REG - Alliance Pharma PLC - Results for the year ended 31 December 2021
22/03/2022 07:16
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RNS Number : 5241F Alliance Pharma PLC 22 March 2022
For immediate release
22 March 2022
ALLIANCE PHARMA PLC
("Alliance" or the "Group")
Unaudited Preliminary Results for the year ended 31 December 2021
Excellent performance in 2021 gives strong foundation to continue growth in
2022
Alliance Pharma plc (AIM: APH), the international healthcare group, is pleased
to announce its unaudited preliminary results for the year ended 31 December
2021 ("the Year"). The Group delivered a strong operational and financial
performance in 2021, positioning the Group to take advantage of further growth
opportunities in 2022.
FINANCIAL SUMMARY
Year ended 2021 2021 2020 2020 Growth underlying Growth reported
Underlying (£m) Reported (£m) Underlying (£m) Reported (£m)
Revenue (see-through basis)* 169.6 169.6 137.5 137.5 +23% +23%
Revenue (statutory basis) 163.2 163.2 129.8 129.8 +26% +26%
Gross profit 109.5 109.5 82.8 82.8 +32% +32%
Profit before taxation 42.2 18.2 33.5 13.0 +26% +39%
Basic earnings per share 6.39p 1.37p 5.11p 1.51p +25% -9%
Free cash flow* 30.2 34.1 -12%
Cash from operations 44.9 46.4 -3%
Net debt* 87.0 109.4
Proposed total dividend per share 1.69p 1.61p +5%
OPERATING AND FINANCIAL HIGHLIGHTS
· Strong overall revenue growth driven by Consumer Healthcare,
underpinned by continued market penetration via e-commerce activity which now
represents around 25% of Group revenues
· Consumer Healthcare see-through revenue* up 31% to £121.8m
(2020: £93.0m) and up 36% at constant exchange rates ("CER*") with excellent
performance from Kelo-cote(TM) and the first full year of Amberen(TM),
acquired in December 2020
· Robust Prescription Medicine performance with revenues up 8% to
£47.8m (2020: £44.5m), with strong H2 recovery as the effects of COVID-19
receded
· Strong free cash flow*, driving down Group leverage to 1.7x at 31
December 2021 (2.4x at 31 December 2020)
· Amberen fully integrated into the Group
· Successfully implemented Group-wide ERP system, enhancing
visibility across the business
DEVELOPING OUR BUSINESS
· US operating capabilities expanded to provide a platform for
future growth
· Strengthened European management team and expanded the Board to
increase consumer brand experience
· Dedicated Innovation and Development ("I&D") team now in
place to underpin Consumer Healthcare organic growth
· Rollout of strategic brand plan for Nizoral(TM) now well underway
· Committed to carbon neutral Scope 1 and 2 emissions from 2021
· Certified as a Great Place To Work® again in UK and China, and
now in Singapore with a Trust Index(©) rating of 76%
Commenting on the results, Peter Butterfield, Chief Executive Officer of
Alliance, said:
"I'm delighted with the strong operational and financial performance of the
Group in 2021. Our Consumer Healthcare business continued to perform well,
with Kelo-cote enjoying another excellent year as we capitalised on the
opportunities identified for the brand. Group double-digit organic revenue
growth was complemented by the acquisition of Amberen which, coupled with
solid cost control, resulted in strong cash generation allowing us to reduce
both net debt and leverage.
"2022 has got off to an encouraging start. We remain confident in our ability
to further capitalise on identified organic growth opportunities within the
business and to deliver financial performance in line with market
expectations. In addition, we continue to evaluate opportunities to
selectively add complementary acquisitions to our Consumer Healthcare
platform, taking advantage of our strong cash flow and reduced leverage."
Outlook for 2022
Our clear focus on the core Consumer Healthcare business in addition to our
well-established, scalable platform across EMEA, APAC and the US, should
support significant organic growth this year and beyond.
We expect to see increased growth from Nizoral in 2022, as we accelerate the
roll-out of our strategic plan for the brand, and as the impact of the
pandemic recedes. We also anticipate sales growth acceleration for Amberen now
that the business is fully integrated into our enlarged US operations, and we
realise additional revenue opportunities. The new Kelo-cote distribution
agreement put in place in 2021 should enable us to drive further growth in
cross-border e-commerce ("CBEC") sales and provides an opportunity to extend
the range of products made available through this channel, potentially
increasing the growth of a number of our other consumer brands.
We now have a more balanced consumer portfolio around the globe and, as our
net debt and leverage continue to reduce, we are increasingly well placed to
participate in complementary acquisitions in the consumer healthcare space,
especially those that can leverage our established infrastructure. With a
proven ability to extract value from our key consumer brands and acquired
consumer brands, we remain confident in our ability to realise our mid-term
growth ambitions.
* 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 14.
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, 22 March 2022, at
Investec Bank plc, 30 Gresham Street, London EC2V 7QP. For further details,
analysts should contact Buchanan at alliancepharma@buchanan.uk.com
(mailto:alliancepharma@buchanan.uk.com) .
A live webcast of the analyst meeting will be available at this link:
https://webcasting.buchanan.uk.com/broadcast/620a757b26d01a4c0553d15f
(https://webcasting.buchanan.uk.com/broadcast/620a757b26d01a4c0553d15f) .
A recording of the webcast will be made available at the investor section of
Alliance's website, https://www.alliancepharmaceuticals.com/investors/
(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 / Sophie Wills / 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
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)
Trading performance
Strong revenue growth
The Group delivered a strong financial performance in the Year, with
see-through revenue increasing 23% to £169.6m at actual exchange rates
("AER") (2020: £137.5m) and 27% CER. Like-for-like (LFL*) revenue excluding
Amberen, which was acquired in December 2020, increased 9% AER and 12% CER.
Group revenue was adversely impacted in 2021 by exchange rate movements,
principally the strengthening of Sterling against the US Dollar, which
depressed see-through revenue by approximately £5.1m. Statutory revenue
increased 26% AER to £163.2m (2020: £129.8m) and rose 30% CER.
Revenue summary
Year ended 31 December 2021 2020 Growth CER growth
£m £m
Kelo-cote 48.8 34.7 +41% +47%
Amberen 19.2 - - -
Nizoral* 20.6 21.0 -2% +1%
Other consumer brands 33.2 37.3 -11% -9%
Consumer Healthcare 121.8 93.0 +31% +36%
Prescription Medicines 47.8 44.5 +8% +8%
See-through revenue* 169.6 137.5 +23% +27%
LFL Consumer Healthcare see-through revenue*, excl. Amberen 102.6 93.0 +10% +14%
LFL see-through revenue*, excluding Amberen 150.4 137.5 +9% +12%
Statutory revenue - Consumer Healthcare 115.4 85.3 +35% +41%
Statutory revenue - Group 163.2 129.8 +26% +30%
LFL Consumer Healthcare statutory revenue, excluding Amberen 96.1 85.3 +13% +16%
LFL Group statutory revenue, excluding Amberen 144.0 129.8 +11% +14%
Consumer Healthcare
Our Consumer Healthcare business continued to perform well through 2021, with
increased e-commerce activity and the integration of Amberen helping to drive
year-on-year see-through revenue growth of 31% AER and 36% CER, to £121.8m
(2020: £93.0m). On a statutory basis, reported revenues were £115.4m, up 35%
AER from the previous year (2020: £85.3m) and up 41% CER.
