 Corporate Finance: Daniel Adams 
 Corporate Broking: Patrick Robb

About Alliance

Alliance Pharma plc (AIM: APH) is an international healthcare group. Our purpose is to improve the lives of consumers and patients through making available a range of clinically valuable healthcare products.

Our core focus is on the marketing of Consumer Healthcare brands, complemented by a smaller Prescription Medicines business. In total, we hold marketing rights to around 80 brands, with revenues generated from a mix of direct, distributor and e-commerce sales.

Headquartered in the UK, the Group employs around 250 people based in locations across Europe, North America, and the Asia Pacific region. By outsourcing our manufacturing and logistics operations, we remain asset-light and focused on maximising the value of our brands.

More information on Alliance can be found on our website: www.alliancepharmaceuticals.com

CHIEF EXECUTIVE'S STATEMENT

Trading performance

Overview

The Group delivered another strong performance in the Period, with see-through revenue up 24% to GBP80.9m (H1 2020: GBP65.3m), despite the impact of currency headwinds and continuing lockdowns, particularly in the APAC region; on a constant currency basis, revenue was up 28%. Like-for-like revenue, excluding Amberen, which was acquired by the Group at the end of 2020, was up 9% (up 12% on a constant currency basis).

Gross profit increased by 34% to GBP51.6m (H1 2020: GBP38.6m), the increase outstripping revenue growth due to favourable changes in product mix. This was balanced by an increase in operational costs, primarily reflecting the inclusion of the Amberen cost base. Coupled with small increases in depreciation charges and financing costs, underlying profit before tax increased 24% to GBP20.1m (H1 2020: GBP16.3m), with the profit before tax margin being maintained at 25%.

Consumer Healthcare performance

Overall, see-through revenue across our Consumer Healthcare brands increased by 30% in the Period to GBP56.8m (H1 2020: GBP43.8m) and by 35% on a constant currency basis. On a like-for-like basis, excluding Amberen, see-through revenue increased by 8% (12% CCY).

Our leading brands generally performed well during the Period, with a particularly strong performance from Kelo-cote and an encouraging start by Amberen since acquisition in December 2020.

Kelo-cote - scar prevention and treatment

Kelo-cote growth accelerated strongly in the Period, with sales up 54% to GBP21.9m (H1 2020: GBP14.2m), notwithstanding the impact of adverse currency movements. On a constant currency basis, sales were up 62% due to continued strong demand from China, reflected both in the growth of domestic sales and in significant growth in cross-border e-commerce ("CBEC") sales.

Kelo-cote is very well established in China, with high brand awareness and usage. The growth in domestic and CBEC sales reflects the increasing trend for consumers in China and elsewhere to buy more of the brand, and healthcare products generally, online. This trend has been accelerated by the global pandemic.

In recognition of the success of CBEC in facilitating export sales from the EU to consumers in China, and the significant opportunity China offers as a growth driver for this key brand, we have recently entered into a new CBEC distribution agreement for Kelo-cote, which gets us closer to the customer and gives us further control of our distribution chain. We expect this to further accelerate top-line growth in this key market in the medium term.

Performance across the rest of APAC, South America and EMEA was more mixed, primarily due to the continuing impacts of the global pandemic, and the timing of distributor orders. Sales to a number of APAC countries, including Hong Kong and South Korea, benefited from a post-COVID-19 recovery, whilst distributor order phasing benefited sales to South America notwithstanding the resurgence of the pandemic negatively impacting in-market demand. In EMEA, strong performances from a number of European territories including France (domestic and export sales) and the UK were partially offset by distributor order phasing adversely affecting sales to the Middle East and Africa.

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

Amberen made an encouraging start during its first period of trading under the Group's ownership, generating sales of GBP9.5m, up 10% on a constant currency basis versus sales for the last six months under its previous ownership and in line with management's expectations.

Growth from the Perimenopause product, launched in June 2020, has been particularly encouraging with the product now having a 7% market share, double that at acquisition. Just 12 months after launch, it is now the fifth largest SKU in the category by value.

Full year sales expectations continue to be weighted towards the second half, reflecting an increased focus on media investment and online marketing.

