Date: Tuesday 14 Jan 2014
LONDON (ShareCast) - Better sales from its dermatology and post-abdominal surgery treatment products helped AIM drug company Alliance Pharma hit profit expectations for 2013.
In a statement before the AIM-listed company enters its close period, Alliance said annual turnover was expected to hit £45.5m, up marginally from the £44.9m of the year before, with pre-tax profits in line with current market expectations.
A strong performance from its Hydromol dermatology range saw revenues rise from £4.7m in 2012 to £5.3m in 2013, with the post-bowel surgery Opus stoma care business making considerable contribution to sales of £3.9m.
However, increased competition for its cyclical toxicology in the second half from a number of new market entrants means analysts were cautious about the future.
To allay this, Alliance also announced the acquisition on Tuesday of rights to thyroid product Irenat from Germany’s Bayer, in addition to December’s acquisition of popular lip balm Lypsyl.
Based on the latest full-year sales figures, Lypsyl adds around £1.2m of annual revenue with Irenat bringing a further 0.8m euro.
Net bank debt at year end was up from £21.8m to £25.5m, after £10m was invested in acquisitions during the year, and leaving more than £20m of committed, unutilised acquisition facility available to fund acquisition opportunities.
Broker Investec issued a 'sell' recommendation on the shares. It said: "Although the company is cash generative and has debt facilities to provide firepower for acquisitions, we think these will be required to support current forecasts. This, alongside our valuation model indicating that the shares look over-rated, suggests it is time to take profits."
Shares in Alliance were down 4.2% to 36.88p at 11:00 on Tuesday.
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