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RNS
Alliance Pharma PLC  -  APH   

Full Year Results

Released 07:00 27-Mar-2018

RNS Number : 9971I
Alliance Pharma PLC
27 March 2018
 

 

                                                  27 March 2018

 

 

ALLIANCE PHARMA PLC

("Alliance" or the "Group")

 

Results for the year ended 31 December 2017

Alliance Pharma plc (AIM: APH), the international specialty pharmaceutical company, is pleased to announce its results for the year ended 31 December 2017.

Financial Highlights

·      Revenue up 6% to £103.3m (2016: £97.5m)

FX effect approximately £2.7m, up 3% on constant currency basis

·      EBITDA* up 3% to £26.8m (2016: £26.0m)

·      Reported pre-tax profit up 28% to £28.4m (2016: £22.2m)

Underlying pre-tax profit up 8% to £24.0m (2016: £22.2m)

·      Reported basic EPS up 58% to 6.10p (2016: 3.85p) including the impact of the Sinclair settlement income and the effect of tax rate changes, primarily in the US

Underlying adjusted basic EPS* up 10% to 4.06p (2016: 3.69p)

·      Free cash flow* up 67% to £21.7m (2016: £13.0m)

·      Net bank debt* of £72.3m (2016: £76.1m)

A reduction in net debt despite the £16.0m investment in acquisitions

Leverage at year end of 2.46 times (Adjusted net debt to EBITDA ratio)

·      Proposed dividend:

Final dividend up 10% to 0.888p per share (2016: 0.807p)

Full year dividend up 10% to 1.331p per share (2016: 1.210p)

 

 

* For definitions of non IFRS alternative performance measures see note 16

 

Operational Highlights

·      Strong organic performance, driven by our International Star brands

Kelo-coteTM, our scar reduction brand, grew 34% to £13.3m (2016: 10.0m)

MacuShieldTM, the No.1 macular pigment supplement recommended by eye experts, grew 38% to £7.3m (2016: £5.3m)

·      Agreed a settlement in March 2017 with Sinclair, including £5.0m cash compensation, in relation to the material reduction of business in Kelo-stretchTM

·      Acquisition of VamousseTM in December 2017, adding a third International Star brand and creating a US operation for the Group

·      Acquisition of AmetopTM in December 2017 to complement our Bedrock portfolio

·      Now a £100m+ revenue business involving operations on three continents, with good progress in Asia Pacific through our distributor network

 

Commenting on the results, David Cook, Alliance's Chairman, said:

"Following a transformational year in 2016 in which the Sinclair Healthcare Products business was integrated into the Group, the business has delivered strongly in 2017. The strength of cash generation, coupled with the opportunities from our International Star brands, means we are well positioned to pursue growth both organically and through further acquisitions in 2018.

 

"The year has started well, including the establishment of a US affiliate, and we look forward to leveraging our expanded footprint."

 

For further information:

 

Alliance Pharma plc

+ 44 (0) 1249 466966

John Dawson, Chief Executive

Peter Butterfield, Deputy Chief Executive Officer

 

Andrew Franklin, Chief Financial Officer

www.alliancepharma.co.uk

 

www.alliancepharma.co.uk

 

Buchanan

+ 44 (0) 20 7466 5000

Mark Court / Sophie Wills / Gemma Mostyn-Owen

 

 

 

Numis Securities Limited

+ 44 (0) 20 7260 1000

Nominated Adviser: Michael Meade / Freddie Barnfield

 

Corporate Broking: James Black / Toby Adcock

 

 

Investec Bank plc

+ 44 (0) 20 7597 5970

Corporate Finance: Daniel Adams / Ed Thomas

 

Corporate Broking: Patrick Robb / Rob Baker

 

 

 

Alliance Pharma plc is an international specialty pharmaceutical company.

Headquartered in Chippenham, UK, Alliance commenced trading in 1998 and has been listed on AIM since 2003. Alliance has a strong track record of acquiring established niche products and it currently owns or licenses the rights to approximately 90 pharmaceutical and consumer healthcare products. It has sales in more than 100 countries either directly via its affiliates or through its selected network of distributor partners. Alliance joined the AIM market of the London Stock Exchange in December 2003 and trades under the symbol APH.

 

 

Chairman's and Chief Executive's Review

After another year's strong performance we have  exceeded £100m of revenue for the first time, marking an important milestone in the development of the Group.

Performance by region

UK and Republic of Ireland

Sales in our largest market grew to £56.3m, an increase of 4% on a like-for-like basis, driven primarily by MacuShield, which responded well to increased marketing investment and wider distribution, to achieve sales of £6.2m (2016: £4.6m). Similarly, Kelo-cote performed well during the year, with our renewed focus on the brand generating 38% growth to £0.8m. Sales of HydromolTM remained static at £7.0m as the emollient market slowed considerably.

Other highlights include our Local Hero brand LypsylTM, which grew by 32% to £1.2m, as a result of a product refresh and increased marketing effort.

Mainland Europe

In aggregate, the sales in our direct European territories (France, Germany, Switzerland, Austria, Italy, Spain and Portugal) were up 2% to £20.6m (decreasing by 4% on a constant currency basis relative to 2016). We saw a strong performance from Kelo-cote of £3.2m (2016: £1.4m), particularly since we repatriated our distribution agreements in France and Italy, but this was offset by distributor stocking patterns in Spain and Italy, primarily for AloclairTM, as we completed livery changes. We are working to solidify our position in these markets. We will evaluate opportunities to introduce Vamousse where appropriate and continue to analyse further acquisition prospects to leverage our footprint.

International

We were particularly pleased with our sales in our International business, which grew by 13% to £26.4m compared with 2016 (7% on a constant currency basis). Asia Pacific was the primary engine of growth, with sales increasing by 35% (28% in constant currency) thanks to robust sales of Kelo-cote and Aloclair through our distribution partners. Our Chinese business saw sales grow by 61% (54% in constant currency), with Kelo-cote the principal driver.

Strategy

Our Buy & Build model continues to perform well, providing growth, profitability and cash generation.

A key part of the model is our portfolio strategy.  We segment out our high growth International Star brands as the top priority for promotional investment.  These are Kelo-cote, our patented scar reduction product, and MacuShield, our supplement product that replenishes the layer of protective pigment on the macula, a critical region at the back of the eye.  MacuShield is the No.1 macula pigment supplement recommended by UK eye experts.  Following the acquisition at the end of 2017, we now have a third International Star brand in Vamousse, a novel, naturally based, pesticide-free treatment for headlice.  Each of these products has international potential.  Their individual marketing strategies are created centrally and adapted locally to suit different therapeutic and cultural approaches to treatment.

