International ‘star brands’ are set to make a bigger contribution to revenues at Alliance Pharma (APH) in the coming years. That’s good news because all three of the group’s existing commercial products in this segment reported double-digit like-for-like revenue growth in the first six months of 2018, which more than offset timing issues that caused a decline in the core ‘local brands’ portfolio.
In June, the group secured ownership of anti-dandruff shampoo, Nizoral – it’s 'fifth star' – in the Asia Pacific region, where it generated £18.5m of revenue for its previous owner, Johnson & Johnson, over 2017. And in July, the group gained regulatory approval for nausea medicine Xonvea, which it plans to launch in the UK later this year. These two products are expected to boost the star brands division to 40 per cent of group revenues by 2019, from 32 per cent in these numbers.
But chief executive Peter Butterfield doesn’t want Alliance “to turn into a super growth company with no cash flow”. The local brands portfolio is incredibly cash generative, meaning the group converted over 100 per cent of its net profits into free cash flow in the first half.
Broker Investec expects adjusted pre-tax profit and EPS of £28m and 4.4p, respectively, in 2018, up from £24m and 4p in 2017.
| ALLIANCE PHARMA (APH) | ||||
| ORD PRICE: | 91p | MARKET VALUE: | £469m | |
| TOUCH: | 90-91p | 12-MONTH HIGH: | 103p | LOW: 53p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 47p* | NET DEBT: | 36% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 49.4 | 16.9 | 2.84 | 0.44 |
| 2018 | 54.5 | 10.9 | 1.85 | 0.49 |
| % change | +10 | -36 | -35 | +10 |
| Ex-div: | 20 Dec | |||
| Payment: | 10 Jan | |||
| *Includes intangible assets of £339m, or 66p a share | ||||
