Alliance Pharma to more than double revenue in 2016 results

Specialty pharmaceutical company Alliance Pharma announced its pre-close trading update ahead of its preliminary results for the year to 31 December on Monday.

The AIM-traded firm said group revenue for 2016 was now expected to be more than double the prior year at £97.5m.

It said that was driven by the “transformational” acquisition of the ex-Sinclair products in December 2015 and the continued strong performance of the original Alliance portfolio.

Trading profit before tax was expected to be in line with the board's expectations.

“The ex-Sinclair products delivered sales of approximately £43.8m and represented 45% of total sales, which is in line with the board's expectations,” it reported in a statement.

“The remaining Alliance portfolio performed strongly and delivered a sales increase of 13% to approximately £53.7m for the year.”

Group sales were reportedly enhanced by approximately £4.2m due to the weakening of sterling, primarily against the euro and dollar.

“However the effect on profits was much smaller due to the increases in cost of goods and operating costs denominated in these currencies.”

The company said its key brands delivered a strong performance in 2016, with its scar reduction product Kelo-Cote recording sales of £10.1m, exceeding £10m for the first time.

Nutritional supplement product for age-related macular degeneration, MacuShield, also performed strongly with sales of £5.3m for the year compared with sales of £3.5m in the prior eleven months following its acquisition in February 2015.

On an annualised basis that would equate to a growth rate of 40%, the board pointed out.

Emollient range Hydromol grew 6% with sales of £7.0m in what Alliance called a competitive market.

“We were also pleased with the sales performance of our UK Consumer Health products, including Ashton & Parsons infant powders, whose sales grew from £1.5m in 2015 to £1.9m.”

Full year free cash flow was approximately double the prior year at over £12m, compared to £6.3m.

“Cash conversion was particularly good in the second half of the year with the generation of more than £10m of free cash flow.

“The first half was affected by the normalisation of working capital movements following the acquisition of the ex-Sinclair products,” the board explained.

“The integration of operations and systems from Sinclair has progressed well and the transfer of the cash-generating activities is now complete.”

Net debt decreased from £79.0m at 30 June to approximately £76.1m as at 31 December, despite adverse foreign exchange movements following the weakening of sterling..

Expressed at 30 June 2016 currency rates, the board said net debt would have been £73.8m.

It still expected net debt to progressively reduce during 2017, driven by the group's strong underlying cash generation.

“The UK registration for Diclectin, a product undergoing approval for the treatment for nausea and vomiting of pregnancy, is progressing to plan.

“We expect UK registration mid-year, which will enable us to begin sales in the second half of 2017 with European territories following from late 2018.”

Alliance said it expects to announce its preliminary results on 29 March.