Alliance Pharma Regulatory News (APH)

22 Mar 2007 07:03

Alliance Pharma PLC22 March 2007 For immediate release 22 March 2007 ALLIANCE PHARMA PLC ("Alliance Pharma" or "the Company") Preliminary Results for the year ended 31 December 2006 Alliance Pharma plc (AIM: APH), the emerging speciality pharmaceutical company,is pleased to announce its preliminary results for the year ended 31 December2006. Financial Highlights • Sales of £17.3m, an increase of 17% against the 2005 annualised figure • Operating profit increased to £2.60m (2005: £2.17m) • Pre-tax profit restored to £0.50m (2005: £0.66m) • Gross profit margin at 53.5% (2005: 54.4%) Operational Highlights • Forceval marketing rights in China acquired in a joint venture agreement announced today (see separate release) • Specialist dermatology sales force established • Acquisition of Hydromol range - sales growing at more than 35% per year • Acquisition of three dermatology products from Pfizer Commenting on the results, Michael Gatenby, Alliance Pharma's Chairman, said: "Our focus going forward will be on driving the Growth portfolio and progressingour development products but we remain receptive to any attractive acquisitionopportunities that may arise. We are particularly pleased with today'sannouncement of the acquisition of Forceval rights in China. "Trading in early 2007 has been in line with expectations and we are lookingforward to a satisfactory outcome for the year as a whole." For further information: Alliance Pharma plc + 44 (0) 1249 466966 John Dawson, Chief ExecutiveMaddy Scott, Finance Directorwww.alliancepharma.co.uk Buchanan Communications + 44 (0) 20 7466 5000 Mark Court / Rebecca Skye Dietrich Chairman's and Chief Executive's statement The Company made good progress in 2006, particularly in the second half. Thetrading business continued to grow in scale and profitability, and now earnsmore than 30% of its turnover outside the UK. Financial results Sales for the 12 months to 31 December 2006 were £17.3m, an increase of 17.1%against the 2005 annualised result. Like for like growth was 5.7%, and thebalance came from brands acquired during the year. As anticipated in our interim report, we have restored profitability: thepre-tax profit for the year was £0.50m (2005: £0.66m). The reduction in profitreflected an increase in operating costs as we strengthened investment inmarketing our enlarged Growth product portfolio and in our development products. Over the past year, in line with the recent trend, there was a significantincrease in our R&D, marketing and administrative spend. Our infrastructureshould now be broadly sufficient to support considerable growth, and the impacton margins will diminish as our sales continue to grow. We recognise theimportance of driving the business for profit and have taken action to controlthe level of infrastructure expenditure. Debt increased by £5.80m reflecting the loan finance arranged to fund productacquisitions. In May 2006 we had a well supported £2.39m (net) equity placing tostrengthen our cash position. Trading business Our trading business made an operating profit of £5.12m, up 15.8% on theprevious period annualised. We further strengthened the business during theyear, adding five new brands to our Growth portfolio and two to our Coreportfolio both generating cash for further investment. Our Growth portfolio increased sales by 30.2% on an annualised basis, benefitingfrom past marketing investment and the acquisition of new products. Newmarketing investment has been concentrated on Periostat and the dermatologyproducts. Periostat is demonstrating excellent growth, with 74% achieved in theperiod, and continues to build momentum. In 2006 we progressed Periostat's UKmarketing, shipped product under a distribution and marketing deal to Italy andmoved further towards gaining approval for launch in Turkey later this year. This year we established a specialist dermatology sales force and thedermatology portfolio gained critical mass after we made the followingacquisitions: • February 2006: the Hydromol range of prescription emollients, which isincreasing sales at more than 35% a year in a market growing by 8.8% a year • May 2006: Caraderm Ltd, whose primary product is Dermamist, a sprayfor dry skin conditions with sales of £0.09m • July 2006: UK rights to three products from Pfizer - Atarax, for itchyskin disorders, with sales of £1.04m a year joins our Growth portfolio;Deltacortril, for a wide range of steroid-responsive conditions, with sales of£1.45m joins our Core portfolio; and Terra-Cortril, which we plan to relaunch.Although off the market for 18 months Terra-Cortril remains much in demand fromburns units. A feature of the acquisition of these three products is that, incontrast to our debt-based deals, the consideration will be paid out of futureearnings • September 2006: UK and Ireland rights to Permitabs, used