TIDMUDG
RNS Number : 9840P
UDG Healthcare Public Limited Co.
24 November 2016
UDG Healthcare plc
Preliminary Announcement of Results
Year ended 30 September 2016
24 November 2016: UDG Healthcare plc ("UDG Healthcare" or
"Group"), a leading international healthcare services provider,
announces its preliminary results for the year ended 30 September
2016, after another year of continued growth and strategic progress
for the Group.
Financial highlights (continuing Group only)
-- Diluted earnings per share(1) (EPS) from continuing
operations increased by 8% (9% on a constant currency basis).
-- Revenue growth of 3% to EUR943.1m. Underlying revenue(2) up 7%.
-- Operating profit(1) growth of 8% (9% on a constant currency basis) to EUR104.2 million.
-- Operating margin(1) increased from 10.5% to 11.1%. Net
operating margin(3) increased from 12.2% to 12.6%.
-- Profit before tax(1) up 10% (11% on a constant currency basis).
-- Proposed 5% increase in final dividend to 8.50c per share,
yielding a full year dividend of 11.55c per share.
-- The Group has net cash of EUR128.3m at 30 September 2016.
-- Return on capital employed (ROCE) for 2016 was 13.7%, up from 13.5% in 2015.
Strategic & operating highlights
-- Disposal of the United Drug Supply Chain businesses and MASTA
completed on 1 April 2016 resulting in a net profit on disposal of
EUR132.1m.
-- Completed the acquisition of Pegasus in April 2016, and STEM
post year end. Both acquisitions are an excellent strategic fit for
Ashfield, with good growth prospects and a higher margin
profile.
-- Ashfield's operating profit increased by 7% (underlying
growth(2) of 9%), driven by positive underlying growth(2) in both
Ashfield Commercial & Clinical and Ashfield Communications.
-- Sharp's operating profit increased by 16% (underlying
growth(2) of 12%) driven by continued growth in the US commercial
packaging business.
-- Sharp completed the build and fit out of its new packaging
facility in Allentown, Pennsylvania increasing US commercial
packaging capacity by approximately 30%.
-- Aquilant's performance negatively impacted by adverse
currency movements with underlying(2) operating profit EUR0.2
million down.
Chief Executive's comment
Commenting on the 2016 performance, UDG Healthcare plc Chief
Executive Officer, Brendan McAtamney said:
"2016 saw the continuing business deliver another year of good
growth as the Group positioned itself for the next phase of
development, following the disposal of the United Drug Supply Chain
businesses. The Group has made significant progress in delivering
on its strategy to capitalise on an increasing trend among
healthcare companies to outsource non-core and specialist
activities on an international basis.
The Group began to deploy the disposal proceeds with the
acquisitions of Pegasus, a UK-based healthcare communications
business, and following the year end, STEM, a leading global
provider of commercial and medical audits to pharmaceutical
companies. Both acquisitions are aligned with the Group's global
growth strategy.
The Group's earnings per share increased by 8% (9% on a constant
currency basis) during the year. Sharp's operating profit increased
by 16% while Ashfield increased operating profit by 7%, with
operating margins in both divisions increasing during the year.
Overall Group operating margins continue to improve, increasing
from 10.5% to 11.1%.
The Group remains focused on delivering organic growth and
executing strategic acquisition opportunities, complementary to our
existing high growth businesses."
1 Before the amortisation of acquired intangible assets and
transaction costs.
2 Underlying growth is reported growth adjusted for the impact
of currency translation movements and any acquisition or disposal
activity.
3 Operating margin as a percentage of net revenue. Net revenue
represents gross revenue adjusted for revenue associated with
pass-through costs for which the Group does not earn a margin.
Financial Results
Constant
currency
Increase increase
IFRS Adjustments(1) Adjusted on 2015 on 2015
based
EUR'm EUR'm EUR'm % %
Continuing operations
Revenue 943.1 - 943.1 3 3
Operating profit 87.8 16.4 104.2 8 9
Profit before tax 75.2 16.4 91.6 10 11
EBITDA 122.3 2.0 124.3 8 8
Diluted earnings
per share (cent) 24.78 3.83 28.61 8 9
Discontinued
operations(2)
Profit after tax 132.0 (115.1) 16.9 (19) (18)
Diluted earnings
per share (cent) 53.33 (46.53) 6.80 (19) (19)
Total diluted earnings
per share (cent) 78.11 (42.70) 35.41 1 2
Dividend per share
(cent) 11.55 - 11.55 5 5
------------------------ ---------- ------------------------------- ----------- ----------------- -----------
2016 2015
Net cash/(debt)
(EUR'm) 128.3 (195.8)
Net
cash/(debt)/annualised
EBITDA 1.04 (1.42)
Operating margin 11.1% 10.5%
------------------------ ---------- ------------------------------- ----------- -----------------
Non-GAAP information
The Group reports certain financial measures that are not
required under International Financial Reporting Standards (IFRS)
which represent the generally accepted accounting principles (GAAP)
under which the Group reports. The Group believes that the
presentation of these non-GAAP measures provides useful
supplemental information which, when viewed in conjunction with our
IFRS financial information, provides investors with a more
meaningful understanding of the underlying financial and operating
performance of the Group and its divisions. These measures are also
used internally to evaluate the historical and planned future
performance of the Group's operations and to measure executive
management's performance based remuneration. Reference to these
performance measurements throughout this report are to the adjusted
measurements unless otherwise stated and these adjusted measures
are explained in detail on pages 33 - 38.
(1) Adjusted operating profit, profit before tax and diluted EPS
from continuing operations are stated before the amortisation of
acquired intangible assets (EUR14.4m, pre-tax) and transaction
costs (EUR2.0m, pre-tax).
Adjusted profit after tax and diluted EPS from discontinued
operations is stated after deducting the profit on disposal of the
discontinued operations (EUR132.1m, net of tax), and adding back
impairment of the investment in Magir Limited, an asset held for
sale (EUR17.0m, net of tax).
(2) The discontinued operations include United Drug Supply Chain
Services, United Drug Sangers, TCP Group and MASTA. These
operations were included in the Group's disposal which was
announced on 18 September 2015 and completed on 1 April 2016. The
discontinued operations also include Magir Limited, which is
classified as an asset held for sale at 30 September 2016.
Group development and outlook
During 2016, the Group completed the disposal of the United Drug
Supply Chain and MASTA businesses to McKesson and began to reinvest
the disposal proceeds received. The Group's continuing operations
delivered good EPS growth of 8% (9% on a constant currency basis).
The proposed full year dividend will increase by 5% continuing the
Group's 27-year history of consistent dividend growth.
Corporate development activity
In April, the Group acquired Pegasus Public Relations Limited
("Pegasus"), for a total potential consideration of up to
StgGBP16.8 million. Pegasus is a UK-based healthcare communications
business, complementing the existing services provided by Ashfield
Communications.
Post the year end, the Group acquired STEM Marketing Limited
("STEM"), on 21 October 2016 for an initial consideration of
StgGBP55 million with an additional consideration of up to StgGBP29
million payable over the next three years, based on the achievement
of agreed profit targets. STEM provides services in 35 countries
and is a leading provider of commercial and medical audits to
pharmaceutical companies. The acquisition of STEM, a business with
an established global footprint and strong growth opportunities,
will enable the Group to provide new advisory services to our
clients, which are highly complementary to those already delivered
by Ashfield.
The Group is in a net cash position and will continue to focus
on delivering organic growth and executing strategic acquisition
opportunities, complementary to our existing high growth
businesses.
Future Fit
The Group has delivered continued growth while simultaneously
investing in scalable infrastructure across HR, Finance and IT.
These investments will support the Group's delivery of sustainable
future growth, by ensuring there is a robust platform in place to
manage the existing businesses and to integrate future
acquisitions. The first phase of this project, the implementation
of a Group wide Human Resource Information System, is expected to
go live during the second half of 2017 with a total capital
investment of EUR12 million. The implementation of the Ashfield
finance system and investments in the Group's IT infrastructure
will be phased over the next two years with a total combined cost
of EUR25 million.
Sharp and Ashfield expansion
In April 2016, Sharp US completed the build and fit out of its
new packaging facility in Allentown, Pennsylvania increasing its US
commercial packaging capacity by approximately 30%. The initial
phase of packaging suites are now operational with the remainder
expected to become operational during 2017. Additionally, the
business continues to invest in serialisation capabilities in
advance of the regulatory requirement for prescription products to
be serialised from November 2017 in the US and from February 2019
in Europe. The business is well positioned to take advantage of
demand for serialisation services.
To support the delivery of sustainable growth in Ashfield, a
number of businesses are scheduled to relocate to larger office
facilities during 2017. This includes Ashfield's US Commercial
& Clinical operations which will move to a new office in
Pennsylvania which is 60% larger than the current facility. The
expansion of these office facilities, will put in place a long term
growth platform to support the continued expansion of Ashfield.
Reporting currency
The Group announced in August 2016 that from the beginning of
the new financial year 1 October 2016, it will present its
financial results in US Dollars. These 2016 results will therefore
be the last set of results which the Group will present in Euro.
The geographic profile of the Group's businesses has changed
considerably with the Group's US based businesses generating 52% of
continuing Group profits in 2016 and also providing the greatest
organic and inorganic growth opportunities. The Group expects that
this change will provide a clearer understanding of the Group's
financial performance and reduce the impact of currency movements
on the Group's reported results in the long term.
The average 2016 financial year exchange rates were EUR1 =
GBP0.7826 and $1.1109. (2015 EUR1 = GBP0.7428 and $1.1482). Based
on the current prevailing exchange rates, the Group is likely to
face a foreign exchange headwind on the translation of non-US
profits in FY17.
Outlook
The Group's activities and strategy continue to be supported by
the strong growth outlook for the outsourced healthcare services
market. Following the disposal of the United Drug Supply Chain
businesses and MASTA the Group is in a net cash position and is
well positioned to deliver sustained future growth.
Analyst presentation:
A presentation for investors and analysts will be held at the
London Stock Exchange at 9.00 GMT today, Thursday, 24 November
2016. If you wish to attend, please contact Powerscourt on the
details below. Alternatively, to dial into the conference call or
webcast, the details are as follows:
Audio webcast
http://edge.media-server.com/m/p/g8vc7tax
Conference call
UK number: +44(0)20-3427-1902
Ireland number: + 353-1-246-5601
US number: + 1-646-254-3361
Participant code: 6446012
If you wish to ask questions, please do so via the conference
call.
A replay of the audio webcast can be accessed via the same
webcast link above.
For further information, please contact:
Investors and Analysts:
Alan Ralph Keith Byrne
CFO Head of IR, Strategy & Corporate
UDG Healthcare plc Communications
Tel: +353-1-468-9000 UDG Healthcare plc
Tel: + 353-1-468-9000
Media:
Business / Financial media:
Lisa Kavanagh / Jack Hickey
Powerscourt
Tel: +44-207-250-1446
Review of Operations
Ashfield(1)
2016 2015 Actual Underlying
EUR'm EUR'm Growth Growth(3)
---------------------------- ------ ------ ------- -----------
Gross revenue
Commercial & Clinical 445.4 409.6 9% 10%
Communications 139.1 165.7 (16%) 1%
Total gross revenue 584.5 575.3 2% 8%
Net revenue(2)
Commercial & Clinical 351.7 330.2 7% 8%
Communications 117.8 118.2 - 4%
Total net revenue 469.5 448.4 5% 7%
Operating profit
Commercial & Clinical 35.2 32.5 8% 9%
Communications 28.4 27.0 5% 10%
Total operating profit 63.6 59.5 7% 9%
Operating margin
Operating margin (on gross
revenue) 10.9% 10.3%
Net operating margin (on
net revenue) 13.5% 13.3%
---------------------------- ------ ------ ------- -----------
(1) Excludes MASTA discontinued operations in both 2016 and
2015. This disposal was completed on 1 April 2016.
(2) Net revenue represents gross revenue adjusted for revenue
associated with pass-through costs for which the Group does not
earn a margin. There are no pass-through costs in Sharp or
Aquilant.
(3) Underlying growth adjusts for the impact of currency
translation movements and any acquisition or disposal activity.
