In Inte terim rim res esult lts for the he six mont nths hs - - PowerPoint PPT Presentation
In Inte terim rim res esult lts for the he six mont nths hs end nded ed 30 Jun une 2019 19 Peter Butterfield Chief Executive Officer Andrew Franklin Chief Financial Officer Age genda da Business Overview Contents H1 2019
Peter Butterfield Chief Executive Officer Andrew Franklin Chief Financial Officer
Contents September 2019 Interim results 2019 3
Business Overview H1 2019 Results Outlook Summary
September 2019 Interim results 2019 4 Overview
Organic growth
Kelo-cote Treatment for scar reduction Nizoral Medicated anti-dandruff shampoo MacuShield Eye health supplement Vamousse Treatment for head lice Xonvea Prescription medicine for the treatment of nausea and vomiting of pregnancy (NVP) where conservative management has failed
International Stars – a select group of global growth brands
Interim results 2019 September 2019 5
44% International Star brands 56% Local brands
H1 2019 Revenue by brand
Local brands
Key component of our portfolio mix Highly cash generative Sold in a limited number of local markets with little or no promotional investment Mix of prescription and consumer products – many are niche products, or have an established brand name Revenues broadly stable over time
Organic growth: underpinned by effective portfolio prioritisation
H1 2019 H1 2019
September 2019 6 Business evolution Interim results 2019
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 2015 2016 2017 2018 £m Base sales Acquisitions
2015 Routes to market
75% 46% 25%
8%
29%
17%
MacuShiel eld £10.8m Kelo-cot
(Sinclai air) £127.5m Xonvea ea UK UK £1.5m Xonvea ea EU £1.0m Vamou
sse £9.7– 13.1m Nizoral
(APAC PAC) £60.3m
2015 2016 2017 2018
2015
7%
44% 93% 56%
Portfolio mix Sales evolution: acquisitions vs organic growth 3-year CAGR (2015 – 2018): 37%
International Star brands Local brands Rx OTx OTC
H1 2019
1 2 3 4 5 6 8 7 9 10
Offices UK – Chippenham (HQ) UK - Chester Dublin Paris Dusseldorf Milan Madrid Shanghai Singapore North Carolina Distributor relationships
Business evolution Team
Countries
Offices
People
1
2
3 7
4
5 6 10 8 9
Interim results 2019 September 2019 7
2015
10% 2% 88% 37%
Revenue by geography
20% 4% 39% UK & ROI International Mainland Europe US
September 2019 Interim results 2019 8 H1 2019 Results
H1 2019 Results September 2019 Interim results 2019 9
* Non-IFRS alternative performance measures. See-through revenue includes sales from Nizoral in full. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15. ** 2018 comparatives restated following the adoption of IFRS 16 Leases and the capitalisation of £0.3m of Nizoral acquisition costs.
‘See through’ Gross Margin Rate*
(H1 2018: 59.6%)
Underlying EBITDA*
+34%**
Underlying Profit Before Tax
+25%**
‘See-through’ Revenue*
+29%**
Statutory Revenue
+21%**
Statutory Gross Margin Rate
(H1 2018: 59.6%)
£46.4m £49.4m £54.5m £70.3m
H1 2016 H1 2017 H1 2018 H1 2019
See-through Revenue* (3 year CAGR 15%)
£11.7m £11.9m £12.1m £15.2m
H1 2016 H1 2017 H1 2018 H1 2019
Underlying Profit Before Tax (3 year CAGR 9%)
£13.2m £13.6m £14.1m £18.8m
H1 2016 H1 2017 H1 2018 H1 2019
Underlying EBITDA** (3 year CAGR 13%)
H1 2019 Results September 2019 Interim results 2019 10
Underlying Basic EPS
+15%**
Interim dividend
+10%
Free Cash flow*
(H1 2018: £10.4m)**
Net bank debt*
(31 Dec 2018: £85.8m)
Leverage at
Adjusted net debt to EBITDA ratio