Excluding the impact of Amberen, like-for-like see-through Consumer Healthcare
revenue increased by 10% AER and 14% CER to £102.6m whilst reported revenue
increased by 13% AER and 16% CER to £96.1m.
Kelo-cote - scar prevention and treatment
Kelo-cote delivered another excellent performance, particularly in the APAC
region, generating revenues of £48.8m, up 41% on the prior year (2020:
£34.7m). CER revenues were up 47% due to continued strong demand from China,
reflecting the growth of both domestic sales and significant 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 revenues reflects the increasing trend
for consumers in China and elsewhere to migrate more to online purchasing,
both of the brand itself, and healthcare products generally - a trend
accelerated by the global pandemic.
In 2021, we entered into a new CBEC distribution agreement for Kelo-cote, to
move Alliance closer to the customer and provide greater control of our
distribution chain. This decision was taken in response to the success of CBEC
in facilitating export sales from the EU to consumers in China, and in
recognition of the significant opportunity that China offers for this key
brand. As a result, we expect further top-line growth in China over the medium
term.
Performance across the rest of the APAC region was more mixed, as many
countries continued to be impacted by the pandemic, although both Hong Kong
and South Korea recorded solid growth. A similar trend was evident across
South America and much of EMEA; with strong performances from a number of
European territories including France (domestic and export sales), and from
the UK.
Amberen - vitamin mineral supplement for the relief of menopause symptoms
(US)
Amberen made an encouraging start during its first year of trading under the
Group's ownership, generating net revenues of $26.5m (£19.2m) in the Year,
with H2 2021 revenues up 12% on H2 2020 (under previous ownership) CER. Full
year revenue growth was up 3% CER, with the brand's Amazon sales in particular
experiencing strong year-on-year growth, compensating for more challenging
trading conditions for the category as a whole in the bricks and mortar retail
sector.
We expect to see Amberen revenue growth accelerate in 2022, with a weighting
towards H2, as we look to leverage the expanded operating platform we have put
in place in the US, increase our focus on brand positioning and execute a new
integrated marketing campaign for the brand.
We are focused on developing an innovation pipeline, to underpin the growth of
the brand in the longer-term.
Nizoral - medicated anti-dandruff shampoo
Nizoral had a challenging start to the year, due to a combination of
distributor order phasing, manufacturing delays, and the ongoing impacts of
COVID-19 on demand, particularly in India. We experienced some delay to the
transitioning of regulatory approvals in Vietnam and the Philippines whilst
growth in key pharmacy chain listings for the new Triatop Combi product in
China was also slower than planned.
However, revenues started to recover in the second half of the Year, with
see-through revenue of £11.6m in H2 2021 (£9.0m in H1 2021 and £11.2m in H2
2020), as the challenging regional trading conditions affecting both supply
and demand eased. Triatop Combi product pharmacy listings in China also
improved in the last few weeks of the year, which should help support further
sales momentum in 2022. Consequently, see-through revenues for the Year of
£20.6m, were up 1% CER (-2% AER) (2020: £21.0m). On a statutory reported
basis, revenues were up 7%, at £14.2m (2020: £13.3m) (+9% CER).
We expect to see further improvement in 2022, as the pandemic recedes, and we
take full control of the supply chain following the end of the transition
period with J&J. The roll-out of our strategic brand plan for Nizoral is
now well underway, with consumer activation campaigns ongoing or planned
across a number of key territories, including Australia, South Korea and
Taiwan, in partnership with our local distribution partners, as part of a
growth strategy centred around consumer and healthcare professional
activation, e-commerce, and I&D.
Other Consumer Healthcare brands
We continued to see a mixed performance across our other Consumer Healthcare
brands, particularly for those products sold principally through international
distributors.
MacuShield (eye health supplement) was an early beneficiary of a recovery in
UK retail sales post COVID-19 whilst Vamousse (prevention and treatment of
head lice) continued to be impacted by COVID-19 challenges as school closures
and social distancing requirements led to significantly reduced incidence of
head lice, particularly in the US, the product's primary market. With
distributor stocking patterns contributing to declines in Oxyplastine and
Aloclair, revenues in other Consumer Healthcare brands fell 9% adjusted for
currency.
As we progress through 2022, and global trading patterns and consumer
behaviours start to normalise post COVID-19, we expect to see sales of
Vamousse, Aloclair, Oxyplastine and a number of our other smaller consumer
brands start to pick up again. Further revenue detail on these brands is
available in note 2.
Prescription Medicines
The Prescription Medicines business delivered robust revenues of £47.8m
(2020: £44.5m), up 8% on the prior year, reflecting a partial return to the
delivery of routine treatments and normalisation of daily life compared with
the early stages of the pandemic in 2020. Key drivers of revenue growth
included the Opus range of stoma care products, Forceval (nutritional
supplement), Hydromol (emollient for the treatment of eczema) and Flammazine
(prevention of infection of burns and wounds).
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, this
business continues to play an important part in our overall product
portfolio.
Regional performance
EMEA (Europe, UK, Middle East and Africa)
EMEA regional revenues of £89.2m were down 5% versus those for the prior year
(2020: £93.8m), primarily due to a mid-year change in the distributor for
Kelo-cote CBEC, which is now located in APAC, and hence sales are now included
in APAC revenues whereas previously they were included in EMEA. This change in
revenue classification was partially offset by the uplift in Prescription
Medicines revenues, with 95% of all Prescription Medicines sales generated in
EMEA, and growth in MacuShield sales, which originate primarily in EMEA (the
largest market being the UK).
APAC (Asia Pacific and China)
APAC regional see-through revenues rose 47% versus the prior year at £54.4m
(2020: £37.0m), with statutory revenues up 64% to £48.0m (2020: £29.3m).
Kelo-cote and Nizoral collectively accounted for 90% of APAC sales in 2021
with all Nizoral sales by Alliance generated in this region.
Regional revenues in 2021 benefited from the change in distribution
arrangements for Kelo-cote CBEC sales described above. The uplift in sales
also reflects underlying growth in Kelo-cote sales, both in China and across
the wider APAC region, coupled with a slight decline in Nizoral sales.
AMER (The Americas)
Revenues in the AMER region increased by £19.3m to £26.0m (2020: £6.7m),
reflecting the acquisition of Amberen. On a like-for-like basis, sales were in
line with the prior year at £6.8m, with a decline in Vamousse sales in the US
offset by increased sales of Kelo-cote in South America. This region now
accounts for more than 20% of our Consumer Healthcare revenues.
The integration of Amberen into the business is now complete. Following a
period of investment to expand its local operating capabilities, the US
business now has an enhanced platform from which to generate strong growth in
Amberen and other existing brands, and to scale up further when suitable
acquisitions are identified.
