Alliance Pharma ends year in line with recent forecasts

Alliance Pharma said in a trading update on Tuesday that it delivered see-through revenues of £172m in 2022, up from £169.6m in 2021 and in line with its November trading update.

The AIM-traded firm said that adjusting for currency, revenues were down 3%.

Excluding sales from ‘ScarAway’ and the US rights to ‘Kelo-cote’, which were both acquired in March 2022, like-for-like see-through revenues declined 6% at constant exchange rates.

Alliance said underlying profit before tax was expected to be slightly above £30m, in line with the November trading update.

Free cash flow totalled £15.8m, down from £30.2m in 2021, and following the US acquisition, net debt increased to £102m by 31 December from £87m a year earlier.

Group leverage was expected to be in the range of 2.5x to 2.6x, compared to 1.7x at the end of 2021 and below its banking covenants of 3x.

Net debt and group leverage were both expected to fall during 2023, reflecting the company’s anticipated strong cash generation, with group leverage expected to be below 2x by the end of 2023.

“Our portfolio continues to provide a robust platform from which to grow our consumer healthcare brands and we are starting to see the benefits of our investment in innovation and development,” said chief financial officer Andrew Franklin.

“Kelo-cote Kids Gel had a successful launch in China in 2022 and will be introduced in the UK and Germany this year, whilst Canker-X - part of the Aloclair brand franchise - was launched in the US this month and is already being sold through Walgreens and RiteAid.

“2023 has started well for Alliance and we were pleased to announce last week the appointment of Jeyan Heper as chief operating officer, starting on 1 February.”

Franklin said that while there was a sudden rise in Covid-19 cases in China in December after the relaxation of Beijing’s zero-Covid policy, the level of infection in major cities was now reducing and normal life was starting to resume.

“Whilst end-market demand for consumer healthcare products in China has been constrained, available evidence indicates that the recovery has already commenced and the board remains confident in our full year expectations.

“Our free cash flow has remained robust, and is expected to build strongly throughout 2023, which we anticipate will enable us to reduce our net debt and leverage over the course of the year.”

At the close on Tuesday, shares in Alliance Pharma were up 0.82% at 61.2p.

Reporting by Josh White for Sharecast.com.