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Started: Mulder, 10 Jun 2024 11:40
Last post: 1pencil, 15 Jun 2024 14:37
Another possible way to play this (without the inherent risk of buying directly), is to look at listed Logistics Development Group which DBAY is a subsidiary of.
This is all highly speculative of course, but if Alliance release okay results, DBAY make a move then exposure can be had by investing in the parent .
Haven't looked at their business in detail but something to bear in mind perhaps.
Its the strength of the underlying business that is difficult to assess with no material updates.
From Mark Slaters AR,
'Through 2023 we continued our collaborative engagement regarding Alliance Pharma Plc.
The company has been facing a number of challenges; a long running Competition and Markets Authority investigation (and subsequent appeal) into the company, issues with their most successful product being counterfeited in China and the loss of a significant discount store account for another of their main products.'
https://slaterinvestments.com/key-documents/
I'm not convinced it will get bought in near term. I think BoD will hold out for price well in excess of what DBay would want to pay. Rumour was they turned down APAX at 70p or something early last year. Also DBay would not be allowed to buy shares in the market if they were in active discussions with the company currently.
https://news.sky.com/story/apax-steps-away-from-400m-takeover-of-london-listed-alliance-pharma-12861074
FWIW, my base case is annual report gets published with little fanfare in the next week or so with no real reason given as to why it took so long (ie assume Deloitte were / are useless). There might be some write downs of intangibles on the balance sheet but that's a non-cash charge and don't think that would change anything about the company going forward. Shares probably back to 40-45p or something, and will track sideways until there is visibility on forwards earning growth next year. And should generate cash and restart divi at some point in next 12m I would have thought also. More a long term hold for me I think.
If they don't get the annual report out before the deadline surely they will have to give a better reason for why it is taking so long, which means we should get some more info one way or another in the next week or so. GLA.
Yes I think that is how it will play out. I expect that is why Kempen sold, though personally I have bought and am happy to hold when suspended as I am expecting a TO here. I have also read that the takeover can happen when the company is suspended so this might never come back. That just leaves Blackrock who have about 0.86 short to close before the end of the month, I would have thought Kempen selling has facilitated this.
IIRC AIM requires companies post annual reports within 6 months of year end; so if the accounts aren't released before the end of June the shares will be suspended until they are published. Might see the shares weaken over the next couple of weeks as a result unless / until they publish them as many will not want to be locked in and unable to trade.
It really is incredible that we are in this situation for a company of this sort and size. Someone is going to end up with egg on their face if they miss the deadline... Deloitte if there are no material issues with the accounts (ie delay is simply because they are useless / slow); the brokers (Numis, Investec) if they have not forced the company to fess up earlier to known issues eg with trading of the balance sheet; the company / board if there are material issues that have not been identified historically...
Started: Richard08, 23 May 2024 15:50
Last post: LearningAlways, 30 May 2024 14:29
Youre right many would disagree. Just look at the EPS growth over the past years. Do we even know when the next dividend is (or will be?)
So pleased that they won the appeal. I never understood why they were implicated in the first place, so good result after a long wait..
Others may disagree, but given the CMA decision I think its a shame Peter Butterfield (ec-CEO) has stepped down. Thought he was v good apart from this CMA mess that was hanging over the company and his (now unsullied) reputation.
All good thoughts there TargetPractice. Hopefully, with the market's closed, this news can be digested overnight and then this will move up a few percentage points more tomorrow.
Unexpected and welcome news indeed! Means an extra £8m+ cash ie no fine, and no need to pay CMA legal fees. Big black eye for the CMA having spent literally years pursuing this! Hopefully means accounts can be released shortly and we can return to a rating that's commensurate with the quality of the business... We might even get a divi restored sooner rather than later given gearing should fall quite quickly from here. I've got a mid 50s target price over the next 18-24 months, but that's on a pretty conservative 8x EBIT multiple, so we could push beyond that with a little top / bottom line growth...
Started: Mulder, 15 May 2024 11:07
Last post: Mulder, 15 May 2024 11:07
Took the opportunity to add.
Now holding >22%.
Bid?
