Preliminary Results

Alliance Pharma PLC
12 May 2005




For Immediate Release                                                12 May 2005





                             ALLIANCE PHARMA PLC

                      ('Alliance Pharma' or 'the Company')



            Preliminary Results for the year ended 28 February 2005



Alliance Pharma plc (AIM: APH), an emerging speciality pharmaceutical company,
is pleased to announce its preliminary results for the year ended 28 February
2005. These are the Company's first full year results as a listed company,
following the Company's admission to AIM in December 2003.



Financial Highlights



•   Turnover increased 13% to £11.8 million (2004: £10.4m) - the full year
    impact of two product acquisitions in November 2004, Periostat(R) and 
    Forceval(R), would show an annualised turnover of £15m

•   Gross margin improved to 52.4% (2004: 48.4%)

•   Adjusted EBAT (earnings before exceptional items, amortisation and
    tax) of £0.645 million (2004: £1.21m) - the decrease largely reflecting the
    investment in infrastructure and the marketing expenditure associated with
    current and pipeline products

•   Profit before tax of £0.418 million (2004: loss of £2.15m)

•   Operating cashflow remains strong at £1.59 million (2004: £2.11m)

•   Adjusted earnings per share 0.52p (2004: 1.18p)

•   Basic earnings per share 0.34p (2004: loss per share of 2.44p)


Operational Highlights

•   Continued strong sales growth of Symmetrel(R)and Nu-Seals(R)

•   Acquisition of Periostat and Forceval in November 2004

•   Regulatory approval anticipated imminently to begin clinical trials of
    Posidorm(TM), melatonin  in sleep disorders

•   Start of Phase III clinical trials in January 2005 of APL 202
    misoprostol for the induction of labour

•   Launch of International division to drive overseas sales through
    out-licensing and distributors

•   Co-promotion agreement signed with OralDent Ltd for the UK marketing
    and distribution of Periostat(R), a prescription medicine for the treatment 
    of the severe gum disease periodontitis


Commenting on the results, John Dawson, Alliance Pharma's Chief Executive, said:
'These results underline the robustness of Alliance Pharma's business model, in
which the cashflow from our marketed products supports the development of our
clinical pipeline. We will shortly commence the trial programme leading to
registration for our product Posidorm(TM) for sleep disorders, which seeks to
address a market that is currently at £0.5bn but which is expected to treble in
the next decade.'







For further information:


Alliance Pharma plc                                         + 44 (0) 1249 466966
John Dawson, Chief Executive
Maddy Scott, Finance Director
www.alliancepharma.co.uk

Buchanan Communications                                    + 44 (0) 20 7466 5000
Mark Court/Lisa Baderoon/Rebecca Skye Dietrich





Notes to editors


About Alliance Pharma

Alliance Pharma, founded in 1996, is an AIM listed emerging speciality
pharmaceutical company based in Chippenham, Wiltshire, UK. The company has a
strong track record of acquiring the rights to established niche brands and
owns, or shares, the rights to 30 branded pharmaceutical products and continues
to explore opportunities to expand the range.

Alliance Pharma's products are prescribed in the treatment of a wide range of
conditions and include brands used in periodontitis, a gum disease, the
prevention of heart disease, in Parkinson's disease, in nutrition, in nasal
infections, in the treatment of dermatological conditions and in childbirth. 
Alliance Pharma's sales are mainly prescription driven.  Its products are
distributed to hospitals directly and to pharmaceutical wholesalers which
service both hospital and retail pharmacies with their prescription
requirements.

Alliance Pharma is also developing novel products for sleep disorders and the
induction of labour.

Alliance Pharma joined the AIM market of the London Stock Exchange in December
2003 and trades under the symbol APH.