* Non-IFRS alternative performance measures. See-through revenue includes sales from Nizoral in full. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15. ** 2018 comparatives restated following the adoption of IFRS 16 Leases and the capitalisation of £0.3m of Nizoral acquisition costs. 2.04p 1.97p 2.04p 2.34p
H1 2016 H1 2017 H1 2018 H1 2019
Underlying Basic EPS (3 year CAGR 5%)
0.403p 0.443p 0.487p 0.536p
H1 2016 H1 2017 H1 2018 H1 2019
Interim Dividend Per Share (3 year CAGR 10%)
£2.1m £11.1m £10.4m £14.5m
H1 2016 H1 2017 H1 2018 H1 2019
Free Cash Flow* (3 year CAGR 90%)
September 2019 Interim results 2019 11 H1 2019 Results
OPEX – increase due to transitional service fees
payable to J&J (not in H1 2018) together with increased investments to support Nizoral transition and Star brands
Strong underlying performance – pre-tax profits
up 25%, with operational leverage maintained
Financing costs – increase primarily due to
currency movements: £0.3m benefit in H1 2018 vs £0.6m adverse in H1 2019, including £0.4m exchange loss on FX forwards
* Non-IFRS alternative performance measures. See-through revenue includes sales from Nizoral in full. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15. ** 2018 comparatives restated following the adoption of IFRS 16 Leases and the capitalisation of £0.3m of Nizoral acquisition costs. £46.4m £49.4m £54.5m £70.3m
H1 2016 H1 2017 H1 2018 H1 2019
See-through Revenue* (3 year CAGR 15%)
Six months ended 30 June 2019 2018 (restated** ) Movement
Underlying results
£m £m % See-through revenue* 70.3 54.5 29.1% Gross profit 41.3 32.4 27.4% Gross profit % 58.8% 59.6% (0.8%) Operating costs (21.7) (17.8) (21.6%) Share-based payments (0.9) (0.6) (49.7%) EBITDA 18.8 14.1 33.7% EBITDA % 26.8% 25.8% 1.0% Depreciation & Amortisation (1.1) (0.8) (44.5%) EBIT 17.7 13.3 33.1% Financing costs (2.5) (1.1) (122.7%) Profit Before Tax 15.2 12.1 24.8% PBT % 21.6% 22.3% (0.7%) Profit After Tax 12.1 9.7 Basic EPS 2.34p 2.04p
14.7%
Diluted EPS 2.30p 1.98p
16.2%
H1 2019 Results September 2019 Interim results 2019 12
Cash flow from trading £19.2m
* Non-IFRS alternative performance measures. See-through revenue includes sales from Nizoral in full. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15. ** 2018 comparatives restated following the adoption of IFRS 16 Leases and the capitalisation of £0.3m of Nizoral acquisition costs. £2.1m £11.1m £10.4m £14.5m
H1 2016 H1 2017 H1 2018 H1 2019
Free Cash Flow** (3 year CAGR 90%)
September 2019 Interim results 2019 13 H1 2019 Results
Working capital – reduction in total inventory balance (£2.2m) due to wind down
Net debt – reduction reflects strong underlying cash generation Corporation tax – reflects timing of tax payments
As at: 30-Jun-19 31-Dec-18 £m £m Goodwill and Intangibles 335.0 335.2 Working capital 20.9 26.1 Corporation tax (3.3) (1.5) Deferred tax (net) (26.9) (26.8) Deferred consideration (0.5) (0.5) Other net assets 6.8 5.4 332.0 338.0 Net debt (74.1) (85.8) Net assets 257.9 252.2
H1 2019 Results September 2019 Interim results 2019 14
Net debt
Leverage
2.33x 1.95x
Leverage reduction –
leverage is forecast to reduce further in H2 2019
Debt reduction – net debt
reduced by £11.7m in H1 2019
New debt facility – in place from
2 July 2019: £165m fully Revolving Credit Facility and £50m accordion Enlarged syndicate of lenders and improved terms Provides flexibility to deliver carefully targeted acquisitions
September 2019 Interim results 2019 15 Brand performance
* Non-IFRS alternative performance measures. See-through revenue includes sales from Nizoral in full. For statutory accounting purposes the product margin on Nizoral sales is included within Revenue, in line with IFRS 15.