in eczemarelated woundcare, which has steady sales of £0.27m a year In October we acquired the UK intellectual property for Syntometrine, achildbirth anti-haemorrhage product that we have marketed and distributed forNovartis since 1998. We are transferring production to one of our contractmanufacturers and expect to realise a substantial margin improvement over thenext year. We continue to explore export opportunities for other brands from the Growthportfolio, which has benefited from the acquisition, announced today, of therights to market Forceval in China (see separate release), where the product isendorsed by public health authorities. The acquisition of the China rightscompletes Alliance's global distribution rights to Forceval. In 2006, sales ofForceval from the UK to China were £1.9m.. Alliance has acquired the rights inChina through a joint venture company, Bellona Group Ltd, which is 60 per ownedby Alliance and 40 per cent owned by Pacific Glory Development Ltd, a Chinesecompany that currently distributes Forceval in China and will continue to do so. Development business Both our development products made good progress in their Phase III clinicaltrials, but there have been unavoidable increases in the development timescalesdue to changes in regulatory requirements. Net revenue expenditure in ourdevelopment business was £1.69m as we increased expenditure in the pre-launchmarketing activity (totalling £3.63m including the clinical developmentexpenditure). Posidorm, our melatonin product for sleep disorders, has successfully completedthe pilot phases of its Phase III trials in shiftworkers and elderly patients.The results show significant improvements in sleep duration, as well as improvednight-time performance in shiftworkers, without unexpected side-effects. As announced in our recent trading update, we had originally intended to seek UKregistration first, which would subsequently have allowed registration in otherEuropean countries. Due to recent changes in regulatory procedures, we must nowgo through the European Medicines Agency (EMEA) in a process that will take lessaccount of the existing medical and scientific literature on melatonin. As aresult additional safety and dose confirmation studies are required, whichdelays the anticipated completion of development and adds substantial additionalcosts. However, the EMEA route gives a clear pathway through the registrationprocess and allows an optimised pan-European product launch beginning in 2010/11. Posidorm has the potential to transform the Company through significant annualrevenues. We are currently considering our options for sharing some of thefinal-stage investment costs with co-development and marketing partners. Our other development project, Isprelor for induction of labour, has justcompleted recruitment in its major Phase III trials. Once the results from thesestudies become available, the final stage of development can be undertaken. Thismainly relates to formulation optimisation and, based on input from the relevantregulatory agencies at our pre-submission meetings, generation of additionalpharmacokinetic data. This work, although routine, will nevertheless delay theanticipated completion of development from mid 2007 to late 2008 and adds costsestimated at £1m. As part of the preparation for a 2009 product launch,outlicensing negotiations are under way. People In June 2006 we appointed Andrew Smith, a highly experienced healthcareexecutive, as our third non-executive director. He is a former managing directorof SmithKline Beecham Pharmaceuticals UK & Ireland. In January 2007, Mark Tomlinson joined the board as Medical Director. DrTomlinson is an experienced pharmaceutical physician having held senior medicalroles in major organisations including Bristol-Myers Squibb andSanofi-Synthelabo. His particular expertise is in managing clinical researchprojects and preparing products for market At the forthcoming AGM Maddy Scott, Finance Director, and Sam Madden, Director:Acquisitions Integration, will both be resigning as directors and leavingAlliance. Maddy Scott leaves a strong and capable finance function and a searchis currently ongoing to source her replacement. Sam Madden's functional role interms of acquisitions' integration is now being absorbed within variousdepartments, where staff have grown in experience, and her role as scientificlead on the Board has been taken over by Mark Tomlinson's appointment. Outlook This year we look forward to further sales growth in our trading business,building on the past year's success and a full-year contribution from our 2006acquisitions. We aim to optimise profit through good cost management. Margins will benefitfrom driving higher sales through our infrastructure and the transfer ofrecently acquired products to our own contract manufacturing arrangements; weare awaiting regulatory approval to transfer Atarax