Increased profitability
The strong growth in our higher margin consumer health brands, coupled with
changes to our distribution arrangements for Kelo-cote and the acquisition of
Amberen, led to a 32% increase in gross profit to £109.5m (2020: £82.8m).
Consequently, gross margin increased 430 basis points (bp) to 64.5% of
see-through revenue (2020: 60.2%) and gross margin relative to statutory
revenue was 67.1% (2020: 63.8%).
Underlying profit before tax increased 26% to £42.2m (2020: £33.5m) driving
a 50 basis-point (bp) margin improvement to 24.9% despite increased operating
expenses through the inclusion of the Amberen cost base, coupled with a modest
increase in depreciation and underlying amortisation. Reported profit before
tax increased 39% to £18.2m (2020: £13.0m).
We increased our investment in the business in 2021, improving our operating
capabilities and boosting the level of marketing support provided to a number
of our brands. With the resumption of discretionary spend, which we deferred
or cancelled in 2020 in response to the global pandemic, in addition to the
aforementioned inclusion of the Amberen cost base, operating costs (defined as
underlying administration and marketing expenses, excluding depreciation and
underlying amortisation charges) increased by 37% versus the prior year to
£58.6m (2020: £42.8m). As a result, operating costs as a percentage of sales
increased 3.5% to 34.6% of see-through sales (2020: 31.1%).
The IFRS 2 share options charge for the Year was £2.3m, up £0.9m versus that
for the prior year (2020: £1.4m), reflecting an increase in the share price
in 2021.
Net of the increase in operating costs and the share options charge,
underlying earnings before interest, taxes, depreciation, and underlying
amortisation (EBITDA) increased 26% in the Year to £48.6m (2020: £38.6m),
whilst underlying operating profit (EBIT) increased by 24% to £45.6m (2020:
£36.8m). Reported operating profit increased by £5.3m to £21.6m (2020:
£16.3m), with non-underlying items of £24.1m (2020: £20.5m), principally
comprising amortisation charges of £7.2m (2020: £7.2m), impairment charges
of £6.2m (2020: £12.1m), restructuring costs of £2.4m (2020: £nil) and a
provision in relation to the Competition and Markets Authority (CMA) decision
of £7.9m. Further detail on non-underlying items is provided in note 4.
With net finance costs of £3.4m in-line with prior year (2020: £3.3m) and an
underlying tax charge of £8.0m (2020: £6.4m) equating to a tax rate of 19.0%
(2020: 19.0%), underlying basic earnings per share increased 25% to 6.39p
(2020: 5.11p).
Balance sheet development
Following the successful deployment of our new ERP system in mid-2021, we
conducted a review of the associated capitalised project costs, and as a
result have transferred these capitalised costs, amounting to £15.0m, from
property, plant and equipment (PPE) to intangible assets. These additions have
effectively been offset by underlying amortisation charges of £1.4m,
non-underlying amortisation charges of £7.2m and non-underlying impairment
charges of £6.2m, such that the increase in intangible assets for the Year
amounted to £0.9m.
In the Year, the Group created provisions totalling £9.5m as at 31 December
2021 (31 December 2020: £nil), £7.9m of which relates to the CMA decision,
the remainder, £1.6m, being a provision for restructuring costs. Further
detail is provided in note 10.
Strong cash generation
Free cash flow (see note 14B for definition) for the Year remained strong at
£30.2m (2020: £34.1m), with second half cash flows being significantly
stronger than first half (H1 2021: £6.5m; H2 2021: £23.7m), reflecting both
the reversal of the favourable movements in net working capital seen at the
end of 2020 during the first half of the Year, and the timing of sales in the
second half. Cash generated from operations decreased by 3% to £44.9m (2020:
£46.4m).
As a result, net debt reduced by £22.4m to £87.0m at 31 December 2021 (31
December 2020: £109.4m), with Group leverage reducing to 1.73 times (31
December 2020: 2.43 times).
We expect our cash generation to remain strong in 2022, and for leverage to
reduce below 1.5 times by the end of the year, in the absence of further
acquisitions.
Dividend
The Board is pleased to announce that it is proposing a final dividend payment
of 1.128p per share for 2021, an increase of 5% on the final dividend payment
for 2020, taking the total dividend payment for the year to 1.691p (2020:
1.610p). The Board will continue to assess the level of future cash
distributions having regard to overall business performance and future
outlook.
The final dividend for 2021, subject to approval at the Company's AGM on 18
May 2022, will be paid on 7 July 2022, to shareholders on the register on 10
June 2022.
Operational developments
We recognise the need to invest in our business to maintain strong organic
revenue growth. We recently implemented a new I&D process and in 2021 we
created new dedicated roles and a central I&D budget to deliver new
products, claims and packaging ideas. We expect to see a number of these
innovations come to market in 2022 as we refresh existing products to maintain
consumer appeal.
We have also commenced the roll out of our new Digital Excellence training
programme to our global marketing teams to ensure our staff have the necessary
skills and knowledge to drive sustainable long- term value.
Our ERP system went live in the first half of 2021 and we have already
realised benefits to the business through the standardisation of processes.
Our significant pre-launch preparation ensured a virtually seamless
changeover; work continues on the refinement of some reporting requirements
and rolling the system out to a few remaining smaller entities, but we expect
this to complete in the next 12 months.
During the Year we secured new, larger offices in Cary, North Carolina, to
accommodate our growing US team, closed our office in Los Angeles and
streamlined our European footprint through the closure of our Milan office,
incurring associated restructuring costs of £2.4m, which have been presented
as non-underlying. We also completed further substantial upgrade and
refurbishment works at our UK headquarters, improving the building's
environmental credentials whilst also reconfiguring space to better
accommodate post-pandemic working arrangements. All employees have now
returned to the office on a hybrid basis, both in the UK and in our regional
offices around the globe, as pandemic restrictions allow.
Increasing our focus on sustainability
We have continued to focus on developing our sustainable business strategy
during the Year, under the direction of the ESG Board Committee, and informed
by feedback from a number of our key investors plus external gap analysis.
This work has resulted in the development of our Sustainability Framework; and
we now have greater clarity regarding our specific areas of focus and the key
activities which underpin these.
We have initiated a programme of work to drive improvements to the
sustainability of our product packaging and are also in the early stages of
developing our broader environmental strategy including our response to
climate change. In 2021, we quantified our Scope 3 greenhouse gas emissions
for the first time and are using the results to help inform the development of
our carbon action plan, with a view to setting carbon reduction targets and
our path to net zero in the near future.
Given the nature of our business, and our use of third-party distributors,
contract manufacturers (CMOs) and logistics service providers (LSPs), the
majority of our greenhouse gas emissions are classified as Scope 3. In 2022,
we plan to reach out to our larger CMOs and LSPs to better understand where
they are on their respective emissions reduction journeys and to obtain their
Scope 1 and 2 data to help improve the methodology used for our Scope 3
calculations. We will also continue to reduce our own Scope 1 and 2 emissions,
which were 90tCO(2)e for our UK operations in 2021, and will achieve carbon
neutrality for these retrospectively in 2022 through the use of sequestration
schemes.
