Alliance Pharma's headline results suffered from the ongoing decline of Deltacortril, an ancient corticosteroid that proved a surprise hit with patients after Alliance Pharma acquired the product. However, signs are that Deltacortril sales are stabilising and, when its impact is excluded, Alliance's underlying pre-tax profits were 16 per cent higher driven by year-on-year sales growth of 2 per cent.
The company is now looking to diversify away from the under-pressure medical markets in Ireland and the UK which is a sensible move. Ireland is proving particularly problematic as rivals chipped away at sales of Nu-Seals, a low dose aspirin, with product sales falling 25 per cent to £2.1m. The government will also introduce generic substitution and lower reference price legislation this year which will further undermine sales of the product. In addition, the manufacturing disruption that halted supplies of bladder cancer drug ImmuCyst isn't expected to ease until the end of 2013.
To offset these pressures, Alliance Pharma is looking to expand in Europe and has appointed new managers for the German-speaking countries and France, which should help the business gain access to a broader range of potential acquisitions.
Broker Peel Hunt forecasts full-year pre-tax profits of £10.8m and EPS of 3.1p (2011: £11.5m and 3.6p)
ALLIANCE PHARMA (APH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 26p | MARKET VALUE: | £16.5m | |
| TOUCH: | 26-27p | 12-MONTH HIGH: | 32p | LOW: 21p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 74p* | NET DEBT: | 30% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 24.3 | 7.00 | 2.38 | 0.25 |
| 2012 | 22.0 | 5.30 | 1.80 | 0.28 |
| % change | -9 | -24 | -24 | +10 |
Ex-div: 5 Dec Payment15 Jan *Includes intangible assets of £66.1m, or 104p a share | ||||
