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Alliance Pharma plc

ALLIANCE PHARMA PLC

("Alliance" or the "Group")

Preliminary Results for the year ended 31 December 2022

Diversified portfolio provides robust platform to drive growth in 2023

Alliance Pharma plc (AIM: APH), the international healthcare group, presents its preliminary results for the year ended 31 December 2022 ("the Year"). Whilst trading performance in 2022 was not as strong as had been anticipated at the start of the Year, Alliance successfully completed the highly strategic acquisition of ScarAwayTM and the US rights to Kelo-CoteTM ("the US Acquisition") in March 2022, and has robust mitigation plans in place to support a return to growth in 2023.

FINANCIAL SUMMARY

OPERATING AND FINANCIAL HIGHLIGHTS

• Consumer Healthcare see-through revenue* up 3% to £125.2m (2021: £121.8m) and down 3% at constant exchange rates ("CER") with 16% growth in other consumer brands offsetting softer performance in key brands
• Revenue growth impacted by lockdown in China, associated temporary disruption to the supply chain, slower recovery in business to business ("B2B") demand for Kelo-Cote and a one-off destocking effect, but boosted by the US Acquisition and FX gains
• Prescription Medicine performance stable with revenues of £46.8m (2021: £47.8m), down 2% CER
• Underlying PBT declined 28% largely due to less favourable product mix with a lower proportion of Kelo-Cote and AmberenTM sales. Reported PBT declined 71%, due to higher non-cash impairment charges of £18.2m, including £12.0m for Amberen
• Free cash flow was lower by 48% at £15.8m, primarily reflecting the timing of sales and cash receipts. Cash from operations declined by 45% to £24.9m
• Following the highly strategic US Acquisition for $19.4m (£14.8m), net debt increased to £102.0m moving Group leverage to 2.57 times at 31 December 2022 (1.73 times at 31 December 2021)

DEVELOPING OUR BUSINESS

Alliance Pharma plc

• Integration of the US Acquisition completed in just four months, successfully leveraging our established infrastructure, with revenues in-line with expectations
• Last remaining NizoralTM marketing authorisations transferred from Johnson & Johnson ("J&J") to Alliance in both China and Vietnam, new top-tier Chinese distributor appointed and manufacturing supply consolidation progressing well, which will result in improvements in cost efficiencies in the near future
• Several new proprietary complementary products launched including Kelo-Cote Kids gel and Kelo- Cote Scar Sheets in China, and Canker-XTM in the US, all of which will contribute to ongoing organic growth
• Scope 1 and 2 emissions target set to achieve net zero in 2030, with an interim reduction of 65% by 2025
• Re-certifiedas a Great Place To Work® in UK, China and Singapore with new certifications in the US and France and a Trust Index© rating of 79% (2021: 76%)
• Updated and refined our Purpose, Vision and Strategy to align better with the evolving dynamics of the Consumer Healthcare market

POST YEAR END, STRENGTHENED EXECUTIVE TEAM AND BOARD

• Peter Butterfield, Chief Executive Officer, has commenced a phased return to work as planned
• Jeyan Heper appointed as Chief Operating Officer and Board member in February 2023
• Martin Sutherland appointed as an Independent Non-Executive Director in February 2023

Commenting on the results, Andrew Franklin, Chief Financial Officer of Alliance, said:

"Our portfolio continues to provide a robust platform from which to grow our Consumer Healthcare brands. In 2022, we successfully leveraged our existing infrastructure, acquiring ScarAway and the US rights to Kelo-Cote to create our first truly global brand and bringing additional growth opportunities into the business. We also started to realise the benefits of our investment in Innovation and Development with the launch of Kelo-Cote Kids gel.

"We remain confident in our long-term performance having refreshed our strategy in 2022, to better align our business with the evolving dynamics of the Consumer Healthcare market. Going forward, our efforts will be focused on those market segments in which we already have a strong presence and expertise in order to drive solid organic revenue growth above that of the broader Consumer Healthcare market."

Outlook for 2023

Our clear focus on the core Consumer Healthcare business in addition to our well-established, scalable platform across EMEA, APAC and the US, should support good organic growth in the near term. Whilst 2022 presented some challenges to the business, we have robust plans in place to drive growth in 2023 and the Board's expectations for full year performance are unchanged.