With the foundations now in place, we will be looking to raise the profile of
sustainability within Alliance more widely in 2022, as we continue our journey
to become a more sustainable business. We remain a responsible corporate
citizen, committed to minimising the negative impacts of our operations on the
environment whilst making a positive contribution to society.
Further coverage on the progress we have made with our sustainable business
strategy can be found in our 2021 Annual Report, which will be published in
due course on our website.
People
On behalf of the Board, we would like to take this opportunity to express our
sincere thanks to all those who have helped to make 2021 such a successful
year for Alliance. We currently employ around 250 people in 10 locations
around the globe. In 2021, we created around 20 new roles, spread across all
our main geographic locations, as we looked to meet our evolving business
needs. This included the creation of a new dedicated I&D team, to underpin
the growth of our Consumer Healthcare brands.
We recognise the need to develop appropriate in-house expertise, in specific
skill sets, using a blend of external subject matter experts and internal
training to ensure our platform remains scalable as we grow. We anticipate
continued investment in our global team in 2022.
In 2021, we once again participated in the Great Place To Work® survey, as we
further progressed our employee engagement journey. We were very pleased to
have received an overall Trust Index© rating of 76% and to have been
re-certified as a Great Place To Work® in the UK and China whilst gaining an
additional certification in Singapore, with 81% of participants globally
saying that Alliance was a Great Place to Work®.
Further coverage on this and other aspects of our people strategy can be found
in our 2021 Annual Report, which will be published on our website.
During the second half of the Year, we rolled out and refined our new ways of
working to provide flexibility over office and home working for our employees
around the globe, based on individual role, activities, and the location of
other colleagues with whom they interact regularly. The majority of employees
now spend two to three days a week in the office, subject to local government
guidance, allowing them to combine the benefits of individual focus time with
the increased connection and collaboration opportunities that come from being
physically present with colleagues in the office. This increased flexibility
has been very positively received across the business and is working well for
us.
We recognise that great people, and the successful partnerships that they
build both within the business and externally, are key to the delivery of
great results.
Board changes
As previously announced, Kristof Neirynck, a highly experienced consumer
brands executive, took up his position as an independent Non-Executive
Director of the Group on 1 December 2021, bringing with him almost 20 years of
international consumer brand experience including complex omni-channel
business models, direct-to-consumer strategies and CBEC sales into China. His
experience will be invaluable as we look to further develop and grow our
business, in particular our CBEC activities, over the coming years.
Looking forward to 2022
2022 has got off to an encouraging start. We remain confident in our ability
to further capitalise on identified organic growth opportunities within the
business and to deliver financial performance in line with market
expectations.
Operationally, the priorities for the Group in 2022 are:
· To continue to invest behind our larger Consumer Healthcare
brands, in order to drive further growth, supported by our increasing focus on
e-commerce and I&D activities;
· To continue to progress our sustainable business agenda,
including the creation of our carbon action plan and the setting of emissions
reduction targets;
· To continue to look for opportunities to participate in
complementary acquisitions in the consumer healthcare space, to leverage the
operating platform we have built across EMEA, APAC and the US, and balance the
scale of our business operations across these regions.
Peter Butterfield
Andrew Franklin
Chief Executive
Officer
Chief Financial Officer
22 March
2022
22 March 2022
CONSOLIDATED INCOME STATEMENT
Note Year ended 31 December 2021 Year ended 31 December 2020
Underlying Non-Underlying Total Underlying Non-Underlying Total
£000s £000s £000s £000s £000s £000s
(Note 4) (Note 4)
Revenue 2, 14 163,207 - 163,207 129,801 - 129,801
Cost of sales (53,757) - (53,757) (46,985) - (46,985)
Gross profit 109,450 - 109,450 82,816 - 82,816
Operating expenses
Administration and marketing expenses 4 (60,202) (2,843) (63,045) (44,614) (1,300) (45,914)
Amortisation of intangible assets 4 (1,362) (7,168) (8,530) - (7,155) (7,155)
Impairment of goodwill and intangible assets 4 - (6,150) (6,150) - (12,057) (12,057)
CMA provision 10 - (7,900) (7,900) - - -
Share-based employee remuneration (2,250) - (2,250) (1,374) - (1,374)
Operating profit 45,636 (24,061) 21,575 36,828 (20,512) 16,316
Finance costs
Interest payable and similar charges 5 (3,646) - (3,646) (2,657) - (2,657)
Finance costs 5 228 - 228 (643) - (643)
(3,418) - (3,418) (3,300) - (3,300)
Profit before taxation 3 42,218 (24,061) 18,157 33,528 (20,512) 13,016
Taxation 4, 6 (8,033) (2,805) (10,838) (6,372) 1,383 (4,989)
Profit for the period attributable to equity shareholders 34,185 (26,866) 7,319 27,156 (19,129) 8,027
Earnings per share
Basic (pence) 8 6.39 1.37 5.11 1.51
Diluted (pence) 8 6.30 1.35 5.05 1.49
All of the activities of the Group are classed as continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 2021 31 December 2020
£000s £000s
Profit for the year 7,319 8,027
Other comprehensive income
Items that may be reclassified to profit or loss
Foreign exchange translation differences (net of deferred tax) 636 (1,051)
Forward exchange forward contracts - cash flow hedge (net of deferred tax) (191) (250)
Interest rate swaps - cash flow hedge (net of deferred tax) - 27
Total comprehensive income for the year 7,764 6,753
CONSOLIDATED BALANCE SHEET
Note 31 December 2021 31 December 2020
£000s £000s
Assets
Non-current assets
Goodwill and intangible assets 413,744 412,872
Property, plant and equipment 4,826 15,921
Deferred tax 11 3,526 2,139
Other non-current assets 371 682
422,467 431,614
Current assets
Inventories 21,075 22,917
Trade and other receivables 30,821 25,114
Derivative financial instruments 64 310
Cash and cash equivalents 29,061 28,898
81,021 77,239
Total assets 503,488 508,853
Equity
Ordinary share capital 12 5,382 5,329
Share premium account 151,328 150,645
Share option reserve 10,058 8,426
Other reserve (329) (329)
Cash flow hedging reserve 48 239
Translation reserve (419) (1,055)
Retained earnings 116,418 117,703
Total equity 282,486 280,958
Liabilities
Non-current liabilities
Loans and borrowings 9 116,060 138,328
Other liabilities 2,637 3,200
Deferred tax liability 11 61,728 56,181
180,425 197,709
Current liabilities
Corporation tax 1,178 1,435
Trade and other payables 29,930 28,736
Provisions 10 9,469 -
Derivative financial instruments - 15
40,577 30,186
Total liabilities 221,002 227,895
Total equity and liabilities 503,488 508,853
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary share capital Share premium account Other reserve Cash flow hedging reserve Translation reserve Share option reserve Retained earnings Total equity
£000s £000s £000s £000s £000s £000s £000s £000s
Balance 1 January 2020 5,294 149,036 (329) 462 (4) 7,208 112,513 274,180
Issue of shares 35 1,609 - - - - - 1,644
Dividend paid - - - - - - (2,837) (2,837)
Share options charge (including deferred tax) - - - - - 1,218 - 1,218
Transactions with owners 35 1,609 - - - 1,218 (2,837) 25
Profit for the year - - - - - - 8,027 8,027
Other comprehensive income
