REG - Alliance Pharma PLC - Full Year Trading Update

Alliance PharmaAnnouncement

17/01/2023 07:00

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RNS Number : 9041M  Alliance Pharma PLC  17 January 2023

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

 For immediate release
                            17 January 2023

ALLIANCE PHARMA PLC

("Alliance" or the "Group")

 

Full Year Trading Update

Alliance Pharma plc (AIM: APH), the international healthcare group, announces
its unaudited trading update for the year ended 31 December 2022 ("the Year"),
ahead of the expected announcement of the Group's audited full year results on
21 March 2023.

The Group delivered see-through(1) revenues of £172.0m in the Year (2021:
£169.6m), in line with the trading update on 23 November 2022 (the "November
Trading Update") and up 1% on the prior year. Adjusting for currency, revenues
declined 3%. Excluding sales from ScarAway™ and the US rights to
Kelo-cote™, both acquired in March 2022 (the "US Acquisition"),
like-for-like(2) see-through revenues declined 6% at constant exchange rates
("CER").

Kelo-cote revenues grew 2% to £50.0m (2021: £48.8m) in the Year, boosted by
the US Acquisition and currency gains (-6% CER). As previously reported in the
November Trading Update, a slower recovery in B2B demand for Kelo-cote in the
China cross-border e-commerce channel, coupled with a one-off destocking
effect in that channel, meant that like-for-like Kelo-cote revenues were down
17% CER.

End-consumer demand in the scar treatment market in e-commerce in China
remains strong, with 18% value growth in the three months to end October (the
latest available data) and Kelo-cote gaining share in that period. Looking
ahead, we expect Kelo-cote revenues to build throughout the year with overall
growth anticipated to be above 20% in 2023, slightly ahead of the 18% CAGR
delivered for the four year period ending 31 December 2022, excluding the US
Acquisition.

Nizoral™ revenues recovered strongly in H2 2022 growing 15% CER, partly due
to the delayed orders from H1 falling into H2 and as Alliance finalised the
remaining marketing authorisation transfers in China and Vietnam, paving the
way for a new distributor to be appointed in China in June 2022. Consequently
revenues grew 6% to £21.8m (2021: £20.6m) for the Year (3% CER). The new
Chinese distributor, and the completion of all marketing authorisation
transfers, provides a very strong platform to drive high single digit revenue
growth for Nizoral in 2023, supported by new marketing initiatives and the
introduction of updated packaging.

In the US, Amberen™ generated net revenues of £14.9m (2021: £19.2m), 22%
below prior year (-30% CER), reflecting tougher trading conditions in the
bricks and mortar category and the loss of a leading discount store account.
Alliance is continuing to invest in transitioning Amberen towards the higher
growth e-commerce channel and refreshing its marketing campaign and packaging
to accelerate this. Amberen now has an enhanced platform from which to
generate double-digit revenue growth on a like-for-like basis in 2023 and
beyond.

Other consumer brands continued the positive trajectory seen in H1, delivering
revenues for the Year of £38.4m (2021: £33.2m), up 16% on the prior year
(14% CER), with particularly strong growth from Aloclair and Vamousse. This
solid performance in other consumer healthcare brands clearly illustrates the
benefits of a diversified portfolio, and we anticipate continued high
single-digit growth in this portfolio of products in 2023, substantially ahead
of the broader consumer healthcare market.

Total Consumer Healthcare revenues for the Year were £125.2m (2021:
£121.8m), up 3% on the prior year (-3% CER). The Kelo-cote performance meant
that like-for-like total Consumer Healthcare revenues fell 7% CER. The
Prescription Medicines business continues to deliver stable revenues with
£46.8m (2021: £47.8m), in the Year, down 2% on the prior year on both a
reported and currency adjusted basis.

Underlying profit before tax is expected to be slightly above £30m, in-line
with the November Trading Update. Free cash flow was £15.8m (2021: £30.2m)
and, following the US Acquisition, net debt increased to £102.0m at 31
December 2022 (31 December 2021: £87.0m). Group leverage(3) is expected to be
in the range of 2.5x-2.6x (31 December 2021: 1.7x), below the Group's banking
covenants of 3.0x. Net debt and Group leverage are both expected to fall
during 2023, reflecting the Group's anticipated strong cash generation, with
Group leverage expected to be below 2.0x by the end of 2023.

Andrew Franklin, Chief Financial Officer of Alliance, commented:

 

"Our portfolio continues to provide a robust platform from which to grow our
Consumer Healthcare brands and we are starting to see the benefits of our
investment in innovation and development. Kelo-cote Kids Gel had a successful
launch in China in 2022 and will be introduced in the UK and Germany this
year, whilst Canker-X (part of the Aloclair brand franchise) was launched in
the US this month and is already being sold through Walgreens and RiteAid.

"2023 has started well for Alliance and we were pleased to announce last week
the appointment of Jeyan Heper as Chief Operating Officer, starting on 1
February. Whilst there was a sudden rise in COVID cases in China in December,
following the relaxation of the Zero-COVID policy, the level of infection in
major cities is reducing and normal life is beginning to resume. Whilst
end-market demand for consumer healthcare products in China has been
constrained, available evidence indicates that the recovery has already
commenced and the Board remains confident in our full year expectations.

"Our free cash flow has remained robust, and is expected to build strongly
throughout 2023, which we anticipate will enable us to reduce our net debt and
leverage over the course of the year."

 

(1) See-through revenue includes 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. Revenue for 2022 on a statutory reported
basis is expected to be £167.4, an increase of 3% on the prior year

(2) Like-for-like revenues exclude ScarAway and US Kelo-cote, which were
acquired in March 2022

(3) Adjusted net debt / enlarged Group EBITDA, calculated using pro forma
EBITDA on a trailing 12-month basis

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (withdrawal) act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under article 17 of
MAR.

 

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 (mailto: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 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.

For more information on Alliance, please visit our website:
www.alliancepharmaceuticals.com (http://www.alliancepharmaceuticals.com)

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