The Group has changed the way it reports within the Ashfield
division, moving from a geographic basis to a business unit segment
basis. This revised format is to align our reporting to how the
Group operates the business and to ensure a more meaningful
representation of the key drivers of the division. A geographical
breakdown is available in the 2016 Investor presentation booklet
(see www.udghealthcare.com).
Ashfield continued to perform well during 2016, with net revenue
up 5% to EUR469.5 million and operating profit up 7% to EUR63.6
million. Adjusting for the negative impact of currency movements,
the contribution of Pegasus profits for six months and the 2015
disposal of the non-core Speaker Bureau business, Ashfield
generated 7% net underlying revenue growth and underlying operating
profit growth of 9%. The business delivered good organic growth
across both the Commercial & Clinical and the Communications
segments of the business. Operating margin increased to 10.9%,
whilst net operating margin (allowing for pass-through costs) was
13.5%.
Ashfield Commercial & Clinical delivered good growth during
the year with net revenue increasing by 7% (underlying growth of
8%) and operating profit increasing by 8% (underlying growth of
9%). This was principally due to strong growth in Europe
supplemented by good growth in North America, partly offset by a
weaker performance from the UK commercial business which operates
in a more mature market. Ashfield's Japanese joint venture, CMIC
Ashfield, continued to show strong growth during the year.
Ashfield's US Commercial & Clinical operations will move to a
new office in Pennsylvania during 2017. This will ensure the
business is well placed to continue to deliver sustainable growth
having secured a number of new contract wins during 2016.
Ashfield Communications also delivered good underlying growth
during the year. Adjusting for the negative impact of currency
movements, the contribution of Pegasus profits for six months and
the 2015 disposal of the non-core Speaker Bureau business, net
underlying revenues grew by 4% and underlying operating profit grew
by 10% during the year. The increasing number of new molecules
being developed and new products being approved, including a
growing proportion of specialty products requiring greater
scientific expertise, supports the growth prospects of the
communications business.
Sharp
2016 2015 Actual Underlying
EUR'm EUR'm Growth Growth(1)
------------------------- ------ ------ ------- -----------
Revenue
USA 221.5 192.1 15% 12%
EU 44.9 52.0 (14%) (12%)
Total revenue 266.4 244.1 9% 7%
Operating profit/(loss)
USA 35.6 29.9 19% 15%
EU (1.2) (0.3) (377%) (199%)
Total operating profit 34.4 29.6 16% 12%
Operating margin % 12.9% 12.1%
------------------------- ------ ------ ------- -----------
(1) Underlying growth adjusts for the impact of currency
movements. There was no acquisition or disposal activity in 2015 or
2016.
Sharp delivered another year of strong growth with revenue
increasing by 9% to EUR266.4 million and operating profit by 16% to
EUR34.4 million. The division generated underlying constant
currency operating profit growth of 12% and operating margin
increased to 12.9% during the year.
Sharp US delivered strong growth with revenue increasing by 15%
compared to the prior year and operating profit increased by 19% to
EUR35.6 million with positive growth evident across all packaging
formats. Operating margin in the US increased to 16.1%.
During 2016, Sharp completed the build and fit out of its new
commercial packaging facility in Allentown, Pennsylvania increasing
US commercial packaging capacity by 30%. The initial phase of
packaging suites are now operational with the remainder expected to
become operational during 2017.
Sharp Europe generated an operating loss of EUR1.2 million
during 2016. During the year, the packaging facility in Belgium
successfully passed its FDA certification audit, however in doing
so, the business incurred additional one-off costs. Despite the
volume of activity across our European facilities remaining below
requirements, the improved business development pipeline in the
second half of the year leaves the business better positioned.
Serialisation of prescription products will be mandatory from
November 2017 in the US and from February 2019 in Europe. Sharp is
well positioned to take advantage of demand for serialisation
services, with the majority of required equipment already
serialised and good ongoing client engagement. While the Group
continues to expect that serialisation will be a growth driver, any
benefit in 2017 is expected to be weighted towards the second half
of the year.
Aquilant(1)
2016 2015 Actual Underlying
EUR'm EUR'm Growth Growth(2)
-------------------- ------ ------ ------- -----------
Revenue 92.2 99.9 (8%) (1%)
Operating profit 6.2 7.2 (14%) (2%)
Operating margin % 6.7% 7.2%
-------------------- ------ ------ ------- -----------
(1) Excludes United Drug Supply Chain Services, United Drug
Sangers and TCP Group in 2016 and 2015 as they are included in
discontinued operations with their disposal completed on 1 April
2016. Also excludes the Group's share of profits from the joint
venture, Magir Limited, which has been classified as a discontinued
operation.
(2) Underlying growth adjusts for the impact of currency
movements and any acquisition, closure or disposal activity.
Revenue was 8% behind the prior year, however, adjusting for the
closure of Aquilant's UK laboratory distribution business in
February 2015 and negative currency movements, underlying revenue
was in line with the prior year.
Reported operating profit was 14% behind the prior year,
primarily due to adverse currency movements and the timing of
capital sales activity. Underlying operating profit was 2% (c.
EUR0.2 million) behind the prior year.
Discontinued operations
2016 2015 Change
EUR'm EUR'm
--------------------- ------ -------- -------
Revenue 682.9 1,409.7 -
Profit after tax(1) 16.8 20.7 -
1 Profit after tax from discontinued operations is stated before
amortisation of acquired intangible assets, transaction costs,
exceptional items, profit on disposal of discontinued operations
and before the impairment of the Group's investment in Magir
Limited, an asset held for sale at 30 September 2016. In accordance
with IFRS 5, depreciation of property, plant and equipment and
amortisation of intangibles has not been charged on the assets
disposed of during the year. If the assets had continued to be
depreciated and amortised, the respective pre-tax charges for the
year would have been EUR3,526,000 and EUR720,000.
On 1 April 2016 the Group completed the disposal of United Drug
Supply Chain Services, United Drug Sangers, TCP Group and MASTA.
These businesses are treated as discontinued operations and have
performed in line with expectations for the six-month period. 2015
includes results for the twelve month period. The disposal resulted
in a profit on disposal of EUR132.1 million, net of tax.
The Group has classified its investment in Magir Limited as an
asset held for sale at 30 September 2016 and has accounted for the
Group's share of the profit after tax for the year ended 30
September 2016 as a discontinued operation. The value of this
investment has been impaired by EUR17.0 million.
Forward-looking information
Some statements in this announcement are or may be forward
looking statements. They represent expectations for the Group's
business, including statements that relate to the Group's future
prospects, developments and strategies, and involve risks and
uncertainties both general and specific. The Group has based these
forward-looking statements on assumptions regarding present and
future strategies of the Group and the environment in which it will
operate in the future. However, because they involve known and
unknown risks, uncertainties and other factors including but not
limited to general economic, political, financial and business
factors, which in some cases are beyond the Group's control, actual
results, performance, operations or achievements expressed or
implied by such forward looking statements may differ materially
from those expressed or implied by such forward-looking statements
and accordingly you should not rely on these forward looking
statements in making investment decisions. Except as required by
applicable law or regulation, neither the Group nor any other party
intends to update or revise these forward looking statements after
the date these statements are published, whether as a result of new
information, future events or otherwise.
About UDG Healthcare plc:
UDG Healthcare plc (LON: UDG) is a leading international partner
of choice delivering commercial, clinical, communications and
packaging services to the healthcare industry, employing almost
8,000 people with operations in 23 countries and delivering
services in over 50 countries.
UDG Healthcare plc operates across three divisions: Ashfield,
Sharp and Aquilant.
Ashfield is a global leader in commercialisation services for
the pharmaceutical and healthcare industry, operating across two
broad areas of activity: commercial & clinical services, and
communications services. It focuses on supporting healthcare
professionals and patients at all stages of the product life cycle.
The division provides field and contact centre sales teams,
healthcare communications, patient support, audit, advisory,
medical information and event management services to over 300
healthcare companies.
Sharp is a global leader in contract commercial packaging and
clinical trial packaging services for the pharmaceutical and
biotechnology industries, operating from state of the art
facilities across the US and Europe. Sharp is also a world leader
in 'Track and Trace' serialisation services, which will require all
prescription drugs to have a unique serial code for authentication
and traceability.
Aquilant is a leading provider of outsourced sales, marketing,
distribution and engineering services to the medical and scientific
sectors in the UK, Ireland and the Netherlands.
The company is listed on the London Stock Exchange and is a
constituent of the FTSE 250.
For more information please go to: www.udghealthcare.com
Finance Review
for the year ended 30 September 2016
Revenue
Revenue from continuing operations of EUR943.1 million for the
year was 3% ahead of 2015. Ashfield reported revenue 2% ahead of
the prior year (up 5% excluding pass through revenue) and Sharp
reported revenue 9% ahead of the prior year. Aquilant revenue was
8% down on 2015 due to the closure of Aquilant's UK laboratory
distribution business in February 2015 and the significant adverse
movement in Sterling exchange rates.
Adjusted operating profit
Adjusted operating profit from continuing operations of EUR104.2
million is 8% ahead (9% on a constant currency basis) of 2015.
Adjusted operating margin
The adjusted operating margin for the continuing businesses for
the year of 11.1% increased from 10.5% in 2015. This continues the
upward trend in operating margin in recent years as the Group
focuses on operating efficiencies and achieving faster growth from
businesses with higher operating margins.
Adjusted profit before tax
Net interest costs for the year of EUR12.6 million are 3% lower
than 2015. This delivered a profit before tax from continuing
operations of EUR91.6 million which is 10% ahead of 2015 (11% on a
constant currency basis).
Taxation
The effective taxation rate on continuing operations has
increased from 21.9% in 2015 to 22.7% in 2016. This is because a
larger proportion of profit has been generated in countries with
higher taxation rates.
Adjusted diluted earnings per share
Earnings per share from continuing operations is 8% ahead (9% on
a constant currency basis) of 2015 at 28.61 cent. On a combined
continuing and discontinued basis, adjusted diluted earnings per
share increased by 1% to 35.41 cent.
Foreign exchange
The Group operates in 23 countries, with its primary foreign
exchange exposure being the translation of local income statements
and balance sheets into Euro for Group reporting purposes. The
primary non-Euro currencies are Sterling and US Dollar and their
exchange rates for 2015 and 2016 are outlined in note 19. The
re-translation of overseas profits to Euro has reduced constant
currency EPS growth of 9% to a reported EPS growth rate of 8%.
On 4 August 2016 the Group announced that due to the growth in
its US business and the disposal of its Irish supply chain
businesses, that the Group will change its presentation currency to
US Dollar for the 2017 Financial Year.
Discontinued operations
On 1 April 2016 the Group disposed of the United Drug Supply
Chain businesses and MASTA. These businesses are reported as
discontinued operations in 2016. At 30 September 2016 the Group has
classified its joint venture arrangement with Magir Limited as a
discontinued operation and an asset held for sale. The discontinued
businesses contributed an operating profit of EUR17.6 million to
the Group made up of six months contribution from the disposed
businesses and twelve months profit from Magir Limited. The
operating profit of the Group's continuing and discontinued
businesses of EUR121.8 million increased by 1% in comparison to the
2015 operating profit of EUR120.3 million. The discontinued
businesses have also contributed EUR132.1 million of a profit on
disposal, offset by a EUR17.0 million reduction in the investment
in Magir Limited.
Cash flow
Net cash increased by EUR324.1 million in the year to EUR128.3
million (30 September 2015: net debt EUR195.8 million). The net
cash inflow from operating activities was EUR66.9 million with
EUR85.2 million being generated by continuing operations and an
outflow of EUR18.3 million from discontinued operations.
The net cash received resulting from the disposal of the United
Drug Supply Chain businesses and MASTA was EUR373.9 million (pre
transaction costs and taxation). EUR38.4 million was invested in
our continuing operations in property, plant and equipment and
computer software. This includes IT investment to enable our
businesses to grow in an efficient manner and investment in the new
facility in Sharp US. EUR12.7 million was paid in consideration for
the acquisition of Pegasus, while the Group also paid EUR15.6
million in deferred contingent consideration associated with prior
year acquisitions. Dividend payments of EUR27.4 million relating to
the final 2015 dividend and the 2016 interim dividend were made
during the year. Foreign exchange translation reduced cash balances
by EUR15.3 million.