Nizoral - medicated anti-dandruff shampoo

Nizoral see-through sales were 8% lower than for the prior period, at GBP9.0m (H1 2020: GBP9.8m), 7% lower on a constant currency basis, due to a combination of distributor order phasing, manufacturing delays, and the ongoing impacts of COVID-19 on demand, particularly in India, and on the processing of regulatory approvals in Vietnam and the Philippines.

We are now starting to roll out our strategic brand plan for Nizoral, with consumer activation underway in South Korea, Australia, Taiwan and the Philippines as part of a growth strategy centred around consumer and healthcare professional activation, e-commerce, and innovation and development.

Excellence in execution will be key to realising the growth opportunities for the brand across the 14 culturally diverse markets in the APAC region in which it is sold, and particularly in China, which is currently the brand's largest market and one that represents a significant growth opportunity for Nizoral.

Other Consumer Healthcare brands

Performance across our other Consumer Healthcare brands was mixed, particularly for those products sold principally through international distributors . We saw a strong performance from MacuShield (eye health supplement), with first half sales up 54% on those for the prior period at GBP4.4m (H1 2020: GBP2.8m), reflecting the recovery of UK retail sales adversely affected in the first half of 2020 by COVID-19 and the normalisation of distributor stocking post Brexit. However, other brands, including Vamousse, Aloclair and Oxyplastine, continued to be adversely affected by COVID-19 and the knock-on impact of the pandemic on distributor stocking and order phasing.

Vamousse ( prevention and treatment of head lice ) sales were down 28% (-22% CCY) versus the prior period at GBP2.3m (H1 2020: GBP3.2m), reflecting ongoing trading challenges due to COVID-19, with the incidence of head lice, and hence the demand for treatment and prevention products, continuing to be suppressed by school closures, particularly in the US, the product's primary market. That said, the head lice category in the US is now starting to show month-on-month growth and Vamousse continues to track ahead of category performance, having gained 1.6 percentage points of market share over the 52 weeks to 19 June 2021.

Aloclair ( treatment for mouth ulcers ) saw sales fall by 40% in the Period to GBP2.7m (H1 2020: GBP4.6m), as distributors continued to respond to changes in local trading conditions as a result of COVID-19. As lockdowns ease, we would expect demand to normalise .

Sales of Oxyplastine (treatment for skin irritations, including nappy rash) fell by 58% to GBP0.9m in the Period (H1 2020: GBP2.2m), due to import restrictions and COVID-19 related impacts on distributor sales to Algeria, historically the brand's largest market. Both Oxyplastine and Aloclair tend to generate relatively low margins, thereby limiting the impact of the reduction in revenues at the gross margin level.

Prescription Medicines performance

Sales from our Prescription Medicines portfolio increased by 12% in the Period to GBP24.1m (H1 2020: GBP21.5m), reflecting a partial return to the delivery of routine treatments and normalisation of daily life compared with the early stages of the pandemic.

We continue to actively manage this part of our portfolio, periodically discontinuing or disposing of smaller products that deliver very low sales and margins. However, the cash generation from these assets remains good and, coupled with their limited requirement for promotional investment, they will continue to play an important part in our overall product portfolio.

Regional performance

EMEA

Across the EMEA region as a whole, first half sales were up 11% versus those for the prior period at GBP49.9m (H1 2020: GBP44.8m).

This was primarily due to the uplift in Prescription Medicines sales, with this region accounting for 95% of all Prescription Medicines sales in the Period, coupled with a significant uplift in CBEC sales of Kelo-cote from the EU to China, and the uplift in MacuShield sales, which originate primarily in EMEA (the largest market is the UK).

APAC

See-through sales across the APAC region as a whole were up 6% versus the prior period at GBP17.9m (H1 2020: GBP16.9m), notwithstanding the continuing impacts of local lockdowns across much of this region.

APAC is primarily a Consumer Healthcare region, with consumer products accounting for approximately 95% of total see-through sales in the region. The dominant brands are Kelo-cote and Nizoral (which is only sold by Alliance in APAC), which collectively account for almost 90% of the region's see-through sales.

The uplift in sales reflects growth in Kelo-cote sales, both in China and across the wider APAC region, coupled with a slight decline in Nizoral sales, primarily due to distributor order phasing.