and Deltacortril, and willtransfer Syntometrine in late 2007. Our focus will be on driving the Growth portfolio and progressing ourdevelopment products, but we remain receptive to any attractive acquisitionopportunities that may arise. Trading in early 2007 has been in line with expectations. We are looking forwardto a satisfactory outcome for the year as a whole, although within the yearthere are known factors, specifically the timing of brand production transfersand the recent acquisition of Forceval for the Chinese market, which will resultin the second half being stronger than the first. Michael Gatenby, Chairman John Dawson, Chief Executive 21 March 2007 * To move our reporting year-end to 31 December, our previous full accounts werefor the 10 months to 31December 2005. In some cases prior year figures in thisstatement have been annualised to provide more meaningful comparison. Financial review Presentation of results Following our change of year-end to 31 December in 2005, the figures given inthis report have three bases rather than the normal two. Figures under theheading '2006' or 'December 06' relate to the 12 months ended 31 December 2006.Those under the heading '2005' or 'December 05' relate to the 10 months ended 31December 2005. Those under '2005 annualised' are the December 05 figuresmultiplied by 12/10 to give a nominal value for the full 2005 calendar year. We segment the Group figures into three areas: • Core brands receive no promotional investment, with stable salesdriven by prescribing habit • Growth brands have stable sales with growth potential and we back themwith promotional investment Together, the Core brands and Growth brands make up our profitable tradingbusiness. • Development brands - the products Isprelor and Posidorm - arecurrently under clinical development with a view to launch in the future.Investments in these brands, both on marketing and infrastructure, effectivelytemper the results of the trading segments. Turnover Our 2006 turnover was £17.25m, a 40.5% increase on the £12.28m achieved in 2005.Against the 2005 annualised result, the increase was 17.1%. This increase was driven by our Growth brands, which achieved 2006 sales of£8.83m compared with £5.65m in 2005. The annualised growth was 30.2%, benefitingfrom a succession of acquisitions through the year. In 2006 the Growth brandsaccounted for 51.2% of our trading business sales. The remaining 48.8% came from our Core brands, which achieved 2006 sales of£8.42m compared with £6.62m in 2005. The annualised growth rate was 5.9%. We are increasing our international sales which rose from 9.2% of our totalturnover compared with 7.5% in 2005. 12 months 10 months 2005 annualised to December 2006 to December 2005 £m £m £mTurnover 17.25 12.28 14.73Growth 40.5% 17.1% Gross profit Our gross profit margin stabilised at 53.5% as expected, slightly below theprevious year's margin of 54.4%. It should continue at this level, as theopportunities to increase it much further are limited in the short term.However, we expect further improvement once the development products arelaunched. Operating expenses The increase in operating expenses reflects further significant investment inthe future growth of the Group. This included £1.69m investment in earlymarketing and infrastructure to further the development of Isprelor andPosidorm. The total expenditure of £6.63m was an increase of £0.95m (16.7%) onthe 2005 annualised figure, a consistent percentage of sales. Profit before tax The 2006 operating profit of £2.60m was 20.0% up on the 2005 figure. Excludingthe development spend of £1.69m, the trading business operating profit was£5.12m - a 15.8% increase on 2005 annualised excluding unallocated costs. However, because of increased investment in the development portfolio and twooperational issues in the first half that are now resolved, our pre-tax profitreduced from £0.66m in 2005 to £0.50m in 2006. 12 months to December 10 months to 2006 December 2005 £m £mSales revenue 17.25 12.28Gross profit 9.23 6.67 53.5% 54.4%Trading business expenses 4.11 3.59Trading business profit 5.12 3.08Development projects (1.69) (1.14)Unallocated costs (eg central admin) (0.83) (0.60)Operating profit before finance costsafter non-recurring items 2.60 2.17 Earnings per share The basic EPS figure of 0.32p reflects the recognition of a deferred tax assetin the period. The EPS figure reflects the investment made during the year inmarketing and infrastructure expenses on the development projects. If the loanstock was converted into ordinary shares, the EPS would not be diluted becauseof the increase in earnings due to savings on the interest payable on the loanstock. Cash flow Although the operating profit was £2.60m, a one off increase in working capitalassociated with the acquisitions reduced the cash inflow from operatingactivities to £1.12m in 2006, compared with £1.79m in 