Balance sheet
Net cash at the end of the year was EUR128.3 million (EUR384.1
million cash and EUR255.8 million debt). The net cash/(debt) to
annualised EBITDA ratio is 1.04 times cash (2015: 1.42 times debt)
and net interest is covered 10.6 times (2015: 11.4 times) by
annualised EBITDA. Financial covenants in our principal debt
facilities are based on net debt to EBITDA being less than 3.5
times and EBITDA interest cover being greater than three times.
The Group has maintained its long term private placement debt as
it expects to make acquisitions and other capital investments in
the coming years. At 30 September 2016 the Group also had EUR220
million of undrawn overdraft and loan facilities.
Return on capital employed (ROCE)
The ROCE for continuing operations was 13.7%, up from 13.5% at
the end of 2015.
The Group targets ROCE of 15% within three years for all
investments. The Group has invested significantly in acquisitions
and capital expenditure in recent years and we are targeting that
organic growth in future years will increase Group ROCE to 15%.
Dividends
The directors are proposing a final dividend of 8.50 cents per
share representing an increase of 5% on the 2015 final dividend of
8.10 cent per share. This represents 5% growth in the total
dividend for the year to 11.55 cent per share. This continues the
Group's record of consistently increasing dividends for over 25
years.
Subject to shareholder approval at the Company's 2017 Annual
General Meeting, the proposed final dividend of 8.50 cent per share
will be paid on 13 February 2017 to ordinary shareholders on the
Company's register at 5.00 p.m. on 19 January 2017.
2016 Annual Report and Annual General Meeting
The 2016 Annual Report and Accounts will be published in
December 2016 and the Annual General Meeting of the Company will be
held on 7 February 2017.
Investor relations
UDG Healthcare's senior management team spend a significant
amount of time meeting with shareholders and the international
financial community. We have invested in dedicated investor
relations resources and are focused on increasing the awareness of
the Company among the investor and analyst community.
We communicate regularly with our shareholders throughout the
year, specifically following the release of our interim and
preliminary results, and at the time of major developments. During
2016, the executive management team attended eleven investor
conferences and conducted over 250 institutional investor
one-on-one / group meetings. In addition, the Group held two
investor events during the year. In February 2016, the Group hosted
a site visit to its Sharp headquarters in Allentown, Pennsylvania,
US and in September 2016, the Group held a Capital Markets Day in
London.
Our website www.udghealthcare.com, is the primary method of
communication for the majority of our shareholders. We publish our
annual report, preliminary results and other public announcements
on our website. In addition, details of our conference calls and
presentations are available through our website.
The Board of Directors considers it important to understand the
views of shareholders and receive regular updates on investor
perceptions.
Our investor relations department provides a point of contact
for shareholders and full contact details are set out in the
investor relations section of our website. Shareholders can also
submit an information request through the shareholder services
section of our website.
Income Statement
for the year ended 30 September 2016
Year ended Restated (note 3, 8)
30 September Year ended 30 September 2015
2016
Notes Pre- Exceptional
exceptional items
Total items (note 6) Total
EUR'000 EUR'000 EUR'000 EUR'000
Continuing
operations
Revenue 4 943,080 919,274 - 919,274
Cost of sales (658,981) (654,086) (2,092) (656,178)
-------------------- ------ ---------------- --------------- ------------ -----------------------
Gross profit 284,099 265,188 (2,092) 263,096
Selling and
distribution
expenses (159,820) (151,196) (7,449) (158,645)
Administration
expenses (18,771) (16,074) (1,713) (17,787)
Other operating
expenses (16,395) (17,008) (2,216) (19,224)
Transaction costs (1,993) (1,225) - (1,225)
Share of joint
ventures' profit
after tax 5 718 292 - 292
Profit on disposal
of subsidiary
undertakings 6 - - 176 176
-------------------- ------ ---------------- --------------- ------------ -----------------------
Operating profit 87,838 79,977 (13,294) 66,683
Finance income 7 4,781 29,510 - 29,510
Finance expense 7 (17,417) (42,569) - (42,569)
Profit before tax
from continuing
operations 75,202 66,918 (13,294) 53,624
Income tax
(expense)/credit (13,888) (16,125) 2,096 (14,029)
-------------------- ------ ---------------- --------------- ------------ -----------------------
Profit for the
year from
continuing
operations 61,314 50,793 (11,198) 39,595
Profit after tax
for the year from
discontinued
operations 8 131,958 16,424 (1,146) 15,278
-------------------- ------ ---------------- --------------- ------------ -----------------------
Profit for the year 193,272 67,217 (12,344) 54,873
-------------------- ------ ---------------- --------------- ------------ -----------------------
Profit
attributable to:
Owners of the
parent 193,272 54,852
Non-controlling
interests - 21
-------------------- ------ ---------------- --------------- ------------ -----------------------
193,272 54,873
-------------------- ------ ---------------- --------------- ------------ -----------------------
Profit attributable to:
Continuing operations 61,314 39,595
Discontinued operations 131,958 15,278
--------------------------- -------- -----------
193,272 54,873
------------------------- -------- -----------
Earnings per ordinary share:
Basic - continuing operations 9 24.88c 16.21c
Basic - discontinued operations 9 53.56c 6.26c
--------------------------------- ----------- -----------
Basic 78.44c 22.47c
--------------------------------- ----------- -----------
Diluted - continuing operations 9 24.78c 16.13c
Diluted - discontinued operations 9 53.33c 6.22c
----------------------------------- ---- --------- -------
Diluted 78.11c 22.35c
----------------------------------- ---- --------- -------
Group Statement of Comprehensive Income
for the year ended 30 September 2016
Restated
(note
8)
2015
2016
Notes EUR'000 EUR'000
Profit for the year 193,272 54,873
Other comprehensive income/(expense):
Items that will not be reclassified
to profit or loss:
Remeasurement (loss)/gain
on Group defined benefit schemes 16
* Continuing operations (8,468) (3,650)
* Discontinued operations 1,057 26
Deferred tax on Group defined
benefit schemes
* Continuing operations 539 641
* Discontinued operations (211) (5)
--------------------------------------- ------ -------- --------- ----------- ----------
(7,083) (2,988)
--------------------------------------- ------ -------- --------- ----------- ----------
Items that may be reclassified
subsequently to profit or
loss:
Foreign currency translation
adjustment 12
* Continuing operations (45,373) 45,594
* Discontinued operations (7,109) 4,127
Reclassification on loss of
control of subsidiary undertakings 12 4,640 (165)
Gain/(loss) on hedge of net
investment in foreign operations 12 2,262 (15,636)
Group cash flow hedges:
- Effective portion of cash
flow hedges - movement into
reserve - 32,287
- Effective portion of cash
flow hedges - movement out
of reserve (5,742) (23,677)
-------- -----------
Effective portion of cash
flow hedges 12 (5,742) 8,610
- Movement in deferred tax
- movement into reserve - (4,036)
- Movement in deferred tax
- movement out of reserve 718 2,960
-------- -----------
Net movement in deferred tax 12 718 (1,076)
--------------------------------------- ------ -------- --------- ----------- ----------
(50,604) 41,454
--------------------------------------- ------ -------- --------- ----------- ----------
Other comprehensive (expense)/income,
net of tax (57,687) 38,466
--------------------------------------- ------ -------- --------- ----------- ----------
Total comprehensive income,
net of tax 135,585 93,339
--------------------------------------- ------ -------- --------- ----------- ----------
Total comprehensive income
attributable to:
Owners of the parent 135,585 93,318
Non-controlling interests - 21
--------------------------------------- ------ -------- --------- ----------- ----------
135,585 93,339
--------------------------------------- ------ -------- --------- ----------- ----------
Total comprehensive income
attributable to:
Continuing operations 5,250 73,913
Discontinued operations 130,335 19,426
------------------------------ -------- -------------------
135,585 93,339
---------------------------- -------- -------------------
Group Statement of Changes in Equity
for the year ended 30 September 2016
Equity Other
share Share Retained reserves Total
capital premium earnings (Note 12) equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 October 2015 12,621 152,164 433,912 10,077 608,774
Profit for the financial year - - 193,272 - 193,272
Other comprehensive income/(expense):
Effective portion of cash flow hedges - - - (5,742) (5,742)
Deferred tax on cash flow hedges - - - 718 718
Translation adjustment
* Continuing operations - - - (45,373) (45,373)
* Discontinued operations - - - (7,109) (7,109)
Reclassification on loss of control on subsidiary undertakings - - - 4,640 4,640
Gain on hedge of net investment in foreign operations - - - 2,262 2,262
Remeasurement (loss)/gain on defined benefit schemes
* Continuing operations - - (8,468) - (8,468)
* Discontinued operations - - 1,057 - 1,057
Deferred tax on defined benefit schemes
* Continuing operations - - 539 - 539
* Discontinued operations - - (211) - (211)
--------------------------------------------------------------- --------- -------- --------- ---------- ---------
Total comprehensive income/(expense) for the year - - 186,189 (50,604) 135,585
Transactions with shareholders:
New shares issued 94 3,920 - - 4,014
Share-based payment expense - - - 1,966 1,966
Dividends paid to equity holders - - (27,386) - (27,386)
Release from share-based payment reserve - - 2,734 (2,734) -
--------------------------------------------------------------- --------- -------- --------- ---------- ---------
At 30 September 2016 12,715 156,084 595,449 (41,295) 722,953
--------------------------------------------------------------- --------- -------- --------- ---------- ---------
for the year ended 30 September 2015 (restated)
Equity Other Attributable
share Share Retained reserves to owners Non-controlling Total
capital premium earnings (Note 12) of the parent interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 October 2014 12,485 147,176 404,212 (30,173) 533,700 (21) 533,679
Profit for the financial year - - 54,852 - 54,852 21 54,873
Other comprehensive
income/(expense):
Effective portion of cash flow
hedges - - - 8,610 8,610 - 8,610
Deferred tax on cash flow hedges - - - (1,076) (1,076) - (1,076)
Translation adjustment
* Continuing operations - - - 45,594 45,594 - 45,594
* Discontinued operations - - - 4,127 4,127 - 4,127
Reclassification on loss of control
of subsidiary undertakings - - - (165) (165) - (165)
Loss on hedge of net investment in
foreign operations - - - (15,636) (15,636) - (15,636)
Remeasurement (loss)/gain on
defined benefit schemes
* Continuing operations - - (3,650) - (3,650) - (3,650)
* Discontinued operations - - 26 - 26 - 26
Deferred tax on defined benefit
schemes
* Continuing operations - - 641 - 641 - 641
* Discontinued operations - - (5) - (5) - (5)
------------------------------------ -------- -------- --------- ---------- -------------- ---------------- ---------
Total comprehensive income for the
year - - 51,864 41,454 93,318 21 93,339
Transactions with shareholders:
New shares issued 136 4,988 - - 5,124 - 5,124
Share-based payment expense - - - 1,778 1,778 - 1,778
Dividends paid to equity holders - - (25,146) - (25,146) - (25,146)
Release from share-based payment
reserve - - 2,982 (2,982) - - -
------------------------------------ -------- -------- --------- ---------- -------------- ---------------- ---------
At 30 September 2015 12,621 152,164 433,912 10,077 608,774 - 608,774
------------------------------------ -------- -------- --------- ---------- -------------- ---------------- ---------
Group Balance Sheet
as at 30 September 2016
2016 2015
Notes EUR'000 EUR'000
ASSETS
Non-current
Property, plant and equipment 10 122,638 117,903
Goodwill 11 344,521 358,213
Intangible assets 11 97,054 101,693
Investment in joint ventures and associates 11 8,124 23,079
Derivative financial instruments 13 11,814 22,048
Deferred income tax assets 3,849 3,984
Employee benefits 16 12,489 13,067
--------------------------------------------- ------ ---------- ----------
Total non-current assets 600,489 639,987