Foreign exchange forward contracts - cash flow hedge (net of deferred tax) - - - (250) - - - (250)
Interest rate swaps - cash flow hedge (net of deferred tax) - - - 27 - - - 27
Foreign exchange translation differences (net of deferred tax) - - - - (1,051) - - (1,051)
Total comprehensive income for the year - - - (223) (1,055) - 8,027 6,753
Balance 31 December 2020 5,329 150,645 (329) 239 (1,055) 8,426 117,703 280,958
Balance 1 January 2021 5,329 150,645 (329) 239 (1,055) 8,426 117,703 280,958
Issue of shares 53 683 - - - - - 736
Dividend paid - - - - - - (8,604) (8,604)
Share options charge (including deferred tax) - - - - - 1,632 - 1,632
Transactions with owners 53 683 - - - 1,632 (8,604) (6,236)
Profit for the year 7,319 7,319
Other comprehensive income
Foreign exchange forward contracts - cash flow hedge (net of deferred tax) - - - (191) - - - (191)
Interest rate swaps - cash flow hedge (net of deferred tax) - - - - - - - -
Foreign exchange translation differences (net of deferred tax) - - - - 636 - - 636
Total comprehensive income for the year - - - (191) 636 - 7,319 7,764
Balance 31 December 2021 5,382 151,328 (329) 48 (419) 10,058 116,418 282,486
CONSOLIDATED CASH FLOW STATEMENT
Note Year ended Year ended
31 December 2021 £000s 31 December 2020
£000s
Cash flows from operating activities
Cash generated from operations 13 44,919 46,405
Tax paid (6,260) (4,838)
Cash flows from operating activities 38,659 41,567
Investing activities
Interest received - 10
Acquisition of Biogix Inc 183 (82,667)
Purchase of intangibles (4,006) -
Purchase of property, plant and equipment (1,526) (4,612)
Proceeds from disposal of intangibles 750 1,405
Net cash used in investing activities (4,599) (85,864)
Financing activities
Interest paid and similar charges (2,965) (2,866)
Loan issue costs - (362)
Capital lease payments (924) (884)
Proceeds from exercise of share options 736 1,644
Dividend paid (8,604) (2,837)
Proceeds from borrowings - 82,595
Repayment of borrowings (22,587) (21,541)
Net cash provided by/(used in) financing activities (34,344) 55,749
Net movement in cash and cash equivalents (284) 11,452
Cash and cash equivalents at 1 January 28,898 17,830
Exchange losses on cash and cash equivalents 447 (384)
Cash and cash equivalents at 31 December 29,061 28,898
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. General information
Alliance Pharma plc ('the Company') and its subsidiaries (together "the
Group") acquire, market and distribute pharmaceutical and other medical
products. The Company is a public limited company, limited by shares,
registered, incorporated and domiciled in England and Wales in the UK. The
address of its registered office is Avonbridge House, Bath Road, Chippenham,
Wiltshire, SN15 2BB. The Company is listed on the AIM stock exchange.
The financial information set out in the announcement does not constitute the
Group's statutory accounts for the year ended 31 December 2021 or 31 December
2020. The auditors reported on the accounts for the year ended 31 December
2020 and their report was (i) unqualified, (ii) did not include references to
any matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain statements under section 498
(2) or (3) of the Companies Act 2006. The statutory accounts for the year
ended 31 December 2021 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and
will be delivered to the Registrar of Companies in due course.
2. Revenue and segmental information
The Group's reportable segments are the strategic business units that
represent different parts of the overall product portfolio. These being
Consumer Healthcare brands and Prescription Medicines. The business units are
managed separately as each portfolio requires different expertise to deliver
the corresponding product offering. The segmental presentation reflects the
decision in the year to reclassify the portfolio, in recognition of the
inherently different characteristics of these product types. Previously the
business has been reported as a single segment.
Operating segments are disclosed in a manner consistent with the internal
reporting provided to the CODM during the reporting year. The Group's Board of
Directors ('the Board') is the Group's CODM. The Group evaluates performance
of the operational segments on the basis of revenue and gross profit. Other
than intangible assets, assets and liabilities are reported to the Board at
Group level and are not separated segmentally.
Revenue information By Brand Year ended Year ended
31 December 2021 31 December 2020
£000s £000s
Consumer Healthcare brands:
Kelo-cote 48,845 34,748
Amberen 19,233 -
Nizoral * 14,189 13,260
MacuShield 8,829 6,751
Aloclair 5,773 7,601
Vamousse 4,110 5,626
Other consumer healthcare brands 14,397 17,354
Total revenue - Consumer healthcare brands 115,376 85,340
Prescription Medicines:
Hydromol 7,009 6,304
Flamma Franchise 6,610 5,897
Forceval 5,685 4,893
Other prescription medicines 28,527 27,367
Total revenue - Prescription medicines 47,831 44,461
Total Revenue 163,207 129,801
* Nizoral statutory revenue includes revenue generated on an agency basis.
Nizoral revenue presented on a see-through income statement basis is included
as an alternative performance measure in note 14.
Revenue information by Geography
Classification by geography is based on customer location.
Revenue information By Geography Year ended Year ended
31 December 2021 31 December 2020
£000s £000s
Europe, Middle East and Africa (EMEA) 89,188 93,769
Asia Pacific and China (APAC) 48,030 29,309
Americas (AMER) 25,989 6,723
Total Revenue 163,207 129,801
Operating Segment Results
Year ended 31 December 2021
Consumer Healthcare Prescription Medicines
£000s £000s Total
£'000s
Revenue 115,376 47,831 163,207
Cost of Sales (31,545) (22,212) (53,757)
Gross Profit 83,831 25,619 109,450
Year ended 31 December 2020
Consumer Healthcare Prescription Medicines
£000s £000s Total
£'000s
Revenue 85,340 44,461 129,801
Cost of Sales (26,199) (20,786) (46,985)
Gross Profit 59,141 23,675 82,816
Major customers
The revenues from the Group's largest customers are as follows. No customers
separately comprised 10% or more of revenue (2020: two).
Major customer 1 is a multinational organisation with sales in both EMEA and
AMER regions.
Year ended Year ended
31 December 2021 31 December 2020
£000s £000s
Major customer 1 (Consumer healthcare and Prescription medicine sales in EMEA 13,723 17,345
and AMER)
Major customer 2 (Consumer healthcare sales in EMEA) 12,014 16,646
3. Profit before taxation
Profit before taxation is stated after charging: Year ended Year ended
31 December 2021 31 December 2020
£000 £000
Amounts receivable by the Company's auditor and its associates in respect of
- The audit of these financial statements 96 48
- The audit of the financial statements of subsidiaries 326 198
- Other assurance services 5 5
Amortisation of intangible assets 8,530 7,155
Impairment of intangible assets 6,150 12,057
CMA provision 7,900 -
Losses on disposals - 308
Share options charge 2,250 1,374
Depreciation of plant, property and equipment 1,575 1,753
(Gain)/Loss on foreign exchange transactions (205) 653
4. Non-underlying items
The Group presents a number of non-IFRS measures which exclude the impact of
significant non-underlying items. This is to allow investors to understand the
underlying trading performance of the Group, and can exclude items such as:
amortisation and impairment of acquired intangible assets; restructuring
costs; gains or losses on disposal; remeasurement and accounting for the
passage of time in respect of contingent considerations; and the revaluation
of deferred tax balances following substantial tax legislation changes. This
assessment requires judgement to be applied by the Directors as to which
transactions are non-underlying and whether this classification enhances the
understanding of the users of the financial statements.
