We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Udg Healthcare Public Limited Company | LSE:UDG | London | Ordinary Share | IE0033024807 | ORD EUR0.05 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,079.00 | 1,078.00 | 1,079.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
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
Hot Features
Premium
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)
1 Year Udg Healthcare Public Chart |
1 Month Udg Healthcare Public Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
