Alliance Pharma : 2020 Annual Report (6.1mb)

Alliance Pharma plc Annual Report and Accounts 2020

Together

    we achieve

more

Company Overview

An alliance of people, partners and brands, working together

to achieve more

Contents

Overview			Governance			Financial Statements			Additional Information
2020 Overview & Financial Highlights	01		Chairman's Introduction	68		Independent Auditor's Report	100		Unaudited Information	158
At a Glance	02		to Governance		Consolidated Income Statement	108		Five Year Summary	159
Making Great Alliances	04		Board of Directors	70		Consolidated Statement	109		Advisers and Key Service Providers	160
Investment Case	10		Our Governance Framework	72		of Comprehensive Income		Cautionary Statement	161
			QCA Code Compliance	73		Consolidated Balance Sheet	110		Glossary	162
Strategic Report
		Nomination Committee Report	79		Company Balance Sheet	111
Chief Executive's Review	14		Audit and Risk Committee Report	82		Consolidated Statement	112
Our Markets	20		Remuneration Committee Report	86		of Changes in Equity
Our Business Model	22		Directors' Report	95		Company Statement	113
		of Changes in Equity
Our Strategy	24
				Consolidated and Company
Strategy in Action	28					114
				Cash Flow Statements
Responding to COVID-19	32					Notes to the Financial Statements	115
Key Performance Indicators	34
Responsible Business	36
Financial Review	52
Risk Management and Internal Controls	56
Our Principal Risks and Uncertainties	58

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Alliance Pharma plc - Annual Report and Accounts 2020

2020 Financial Highlights

The Group continued to deliver a robust operational and financial performance in 2020, despite the challenges posed by COVID-19.

Overview

Strategic Report

Overview

Strong performance from Consumer Healthcare brands, which now account for over two thirds of Group see-through revenues*

Kelo-cote™ revenues up 12% Nizoral™ see-through revenues*up 4%

See-through revenues*overall up 1% to £93.0m (2019: £92.4m)

See-through Revenue*

£137.5m -5%

(2019: £144.3m)

2020 £137.5m

2019 £144.3m

2018 £124.0m

2017 £101.6m

Statutory Revenue

£129.8m -4%

(2019: £135.6m)

2020 £129.8m

2019 £135.6m

2018 £118.2m

2017 £101.6m

Governance

Statutory revenues up 2% to £85.3m (2019: £83.7m)

Prescription Medicine revenues down

14% to £44.5m (2019: £51.9m), reflecting delays in routine treatments as a result

of COVID-19

Group see-through revenue* in total down 5% (down 5% CCY*) to £137.5m (2019: £144.3m)

Underlying Profit Before Tax

£33.5m +2%

(2019: £32.9m)

2020 £33.5m

2019 £32.9m

2018 £28.1m

2017 £23.9m

Reported Profit Before Tax

£13.0m -58%

(2019: £31.1m)

2020 £13.0m

2019 £31.1m

2018 £22.8m

2017 £28.3m

Financial Statements

Group statutory revenues down 4%, to £129.8m (2019: £135.6m)

Substantial US acquisition completed in December 2020, bringing highly successful and fast-growing brand, Amberen™, into the Group, and creating scale in the Group's US operations

Underlying profit before tax up 2% to £33.5m (2019: £32.9m)

Reported profit before tax down 58% to £13.0m (2019: £31.1m), due to non-cash

Underlying Basic EPS**

5.11p

(2019: 5.09p)

2020 5.11p

2019 5.09p

2018 4.54p

2017 4.05p

Reported Basic EPS

1.51p -69%

(2019: 4.80p)

2020 1.51p

2019 4.80p

2018 3.69p

2017 6.08p

Additional Information

impairment and amortisation charges, and acquisition costs relating to the Biogix acquisition

Group leverage post acquisition of Biogix Inc at 2.43 times, up from 1.48 times at December 2019; leverage expected to decrease to below 2.0 times during 2021