Chairman's Statement





This is Alliance Pharma's first full year's accounts as a publicly listed
company and show a purposeful continuation of the broad strategy we outlined at
the time of our obtaining a listing, namely:



  • Obtaining turnover, margin and cashflow from a portfolio of mature branded
    pharmaceutical products and investing further in the marketing and promotion
    of those products judged to have real potential for growth
  • Taking our two current clinical development projects towards
    commercialisation and
  • A continuing evaluation of opportunities arising from the wider
    rationalisation of the pharmaceutical industry, with a view to acquiring
    additional branded products and/or development opportunities that fall
    within our chosen area of expertise and investment criteria



The year's results show our moving forward in all aspects of the strategy.
During the year to February 2005, sales from our existing portfolio grew some
7%, on a like for like basis, with good gross margin improvement mainly arising
from our promoted brands Nu-Seals(R) and Symmetrel(R).  During the year we
acquired Forceval(R), a prescription multi-vitamin, and Periostat(R), a
treatment for periodontitis.  Both contributed to the overall sales and gross
margin increase during the year but, more importantly, looking to the future,
offer good potential for further growth in the UK and in overseas territories
where we have also acquired distribution rights.  Further, through the
acquisition of Periostat we have entered the substantial dental market and have
already taken additional steps to widen our involvement in it.



The work programme for our two key clinical development projects - Posidorm(TM),
melatonin for sleep disorders, and APL 202, misoprostrol for labour induction -
has begun in earnest.  The trials programmes have been established and necessary
pre-marketing expenditure incurred, all within a carefully planned and costed
framework.  When completed these projects have the potential to transform the
business.



Trading profit, at £0.645m (before exceptional items) was lower than last year
but this was expected as it largely resulted from the continuing marketing
expenditure on our promoted brands and the pre-marketing expenditure for our
development projects.  Both these categories of cost are, in reality, an
investment in the future.  Additionally the 7% price reduction under the 2005
PPRS settlement cost us £155,000 from December 2004 to February 2005.



Taking a wider look at our financial position, the benefits of our AIM listing
are clear.  During the year we were able to raise some £4.2m through the issue
of new shares, to be used towards the cost of the Forceval and Periostat
acquisitions with the balance of the consideration being provided by a new loan
facility.  Having wider potential access to capital has enabled us to continue
work on our development projects.



The year has also seen necessary changes in our organisation.  The team led by
John Dawson has grown from 13 to 21, which, while still relatively small, can
operate in a more structured way with clear lines of responsibility and profit
accountability on a business unit basis.



All in all, this has been a year of solid achievement on which we will continue
to build for the future.  Our brand and product development projects have
clearly established programmes for the coming year, while we continue to be
alert to identify new opportunities.  Based on the experience of the early
months of the current year, trading results continue to be satisfactory.





Michael R B Gatenby
Chairman
12 May 2005



Chief Executive's Review



Strategic Overview

In the year ended February 2005, tremendous progress on the growth of Alliance
has been made on many fronts.  We have moved our two development projects -
Posidorm(TM), melatonin for sleep disorders, and APL 202, misoprostol for
induction of labour - further down the path towards marketing; we have acquired
a major growth opportunity in Periostat for periodontitis; we have acquired a
significant and respected cash-generative brand in the prescription
multivitamin, Forceval; we have made considerable development to the operational
team; and via the acquisitions of Periostat and Forceval we now have
international opportunities beyond our historical territories of the UK and
Ireland.

Progress in 2004

Sales development

Sales for the year grew by £1.4m or 13.5%; 6.8% being like-for-like, principally
from Nu-Seals(R) and Symmetrel(R), and 6.7% through the acquisitions of
Periostat(R) and Forceval(R) in November 2004.  UK sales were affected by the 7%
PPRS price decrease, which became effective from January 2005.  Although this
anticipated price decrease was significant, it does mean that in the UK, for
branded prescription medicines, there is price stability going forward for five
years.

Nu-Seals, our low-dose enteric-coated aspirin for the prevention of heart
attacks and strokes, continues to grow well (17%) in Ireland, where there is
much emphasis on reducing cardiovascular disease.