--------------------------------------------- ------ ---------- ----------
Current
Inventories 49,226 55,017
Trade and other receivables 209,472 205,248
Cash and cash equivalents 13 384,131 214,078
Current income tax assets 4,061 1,612
Derivative financial instruments 13 7,382 4,750
Assets held for sale 8 - 473,820
Total current assets 654,272 954,525
--------------------------------------------- ------ ---------- ----------
Total assets 1,254,761 1,594,512
--------------------------------------------- ------ ---------- ----------
EQUITY
Equity share capital 12,715 12,621
Share premium 156,084 152,164
Other reserves 12 (41,295) 10,077
Retained earnings 595,449 433,912
--------------------------------------------- ------ ---------- ----------
Total equity 722,953 608,774
LIABILITIES
Non-current
Interest-bearing loans and borrowings 13 216,923 415,840
Provisions 14 5,451 7,508
Employee benefits 16 18,315 18,303
Deferred income tax liabilities 27,782 28,050
--------------------------------------------- ------ ---------- ----------
Total non-current liabilities 268,471 469,701
--------------------------------------------- ------ ---------- ----------
Current
Interest-bearing loans and borrowings 13 58,133 20,811
Trade and other payables 183,190 191,758
Current income tax liabilities 13,070 4,452
Provisions 14 8,944 18,683
Liabilities held for sale 8 - 280,333
--------------------------------------------- ------ ---------- ----------
Total current liabilities 263,337 516,037
--------------------------------------------- ------ ---------- ----------
Total liabilities 531,808 985,738
--------------------------------------------- ------ ---------- ----------
Total equity and liabilities 1,254,761 1,594,512
--------------------------------------------- ------ ---------- ----------
Group Cash Flow Statement
for the year ended 30 September 2016
2016 2015
-------------------------------------------- -----------------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cash flows from
operating activities
Profit before tax 75,202 132,705 207,907 53,624 18,174 71,798
Finance income (4,781) (7) (4,788) (29,510) (10) (29,520)
Finance expense 17,417 58 17,475 42,569 126 42,695
Exceptional items - - - 13,294 1,335 14,629
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Operating profit
(pre-exceptional
items in 2015) 87,838 132,756 220,594 79,977 19,625 99,602
Share of joint
ventures' profit
after tax (718) (1,493) (2,211) (292) (2,190) (2,482)
Depreciation charge 18,032 - 18,032 16,637 7,286 23,923
Loss/(profit) on
disposal of property,
plant and equipment 64 (11) 53 45 12 57
Impairment of
intangible assets 718 1,031 1,749 - - -
Amortisation of
intangible assets 16,395 - 16,395 17,008 1,801 18,809
Share-based payment
expense 1,966 - 1,966 1,471 307 1,778
Decrease/(increase) in
inventories 3,107 3,523 6,630 121 (3,859) (3,738)
(Increase)/decrease in
trade and other
receivables (8,806) (9,170) (17,976) 6,383 (17,134) (10,751)
(Decrease)/increase in
trade payables,
provisions and other
payables (7,798) (29,104) (36,902) 7,043 38,414 45,457
Exceptional items paid (2,308) - (2,308) (6,359) (1,784) (8,143)
Profit on disposal of
discontinued
operations - (132,093) (132,093) - - -
Impairment of asset
held for sale - 16,961 16,961 - - -
Interest paid (10,983) - (10,983) (12,257) (1) (12,258)
Income taxes paid (12,347) (707) (13,054) (12,189) (2,663) (14,852)
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Net cash
inflow/(outflow) from
operating activities 85,160 (18,307) 66,853 97,588 39,814 137,402
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Cash flows from
investing activities
Interest received 597 7 604 429 10 439
Purchase of property,
plant and equipment (28,568) (2,306) (30,874) (36,449) (9,242) (45,691)
Proceeds from disposal
of property, plant
and equipment 392 11 403 501 141 642
Investment in
intangible assets -
computer software (9,835) (6,051) (15,886) (2,122) (16,858) (18,980)
Acquisitions of
subsidiaries (net of
cash and cash
equivalents) (12,736) - (12,736) - - -
Deferred contingent
acquisition
consideration paid (15,601) - (15,601) (501) - (501)
Disposal of subsidiary
undertakings (net of
cash and cash
equivalents disposed) 392,720 (18,787) 373,933 2,169 - 2,169
Investment in joint
ventures - - - (6,124) - (6,124)
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Net cash
inflow/(outflow) from
investing activities 326,969 (27,126) 299,843 (42,097) (25,949) (68,046)
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Cash flows from
financing activities
Proceeds from issue of
shares (including
share premium
thereon) 4,014 - 4,014 5,124 - 5,124
Proceeds from
interest-bearing
loans and borrowings - - - 11,908 - 11,908
Repayments of
interest-bearing
loans and borrowings (157,926) - (157,926) (13,573) - (13,573)
Group transfers 2,592 (2,592) - 11,882 (11,882) -
(Decrease)/increase in
finance leases (72) - (72) 133 - 133
Dividends paid to
equity holders of the
Company (27,386) - (27,386) (25,146) - (25,146)
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Net cash outflow from
financing activities (178,778) (2,592) (181,370) (9,672) (11,882) (21,554)
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Net
increase/(decrease)
in cash and cash
equivalents 233,351 (48,025) 185,326 45,819 1,983 47,802
Translation adjustment (15,273) 9,021
Cash and cash
equivalents at
beginning of year 214,078 157,255
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Cash and cash
equivalents at end of
year 384,131 214,078
----------------------- -------------- -------------- ------------ -------------- -------------- ---------
Cash and cash
equivalents is
comprised of:
Cash at bank and short
term deposits 384,131 214,078
Notes to the Preliminary Announcement
for the year ended 30 September 2016
1. Reporting entity
UDG Healthcare plc (the "Company") is a company domiciled in
Ireland. The preliminary consolidated financial information of the
Company for the year ended 30 September 2016, are comprised of the
Company and its subsidiaries (together referred to as the "Group")
and the Group's interest in joint ventures and associates.
The financial information presented herein does not amount to
statutory financial statements that are required by Section 347 of
the Companies Act, 2014 to be annexed to the annual return of the
Company. The financial information does not include all the
information and disclosures required in the annual financial
statements. The statutory financial statements for the year ended
30 September 2015 have been annexed to the annual return and filed
with the Registrar of Companies. The audit report on those
statutory financial statements was unqualified and did not contain
any matters to which attention was drawn by way of emphasis. The
statutory financial statements for the year ended 30 September 2016
will be annexed to the next annual return of the Company and filed
with the Registrar of Companies.
2. Statement of compliance
This announcement has been prepared on the basis of the results
and financial position that the directors expect will be reflected
in the audited statutory accounts when these are completed. The
financial information presented in this report has been prepared in
accordance with the Group's accounting policies under International
Financial Reporting Standards (IFRS), as adopted by the EU and as
set out more fully in the Group's last Annual Report.
The accounting policies adopted are consistent with those of the
previous year except for the following new and amended IFRSs and
International Financial Reporting Interpretations Committee (IFRIC)
that were adopted by the Group as of 1 October 2015 and that are
effective for the Group's financial year ended 30 September 2016
but did not have a material effect on the results or financial
position of the Group:
-- Annual Improvements to IFRSs 2010-2012 Cycle
-- Annual Improvements to IFRSs 2011-2013 Cycle
-- IAS 19 Amendment: Defined Benefit Plans; Employee Contributions
The following standards, amendments to existing standards, and
interpretations published by IASB are not yet effective for the
year end 30 September 2016 and have not been early adopted in
preparing the financial statements:
* Annual Improvements to IFRSs 2012-2014 Cycle
* Amendments to IFRS 11 - Accounting for acquisitions
of interests in Joint Operations*
* IFRS 14 - Regulatory Deferral Accounts
* Amendments to IAS 16 and IAS 38: Clarification of
acceptable methods of depreciation and amortisation*
* Amendments to IAS 16 - Property, Plant and Equipment
and IAS 41 - Bearer Plants
* Amendments to IAS 27 - Equity Method in Separate
Financial Statements
* Amendments to IFRS 10 and IAS 28 - Sale or
contribution of assets between an investor and its
associate or joint venture*
* Amendment to IAS 1: Disclosure Initiative*
* Clarifications to IFRS 15 - Revenue from contracts
with customers*
* IFRS 9 - Financial Instruments (2014)*
* Amendments to IAS 7: Disclosure Initiative*
* Amendments to IAS 12: Recognition of deferred tax
assets for unrealised losses*
* Amendments to IFRS 2: Classification and measurement
of share-based payment transactions*
* IFRS 16: Leases*
A number of the standards (*) set out above have not yet been
endorsed by the EU. These standards, interpretations and amendments
to existing standards will be applied for the purposes of the Group
and Company financial statements with effect from their respective
effective dates. The Group is currently considering the impact of
these accounting standards.
3. Prior year adjustment
Reclassification of wages and salary expenses
The Ashfield Division contracts out employees to its customers
to work on sales and marketing of their products in the
marketplace. Wages and salaries paid to these employees in the
amount of EUR51,849,000 have been classified as a cost of sale in
the current year. These expenses were classified as selling and
distribution expenses in 2015 and prior years. The Group considers
the classification of this expense as a cost of sale to be a more
appropriate classification given that Group revenue includes the
amounts charged to customers for their service. As a result,
EUR72,431,000 of wages and salaries has been reclassified from
selling and distribution expenses to cost of sales in 2015 so that
the results are presented on a consistent basis in both 2016 and
2015. There is no impact on operating profit.
A summary of the impact on the previously reported figures in
2015 is set out below:
As previously
stated Reclassification As restated
EUR'000 EUR'000 EUR'000
------------------------- ------------- ---------------- -----------
Cost of sales (583,747) (72,431) (656,178)
Gross profit 335,527 (72,431) 263,096
Selling and distribution
expenses (231,076) 72,431 (158,645)
Operating profit 66,683 - 66,683
------------------------- ------------- ---------------- -----------
4. Segmental analysis
The Group's operations are divided into the following operating
segments each of which operates in a distinct sector of the
healthcare services market:
Ashfield - Ashfield is a global leader in commercialisation
services for the pharmaceutical and healthcare industry, operating
across two broad areas of activity: commercial & clinical
services, and communications services. It focuses on supporting
healthcare professionals and patients at all stages of the product
life cycle. The division provides field and contact centre sales
teams, healthcare communications, patient support, audit, advisory,
medical information and event management services to over 300
healthcare companies.
Sharp - Sharp is a global leader in contract commercial
packaging and clinical trial packaging services for the
pharmaceutical and biotechnology industries, operating from state
of the art facilities across the US and Europe. Sharp is also a
world leader in 'Track and Trace' serialisation services, which
will require all prescription drugs to have a unique serial code
for authentication and traceability.
Aquilant - Aquilant is a leading provider of outsourced sales,
marketing, distribution and engineering services to the medical and
scientific sectors in the UK, Ireland and the Netherlands.
At 30 September 2016 the Group has classified the joint venture
investment in Magir Limited as a discontinued operation and an
asset held for sale. Following this change, we have revised our
segmental reporting and restated the prior year segmental
disclosures as required by IFRS 8. Details of the discontinued
operations are included in note 8. The segmental analysis of the
business corresponds with the Group's organisational structure and
the Group's internal reporting for the purpose of managing the
business and assessing performance as reviewed by the Group's Chief
Operating Decision Maker (CODM), which the Group has defined as
Brendan McAtamney (Chief Executive Officer).