T argeted investment in Star brands
In marketing support and product development / range enhancement Opportunity to do the same with Nizoral
Good market positioning
All Star brands are established in inherently strong growth markets
Diversified portfolio of local brands
Providing good cash generation
Six months ended 30 June
2019
2018
Change Movement
£m £m £m % Kelo-cote Treatment for scar reduction 13.1 10.9 2.2 20% Nizoral* Medicated anti-dandruff shampoo 10.0 0.0 10.0
Eye health supplement 4.7 3.7 1.0 27% Vamousse Treatment for head lice 3.1 2.7 0.4 15% Xonvea Nausea & vomitting of pregnancy where conservative management has failed 0.0 0.0 0.0
17.3 13.6 79% Local brands 39.4 37.2 2.2 6% Total revenue (see-through basis)* 70.3 54.5 15.8 29% International Star brands:
Star brands performance September 2019 Interim results 2019 16
Kelo-cote delivered another very strong performance in H1 2019, with sales increasing 20% to £13.1m – almost double their pre-acquisition full year value in 2015
H1 2019 growth came primarily from continued demand from the Asia Pacific region (including China) Continued growth achieved through maintaining the level of marketing support both locally and globally and through focused execution of our global marketing strategy – working collaboratively with our distribution partners to build brand awareness, recommendation and advocacy by healthcare professionals, supported by ongoing product development and innovation
Focus in H2 will be on increasing penetration in existing markets and pursuing further geographic expansion in line with our global brand strategy Category fundamentals are good – particularly in our core Asia Pacific markets. Through maintaining the level of marketing support locally & globally we believe we are in a good position to continue to exploit this growth during H2 2019 and beyond
H1 2019 sales: Full year sales at acquisition (2015): Global market size (@MSP)*: Global category growth*: Future brand potential:
£13.1m £7.7m £30m+ £225m 5.0%
* Nicholas Hall DB6 report – 2018 (excludes online sales)
T
products in 2018 were USA, Brazil, China, Mexico and Germany – of which China ( key market for Kelo-cote) was the fastest growing at 22% Kelo-cote was the fastest growing scar treatment brand globally in 2018 Kelo-cote global share grew from 5.5% in 2017 to 7% in 2018, overtaking Dermatix to become 4th largest brand
** Nicholas Hall DB6 report – 2018 (excludes online sales)
Star brands performance September 2019 Interim results 2019 17
A key strategic acquisition, which further enhances our geographic footprint and scale in the fast-growing Asia Pacific region
Product is currently sold in 14 territories across APAC, largest being China, Japan, Thailand, Korea & Australia/NZ 2-year transitional services agreement in place with J&J, ending in June 2020 (with possible extension in China) 5-year manufacturing and supply agreement in place for some (but not all) territories
Background
H1 2019 performance broadly in line with H2 2018 – growing in line with category Transition arrangements working well – benefits of control expected post MA transfers Transfer of all marketing authorisations progressing to plan – Hong Kong and Taiwan submissions made; most other markets planned over next 12 months Product integration progressing well – appointment
through promotion, NPD and COGs reductions. Infrastructure established in Singapore & Shanghai – new offices and dedicated team
Progress in H1 2019...