Vamousse is of special strategic relevance in that it was developed in the US, where it records over 80% of its current sales.  Acquiring Vamousse has enabled us to establish a low-risk entry into the world's largest healthcare market with immediate profitability. This will undoubtedly allow us to benefit from further opportunities as we establish ourselves in this major market.  Vamousse also has good UK sales, and the brand fits neatly into our existing UK OTC portfolio.

As well as our International Stars, we have several Local Heroes which are national growth brands that excel in one or two markets without necessarily having broader global potential.  Examples are Hydromol, our UK dermatology brand; Aloclair, our brand for mouth ulcers that performs very well in Italy and Spain; and OxyplastineTM, a well-known nappy rash product in France and francophone Africa.

Of fundamental importance for providing profitability and cash contribution are our numerous Bedrock products.  This part of the portfolio contains around 70 of our 90 brands and provides around 50% of our sales, providing a sustainable base for the business. These products are very well established in market niches and need minimal promotional support.  Our Bedrock products were recently boosted by the acquisition of Ametop from Smith & Nephew in December 2017.  Ametop is a well-established and widely used local anaesthetic gel, used on the skin prior to injections or cannulations. 

We continue to work with the Medicines and Healthcare products Regulatory Agency (MHRA) on DiclectinTM, a treatment for nausea and vomiting of pregnancy. We in-licensed the product from the Canadian group, Duchesnay Inc., for the UK in 2015 and for a further nine European territories in 2016. Working with Duchesnay, we believe that we are making good progress in resolving some of the issues initially expressed by the regulator in July 2017. We expect to have more clarity on the regulatory position within the next few months.  There are currently no licensed treatments for nausea and vomiting of pregnancy in the UK, highlighting a clear unmet medical need. If approved, Diclectin would represent a sizeable mid-term opportunity, once the initial marketing investments have paid back.

Over and above our organic growth opportunities, we will continue to look for good bolt-on acquisitions that will further enhance our growth.  Our ability to conclude such acquisitions is facilitated by our strong cash generation and our falling debt leverage position, as outlined in our financial review. Our ability to integrate acquisitions has been finely honed through 35 deals in the past 20 years.

Operations

Our new enterprise resource planning system, Microsoft AX, is anticipated to be operational by the end of 2018. By bringing several legacy systems onto a single platform that will handle all our financial and supply chain planning and fulfilment activities, this will streamline our processes and provide a scalable platform as we pursue further growth.

We continue to keep a close eye on the unfolding situation with regards to Brexit. Many of our licences for medicines were granted on a national basis, so will remain unaffected. However, we are taking proactive steps to ensure that our regulatory, pharmacovigilance and quality functions can continue to operate effectively in the post Brexit environment. The presence of our European affiliates affords us a good degree of optionality in this respect and we expect minimal changes to our operational cost base as a result. 

Working in conjunction with our contract manufacturers, we are also well advanced in our preparations to upgrade our product packs and distribution systems to comply with the forthcoming obligations of the EU Falsified Medicines Directive legislation (FMD), which is designed to prevent counterfeit medicines reaching patients.

People

At Board level, Peter Butterfield was appointed Chief Operating Officer in June 2017, to add to his duties as Deputy Chief Executive. This shift in responsibilities has allowed John Dawson to be able to focus more on outward-facing initiatives, and Peter to continue the transition to CEO. In March we announced that following this planned transition period, Peter will step into the CEO role from the 1 May 2018 and John will become a Non-executive Director. Peter has almost 20 years of commercial and operational healthcare experience, the last eight being spent at Alliance.  The Chairman, Andrew Smith, stepped down from the Board on 1 March 2018, and was succeeded by David Cook, who has been a Non-executive Director of the Company for almost four years.

We thank Andrew for his valuable contribution to the Company over the past eleven years that has seen our underlying PBT grow from £0.5m to £24.0m and our market capitalisation from £22m to £320m.

To complement our internal promotions, during the year we appointed several external candidates to round out the Group's capabilities. These included Amanda Sicvol, our General Manager for the US market, who joined Alliance Pharma with the acquisition of Vamousse; Chris Delafield, who joined us from Sanofi as the new Global Marketing Head for Kelo-cote; and Chris Chrysanthou, who joined us from Fladgate LLP to create our own in-house commercial legal function.

The performance of the business is built upon the hard work of our valued employees, and we wish to thank all our people for their dedication and contributions to the success of the Group. In addition to our ongoing investment in training and development, in the last couple of years we have enhanced our working environments, with significant refurbishment of our offices in Chippenham, as well as new offices in Madrid, Singapore, and - most recently - in the United States with the establishment of Alliance Pharma Inc. in Cary, North Carolina.

We are delighted to report that in our most recent survey, we received our highest ever rating on employee engagement and look forward to continuing our efforts to make Alliance a great place to work and an employer of choice.

 

Financial review

Group performance

 

The Group achieved a strong financial performance with revenue increasing 6% to £103.3m (2016: £97.5m) and underlying profit before tax increasing 8% to £24.0m (2016: £22.2m).

The Group's revenue was enhanced by approximately £2.7m due to the weakening of Sterling, primarily against the Euro and US Dollar. However, the effect on operating profits was much lower at approximately £0.3m due to the natural Euro hedge that exists, whereby Euro-denominated movements in sales are matched by corresponding movements in Euro-denominated cost of goods and operating costs.

Gross profit increased at a faster rate than revenue, increasing 8% to £59.0m (2016: £54.8m), resulting in a gross margin up 0.8% for the year to 57.1% (2016: 56.3%).  The increase in margin percentage resulted from the performance of our International Star growth brands, Kelo-cote and MacuShield, and we expect this trend to continue in 2018.

As planned, the Group increased investment in sales and marketing during 2017, focusing on our International Stars to support sales growth; this additional spend resulted in an increase in administration and marketing costs (excl. depreciation and amortisation) of £2.4m to £30.8m, representing 29.8% of sales. The IFRS2 share options charge also increased from £0.7m to £1.5m following the increased number of employees resulting from the Sinclair acquisition.