Symmetrel, our product for treating dyskinesias, which are large involuntary
movements associated with Parkinson's disease, experienced growth of 18% as our
UK hospital field force established itself.

In the other area where we have been placing promotional effort, the group of
four dermatology brands that we acquired from Dermapharm Ltd in February 2004,
growth was 15%.

Financial Performance

As had been forecast, profitability reduced as we invested in the UK hospital
field force and in pre-marketing activities for our two development projects.
Before exceptional items, amortisation and tax, profits were £0.645m, compared
with £1.210m in the prior year (a reconciliation of these numbers is in the
Financial Review).

Following our reassessment of the useful economic lives of our intangible fixed
assets to indefinite, the brands we have acquired over the past six years were
subjected to a full impairment review.  This review concluded that the value of
these intangible assets has not been impaired since acquisition and supports our
long-standing practice of judging our trading profit before amortisation.  Going
forward our previous practice of amortising our brands over 20 years will be
replaced by an annual impairment review.

Development pipeline

Our largest development opportunity is Posidorm(TM) for sleep disorders.
Melatonin is the body's natural hormone for regulating the sleep/wake cycle.
When given therapeutically it can alleviate several sleep disorders connected
with melatonin imbalance.  These are found in the elderly; in patients with
neurological damage; in the blind; in shiftworkers; and in travelling across
time-zones.  Although not yet registered, UK prescribing of melatonin on a named
patient basis supplied by other companies is estimated to be worth between £5m
and £6m.

We are developing Posidorm(TM) for registration across the EU, initially in the
indications of sleep disorders associated with shiftworking and in the elderly,
where market research has shown that doctors recognise sleep disorders in the
elderly as a major problem and would welcome the opportunity to wean their
patients off the long-term usage of existing hypnotic drugs.

Overall the market for products for sleep disorders across the EU is currently
worth £500m (IMS data) and is forecast to treble in the next decade (ESPICOM
research). Hypothetically, if every patient in the EU suffering from the two
sleep disorders addressed by our clinical developments were to receive melatonin
therapy, the market would be in excess of £2bn. We intend to expand our own
sales forces in the UK and Ireland for the launch and marketing of Posidorm(TM).
On the Continent we intend to commercialise the opportunity via out-licensing
agreements.

We have successfully developed an advanced, surge-sustained tablet formulation
that has performed well in the pharmacokinetic trials.  Approvals are expected
to be received imminently for the commencement of the clinical trials programme,
which leads to product registration.  The trials will start during this current
quarter of Q2 2005 and a registration application is expected during the second
half of 2006.  Since melatonin has not been previously registered in the EU, we
anticipate that we shall gain data exclusivity, thus preventing generic
companies from cross-referencing our data for a period of ten years.

Our second development is APL 202, a vaginal tablet of misoprostol for the
induction of labour, to be used when pregnancy has progressed beyond its term.

The use of misoprostol for the induction of labour has been well researched over
the past decade and is well known as a treatment option to obstetricians.
Several clinical trials have shown misoprostol to yield more reliable results
than the current market leader in this area.  However there is no suitable form
of misoprostol on the market for this indication and indeed in 2002 the Royal
College of Obstetricians and Gynaecologists called for an obstetric form to be
developed.

Across the EU it is estimated that there are over 700,000 induced births per
year and the existing market for induction agents is £13m per annum.  We intend
to market APL 202 via our existing field forces in the UK and Ireland and to
seek marketing and distribution partners on the Continent.

Our clinical trials programme started in January 2005 and we expect to be
submitting for registration around the end of this year.

Acquisitions

Last November we made two important brand acquisitions, namely, Periostat
(doxycycline 20mg) for periodontitis, which we acquired from CollaGenex Inc for
$3.3m, and Forceval, a prescription multi-vitamin/multi-mineral product for
clinical malnutrition, which we acquired from the Administrators of Unigreg Ltd
for £7m.