The amount of revenue and operating profit under the Group's
operating segments is as follows:
Continuing operations
2016 2015
EUR'000 EUR'000
Revenue
Ashfield 584,454 575,290
Sharp 266,443 244,076
Aquilant 92,183 99,908
943,080 919,274
--------------------------------------------------------------------------------------------- --------- ---------
Operating profit before acquired intangible amortisation, transaction costs and exceptional
items
Ashfield 63,599 59,501
Sharp 34,394 29,592
Aquilant 6,220 7,240
104,213 96,333
Amortisation of acquired intangibles (14,382) (15,131)
Exceptional items - (13,294)
Transaction costs (1,993) (1,225)
--------------------------------------------------------------------------------------------- --------- ---------
Operating profit 87,838 66,683
Finance income 4,781 29,510
Finance expense (17,417) (42,569)
--------------------------------------------------------------------------------------------- --------- ---------
Profit before tax 75,202 53,624
Income tax expense (13,888) (14,029)
--------------------------------------------------------------------------------------------- --------- ---------
Profit after tax for the year 61,314 39,595
--------------------------------------------------------------------------------------------- --------- ---------
Geographical analysis of revenue
United Kingdom and Republic of Ireland 359,041 376,583
North America 420,489 381,863
Continental Europe 163,550 160,828
--------------------------------------------------------------------------------------------- --------- ---------
943,080 919,274
--------------------------------------------------------------------------------------------- --------- ---------
5. Share of joint ventures' profit after tax
2016 2015
EUR'000 EUR'000
Group share of revenue 29,776 25,249
Group share of expenses, inclusive of tax (29,058) (24,957)
---------------------------------------------- --------- ---------
Group share of profit after tax - continuing 718 292
---------------------------------------------- --------- ---------
6. Exceptional items
2016 2015
EUR'000 EUR'000
Restructuring costs and other - 7,757
Impairment of assets - 4,308
Onerous leases - 1,405
Profit on disposal of subsidiary undertakings - (176)
Exceptional items relating to continuing operations - 13,294
Exceptional items relating to discontinued operations - 1,335
------------------------------------------------------- -------- --------
- 14,629
Exceptional tax credit - (2,285)
------------------------------------------------------- -------- --------
Net exceptional items after taxation - 12,344
------------------------------------------------------- -------- --------
There were no exceptional costs during the year.
Restructuring costs and other, for the year ended 30 September
2015, primarily included redundancy costs of EUR7,411,000 in
relation to recently acquired and existing Group businesses. The
closure of Aquilant Scientific (UK) Limited (a UK based distributor
of laboratory equipment) was announced on 28 February 2015. This
resulted in non-cash impairment charges in respect of goodwill
(EUR2,216,000) and other assets (EUR2,092,000). Onerous lease costs
were incurred in relation to the recently acquired and existing
portfolio of leased properties that are no longer in use.
Discontinued operations incurred redundancy costs of EUR1,335,000
during the prior year.
On 1 October 2014, the Group disposed of its shareholding in
Ashfield KK as part of the Group entering into a joint venture
agreement with CMIC Holdings Co., Ltd. On 30 November 2014, the
Group disposed of its shareholding in Pharmaceutical Trade
Services, Inc. On 22 May 2015, the Group disposed of its Physicians
World Speakers Bureau business, a portfolio of agencies located in
the US which was acquired as part of KnowledgePoint360 in 2014.
The following table details the (profit)/loss on each of these
disposals:
Physicians World Speakers
Pharmaceutical Trade Bureau
Ashfield KK Services Inc Total
EUR'000 EUR'000 EUR'000 EUR'000
Consideration, net of cash
disposed 737 (1,080) (1,826) (2,169)
Net (liabilities)/assets on
disposal (1,066) 1,037 797 768
Goodwill and intangibles,
net of deferred tax - 30 1,038 1,068
Foreign currency translation
reserve (146) (19) - (165)
Deferred contingent
consideration - (105) - (105)
Disposal costs 266 78 83 427
------------------------------ ------------ --------------------------- --------------------------- --------
(Profit)/loss on disposal (209) (59) 92 (176)
------------------------------ ------------ --------------------------- --------------------------- --------
Reconciliation to Group Income Statement - year ended 30
September 2015
Selling & Other Disposal of Total
Cost of sales distribution Administration operating subsidiary exceptional
expenses expenses expenses undertakings items
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Restructuring
costs and
other - 7,333 424 - - 7,757
Impairment of
assets 2,092 - - 2,216 - 4,308
Onerous leases - 116 1,289 - - 1,405
Profit on
disposal of
subsidiary
undertakings - - - - (176) (176)
---------------- --------------- -------------- ---------------- -------------- -------------- ---------------
2,092 7,449 1,713 2,216 (176) 13,294
Restructuring
costs relating
to
discontinued
operations 1,335
---------------- --------------- -------------- ---------------- -------------- -------------- ---------------
14,629
Exceptional tax
credit (2,285)
---------------- --------------- -------------- ---------------- -------------- -------------- ---------------
12,344
--------------- --------------- -------------- ---------------- -------------- -------------- ---------------
7. Finance income and expense
2016 2015
EUR'000 EUR'000
Finance income
Income arising from cash deposits 640 429
Fair value of deferred contingent consideration 264 -
Fair value of cash flow hedges transferred from equity 806 23,677
Fair value adjustments to fair value hedges - 5,159
Fair value adjustment to guaranteed senior unsecured notes 2,842 -
Ineffective portion of cash flow hedges 229 245
---------------------------------------------------------------------------------- --------- ---------
4,781 29,510
---------------------------------------------------------------------------------- --------- ---------
Finance expense
Interest on overdrafts (29) (114)
Interest on bank loans and other loans
-wholly repayable within 5 years (6,986) (7,630)
-wholly repayable after 5 years (5,118) (5,087)
Interest on finance leases (1) (6)
Unwinding of discount on provisions (1,042) (823)
Fair value of deferred contingent consideration (582) -
Fair value adjustments to fair value hedges (2,842) -
Fair value adjustments to guaranteed senior unsecured loan notes - (5,159)
Foreign currency loss on retranslation of guaranteed senior unsecured loan notes (806) (23,677)
Net finance cost on pension scheme obligations (11) (73)
---------------------------------------------------------------------------------- --------- ---------
(17,417) (42,569)
---------------------------------------------------------------------------------- --------- ---------
Net finance expense relating to continuing operations (12,636) (13,059)
Net finance expense relating to discontinued operations (51) (116)
---------------------------------------------------------------------------------- --------- ---------
Net finance expense (12,687) (13,175)
---------------------------------------------------------------------------------- --------- ---------
8. Net result from discontinued operations, disposals and assets
and liabilities classified as held for sale
Profit from discontinued operations after tax included in the
Group Income Statement is summarised in the table below:
2016 2015
EUR'000 EUR'000
Profit from discontinued operations
after tax
* United Drug Supply Chain Services businesses and
MASTA (a) 15,333 13,088
* Magir Limited (c) 1,493 2,190
Profit from disposal of discontinued
operations (b) 132,093 -
Impairment of assets held for sale (c) (16,961) -
-------------------------------------------------------------- ------- -------- -------
Profit from discontinued operations
after tax 131,958 15,278
----------------------------------------------------------------------- -------- -------
The profit for the year from discontinued operations is fully
attributable to the equity holders of the company.
On 18 September 2015 the Group announced the proposed disposal
of United Drug Supply Chain Services, United Drug Sangers, TCP
Group and MASTA for an aggregate cash consideration of EUR407.5
million before adjustments in respect of working capital, taxation
and costs. The disposal was approved by shareholders at an EGM on
13 October 2015 and on 1 April 2016 the Group completed the
disposal of these businesses. The Group has treated these
operations as discontinued operations in accordance with IFRS 5.
The following table details the results of these discontinued
operations included in the Group Income Statement:
2016 2015
(a) EUR'000 EUR'000
Revenue 682,875 1,409,686
Cost of sales (632,961) (1,311,639)
------------------------------------------- --------- -----------
Gross profit 49,914 98,047
Selling and distribution expenses (33,921) (70,630)
Administration expenses (2,266) (4,364)
Other operating expenses - (1,801)
Settlement gain on defined benefit pension 2,404 -
Transaction costs - (3,817)
Operating profit 16,131 17,435
Net finance expense (51) (116)
------------------------------------------- --------- -----------
Profit before exceptional items and
tax 16,080 17,319
Exceptional items - (1,335)
------------------------------------------- --------- -----------
Profit from discontinued operations
before tax 16,080 15,984
------------------------------------------- --------- -----------
Income tax expense (747) (2,896)
------------------------------------------- --------- -----------
Profit from discontinued operations
after tax 15,333 13,088
------------------------------------------- --------- -----------
In accordance with IFRS 5, depreciation of property, plant and
equipment and amortisation of intangibles has not been charged on
the assets disposed of during the year. If the assets had continued
to be depreciated and amortised, the respective pre-tax charges for
the year would have been EUR3,526,000 and EUR720,000.
(b) The following tables summarise the consideration received,
the profit on disposal of discontinued operations and the net cash
flow arising on the disposal of these businesses:
Reconciliation of consideration received
to cash received
2016
EUR'000
Total consideration 407,500
Working capital and related adjustments (14,780)
Cash received on completion 392,720
Cash and cash equivalents disposed of (18,787)
Disposal related costs paid (8,481)
Net consideration received on completion 365,452
------------------------------------------ --------
2016
EUR'000
----------------------------------------------- ------------- ---------
Net consideration received on completion 365,452
----------------------------------------------- ------------- ---------
Assets and liabilities disposed of
Assets
Property, plant and equipment 84,966
Goodwill 14,296
Intangible assets 46,843
Deferred income tax assets 989
Inventories 112,360
Trade and other receivables 219,244
Total assets 478,698
Liabilities
Deferred income tax liabilities (343)
Trade and other payables (252,148)
Employee benefits (1,967)
Current income tax liability (633)
Total liabilities (255,091)
--------------------------------------------------- --------- ---------
Net identifiable assets and liabilities
disposed of (223,607)
----------------------------------------------- ------------- ---------
Recycling of foreign exchange loss previously
recognised in foreign currency translation
reserves (4,640)
Provision for taxation (5,112)
----------------------------------------------- ------------- ---------
Profit on disposal of discontinued operations
after tax 132,093
----------------------------------------------- ------------- ---------
(c) The Group has also treated the investment in Magir Limited
as a discontinued operation and asset held for sale in accordance
with IFRS 5 as the business is no longer a strategic asset
following our exit from the Pharma Wholesaling segment of the
market and given the decision by management to dispose of the
shareholding as it is non-core. The comparative Group Income
Statement, Group Statement of Comprehensive Income and Group Cash
Flow to 30 September 2015 have been restated to show the
discontinued operation separately from continuing operations.
The following table details the results of this discontinued
operation included in the Group Income Statement:
2016 2015
EUR'000 EUR'000
Share of joint ventures' profit after
tax 1,493 2,190
Operating profit 1,493 2,190
Impairment charge (16,961) -
-------------------------------------- -------- -------
Profit from discontinued operations
after tax (15,468) 2,190
-------------------------------------- -------- -------
The following table details the assets and liabilities
classified as held for sale in the Group Balance Sheet:
Carrying Carrying
value value
2016 2015
EUR'000 EUR'000
Assets
Property, plant and equipment - 84,867
Goodwill - 15,629
Intangible assets - 40,426
Investment in joint ventures -
and associates -
Deferred income tax assets - 527
Inventories - 117,155
Trade and other receivables - 215,021
Current income tax asset - 195
Assets held for sale - 473,820
--------------------------------- --------- ----------
Carrying Carrying
value value
2016 2015
EUR'000 EUR'000
Liabilities
Deferred income tax liabilities - (387)
Trade and other payables - (276,682)
Employee benefits - (3,264)
Current income tax liabilities - -
-------------------------------- --------- ------------
Liabilities held for sale - (280,333)
---------------------------------- --------- ------------
Net assets - 193,487
----------------------------------- --------- ------------
9. Earnings per ordinary share
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2016 2016 2016 2015 2015 2015
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Profit
attributable to
the owners of
the parent 61,314 131,958 193,272 39,595 15,278 54,873
Adjustment for
amortisation of
acquired
intangible
assets (net of
tax) 7,573 - 7,573 13,108 411 13,519
Adjustment for
transaction
costs (net of
tax) 1,911 - 1,911 1,116 3,817 4,933
Adjustment for
exceptional
items (net of
tax) - - - 11,198 1,146 12,344
Adjustment for
profit on
disposal (net of
tax) - (132,093) (132,093) - - -
Adjustment for
impairment of
asset held for
sale (net of
tax) - 16,961 16,961 - - -
Adjusted profit
attributable to
owners of the
parent 70,798(1) 16,826(2) 87,624 65,017 20,652 85,669
------------------ ----------------- ----------------- ---------- ------------------ ----------------- ---------
2016 2015
Number Number
of shares of shares
Weighted average number of shares 246,405,955 244,199,334
Number of dilutive shares under option 1,016,938 1,272,001
------------------------------------------------------------ ------------ ------------
Weighted average number of shares, including share options 247,422,893 245,471,335
------------------------------------------------------------ ------------ ------------
Continuing Discontinued Continuing Discontinued
Operations operations Total operations operations Total
2016 2016 2016 2015 2015 2015
Basic earnings per share - cent 24.88 53.56 78.44 16.21 6.26 22.47
Diluted earnings per share - cent 24.78 53.33 78.11 16.13 6.22 22.35
Adjusted basic earnings per share -
cent 28.73(1) 6.83(2) 35.56 26.63 8.45 35.08
Adjusted diluted earnings per share -
cent 28.61(1) 6.80(2) 35.41 26.49 8.41 34.90
Non-GAAP information
The Group reports certain financial measures that are not
required under International Financial Reporting Standards (IFRS)
which represent the generally accepted accounting principles (GAAP)
under which the Group reports. The Group believes that the
presentation of these non-GAAP measures provides useful
supplemental information which, when viewed in conjunction with our
IFRS financial information, provides investors with a more
meaningful understanding of the underlying financial and operating
performance of the Group and its divisions. These measures are also
used internally to evaluate the historical and planned future
performance of the Group's operations and to measure executive
management's performance based remuneration.
