Alliance Pharma : (427KB)

Alliance Pharma plc

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™, an uplift in revenue from Prescription Medicines and a significant contribution from recently acquired Amberen™
• See-throughrevenue in total up 24% (+28% on a constant currency basis ("CCY")) to £80.9m; like- for-like ("LFL") see-through revenue, which excludes Amberen, up 9% (+12% CCY); statutory revenue up 27% to £78.6m (H1 2020 £61.7m)
  o Strong performance from Consumer Healthcare brands, with see-through revenue up 30% overall (+35% CCY)
• • Kelo-coterevenue up 54% (+62% CCY)
  • LFL Consumer Healthcare revenue up 8% (+12% CCY)

• 1. 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 £20.1m (H1 2020: £16.3m); reported profit before tax £16.5m
  (H1 2020: £0.6m)
• Free cash flow £6.5m (H1 2020: £10.5m), 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 30 June	H1 2021	H1 2020	Growth	CCY
	£m	£m		growth
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%

Alliance Pharma plc

FINANCIAL SUMMARY

Unaudited six months ended 30 June	H1 2021	H1 2020	Growth
	£m	£m
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™ 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 athttps://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 [e-mail].

Alliance Pharma plc

For further information:

Alliance Pharma plc	+ 44 (0)1249 466966
Peter Butterfield, Chief Executive Officer
Andrew Franklin, Chief Financial Officer
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

Alliance Pharma plc

CHIEF EXECUTIVE'S STATEMENT

Trading performance

Overview

The Group delivered another strong performance in the Period, with see-through revenue up 24% to £80.9m (H1 2020: £65.3m), 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 £51.6m (H1 2020: £38.6m), 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 £20.1m (H1 2020: £16.3m), 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 £56.8m (H1 2020: £43.8m) 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 £21.9m (H1 2020: £14.2m), 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-bordere-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 £9.5m, 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.

Alliance Pharma plc

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 £9.0m (H1 2020: £9.8m), 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 £4.4m (H1 2020: £2.8m), 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 £2.3m (H1 2020: £3.2m), 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 £2.7m (H1 2020: £4.6m), 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 £0.9m in the Period (H1 2020: £2.2m), 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 £24.1m (H1 2020: £21.5m), 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 £49.9m (H1 2020: £44.8m).