Started: toli, 8 May 2024 14:10
Last post: Richard08, 9 May 2024 21:37
Tend to agree with you both. The market hates uncertainty and is trying to price in a lot at the moment. As ever, it will over estimate to the downside in lieu of facts about what’s going on. Hopefully the new CEO knows what he’s about and has also run the rule of the company before taking it on so he knows what he’s up against. As soon as the closed period ends he could buy some shares himself which would help restore confidence in the short term, and then just publish the results! Better to get all the bad news public quickly so as to tie it to your predecessor…
Wow that was clearly on a very different level from what I can mange
For me the main risk is weak trading and more downgrades, but I hope them pointing to Jan trading update as recently as yesterday means this is not the case currently. I don't think the board / Numis Deutsche / Investec (blue chips in small cap world) would let them mislead on this point.
I should say - those EBIT multiples I gave are EV/adj EBIT multiples.
Even if no profit growth for next three years (v unlikely in my view), and if it only rerates to 8x EV/EBIT (v conservative in my view vs peers), I see c.80% upside at least from here simply as the business should reduce net debt to about £30m by 2026 even after paying the fine as interest costs will come down as debt reduces.
£41.5m EBIT x8 = £330m EV, less £30m net debt in 2026 = £300m mcap vs £165m today, ie 80% upside over 2-3 years. Excellent risk vs reward imho.
In reality (assuming nothing more nefarious in the accounts - which is a known risk) I think they will return to growth in 2025, reinstate divi and rerate to something more in line with historic rating of c.10x, so think my target above is pretty conservative in terms of both timing and share price. Also opportunity for further M&A which I think on the balance will lead to upgrades and be positive for the story.
Good post. A few additional points:
+ve. They've repeatedly pointed to their Jan trading update saying everything in it remains valid, ie: 2023 inline with cons ie £183m rev, £45m adj EBITDA, £41.5m adj EBIT, and net debt £92.4m, so leverage 2.05x EBITDA . AND importantly for 2024, revenue growth (ie £185-190m?) and flat profit ie £45m EBITDA and £41.5m EBIT.
-ve. CMA investigation. They've been found guilty (in 2022) and have provided for £8m fine but not paid it as they appealed, which was heard Aug 2023, no decision yet. I've looked at the CMA decision document (CMA website) and seems more likely than not that the appeal will not succeed so they will have to pay the fine. Personally I think this is already 'in the price'.
+ve. Balance sheet looks fine. Net debt £92.4m at y/e, should be lower now. Business is v cash generative, capex c.£2m, interest £9-10m so post tax should generate about £25m FCF (ie 45m EBITDA - 2m capex -10 interest) less 25% tax. Maybe a bit less due to working capital investment for growth (£2-3m?) and a few exceptionals (£2m?), it should generate £20m FCF. Even if they have to pay the fine plus costs (say £10m) net debt should reduce by about £10m this year to £80-85m. Note covenants are 3x leverage vs adj EBITDA (2x currently) and 4x net interest vs adj EBITDA (4.5x to 5.0x currently).
-ve. CEO has left. My take is it was related to the above - he was likely to be disqualified from being a director if the appeal failed. Think its probably on balance positive that the Board (which has been refreshed and looks high quality) is being proactive to have a new CEO in place before the appeal ruling.
??. Accounts delayed. Don't know why, seems many companies have had this happen this year. But delayed 4 times is very poor, especially with no reasons given. We know though that Deliotte was appointed 2022 and signed off 2022 accounts when all the CMA issues already existed and when debt was higher and profit lower. I think uncertainty the delayed results have caused is main reason for SP being where it is.
+ve. DBAY biggest shareholder at 20%. Good track record, and potentially could take it private. I also note Apax were sniffing around with a rumoured 70p bid early last year. No TR1s yet to see if any changes.
Overall I'm bullish at this price, I think this is a decent business that has built up a portfolio of quality global consumer healthcare brands, has demonstrated a consistent / predictable revenue profile and good cash generation. Consumer health businesses should trade on 10-15x EBIT (Reckitt on about 11.5x, Haleon on about 14.5x); Alliance can be had for c.6x EBIT, and after the fine has been paid it will throw off cash, degear rapidly and reinstate divis.
Obvious risk is that something more nefarious is going on with the accounts so understand those who want to sit it out. For me the main risk is weak trading and more downgrades, but I hope them pointing to Jan trading update
* new director who has considerable experience/
* growing revenue last announcement did not have the two newest companies accounted for
* World wide reach
* New releases
* Revenues as expected.
* Some problem with accounting - a little strange for a company that large ?
* A director leaving Is ther some scandal something dirty looming .
ONLY TIME WILL TELL BUT WELL WORTH KEEPING ON ONES RADAR.
