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Alliance Pharma eyes pick up in momentum in second half of 2020

Snapshot

  • Underlying earnings up 22% in 2019
  • Integrating Nizoral acquisition from Johnson & Johnson 
  • Strong cash generation
Alliance

Quick facts: Alliance Pharma PLC

Price: 76 GBX

AIM:APH
Market: AIM
Market Cap: £403.6 m
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What Alliance Pharma does:

Alliance Pharma PLC (LON:APH) is an AIM traded company that focuses on the acquisition and licensing of pharmaceutical and healthcare products.

Over the past 20 years the group has made 35 acquisitions, which include healthcare and pharma businesses, and rights to products.

Alliance has five so-called "star" brands, which are managed and marketed centrally and sold internationally.

These brands include: Lice treatment Vamousse; Kelo-cote, a scar reduction product; MacuShield, a supplement recommended by eye experts; anti-fungal shampoo Nizoral; and Xonvea, a pregnancy nausea treatment.

The company runs its business across three broad regions: Europe, where the company sells a combination of prescription and OTC products; the newer US business, where it is focusing on the promotion of Vamousse; and the fast-growing Asia Pacific business, which has a tilt towards dermatology.

 

How it's doing:

See-through revenues for the 12 months ended December 31 were up 16% to £144.3mln, which translated to underlying earnings (EBITDA) of £39.4mln, up 22%.

The company’s star brands performed well, led by its Kelo-cote scar treatment. The figures also included a first-time contribution from Nizoral, the medicated shampoo acquired from Johnson & Johnson.

Forgetting the impact of Alliance’s recent purchases, organic top-line growth was a more than creditable 10%.

Cash generation was strong, meaning the company’s net debt fell to £59.2mln from £85.8mln a year earlier, which meant Alliance’s leverage was 1.48-times earnings at the year-end, down from 2.33-times.

There was a sting in the tail for investors, though probably not totally unexpected, as Alliance decided to pass on the final dividend to conserve cash through the coronavirus crisis. It said it will reassess its position later in the year, potentially offering an interim payout.

In a statement at the company's AGM in May, chief executive Peter Butterfield said while the company had seen “some impact on year to date revenues” due to the coronavirus crisis, it had been encouraged by the robustness of its product portfolio and anticipated that trading will be weighted to the second half of the year.

The CEO also said that the firm’s supply chain remained “robust” and that it had not experienced “any significant supply disruption” due to the outbreak.

“With a strong balance sheet and significant covenant headroom, the board is confident that the group is well placed to respond to increasing demand as local lockdown measures are eased”, Butterfield said.

 

Inflection points:

  • In February, Alliance said demand in the Asia Pacific region, including China, will be lower in the first half of 2020 but is expected to pick up thereafter
  • Overseas sales exceeded surpassed domestic revenues in 2018 for the first time ever.
  • The integration of Nizoral, a Johnson & Johnson medicated shampoo, for which Alliance acquired the Asia-Pacific rights last June for £60mln, is progressing well and traded in line with expectations last year.
  • Chief executive Peter Butterfield has hinted at further acquisitions as the group looks to deploy its strong cash flow to further develop the business.

 

Watch the interview:

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Full interview: Alliance Pharma delivers 'solid' first-half performance with...

Alliance Pharma PLC's (LON:APH) Peter Butterfield discusses with Proactive London's Andrew Scott the firm's interim results and says they delivered a solid first-half performance. Revenues for the period were £70.3mln, up 28% on a constant currency basis, or an organic 10% if the...

on 4/10/19

3 min read