Year ended Year ended
31 December 2021 31 December 2020
£000s £000s
Amortisation of intangible assets (7,168) (7,155)
Impairment of goodwill and intangible assets (6,150) (12,057)
Biogix acquisition costs - (1,300)
CMA provision (see note 10) (7,900) -
Restructuring costs (2,420) -
Other (423) -
Total non-underlying items before taxation (24,061) (20,512)
Taxation on non-underlying items 2,167 3,194
Impact of UK tax rate change from 17% to 19% - (1,811)
Impact of UK tax rate change from 19% to 25% (4,972) -
Non-underlying taxation (2,805) 1,383
Total non-underlying items after taxation (26,866) (19,129)
Amortisation of intangible assets
The amortisation costs of acquired intangible assets are a significant item
considered unrelated to trading performance, and as such have been presented
as non-underlying. This classification is in line with the majority of peer
companies of the Group.
Impairment of goodwill and intangible assets
The impairment reviews for the Group's intangible assets resulted in
impairment losses as the carrying value of certain cash-generating units
exceeded estimated recoverable amounts. The impairment losses are significant
items resulting from changes in assumptions for future recoverable amounts. As
such they are considered unrelated to 2021 trading performance, and have been
presented as non-underlying.
Biogix acquisition costs
Legal and professional fees related to the purchase of Biogix Inc in 2020 were
£1.3m. These acquisition costs are a significant item considered unrelated to
2020 trading performance, and as such have been presented as non-underlying.
CMA provision
The CMA provision of £7.9m relates to the CMA Infringement Decision which is
detailed further in note 10. This is considered unrelated to trading
performance, and as such has been presented as non-underlying.
Restructuring costs
Costs of group restructuring in the Year ended 31 December 2021 relating to
the closure of the Milan and Los Angeles offices were £2.4m (2020: £Nil).
These costs are a significant item considered unrelated to 2021 trading
performance, and as such have been presented as non-underlying.
Impact of UK tax rate change from 17% to 19%
The taxation charge for the Year Ended 31 December 2020 includes the impact on
deferred tax of the main rate of UK corporation tax from 17% to 19%, following
the abandonment of the proposed reduction to 17% in the March 2020 Budget. The
change in tax rate is a significant item that relates only to deferred tax,
principally on intangibles, and is unrelated to trading performance. As such,
the rate change impact has been presented as non-underlying.
Impact of UK tax rate change from 19% to 25%
In the Budget on 3 March 2021, a further change to UK corporation tax rates
was announced, increasing the main rate from 19% to 25% with effect from 1
April 2023. The impact on deferred tax of this further rate increase is
included in these financial statements as a non-underlying item.
5. Finance costs
Year ended Year ended
31 December 2021 31 December 2020 £000s
£000s
Interest payable and similar charges
On loans and overdrafts (2,904) (1,988)
Amortised finance issue costs (639) (581)
Interest on lease liabilities (103) (88)
(3,646) (2,657)
Finance income
Interest income 23 10
Net exchange gains/(losses) 205 (653)
228 (643)
Finance costs - net (3,418) (3,300)
6. Taxation
Analysis of the charge for the period is as follows:
Year ended Year ended
31 December 2021 31 December 2020
£000s £000s
Corporation tax
In respect of current period 6,069 4,417
Adjustment in respect of prior periods (65) (123)
6,004 4,294
Deferred tax (see note 11)
Origination and reversal of temporary differences 4,471 705
Adjustment in respect of prior periods 363 (10)
Taxation 10,838 4,989
The difference between the total tax charge shown above and the amount
calculated by applying the standard rate of UK corporation tax to the profit
before tax is as follows:
Year ended Year ended
31 December 2021 31 December 2020 £000s
£000s
Profit before taxation 18.157 13,016
Profit before taxation multiplied by standard rate of corporation tax in the 3,449 2,473
United Kingdom of 19.00% (2019: 19.00%)
Effect of:
Non-deductible expenses 1,888 614
Non-taxable income (4) (18)
Adjustment in respect of prior periods 298 (132)
Differences between current and deferred tax rates 4,972 1,811
Differing tax rates on overseas earnings 114 40
Unrecognised losses 246 -
Foreign exchange 96 -
Share options (352) (7)
Movement in other tax provisions - 208
Other differences 131 -
Total taxation 10,838 4,989
The taxation charge for the year ended 31 December 2020 included the impact on
deferred tax of the increase in the main rate of UK tax from 17% to 19%,
following the abandonment of the proposed reduction to 17% in the Budget on 11
March 2020.
A further change to UK corporation tax was announced in the Budget on 3 March
2021, increasing the main rate of UK corporation tax from 19% to 25% with
effect from 1 April 2023. The taxation charge for the year ended 31 December
2021 includes the impact on deferred tax of this increase.
The Group has calculated 'adjusted underlying effective tax rate' as an
alternative performance measure in note 14.
7. Dividends
An interim dividend of 0.563p per share for the 2021 financial year was paid
on 7 January 2022. The Board is proposing a final dividend payment of 1.128p
per share for 2021, taking the total dividend payment for the year to 1.691p
(2020: 1.610p).
Year ended 31 December 2021
Pence / share £'000s
Amounts recognised as distributions to owners in 2021
Interim dividend for the 2020 financial year 0.536 2,857
Final dividend for the 2020 financial year 1.074 5,747
Total dividend 1.610 8,604
The interim dividend for 2020 was paid on 7 January 2021. The final dividend
for 2020 was paid on 8 July 2021.
Year ended 31 December 2020
Pence / share £'000s
Amounts recognised as distributions to owners in 2020
Interim dividend for the 2019 financial year 0.536 2,837
The interim dividend for 2019 was paid on 10 January 2020.
8. Earnings per share (EPS)
Basic EPS is calculated by dividing the earnings attributable to Ordinary
shareholders by the weighted average number of Ordinary shares in issue during
the year. For diluted EPS, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential Ordinary
shares. There are no differences in earnings used to calculate each measure as
a result of the dilutive employee share options.
