Alliance Pharma plc (APH) Earnings Call Transcript & Summary

So good morning and a very warm welcome to our 2022 results presentation. Today, I'm very pleased to be joined by Jeyan Heper. Jeyan joined Alliance last month as Chief Operating Officer. And in such a short time, he's gained a very good understanding of our business and is putting his 25 years' experience gained in international health care companies to good use. I'm also very pleased to let you know that Pete Butterfield has commenced his return-to-work. And Pete will initially focus on preparing for the upcoming Competition Appeals Tribunal in June, and then I'll hand back the CEO responsibilities to Pete. So today, Jeyan and I will cover last year's performance, an update to our purpose, vision and strategy and conclude with some outlook and summary remarks for this year. So we recognize that last year didn't deliver the trading performance that we had expected. And this was due to 2 discrete areas in our business. Sales of Kelo-cote were impacted in China due to COVID-related lockdowns of destocking at a distributor and sales of Amberen, which were impacted by a decline in the bricks-and-mortar channel together with a loss of a key discount store. This is set against a challenging economic backdrop, together with the war in Ukraine, creating additional supply disruption. However, the group -- as a group, we still delivered GBP 172 million worth of revenue, up 1%, aided by favorable currency tailwinds and the highly strategic acquisition in the U.S. of ScarAway completed in March last year. And other health care consumer brands delivered another strong year of excellent organic growth, demonstrating the value of our diversified strategy. And our Prescription Medicines business continued to provide a stable income stream. We also worked hard to ensure the business remains positioned to deliver sustainable growth for the longer term and the integration of the U.S. acquisition was a great success achieved in just 4 months and serves as a blueprint for future acquisitions. We transferred the final marketing authorization for Nizoral in China and Vietnam, giving us total control over the brand for the first time. And we have not wasted any time implementing our strategic brand plan as we continue the innovation and development journey started in 2021. This is progressing well with the launch of Kelo-cote Kids last year and the launch of Kelo-cote Scar Sheets and Canker-X, a product for mouth ulcers this year. At Alliance, people are fundamental to our success, and we continue to invest in our colleagues, and we've created new roles across all geographies to meet the evolving needs of the business. We also expanded the talent development program and launched 2 early career schemes in the U.K., 1 for graduates and 1 for year in industry placements for undergraduates, which complements our existing apprenticeship scheme in the U.K. And as restrictions eased around the world, we brought together colleagues to reconnect after global pandemic to embed stronger working relationships and to develop our strategy further. And our efforts were rewarded by the recertification as a great place to work in the U.K., China and Singapore, in addition to new awards in France and the U.S. for the first time. And this means that all of our qualifying offices are now certified as great places to work. We also strengthened our executive team and Board with the appoint of Jeyan as Chief Operating Officer; and Martin Sutherland, as an independent nonexecutive director, both of whom were appointed in February. And we also continue to make good progress on our sustainability journey. Last year, we set out our target to reach Net Zero Scope 1 and 2 emissions by 2030 and have appointed a sustainable sourcing lead who will help develop our packaging estate and you can find more on our Sustainability section of our website, which now includes a detailed sustainability report. And during last year, we updated and refined our purpose, vision and strategy. to more closely align with our transition to predominantly consumer health care company, and Jeyan will talk about this in more detail later. So I think you can all agree we've had a very busy year. With that, let me now just hand over to Jeyan, who will talk through the performance of our key brands, the challenges we faced last year and the actions we have in place to drive growth this year and beyond. Jeyan?