AMER

Sales in the AMER region increased by GBP9.4m to GBP13.0m (H1 2020: GBP3.6m), reflecting the acquisition of Amberen, which contributed GBP9.5m to sales in the Period. On a like-for-like basis, sales were marginally down on the prior period at GBP3.5m, with the decline in Vamousse sales in the US being largely offset by increased sales of Kelo-cote to South America, and increased Aloclair sales. This region now accounts for just under a quarter of our Consumer Healthcare revenue.

Current trading and outlook

The second half of the year has started well, and we remain confident in our ability to meet market expectations in terms of revenue, underlying profits and net debt.

We now have a significant new opportunity to drive further growth for Kelo-cote through our CBEC business and to start to realise the growth potential in Nizoral through 2022 and beyond.

Amberen has got off to an encouraging start, and we remain confident in our ability to leverage the growth potential in this key brand going forward.

With the integration of Amberen now complete, we continue to look for opportunities to selectively add to our Consumer Healthcare portfolio, leveraging the platform we have built across EMEA, APAC and, more recently, the US.

Operational developments

Group infrastructure, systems and processes

Our new Innovation & Development process is now fully up and running, increasing our ability to extend the reach of our larger consumer brands through brand extensions (new formulations, targeting related sub-sectors, or new presentations) in addition to refreshing existing products to maintain consumer appeal.

We have also started to roll out our new Digital Excellence training programme to our global marketing teams, to ensure our staff have the necessary skills and knowledge in this area to drive sustainable long- term value.

Our ERP system has now gone live and is already starting to deliver business benefits through the standardisation of processes, with the high level of preparation undertaken pre-go-live ensuring a virtually seamless changeover. Work continues on refining some of the reporting requirements and rolling the system out to a few remaining smaller entities.

We have recently completed further substantial upgrading and refurbishment works at our UK headquarters, improving the building's environmental credentials whilst also reconfiguring space to better accommodate post-pandemic working arrangements. We have recently secured new, larger offices in Cary, North Carolina, to accommodate our growing US team.

Amberen integration

Operationally, integration of Amberen into the business is now complete. A number of new hires have recently been made in the US to strengthen our operating capabilities to better support Amberen and Vamousse and also to enhance our ability to scale up as and when a suitable US acquisition opportunity arises.

Ways of working

At the start of July, we rolled out a new hybrid working model for our employees around the globe to enable them to balance home working with a return to the office. We will continue to refine this during the remainder of the year, as our understanding of what works best, both for our employees and for the business, increases.

Building a sustainable business

We have continued to work on developing our sustainable business strategy in the Period, under the direction of the ESG Board Committee, revisiting our materiality assessment, carrying out an external ESG gap analysis and engaging with many of our key investors in order to develop a Balanced Scorecard for the business and inform future areas of focus. More detail can be found in the accompanying results presentation.

Board changes

As previously announced, Kristof Neirynck, a highly experienced consumer brands executive, will be joining the Group on 1 December 2021 as an independent Non-Executive Director. Kristof brings almost 20 years of international consumer brand experience including complex omni-channel business models, direct-to-consumer strategies and CBEC sales into China to the Group. His experience will be invaluable as we look to further develop and grow our business, in particular our CBEC activities, over the coming years.

Peter Butterfield

Chief Executive Officer

21 September 2021

FINANCIAL REVIEW

Summary underlying income statement

 
 Unaudited six months ended 30 June     H1 2021   H1 2020   Growth 
                                           GBPm      GBPm 
 See-through Revenue*                      80.9      65.3     +24% 
-------------------------------------  --------  --------  ------- 
 Statutory Revenue                         78.6      61.7     +27% 
-------------------------------------  --------  --------  ------- 
 Gross profit                              51.6      38.6     +34% 
-------------------------------------  --------  --------  ------- 
 Operating expenses (including IFRS 
  2 share options charge)                (28.8)    (20.5)     +41% 
-------------------------------------  --------  --------  ------- 
 Underlying EBITDA*                        22.8      18.1     +26% 
-------------------------------------  --------  --------  ------- 
 Depreciation                             (1.1)     (0.8)     +32% 
-------------------------------------  --------  --------  ------- 
 Underlying EBIT*                          21.7      17.2     +26% 
-------------------------------------  --------  --------  ------- 
 Finance costs                            (1.6)     (1.0)     +58% 
-------------------------------------  --------  --------  ------- 
 Underlying profit before taxation         20.1      16.3     +24% 
-------------------------------------  --------  --------  ------- 
 Reported profit before taxation           16.5       0.6 
-------------------------------------  --------  --------  ------- 
 Underlying basic earnings per share      2.99p     2.45p     +22% 
-------------------------------------  --------  --------  ------- 
 Reported basic earnings per share        1.54p   (0.33)p 
-------------------------------------  --------  --------  ------- 
 Interim dividend per share              0.563p    0.536p      +5% 
-------------------------------------  --------  --------  -------

