Alliance Pharma plc (APH) Earnings Call Transcript & Summary

Hello and welcome to the Alliance Pharma Annual General Meeting 2020. Today, I'm pleased to present Peter Butterfield, Chief Executive Officer; and Andrew Franklin, Chief Financial Officer. Please go ahead with your meeting.

Good morning, ladies and gentlemen, and welcome to the 2020 Annual General Meeting of Alliance Pharma during these extraordinary times. My name is Peter Butterfield, and I'm the Chief Executive of Alliance Pharma. I will be chairing today's proceedings and would like to personally thank shareholders for their understanding and cooperation around the logistics of this meeting and the process of voting. It's now 10:00. Notice of the meeting had been duly given. I note that a quorum is present and, therefore, declare the meeting open. I'd like to begin by welcoming my fellow Board members, David Cook, Andrew Franklin, Nigel Clifford, Jo LeCouilliard, Richard Jones, and our shareholders and guests to this call. This is, of course, a listen-only call, which has been arranged due to the unprecedented circumstances surrounding COVID-19. We have this morning released to the market the statement, which reads as follows. Firstly, on behalf of the Board, I would like to thank the Alliance team around the world for their outstanding work in a period of extraordinary challenge as a result of the COVID-19 pandemic. As outlined in our preliminary results announcement last month, the majority of our employees have been working from home with minimal operational disruption to our business owing to our outsourced business model and robust IT systems. Our Shanghai office became fully operational again in April, and we look forward to fully reopening other offices around the world, in line with local government guidance. As expected, we've seen some impact on year-to-date revenues due to COVID-19, although we have been encouraged by the robustness of our product portfolio. We are now beginning to see a return in consumer confidence starting in China, a key market for Alliance, and we continue to anticipate that trading will be weighted to the second half of the year. Our supply chain remains robust, and we have not experienced any significant supply disruption due to COVID-19. With a strong balance sheet and significant covenant headroom, the Board is confident that the group is well placed to respond to increasing demand as local lockdown measures are eased. We look forward to providing an update on our first half trading performance and full year outlook in mid-July 2020 in our scheduled half year trading update. Before moving on to the formal business of the meeting, shareholders should note that where relevant, I will provide answers to any questions we have received relating to that resolution. I will propose the resolution and read out the results of the voting on a poll. As explained in the notice of the meeting, this year, due to COVID-19, all voting has been carried out on a poll, thereby ensuring shareholders are able to vote. All votes have been verified by our registrars, Link Asset Services. I will propose the resolution and then read out the results of the votes for and against. All votes for, including votes to be cast at my discretion, I would remind you that voting numbers provided are of the total number of votes cast. The results of voting for all resolutions will be announced through a regulatory news service and published on our website as soon as reasonably practicable after the close of this meeting. The business to be transacted today is set out in the Notice of Annual General Meeting, copies of which were made available to every shareholder and sent out in line with our Articles of Association. I will take the notice as read. Resolution 1. The first item of business is to receive the consolidated financial statements of the company and its subsidiaries and the reports of the directors and the auditors for the year ended 31st of December 2019. I propose that the consolidated financial statements of the company and its subsidiaries and the reports of the directors and the auditors for the year ended 31st December 2019, be received. Poll votes were as follows: votes for, 307,119,531, representing 87.77%; votes against, 42,803,894, representing 12.23%. There were 341,086 votes withheld on this resolution. Directors' elections and reelections. We now come to resolutions concerning the reelection of directors. Despite our Articles of Association requiring 1/3 of directors to receive reelection at AGM at least once every 3 years, we're now following best practice and putting all the directors forward for annual reelection at the AGM, and we will be doing so for the foreseeable future. The biographies of all the directors can be found in our 2019 annual report and on our website. We've received a question from one of our shareholders in relation to board composition, including the diversity of skills and experience represented, querying specifically the representation of health care professionals on the Board. With the support of the Nomination Committee, the Board keeps under review the balance of skills and experience represented on the Board and the need to ensure that this remains appropriate to our phase of development and growth as we continue to pursue the strategic goals set by the Board. We shall take it under consideration as part of our wider recruitment strategy when considering the diversity of the skills at Board level. There are no further questions received in connection with the reelection of directors. I move on to proposing resolutions 2 to 7 in turn. Resolution 2. Resolution 2 concerns the reelection of David Cook, and I now propose his reelection accordingly. Poll results were as follows: votes for, 348,362,753, representing 99.46%; votes against, 1,894,143, representing 0.54%. There were 7,615 votes withheld on this resolution. I will now hand over proceedings to Andrew Franklin in connection with my reelection.

Thank you, Peter. Resolution 3 concerns the reelection of Peter Butterfield, and I propose that he be reelected as Director of the company. Poll results were as follows: votes for, 350,252,415, representing 99.9%; votes against, 7,502, representing 0.01%. There were 4,594 votes withheld on this resolution. I will now hand back to Peter Butterfield to chair the meeting through the remaining items of business.