As indicated in the January trading update Kelo-Cote revenues are expected to build through the year, supported by strong end-consumer demand. The China Cross-bordere-Commerce ("CBEC") B2B market for Kelo-Cote has shown early signs of recovery with in-market demand and sales orders increasing over the first two months of the year, and we expect total revenue growth for the entire Kelo-Cote franchise to be above 20% in 2023. We expect to see high single digit revenue growth from Nizoral in 2023, as we accelerate the roll-out of our tested strategic plan for the brand in partnership with our new distributors in China and Vietnam.

Amberen faced some temporary headwinds in early 2023 due to supply challenges at Amazon which are being addressed. The underlying market conditions are positive and this, together with our revised marketing plans, mean that we still anticipate double-digit revenue growth for Amberen on a like-for- like basis.

Alliance Pharma plc

Our portfolio of Other Consumer brands is expected to deliver high single digit revenue growth, substantially ahead of the broader consumer healthcare market.

• The performance of the Group is assessed using Alternative Performance Measures ("APMs"), which are measures that are not defined under IFRS, but are used by management to monitor ongoing business performance against both shorter term budgets and forecasts and against the Group's longer term strategic plans. APMs are defined in note 14.

Specifically, see-through revenue includes all sales from Nizoral as if they had been invoiced by Alliance as principal. For statutory accounting purposes the product margin relating to Nizoral sales made on an agency basis is included within Revenue, in line with IFRS 15.

Underlying measures excludes certain items classed as non-underlying to allow the Group's financial performance to be compared more easily against the majority of its peers. For further detail on non-underlying items please see note 4.

ANALYST MEETING & WEBCAST

A meeting for analysts will be held at 10:00am this morning, 21 March 2023, at Buchanan, 107 Cheapside, London EC2V 6DN. For further details, analysts should contact Buchanan at alliancepharma@buchanan.uk.com

A live webcast of the analyst meeting will be available at this link:

https://stream.buchanan.uk.com/broadcast/63ed07a0355eac0afbf3fbf4

A recording of the webcast will be made available at the investor section of Alliance's website, https://www.alliancepharmaceuticals.com/investors/

For further information:

About Alliance

Alliance Pharma plc (AIM: APH) is a growing consumer healthcare company. Our purpose is to empower people to make a positive difference to their health and wellbeing by making our trusted and proven brands available around the world.

We deliver organic growth through investing in our priority brands and channels, in related innovation, and through selective geographic expansion to increase the reach of our brands. Periodically, we may look to enhance our organic growth through selective, complementary acquisitions.

Headquartered in the UK, the Group employs around 285 people based in locations across Europe, North America, and the Asia Pacific region. By outsourcing our manufacturing and logistics we remain asset- light and focused on maximising the value we can bring, both to our stakeholders and to our brands.

For more information on Alliance, please visit our website: www.alliancepharmaceuticals.com

Alliance Pharma plc

Trading performance

The Group delivered see-through revenues of £172.0m in the Year (2021: £169.6m), in line with the guidance given in the trading update on 23 November 2022 (the "November Trading Update") and up 1% on the prior year. Adjusting for currency, revenues declined 3%. Excluding sales from ScarAway and the US rights to Kelo-Cote, both acquired in March 2022 (the "US Acquisition"), like-for-likesee-through revenues declined 6% at constant exchange rates ("CER").

Group revenue benefited from exchange rate movements in 2022, principally the weakening of Sterling against the US Dollar and HK Dollar, which increased see-through revenue by approximately £6.7m. Statutory revenue increased 3% to £167.4m (2021: £163.2m) (-2% CER).

Revenue summary

Consumer Healthcare

Total Consumer Healthcare revenues for the Year were £125.2m (2021: £121.8m), up 3% on the prior year (-3% CER) benefitting from the US Acquisition in addition to currency tailwinds. On a statutory basis, reported Consumer Healthcare revenues were £120.6m, up 5% from the previous year (2021: £115.4m) and up 3% CER.

Excluding the impact of the US Acquisition, like-for-likesee-through Consumer Healthcare revenue fell 2% (-7% CER) to £118.9m, whilst on a statutory basis, like-for-like Consumer Healthcare revenues decreased 1% to £114.3m (-6% CER).

