Alliance Pharma posts strong results after audit delay
By Josh White
Date: Wednesday 19 Jun 2024
(Sharecast News) - Alliance Pharma reported strong preliminary results for the year ended 31 December on Wednesday, after an audit delay, driven by a robust second half that led to record sales and expanded underlying profit.
The AIM-traded firm said consumer healthcare revenue increased 11% at constant exchange rates (CER) to £136.4m, up 9% on a reported basis, with the Kelo-Cote franchise showing significant recovery in the second half, achieving a 29% revenue increase to £63.2m.
Prescription medicine revenue remained stable at £46.3m.
Non-cash impairments totaled £79.3m, due to lower future cash flow expectations and a higher cost of capital, impacting assets like Amberen, Nizoral, and other smaller assets.
A correction of prior year valuation errors added £28.3m to the 2022 non-cash impairment charges.
Underlying profit before tax rose by 4% to £31.5m, while the reported loss before tax widened to £48.8m, from a restated loss of £23.1m in 2022.
Free cash flow grew 35% to £21.3m, and net debt narrowed to £91.2m, bringing group leverage to 2.05x.
The board said it had paused dividends to prioritise reinvestment for business growth.
Its latest US acquisition, ScarAway, performed strongly with £9.9m in revenue, exceeding expectations.
Internal development projects generated £3.5m in revenue, and e-commerce expansions were planned for 2024.
Operational efficiencies included moving Nizoral manufacturing to Thailand, resulting in cost savings and improved delivery performance.
Environmental initiatives achieved a 48% reduction in scope one and two emissions, with targets set for net zero by 2030 and scope three emissions by 2044.
Alliance Pharma noted that it was re-certified as a 'Great Place To Work' in the UK, US, China, and Singapore.
The board was meanwhile strengthened with several new appointments, including a new chair, Camillo Pane, and a new chief executive officer, Nick Sedgwick.
Additionally, the company successfully appealed a Competition and Markets Authority decision, releasing a £7.9m provision for a potential fine.
"Whilst the audit delay has been unsatisfactory, it has allowed us to implement a more robust intangible valuation review process," said chief financial officer Andrew Franklin.
"Despite the non-cash impairments our portfolio continues to provide a solid platform from which to grow our consumer healthcare brands and generate strong cash flow.
"In 2023, we increased marketing investment, launching award winning advertising campaigns for Kelo-Cote and MacuShield to accelerate organic sales growth whilst bringing new products to market."
Franklin said the company's revenues through e-commerce were building strongly, as it strengthened its network of specialist partners and internal capabilities and entered new geographies.
"We remain confident in our medium to long-term performance as we focus our resources on those market segments in which we already have a strong presence and expertise in order to drive solid organic revenue growth above that of the broader consumer healthcare market."
At 0915 BST, shares in Alliance Pharma were up 7.04% at 38p.
Reporting by Josh White for Sharecast.com.
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