Thanks, Andrew. I joined Alliance on February 1, 2023, as Chief Operating Officer. Throughout the last 25 years, I worked at blue-chip companies and meet large-scale companies such as Procter & Gamble, Danone, Ansell and Lifestyles Healthcare. Under the Chinese private equity and pharma ownership, I worked as CEO at Lifestyles Healthcare, and I gained valuable insights and experience on medical devices and consumer health care products. And I hope to bring these valuable experience to Alliance and happy to work with my team here. Today, I will take you through the key brand performance, starting with Kelo-cote. Kelo-cote is the leading scar treatment brand globally. And our product comprises a gel, spray, sheet and as of December 2022, a dedicated formulation for kids. Kelo-cote delivered GBP 50 million revenue in 2022, up 2% on a reported basis, but down 6% adjusted for currency and down 17% on an underlying basis, adjusting for the U.S. acquisition. As we detailed in the interim results in September and the trading update in November, Kelo-cote's sales were significantly impacted by the COVID restrictions in China and the lockdowns that began late March and continued throughout most of the year. China is our biggest Kelo-cote market, representing 64% of our revenue in 2022, and I will go on to explain how our Chinese market actually comprises 3 distinct channels. The majority of our China sales are generated through e-commerce platforms, meaning that some 75% of our global sales of this brand are through e-commerce. Whilst we delivered 18% CAGR revenue growth over the last 5 years, we still see strong future growth potential on Kelo-cote through our innovation and development platform, looking at new formulations and adjacent applications. The scar treatment landscape globally. On this slide, we detail the market opportunity. This market is around GBP 390 million in ex-factory sales in value in 2021. Whilst we have a leading share of 15%, this is still a very fragmented market, where the second and third largest players are only strong in 1 market, such as Cicatricure in Brazil. With a global footprint, we can really lean into our marketing make use of our key opinion leaders and drive our brand forward. By the way, right now in London, we have a strong outdoor campaign running for Kelo-cote. So if you take underground or if you go to shopping malls, you will be able to see strong presence of Kelo-cote around. On this slide, we showed progress that we've made over the last 5 years. Remember, when we bought this brand -- when we acquired this brand Kelo-cote from Sinclair in 2025, we had GBP 7.7 million of revenue. And over the years, we grew this significantly across all channels with the exception being the sales in B2B market in 2022, which declined some 60%. Let me take you through the Chinese market in more detail. I already mentioned that we have 3 routes to market in this country. The first one on the left-hand side, that's the domestic channel. This has its own distributor selling Kelo-cote in a pack with Chinese writing, and that is sold in hospitals and clinics in addition to online channels through a number of retails that we have listed here, such as Taobao, TMall, JD. The cross-border channel refers to western products that are transported to China across the border from Hong Kong. Here, we partnered with a second distributor who serves both B2B and B2C channels. The B2C channel is relatively new, the one that we have been developing since 2021 with the launch of our flagship store on TMall. 2022 was a great year for Alliance in this channel, and we were delighted to receive the prestigious award from TMall Global Award for surpassing RMB 100 million sales, which is around GBP 12 million. We also work with social media influencers who run live events, promoting Kelo-cote. It's a bit like you might see on various live stream shopping channels. Anyone viewing the event is offered a promo code. And if they purchase directly through the social media channels, these are called dropship sales, and our distributor goes and delivers this product directly from the warehouse. In market B2C, sales increased over 600% in 2022 albeit a small base. Finally, the B2B sales are those we make to our distributor to service smaller companies that host a shop on bigger Internet platforms. It's like a bit of Amazon, Amazon Marketplace. In this slide, we detailed the performance of each channel that I have just described. You will see that the domestic e-commerce market for silicone scar treatment increased 10% in 2022. This is the growth in value terms in sales to consumers. Kelo-cote grew 23% in the same period. This is the end market sales to consumers, not ex-factory sales to distributor. As we already discussed, business-to-consumer market grew rapidly in 2022. In fact, it was only the business-to-business channel, which underperformed our expectations in 2022. An issue that was compounded by a one-off destocking effect by our distributor. And let me take you more detail on that. The cross-border market was affected at effectively closed between late March and early December. This had a twofold impact on Kelo-cote. Firstly, the value of the market declines because we and our competitors we're unable to transport product into China in order to meet the demand. This increase -- this created a void for counterfeiters, and they just jumped in to fill it. That leads to the second impact in normal times, we have an active anti-counterfeit program in place, working with local law enforcement offices, and we identify manufacturers, rate warehouses, shutdown factories arrest perpetrators. During the Zero COVID policy, all our agencies we work with, they involved with the lockdown, enforcing the lockdown, and counterfeit was effectively able to grow. So cross-border e-commerce market sales declined 4% in that period with Kelo-cote in-market sales broadly in line with the market declined 5%. However, Kelo-cote in-market sales rebounded strongly in H2, outperforming the market. Now that the COVID restrictions have been removed, I'm pleased to say that we have restarted our brand protection efforts, and we have worked with law enforcement to shut factories, make a rest and eliminate 95% of the counterfeit products in markets. We are working to ensure that the business-to-business traders are aware of the successes so that they can be confident to buy the genuine Kelo-cote from our distributor. So the final impact, which resulted in our trading update in November, was the one-off destocking from our distributor. Normally, our domestic distributor holds some 9 to 12 months of stock, whereas our cross-border e-commerce distributor holds 6 to 9 months. In November, mindful that business-to-business traders were reluctant by Kelo-cote due to fears that they would be undercut by counterfeit product. Our distributor decided to work through its inventory holding rather than buy more. Our cross-border e-commerce distributor was holding around 6 months of stock at that time, at the end of 2022 at a normal sellout velocity. With the COVID-related lockdowns easing, we expect this to be depleted during H1 2023 and for stock levels to normalize at around 3 to 4 months, meaning we expect orders to recommence around H2 2023. I want to reassure you that we remain in close contact with our distributor and have clear sight of inventory levels. We anticipate that ex-factory sales will rebound will build through the year with a strong performance in H2. Hopefully, you can now see why we remain confident that Chinese consumers still want to buy Kelo-cote and that strong ex-factory growth will return in 2023. Turning to the U.S. market. We were delighted to complete this highly