Earnings before interest, taxes, depreciation and amortisation (EBITDA), as per note 16, increased by 3% to £26.8m (2016: £26.0m).  Excluding the IFRS2 share options charge, EBIDTA increased by 6% to £28.2m (2016: £26.7m), maintaining its ratio of 27% of sales.

Finance cost

 

Finance costs reduced by £1.6m on the prior year to £1.8m (2016: £3.4m), due to a reduction in overall gross debt and a release of £0.6m estimated deferred consideration (2016: £0.8m charge).

The average interest charge on gross debt during the year was 2.96%.

Taxation

 

The total tax credit for the year of £0.5m (2016: £4.1m tax charge) is due to several events occurring in 2017: the enacted reduction in Corporate Income Taxes in the US and France reducing our deferred tax balances relating to intangible assets held in these jurisdictions, and the £5.0m compensation from Sinclair in respect of Kelo-Stretch.  As detailed in note 16, excluding the impact of these events and the residual impact of the UK tax rate reduction results in a revised underlying tax charge of £4.8m, representing an effective tax rate (ETR) of 19.8%.  This revised ETR is in line with expectations and better reflects the Group's underlying ETR for the foreseeable future.

Sinclair settlement

 

As announced on 21 March 2017, the Group reached agreement with Sinclair Pharma plc in connection with the material reduction of business in Kelo-Stretch, acquired in 2015. The terms of the compensation agreement were a £4.0m cash payment to Alliance (received in April 2017) and a deferred cash payment of a further £1.0m to be paid on or before 30 June 2018.

Net compensation of £4.4m is recognised as non-underlying exceptional income in the Income Statement, representing the £5.0m settlement net of an impairment charge for Kelo-Stretch and associated costs totalling £0.6m.

Earnings per share

 

Reported basic earnings per share increased 58% to 6.10p (2016: 3.85p) due primarily to the Sinclair settlement and the impact of the reduction in the US tax rate.

Adjusting underlying basic earnings per share to exclude non-underlying items and the effect of tax rate changes, this metric increased by 10% to 4.06p (2016: 3.69p). The increase reflects the Group's higher underlying profit after tax and is the measure used by the Board and Management in assessing earnings performance.

Intangible assets

 

Intangible assets increased by £13.8m to £278.6m (2016: £264.8m) due to the acquisition of the worldwide rights to Ametop announced on 1 December 2017 for $7.5m (£5.6m); the acquisition of the worldwide rights to Vamousse announced on 28 December 2017 for estimated consideration of $15.5m (£11.6m); and £0.5m of development costs; less foreign exchange adjustments of £3.4m; and also less the £0.5m impairment for Kelo-Stretch described above.

Cash flow and net debt

Demonstrating the strong cash generation of the Group, free cash flow (defined as cash generated from operating activities (excluding non-underlying items) less interest, tax and capital expenditure) increased 67% in 2017 to £21.7m (2016: £13.0m). 

The increase is driven by the trading strength of the Group and the stabilising of working capital in 2017 following its build-up in 2016 after the Sinclair acquisition.

The Group's strong underlying cash generation, together with the £4.0m settlement claim receipt from Sinclair, resulted in a reduction in the Group's net debt to £72.3m as at 31 December 2017 (31 December 2016: £76.1m) despite the £16.0m investment in acquisitions.

Consequently, adjusted net debt/EBITDA leverage fell to 2.46 times (2016: 2.83 times) against our covenant limit of 3.0 times (31 December 2016: 3.0 times). As announced in December, we renegotiated our banking covenants, and our net debt to EBITDA covenant has been relaxed from 2.5x to 3.0x for the life of the agreement through to December 2020. Excluding the acquisitions completed in December 2017, our leverage at 31 December 2017 would have been 2.06 times.

Based on current business performance and excluding any acquisitions we may make during the year, we expect leverage to continue to reduce during 2018 to below 2.0 times by the end of the 2018 financial year.

The Group has total bank facilities of £100.0m of which £50.3m (31 December 2016: £66.5m) was drawn on the Term Loan with £34.0m (31 December 2016: £18.0m) utilised from the Revolving Credit Facility. In addition to this, the Group also has access to a £4.5m working capital facility, which was undrawn at 31 December 2017, and an additional undrawn £25.0m facility available with bank approval.

Dividend

 

The Directors propose to maintain the progressive dividend policy and are recommending a final payment of 0.888p per ordinary share to give a total for the year of 1.331p. This represents an increase of 10% on 2016.

The final dividend, subject to approval at the Company's AGM on 24 May 2018, will be paid on 11 July 2018 to shareholders on the register on 15 June 2018.

The level of dividend cover in 2017 remained prudent at over three times. The total dividend payment for the 2017 financial year will be £6.3m, including the £2.1m interim payment.

Outlook

We ended the year strongly, with good levels of organic growth complemented by the two acquisitions made at the close of the financial year. We see exciting prospects for our newly acquired brand Vamousse, which alongside Kelo-cote and MacuShield increases the growth capacity of the International Star section of our portfolio.

Our geographic operations have been greatly enhanced by the creation of our new affiliate in the US, the world's largest healthcare market, where in the medium term we anticipate finding further good opportunities.

Our strong cash generation and access to debt capital give us firepower to make further acquisitions, in line with our proven strategy, and should we achieve a favourable regulatory outcome in relation to Diclectin, this would further enhance our growth prospects.

We are now a business with more than £100m of revenues, an international geographical presence and a strong, capable and ambitious management team. We have the scale and infrastructure in place for further growth and we look forward to the future with great confidence.

 

 

 

 

Consolidated Income Statement

 

 

 

 

 

Year ended

31 December 2017

 

 

Year ended

31 December 2016

 

 

 

 

 

 

 Underlying

 

 

Non-Underlying (note 4)

 

 

 

 

Total

 

 

 

 

 Underlying

 

 

Non-Underlying (note 4)

 

 

 

 

Total

 

Note

£000s

£000s

£000s

£000s

£000s

£000s

Revenue

2

103,315

-

103,315

97,492

-

97,492

Cost of sales

(44,354)

-

(44,354)

(42,643)

-

(42,643)

Gross profit

58,961

-

58,961

54,849

-

54,849

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Administration and marketing expenses

 

(31,706)

-

(31,706)

(28,842)

-

(28,842)

Share-based employee remuneration

 

(1,453)

-

(1,453)

(696)

-

(696)

Share of Joint Venture profits

19

-

19

299

-

299

 

(33,140)

-

(33,140)

(29,239)

-

(29,239)

 