Periodontitis is a severe form of gum disease in which openings or pockets
develop between the tooth and the gum, leading to abscesses, tooth sensitivity,
tooth mobility and ultimately tooth loss. It is estimated to affect 11% of the
adult population in the UK.  Whilst the disease process starts off as a
background infection, it is exacerbated by the body producing an excess of the
enzyme collagenase, which destroys the supporting structures which hold the
affected tooth in place.  Left unchecked, periodontitis often leads to the loss
of otherwise healthy teeth.  Traditional treatment involves extensive cleaning
of plaque and debris by an intensive procedure known as scaling and root
planing, sometimes in conjunction with short-term antibiotics, and coaching the
patient to improve his or her oral hygiene.  Periostat enhances traditional
treatment by suppressing the collagenase enzyme that is destroying the dental
support structures, thus facilitating the closing of the gum pockets and
accelerating the healing process.  Periostat was introduced into the UK dental
market three years ago, but has received minimal promotion and its UK sales are
just under £300,000.  However, in the US, where CollaGenex has marketed the
product effectively, sales have reached $45m after five years.  Following our
co-promotion agreement with OralDent Ltd, from May 2005 we now have an effective
dental marketing operation in the UK from which to develop the brand.
Additionally we have, as territories to develop, the rest of the enlarged EU
plus Switzerland, Israel, Australia, New Zealand and South Africa.  Through the
acquisition of Periostat, we feel we have secured a very significant growth
opportunity.

The acquisition of Forceval, and other minor brands from Unigreg Ltd, with sales
of £2.8m, adds to the portfolio an established, profitable brand which, in terms
of sales and profits, will rank second to Nu-Seals.  The international sales of
Forceval, which amount to around £0.8m, arise from only ten territories.  We
have acquired the rights to all territories apart from China and therefore,
working via new distributors in new territories, some growth in international
sales can be expected.

Organisation

In December 2004, our UK hospital sales force, which was set up in December 2003
on an out-sourced basis, was brought onto our payroll, having established itself
as an effective operation.  It is currently promoting Symmetrel to neurologists
and care-of-the-elderly physicians and our dermatology range to dermatologists.
During the coming year it will start to establish relationships with
obstetricians in preparation for the launch of APL 202 misoprostol in 2006.

During the year we have also made measured investments in infrastructure to
drive the future growth of the business.  We have added depth to our Scientific
Affairs area in order to manage the development of the new products Posidorm(TM)
and APL 202.  Following the acquisition of Periostat, we have recruited an
experienced dental industry executive to head up the new Dental Products
business unit and also an experienced international manager to drive the
international opportunities of Periostat and Forceval.

To optimise the management of our expanded portfolio and to prepare for the
introductions of Posidorm(TM) and APL 202, during the year we instituted a
business unit structure, placing responsibility for operational profitability
with the business unit manager.

Looking Forward

We can expect continued incremental growth from Nu-Seals, Symmetrel and our
dermatology range.  The launch of APL 202 for induction of labour, anticipated
in 2006, will bring moderate, but nevertheless significant, growth.  However the
real opportunities for transformational growth are from Periostat in
periodontitis and Posidorm(TM) in sleep disorders, following its expected
introduction in 2007.

With the management now in place and a co-promotional partner now on board,
growth in Periostat is expected to commence in the second half of this year.

For Posidorm(TM), aside from the obvious completion of the development
programme, the key factors affecting success will be concerned with the quality
of our pre-marketing and our selection of the right marketing partner for the
Continent.  Resources and effort going into these factors are of a top priority.