strategic acquisition of ScarAway, and U.S. rights to Kelo-cote in March 2022 for $19.4 million. The U.S. market is the second largest market for scar treatment globally and is worth some $90 million in end-user sales with ScarAway commanding a market share of 28%, the second biggest brand behind Moderna. Whilst Kelo-cote has only 1% market share in U.S. -- in the U.S. It was important for us to gain worldwide rights to the brand from a strategic perspective, allowing us full control of the brand and creating a strong position to leverage global marketing and key opinion leaders. We were particularly pleased with the integration process. This was the first acquisition where we worked with external consultants, and we're able to complete the process in just 4 months, a situation that was greatly improved by the implementation of our ERP system. Our U.S. business now boost 3 strong consumer brands, ScarAway, Amberen and Vamousse in the largest consumer health care market in the world. In fact, in 2023, we now have a fourth brand with the launch of Canker-X, our mouth ulcer treatment from the Aloclair franchise which will further leverage our existing infrastructure without the need for additional headcount. Amberen. Turning now to Amber. The latest data from Nielsen suggests that the market for vitamin and mineral supplements for the relief of symptoms of menopause is worth some $200 million. And that's 75% of the sales are through e-commerce. Amberen is the second largest brand behind Estroven, but with only 34% of sales generated online. The Amberen range comprises just to SKUs, a menopause and a perimenopause product whereas Estroven has a much broader range of SKUs, each targeting a specific symptom of the menopause. In the face of rising cost of living, U.S. consumers have been turning to private label products in the menopause category. Interestingly, these private label products have been priced at a discount to Amberen, but a premium to Estroven. Our strategy is to build strong brands with evidence-backed differentiation, which can therefore, commend the price premium over the competition and Amberen is no different. We talked a lot last year about improving our claims, claims set for Amberen. And this slide details the result of a 12-week randomized, placebo-controlled, double-blind study of women who tried Amberen, and the results were compelling. And you can see the product packaging that we call out a 91% reduction in hot flushes or flashes as they are called in the U.S. on our packs. Our marketing highlights the clear evidence-based differences between Amberen and other menopause supplements, making it clear that Amberen is a unique formulation that is not available as a store or private label brand. So why did Amberen underperformed in 2022? Sales declined for a number of reasons. Firstly, there has been a rapid increase in new products launched as other companies recognize the potential market opportunity, fueled by a pilot of consumers seeking solutions online during periods of COVID restrictions. The Internet is far less regulated than the bricks and mortar retailers, meaning a proliferation of new products with some superior claims and it can take some months for trading standards to close these products down. Additionally, with relatively low awareness of the range of products available, there was limited brand loyalty, and it's reduced repeat purchasing. Amberen has a narrow product portfolio relative to its main competitor, which limits our ability to offer appropriate customization and to support regular use of our brands. Finally, Amberen is overexposed to bricks and mortar markets with 66% of our sales in 2022 generated through this channel. The bricks and mortar market declined in the last 2 years as consumers pivoted online and a major club retailer withdrew all menopause products from its shelves at the end of Q1 2021. Additionally, Amberen lost a major listing at a discount store that had been stocking both Amberen, Estroven and now only stocks Estroven. So where do we go from here? Well, we have conducted a detailed business plan, and we set 4 strategic objectives. Firstly, we are leaning into e-commerce opportunity, focusing our advertising investment on digital, video, social media and search engine optimization. We also have our own direct-to-consumer website, amberen.com, and we have refreshed this to optimize the consumer experience. Secondly, we will stabilize our bricks-and-mortar sales through the prioritization of the key retail accounts through leveraging innovation and through doubling down on key points of differentiation versus competition on the shelf. Thirdly, we will use our innovation to attract new brand users, increase penetration with our existing users and promote brand regimen and customization. Finally, we will increase brand awareness through effective campaigns, which highlight the benefits of using Amberen and its superior efficacy. To do this, we will invest in branded and nonbranded media, partnering with credible medical professionals to build awareness. This chart shows how we delivered in 2022 and those we expect in 2025 by channel. Adjusting for the loss of major discount store account, which you can see in blue here, we anticipate 15% compound annual revenue growth in underlying bricks-and-mortar sales and 27% growth in e-commerce as our marketing and innovation efforts gain momentum. In the January trading statement, we stated that we expect double-digit growth for Amberen in 2023 on a like-for-like basis, meaning adjusting for the loss of the major discount store account. Whilst Amberen has faced some temporary headwinds early this year due to supply challenges at Amazon, these are being addressed, and we remain on track for the year. Given the disruption to the bricks-and-mortar markets, we now anticipate 2025 sales of GBP 20 million, below our original GBP 35 million expectation. Turning now to Nizoral or Triatop, as it's known in China. We are really excited about the potential for this brand, and we have now finally completed the transfer of all the marketing authorizations from Johnson & Johnson. We delivered sales of GBP 21.8 million in 2022, of which 38% were generated in China. The majority of our Israel sales are true bricks-and-mortar channel, although we see potential to drive an increase in online sales through our refreshed activation campaigns. Nizoral is a treatment for severe dandruff, which affects around 3% of the population globally. It has created -- it's a market expected to be worth around GBP 300 million in 2025 and forecast to grow around 4% per annum. Nizoral currently holds leadership position in 4 markets: South Korea, Japan, Australia and Thailand, and is the second largest brand in China behind Kang Rank. This slide details how we intend to drive our sales further for Nizoral. The brand had been deprived by its former owner and thus hadn't received marketing investment for several years. As a result, whilst it had a very loyal following among all the consumers, a whole generation of younger consumers are largely unaware of the brands. Starting in late 2021, we designed a new marketing campaign to target this demographic through an appropriate channel mix, partnering with local distributors and agencies to tailor the execution by country. The images that you see on this slide are from South Korea. We see further opportunities in brand expansion into adjacent markets and we'll be introducing more modernized packaging in 2023. We have a number of innovation projects in our pipeline, and we will provide more detail when we bring these products to market. With that, I would like to hand over to Andrew and to talk to you the detail of the 2020 results.