 

 

 

 

 

 

 

Operating profit excluding exceptional item

 

Net exceptional compensation income

4

25,821

 

-

-

 

4,356

25,821

 

4,356

25,610

 

-

-

 

-

25,610

 

-

 

 

 

 

 

 

 

 

Operating profit

 

25,821

4,356

30,177

25,610

-

25,610

 

 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

 

Interest payable and similar charges

5

(3,064)

-

(3,064)

(3,355)

-

(3,355)

Change in deferred consideration

5

618

-

618

(840)

-

(840)

Finance income

5

638

-

638

804

-

804

 

 

(1,808)

-

(1,808)

(3,391)

-

(3,391)

 

 

 

 

 

 

 

 

Profit before taxation

3

24,013

4,356

28,369

22,219

-

22,219

Taxation

1,305

(764)

541

(4,127)

-

(4,127)

Profit for the year attributable to equity shareholders

 

25,318

3,592

28,910

18,092

-

18,092

Earnings per share

 

 

 

 

 

 

 

Basic (pence)

 

5.34

 

6.10

3.85

 

3.85

Diluted (pence)

 

5.28

 

6.03

3.82

 

3.82

 

 

All of the activities of the Group are classed as continuing.

 

 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

Year ended             31 December      2017

Year ended        31 December 2016

 

 

 

£000s

£000s

 

 

 

 

 

Profit for the year

 

 

28,910

18,092

 

Other comprehensive income

 

Items that may be reclassified to profit or loss

 

 

 

 

Net foreign exchange (loss)/gain on investment in foreign subsidiaries (net of hedged items)

 

 

(1,718)

2,076

Interest rate swaps - cash flow hedge (net of deferred tax)

 

 

202

(221)

Total comprehensive income for the year

 

 

27,394

19,947

 

 

 

 

 

Consolidated Balance Sheet

 

 

 

 

 

31 December 2017

 

 

31 December 2016

 

 

 

 

 

 

 

Note

 

£000s

 

£000s

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Goodwill and intangible assets

7

 

278,623

 

264,833

Property, plant and equipment

 

 

3,377

 

1,806

Joint Venture investment

 

 

1,483

 

1,464

Joint Venture receivable

 

 

1,462

 

1,462

Deferred tax asset

 

 

2,174

 

1,709

Other non-current assets

 

 

229

 

180

 

 

 

287,348

 

271,454

Current assets

 

 

 

 

 

Inventories

8

 

14,248

 

15,356

Trade and other receivables

9

 

23,695

 

26,706

Cash and cash equivalents

10

 

11,184

 

7,221

 

 

 

49,127

 

49,283

Total assets

 

 

336,475

 

320,737

 

 

 

 

 

 

Equity

 

 

 

 

 

Ordinary share capital

 

 

4,750

 

4,726

Share premium account

 

 

110,252

 

109,594

Share option reserve

 

 

5,073

 

3,306

Reverse takeover reserve

 

 

(329)

 

(329)

Other reserve

 

 

(117)

 

(319)

Translation reserve

 

 

390

 

2,108

Retained earnings

 

 

83,358

 

60,177

Total equity

 

 

203,377

 

179,263

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Loans and borrowings

12

 

41,780

 

57,554

Other liabilities

13

 

3,525

 

1,817

Deferred tax liability

 

 

26,920

 

31,442

Derivative financial instruments

 

 

63

 

384

 

 

 

72,288

 

91,197

Current liabilities

 

 

 

 

 

Loans and borrowings

12

 

41,719

 

25,782

Corporation tax

 

 

2,436

 

2,543

Trade and other payables

11

 

16,576

 

21,952

Derivative financial instruments

 

 

79

 

-

 

 

 

60,810

 

50,277

 

 

 

 

 

 

Total liabilities

 

 

133,098

 

141,474

 

 

 

 

 

 

Total equity and liabilities

 

 

336,475

 

320,737

 

 

 

 

 

 

 

 Consolidated Statement of Changes in Equity

 

 

Ordinary share capital

Share premium account

Reverse takeover reserve

Other reserve

Translation reserve 

Share option reserve

Retained earnings 

Total equity

 

£000s

£000s

£000s

£000s

£000s

£000s

£000s

£000s

 

 

 

 

 

 

 

 

 

Balance 1 January 2016

4,682

108,308

(329)

(98)

32

2,610

47,237

162,442

 

 

 

 

 

 

 

 

 

Issue of shares

44

-

-

-

-

-

-

44

Share premium

-

1,286

-

-

-

-

-

1,286

Dividend paid

-

-

-

-

-

-

(5,152)

(5,152)

Share options charge

-

-

-

-

-

      696

-

696

Transactions with owners

44

1,286

-

-

-

696

(5,152)

(3,126)

Profit for the period

-

-

-

-

-

-

18,092

18,092

Other comprehensive income

 

 

 

 

 

 

 

 

Interest rate swaps - cash flow hedge (net of deferred tax)

-

-

-

(221)

-

-

-

(221)

Foreign exchange translation differences

-

-

-

-

2,076

-

-

2,076

Total comprehensive income for the period

-

-

-

(221)

2,076

-

18,092

19,947

Balance 31 December 2016

4,726

109,594

(329)

(319)

2,108

3,306

60,177

179,263

 

 

 

 

 

 

 

 

 

Balance 1 January 2017

4,726

109,594

(329)

(319)

2,108

3,306

60,177

179,263

 

 

 

 

 

 

 

 

 

Issue of shares

24

-

-

-

-

-

-

24

Share premium

-

658

-

-

-

-

-

658

Dividend paid

-

-

-

-

-

-

(5,729)

(5,729)

Share options charge (including deferred tax)

-

-

-

-

-

1,767

-

1,767

Transactions with owners

24

658

-

-

-

1,767

(5,729)

(3,280)

Profit for the period

-

-

-

-

-

-

28,910

28,910

Other comprehensive income

 

 

 

 

 

 

 

 

Interest rate swaps - cash flow hedge (net of deferred tax)

-

-

-

202

-

-

-

202

Foreign exchange translation differences

-

-

-

-

(1,718)

-

-

(1,718)

Total comprehensive income for the period

-

-

-

202

(1,718)

-

28,910

27,394

Balance 31 December 2017

4,750

110,252

(329)

(117)

390

5,073

83,358

203,377

 

 

 

 

 

Consolidated Cash Flow Statement

 

 

 

Year ended

31 December

2017

 