Free cash flow very strong at £34.1m, helped by favourable movements in net working capital

Cash generated from operations up 19% to £46.4m (2019: £39.0m)

Proposed final dividend payment of

1.074p per share, giving a total dividend of 1.610p (2019: 0.536p)

Free Cash Flow*

Net Debt

£34.1m

+17%

£109.4m +85%

(2019: £29.1m)

(2019: £59.2m)

2020

£34.1m

2020

£109.4m

2019

£29.1m

2019

£59.2m

2018

£16.1m

2018

£85.8m

2017

£22.0m

2017

£72.3m

• Non-IFRSalternative performance measures (see note 33). See-through revenue includes sales from Nizoral as if they had been invoiced by Alliance. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15.
• The 2017 measure refers to the Underlying Adjusted Basic EPS as disclosed in the 2017 Annual Report which was adjusted to normalise the impact of significant changes in overseas tax rates.

01

Company Overview

At a Glance

We are a leading international healthcare business of interconnected people and brands. A global range of products delivering outstanding value.

We are an alliance One team,

achieving more

Who we are

Founded in the UK over 20 years ago, we have grown both our geographic reach and our product range and now market around 80 consumer healthcare and pharmaceutical products in over 100 countries worldwide.

What we do

We focus on our strengths - bringing our specialist expertise to the marketing and regulatory management of our products, so as to ensure that they can be made available to the widest range of people who could potentially benefit from them, wherever they may be located. Outsourcing

all our manufacturing, warehousing and logistics activities enables us to remain asset-light and focused on doing what we do best.

Our mission

To create partnerships that unlock potential for brands, businesses and people around the world.

Responsible business

We are committed to operating our business in an ethical and sustainable way, having regard to the interests of all our stakeholders - including our customers, suppliers, business partners and employees. We recognise that everything we do has an impact on the natural environment and on the people and communities within it and we are committed

to looking for ways to reduce our impact in these areas to ensure a better future for all.

How we do it

We have built a successful business with a strong collaborative culture. We recognise that our relevance and value is in how we work together, both with our colleagues and with our customers, suppliers and all other external stakeholders. Our entrepreneurial spirit and our core values of performance, realism, accountability, integrity, skill and entrepreneurship remain at the heart of how we engage with each other and conduct our business.

Proud to be recognised as a London Stock Exchange Group '1,000 Companies to Inspire Britain' page 27

02 Alliance Pharma plc - Annual Report and Accounts 2020

Our Vision

To be a leading international healthcare business, built around products that are clinically valuable to patients.

G Achieved through G

Our Purpose

To make a difference to people's lives, through making a range of clinically valuable healthcare products available to consumers and patients around the world.

Overview

Strategic Report

Governance

Our Values

Performance - Our high-performing people continually drive business success

Realism - We set stretching goals and targets which we believe are achievable

Accountability - We take responsibility and deliver what we promise

Integrity - We build trust in all our relationships through openness and fairness

Skill - We recruit highly skilled people and develop their talents to the full

Entrepreneurship - Our people think of the business as if it was their own

Financial Statements

			G Delivered by G
	Our Strategy (see page 24)
		Maximising brand potential -			Investing in people -
		to deliver organic growth			and in developing our strong, collaborative culture
		Acquiring new products -			Acting responsibly -
		to deliver incremental growth			to maximise the value created for all our stakeholders

Additional Information

G Enabled by G

Our Business Model (see page 22)

  Investing behind selected brands, primarily Consumer Healthcare brands, to promote growth

  Maintaining our cash-generative Prescription Medicines portfolio

  Acquiring new products to provide further opportunities for growth

  Reinvesting cash generated in:

• Growing our existing brands
• Paying down debt
• Rewarding our shareholders
• Funding acquisitions

G Supported by G

Our strong, collaborative culture of working together to achieve more (see more on page 06)

03