Thank you much indeed, Jeyan. So as already mentioned, see-though sales increased 1% on a reported basis to GBP 172 million and declined 6% adjusted for currency and for the U.S. acquisition. As Jeyan has just discussed, this decline is due largely to the lower sales of Kelo-cote in the cross-border channel and lower Amberen sales in the bricks-and-mortar channel. Gross margin declined due to product mix following the lower proportion of Kelo-cote and Amberen sold, both which have higher gross margins resulted in the gross margin to a very healthy at 59.1%. Underlying EBITDA decreased 19% to GBP 39.2 million as a result of that gross -- lower gross margin, together with slightly higher operating expenses, up 6% and due to the increased investment in marketing and people costs. Together with higher financing costs, underlying PBT declined 28% to GBP 30.3 million and with an effective tax rate of 23.9%. Underlying basic earnings per share reduced 33% to 4.28p per share. The Board is proposing a final dividend of 1.184p per share, an increase of 5% on the final dividend for 2021. This takes the total dividend payment for the year to per share. The final dividend subject to approval of the company's AGM will be paid to shareholders in July. I won't discuss this slide in detail, as Jeyan has already covered the 3 key brands, but I do want to highlight the 16% growth in other consumer health care brands, which includes strong growth from products, including Aloclair and Vamousse and demonstrates again the benefits of a diversified portfolio. And as a reminder, the wider consumer health care market is anticipated to grow between some 3% and 5% per annum. Our Prescription Medicines portfolio continues to provide a stable performance with revenues generated of GBP 47 million, with key brands, including Hydromol, our ammonia for eczema; Forceval, our nutritional supplement and the Opus range of stoma care products all performing well. And overall, our proportion of sales from consumer health care brands increased slightly from 72% to 73% of total revenues. Non-underlying items in the year comprised principally of the annual amortization charge for our Prescription Medicines portfolio and amounted to GBP 7.2 million, the same as last year. We also posted a noncash impairment charge totaling GBP 18.2 million, which includes a one-off noncash charge in relation to Amberen of GBP 12 million. This reflects a significant increase in the cost of capital due to the higher market interest rates and also recognizes the current challenging trading conditions, particularly in the bricks-and-mortar channel. This slide walks through both the revenue and underlying PBT movements in the year. Looking at the revenue chart on the left-hand side, this shows visually the impact of the challenges we face in the China cross-border channel on our Kelo-cote sales and also for Amberen. And looking on the right-hand side of the PBT movement, you can see the majority of the decline in profit relates to lower gross profit due to a low proportion of Kelo-cote and Amberen sales versus 2021, together with a modest increase in shipping and distribution costs. Operating costs were well controlled, increasing GBP 3.6 million despite a high inflationary environment where we increased investment in both marketing and headcount to drive future sales growth. And the lower share options charge in the year of GBP 2.2 million more than offsets the higher interest costs, which reflects an increase in interest rates and an increase in the overall level of borrowings following the acquisition of ScarAway and Kelo-cote in the U.S. And we ended the year with a PBT of GBP 30.3 million, in line with our November announcement. In the year, we generated cash flow from trading of GBP 25 million. Free cash flow was GBP 15.8 million, reflecting a working capital outflow of GBP 14 million due to the timing of sales and cash receipts, which we will largely reverse in the first half of this year. In 2022, we made tax payments of GBP 4 million and interest payments of GBP 5 million. And you'll also note that CapEx spend for the year of GBP 0.4 million was much lower than in previous years for the implementation of our ERP system, which has been the main expense in prior periods. The chart on the right-hand side shows the moving to net debt. We started the year with net debt totaling GBP 87 million. And following tax and interest payments and the acquisition of ScarAway in the U.S., net debt increased GBP 15 million to GBP 102 million. This resulted in an increase in group leverage to 2.57x. And we expect leverage to remain at this level for the first half and then the delever in the second half, and we expect leverage to be below 2x by the end of this year. And for information, we've included some technical guidance in the appendix to indicate our expectations for items such as tax rate, interest charge and CapEx. Now moving away from the financials. During last year, we redefined refined our purpose vision to align with our transformation to a predominantly consumer health care company. And we evolved our strategy to move Alliance to position our lines better for the years ahead. With that, I'd like to hand back to Jeyan, who will talk through this in more detail.