Continuing to progress MA transfers to plan Developing new distributor relationships – across all territories in which the product is sold Continuing to develop our infrastructure in Singapore and Shanghai – to support MA transfers and commercial growth Securing supply – for those territories where the product is manufactured locally
Focus for H2 2019…
2019 H1 net sales*: 2018 H2 net sales*: Market size**: Regional category growth (5-yr CAGR): Future brand potential:
£10.0m £10.9m £25-£30m $328m 8.2%
* ‘See through’ basis ** OTC APAC Medicated Haircare segment (Euromonitor 2017)
September 2019 Interim results 2019 18 International Star brands
REVENUE GROWTH (H1 2019)
Range of pesticide-free products for the treatment & prevention of headlice ** Nicholas Hall DB6 report – 2018 (excludes online sales)
▪ Another good performance in H1 2019, underpinnd by good growth in the US (core market) due to increased distribution & line extensions, despite slight category decline (<1%) ▪ 2 largest retailers in US made strategic shifts in H1 2019 – Walmart to pesticide-free and Walgreens to fewer brands; potentially beneficial for Vamousse ▪ At a global level, focus for H2 2019 will be on: maximising distribution and growing market share in other existing markets (UK & FR) and progressing planned launches in other territories (1 to launch in H2; 2 others under discussion)
H1 2019 sales: Annual sales at acquisition (2017): Global market size (@MSP)**: Global category growth**: Future brand potential:
£3.1m £4.9m
£296m £10m+
▪ Launched in the UK in October 2018 ▪ Interest in Xonvea is high ▪ Focus remains on market access. Xonvea is available in some primary care and hospital providers - a number await the publication of updated RCOG NVP guidelines, expected early next year ▪ We continue to build HCP support and advocacy for the brand ▪ Republic of Ireland MA granted with launch expected Q1 2020. Other EU submissions being progressed
Prescription medicine for the treatment of nausea and vomiting of pregnancy where conservative management has failed, launched October 2018
737k
▪ MacuShield continued to perform well in H1 2019, growth coming primarily from the repatriation of a distribution agreement in the ROI ▪ In 2018, MacuShield had 5.9% share of the global market for eyecare supplements and was the 4th largest brand in Western Europe, driving the growth in this region* ▪ Product launched in Italy & Turkey in H1 2019 and launches planned in another 2 markets in H2 2019 ▪ Focus for H2 2019: delivering / supporting new market launches and continuing to build engagement with distributors, HCPs & KOLs in
REVENUE GROWTH (H1 2019) Most recommended eye supplement by eye experts in the UK
H1 2019 sales: Annual sales at acquisition (2015): Global market size (@MSP)*: Global category growth*: Future brand potential:
£4.7m £3.5m £10m+ $996m 3.3%
* Nicholas Hall DB6 report – 2018 (excludes online sales)
Potential annual cost of NVP to the UK NHS:
£63m
Number of cases of NVP in the UK (2018): Number of hospital admissions in UK (2017):
33k
September 2019 Interim results 2019 19 Our Business Model
Overview September 2019 Interim results 2019 20
Product portfolio
To have a balanced portfolio of products: International Stars, with significant brand growth potential + Local brands, providing stability & cash Targeted channels: OTC, OTx, Rx
Scale
To be at least twice the size we are currently
Revenues
With revenues generated principally from organic growth, supported by carefully selected acquisitions
Route to market
To have a blended mix of affiliate and distributor operations
Geographical reach
To have leveraged our footprint in the US, APAC and the EU
Organic growth
Proven ability to drive organic growth with carefully targeted investment – as evidenced by Kelo-cote, MacuShield & Hydromol
Selective acquisitions
Proven ability to buy well and exploit strong ROI post acquisition
Operational capabilities
Strong supply chain & operational capabilities spanning a wide range of geographies and product types (OTC, OTx, Rx)
Key characteristics:
Good market positioning
Established in inherently strong growth markets
Diversification reduces risk
High level of diversification, both in terms of products and geographies reduces downside risk
Delivered through maintaining:
Strong cash flow Selective approach to acquisitions Investment in key growth brands Operational effectiveness Operational leverage High performing & engaged team
September 2019 Interim results 2019 21 Summary
Nizoral APAC integration progressing well Kelo-cote +20% revenue growth +29% see-through revenue growth (incl. acquisitions) Interim dividend increased 10% to 0.536p Continued strong cash generation New enhanced banking facilities in place Leveraging increased scale & geographic presence Maximising
Pursuing additional growth through selected acquisitions Delivering on
Maintaining Local brands Investing in International Star brands
Alliance Pharma plc Avonbridge House, Bath Road, Chippenham, Wiltshire SN15 2BB T: +44 (0)1249 466966 e-mail: info@alliancepharma.co.uk www.alliancepharmaceuticals.com