Alliance Pharma plc

For immediate release

20 September 2022

ALLIANCE PHARMA PLC

("Alliance" or the "Group")

Results for the six months ended 30 June 2022

Alliance Pharma plc (AIM: APH), the international healthcare group, is pleased to announce its interim results for the six months ended 30 June 2022 ("the Period"). The Group navigated the challenges of H1 well and is on track to accelerate revenues in H2 as supply constraints ease and our marketing and product development initiatives stimulate greater demand. We remain on track to meet market expectations for full year financial performance, noting that the timing of certain orders in Q4 is dependent on the rate of recovery in those markets.

FINANCIAL SUMMARY

Unaudited six months ended

2022

2022

2021

2021

Growth

Growth

June 30

Underlying

Reported

Underlying

Reported

underlying

reported

(£m)

(£m)

(£m)

(£m)

Revenue (see-through basis)*

81.6

81.6

80.9

80.9

+1%

+1%

Revenue (statutory basis)

78.8

78.8

78.6

78.6

0%

0%

Gross profit

50.6

50.6

51.6

51.6

-2%

-2%

Profit before taxation

19.7

16.5

20.1

16.5

-2%

0%

Basic earnings per share

2.90

2.43

2.99

1.54

-3%

+58%

Free cash flow*

5.1

6.5

Cash from operations

8.4

14.5

Net debt*

103.6

31 Dec: 87.0

Interim dividend per share

0.592p

0.563p

OPERATING AND FINANCIAL HIGHLIGHTS

  • H1 revenue growth impacted by lockdown in Shanghai, and associated temporary disruption to supply chain, therefore, as previously indicated, performance more heavily weighted to H2 due to order phasing
  • Consumer Healthcare see-through revenue* up 1% to £57.4m (H1 21: £56.8m) with 15% growth in Other Consumer Healthcare revenues offsetting softer performance in key brands
  • Robust Prescription Medicine performance with revenues of £24.1m in line with prior year (H1 21: £24.1m)
  • Free cash flow of £5.1m (H1 21: £6.5m). Highly strategic acquisition of ScarAway™ and US rights to Kelo-cote™ for $19.4m (£14.8m) led to an increase in net debt and Group leverage of 2.05x at Period end.

DEVELOPING OUR BUSINESS

  • Integration of ScarAway™ and US rights to Kelo-cote completed, with revenues in-line with expectations
  • Last remaining Nizoral™ marketing authorisations transferred from J&J to Alliance in China and Vietnam, new top-tier Chinese distributor appointed and manufacturing supply consolidation progressing well which will result in improvements in efficiencies and COGS

Alliance Pharma plc

  • Several new complementary proprietary products launched, or planned to launch this year, including Kelo-cote Kids and Kelo-cote Scar Sheets in China, and Canker-X™ in the USA, all of which will contribute to ongoing organic growth
  • ERP system successfully rolled out to further territories including North America
  • Scope 1 and 2 emissions target set to achieve net zero in 2030, with an interim reduction of 65% by 2025

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

"I am pleased with the performance of the Group in the first half of 2022 against the backdrop of difficult global trading conditions. Our portfolio continues to provide a robust platform from which to grow our consumer healthcare brands. I was also delighted to close a highly strategic US acquisition in the Period which consolidates our position in the scar reduction market. The integration of ScarAway has gone very smoothly and we continue to evaluate opportunities to acquire selective complementary new products to enhance our Consumer Healthcare platform.

"The second half of 2022 has got off to an encouraging start as lockdowns and supply constraints have eased. We anticipate strong sales growth in H2 as our marketing campaigns yield benefits, we integrate our new distribution partners and launch new products to grow our market share. Our FY 22 expectation includes several large distributor orders in Q4 to meet increased demand, with the timing of these orders dependent on the rate of recovery in those markets. Our base business remains strong with further new product launches expected in 2023 to secure future growth."

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

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

ANALYST MEETING & WEBCAST

A meeting for analysts will be held at 9.30am this morning, 20 September 2022, at Investec Bank plc, 30 Gresham Street, London EC2V 7QP. For further details, analysts should contact Buchanan at alliancepharma@buchanan.uk.com.

A live webcast of the analyst meeting will be available at this link: https://webcasting.buchanan.uk.com/broadcast/6307905bda906b287e99fad3

A recording of the webcast will be made available at the investor section of Alliance's website, https://www.alliancepharmaceuticals.com/investors/

For further information:

Alliance Pharma plc

+ 44 (0)1249 466966

Head of Investor Relations: Cora McCallum

+ 44 (0)1249 705168

ir@allianceph.com

Buchanan

+ 44 (0)20 7466 5000

Mark Court / Hannah Ratcliff

alliancepharma@buchanan.uk.com

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

Alliance Pharma plc

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.

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

Alliance Pharma plc

Trading performance

Overview

Group see-through revenue of £81.6m was up 1% on the prior period at actual exchange rates ("AER") (H1 21: £80.9m) and down 2% at constant exchange rates ("CER"), with statutory revenue in line with the prior period at £78.8m (H1 21: £78.6m) AER and down 2% CER. As detailed in our AGM trading statement on 18 May 2022, Group performance is expected to be more heavily weighted to H2 than in previous years owing to the lockdown in Shanghai and associated temporary disruption to our supply chain, coupled with the anticipated revenue trajectory for our consumer brands.