The group has treated the joint venture arrangement with Magir
Limited as a discontinued operation and asset held for sale in
accordance with IFRS 5. The comparative Group Income Statement,
Group Statement of Comprehensive Income and Group Cash Flow to 30
September 2015 have been restated to reflect this change and as
such the 2015 earnings per share calculations have been
adjusted.
(1) Adjusted profit attributable to owners of the parent from
continuing operations is stated before the amortisation of acquired
intangible assets and transaction costs.
(2) Adjusted profit attributable to owners of the parent from
discontinued operations is stated after deducting the profit on
disposal of the discontinued operations (EUR132.1m, net of tax),
and adding back the impairment of the investment in Magir Limited,
an asset held for sale (EUR17.0m, net of tax).
Treasury shares have been excluded from the weighted average
number of shares in issue used in the calculation of earnings per
share.
The average market value of the Company's shares for the
purposes of calculating the dilutive effect of share options was
based on quoted market prices for the year.
10. Property, plant and equipment
Land and Plant and Computer Assets under
buildings equipment Motor vehicles equipment construction Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 1 October 2015 72,817 86,990 995 20,456 10,017 191,275
Additions in year 7,240 9,036 133 5,764 6,395 28,568
Arising on
acquisitions 201 137 9 168 - 515
Disposals in year (172) (3,863) (128) (362) - (4,525)
Transfer to assets
held for sale - (1,163) - - - (1,163)
Transfer to
intangibles - - - (6,671) - (6,671)
Reclassifications 3,471 12,461 (64) 628 (16,496) -
Translation
adjustment (3,117) (1,708) (78) (1,699) 84 (6,518)
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 30 September
2016 80,440 101,890 867 18,284 - 201,481
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
Depreciation
At 1 October 2015 20,929 41,294 666 10,483 - 73,372
Depreciation
charge for the
year 4,451 9,444 56 4,081 - 18,032
Eliminated on
disposal (53) (3,634) (66) (316) - (4,069)
Transfer to assets
held for sale - (238) - - - (238)
Transfer to
intangibles - - - (5,140) - (5,140)
Reclassifications - 6 (25) 19 - -
Translation
adjustment (885) (1,225) (24) (980) - (3,114)
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 30 September
2016 24,442 45,647 607 8,147 - 78,843
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
Carrying amount
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 30 September
2016 55,998 56,243 260 10,137 - 122,638
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 30 September
2015 51,888 45,696 329 9,973 10,017 117,903
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
11. Movement in goodwill, intangible assets and investment in
joint ventures and associates
Investment in joint ventures and
Intangible associates
Goodwill assets
EUR'000 EUR'000 EUR'000
Balance at 1 October 2015 358,213 101,693 23,079
Investment in computer software - 9,835 -
Amortisation of acquired intangible
assets - (14,382) -
Amortisation of computer software - (2,013) -
Arising on acquisition 10,235 9,241 -
Impairment charge - (718) -
Transfer from property, plant and
equipment - 1,531 -
Share of joint ventures' profit after tax
* continuing - - 718
* discontinued - - 1,493
Transfer to assets held for sale - (1,679) (16,961)
Translation adjustment (23,927) (6,454) (205)
Balance at 30 September 2016 344,521 97,054 8,124
-------------------------------------------- ----------- ------------- ----------------------------------------
12. Other reserves
Share-based Capital
Cash flow payment Foreign Treasury redemption
hedge exchange shares reserve Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 October 2015 (4,357) 4,762 15,182 (5,760) 250 10,077
Effective portion of cash flow
hedges (5,742) - - - - (5,742)
Deferred tax on cash flow hedges 718 - - - - 718
Share-based payment expense - 1,966 - - - 1,966
Release from share-based payment
reserve - (2,734) - - - (2,734)
Gain on hedge of net investment in
foreign operations - - 2,262 - - 2,262
Translation adjustment
* Continuing operations - - (45,373) - - (45,373)
* Discontinued operations - - (7,109) - - (7,109)
Reclassification on loss of control - - 4,640 - - 4,640
Release of treasury shares on
vesting - (21) - 21 - -
Balance at 30 September 2016 (9,381) 3,973 (30,398) (5,739) 250 (41,295)
------------------------------------ ------------ ------------ ------------ ------------- ------------ ---------
Share-based Foreign Treasury Capital Total
Cash flow payment exchange shares redemption
hedge reserve
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 October 2014 (11,891) 5,964 (18,738) (5,758) 250 (30,173)
Effective portion of cash flow
hedges 8,610 - - - - 8,610
Deferred tax on cash flow hedges (1,076) - - - - (1,076)
Share-based payment expense - 1,778 - - - 1,778
Release from share-based payment
reserve - (2,982) - - - (2,982)
Loss on hedge of net investment in
foreign operations - - (15,636) - - (15,636)
Translation adjustment
* Continuing operations - - 45,594 - - 45,594
* Discontinued operations - - 4,127 - - 4,127
Reclassification on loss of control
of subsidiary undertakings - - (165) - - (165)
Release of treasury shares on
vesting - 2 - (2) - -
------------------------------------ ------------ ------------ ------------ ------------- ------------ ---------
Balance at 30 September 2015 (4,357) 4,762 15,182 (5,760) 250 10,077
------------------------------------ ------------ ------------ ------------ ------------- ------------ ---------
13. Net cash/(debt)
As at As at
30 Sept 30 Sept
2016 2015
EUR'000 EUR'000
Current assets
Cash at bank and short term deposits 384,131 214,078
Derivative financial instruments 7,382 4,750
Non-current assets
Derivative financial instruments 11,814 22,048
Current liabilities
Interest bearing loans and borrowings (57,991) (20,605)
Finance leases (142) (206)
Non-current liabilities
Interest bearing loans and borrowings (216,915) (415,824)
Finance leases (8) (16)
Net cash/(debt) 128,271 (195,775)
---------------------------------------- ---------- ----------
14. Provisions
Deferred contingent
consideration Onerous leases Restructuring and other
costs Total
EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 October 2015 22,029 372 3,790 26,191
Charge/(release) to income
statement 318 - (1,238) (920)
Arising on acquisition 7,565 - - 7,565
Utilised during the year (15,601) (50) (2,258) (17,909)
Unwinding of discount 1,042 - - 1,042
Translation adjustment (1,538) - (36) (1,574)
---------------------------- --------------------------- ----------------- --------------------------- ---------
Balance at 30 September
2016 13,815 322 258 14,395
---------------------------- --------------------------- ----------------- --------------------------- ---------
Non-current 5,451
Current 8,944
Total 14,395
---------------------------- --------------------------- ----------------- --------------------------- ---------
15. Acquisition of subsidiary undertakings
On 18 April 2016 the Group acquired Pegasus Public Relations
Limited, a healthcare communications company based in the United
Kingdom. The Group did not complete any acquisitions in the prior
year. The fair value of the assets and liabilities acquired in the
year ended 30 September 2016 (excluding net cash acquired) were as
follows:
2016
Total
EUR'000
Assets
Non-current assets
Property, plant and
equipment 515
Intangible assets -
other intangible assets 9,241
------------------------------- --------
Total non-current assets 9,756
------------------------------- --------
Current assets
Trade and other receivables 5,479
------------------------------- --------
Total current assets 5,479
------------------------------- --------
Non-current liabilities
Deferred income tax
liabilities (1,571)
------------------------------- --------
Total non-current liabilities (1,571)
------------------------------- --------
Current liabilities
Trade and other payables (3,122)
Current income tax
liabilities (476)
------------------------------- --------
Total current liabilities (3,598)
------------------------------- --------
Identifiable net assets
acquired 10,066
Intangible assets -
goodwill 10,235
------------------------------- --------
Total consideration
(enterprise value) 20,301
------------------------------- --------
Satisfied by:
Cash 14,849
Net cash acquired (2,113)
Net cash outflow 12,736
Deferred contingent
acquisition consideration 7,565
------------------------------- --------
Total consideration 20,301
------------------------------- --------
Goodwill is attributable to the future economic benefits arising
from assets which are not capable of being individually identified
and separately recognised. The significant factors giving rise to
the goodwill include the value of the workforce and management
teams within the businesses acquired and the enhancement of the
competitive position of the Group in the marketplace and the
strategic premium paid by UDG Healthcare plc to create the combined
Group.
The intangible assets arising on the acquisitions are related to
the trade names and customer relationships.
The contractual assets are not materially different from the
disclosed trade and other receivables.
The total transaction related costs for completed and aborted
acquisitions amounts to EUR1,993,000 (2015: EUR1,225,000). These
are presented separately in the Group income statement.
The fair value of contingent consideration recognised at the
date of acquisition is calculated by discounting the expected
future payment to present value at the acquisition date. In
general, for contingent consideration to become payable,
pre-defined profit thresholds must be exceeded. On an undiscounted
basis, the future payments for which the Group may be liable in
respect of acquisitions in the current year ranges from nil to
EUR7,863,000 (2015: nil).
16. Employee benefits
Employee Employee Employee
benefit benefit benefit
asset liability total
EUR'000 EUR'000 EUR'000
Employee benefit asset/(liability) at 1 October 2015 13,067 (21,567) (8,500)
Current service cost (1,968) (235) (2,203)
Curtailment gain - 328 328
Settlement gain - 3,663 3,663
Interest costs 354 (423) (69)
Contributions paid - 6,187 6,187
Remeasurement gain/(loss) 984 (8,395) (7,411)
Disposal of liabilities(1) - 1,967 1,967
Translation adjustment 52 160 212
----------------------------------------------------------- --------- ---------- ---------
Employee benefit asset/(liability) at 30 September 2016 12,489 (18,315) (5,826)
----------------------------------------------------------- --------- ---------- ---------
(1) This relates to the United Drug Sangers' scheme which was
disposed of on 1 April 2016.
Employee Employee Employee
benefit benefit benefit
asset liability total
EUR'000 EUR'000 EUR'000
Employee benefit asset/(liability) at 1 October 2014 13,553 (19,780) (6,227)
Current service cost (1,771) (681) (2,452)
Interest on scheme obligations 391 (589) (198)
Contributions paid - 2,555 2,555
Remeasurement gain/(loss) (738) (2,886) (3,624)
Translation adjustment 1,632 (186) 1,446
----------------------------------------------------------- --------- ---------- ---------
Employee benefit asset/(liability) at 30 September 2015 13,067 (21,567) (8,500)
----------------------------------------------------------- --------- ---------- ---------
Analysed as:
Assets and liabilities associated with continuing operations 13,067 (18,303) (5,236)
Liabilities held for sale(1) - (3,264) (3,264)
-------------------------------------------------------------- ------- --------- --------
13,067 (21,567) (8,500)
-------------------------------------------------------------- ------- --------- --------
As set out in the consolidated financial statements for the year
ended 30 September 2015, the Group operates a number of defined
benefit pension schemes which are funded by the payments of
contributions to separately administered trust funds. The employee
benefit asset relates to the United States pension scheme and the
employee benefit liability relates to the Republic of Ireland (ROI)
and Northern Ireland (NI) pension schemes. The remeasurement loss
during the current year primarily relates to a decrease in the
discount rates in respect of the Republic of Ireland schemes. The
change in the discount rate within the schemes is reflective of
changes in bond yields during the year. The United States scheme
has an actuarial gain in the current year arising from a higher
than expected return on plan assets. Accrual of pension benefits
within the ROI schemes ceased with effect from 31 December
2015.