 

Year ended                             31 December 2016

 

 

 

Note

£000s

£000s

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Cash generated from operations

14

30,311

19,957

 

Tax paid

 

(3,728)

(3,032)

 

Cash flows from operating activities

 

26,583

16,925

 

 

 

 

 

 

Investing activities

 

 

 

 

Interest received

 

104

111

 

Dividend received

 

-

300

 

Investment in subsidiary

 

-

-

 

Development costs capitalised

7

(459)

(266)

 

Purchase of property, plant and equipment

 

(2,236)

(1,130)

 

Loan to Joint Venture

 

154

(1,018)

 

Exceptional compensation income

4

4,000

-

 

Consideration on acquisitions

 

(15,314)

(1,289)

 

Deferred contingent consideration on acquisitions

 

(2,161)

(4,737)

 

Net cash from investing activities

 

(15,912)

(8,029)

 

 

 

 

 

 

Financing activities

 

 

 

 

Interest paid and similar charges

 

(2,678)

(2,822)

 

Loan issue costs

 

-

(326)

 

Proceeds from exercise of share options

 

682

1,330

 

Dividend paid

 

(5,729)

(5,152)

 

Receipt from borrowings

 

16,000

8,000

 

Repayment of borrowings

 

(14,730)

(6,495)

 

Net cash received from financing activities

 

(6,455)

(5,465)

 

 

 

 

 

 

Net movement in cash and cash equivalents

 

4,216

3,431

 

 

 

 

 

 

Cash and cash equivalents at 1 January 2017

 

7,221

3,198

 

Exchange (loss)/gain on cash and cash equivalents

 

(253)

592

 

Cash and cash equivalents at 31 December 2017

10

11,184

7,221

 

           

 

NOTES TO THE FINANCIAL STATEMENTS

 

1. Basis of preparation

 

The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 31 December 2017 or 31 December 2016. The auditors reported on those accounts; their report was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for the year ended 31 December 2017 have not yet been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2016 were delivered to the Registrar of Companies on 14 June 2017.

 

 

2. Segmental reporting

Operating segments

The Group is engaged in a single business activity of pharmaceuticals. The Group's pharmaceutical business consists of the marketing and sales of acquired products. The Group's Board of Directors ("the Board") is the Group's Chief Operating Decision Maker ("CODM"), as defined by IFRS 8, and all significant operating decisions are taken by the Board. In assessing performance, the Board reviews financial information on an integrated basis for the Group, substantially in the form of, and on the same basis as, the Group's IFRS financial statements.

 

Geographical information

The following revenue information is based on the geographical location of the customer:

 

 

 

Year ended 31 December 2017

Year ended            31 December      2016

 

 

 

 

£000s

£000s

 

United Kingdom

 

 

52,355

49,411

 

Rest of Europe

 

 

29,982

29,006

 

Rest of the World

 

 

20,978

19,075

 

 

 

 

103,315

97,492

 

 

Non-current assets are located within the United Kingdom, France, Italy and the United States of America.

 

Major customers

During the year there were 2 customers who separately comprised 10% or more of revenue (year ended 31 December 2016: 1).

 

 

 

Year ended 31 December 2017

Year ended            31 December     2016

 

 

 

£000s

£000s

Major customer 1

 

 

22,542

17,660

Major customer 2

 

 

10,597

9,406

 

 

 

33,139

27,066

 

 

3. Profit before taxation

Profit before taxation is stated after charging/(crediting):

 

Year ended         31 December 2017

Year ended            31 December     2016

 

£000

£000

Fees payable to the Company's auditor for the audit of the Company's annual accounts

26

25

Fees payable by the Group to the Company's auditor for other services:

 

 

- The audit of the financial statements of subsidiaries

105

103

- Corporate finance services (either proposed or entered into) by or on behalf of the Company or any of its associates

57

-

Amortisation of intangible assets

276

92

Impairment of intangible assets

507

-

Share options charge

1,453

696

Depreciation of plant, property and equipment

657

337

Operating lease rentals - land and buildings

769

518

Research and development

169

91

Gain on foreign exchange transactions

(534)

(693)

 

 

4. Non-underlying and exceptional items

 

Non-underlying items are those significant items which the Directors consider, by their nature, are not related to the normal trading activities of the Group. They are therefore separately disclosed as their significant, non-recurring nature does not allow a true understanding of the Group's underlying financial performance.  Exceptional items, including settlements and impairments of intangible assets, are also shown as non-underlying items. The non-underlying and exceptional items relate to the following:

 

Year ended             31 December      2017

Year ended            31 December      2016

 

 £000s

£000s

Exceptional compensation income

5,000

-

Associated costs 

(137)

-

Associated impairment of intangibles

(507)

-

 Net exceptional compensation income before taxation

4,356

-

 

In March 2017, the Group reached a settlement agreement with Sinclair Pharma plc, in connection with the material reduction of business in Kelo-stretch, which was acquired in 2015. The terms of the agreement included a sum of £5.0m of which £4.0m was paid in 2017 and £1.0m is due on or before 30 June 2018. This settlement less associated costs and impairment (note 7) are shown as exceptional items.

 

 

5. Finance costs

 

Year ended    31 December 2017

Year ended            31 December      2016

 

£000s

£000s

Interest payable and similar charges

 

 

        On loans and overdrafts

(2,719)

(2,868)

        Amortised finance issue costs

(303)

        Notional interest

(42)

(129)

 

(3,064)

(3,355)

 

 

 

Change in fair value of deferred consideration

618

(840)

 

 

 

Finance income

 

 

         Interest income

104

111

         Other finance income - foreign exchange movements

534

693

 

638

804

 

 

 

Finance costs - net

(1,808)

(3,391)

 

Notional interest relates to the unwinding of the deferred consideration on the Macuhealth acquisition. The current year decrease in deferred consideration relates to changes in the original estimated amounts payable for the acquisitions of MacuVision and Nutraceutical brands. The previous year increase related to a change in the original estimated amount payable for the Macuvision acquisition. These changes are caused by differences in trading performance compared to acquisition forecasts.