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

Specifically, see-through revenue includes 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. 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 2021, underlying results exclude the amortisation of intangible assets; for 2020, underlying results exclude the amortisation and impairment of intangible assets. Further detail can be found in note 6.

The Group delivered a strong financial performance in the Period, with see-through revenue increasing 24% to GBP80.9m (H1 2020: GBP65.3m) and statutory revenue increasing 27% to GBP78.6m (H1 2020: GBP61.7m). Like-for-like revenue excluding Amberen increased by 9%. Whilst operating expenses increased, due mainly to the inclusion of the Amberen cost base coupled with small increases in depreciation and finance costs, underlying profit before tax as a percentage of sales was maintained with underlying profit before tax increasing 24% to GBP20.1m (H1 2020: GBP16.3m).

Group revenue was adversely impacted by exchange rate movements, principally the strengthening of Sterling against the US Dollar, which depressed see-through revenue by approximately GBP2.4m. On a constant currency basis, see-through revenue increased 28% overall and 12% on a like-for-like basis.

Gross profit increased by a larger percentage than sales at 34% to GBP51.6m (H1 2020: GBP38.6m), with gross margin increasing from 59.1% to 63.8% of see-through revenue, reflecting favourable changes in product mix. Gross margin relative to statutory revenue was 65.6% (H1 2020: 62.5%).

Operating costs (defined as underlying administration and marketing expenses, excluding depreciation charges) were up by GBP7.4m versus the prior Period at GBP27.3m (H1 2020: GBP19.9m) due primarily to the inclusion of the Amberen cost base, coupled with the resumption of discretionary spend deferred or cancelled in H1 2020 in response to the global pandemic and increased levels of investment in the business more generally. As a result, operating costs as a percentage of sales increased 3.4% to 33.9% of see-through sales (H1 2020: 30.5%).

The IFRS 2 share options charge for the Period was GBP1.5m, up GBP0.9m versus that for the prior period (H1 2020: GBP0.6m).

Net of the increase in operating costs and the share options charge, underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 26% in the Period to GBP22.8m (H1 2020: GBP18.1m), whilst underlying operating profit increased by a similar percentage to GBP21.7m (H1 2020: GBP17.2m) and reported operating profit increased by GBP16.5m to GBP18.1m (H1 2020: GBP1.6m).

Depreciation

Depreciation charges for the Period were GBP1.1m, up GBP0.3m on the prior period (H1 2020: GBP0.8m).

Finance costs

Finance costs were up by GBP0.6m compared with the prior period at GBP1.6m (H1 2020: GBP1.0m), GBP0.3m of which related to an increase in borrowing costs, reflecting the higher level of borrowings following the Amberen acquisition and the remainder relating primarily to lower net gains on currency movements in the Period of GBP0.2m (H1 2020: GBP0.6m).

The average interest charge on gross debt during the Period (including non-utilisation fees) was 2.04% (H1 2020: 2.78%).

Non-underlying items

Non-underlying items in the Period comprise amortisation charges for Prescription Medicines and certain other brand assets; for the prior period, non-underlying items comprise amortisation charges and impairment charges.