Started: peterobert, 8 May 2024 11:00
Last post: TargetPractice, 9 May 2024 14:25
FYI, KPMGs resignation letter as auditor in 2022, and the company's response to it is below. Relates to the accounting treatment of the CMA fine, ie the £8m provision made in 2021 accounts, and KPMGs view of the process by which the Board signed off on this treatment. Despite these concerns they still signed off on the 2021 accounts, as Deloitte did on the 2022 accounts. FWIW I don't really care about accounting treatment of the CMA fine, my base case is they eventually have to pay the £8m in full plus some CMA costs of £1-2m. Anything less is upside. Again me saying this doesn't preclude some other issues, technical or otherwise, with the delayed 2023 accounts...
https://www.alliancepharmaceuticals.com/media/gdgnqciv/circular-080822.pdf
It is part of their job, however previous auditor quit because they had some concerns about governance.There are some issues can be minor or.... . .but we can only comment once results are out.Delaying results three times does not sound good and there has to be a good reason behind it.
Cora head of IR seems very calm and painting a very different picture to the sheer panic on these boards. Blackrock benefiting from their open short....so far.
Alliance Pharma PLC, down 19% at 26.00p, 12-month range 25.18p-73.04p. The distributor of consumer healthcare brands and prescription medicines says CEO Peter Butterfield has decided to leave the company to pursue other business interests. Following a "comprehensive" search process, it appoints Nick Sedgwick as new CEO, starting on Monday next week. Butterfield will remain with Alliance Pharma until June 30 to facilitate a "thorough" handover. Butterfield joined the board in 2010 and became CEO in 2018. Alliance Pharma also notes that its 2023 results will not be published on Tuesday next week as its audit continues. It says that the details of its January trading update remain accurate.
Started: Mulder, 9 May 2024 12:43
Last post: Mulder, 9 May 2024 12:43
Bailey - 'we will cut more than markets are currently pricing in'
Started: shamI89, 8 May 2024 10:07
Last post: schjmh, 8 May 2024 10:52
Agree..and I got out first thing
It looks like there are some issues that auditors are concerned about and are refusing to sign off.
Started: Richard08, 22 Apr 2024 07:47
Last post: Dartron, 7 May 2024 18:39
I would not describe the fine as peanuts, as it is over £7M. But they do already have this money as a provision on their balance sheet. That said, this is selling off like there will be a placing. Recent lesson learnt from AGFX. Expect it will be touted as positive, to buy something or develop the business, just like AGFX. Price action is too obvious and Black rock have hung on at 1%. Cant see any other reason for such dumping and lack of buying from DBay etc.
The fine had already been declared and was peanuts. It's the appeal we are hearing to learn about. Won't make a difference really either way.
Kirkyrip has an absolutely correct interpretation of the situation, IMHO.
I doubt it's a manpower issue. I expect it relates to the elephant in the room, namely the outstanding litigation. That was supposed to have been sorted by the end of 2023 but hasn't and for whatever reason the auditors don't believe they have the full picture. The fact it is ongoing suggests further legal fees etc and maybe more.
I've sold out this morning.
This set of accountants are beyond incompetence! The company should sack the lot at the first available opportunity. How can it take this long?? Put more people on it if needed! Grrr
Started: Richard08, 29 Jan 2024 07:52
Last post: Richard08, 5 Apr 2024 20:13
Certainly not a good sign… hopefully there is no more bad news to come!
Disappointed that results have been put back a couple of weeks. Smacks of weak management. Far more complex businesses can report in this timescale.
Shareholders deserve some good news!!
The trading update has no bearing on the dividend, which was cancelled over 4 months back in the interims. Even if they wanted to pay a dividend, the largest share holder is not in favour of it. The update is ok, but not great in my opinion. I would have liked to see net debt reduced by more than 2M over last 6 months. Not much to look forward to, according to the board. Lets just hope that this gets taken over within the next year, so investors can see some return. Blackrock are slowly closing short position so we may see some upside in the mean time.
I can tell you one for a starter, the change in the dividend policy.
That seems a positive update. I keep reading it looking for the nasty detail but there doesn’t appear to be one. Dare we hope the company is on the right track at last?
Started: PhatStyle4321, 7 Jan 2024 23:43
Last post: PhatStyle4321, 7 Jan 2024 23:43
Huge placing here I suspect
Started: scoredagainsteps, 16 Nov 2023 11:21
Last post: scoredagainsteps, 16 Nov 2023 11:21
On the charts looking frw to the new products launch and year end i feel a rerate is due
Last post: Tintin200, 14 Nov 2023 11:02
Nice rise will be 50p possibly more soon
With IV buying, what is the reason todays sells?