 

 

6. Taxation

 

Analysis of the (credit)/charge for the period is as follows:

 

Year ended         31 December 2017

Year ended            31 December     2016

 

£000s

£000s

Corporation tax

 

 

  In respect of current period

3,573

3,552

  Adjustment in respect of prior periods

44

32

 

3,617

3,584

Deferred tax

 

 

  Origination and reversal of temporary differences

(5,101)

539

  Adjustment in respect of prior periods

943

4

Taxation (credit)/charge

(541)

4,127

 

 

 

 

       

The difference between the total tax (credit)/charge above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:

 

 

Year ended            31 December      2017

Year ended            31 December     2016

 

£000s

£000s

Profit before taxation

28,369

22,219

Profit before taxation multiplied by standard rate of corporation tax in the United Kingdom of 19.25% (2016: 20.00%)

5,461

4,444

Effect of:

 

 

Non-deductible expenses

145

376

Non-taxable income

(1,216)

(60)

Adjustment in respect of prior periods

987

36

Impact of reduction in UK tax rate on deferred tax

(101)

(755)

Impact of reduction in US and French tax rate on deferred tax

(5,958)

-

Differing tax rates on overseas earnings

182

205

Share options

(15)

(133)

Other differences and Foreign exchange

(26)

14

Total taxation

(541)

4,127

 

Changes to the UK corporation tax rate were announced in Finance Act (No 2) 2015 and Finance Act 2016, reducing the UK's main rate to 17% from 1 April 2020. As the change was substantively enacted at the balance sheet date the effect is included in these financial statements.

 

During 2017 US and French tax reform were both substantively enacted.  The deferred tax rates applied to US and French timing differences have hence changed from 35.0% to 24.0% and from 33.3% to 25.0% respectively.

 

To exclude the impact of tax rate changes and non-underlying tax charges the Group has calculated "adjusted underlying effective tax rate" as an alternative performance measure in note 16.

 

7. Goodwill and intangible assets

 

 

 Goodwill

 

 

Brands and distribution rights

Development costs

 

 

Assets under development

Total

The Group

£000s

£000s

£000s

£000

£000s

Cost

 

 

 

 

 

At 1 January 2017

16,197

249,376

704

2,500

268,777

Additions

368

17,193

459

-

18,020

Transfer

-

438

(438)

-

-

Exchange adjustments

-

(3,447)

-

-

(3,447)

At 31 December 2017

16,565

263,560

725

2,500

283,350

Amortisation and impairment

 

 

 

 

 

At 1 January 2017

-

3,944

-

-

3,944

Impairment for the year

-

507

-

-

507

Amortisation for the year

-

276

-

-

276

At 31 December 2017

-

4,727

-

-

4,727

Net book amount

 

 

 

 

 

At 31 December 2017

16,565

258,833

725

2,500

278,623

At 1 January 2017

16,197

245,432

704

2,500

264,833

 

Goodwill and the majority of brands and distribution rights are considered to have indefinite useful economic lives and are therefore subject to an impairment review at least annually.

 

Brands and distribution rights

Key judgement - useful economic lives

Applying indefinite lives to certain acquired brands is appropriate due to the stable long-term nature of the business and the enduring nature of the brands. These brands are assessed on acquisition to ensure they meet set criteria including an established and stable sales history.

 

Where distribution rights are deemed to have a finite life they are amortised accordingly. Amortisation is included in administration and marketing expenses. The remainder of the distribution rights have no defined time period or there is evidence to support the renewal of distribution rights without disproportionate cost. These assets are therefore treated the same as acquired brands.

 

It is the opinion of the Directors that the indefinite life assets meet the criteria set out in IAS 38. This assessment is made on an asset by asset basis taking into account:

 

·        How long the brand has been established in the market and subsequent resilience to economic and social changes;

·        Stability of the industry in which the brand is used;

·        Potential obsolescence or erosion of sales;

·        Barriers to entry;

·        Whether sufficient marketing promotional resourcing is available; and

·        Dependency on other assets with defined useful economic lives.

 

Certain brands were acquired with patent protection, which lasts for a finite period of time. It is the opinion of the Directors that these patents do not provide any incremental value to the value of the brand and therefore no separate value has been placed on these patents. This assessment is based on a view of future profitability after patent expiry and past experience with similar brands.

 

Development costs

 

Capitalised costs relate to clinical development and regulatory plans expected to be commercialised in future.

 

Goodwill

 

The net book value of brand and distribution rights and goodwill which are considered to have indefinite useful lives are allocated to CGUs in the following table. Goodwill relating to the acquisition of certain assets and businesses from Sinclair IS Pharma plc is allocated to the group of related product CGUs. Other Goodwill amounts are allocated to the product CGU with which they were originally acquired.

 

Year ended 31 December 2017

      Goodwill

Brands and distribution rights

Total

 

£000s

£000s

£000s

Menadiol, Vitamin E & Others

598

12,876

13,474

Forceval, Amantadine & Others

-

12,931

        12,931

Vamousse

-

11,596

        11,596

MacuShield

1,748

8,740

        10,488

Nu-Seals

-

9,100

          9,100

SkinSafe, Dansac & Others

1,849

8,043

          9,892

Timodine & Buccastem

-

7,697

          7,697

Syntometrine (excluding UK)

-

7,527

          7,527

Ametop

-

5,575

          5,575

Others

            1,147

31,462

        32,609

Products acquired from Sinclair

 

 

 

Kelo-cote (non EU, excluding US)

-

40,842

        40,842

Oxyplastine, Fazol & Others

-

26,158

        26,158

Haemopressin, Optiflo & Others

-

25,000

        25,000

Kelo-cote (EU)

-

17,800

        17,800

Flamma Franchise

-

17,400

        17,400

Aloclair

-

14,000

        14,000

Goodwill

11,223

-

11,223

 

          16,565

       256,747

      273,312

 

Recent acquisitions

 

The following acquisition activities took place in the year:

 

On 1 December 2017, the Group acquired the worldwide rights to Ametop from global medical technology business Smith & Nephew for a consideration of US$7.5m (£5.6m).

 

On 28 December 2017, the Group acquired the worldwide rights to Vamousse from TyraTech Inc for an initial cash consideration of US$13.0m (£9.7m) and deferred contingent consideration of between US $nil and U$4.5m. Up to US$2.0m of this the deferred consideration is payable in 2020, and up to US$2.5m is payable in 2021, both dependent on the revenue growth of Vamousse. An estimated amount of US$2.5m (£1.9m) based on forecast sales is included in the Vamousse intangible addition and other non-current liabilities. Separate cash consideration of US$0.5m (£0.4m) was paid for inventories acquired (note 8).