We will continue to build the financial base of the company by further
acquisitions of cash-generative brands when the right opportunities arise.  Our
track record of eight transactions in six years demonstrates our ability to find
and execute these deals; our recent impairment review showing zero impairment of
the assets acquired demonstrates our ability to screen and select the best of
the opportunities on offer.  The climate for portfolio rationalisation amongst
big pharma continues to be favourable and therefore we anticipate that further
good opportunities will present themselves.  Our practice of leveraging the
fresh equity going into each transaction with an appropriate amount of debt
optimises the longer-term shareholder return.

Overall trading so far this year is in line with the expectation set following
our acquisition of Periostat and Forceval in November 2004.

Finally we look forward to the future with the increased confidence that is
drawn from the quality of the team we are building.  The high quality and big
pharma backgrounds of our senior team have often been commented upon.  By
selective recruitment and development we are now putting the necessary depth
into the organisation.



John Dawson
Chief Executive
12 May 2005





Financial Review
Key Figures                                                    2005             2004    % Increase
Turnover                                                   £11.826m         £10.416m         13.5%
Gross Profit                                                £6.201m          £5.039m
Gross Margin %                                                52.4%            48.4%
Operating Expenses                                          £3.930m          £4.335m       (10.3)%
Interest charges (excl other finance chgs)                  £1.661m          £1.502m         10.6%
Adjusted EBAT (earnings before amortisation, tax,           £0.645m          £1.210m       (46.7)%
exceptional project costs and finance charges - as
reconciled below)
Profit/(loss) before tax                                    £0.418m        £(2.153m)             -
Net assets                                                  £6.824m          £2.224m             -
Basic earnings per share                                      0.34p          (2.44p)        113.9%
Adjusted earnings per share                                   0.52p            1.18p       (55.9)%

Turnover

The turnover for the year increased 13.5% to £11.8m from £10.4m. Of this 6.8%
was a like for like increase on the previous year with the remaining 6.7% being
due to the acquisition of the product licences for Periostat and Forceval in
November 2004. The impact of these acquisitions was an increase in turnover of
£0.7m and gross margin of 1.3%.

The full year impact of these acquisitions would show an annualised turnover of
£15.0m.

Gross Profit

The 4.0% improvement in gross margin from 48.4% to 52.4% was partly due to the
full year impact of the improvements in cost of goods made on the acquisition of
Nu-Seals in 2002 and partly due to the acquisitions of Periostat and Forceval.
The running rate of gross margin would be 54.5% for a full year impact of the
acquisitions.

Operating Expenses

During the year a thorough review of the useful economic lives of all intangible
assets was made, the result being that this was determined to be indefinite and
as such no amortisation has been charged during the year. Therefore the prior
year operating expenses figure should be restated to remove amortisation of
£1.750m, (brand amortisation accounted for £0.907m whilst reverse takeover
goodwill was £0.843m) to show a like for like comparison of £2.585m. There was
significant investment in the future growth of the company made through the
operating expenses, of which an additional £0.800m was due to sales and
marketing expenses for the promotions of our UK hospital products and the early
marketing activities for the development of APL202 misoprostol and APL510
melatonin. The remaining increase is due to the investment in the infrastructure
of the company to support the activities to drive the future growth.


                                                               2005             2004  % Increase
Operating Expenses                                          £3.930m          £4.335m    (9.6)%
Project costs in relation to aborted acquisition            £0.110m                -
Amortisation                                                      -          £1.750m
Operating Expenses (excl amortisation)                      £3.820m          £2.585m     52.1%



Finance Costs

The increase in ongoing interest payable from £1.502m to £1.661m in the
financial year reflected the full year impact of the interest payments on the
convertible loan stock, and the additional debt provided by Bank of Scotland in
November 2004 for the acquisition of Forceval. The other finance charges
reflects the effect of the movement in the exchange rate on the euro denominated
loan of £0.118m and £1.345m shown in the prior year being one-off costs
associated with the AIM listing.