2005. This reduction in cash flow also reflects increased investment in promotionaland development opportunities. This was reinvested into the Group by way of£1.94m on the clinical development spend, an increase of £0.09m on 2005. Interest and capital repayments on the debt funding amounted to £2.16m and£0.70m respectively. This compares with £1.43m and £1.12m respectively in 2005. We raised additional funds of £2.39m, net of expenses, during the year by way ofa placing of 14.7m shares. Intangible assets The further £1.94m invested in the development of Isprelor and Posidorm added tothe previous spend of £3.08m, bringing the cumulative total to £5.02m. These costs meet the criteria set by IAS38 and have been capitalised. Eachproject has been re-examined to ensure that it is technically feasible and hasultimate commercial viability. Financial liabilities and convertible debt Financial liabilities increased over the year from £22.89m to £28.69m, includingthe Convertible Loan Stock at £7.21m. The increase was principally due tofunding from Bank of Scotland for acquisitions made during the year. Of the total financial liabilities, 57.2% is subject to fixed interest rates.This is due to the Convertible Loan Stock interest being fixed and to other debtinterest rate swaps which reduce our interest rate exposure. We have reduced thecurrency risk using a debt facility denominated in euros to match revenuesarising in the Eurozone. Group income statement at 31 December 2006 Year ended 10 months ended 31 December 2006 31 December 2005 Note £ £Revenue 17,252,942 12,275,888Cost of sales (8,022,485) (5,601,143)Gross profit 9,230,457 6,674,745 Operating expensesAdministration and marketing expense (6,595,007) (4,716,258)Share-based employee remuneration (33,941) (19,083) (6,628,948) (4,735,341) Operating profit pre non-recurring items 2,601,509 1,939,404Non-recurring items 2 - 227,731Operating profit 2,601,509 2,167,135 Finance costsInterest paid 3 (2,154,594) (1,366,747)Other finance costs 3 (65,405) (76,373)Change in fair value of derivative financial 4 109,574 (62,846)instruments (2,110,425) (1,505,966) Profit on ordinary activities before taxation 2 491,084 661,169Taxation 11,456 -Profit for the year attributable to equity 502,540 661,169shareholdersEarnings per shareBasic and diluted (pence) 0.32 0.45 All of the activities of the company are classed as continuing. There were no recognised gains or losses other than the profit for the financialperiod. Group balance sheet at 31 December 2006 31 December 31 December 31 December 31 December 2005 2006 2006 2005 Note £ £ £ £AssetsNon-current assetsGoodwill 1,128,973 1,128,973Intangible assets - Product licences 33,316,479 25,501,988 - Development costs 5,016,619 3,075,200Property, plant and equipment 296,676 280,977 39,758,747 29,987,138Current assetsInventories 2,852,125 2,739,869Trade and other receivables 5,223,557 3,034,240 8,075,682 5,774,109 Total assets 47,834,429 35,761,247 EquityOrdinary share capital 1,620,618 1,473,559Share premium account 11,274,650 9,030,959Share option reserve 65,447 31,506Reverse takeover reserve (329,349) (329,349)Retained earnings (2,199,577) (2,702,117)Total equity 10,431,789 7,504,558 LiabilitiesNon-current liabilitiesLong term financial liabilities 4 18,451,793 14,794,873Convertible debt 7,208,714 7,167,100Other liabilities 4 939,626 177,778 26,600,133 22,139,751Current liabilitiesCash and cash equivalents 2,606,660 899,066Financial liabilities 3,031,407 933,749Trade creditors and other payables 5,164,440 4,284,123 10,802,507 6,116,938 Total liabilities 37,402,640 28,256,689 Total equity and liabilities 47,834,429 35,761,247 Statement of changes in shareholders' equity at 31 December 2006 The accompanying accounting policies and notes form an integral part of these financial statements. Group statement of changes in shareholders' equity Share Share Shares to Reserves Retained Total capital premium be issued earnings equity £ £ £ £ £ £ Balance at 1 January 2006 1,473,559 9,030,959 31,506 (329,349) (2,702,117) 7,504,558 Issue of shares 147,059 - - - - 147,059Premium on shares issued - 2,243,691 - - - 2,243,691Employee benefits - - 33,941 - - 33,941Profit for the period - - - - 502,540 502,540 Balance at 31 December 2006 1,620,618 11,274,650 65,447 (329,349) (2,199,577) 10,431,789 Balance at 1 March 2005 1,473,559 9,030,959 12,423 (329,349) (3,363,286) 6,824,306 Employee benefits - - 19,083 - - 19,083Profit for the period - - - - 661,169 661,169 Balance at 31 December 2005 1,473,559 9,030,959 31,506 (329,349) (2,702,117) 7,504,558 Group and company cash flow statements at 31 December 2006 Group Company Year ended 31 10 months Year ended 31 10 months December 2006 ended December 2006 ended 31 December 31 December 2005 2005 Note £ £ £ £ Cash flows from operating activitiesCash generated from operations 5 1,110,838 1,788,157 (2,643,909) (1,105,185)Tax