Thank you, Andrew. Resolution 4 concerns the reelection of Andrew Franklin as a Director of the company, and I now propose his reelection as a Director of the company. Poll results were as follows: votes for, 350,126,924, representing 99.97%; votes against, 118,638, representing 0.03%. There were 18,949 votes withheld on this resolution. Turning to resolution 5. I now propose the reelection of Nigel Clifford. Poll results were as follows: votes for, 302,972,623, representing 87.53%; votes against, 43,167,791, representing 12.47%. There were 4,124,097 votes withheld on this resolution. Resolution 6 concerns the reelection of Jo LeCouilliard. Poll results were as follows: votes for, 349,230,711, representing 99.71%; votes against 1,014,851, representing 0.29%. There were 18,949 votes withheld on this resolution. And finally, Richard Jones is proposed for reelection under resolution 7. Poll results were as follows: votes for, 349,908,539, representing 99.90%; votes against, 334,002, representing 0.1%. There were 21,970 votes withheld on this resolution. That concludes the resolutions on the reelection of the directors. Moving on to resolution 8. The Companies Act 2006 requires that shareholders appoint the auditors annually. And accordingly, resolution 8 concerns the reappointment of KPMG LLP as auditor of the company for the next year. I now propose resolution 8 that KPMG LLP are reappointed as auditor. Poll results were as follows: votes for, 350,203,002, representing 99.99%; votes against, 35,502, representing 0.01%. There were 26,007 votes withheld on this resolution. Resolution 9, auditor's remuneration. Resolution 9 concerns the power to determine the auditor's remuneration and seeks your authority for the Board to do this or to be able to delegate the duty to the Audit and Risk Committee. I now propose resolution 9 that the directors or a duly authorized committee thereof be authorized to determine the auditor's remuneration. Poll results were as follows: votes for, 350,241,261, representing 99.99%; votes against, 14,619, representing 0.01%. There were 8,631 votes withheld on this resolution. Special business. We now move on to 3 items of special business. Resolution 10 will be proposed as an ordinary resolution, and resolutions 11 and 12 will be proposed as special resolutions and, therefore, must be passed by a majority of not less than 75% of shareholders' votes. Under resolution 10, the directors are seeking your authority to exercise all the powers of the company pursuant to and in accordance with Section 551 of the Companies Act 2006 to allot relevant securities up to an aggregate nominal amount of GBP 1,765,797, and for the authority to lapse until the earlier of the 30th of June 2021 and the conclusion of the next Annual General Meeting. This authority will replace the existing authority to allot shares. In line with best practice, I can confirm that your directors do not have any present intention to use this authority. I therefore propose resolution 10 as set out in the Notice of Meeting as an ordinary resolution. Poll results were as follows: votes for, 340,262,574, representing 97.15%; votes against, 9,995,811, representing 2.85%. There were 6,126 votes withheld on this resolution. We now come to resolution 11. The Companies Act requires that when equity securities are issued for cash, they must firstly offered to existing shareholders on a pro rata basis, known as a preemption right. This resolution seeks your authority for the directors pursuant to Sections 570 and 573 of the Act to disapply those preemption rights in 2 very specific scenarios, and in both cases, such authority will last until the earlier of 30th of June 2021 and the conclusion of the next Annual General Meeting. Firstly, in the event of a rights issue, open offer or other offer of shares, it will enable the directors to follow normal market practice in dealing with fractional entitlements or shareholders who are resident in countries into which we cannot issue our securities. Secondly, and additionally, the directors will be further authorized to allot shares for cash up to an aggregate nominal amount of GBP 530,269. The authorities sought are in line with institutional shareholders' recommended practice and in line with those guidelines. I confirm that your directors have no present intention of using this authority. This resolution is being proposed as a special resolution and, therefore, must be passed by a majority of not less than 75% of shareholders' votes. I therefore propose resolution 11 as set out in the Notice of Meeting as a special resolution. Poll results were as follows: votes for, 297,541,849, representing 84.95%; votes against, 52,716,536, representing 15.05%. There were 6,126 votes withheld on this resolution. Finally, resolution 12 relates to the new Articles of Association. As explained in the meeting circular, the Board has taken the decision to seek approval with the adoption that the new articles of the company to allow it to more efficiently deal with general meetings, including AGMs, in circumstances where physical meetings are prevented due to extreme events such as current unprecedented circumstances we have found ourselves in the COVID-19. Whilst the Board hopes never to use the changes being requested, that changes provide new definitions of physical, electronic and hybrid meetings to allow maximum flexibility in the holding of the shareholder meetings in times where gatherings of large groups of people are prohibited or limited in scope and, therefore, allowing for a remote attendance in the casting of votes via virtual meetings. Your Board wishes to emphasize a continued desire to hold physical meetings, including AGMs, wherever possible. As such, it only intends to use the power being requested by the new articles to hold a virtual meeting in extreme circumstances. A copy of the draft new articles setting out the proposed changes to the existing articles have been made available to shareholders on the company's website. This resolution is being proposed as a special resolution and, therefore, must be passed by a majority of not less than 75% of shareholders' votes. I therefore propose resolution 12 as set out in the Notice of Meeting as a special resolution. Poll results were as follows: votes for, 350,228,320, representing 99.99%; votes against, 2,264, representing 0.01%. There were 33,927 votes withheld on this resolution. That brings us to the end of the resolution. And I'm pleased to report that the voting confirms all resolutions have been duly passed. As advised at the beginning of this meeting, the results of the poll will shortly be released to the stock exchange and will also be published on our website. Before I close the meeting, on behalf of the Board and, I'm sure, the shareholders, I'd like to thank John Dawson, who stepped down from the Board in June 2019. We wish John every success in the future. Ladies and gentlemen, that concludes the business of this year's AGM. I would like to thank you for dialing in and listening, and now declare this meeting closed.