The thinking behind Alliance Pharma’s (APH) recent acquisition of headlice treatment Vamousse was twofold. Firstly, it has added a third product to its 'star' portfolio, which means management thinks it has great potential for international revenue growth. Indeed, in its first two weeks under a new owner, revenues in France had already matched those generated in the whole of the previous year. Secondly, it has given the group a low-risk opportunity to enter the US – the world’s biggest healthcare market. Vamousse was developed in America and generates 80 per cent of its sales there. Deputy chief executive Peter Butterfield said the group will continue to look for more US-born drugs to add to the portfolio.
But the £16m spent on Vamousse and anaesthetic gel Ametop in December meant the group’s year-end net debt position didn’t quite hit management’s previous target of two times adjusted cash profits. Chief financial officer Andrew Franklin says he is now aiming to reach that level by the end of the current financial year, assuming no more acquisitions.
Still, Alliance has returned to being highly cash-generative. In 2017, free cash flow rose 67 per cent to £22m, from £28m of net profits. Broker Numis expects pre-tax profits and EPS of £27.6m and 4.6p, respectively, in 2018, up from £24m and 4p in the reported period.
| ALLIANCE PHARMA (APH) | ||||
| ORD PRICE: | 70p | MARKET VALUE: | £333m | |
| TOUCH: | 68-70p | 12-MONTH HIGH / LOW: | 71p | 46p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 43p* | NET DEBT: | 36% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 45.5 | 12.0 | 3.8 | 0.9 |
| 2014 | 43.5 | 10.2 | 3.2 | 1.0 |
| 2015 | 48.3 | 15.2 | 4.7 | 1.1 |
| 2016 | 97.5 | 22.2 | 3.9 | 1.2 |
| 2017 | 103 | 28.4 | 6.1 | 1.3 |
| % change | +6 | +28 | +58 | +10 |
| Ex-div: | 14 Jun | |||
| Payment: | 11 Jul | |||
| *Includes intangible assets of £279m, or 59p a share | ||||