Well Kempen Capital Management N.V. see an opportunity having taken ten %. Hopefully they are right!
Last post: seagreen, 7 Nov 2023 18:12
Ss Black rock reduced short yesterday as well
Great entry price, can see this being double in no time
PS Good shareholder base although as circa 50% it can cause a bit of volatility as the stale bulls have been leaving or have left.
Taken a couple of longs having gone through the interims also see GLG reducing shorts ....The fall in the share price is rather over done to put it mildly imho...it made £10M real profit at the interims with valid reasons ...income holders may have sold out as the divi was sensibly canceled two good new non execs with experience of e commerce channels Canada oppening up ...one for the ISA could easily recover to circa 45p after the finals and maybe more ...Nice spot me thinks. Do not worry about ADVFN it is shark infested troll city my friend,,,look at the ADVFN share price they are losing their customer base because they refuse to modify the trolls...the numbers are what is important t the end of the day.....
Dartron - When shorters reduce their exposure it is because they fear the share price will rise.
Our BXP- GDR shares are listed in London beccause the Fundraise was in London. The GDR shares have no voting rights and cannot be traded on the Dhaka Stock Exchange, but have precisely the same dividend rights as the BXP shares traded on the Dhaka Stock Exchange. I understand that BXP's exports are channelled through an export-company with a stake in BXP.
The fact that Bangladesh based investors are happy to pay a good price for BXP shares assures me that there is nothing to fear about the soundness of this progressive Company.
The huge discount when comparing our share price with the price paid for the Dhaka Stock Exchange is for me a strong indication that the share price here will rise substantially as we go forward. I am in it for the long term, very long term.
(Our price 38,50 pence, Dhaka price today Taka 146.20 = 107.6 pence)
Not so very long ago a correspondent on this BB rudely told me off for comparing a good Company (APH) with a 'bad' Company (BXP). Well, the fact is that BXP Shares have held up very nicely, whereas APH shares have fallen by some 30% since my being rudely told off. No more rudeness please!
Started: Bankruptstock, 19 Oct 2023 11:52
Last post: Dartron, 30 Oct 2023 12:53
Get the feeling shorts are covering.
GLG Partners LP 0.64% 20 Oct 2023
GLG Partners LP 0.78% 13 Oct 2023
GLG Partners LP 0.87% 24 Aug 2023
BlackRock Investment Management (UK) Limited 1.49% 10 Oct 2023
BlackRock Investment Management (UK) Limited 1.54% 26 Sep 2023
Hope so, became a shareholder today.
I think this could be a good entry point will wait a few days and see if it’s stable.
Started: Dartron, 28 Sep 2023 15:04
Last post: Dartron, 28 Sep 2023 15:04
Blackrock have slightly reduced to 1.54%
GLG on 0.87%
Taking the over all 'notified' short position to 2.41%
Euroclear shows 2.89% for August, this will include smaller notifications not tracked by the over 0.5% rule.
Encouraging that large trades continue to roll through today, so hopeful of seeing further reduction.
Started: Dartron, 28 Sep 2023 13:56
Last post: Dartron, 28 Sep 2023 13:56
Berenberg cuts Alliance Pharma price target to 90 (100) pence - 'buy'
Last post: Richard08, 26 Sep 2023 15:30
It does seem like common sense has prevailed on the sp today and the news has been taken positively. Very extraordinary in my view... unless I'm missing something ridiculously obvious?! The business would appear to be on a firmer footing now as you say. Hopefully we will see continued upside now.
The interim dividend was historically about 0.59p, which cost the company around £3.1M. The FY was 1.18p which cost around £6.4M. Cancelling these will cover the impending CMA fine of 7.9M - although the appeal has not been decided yet.
I expect that is why the short is still lingering, waiting to gap this down on the headline of the fine. However, they seem to have various competition form buyers such as Slater and Dbay. An interesting one to hold, and one I think which has definitely bottomed for now. I see broker consensus is around 85p, but that was set before todays results.
Suspending the divi probably in her best interests of the business long term, but not for the sp today I imagine!
Started: Dartron, 20 Sep 2023 07:58
Last post: Dartron, 20 Sep 2023 07:58
Https://www.lse.co.uk/rns/FIF/recommended-acquisition-of-finsbury-food-group-qkxhw2obvcnu06r.html
23.6 per cent. to the Closing Price of 89.0p on 19 September 2023;
APH next?!!