A reconciliation of the weighted average number of Ordinary shares used in the
measures is given below:
Year ended Year ended
31 December 2021 31 December 2020
Basic EPS calculation 535,295,583 531,062,798
Employee share options 7,039,113 6,256,040
Diluted EPS calculation 542,334,696 537,318,838
The underlying basic EPS is intended to demonstrate recurring elements of the
results of the Group before non-underlying items. A reconciliation of the
earnings used in the different measures is given below:
Year ended Year ended
31 December 2021 31 December 2020
£000s £000s
Earnings for basic EPS 7,319 8,027
Non-underlying items (note 4) 26,866 19,129
Earnings for underlying basic EPS 34,185 27,156
The resulting EPS measures are:
Year ended Year ended
31 December 2021 31 December 2020
Pence Pence
Basic EPS 1.37 1.51
Diluted EPS 1.35 1.49
Underlying basic EPS 6.39 5.11
Underlying diluted EPS 6.30 5.05
9. Loans and borrowings
The Group has a £165m fully Revolving Credit Facility ('RCF'), together with
a £50m accordion facility, with a syndicate of lenders. This facility is
available until July 2024. The bank facility is secured by a fixed and
floating charge over the Company's and Group's assets registered with
Companies House.
Non-current 31 December 2021 31 December 2020
£000s £000s
Bank loans:
Secured 117,025 139,920
Finance issue costs (965) (1,592)
116,060 138,328
Movement in loans and borrowings 31 December 2021 31 December 2020
£000s £000s
At 1 January 138,328 77,040
Net receipts/(payments) from borrowing (22,587) 61,054
Additional prepaid arrangement fees - (362)
Amortisation of prepaid arrangement fees 628 578
Exchange movements * (309) 18
At 31 December 116,060 138,328
* Exchange movements on loans and borrowings are reported in other
comprehensive income and accumulated in the translation reserve.
10. Provisions
CMA provision Restructuring provision Total
£000s £000s £000s
At 1 January 2021 - - -
Charge to income statement 7,900 1,869 9,769
Provisions utilised during the year - (259) (259)
Exchange differences - (41) (41)
At 31 December 2021 7,900 1,569 9,469
On 23 May 2019 the UK's Competition and Markets Authority ('CMA') issued a
Statement of Objection alleging anti-competitive agreement involving the Group
and certain other pharmaceutical companies in relation to the sale of
prescription prochlorperazine. Prochlorperazine is one of the Group's smaller
products and had peak sales in 2015 of £1.9m and sales of £0.7m in 2021.
On 3 February 2022, the CMA announced its finding that four companies,
including Alliance, had infringed competition law (the "Infringement
Decision"). The Directors fundamentally disagree with the CMA's finding.
The Group believes that it has a strong case and will be appealing the CMA's
decision, and the proposed fine of £7.9m, at the Competition Appeal Tribunal
which is expected to be heard in late 2022/early 2023, although the timing may
be extended due to the current workload pressures within the court system.
Historically, the Group's assessment was that there were no matters for which
a provision was required, however the Infringement Decision has caused the
Group to revisit this assessment.
Despite the Group's intention to appeal, the Directors believe that, as a
result of the Infringement Decision, a provision of £7.9m should be recorded
at 31 December 2021 (2020: £nil).
This reflects the amount of the proposed fine communicated by the CMA, and
therefore, notwithstanding the Directors belief as to the merits of the
grounds on which it will be appealing the CMA decision, the Directors consider
this to be the appropriate position given that, in the event that the Group's
appeal proved to be unsuccessful, the ultimate level of the fine cannot be
greater than this. In addition, in the event the Group's appeal were to prove
to be unsuccessful, the Directors consider that there are strong grounds upon
which the amount of the fine could be reduced. However, as this is a matter
which cannot be predicted with certainty at this time the Directors believe
that the most appropriate course of action is to include the maximum potential
amount of the fine.
If the appeal is unsuccessful, the Group may also be liable for a proportion
of the legal costs of the CMA relating to the appeal. The Group has not
recorded a provision in relation to these potential litigation costs as these
costs relate to the decision to appeal which was taken after the year end and
their amount cannot be reliably estimated.
In accordance with IAS 37.92, the Group does not provide further information
on the grounds that this could seriously prejudice the outcome of the appeal.
The restructuring provision of £1.6m at 31 December 2021 (2020: £Nil)
relates to restructuring costs in relation to the closure of the Milan office
following a change to the operating model for our direct-to-market business in
Italy. The related outflows are expected to occur in the Year Ended 31
December 2022.
11. Deferred tax
31 December 2021 31 December 2020
£000s £000s
Accelerated capital allowances on tangible assets (464) (917)
Temporary differences: trading 291 492
Temporary differences: non-trading 915 623
Accelerated allowances on intangible assets (13,452) (9,839)
Initial recognition of intangible assets from business combination (47,796) (45,369)
Share-based payments 1,819 1,024
Foreign exchange forward contracts (16) (56)
Losses 501 -
(58,202) (54,042)
Recognised as:
Deferred tax asset 3,526 2,139
Deferred tax liability (61,728) (56,181)
(58,202) (54,042)
Reconciliation of deferred tax movements:
1 January 2021 Transfer Recognised in other comprehensive income Recognised in the income statement 31 December 2021
£000s £000s £000s £000s £000s
Non-current assets
Intangible assets (55,208) (670) (284) (5,086) (61,248)
Property, plant and equipment (917) 670 - (217) (464)
Non-current liabilities
Derivative financial instruments (56) - 40 - (16)
Other non-current liabilities 623 - 292 - 915
Equity
Share option reserve 1,024 - 626 169 1,819
Temporary differences
Trading 492 - - (201) 291
Losses - - - 501 501
(54,042) - 674 (4,834) (58,202)
Recognised as:
Deferred tax asset 2,139 3,526
Deferred tax liability (56,181) (61,728)
1 January 2020 Recognised in other comprehensive income Recognised on acquisition Recognised in the income statement 31 December 2020
£000s £000s Recognised directly in equity £000s £000s £000s
£'000s
Non-current assets
Intangible assets (29,242) - - (25,491) (475) (55,208)
Property, plant and equipment (468) - (42) - (407) (917)
Non-current liabilities
Derivative financial instruments (92) 36 - - - (56)
Other non-current liabilities 662 (39) - - - 623
Equity
Share option reserve 806 - 96 - 122 1,024
Temporary differences
Trading 234 - 221 - 37 492
(28,100) (3) 275 (25,491) (723) (54,042)
Recognised as:
Deferred tax asset 1,710 2,139
Deferred tax liability (29,810) (56,181)
The Group has no unrecognised deferred tax assets (2020: £nil).
12. Share capital
Allotted, called up and fully paid
No. of shares £000s
At 1 January 2020 - ordinary shares of 1p each 529,402,619 5,294
Issued during the year 3,516,492 35
At 31 December 2020 - ordinary shares of 1p each 532,919,111 5,329
Issued during the year 5,306,413 53
At 31 December 2021 - ordinary shares of 1p each 538,225,524 5,382
Between 1 January 2021 and 31 December 2021 5,306,413 shares were issued on
the exercise of employee share options (2020: 3,516,492).
The holders of Ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company.
Managing Capital
Our objective in managing the business's capital structure is to ensure that
the Group has the financial capacity, liquidity and flexibility to support the
existing business and to fund acquisition opportunities as they arise.
The capital structure of the Group consists of net bank debt and shareholders'
equity. At 31 December 2021 net debt was £87.0m (2020: £109.4m), whilst
shareholders' equity was £282.5m (2020: £281.0m).
