Alliance Pharma : Final Results for the year ended 31 December 2022 Reports

WE ARE

ALLIANCE

Alliance Pharma plc

Annual Report and Accounts 2022

CONTENTS

AN ALLIANCE OF PEOPLE, PARTNERS AND BRANDS, WORKING TOGETHER TO ACHIEVE MORE

How we report to our stakeholders

View our report online at alliancepharmaceuticals. com/annualreport22

Online Sustainability Report

Online sustainability report at alliancepharmaceuticals. com/sustainability

Visit our main site for further information at alliancepharmaceuticals.com

Company Overview

Who We Are 01

2022 Performance Overview 02

2022 A Year in Review 03

Purpose, Vision, Strategy, Values 04

Strategic Report

Chief Executive's Review 06

Market Overview 09

Our Strategy 12 Spotlight on…

Marketing excellence 18

Innovation and development 20

ScarAway™ and Kelo-Cote™

US acquisition 22

Culture, people and values 24

Key Performance Indicators 27

Sustainability 29 Spotlight on…

Managing our packaging estate 31

Developing our response

to climate change 33

TCFD 35

Stakeholder Engagement 40

Financial Review 42

Principal Risks and Uncertainties 47

Governance

Chair's Introduction 57

Our Governance Structure 60

Board of Directors 61

Governance 63

Nomination Committee Report 69

Audit and Risk Committee Report 72

Remuneration Committee Report 77

ESG Committee Report 86

Directors' Report 88

Financial Statements

Independent Auditor's Report 93

Consolidated Income Statement 102

Consolidated Statement of

Comprehensive Income 103

Consolidated Balance Sheet 104

Company Balance Sheet 105

Consolidated Statement of Changes

in Equity 106

Company Statement of Changes in Equity 107

Consolidated and Company Cash

Flow Statements 108

Notes to the Financial Statements 109

Additional Information

Unaudited Information 148

Five Year Summary 149

Advisers and Key Service Providers 150

Cautionary Statement 151

Glossary 152

WHO WE ARE

WE ARE ALLIANCE

Who We Are 01

2022 Performance Overview 02

2022 A Year in Review 03

Purpose, Vision, Strategy, Values 04

An international consumer healthcare company, empowering people to make a positive difference to their health and wellbeing, through making our trusted and proven brands available around the world.

Working together to deliver value for our stakeholders through maximising the value of our brands.

EXTENDING THE GEOGRAPHIC REACH

Outsourcing capital-intensive activities, such as manufacturing and logistics, to allow us to focus on what we do best.

2022 PERFORMANCE OVERVIEW

SEE-THROUGH REVENUE*

Who We Are 01

2022 Performance Overview 02

2022 A Year in Review 03

Purpose, Vision, Strategy, Values 04

£172.0m +1%

(2021: £169.6m)

UNDERLYING PROFIT BEFORE TAX*

£30.3m -28%

(2021: £42.2m)

UNDERLYING BASIC EPS*

4.28p -33%

(2021: 6.39p)

STATUTORY REVENUE

£167.4m +3%

REPORTED PROFIT BEFORE TAX

£5.2m -71%

REPORTED BASIC EPS

0.17p -88%

(2021: £163.2m)

(2021: £18.2m)

(2021: 1.37p)

* Non-IFRS Alternative Performance Measures ('APMs'), (see note 31).

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.

2022 A YEAR IN REVIEW

Whilst trading performance in 2022 was not as strong as had been anticipated at the start of the Year, Alliance successfully completed a highly strategic acquisition of ScarAway™ and the rights to Kelo-Cote™ in the US in March and delivered the first new product launch from its innovation and development platform. The Group has robust plans in place to support a return to growth in 2023

• › Consumer Healthcare see-through revenue1 up 3% to £125.2m (2021: £121.8m) (down 3% CER2) with 16% growth in Other Consumer brands partially offsetting softer performance in key brands.

• › Revenue growth impacted by lockdown in China, associated temporary business-to-business ('B2B') disruption to the supply chain, slower recovery in B2B demand for Kelo-Cote™ and a one-off destocking effect, but boosted by the US acquisition and FX gains.

• › Prescription Medicines performance stable, with revenues of £46.8m (2021: £47.8m), down 2% CER2.

• › Underlying PBT declined 28% largely due to less favourable product mix with a lower proportion of Kelo-Cote™ and Amberen™ 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).

• › 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.

• 1 Non-IFRS Alternative Performance Measure ('APM'), (see note 31).

  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.

• 2 Constant exchange rates.

• ›See our Spotlight on ScarAway™ and Kelo-CoteTM US acquisition on page 22

• ›See the Chief Executive's Review on page 06

• › First new product launched from our innovation and development programme - Kelo-Cote™ Kids.

  See our Spotlight on innovation and development on page 20

• › Scope 1 and 2 emissions target set to achieve net zero in 2030, with an interim reduction of 65% by 2025.

  See our Spotlight on developing our response to climate change on page 33

• › Re-certified as a Great Place To Work® (GPTW) in the UK, China and Singapore with new certifications in the US and France and a Trust Index© rating of 79% (2021: 76%).

  See our Spotlight on culture, people & values on page 24

• › Updated and refined our Purpose, Vision and Strategy to better align with the evolving dynamics of the consumer healthcare market.

  See Our Strategy on page 12