Alliance Pharma PLC - Half Year Trading Update
Alliance Pharma plc (AIM: APH), the international healthcare group, is pleased to announce its trading update for the six months ended 30 June 2020, ahead of the expected announcement of the Group’s interim results on 22 September 2020.
As anticipated, COVID-19 has affected first half revenue performance, principally in our prescription medicines business as sales of our consumer healthcare products have continued to be robust.
The Group’s see-through revenue* for the first half of 2020 was £65.3m, 7% lower than the same period last year (H1 2019: £70.3m) and 7% lower on a constant currency basis. Based on trading in the year to date, the Board expects revenue and underlying profit before tax for the full year to be in line with market expectations.
Our consumer healthcare focused International Star brands proved resilient in the first half, generating sales of £30.0m, only slightly down on the same period last year (H1 2019: £30.9m). Sales of Kelo-coteTM for the six months were up £1.1m at £14.2m (H1 2019: £13.1m), whilst sales of NizoralTM were broadly in line at £9.8m (H1 2019: £10.0m).
In contrast, demand for our prescription driven products was lower in the first half due to the delays in routine treatments as healthcare professionals focused on maintaining hospital capacity to treat patients with COVID-19. As a result, Local brand revenues were down 11% on the corresponding period last year at £35.1m (H1 2019: £39.4m).
Free cash flow for the first half of 2020 remained robust at £10.5m (H1 2019: £14.5m), with net debt reducing by £7.0m to £52.2m as at 30 June 2020. Leverage (adjusted net debt/proforma EBITDA) reduced to 1.34 times at the end of June (31 December 2019: 1.48 times) and we expect this to reduce further in the second half of the year.
Our outsourced business model and robust IT systems have enabled us to transition the business to effective remote working and operationally the business has performed extremely well, with further positive progress being made on the Nizoral integration.
We have experienced only minimal disruption to our supply chain due to COVID-19 and continue to expect further recovery in trading during the second half of the year, as markets normalise and demand improves. Overall, we are starting to see some good signs of recovery in our main markets, particularly in China.
Peter Butterfield, Chief Executive Officer of Alliance Pharma, commented: “We expected some reduction in demand during the first half of 2020 as a result of COVID-19. That said, we have come through strongly towards the end of the half and expect trading to recover further as we move into the second half of the year. The resilience and diversity of our product portfolio, and the ease with which we have managed to transition the business to operating remotely, position us very well to resume our growth trajectory as the markets for our products recover.”
* See-through revenue includes sales from Nizoral™ as if they had been invoiced by Alliance. Under the terms of the transitional services agreement with Johnson & Johnson (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. Revenue for H1 2020, on a statutory-reported basis, is expected to be £61.7m, a decrease of 7% on the same period last year