Alliance Pre-Close Trading Update
12th Feb 2019
Alliance Pharma plc (AIM: APH), the international healthcare group, is pleased to announce its unaudited pre-close trading update ahead of the Group’s preliminary results for the year ended 31 December 2018.
Revenues on a ‘see-through’ basis* for 2018 were up 22% on the prior year (up 23% on a constant currency basis) at approximately £124.0m (2017: £101.6m, restated following the adoption of IFRS 15). Excluding acquisitions, revenues increased 4% on the prior year (4% on a constant currency basis). Underlying profit before tax is expected to be in line with expectations.
Our International Star brands continued to perform strongly in 2018:
- Kelo-cote™ delivered an excellent performance, with sales increasing 68% to £22.5m (2017: £13.3m) with stronger than expected growth across the Asia Pacific region and in mainland Europe.
- Nizoral™, the medicated anti-dandruff shampoo acquired from Johnson & Johnson (J&J) in June 2018, performed in line with expectations generating ‘see-through’ sales* of £10.9m in the second half of 2018.
- MacuShield™ performed well with sales up 6% at £7.0m (2017: £6.6m, restated following the adoption of IFRS 15).
- Vamousse™, acquired in December 2017, performed in line with expectations, achieving sales of £5.8m, up 16% on 2017 (under previous ownership), and up 18% on a constant currency basis.
- Xonvea™, for the treatment of nausea and vomiting of pregnancy where conservative management has failed, was launched in October 2018 and is on track with expectations, having registered its first sales and formulary inclusions.
As expected, revenues from our Local brands returned a better performance in the second half of the year with sales of £40.6m (2017: £37.2m). As a result, sales of Local brands for the year were £77.8m (2017: £81.6m), down 5% on the previous year (down 5% on a constant currency basis). Going forwards, we expect sales in this portfolio to remain broadly stable and in line with the second half 2018 sales on an annualised basis.
Free cash flow for the year was slightly stronger than anticipated at approximately £16.1m (2017: £22.0m, restated following the adoption of IFRS 16), after allowing for costs associated with the implementation of the Falsified Medicines Directive, Brexit and launch costs relating to Xonvea. Adjusted net debt/EBITDA leverage was better than expected at approximately 2.33 times (2017: 2.46 times) and, as planned, net debt remained at similar levels to the half year-end at approximately £85.8m (30 June 2018: £86.3m). In 2019, we expect to generate strong free cash flow, which will exceed 2017 levels, and for leverage to reduce to below 2.0 times during the second half of 2019.
The Group expects to announce its preliminary results for the year ended 31 December 2018 on Tuesday 26 March 2019.
Peter Butterfield, Chief Executive Officer of Alliance Pharma, commented:
“We are very pleased to report continued strong momentum in our business, with sales in 2018 up 22% compared with the previous year. We look forward to delivering further growth in the year ahead and to employing the Group’s strong cashflow to further develop the business as the year progresses.”
* ‘See-through’ revenues include the underlying sales from Nizoral™. Under the terms of the transitional services agreement with 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. Revenues for 2018, on a statutory-reported basis, are expected to be £118.2m, an increase of 16% on the prior year.
For further information:
plc + 44 (0)1249 466966
Peter Butterfield, Chief Executive Officer
Andrew Franklin, Chief Financial Officer
+ 44 (0)20 7466 5000
Mark Court / Sophie Wills / Hannah Ratcliff
Numis Securities Limited
+ 44 (0)20 7260 1000
Nominated Adviser: Michael Meade / Freddie Barnfield
Corporate Broking: James Black
Investec Bank plc
+ 44 (0)20 7597 5970
Corporate Finance: Daniel Adams / Ed Thomas
Corporate Broking: Patrick Robb / Tejas Padalkar
Alliance Pharma plc (AIM: APH) is an international healthcare group, headquartered in the UK with affiliate offices in Europe, the Far East and the US and wide international reach through an extensive network of distributors, generating sales in more than 100 countries.
We currently own or license the rights to more than 90 pharmaceutical and consumer healthcare products, which are managed on a portfolio basis according to their growth potential. Promotional investment is focussed on a small number of brands with significant international or multi-territory reach. The remainder of the portfolio comprises products which are sold in a limited number of local markets and require little or no promotional investment.
Our tried and tested ‘Buy and Build’ strategy, allows us to benefit both from organic growth opportunities and from enhancing our growth rate through carefully selected acquisitions.