refund 11,456 - - -Cash flows from operating activities 1,122,294 1,788,157 (2,643,909) (1,105,185) Investing activitiesInterest received 3 16,610 61,215 - -Payment of deferred consideration (20,000) - - -Development costs capitalised (1,941,419) (1,849,860) - -Purchase of property, plant and equipment (129,395) (82,778) - -Proceeds from divestment of Uniflu - 500,000 - -Proceeds from sales of property, plant andequipment 12,250 - - -Transactions costs on divestment of Uniflu - (32,000) - -Purchase of other intangible assets (6,814,491) (1,555) - -Net cash used in investing activities (8,876,445) (1,404,978) - - Financing activitiesNet proceeds from the issue of shares 2,390,750 - 2,390,750 -Interest paid and similar charges 3 (2,163,464) (1,426,319) - -Other finance charges paid 3 (1,090) (1,643) - -Receipt from borrowings 6,536,187 - - -Repayment of borrowings (704,195) (1,115,839) - -Finance lease payments (11,631) (13,904) - -Net cash received from/used in financing sactivitie 6,046,557 (2,557,705) 2,390,750 - Net movement in cash and cashequivalents (1,707,594) (2,174,526) (253,159) (1,105,185) Cash and cash equivalents at the beginning of (899,066) 1,275,460 262,086 1,367,271the period Cash and cash equivalents at the end of the (2,606,660) (899,066) 8,927 262,086period 1. Basis of preparation The financial information set out in the announcement does not constitute theGroup's statutory accounts for the years ended 31 December 2006 or 31 December2005. The financial information for the period ended 31 December 2005 isderived from the statutory accounts for that year which have been delivered tothe Registrar of Companies as published on the group's website on 12 May 2006.The auditors reported on those accounts; their report was unqualified and didnot contain a statement under s.237(2) or (3) Companies Act 1985. The statutoryaccounts for the year ended 31 December 2006 will be finalised on the basis ofthe financial information presented by the directors in this preliminaryannouncement and will be delivered to the Registrar of Companies. 2. Profit before taxation: Year ended 10 months 31 December 2006 ended 31 December 2005 £After charging Auditors' remuneration - Group - audit services 40,250 30,500 - non-audit services 11,855 53,574Auditors' remuneration - Company - audit services 11,000 8,500 - non-audit services 1,500 1,300Employee benefit expense 33,941 19,083Depreciation of tangible assets 112,462 108,374Operating lease rentals 121,704 37,196Loss on foreign exchange transactions - 12,547After crediting 77,435 - Profit on foreign exchange transactionsNon-recurring item - Gain on disposal of Uniflu less impairment of intangibles - 227,731 Non-audit services relate to tax advice and compliance fees of £12,905 and otherof £450. 3. Finance costs - net Year ended 31 December 10 months 2006 ended 31 December 2005 £Net interest and similar charges On loans and overdrafts (2,170,114) (1,426,319) Finance lease interest (1,090) (1,643) Interest income 16,610 61,215 (2,154,594) (1,366,747)Other finance charges Foreign exchange movement on long-term Euro denominated 54,770 (2,263)debt Amortised finance issue costs (120,175) (74,110) (65,405) (76,373)Finance costs - net (2,219,999) (1,443,120) 4. Financial instruments The Group uses financial instruments comprising borrowings, some cash and liquidresources, and various items such as trade debtors and trade creditors thatarise directly from its operations. The main purpose of these financialinstruments is to raise finance for the Group's operations. The Group also has a bank facility denominated in euros. The purpose of thisfacility is to manage the currency risk arising from the Group's operations. Themain risks arising from the Group's financial instruments are interest raterisk, foreign currency risk and liquidity risk. The Board reviews and agreespolicies for managing each of these risks and they are summarised below. Thesepolicies have remained unchanged from previous year. Interest rate swaps - change in fair value of derivative financial instruments Interest rate swaps have been remeasured at the period end by the Bank ofScotland treasury department, taking into account time to expiry and marketfactors. The change in the fair value has been taken to the income statementand disclosed separately below. Short-term debtors and creditors Short-term debtors and creditors have been excluded from all the followingdisclosures other than currency risk disclosures. Interest rate risk The Group finances its operations through a mixture of debt and equity. The interest rate exposure of the financial liabilities of the Group as at 31December 2006 was: Fixed Floating Total £ £ £At 31 December 2006Sterling 16,063,469 13,730,693 29,794,162Change in fair value of financial instruments (46,728) - (46,728)Euro 2,302,186 - 2,302,186* 18,318,927 13,730,693 32,049,620At 31 December 2005Sterling 