Alliance Pharma PLC – Full Year Results

Alliance Pharma plc (AIM: APH), the international healthcare group, is pleased to announce its preliminary results for the year ended 31 December 2018.

HIGHLIGHTS

• Revenues on a see-through* basis up 22% at £124.0m (up 23% on a constant currency* basis), with like-for-like revenue up 4% (4% on a constant currency* basis), in line with expectations
  –  Continued strong performance from International Star brands, led by Kelo-cote™
  –  For the first time, overseas sales exceeded those from the UK
• Statutory revenues up 16%, to £118.2m (2017 restated**: £101.6m)
• Underlying EBITDA* up 19% to £32.4m (2017 restated**: £27.2m)
• Nizoral™ acquired from Johnson & Johnson for the Asia Pacific region in June 2018 for £60m; revenues in line with expectations; integration progressing well
• Vamousse™ integration completed and Alliance subsidiary fully established in the US; Vamousse revenues up 16% year on year under Alliance management
• Xonvea™, for nausea and vomiting of pregnancy where conservative management has failed, approved in the UK in July 2018 and launched in October – now starting to gain formulary inclusions
• Continued strong cash generation, with leverage falling to 2.33x from 2.46x (2017), including £28m of new borrowings for the Nizoral acquisition
• Proposed final dividend increased 10% to 0.977p, giving a total dividend of 1.464p. Covered 3.1x by underlying earnings

FINANCIAL SUMMARY

Year ended 31 December	2018 £m	2017 £m (restated**)	Growth
Revenue (see-through basis)*	124.0	101.6	22%
Revenue (statutory basis)	118.2	101.6	16%
Gross profit	72.6	59.1	23%
Underlying EBITDA*	32.4	27.2	19%
Underlying profit before taxation*	28.1	23.9	17%
Reported profit before taxation	22.8	28.3	-19%
Adjusted underlying basic earnings per share*	4.54p	4.05p	12%
Reported basic earnings per share	3.69p	6.08p	-39%
Free cash flow*	16.1	22.0	-27%
Leverage	2.33x	2.46x
Net debt*	85.8	72.3
Final dividend per share	0.977p	0.888p	10%

* 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 Groups longer term strategic plans. APMs are defined in note 18.

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 the Asia-Pacific territories transfer from J&J to Alliance, which is expected to occur during 2019 and 2020. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15.

 ** The adoption of IFRS 15 Revenue from Contracts with Customers has resulted in the reclassification of certain rebates as a deduction from revenue; previously these rebates were included within cost of sales. To ensure comparability, the 2017 comparatives have been restated following the adoption of IFRS 15 and IFRS 16 Leases. The impact of this restatement is set out in notes 2 and 3. 

Commenting on the results, Peter Butterfield, Alliance Pharma’s Chief Executive Officer, said:

“In 2018 we continued to deliver on our strategy, with strong sales and profit growth, led by our International Star brands and acquisitions. 2018 marked a milestone in the internationalisation of Alliance in that, for the first time, our overseas sales exceeded those in the UK. The acquisition of Nizoral brings increased scale and opportunities for us in the Asia Pacific region and, together with the creation of a trading operation in the US, further increases our international footprint, whilst the UK approval of Xonvea offers further organic growth prospects for the Group.

“2019 has started well and we look forward to continuing on our growth path in the year ahead and to deploying the Group’s strong cashflow to further develop as a leading international healthcare business.”