The business is profitable and cash-generative. The main financial covenant
applying to bank debt is that leverage (the ratio of net bank debt to EBITDA)
should not exceed 3.0 times. The Group complied with this covenant in 2021 and
2020.
Smaller acquisitions are typically financed using bank debt, while larger
acquisitions typically involve a combination of bank debt and additional
equity. The mixture of debt and equity is varied, taking into account the
desire to maximise the shareholder returns while keeping leverage at
comfortable levels.
13. Cash generated from operations
Year ended Year ended
31 December 31 December
2021 2020
£000s £000s
Profit for the year 7,319 8,027
Taxation 10,838 4,989
Interest payable and similar charges 3,646 2,657
Interest income (23) (10)
Foreign exchange (gain)/loss (205) 644
Loss on disposal of intangibles - 308
Depreciation of property, plant and equipment 1,575 1,753
Amortisation and impairment of intangibles 14,680 19,212
Change in inventories 1,842 (5,206)
Change in trade and other receivables (6,146) 6,728
Change in trade and other payables (326) 5,929
Change in provisions 9,469 -
Share based employee remuneration 2,250 1,374
Cash generated from operations 44,919 46,405
14. Alternative performance measures
The performance of the Group is assessed using Alternative Performance
Measures ('APMs'). The Group's results are presented both before and after
non-underlying items. Adjusted profitability measures are presented excluding
non-underlying items as we believe this provides both management and investors
with useful additional information about the Group's performance and aids a
more effective comparison of the Group's trading performance from one period
to the next and with similar businesses. In addition, the Group's results are
described using certain other measures that are not defined under IFRS and are
therefore considered to be APMs. These measures are used by management to
monitor ongoing business performance against both shorter-term budgets and
forecasts but also against the Group's longer-term strategic plans. APMs used
to explain and monitor Group performance are as follows:
Measure Definition Reconciliation to GAAP measure
Underlying Earnings before interest, tax and non-underlying items (EBIT also referred to Note A below
as underlying operating profit), then depreciation, amortisation and
EBIT and EBITDA underlying impairment (EBITDA).
Calculated by taking profit before tax and financing costs, excluding
non-underlying items and adding back depreciation and amortisation.
EBITDA margin is calculated using see-though revenue.
Free cash flow Free cash flow is defined as cash generated from operations less cash payments Note B below
made for interest payable and similar charges, capital expenditure and tax.
Net debt Net debt is defined as the group's gross bank debt position net of finance Note C below
issue costs and cash.
Underlying effective tax rate Underlying effective tax rate is calculated by dividing total taxation for the Note D below
year less impact of tax rate changes and non-underlying charges, by the
underlying profit before tax for the year.
See-through Under the terms of the transitional services agreement with certain supply Note E below
partners, Alliance receives the benefit of the net profit on sales of Nizoral
income statement from the date of acquisition up until the product licences in the Asia-Pacific
territories transfer to Alliance. The net product margin is recognised as part
of statutory revenue.
The see-through income statement recognises the underlying sales and cost of
sales which give rise to the net product margin, as management consider this
to be a more meaningful representation of the underlying performance of the
business, and to reflect the way in which it is managed
Constant exchange rate (CER) revenue Like-for-like revenue, impact of acquisitions and total see-through revenue Note F below
stated so that the portion denominated in non-sterling currencies is
retranslated using foreign exchange rates from the previous financial year.
Like-for-like Like-for-like figures compare financial results in one period with those for Not needed
the previous period, excluding the impact of acquisitions and disposals made
in either period. For 2021, like-for-like revenue excludes the impact of
Amberen which was acquired in December 2020.
A. Underlying EBIT and EBITDA
Reconciliation of Underlying EBIT and EBITDA Year Ended 31 December 2021 Year Ended 31 December 2020
£000s £000s
Profit before tax 18,157 13,016
Non-underlying items (note 4) 24,061 20,512
Finance costs (note 5) 3,418 3,300
Underlying EBIT 45,636 36,828
Depreciation 1,575 1,753
Underlying Amortisation 1,362 -
Underlying EBITDA 48,573 38,581
B. Free cash flow
Reconciliation of free cash flow Year Ended Year Ended
31 December 2021
31 December 2020
£000s £000s
Cash generated from operations (note 13) 44,919 46,405
Interest payable and similar charges (2,965) (2,866)
Capital expenditure (5,532) (4,612)
Tax paid (6,260) (4,838)
Free cash flow 30,162 34,089
C. Net debt
Reconciliation of net debt Note 31 December 2021 31 December 2020
£000s £000s
Loans and borrowings - non-current 9 (116,060) (138,328)
Cash and cash equivalents 29,061 28,898
Net debt (86,999) (109,430)
D. Underlying effective tax rate
Reconciliation of adjusted underlying effective tax rate Year Ended Year Ended
31 December 2021
31 December 2020
£000s £000s
Total taxation charge for the year (10,838) (4,989)
Non-underlying tax credit 2,805 (1,383)
Adjusted underlying taxation charge for the year (8,033) (6,372)
Underlying profit before tax for the year 42,218 33,528
Adjusted underlying effective tax rate 19.0% 19.0%
E. See-through income statement
2021 statutory values See-through adjustment 2021 see-through values
£000s £000s £000s
Revenue - Consumer healthcare brands 115,376 6,443 121,819
Revenue - Prescription Medicines 47,831 - 47,831
Total Revenue 163,207 6,443 169,650
Cost of sales (53,757) (6,443) (60,200)
Gross profit 109,450 - 109,450
Gross profit margin 67.1% - 64.5%
2020 statutory values See-through adjustment 2020 see-through values
£000s £000s £000s
Revenue - Consumer healthcare brands 85,340 7,719 93,059
Revenue - Prescription Medicines 44,461 - 44,461
Total Revenue 129,801 7,719 137,520
Cost of sales (46,985) (7,719) (54,704)
Gross profit 82,816 - 82,816
Gross profit margin 63.8% 60.2%
There is no impact from the see-through adjustment on income statement lines
below gross profit.
F. Constant exchange rate revenue
See-through revenue 2021 Foreign 2021
exchange
CER
£000s
impact
£000s
£000s
LFL see-through revenue - Consumer Healthcare brands 102,586 3,389 105,975
LFL see-through revenue - Prescription Medicines 47,831 326 48,157
Like-for-like see-through revenue 150,417 3,715 154,132
Impact of acquisitions (Amberen) 19,233 1,362 20,595
See-through revenue (Note E) 169,650 5,077 174,727
Statutory revenue 2021 Foreign 2021
exchange
CER
£000s
impact
£000s
£000s
LFL statutory revenue - Consumer Healthcare brands 96,143 3,247 99,390
LFL statutory revenue - Prescription Medicines 47,831 326 48,157
Like-for-like statutory revenue 143,974 3,573 147,547
Impact of acquisitions (Amberen) 19,233 1,362 20,595
Statutory revenue 163,207 4,935 168,142
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. END FR BKDBQDBKBKNBRecent news on Alliance Pharma
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