                                                               2005             2004  % Increase
Interest charges (excl other finance charges and            £1.661m          £1.502m     10.6%
amortised finance issue costs)
Amortised finance issue costs                               £0.074m          £0.009m
Total finance costs before exceptional items                £1.735m          £1.511m
Other finance charges                                       £0.118m          £1.345m         -

Profit Before Tax

A profit before tax of £0.418m has been achieved in the year, an improvement on
the prior year loss of £2.153m. Adjusting the profit before tax to exclude the
exceptional items of £0.227m shows a trading profit of £0.645m. The exceptional
items are partly due (£0.118m) to the revaluation of the Euro denominated loan
as required by SSAP20 and the project costs associated with an aborted
acquisition attempt during the year. The prior year exceptional items relate to
the reverse takeover transaction during the prior year as shown below:

                                                                              2005             2004
Profit/(loss) on ordinary activities before taxation                       £0.418m        £(2.152)m
Amortisation of intangible assets                                                -          £0.907m
Exceptional Items:
Costs associated with Peerless Technology prior to the reverse                   -          £0.258m
takeover
Amortisation of reverse takeover goodwill                                        -          £0.843m
Debt redemption premia                                                           -          £1.185m
Exceptional project costs, finance charges and finance issue               £0.110m          £0.169m
costs
Foreign exchange movement on Euro denominated load                         £0.118m                -
Adjusted trading profit                                                    £0.645m          £1.210m

This drop in trading profit had been previously forecast as we planned our
investment in our UK marketing capability and preparations connected with our
launch products.

Earnings per share

The basic earnings per share of 0.34p is an improvement on the prior year
position of a loss per share of 2.44p. However this was heavily distorted by
one-off charges and tax credits recognised in the year.  An adjusted EPS figure
of 0.52p (1.18p 2004) reflects the investments made during the year in marketing
and infrastructure expenses and removes exceptional items, amortisation, other
finance charges and deferred tax.

Cashflow

The cash inflow from operating activities was £1.6m. During the year £4.2m was
raised from the issue of shares and was used to acquire Periostat for $3.3m plus
costs and part of the consideration for Forceval. The remainder of the total
consideration for Forceval of £7.0m plus costs, was funded by way of £6.5m debt
from Bank of Scotland.  The reduction in the net operating cashflow is as a
result of the investment in working capital stemming from the acquisitions.

Net Assets

The issue of shares to fund the acquisitions is the main contributor to the
increase in Net Assets to £6.824m (2004: £2.224m).

A further £0.858m was invested in the development of APL202 misoprostol and
Posidorm(TM), adding to the prior year spend of £0.487m, bringing the total to
£1.346m. These costs have been capitalised having met the criteria set by the
current UK accounting standard (SSAP13). Each project has been re-examined to
ensure that it has technical feasibility and has ultimate commercial viability.

Net Debt

The net debt position increased to £22.6m (2004: £16.0m) , including the
Convertible Loan Stock at £7.5m, the increase being principally due to the
funding from Bank of Scotland for the Forceval acquisition. Of the total debt,
89.4% is subject to long term fixed interest rates resulting from the
Convertible Loan Stock interest being fixed and other interest rate swaps to
reduce the interest rate exposure. The currency risk is reduced using a debt
facility denominated in euros to match revenues arising in the Eurozone.

Accounting Standards

A working group has been established to assess the implications of International
Accounting Standards and to prepare the restatement and confirm the accounting
policies under the new regime. The decision has been made by the Directors of
the company to adopt IFRS for the financial year commencing 1st March 2005 ahead
of the required date for AIM listed companies.  As such, additional unaudited
information has been attached to the annual report to provide details of the
impact on the opening balance sheet of the transition to IFRS. There were no
significant adjustments.