Thanks, Andrew. Our new purpose is to empower people to make positive difference to their health and well-being. Our vision is to be a high-performing consumer health care company, built on a portfolio of leading trusted and proven brands. Going forward, our aim is to continue to drive solid organic revenue growth above that of the broader consumer health care markets. Areas of commercial focus for us, this updated strategy provides a more targeted approach, detailing the key global categories in which we operate and more clearly defines the areas in which we would consider for future acquisitions. Going forward, we will focus our resources on the global priority categories of helping them at skin and supporting healthy aging. We also have a number of high-performing local brands, which continue to provide a strong contribution to that business in a particular market or region and warrant specific local focus and investments. Finally, our critical medicines are for conditions that are life-threatening or where physical health would be seriously impacted without access to our product, and there are no viable alternatives available. We believe we have a moral obligation to ensure these medicines continue to be made available, and it is our social responsibility rather than financial returns, which determines our resource allocation to this group of products. Our strategic priorities are highlighted here to drive future sales and profit growth, whilst ensuring our business remains sustainable over the long term. We remain focused on building fast growth brands where consumer choice is driven by the positive difference our products make. We will continue to increase the impact of our e-commerce execution, commercial execution with a particular focus on e-commerce. We will look to transform our supply chain by investing in a network of strategic partnerships, which will reduce the complexity of our business and hopefully deliver cost efficiencies. This is a project we just started, and it will take some 3 to 5 years to implement. Finally, we will continue to invest in our people to cultivate an agile organization and culture. The successful delivery of the strategy drives our global forecast sales for our key brands as detailed on this slide. Here, you can see that we now anticipate GBP 90 million of revenue from Kelo-cote franchise in 2025, above the GBP 75 million we talked about this time last year as we now include ScarAway, and reflect the launch of Kelo-cote Kids. Our forecast for Nizoral remains unchanged at more than GBP 30 million. And as I've already mentioned, we now anticipate GBP 20 million revenue for Amberen. Effectively, whilst we now have a lower sales expectations for Amberen, we have increased our expectations for Kelo-cote by the same amount. With that, I will hand back to Andrew for the summary and the outlook.