19,735,576 2,606,250 22,341,826Change in fair value of financial instruments 62,846 - 62,846Euro 2,688,702 - 2,688,702* 22,487,124 2,606,250 25,093,374 * The value of financial liabilities shown above does not include unamortisedissue costs amounting to £518,792 (Period ended 31 December 2005: £504,750)which are included in the book values shown in the maturity analysis. Fixed rate financial liabilities Weighted average fixed rate % Weighted average period for which rate is fixedAt 31 December 2006Sterling 7.50 5.95 yearsAt 31 December 2005Sterling 7.11 4.32 years The floating rate borrowings bear interest at rates based on LIBOR. The fixedrate borrowings relate to bank debt, on which interest rate swaps which matureon the 29 February 2008 have been taken out and convertible unsecured loanstock. The Group balance sheet also includes material financial assets in the form ofcash at bank and in hand totalling £232,254 (31 December 2005: £793,836) whichare exposed to floating interest rates based on LIBOR. Currency risk The group is exposed to transaction foreign exchange risk. The Group seeks tohedge its exposures using a bank facility denominated in euros, with theobjective of minimising fluctuations in exchange rates on futuretransactions and cash flows. The amount of loans denominated in euros isdisclosed in the interest rate risk table above. Approximately 25% of the Group's sales are to overseas customers in the EU.These sales are calculated in sterling, but invoiced in euros. The Group policyis to minimise currency exposures on balances for which settlement is notanticipated until a later date through the use of the euro bank facility. Allother Group sales are denominated in sterling. Liquidity risk The Group seeks to manage financial risk, to ensure sufficient liquidity isavailable to meet the identifiable needs of the Group and to invest cash assetssafely and profitably. Short-term flexibility is achieved through the use of thebank overdraft facilities. Maturity of financial liabilities The maturity profile of the Group's financial liabilities at 31 December 2006 isas follows: 31 December 2006 31 December 2005 Finance Bank borrowings Finance Bank borrowings leases and leases and other loans other loans £ £ £ £Change in fair value of financial instruments - (46,728) - 62,846In one year, or less 4,248 5,866,153 10,539 2,616,113In more than one year, but not more than two - 3,828,112 5,269 4,380,244In more than two years, but not more than five - 11,986,247 - 10,346,513In more than five years - 9,892,796 - 7,167,100 4,248 31,526,580 15,808 24,572,816 Borrowing facilities The group had £nil (31 December 2005: £nil) undrawn committed borrowingfacilities available at 31 December 2006. The Group's overdraft facility is notfully utilised at the period end. The fair value of the financial instrumentsis not materially different from the book value. After the year end the Group restructured its bank borrowings and, under the newarrangement the maturity profile of the Group's financial liabilities at 31December 2006 would be as follows: 31 December 2006 Finance leases Bank borrowings and other loans £ £Change in fair value of financial instruments - (46,728)In one year, or less 4,248 2,838,914In more than one year, but not more than two - 1,836,728In more than two years, but not more than five - 5,779,073In more than five years - 21,118,593 4,248 31,526,580 5. Cash generated from operations Group Company Year ended 31 10 months Year ended 31 10 months December 2006 ended 31 December 2006 ended 31 December December 2005 2005 £Result for the period before tax and financecosts 2,601,509 2,167,135 151,649 254,984Depreciation of property, plant andequipment 112,462 108,374 - -Change in inventories (112,256) (270,506) - -Profit on disposal of fixed assets (11,016) - - -Change in trade and other receivables (2,189,317) (884,627) (2,703,558) 44,710Change in trade and other payables 675,515 876,429 (125,941) (1,423,962)Write-off intangible assets - 120,269 - -Gain on divestment of Uniflu - (348,000) - -Share options charges 33,941 19,083 33,941 19,083Cash flows from operating activities 1,110,838 1,788,157 (2,643,909) (1,105,185) 6. Post balance sheet events After the year end the Group restructured its bank borrowings (see note 4). In March 2007 the Group acquired the rights to Forceval in China. Theacquisition was made in conjunction with the Chinese distributor of the product,in a joint venture company, of which Alliance holds 60%. The acquisition pricewas £3.25m with Alliance paying a 60% share at £1.95m. Sales of Forceval to China were £1.9m in 2006, having grown from £1.2m in 2005.Funding for the acquisition, which is expected to be earnings enhancing in theyear to 31 December 2007, was via senior debt provided by the Bank of Scotland. This information is provided by RNS The company news service from the London Stock Exchange