Pre-Close Trading Update
ALLIANCE PHARMA PLC
(“Alliance” or the “Group”)
Pre-Close Trading Update
Alliance Pharma plc (AIM: APH), the specialty pharmaceutical group, announces its pre-close trading update ahead of the announcement of its preliminary results for the year ended 31 December 2017.
Group revenue for 2017 is expected to be £103.3m (2016: £97.5m), representing a 6% increase, with profit before tax expected to be in line with the Board's expectations.
Our international growth brands continued their strong performance in 2017. Kelo-Cote™, our scar reduction product, achieved a 33% increase in sales at £13.3m (2016: £10.1m) with good performances across many international territories. MacuShield™, for AMD (age-related macular degeneration), also performed well with sales up 37% at £7.3m (2016: £5.3m). Overall, our other brands have performed in line with expectations.
Foreign exchange rate movements benefited sales in the year by approximately £2.7m due to the weakening of Sterling when compared with the Euro and US Dollar. On a constant currency basis, the Group delivered a sales increase of 3%. The currency impact on operating profits is much smaller due to the increases in cost of goods and operating costs denominated in these currencies.
There was a significant increase in underlying free cash flow in 2017 to £21.5m, up from £13.0m in 2016, underscoring Alliance’s ability to generate high levels of cash flow. The improvement on the prior year was due to the continued strong cash generation of the business and the levelling of working capital following the build-up in the first half of 2016 due to the acquisition of the Healthcare Products Business from Sinclair Pharma plc (“Sinclair”).
Alliance announced two acquisitions during December 2017: Ametop®, a topical anaesthetic gel, and Vamousse®, for the prevention and treatment of human head lice. These products were acquired for US$7.5m (£5.6m) and an initial consideration of US$13.0m (£9.7m) respectively, together with inventory totalling $0.9m (£0.7m); both acquisitions were funded from existing cash and bank facilities.
The Group’s strong underlying cash generation, together with the £4m warranty claim receipt from Sinclair, means that, after spending £16.0m on acquisitions, the Group’s net debt was approximately £72.3m as at 31 December 2017 (31 December 2016: £76.1m). Consequently adjusted net debt/EBITDA leverage has fallen from 2.8 times to less than 2.5 times at the end of 2017. Based on current business performance, we expect leverage to continue to reduce to below 2.0 times by the end of 2018.
The Group expects to announce its preliminary results for the twelve months ended 31 December 2017 on Tuesday 27 March 2018.
For further information:
Alliance Pharma plc + 44 (0) 1249 466966
John Dawson, Chief Executive Officer
Peter Butterfield, Deputy Chief Executive Officer
Andrew Franklin, Chief Financial Officer
Buchanan + 44 (0) 20 7466 5000
Mark Court / Sophie Wills / Gemma Mostyn-Owen
Numis Securities Limited + 44 (0) 20 7260 1000
Nominated Adviser: Michael Meade / Freddie Barnfield
Corporate Broking: James Black / Toby Adcock
Investec Bank plc +44 (0) 20 7597 5970
Corporate Finance: Daniel Adams / Ed Thomas
Corporate Broking: Patrick Robb / Rob Baker
Notes to editors:
About Alliance Pharma
Alliance, founded in 1998, is an international specialty pharmaceutical group based in Chippenham, Wiltshire, UK. The Group has sales in more than 100 countries worldwide via direct sales, joint ventures and a wide network of distributors. Alliance has a strong track record of acquiring the rights to established niche products and it currently owns or licenses the rights to approximately 90 pharmaceutical and consumer healthcare products. The Group continues to explore opportunities to expand its product portfolio.
Alliance joined the AIM market of the London Stock Exchange in December 2003 and trades under the symbol APH.