Thank you, Jeyan. So in summary, whilst I recognize that our 2022 presented several challenges, we continue to develop our business, and we have robust plans in place for the years ahead. The China cross-border B2B market for Kelo-cote has shown early signs of recovery with the in-market demand and orders increasing over the first 2 months. And we expect sales to build over the year with total revenue growth for the entire Kelo-cote franchise expected to be above 20% this year. We expect to see high single-digit revenue growth in Nizoral as we accelerate the rollout of our tested strategic plan for the brand and in partnership with our new distributors in both China and Vietnam. And we still expect double-digit growth for Amberen on a like-for-like basis. Our portfolio of other consumer brands is expected to deliver high single-digit revenue growth, substantially ahead of the broader consumer health care market. And with the stronger trading supporting good cash generation, we expect leverage to fall below 2x by the end of the year. And with that, I'd like to say thank you very much indeed. And Jeyan and I would be very pleased to take your questions. Thank you.

It's Andrew from Investec. Just 2, please. The first one was on capacity, internal capacity. I think Jeyan, when you were talking about Canker-X, you said that there was some capacity in the U.S. team to not such that you don't need to recruit people to put more product into the market. How much capacity have you got globally? Are there lots of things? Is there lots of leverage in the system that you -- where you could buy things in or develop through R&D and you won't need to build cost base, and it will drop straight through. So that -- is there a margin story in that going forward?