On 1 April 2016 the Group completed the disposal of United Drug
Supply Chain Services, United Drug Sangers, TCP Group and MASTA.
Following completion of the disposal, the future funding
obligations in respect of the NI scheme have ceased to be the
responsibility of the Group. Responsibility for the funding
requirements in respect of the ROI schemes remain within the
Group.
During the current year, a general offer was made to the current
members of the ROI schemes to transfer their accrued benefits from
the schemes in exchange for a fixed monetary amount. Acceptance of
the offer was at the discretion of individual members and resulted
in a settlement gain of EUR3,663,000. Related professional fees
amounted to EUR238,000, resulting in a net income statement gain of
EUR3,425,000. EUR2,404,000 of this gain related to discontinued
operations.
The principal assumptions and associated changes are as
follows:
Republic of Ireland Schemes United States Northern Ireland
Scheme Scheme(1)
As at As at As at As at As at As at
30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept
2016 2015 2016 2015 2016 2015
Rate of increase in salaries N/A 2.75% 2.75-4.00% 2.75-4.00% N/A 0.00%
Rate of increase in pensions 0-1.75% 0-1.75% 0.00% 0.00% N/A 1.80-3.30%
Inflation rate 1.50% 1.75% 2.75% 2.75% N/A 2.50%
Discount rate 1.25% 2.70% 3.30% 4.00% N/A 4.00%
(1) This scheme relates to United Drug Sangers which was
disposed of on 1 April 2016.
17. Financial instruments
The fair values of financial assets and financial liabilities,
together with the carrying amounts in the condensed consolidated
balance sheet at 30 September 2016, are as follows:
Carrying Fair
value value
EUR'000 EUR'000
Financial assets
Trade and other receivables 209,472 209,472
Derivative financial
instruments 19,196 19,196
Cash and cash equivalents 384,131 384,131
------------------------------ --------- --------
612,799 612,799
------------------------------ --------- --------
Financial liabilities
Trade and other payables 183,190 183,190
Interest bearing
loans and borrowings 274,906 277,983
Finance lease liabilities 150 150
Deferred contingent
consideration 13,815 13,815
472,061 475,138
------------------------------ --------- --------
Cash and cash equivalents
For cash and cash equivalents, the nominal amount is deemed to
reflect fair value.
Interest-bearing loans and borrowings
The fair value of interest-bearing loans and borrowings is based
on the fair value of the expected future principal and interest
cash flows discounted at interest rates effective at the balance
sheet date and adjusted for movements in credit spreads.
Finance lease liabilities
For finance lease liabilities, the fair value is the present
value of future cash flows discounted at current market rates.
Valuation techniques and significant unobservable inputs
Fair value hierarchy of assets and liabilities measured at fair
value
The Group has adopted the following fair value hierarchy in
relation to its financial instruments that are carried in the
balance sheet at fair value as at the year end:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs, other than quoted prices included within
Level 1, that are observable for the asset or liability either
directly (as prices) or indirectly (derived from prices); and
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
The following table sets out the fair value of all financial
assets and liabilities that are measured at fair value:
Level
Total 1 Level 2 Level 3
EUR'000 EUR'000 EUR'000 EUR'000
Assets measured
at fair value
Designated as hedging
instruments
Cross currency interest
rate swaps 19,196 - 19,196 -
--------------------------- -------- --------- --------- ---------
19,196 - 19,196 -
------------------------ -------- --------- --------- ---------
Liabilities measured
at fair value
At fair value through
profit or loss
Deferred contingent
consideration 13,815 - - 13,815
13,815 - - 13,815
------------------------ -------- --------- --------- ---------
Summary of derivatives:
Amount of Related
financial amounts not Amount of Related
assets/liabilities offset in 30 Sept financial amounts not 30 Sept
as presented in the balance 2016 assets/liabilities offset in 2015
the balance sheet sheet Net as presented in the balance Net
the balance sheet sheet
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Derivative
financial
assets 19,196 - 19,196 26,798 - 26,798
Derivative
financial
liabilities - - - - - -
-------------- -------------------- ------------- ------------- -------------------- ------------- -------------
All derivatives entered into by the Group are included in Level
2 and consist of cross currency interest rates swaps. The fair
values of cross currency interest rate swaps are calculated as the
present value of the estimated future cash flows based on the terms
and maturity of each contract and using forward currency rates and
market interest rates as applicable for a similar instrument at the
measurement date. Fair values reflect the credit risk of the
instrument and include adjustments to take account of the credit
risk of the Group entity and counterparty where appropriate.
The fair values of the financial assets and liabilities
disclosed in the above tables have been determined using the
methods and assumptions set out below.
Trade and other receivables/payables
For receivables and payables, the carrying value less impairment
provision, is deemed to reflect fair value where appropriate.
Deferred contingent consideration
Details of movements in the year are included in note 14. The
deferred contingent consideration liability arose from acquisitions
completed by the Group. The fair value is determined considering
the expected payment, discounted to present value using a risk
adjusted discount rate. The expected payment is determined
separately in respect of each individual earnout agreement taking
into consideration the expected level of profitability of each
acquisition. The provision for deferred consideration is in respect
of acquisitions completed during 2012, 2014 and 2016.
The significant unobservable inputs have not changed since the
last annual report and are as follows:
-- forecasted average annual net revenue growth rate 6%;
-- forecast average EBIT growth rate 10%; and
-- risk adjusted discount rate 6.5% - 8.2%.
Inter-relationship between significant unobservable inputs and
fair value measurement:
The estimated fair value would increase/(decrease) if:
-- the annual net revenue growth was higher/(lower);
-- the EBIT growth rate was higher/(lower); and
-- the risk adjusted discount rate was lower/(higher).
For the fair value of deferred contingent consideration, a
reasonably possible change to one of the significant unobservable
inputs at 30 September 2016, holding the other inputs constant,
would have the following effects:
Increase Decrease
EUR'000 EUR'000
------------------------------- --------- ---------
Effect of change in assumption
on income statements
Annual EBIT growth rate
(1% movement) - -
Annual net revenue growth
rate (1% movement) - -
Risk-adjusted discount
rate (1% movement) 97 (101)
---------------------------------- --------- ---------
18. Dividends
The Board has proposed a final dividend of 8.50 cent per share
which gives a total dividend of 11.55 cent for 2016. This dividend
has not been provided for in the balance sheet at 30 September 2016
as there was no present obligation to pay the dividend at year end.
During the financial year, the final dividend for 2015 (8.10 cent
per share) and the interim dividend for 2016 (3.05 cent per share)
were paid giving rise to a reduction in shareholders' funds of
EUR27,386,000.
19. Foreign currency
The principal exchange rates used in translating sterling and
dollar balance sheets and income statements were as follows:
2016 2015
EUR1=StgGBP EUR1=StgGBP
Balance sheet (closing rate) 0.8610 0.7385
Income statement (average rate) 0.7826 0.7428
EUR1=US$ EUR1=US$
Balance sheet (closing rate) 1.1161 1.1203
Income statement (average rate) 1.1109 1.1482
20. Related parties .
The Group trades in the normal course of business with its joint
venture undertakings. The aggregate value of these transactions is
not material in the context of the Group's financial results.
Magir Limited, the Group's joint venture investment, has been
classified as an asset held for sale at 30 September 2016. The
Group has provided a guarantee to Magir's bankers for an amount of
StgGBP10,750,000 and a loan, gross of interest, of
StgGBP10,639,000.
IAS 24 Related Party Disclosures requires the disclosure of
compensation paid to the Group's key management personnel. Key
management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group. UDG Healthcare classifies directors, the
Company Secretary and members of its executive team as key
management personnel. The senior executive team is the body of
senior executives that formulates business strategy along with the
directors, follows through on the implementation of that strategy
and directs and controls the activities of the Group on a day to
day basis.
Key management personnel receive compensation in the form of
short-term employee benefits, post-employment benefits and equity
compensation benefits. Key management personnel received total
compensation of EUR10,093,000 for the year ended 30 September 2016
(2015: EUR10,658,000).
21. Capital commitments
Capital expenditure authorised but not contracted for amounted
to EUR26,582,000 (2015: EUR29,701,000) at the balance sheet date.
This primarily relates to the capacity expansion in the Group's US
packaging facility and the Group's investment in Future Fit IT
initiatives.
22. Events after the balance sheet date
On 21 October 2016 the Group acquired STEM Marketing Limited, a
leading global provider of commercial, marketing and medical audits
to pharmaceutical companies. The acquisition consideration of
StgGBP84 million was comprised of an upfront payment of StgGBP50
million with StgGBP5 million in UDG Healthcare plc shares. A
potential earn out of StgGBP24 million cash with StgGBP5 million in
UDG Healthcare plc shares is payable for performance over three
years. The initial cash payment was financed from the Group's
internal resources.
Based on initial assessment, the fair value of the net assets
and liabilities acquired are estimated to be EUR6.3 million
(StgGBP5.4 million) and consist primarily of property, plant and
equipment, trade and other receivables, cash, and trade and other
payables.
23. Going concern
The directors believe that the Company and the Group as a whole
have adequate resources to continue in operational existence for
the foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the preliminary announcement.
24. Board approval
This announcement was approved by the Board of Directors of UDG
Healthcare plc on 23 November 2016.
Additional Information
Alternative Performance Measures (GAAP and non-GAAP)
The Group reports certain financial measures that are not
required under International Financial Reporting Standards (IFRS)
which represent the generally accepted accounting principles (GAAP)
under which the Group reports. The Group believes that the
presentation of these non-GAAP measures provides useful
supplemental information which, when viewed in conjunction with
IFRS financial information, provides investors with a more
meaningful understanding of the underlying financial and operating
performance of the Group and its divisions. These measures are also
used internally to evaluate the historical and planned future
performance of the Group's operations and to measure executive
management's performance based remuneration.
None of the non-GAAP measures should be considered as an
alternative to financial measures derived in accordance with GAAP.
The non-GAAP measures can have limitations as analytical tools and
should not be considered in isolation or as a substitute for an
analysis of results as reported under GAAP.
The principal non-GAAP measures used by the Group, together with
reconciliations where the non-GAAP measures are not readily
identifiable from the financial statements, are as follows:
Net revenue (continuing)
Definition
This comprises of gross revenue as reported in the Group Income
Statement, adjusted for revenue associated with pass-through costs
for which the Group does not earn a margin.
2016 2015
Calculation EUR'000 EUR'000
------------------------- --------- ---------
Revenue (continuing) 943,080 919,274
------------------------- --------- ---------
Pass through revenue (114,969) (125,910)
------------------------- --------- ---------
Net revenue (continuing) 828,111 792,364
------------------------- --------- ---------
Adjusted operating profit (continuing)
Definition
This comprises of operating profit as reported in the Group
Income Statement before amortisation of acquired intangible assets,
transaction costs and exceptional items.
2016 2015
Calculation EUR'000 EUR'000
--------------------------------------- -------- --------
Operating profit (continuing) 87,838 66,683
--------------------------------------- -------- --------
Transaction costs (continuing) 1,993 1,225
======================================= ======== ========
Amortisation of acquired intangible
assets (continuing) 14,382 15,131
======================================= ======== ========
Exceptional items (continuing) - 13,294
--------------------------------------- -------- --------
Adjusted operating profit (continuing) 104,213 96,333
--------------------------------------- -------- --------
Adjusted operating profit (discontinued)
Definition
This comprises of operating profit as reported in results from
discontinued operations before amortisation of acquired intangible
assets, transaction costs and exceptional items.
