Those who feared financial repercussions from Alliance Pharma’s (APH) major acquisition in 2016 can breathe a sigh of relief. Half-year results revealed the specialist pharma group is, once again, generating huge amounts of cash – underlying free cash flow leapt from £2.1m to £11m. That helped bring net debt down by £13m to just 2.4 times adjusted cash profit. Chief executive John Dawson assures that the leverage will have fallen to just two times by the end of the year.
Among the 27 products added to the portfolio with that major acquisition was Kelo-Cote, a scar reduction treatment, which has quickly become Alliance’s biggest revenue contributor. Sales were up by a half to £6.2m now that the product is selling in 65 countries. Kelo-Cote and MacuShield – Alliance’s other “star brand” – helped the group report a 9 per cent increase in international revenue at constant currency and sales outside of western Europe now contribute a quarter of the overall top line.
Although the outlook for the full year and beyond has been dampened by the initial rejection of pregnancy nausea treatment Diclectin, analysts still expect double-digit earnings growth in the next two years. In 2017, broker Numis has forecast pre-tax profit and EPS of £24m and 3.9p, a slight uptick on 2016 (£22m and 3.8p), even though underlying profit – after excluding the £5m compensation bonus from Sinclair Pharma – was flat in the first half.
| ALLIANCE PHARMA (APH) | ||||
| ORD PRICE: | 53p | MARKET VALUE: | £249m | |
| TOUCH: | 52.5-53.3p | 12-MONTH HIGH: | 58p | LOW: 42p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 39.5p* | NET DEBT: | 34% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 46.4 | 11.7 | 2.0 | 0.40 |
| 2017 | 50.3 | 16.9 | 2.8 | 0.44 |
| % change | +8 | +44 | +39 | +10 |
| Ex-div: | 21 Dec | |||
| Payment: | 11 Jan | |||
| *Includes intangible assets of £263m, or 55p a share | ||||