I would say there is now. So I think you've seen that with the acquisition of Amberen. That wouldn't have been possible without the further expansion in the U.S. previously. So we've built out that footprint now. We have offices now in all the key locations where we expect growth to happen. With the Amberen acquisition, it was a couple of heads we put in. So a lot of that was -- there's marketing spend from an infrastructure perspective. We're gaining in that area. So yes, I would say there is.

When we bought Amberen, we needed to build out the headcount in the other space with ScarAway.

Sorry, sorry, that way around, sorry.

That's clear. And then the second question was just on the commentary on the supply chain and the network of strategic partnerships. Is there any more color you can give on that or exactly what you're trying to achieve there?

I joined last month. And one of the things I looked was the number of SKUs we have, a number of products, a number of partners that we work to deliver these products. And so our portfolio is big. Our SKUs are huge. So there must be some opportunity there to simplify and look into synergies where we can do like from our key partners, for example, maybe they can take more on their shoulder and produce more products in their capacity so that, that can allow us to simplify our whole network of suppliers. And this is the evaluation that we are just doing. So we kicked it off last month. We are now reviewing it. In H2, we will have more color on that one and we will be able to share in the coming presentations.

So that would look though to support that is that actually it's a longer play because, as you know, moving products around takes time. So it's...

And registrations, 4-hour...

Yes, registrations. So it will be a longer play on that one, Andrew.

So it's sort of rationalizing some of your partners. And then consequently, putting bigger volumes through specific partners that can be beneficial in terms of financials. Is it correct?

That's one of the objectives, yes.

And the other part is then tying up with some very high-quality CMOs where we can work with them from a development opportunity around in certain sectors that we work in.

The end game is can we have fewer, but more effective at the ends number of partners.

[indiscernible].

It's Sam England from Berenberg. Firstly, could you give us a bit of color around the pricing environment that you saw in 2022 and what you're feeling about the pricing environment for 2023? And particularly in other consumer brands, that sort of excellent growth you saw there, was that more volume or price or a bit of a mix of both?

So shall I take the -- I'll take the other consumer health care brands piece there. So we saw some really strong growth coming through. There was an element of tight phasing with that growth brand with some products were moving in registration, but the underlying market was very, very strong. From a price increase viewpoint, like all companies, we have with our distributors agreements where we can refresh the pricing. So we look at that on more on an annual basis.

Okay. Great. And then just within the Amberen business and the B&M channel, are all relationships there now profitable and a good pricing level? Or are there further sort of relationships you could revisit down the line, potentially other retailers that you could look to exit like the discounter in 2022? Or are you pretty happy with the sort of mix of retailers that you're working with?

We constantly look at the opportunity in the brick-and-mortar channel. I mean this is not a dead end for us. There is still opportunity there to go. But we were not part of the one discount, but then there might be other listing opportunities. I was with the team 2 weeks ago, and we evaluated our distribution, weighted distribution opportunities. So we are looking into this area, looking into this area quite closely. So it's 1 of my 4 strategies going forward for Amberen, e-commerce, brick-and-mortar, stabilization and opportunities.

Paul Cuddon from Numis. Just going through the Kelo-cote channel revenues by kind of channel. To what extent could the cross-border B2B recover to kind of levels that were achieved in sort of 2020? Or do you think there might have been a permanent shift in the market from B2B to more domestic e-commerce? So that's the first one.

For that specific channel, cross-border e-commerce, we now see improving in-market demand and sales order, and that is good news for us. And cross-border e-commerce is like 1/4 of the business in China, and it was hit big time last year with the COVID restrictions and counterfeit. But now they are out of the way. We expect also quite good with strong recovery on that area.

It just probably than online. So the domestic online is Western Chinese product. And there is a [indiscernible] product, so I think that's a temporary cannibalization in a [indiscernible].