Madeleine Scott
Finance Director
12 May 2005




Consolidated Profit & Loss Account
for the year ended 28 February 2005






                                              Note           2005          2005          2005             2004
                                                              Pre                       Total            Total
                                                      exceptional   Exceptional
                                                                £             £             £                £
Turnover                                               11,826,292             -    11,826,292       10,416,036
Cost of sales                                         (5,624,857)             -   (5,624,857)      (5,377,179)
Gross profit                                            6,201,435             -     6,201,435        5,038,857

Operating expenses
   Administrative and marketing expenses          1   (3,820,470)     (109,504)   (3,929,974)      (2,584,611)
   Amortisation of intangible assets                            -             -             -      (1,750,245)
                                                      (3,820,470)     (109,504)   (3,929,974)      (4,334,856)

Operating profit                                        2,380,965     (109,504)     2,271,461          704,001

Net interest payable and similar charges
   Net interest and similar charges               2   (1,661,487)             -   (1,661,487)      (1,502,058)
   Other finance charges                          2      (73,988)     (117,727)     (191,715)      (1,354,449)
                                                      (1,735,475)     (117,727)   (1,853,202)      (2,856,507)

Profit/(loss) on ordinary activities before               645,490     (227,231)       418,259      (2,152,506)
taxation
Tax on profit/(loss) on ordinary activities                     -             -             -          197,856
Profit/(loss) transferred to reserves                     645,490     (227,231)       418,259      (1,954,650)
Earnings/(loss) per share
Basic (pence)                                                                            0.34           (2.44)
Adjusted (pence)                                                                         0.52             1.18
Diluted (pence)                                                                          0.82           (2.44)
Adjusted diluted (pence)                                                                 1.00             1.92



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

There were no recognised gains or losses other than the profit for the financial
year.







1. Operating profit is stated:
                                                                                       2005          2004
                                                                                          £             £
After charging

Auditors' remuneration - Group
     - audit services                                                                29,500        18,500
     - non-audit services                                                            60,561       146,870
Auditors' remuneration - Company
     - audit services                                                                 8,500         8,000
     - non-audit services                                                             2,200         2,000
Amortisation of intangible assets                                                         -       907,074
Exceptional items                                                                   109,504             -

- Project costs in relation to aborted acquisition
- Amortisation of goodwill acquired in reverse takeover                                   -       843,171
Depreciation of tangible assets                                                     115,229        83,250
Operating lease rentals                                                              42,816        40,839
After crediting                                                                      37,653         7,488

Profit on foreign exchange transactions

With the exception of amortisation, all the above are included within operating
expenses.







2. Net interest payable and other charges
                                                                                  2005               2004
                                                                                     £                  £
(a) Net interest and similar charges (normal)
        On loans and overdrafts                                            (1,820,209)        (1,562,879)
        Interest receivable and similar income                                 161,726             63,669
        Hire purchase interest                                                 (3,004)            (2,848)
                                                                           (1,661,487)        (1,502,058)
(b) Other finance charges
        Foreign exchange movement on long term Euro denominated              (117,727)                  -
debt
        Amortised finance issue costs                                         (73,988)            (9,268)
        Costs of debt refinancing                                                    -          (160,000)
        Loan redemption premiums                                                     -        (1,185,181)
                                                                             (191,715)        (1,354,449)
                                                                           (1,853,202)        (2,854,507)





Consolidated Balance Sheet
at 28 February 2005



                                                             2005           2005         2004           2004
                                                                £              £            £              £
Fixed assets
Intangible assets                                      28,095,015                  17,987,603
Tangible assets                                           306,573                     147,853
                                                                      28,401,588                  18,135,456
Current assets
Stocks                                                  2,469,363                   1,739,516
Debtors                                                 2,149,613                   1,984,093
Cash at bank and in hand                                1,367,271                   4,579,197
                                                        5,986,247                   8,302,806
Creditors: amounts falling due within one year        (5,959,415)                 (5,462,778)
Net current assets                                                        26,832                   2,840,028
Total assets less current liabilities                                 28,428,420                  20,975,484
Creditors: amounts falling due after more than                      (21,604,114)                (18,751,378)
one year - including convertible debt
                                                                       6,824,306                   2,224,106