Last post: Richard08, 30 Aug 2023 17:54
Hopefully so. And the downwards pressure on this may not be off. Nice little 7% jump today so we will see.
Looks like they are fully out now
Started: Dartron, 19 Aug 2023 22:48
Last post: Dartron, 20 Aug 2023 12:46
Bump
I wrote this on other board in reply to the usual "its the debt", "its the court case" type posts.
"Free cash flow in the Period was £5.7m higher than the prior period at £10.8m (H1 22: £5.1m) and net debt decreased £7.5m to £94.5m at 30 June 2023 (31 December 2022: £102.0m)"
My opinion here is that, Investors are not selling, the price drops are due to aggressive shorting, trying to cover back the stock that the directors bought (100k), and Dbay have taken (1%).
- Andrew Franklin, the Chief Financial Officer of the Company, purchased 50,988 ordinary shares
- LeCouilliard, the non-executive Chair of the Company, purchased 40,957 ordinary shares
- DBAY Advisors Limited as discretionary investment manager of Fixtaia Limited, Logistics Development Group Plc and DouglasBay Capital IV Fund LP, purchased 5.4M by Aug 11th
Anyone who was concerned about debt and court cases would have sold up months ago. Short started in May. Its accumulation time, but each to their own.
Court case is done, its only an appeal over the fine, which is a max of 7.9m. So guess already baked in to the price. Expect shorters are hoping to exploit the RNS if the appeal fails (Which I think it will fail). One party did not even appeal, sounds banged to rights! (I'm future looking here, they pay the fine and get on with it). Butterfield may still get disqualified, again not my concern. If the CFO is happy to buy 50k shares, it tells me they can navigate this. Maybe they know that they got off lightly! 7.9M is manageable for them to pay I think, even if it is at the expense of the interim dividend.
(From IC)
"Shareholders will take heart from the news that the board has addressed the day-to-day management issue by appointing Jeyan Heper in the newly created post of chief operating officer. Mr Heper is a management veteran who has served in senior positions at Proctor & Gamble, Danone and British American Tobacco."
(IC comment) "Broker Numis forecasts a 2023 price/earnings ratio of 11 for 2023 and expects Alliance to focus on higher-growth ecommerce in the US. That could mean the shares are priced for recovery, but we remain cautious."
From the government press release Feb 2022:
https://www.gov.uk/government/news/cma-fines-firms-over-35m-for-illegal-arrangement-for-nhs-drug
"Alliance Pharmaceuticals Limited and Alliance Pharma plc are jointly and severally liable for £7,900,000"
The appeal has already been heard:
Appeal and the competition law issue of the director disqualification proceedings to be heard before the Competition Appeal Tribunal between 5 and 27 June and 27 July and 4 August:
Schedule here
https://www.gov.uk/cma-cases/pharmaceuticals-suspected-anti-competitive-agreements
No publicised outcome yet, though Dbay bought a further 1% after this date (11th Aug). They are pretty smart, don't know if public could attend?
Started: winnings1, 7 Aug 2023 19:53
Last post: Dartron, 17 Aug 2023 16:29
1.6M shares traded today in 2 chunks of 800k. Lets see if Dbay increase again, after they did last week. Now at 17%.
PS Handy, Dbay are not dividend investors.
You obviously missed the takeover news from Mr Kleinman literally just a few weeks ago!
BXP is part of a larger group. It's based in Bangladesh - I don't even think the majority of shares are avilable and it's been around since the 1960s. The shares on AIM are ADRS. PE buy out - get a big grip. It's never going to be a PE buy out . In fact there will never be a take over. This is a divi share.
They half price , what’s not to like !
patience is required guys and accumulation is they key, these will double up eventually or private equity will take them out. They were 70p not so long ago, bargain at this rate ! and paying a small dividend,
Alliance Pharma shares are no longer rising, currently a little out of favour.
Beximco Pharma shares are showing signs of rising, perhaps currently in favour.
I like APH, but I do not like the overhanging court case we hear nothing about.
Started: winnings1, 18 Jul 2023 08:55
Last post: winnings1, 18 Jul 2023 08:55
What happened to the court case over price-fixing?
Started: Richard08, 18 Jul 2023 08:04
Last post: Richard08, 18 Jul 2023 08:04
Well that reads well unless I'm missing something? Most areas up, debt down and CEO seems to have his feet back under the table.
Seems like a good entry to me. I also hold LDG, so already have exposure here.
Price looks low to me here so I just had to buy some this morning. I wonder if Dbay will be tempted to buy some more too.