2016 2015
Calculation EUR'000 EUR'000
----------------------------------------- -------- --------
Operating profit (discontinued) 17,624 19,625
----------------------------------------- -------- --------
Transaction costs (discontinued) - 3,817
----------------------------------------- -------- --------
Amortisation of acquired intangible
assets (discontinued) - 477
----------------------------------------- -------- --------
Adjusted operating profit (discontinued) 17,624 23,919
----------------------------------------- -------- --------
Adjusted profit before tax (continuing)
Definition
This comprises profit before tax as reported in the Group Income
Statement before amortisation of acquired intangible assets,
transaction costs and exceptional items.
2016 2015
Calculation EUR'000 EUR'000
---------------------------------------- -------- --------
Profit before tax (continuing) 75,202 53,624
---------------------------------------- -------- --------
Transaction costs (continuing) 1,993 1,225
---------------------------------------- -------- --------
Amortisation of acquired intangible
assets (continuing) 14,382 15,131
---------------------------------------- -------- --------
Exceptional items (continuing) - 13,294
---------------------------------------- -------- --------
Adjusted profit before tax (continuing) 91,577 83,274
---------------------------------------- -------- --------
Adjusted profit before tax (discontinued)
Definition
This comprises profit after tax as reported in the Group Income
Statement before amortisation of acquired intangible assets,
transaction costs and exceptional items.
2016 2015
Calculation EUR'000 EUR'000
------------------------------------------ --------- --------
Profit after tax (discontinued) 131,958 15,278
------------------------------------------ --------- --------
Profit on disposal of discontinued
operations (132,093) -
------------------------------------------ --------- --------
Impairment of assets held for sale 16,961 -
------------------------------------------ --------- --------
Transaction costs (discontinued) - 3,817
------------------------------------------ --------- --------
Amortisation of acquired intangibles
(discontinued) - 477
------------------------------------------ --------- --------
Exceptional items (discontinued) - 1,335
------------------------------------------ --------- --------
Tax on discontinued operations 747 2,896
------------------------------------------ --------- --------
Adjusted profit before tax (discontinued) 17,573 23,803
------------------------------------------ --------- --------
Adjusted operating margin (continuing)
Definition
Measures the adjusted operating profit as a percentage of
revenue.
2016 2015
Calculation EUR'000 EUR'000
--------------------------------------- -------- --------
Adjusted operating profit (continuing) 104,213 96,333
--------------------------------------- -------- --------
Revenue (continuing) 943,080 919,274
--------------------------------------- -------- --------
Adjusted operating margin (continuing) 11.1% 10.5%
--------------------------------------- -------- --------
Net operating margin (continuing)
Definition
Measures the adjusted operating profit as a percentage of net
revenue.
2016 2015
Calculation EUR'000 EUR'000
--------------------------------------- -------- --------
Adjusted operating profit (continuing) 104,213 96,333
--------------------------------------- -------- --------
Net revenue (continuing) 828,111 792,364
--------------------------------------- -------- --------
Net operating margin (continuing) 12.6% 12.2%
--------------------------------------- -------- --------
Adjusted earnings per share
Definition
The Group defines adjusted earnings per share as basic earnings
per share adjusted for the impact of amortisation of acquired
intangible assets, transaction costs and exceptional items.
2016 2015
Calculation EUR'000 EUR'000
------------------------------------------- -------- --------
Adjusted earnings per share (continuing) 28.61 26.49
------------------------------------------- -------- --------
Adjusted earnings per share (discontinued) 6.80 8.41
------------------------------------------- -------- --------
Adjusted earnings per share 35.41 34.90
------------------------------------------- -------- --------
Net Interest
Definition
The Group defines net interest as the net total of finance costs
and finance income as presented in the Group Income Statement.
2016 2015
Calculation EUR'000 EUR'000
---------------------------- -------- --------
Finance costs (17,417) (42,569)
---------------------------- -------- --------
Finance income 4,781 29,510
---------------------------- -------- --------
Net interest (continuing) (12,636) (13,059)
---------------------------- -------- --------
Net interest (discontinued) (51) (116)
---------------------------- -------- --------
Net interest (12,687) (13,175)
---------------------------- -------- --------
Adjusted Net Interest
Definition
The Group defines adjusted net interest as net interest adjusted
for the impact of the unwind of discount on provisions and the net
finance cost on pension scheme obligations.
2016 2015
Calculation EUR'000 EUR'000
----------------------------------- -------- --------
Net interest 12,687 13,175
----------------------------------- -------- --------
Unwind of discount on provision (1,042) (823)
----------------------------------- -------- --------
Net finance cost on pension scheme
obligations (continuing) (11) (73)
----------------------------------- -------- --------
Net finance cost on pension scheme
obligations (discontinued) (58) (125)
----------------------------------- -------- --------
Adjusted net interest 11,576 12,154
----------------------------------- -------- --------
EBITDA (continuing)
Definition
EBITDA represents the continuing earnings before net interest,
tax, depreciation, amortisation of intangible assets, exceptional
items and transaction costs.
2016 2015
Calculation EUR'000 EUR'000
---------------------------------- -------- --------
Adjusted operating profit 104,213 96,333
---------------------------------- -------- --------
Depreciation 18,032 16,637
---------------------------------- -------- --------
Amortisation of computer software 2,013 1,877
---------------------------------- -------- --------
EBITDA (continuing) 124,258 114,847
---------------------------------- -------- --------
EBITDA (discontinued)
Definition
EBITDA represents the discontinued earnings before net interest,
tax, depreciation, amortisation of intangible assets, exceptional
items and transaction costs.
2016 2015
Calculation EUR'000 EUR'000
----------------------------------------- -------- --------
Adjusted operating profit (discontinued) 17,624 23,919
----------------------------------------- -------- --------
Depreciation - 7,285
----------------------------------------- -------- --------
Amortisation of computer software - 1,324
----------------------------------------- -------- --------
EBITDA (discontinued) 17,624 32,528
----------------------------------------- -------- --------
Annualised EBITDA
Definition
Annualised EBITDA is continuing and discontinued EBITDA adjusted
for the share of joint venture profits, transaction costs,
profit/(loss) on disposal of fixed assets, the annualisation of the
EBITDA of companies acquired during the year and the EBITDA of
completed disposals.
2016 2015
Calculation EUR'000 EUR'000
---------------------------------- ------------------ --------
EBITDA (continuing) 124,258 114,847
---------------------------------- ------------------ --------
EBITDA (discontinued) 17,624 32,528
---------------------------------- ------------------ --------
Transaction costs (continuing) (1,993) (1,225)
---------------------------------- ------------------ --------
Transaction costs (discontinued) - (3,817)
---------------------------------- ------------------ --------
JV profit share (continuing) (718) (292)
---------------------------------- ------------------ --------
JV profit share (discontinued) (1,493) (2,190)
---------------------------------- ------------------ --------
Loss on disposal of fixed assets 53 57
---------------------------------- ------------------ --------
EBITDA of completed disposals (16,131) (1,600)
---------------------------------- ------------------ --------
Annualised EBITDA of acquisitions 1,562 -
---------------------------------- ------------------ --------
Annualised EBITDA 123,162 138,308
---------------------------------- ------------------ --------
Interest cover
Definition
The interest cover ratio measures the Group's ability to pay
interest charges on debt from cash flow.
2016 2015
Calculation EUR'000 EUR'000
------------------------------ -------- --------
Annualised EBITDA 123,162 138,308
------------------------------ -------- --------
Adjusted net interest 11,576 12,154
------------------------------ -------- --------
EBITDA interest cover (times) 10.6 11.4
------------------------------ -------- --------
Net cash/(debt)
Definition
Net cash/(debt) represents the net total of current and
non-current borrowings, current and non-current derivative
financial instruments and cash and cash equivalents as presented in
the Group Balance Sheet.
2016 2015
Calculation EUR'000 EUR'000
-------------------------------------- --------------- ---------
Non-current assets
-------------------------------------- --------------- ---------
Derivative financial instruments 11,814 22,048
-------------------------------------- --------------- ---------
Current assets
-------------------------------------- --------------- ---------
Derivative financial instruments 7,382 4,750
-------------------------------------- --------------- ---------
Cash and cash equivalents 384,131 214,078
-------------------------------------- --------------- ---------
Current liabilities
-------------------------------------- --------------- ---------
Interest bearing loans and borrowings (58,133) (20,811)
-------------------------------------- --------------- ---------
Non-current liabilities
-------------------------------------- --------------- ---------
Interest bearing loans and borrowings (216,923) (415,840)
-------------------------------------- --------------- ---------
Net cash/(debt) 128,271 (195,775)
-------------------------------------- --------------- ---------
Net cash/(debt) to EBITDA
Definition
Net debt to EBITDA ratio measures the Group's ability to pay its
debt.
2016 2015
Calculation EUR'000 EUR'000
---------------------------------- -------- ---------
Annualised EBITDA 123,162 138,308
---------------------------------- -------- ---------
Net cash/(debt) 128,271 (195,775)
---------------------------------- -------- ---------
Net cash/(debt) to EBITDA (times) 1.04 (1.42)
---------------------------------- -------- ---------
Return on capital employed (ROCE)
Definition
ROCE is the continuing adjusted operating profit expressed as a
percentage of the Group's net assets employed. Net assets employed
is the average of the opening and closing net assets in the period
excluding net cash/(debt) adjusted for the historical amortisation
of acquired intangible assets and restructuring charges.
2016 2015
Calculation EUR'000 EUR'000
--------------------------------------- -------------- ---------
Net assets 722,953 608,744
--------------------------------------- -------------- ---------
Less discontinued net assets - (193,487)
--------------------------------------- -------------- ---------
Less investment in Magir Limited
joint venture - (16,391)
--------------------------------------- -------------- ---------
Net (cash)/debt (128,271) 195,775
--------------------------------------- -------------- ---------
Assets before net (cash)/debt 594,682 594,641
--------------------------------------- -------------- ---------
Historical intangible amortisation 131,231 116,848
--------------------------------------- -------------- ---------
Historical restructuring costs 40,650 40,650
--------------------------------------- -------------- ---------
Total capital employed 766,563 752,139
--------------------------------------- -------------- ---------
Average total capital employed 759,351 713,395
--------------------------------------- -------------- ---------
Adjusted operating profit (continuing) 104,213 96,333
--------------------------------------- -------------- ---------
Return on capital employed 13.7% 13.5%
--------------------------------------- -------------- ---------
Effective tax rate (continuing)
Definition
The Group continuing effective tax rate expresses the income tax
expense adjusted for the tax impact of exceptional items,
transaction costs and the amortisation of acquired intangible
assets as a percentage of adjusted profit before tax for continuing
operations.
2016 2015
Calculation EUR'000 EUR'000
-------------------------------------------------------------------------------------------------- -------- --------
Adjusted profit before tax (continuing) 91,577 83,274
-------------------------------------------------------------------------------------------------- -------- --------
Tax charge (continuing) 13,888 16,125
========
Tax relief with respect to transaction costs (continuing) 82 109
-------------------------------------------------------------------------------------------------- -------- --------
Deferred tax credit with respect to acquired intangible
amortisation (continuing) 6,809 2,023
-------------------------------------------------------------------------------------------------- -------- --------
Income tax expense before exceptional, transaction costs and deferred tax attaching to
amortisation
of acquired intangible assets 20,779 18,257
Effective tax rate 22.7% 21.9%
-------------------------------------------------------------------------------------------------- -------- --------
Working capital (continuing)
Definition
Working capital represents the net total of inventories, trade
and other receivables and trade and other payables as presented in
the Group Balance Sheet.
2016 2015
Calculation EUR'000 EUR'000
----------------------------- --------- ---------
Inventories 49,226 55,017
----------------------------- --------- ---------
Trade & other receivables 209,472 205,248
----------------------------- --------- ---------
Trade and other payables (183,190) (191,758)
----------------------------- --------- ---------
Working capital (continuing) 75,508 68,507
----------------------------- --------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UOANRNKAAUAA
(END) Dow Jones Newswires
November 24, 2016 02:00 ET (07:00 GMT)
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