Capital and reserves
Called up share capital                                                1,473,559                   1,107,939
Share premium account                                                  9,030,959                   5,214,638
Other reserve                                                          (329,349)                   (329,349)
Profit and loss account                                              (3,350,863)                 (3,769,122)
Shareholders' funds - equity interests                                 6,824,306                   2,224,106







Consolidated Cash Flow Statement
For the year ended 28 February 2005




                                                                                        2005          2004
                                                                         Note              £             £
Net cash inflow from operating activities                                   3      1,585,204     2,112,318
Returns on investments and servicing of finance
Interest received                                                                    161,726        35,446
Interest paid and similar charges                                                (1,820,209)   (1,562,879)
Loan redemption premiums paid                                                              -   (1,185,181)
Finance issue costs paid                                                                   -     (416,125)
Other finance charges paid                                                                 -     (160,000)
Hire purchase interest paid                                                          (3,004)       (2,848)
Net cash outflow for returns on investments and servicing of                     (1,661,487)   (3,291,587)
finance
Taxation                                                                            (12,747)             -
Capital expenditure
Development costs capitalised                                                      (858,499)     (487,110)
Purchases of other intangible assets                                             (9,248,913)     (441,045)
Purchases of tangible assets                                                       (245,948)      (16,694)
Net cash outflow for capital expenditure                                        (10,353,360)     (944,849)
Acquisitions
Purchase of subsidiary undertakings                                                        -   (1,233,435)
Payment of deferred consideration                                                  (128,399)             -
Net cash acquired with subsidiary undertakings                                             -     2,213,664
Net cash inflow from acquisitions                                                  (128,399)       980,229
Financing
Issue of shares                                                                    4,181,941     3,309,514
Warrant buy-back                                                                           -   (1,333,333)
Receipts from borrowings                                                           6,875,000     9,960,000
Repayment of borrowings                                                          (3,763,859)   (6,393,312)
Capital element of hire purchase contracts                                          (26,031)      (25,965)
Net cash inflow from financing                                                     7,267,051     5,516,904
(Decrease)/increase in cash in the year                                     4    (3,303,738)     4,373,015







3. Net cash inflow from operating activities
                                                                                        2005          2004
                                                                                           £             £
Operating profit                                                                   2,271,461       704,001
Depreciation of tangible fixed assets                                                115,229        83,250
Amortisation of intangible fixed assets                                                    -     1,750,245
(Increase)/decrease in stocks                                                      (729,847)       213,361
(Increase)/decrease in debtors                                                     (165,521)     (260,649)
Increase/(decrease) in creditors                                                      93,882     (377,890)
Net cash inflow from operating activities                                          1,585,204     2,112,318







4. Reconciliation of net cash flow to movement in net debt
                                                                                         2005            2004
                                                                                            £               £
(Decrease)/increase in cash in the year                                           (3,303,738)       4,373,015
Cash inflow from borrowings                                                       (3,111,140)     (3,566,688)
Cash outflow from capital element of hire purchase contracts                           26,031          25,965
Cash outflow from loan issue costs paid                                                     -         416,125
Change in net debt resulting from cash flows                                      (6,388,847)       1,248,417
Non-cash movements                                                                  (219,715)         158,955
Net debt at 1 March 2004                                                         (16,002,224)    (17,409,596)
Net debt at 28 February 2005                                                     (22,610,786)    (16,002,224)



5. Basis of preparation



The financial information set out in the announcement does not constitute the
Group financial statements for the year ended 28 February 2005 or 29 February
2004. The financial information for the year ended 28 February 2004 is derived
from the statutory accounts of Alliance Pharma PLC. Those financial statements
have been delivered to the Registrar of Companies.  The auditors reported on
those accounts; their report was unqualified and did not contain a statement
under s237(2) or (3) Companies Act 1985. The Group accounts for the year ended
28 February 2005 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the Company's annual general
meeting.


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