 

In respect of Vamousse, the amounts included in the consolidated statement of comprehensive income since 28 December 2017 are revenues of £0.1m and gross profit of £0.1m. Had the transaction occurred 1 January 2017 estimated contribution to Group revenues would have been £4.9m and gross profit of £3.4m, based on the prior year financial results.

 

In the prior year the following acquisition activities took place:

 

On 27 October 2016, the Group secured the distribution rights on additional territories for MacuShield.  The consideration recognised in relation to this was £2.3m and the distribution rights are for a period of ten years which the balance is therefore being amortised over.

 

On 12 September 2016 the Group in-licensed Diclectin for a further nine European territories, following the UK in-license acquired in 2015. The total amount paid to Duchesnay for all territories was £1.5m with a further £1.0m payable to Duchesnay on successful licence applications; the total £2.5m is included within assets under development and the £1.0m deferred consideration is included within liabilities. The amount included within assets under development will be amortised when the product is ready for launch.

 

As stated in our announcement in July 2017, the Medicine and Healthcare products Regulatory Agency ("MHRA") did not approve Diclectin for the UK which was unexpected. Our regulatory team has now had time to work with Duchesnay Inc. of Canada ("Duchesnay"), the licensor and marketing authorisation applicant, to better understand the objections of the MHRA. Whilst the communication between the MHRA and Duchesnay remains confidential, we believe that good progress is being made in resolving some of the issues initially expressed by the regulator. Diclectin is a much needed product as there is no licensed medicine for treating nausea and vomiting of pregnancy in the UK.

 

Duchesnay, the licence applicant, has since re-opened discussions with the regulator and the Board has concluded that it continues to be appropriate to retain the intangible asset (and the associated deferred consideration) whilst this review is underway. In the event the licence for Diclectin is not approved, the amounts paid to Duchesnay (£1.5m) are fully refundable and the deferred consideration (£1.0m) would be cancelled resulting in no net financial impact in the Income Statement.

 

8. Inventories

 

31 December       2017

 

31 December    2016

 

 

£000s

 

£000s

 

Finished goods and materials

16,077

 

17,632

 

Inventory provision

(1,829)

 

(2,276)

 

 

14,248

 

15,356

 

 

Inventory costs expensed through the income statement during the year were £36,575,000 (2016: £35,897,000).   During the year £442,000 (2016: £792,000) was recognised as an expense relating to the write-down of inventories to net realisable value.

 

On 1 December 2017, the Group acquired the worldwide rights to Ametop from global medical technology business Smith & Nephew (note 7). As part of this acquisition £0.3m inventories were acquired.

 

On 28 December 2017, the Group acquired the worldwide rights to Vamousse from TyraTech Inc (note 7). As part of this acquisition £0.4m inventories were acquired.

 

 

9. Trade and other receivables

 

 

31 December       2017

 

31 December    2016

 

£000s

 

£000s

Trade receivables

17,347

 

20,530

Other receivables

1,759

 

1,788

Prepayments and accrued income

2,465

 

2,110

Amounts owed by Joint Venture

2,124

 

2,278

 

23,695

 

26,706

 

The ageing of trade receivables of the Group at 31 December is detailed below:

 

 

31 December       2017

 

31 December    2016

 

£000s

 

£000s

Not past due

15,479

 

13,948

Due 30-31 December

782

 

3,465

Past due 3 days to 91 days

511

 

1,947

Past 91 days

575

 

1,170

 

17,347

 

20,530

 

 

Trade and other receivables are stated net of estimated allowances for doubtful debts. As at 31 December 2017, trade and other receivables of £254,000 (2016: £123,000) were past due and impaired.

 

Our policy requires customers to pay us in accordance with agreed payment terms.  Depending on the geographical location, our settlement terms are generally due within 30 or 60 days from the end of the month of sale and do not bear any effective interest rate. 

 

 

10. Cash and cash equivalents

 

 

31 December       2017

 

31 December    2016

 

£000s

 

£000s

Cash at bank and in hand

11,184

 

7,221

 

 

11. Trade and other payables

 

31 December       2017

 

31 December    2016

 

£000s

 

£000s

Trade payables

6,662

 

5,655

Other taxes and social security costs

326

 

1,030

Accruals and deferred income

8,159

 

11,125

Other payables

776

 

1,120

Deferred consideration

653

 

3,022

 

16,576

 

21,952

 

 

Deferred consideration of £0.2m (2016: £0.5m) relates to an agreement with MacuHealth to guarantee supply of MacuShield API and secure additional territories to be able to distribute in.

Deferred contingent consideration of £0.5m (2016: £0.5m) relates to the Licence and Supply Agreement for the product Diclectin with Duchesnay Inc. and is payable in 2018 if the relevant licensing applications are approved (note 7).

Deferred contingent consideration of £nil (2016: £1.8m) relates to the acquisition of MacuVision Europe Limited which took place on 2 February 2015. 

Deferred contingent consideration of £nil (2016: £0.5m) relates to the acquisition of the rights to five Nutraceutical brands from Sinopharm Nutraceuticals (Shanghai) Co Ltd which took place on 16 September 2015.

 

12. Loans and borrowings

 

31 December       2017

 

31 December    2016

Current

£000s

 

£000s

Bank loans due within one year or on demand:

 

 

 

Secured

42,000

 

26,000

Finance issue costs

(281)

 

(218)

 

41,719

 

25,782

 

 

 

31 December       2017

 

31 December    2016

Non-current

£000s

 

£000s

Bank loans due within one year or on demand:

 

 

 

Secured

42,338

 

58,478

Finance issue costs

(558)

 

(924)

 

41,780

 

57,554

 

 

The bank facility is secured by a fixed and floating charge over the Group's assets.

 

 

13. Other non-current liabilities

 

 

31 December       2017

 

31 December    2016

 

£000s

 

£000s

Deferred consideration

3,251

 

1,609

Other non-current liabilities

274

 

208

 

3,525

 

1,817

 

 

Deferred contingent consideration of £0.5m (2016: £0.5m) relates to the Licence and Supply Agreement for the product Diclectin with Duchesnay Inc. and is payable during 2019 if the relevant licensing applications are approved (note 7).

Deferred consideration of £0.9m (2016: £1.1m) relates to a MacuHealth agreement to guarantee supply of MacuShield API and extend the territories in which MacuShield can be sold and is payable over 7 years.