Reconciliation of underlying to reported profit before tax

 
 Unaudited six months ended 30 June       H1 2021   H1 2020 
                                            GBPm      GBPm 
 Underlying profit before taxation         20.1      16.3 
---------------------------------------  --------  -------- 
 Non-underlying items: 
---------------------------------------  --------  -------- 
   Amortisation of intangible assets       (3.6)     (3.6) 
---------------------------------------  --------  -------- 
   Impairment of intangible assets and 
    goodwill                                 -      (12.1) 
---------------------------------------  --------  -------- 
 Total                                     (3.6)    (15.6) 
---------------------------------------  --------  -------- 
 Reported profit before taxation           16.5       0.6 
---------------------------------------  --------  --------

Taxation

The underlying tax charge for the Period was GBP4.1m (H1 2020: GBP3.3m), which equates to an effective tax rate of 20.5% (H1 2020: 20.0%). The total tax charge for the Period was GBP8.3m (H1 2020: GBP2.4m) and includes a GBP5.1m charge following the decision to increase the UK tax rate from 19% to 25% (this charge relates primarily to an increase in the deferred tax balances on intangible assets) partially offset by a tax credit on non-qualifying amortisation of GBP0.9m.

Earnings per share

Underlying basic earnings per share, the measure used by the Board in assessing earnings performance, was 2.99p, an increase of 22% on the prior period (H1 2020: 2.45p), reflecting the increase in the Group's underlying profit after tax coupled with a modest increase in the number of shares in issue.

Reported basic earnings per share increased by 1.87p to 1.54p (H1 2020: (0.33p)) due to the impact of non-underlying items on reported earnings in the Period versus the prior period.

Dividend

The Board is pleased to announce that it is declaring an interim dividend payment of 0.563p per share for 2021, an increase of 5% on the 0.536p interim dividend for 2020. The Board will continue to assess the level of future cash distributions having regard to overall business performance and future outlook.

The interim dividend for 2021 will be paid on 7 January 2022, to shareholders on the register on 24 December 2021.

Balance sheet

Intangible assets reduced by GBP5.7m in the Period to GBP407.2m (31 December 2020: GBP412.9m), reflecting amortisation charges of GBP3.6m together with GBP1.9m due to exchange rate movements and a GBP0.2m true-up for working capital relating to the Amberen acquisition.

Further detail is provided in note 10.

Working capital

Net working capital at 30 June 2021 was GBP27.7m, an increase of GBP8.4m on that at the start of the Period (31 December 2020: GBP19.3m), reflecting an expected increase in receivables as a result of sales timings.

Inventories, net of provisions, amounted to GBP23.2m at 30 June 2021 (31 December 2020: GBP22.9m), the minimal movement reflecting our decision to maintain the higher levels of finished goods inventory, raw materials and componentry built up during 2020 in order to mitigate against any disruption to our supply chain following the UK's departure from the EU.

As noted above, receivables increased by GBP8.5m, reflecting the timing of sales, with second quarter 2021 sales being weighted towards the end of the quarter, versus fourth quarter 2020 sales, which were weighted towards the start of the quarter. We expect receivables to reduce by the end of the year, based on expected sales timings. There was minimal movement in payables, which increased by GBP0.4m.

Cash flow and net debt

Free cash flow for the Period was GBP6.5m (H1 2020: GBP10.5m), the reduction reflecting the expected reversal of the favourable working capital movements in the fourth quarter of 2020 and the timing of sales within the Period. Net debt reduced by GBP4.0m to GBP105.4m as at 30 June 2021 and Group leverage reduced to 2.21 times at the end of June (31 December 2020: 2.43 times). We continue to expect leverage to fall below 2.0 times by the end 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 part-fund larger acquisitions. Borrowings are denominated in Sterling, Euro and US Dollars.

Group risk management policy is to hedge up to 75% of estimated future foreign currency EBITDA exposure, for up to the next 18 months at any point in time. The Group uses forward foreign exchange contracts to implement this policy which are generally designated as cash flow hedges.

The Group benefits from a GBP165m Revolving Credit Facility (RCF) and a GBP50m Accordion Facility, expiring in July 2024. This facility provides flexibility for the Group to pursue its acquisition strategy over the next couple of years to complement future organic growth. GBP32m of this RCF remained unutilised as at 30 June 2021.

We apply the cash generated from our trading operations in reinvesting in our current portfolio of brands, with investment being primarily targeted at our larger Consumer Healthcare brands, acquiring new Consumer Healthcare brands, to complement our existing portfolio and leverage our operating platform, paying down debt and paying dividends to our shareholders.

Andrew Franklin

Chief Financial Officer

21 September 2021

UNAUDITED CONSOLIDATED INCOME STATEMENT