Kelo-Cote franchise - scar prevention and treatment

Kelo-Cote franchise revenues grew 2% to £50.0m (2021: £48.8m) in the Year, boosted by the US Acquisition and currency gains (-6% CER). As previously reported, the CBEC scar treatment market declined during H1 2022 as rigid lockdowns in China from March prevented the movement of product across the border from Hong Kong for a number of months, however the online domestic market grew, and Kelo-Cote gained share. In H2 2022, a slower recovery in B2B demand for Kelo-Cote in the China cross-bordere-commerce channel, coupled with a one-off destocking effect in that channel, meant that like-for-like global Kelo-Cote revenues were down 17% CER in the Year.

End-consumer demand in the scar treatment market in e-commerce in China remains strong, with 7% value growth in 2022 and Kelo-Cote gaining share. We continue to work with our CBEC distributor to develop further this channel, expand reach and optimise sales. Our B2C channel is well developed and

Alliance Pharma plc

in September our Kelo-Cote flagship on-line store was awarded a prestigious Tmall Global award, alongside a small number of other prominent brands, for surpassing RMB100m (c.£12m) in annual sales for the first time. We have refined our strategy to increase our presence in the significant B2B channel, which incorporates additional distributor support, and have successfully reduced the level of counterfeit product in the market.

Looking ahead, we expect total Kelo-Cote franchise revenues to build throughout the year with overall growth anticipated to be above 20% in 2023, compensating in part for the one-off events which adversely affected revenues in 2022. This is slightly ahead of the 18% compound annual growth rate delivered for the four-year period ending 31 December 2022, excluding the US Acquisition.

Nizoral - medicated anti-dandruff shampoo

Following the completion of the marketing authorisation transfer for Nizoral in China from J&J, we transitioned to a new top-tier local distributor at the end of the H1 2022 to service the brand's largest market. Our new distributor offers a larger sales team than the partner we inherited from J&J and has fewer products in its portfolio which ensures more sales resources are dedicated to our account. However, phasing of orders to the new distributor led to a 12% decline in revenues in H1 2022.

Nizoral revenues recovered strongly in H2 2022 growing 15% CER, partly due to the delayed orders from H1 falling into H2 and as Alliance finalised the remaining marketing authorisation transfers in Vietnam. Consequently, revenues grew 6% to £21.8m (2021: £20.6m) for the Year (3% CER). The new Chinese distributor, and the completion of all marketing authorisation transfers, provides a very strong platform to drive high single digit revenue growth for Nizoral in 2023, supported by new marketing initiatives and the introduction of updated packaging.

Amberen - vitamin mineral supplement for the relief of menopause symptoms (US)

In the US, Amberen generated net revenues of £14.9m (2021: £19.2m), 22% below prior year (-30% CER). Amberen sales performance was impacted by declines in the underlying bricks and mortar market due to an increase in prevalence of cheaper, white-label alternatives and customer switching to online platforms, in addition to the loss of a leading discount store account. Alliance is committed to improving the performance of Amberen in the higher growth e-commerce channel whilst optimising sales in bricks and mortar where appropriate. The brand's packaging has been re-launched featuring stronger claims, and advertising investment continues focused on digital, video, social media and search engine optimisation to drive share gains.

Amberen now has an enhanced platform from which to generate double-digit revenue growth on a like- for-like basis in 2023 and beyond. We are also focused on developing an innovation pipeline, to underpin the growth of the brand in the longer-term. Given the disruption to the bricks and mortar market, we now anticipate 2025 sales of c.£20m, below our original £35m expectation. As a consequence, coupled with higher interest rates, we have impaired the asset value by £12.0m.

Other Consumer Healthcare brands

Our underlying business remains strong, with Other Consumer Healthcare revenues increasing 16% to £38.4m (2021: £33.2m) and 14% CER, with particularly strong growth from Aloclair and Vamousse. This solid performance in our Other Consumer Healthcare brands clearly illustrates the benefits of a diversified portfolio, and we anticipate continued high single-digit growth in this portfolio of products in 2023, substantially ahead of the broader consumer healthcare market.

Prescription Medicines

The Prescription Medicines business continues to deliver stable revenues with £46.8m (2021: £47.8m), in the Year, down 2% on the prior year on both a reported and currency adjusted basis. Key brands include Hydromol (emollient for the treatment of eczema), Forceval (nutritional supplement) and the Opus range of stoma care products, all of which performed well in the Year.

We continue to actively manage this part of our portfolio, periodically discontinuing or disposing of smaller products that deliver very low sales and margins. However, the cash generation from these assets