Deferred contingent consideration of £1.9m (2016: £nil) relates to the acquisition of the worldwide rights to Vamousse from TyraTech Inc. Up to US$2.0m is payable in 2020, and up to US$2.5m is payable in 2021, both dependent on the revenue growth of Vamousse. An estimated amount based on forecast sales is included in the Vamousse intangible and other non-current liabilities.

 

 

14. Cash generated from operations

 

31 December       2017

 

31 December    2016

 

£000s

 

£000s

Profit for the year

28,910

 

18,092

Taxation

(541)

 

4,127

Interest payable and similar charges

3,064

 

3,355

Change in deferred consideration

(618)

 

840

Interest income

(104)

 

(111)

Other finance costs

(534)

 

(693)

Net exceptional compensation income

(4,356)

 

-

Depreciation of property, plant and equipment

657

 

337

Amortisation of intangibles

276

 

92

Change in inventories

1,108

 

(2,446)

Share of post-tax Joint Venture profits

(19)

 

(299)

Change in trade and other receivables

4,011

 

(14,116)

Change in trade and other payables

(2,996)

 

10,083

Share based employee remuneration

1,453

 

696

Cash generated from operations

30,311

 

19,957

 

 

15. Contingent liabilities

 

Contingent liabilities are possible obligations that are not probable. The Group operates in a highly regulated sector and in markets and geographies around the world each with differing requirements.  As a result, and in the normal course of business, the Group can be subject to a number of regulatory inspections/investigations on an ongoing basis. It is therefore possible that the Group may incur penalties for non-compliance.  In addition, a number of the Group's brands and products are subject to pricing and other forms of legal or regulatory restrictions from both governmental/regulatory bodies and also from third parties. Assessments as to whether or not to recognise a provision in respect of these matters are judgemental as the matters are often complex and rely on estimates and assumptions as to future events. 

 

The Group's assessment at 31 December 2017 based on currently available information is that there are no matters for which a provision is required (2016: £nil). However, given the inherent uncertainties involved in assessing the outcomes of such matters there can be no assurance regarding the outcome of any ongoing inspections/investigations and the position could change over time as a result of the factors referred to above.

 

 

16. Alternative performance measures

 

The performance of the Group is assessed using Alternative Performance Measures ("APMs"). The Group's results are presented both before and after exceptional and non-underlying items. Adjusted profitability measures are presented excluding exceptional and non-underlying items as we believe this provides both management and investors with useful additional information about the Group's performance and aids a more effective comparison of the Group's trading performance from one period to the next and with similar businesses.

In addition, the Group's results are described using certain other measures that are not defined under IFRS and are therefore considered to be APMs. These measures are used by management to monitor ongoing business performance against both shorter term budgets and forecasts but also against the Groups longer term strategic plans.

APMs used to explain and monitor Group performance:

 

Measure

Definition

Reconciliation to GAAP measure

EBITDA

Earnings before interest, tax, depreciation, amortisation and non-underlying items. Calculated by taking profit before tax and financing costs, excluding non-underlying items and adding back depreciation and amortisation.

Note A below

Free cash flow

Free cash flow is defined as EBITDA less working capital and non-cash movements (excluding exceptional items), tax payments, interest payments, core capex and other non-cash movements.

Note B below

Net debt

Net debt is defined as the group's bank debt position net of its cash position.

Note C below

Adjusted

Underlying basic EPS

Adjusted underlying basic EPS is calculated by dividing underlying earnings attributable to ordinary shareholders less impact of tax rate changes, by the weighted average number of shares in issue during the year.

Note D below

Adjusted underlying effective tax rate

Adjusted underlying effective tax rate is calculated by dividing total taxation for the year less impact of tax rate changes and non-underlying charges, by the underlying profit before tax for the year.

Note E below

 

A.     EBITDA

 

31 December       2017

 

31 December    2016

Reconciliation of EBITDA

£000s

 

£000s

Profit before tax

28,369

 

22,219

Non-underlying items (note 4)

(4,356)

 

-

Finance costs (note 5)

1,808

 

3,391

Depreciation

657

 

337

Amortisation

276

 

92

EBITDA

26,754

 

26,039

 

B.    Free cash flow

 

31 December       2017

 

31 December    2016

Reconciliation of free cash flow

£000s

 

£000s

Cash generated from operations (note 14)

30,311

 

19,957

Financing costs

(2,678)

 

(2,822)

Capital expenditure

(2,236)

 

(1,130)

Tax paid

(3,728)

 

(3,032)

Free cash flow

21,669

 

12,973

 

C.    Net debt

 

 

31 December       2017

 

31 December    2016

Reconciliation of net debt

Note

£000s

 

£000s

Loans and borrowings - current

12

(41,719)

 

(25,782)

Loans and borrowings - non-current

12

(41,780)

 

(57,554)

Cash and cash equivalents

10

11,184

 

7,221

Net debt

 

(72,315)

 

(76,115)

 

D. Adjusted underlying basic EPS

 

31 December       2017

 

31 December    2016

Reconciliation of adjusted underlying basic EPS

£000s

 

£000s

Underlying profit for the year

25,318

 

18,092

Impact of reduction in UK tax rate on deferred tax

(101)

 

(755)

Impact of reduction in US and French tax rate on deferred tax

(5,958)

 

-

Adjusted underlying profit for the year

19,259

 

17,337

 

 

 

 

Weighted average number of shares

473,842,765

 

469,423,814

 

 

 

 

Adjusted underlying basic EPS

4.06

 

3.69

 

During 2017 US and French tax reform were both substantively enacted.  The deferred tax rates applied to US and French timing differences have hence changed from 35.0% to 24.0% and from 33.3% to 25.0% respectively. This has given rise to £6.0m of deferred tax credits during 2017. In 2016 the UK tax rate changed from 18% to 17% giving rise to a £0.8m deferred tax credit.

 

 

E. Adjusted underlying effective tax rate

 

 

31 December       2017

 

31 December    2016

Reconciliation of adjusted underlying effective tax rate

£000s

 

£000s

Total taxation for the year

541

 

(4,127)

Impact of reduction in UK tax rate on deferred tax

(101)

 

(755)

Impact of reduction in US and French tax rate on deferred tax

(5,958)

 

-

Non-underlying tax charge

764

 

-

Adjusted underlying taxation for the year

(4,754)

 

(4,882)

 

 

 

 

Underlying profit before tax for the year

24,013

 

22,219

 

 

 

 

Adjusted underlying effective tax rate

19.8%

 

22.0%

 

 

 

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Full Year Results - RNS