Revenue summary

Unaudited six months ended 30 June

2022

2021

Growth

CER

£m

£m

growth

Kelo-cote franchise

22.9

21.9

+5%

-3%

Amberen

7.5

9.5

-21%

-25%

Nizoral*

7.9

9.0

-12%

-12%

Other consumer brands

19.0

16.5

+15%

+15%

Consumer Healthcare

57.4

56.8

+1%

-3%

Prescription Medicines

24.1

24.1

0%

+1%

See-through revenue*

81.6

80.9

+1%

-2%

LFL Consumer Healthcare see-through revenue*, excl. ScarAway

55.3

56.8

-3%

-6%

LFL see-through revenue*, excluding ScarAway

79.4

80.9

-2%

-4%

Statutory revenue - Consumer Healthcare

54.6

54.6

0%

-4%

Statutory revenue - Group

78.8

78.6

0%

-2%

LFL Consumer Healthcare statutory revenue, excluding ScarAway

52.5

54.6

-4%

-8%

LFL Group statutory revenue, excluding ScarAway

76.6

78.6

-3%

-5%

Consumer Healthcare

Consumer Healthcare revenues of £57.4m were up 1% versus the prior period (H1 21: £56.8m), benefitting from the recent US acquisition (ScarAway and the US rights to Kelo-cote) in addition to currency tailwinds. On a statutory basis, reported revenues were flat on the prior period at £54.6m and down 4% CER.

Excluding the impact of the US acquisition, like-for-likesee-through Consumer Healthcare revenue decreased by 3% AER and 6% CER to £55.3m whilst reported revenue decreased by 4% AER and 8% CER to £52.5m.

Kelo-cote - scar prevention and treatment

Revenues from the Kelo-cote franchise rose 5% in the Period to £22.9m. Adjusting for the recent acquisition and currency tailwinds, like-for-like revenues for the Kelo-cote franchise declined 12% mainly due to lower order volumes from our China cross-bordere-commerce (CBEC) partner. The CBEC scar treatment market declined during H1 22 as lockdowns prevented product from entering China for some months, however the online domestic market grew, and Kelo-cote gained share. In-market demand remains strong, and the latest available data shows a return to growth for the CBEC scar treatment market in July as Chinese lockdowns have eased, with Kelo-cote gaining share in both CBEC and the domestic e-commerce market.

We continue to work with our new CBEC distributor to further develop this channel, expand reach and optimise sales as we complete the first year of implementation of this relationship. Our B2C channel is well developed and in September our Kelo-cote flagship on-line store was awarded a prestigious Tmall Global award, alongside a small number of other prominent brands, for surpassing RMB100m in annual sales for the first time. We have refined our strategy to increase our presence in the significant B2B channel, which incorporates additional distributor support with associated orders expected in Q4 to meet demand in the mid-term.

Alliance Pharma plc

We expanded the Kelo-cote range with the launch of Kelo-cote Kids in the CBEC channel in April 2022. With only two other products in the children's CBEC scar treatment market in China we were able to drive market share gains to 20% in June 2022, driving incremental growth in the brand.

The performance of this launch has exceeded our initial expectations; new product innovation approvals have been submitted in both the UK and Germany which will allow us to launch Kelo-cote Kids in these markets in 2023.

We acquired ScarAway and the rights to Kelo-cote in the US in March 2022 to create the Group's first fully global brand. The integration of both assets has gone very smoothly with full transition completed in just four months and sales remaining in-line with expectations.

New, modernised packaging is in development and is scheduled for launch at the end of 2022 alongside a comprehensive consumer marketing campaign.

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

Amberen revenues of £7.5m (H1 21: £9.5m) were 21% lower (-25% CER) reflecting tougher prior year comparators for the entire category in the discount bricks and mortar stores and increasing competition on-line.

We have focused our efforts on the faster growth e-commerce channel, which represents c.75% of the total market by value and are delivering market share gains in this area. We have strengthened our capabilities to optimise our positioning on Amazon in particular which should support future share gains in this channel.

We have also refreshed our claim set to support our premium pricing, engaged a new media agency and have revised our digital tactics to include connected TV, such as YouTube and Hulu. The early results are promising, and we have further initiatives planned.

In late H1 22 we launched new marketing assets, to reinforce the message that Amberen is differentiated with a clinically validated formula and is not available as a store brand. By contrast, the competitor products are composed of ingredients that might have some supportive studies individually, but no clinical validation of their specific combination.

These marketing campaigns are already showing new and improved user engagement which allows for more efficient use of marketing spend that should drive subsequent margin expansion. Whilst these campaigns are expected to drive future sales improvement in the medium term, sales in H2 22 are now expected to be in-line with H1 22. We continue to invest to ensure a strong sales strategy which, complemented by new packaging and new product development, is expected to deliver growth in 2023 and beyond.

Nizoral - medicated anti-dandruff shampoo

Following the completion of the marketing authorisation transfer for Nizoral in China from Johnson & Johnson, we transitioned to a new top-tier local distributor at the end of the Period to service the brand's largest market. Our new distributor offers a larger sales team than the partner we inherited from Johnson

  • Johnson and has fewer products in its portfolio which ensures more sales resources are dedicated to our account.

Nizoral see-through revenues of £7.9m (H1 21: £9.0m) were 12% lower (-12% CER), primarily due to the phasing of orders to the new distributor. However, the delayed sales from H1 22 were booked in July 2022, and full year revenues are expected to be in line with expectations. We received marketing authorisation in Vietnam in May completing the transfer from J&J to Alliance for all our markets in APAC and allowing Nizoral to be sold in Vietnam for the first time in two years.

The roll-out of our strategic brand plan for Nizoral is now well underway, with consumer activation campaigns ongoing across a number of key territories where Nizoral commands a market leading position, including Australia, South Korea, Thailand and the Philippines. These campaigns are run in partnership with our local distributors, as part of a growth strategy centred around consumer and healthcare professional activation, e-commerce, and Innovation and Development (I&D).

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Alliance Pharma plc published this content on 20 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 September 2022 06:09:06 UTC.