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UDG Healthcare Public Limited Co. Preliminary results

28/11/2017 7:00am

UK Regulatory (RNS & others)


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TIDMUDG

RNS Number : 6507X

UDG Healthcare Public Limited Co.

28 November 2017

UDG Healthcare plc

Preliminary Announcement of Results

Year ended 30 September 2017

Strong full year performance, driven by organic growth and further acquisitions

28 November 2017: UDG Healthcare plc ("UDG Healthcare" or "Group"), a leading international healthcare services provider, announces its preliminary results for the year ended 30 September 2017, which reflects another year of strong growth and strategic progress for the Group.

Financial Results

 
 
                                                                                              Constant 
                                                                                              currency 
                                                                              Increase/      increase/ 
                                                                             (decrease)     (decrease) 
                                    IFRS     Adjustments(1)     Adjusted        on 2016        on 2016 
                                   based 
                                     $'m                $'m          $'m              %              % 
 
 Continuing operations 
 Revenue                         1,219.8                  -      1,219.8             13             17 
 Net revenue(2)                  1,028.5                  -      1,028.5             12             16 
 Operating profit                  103.2               26.1        129.3             12             17 
 Profit before tax                  92.8               26.1        118.9             17             23 
 Diluted earnings 
  per share (EPS) (cent)           28.83               8.29        37.12             17             23 
 
   Discontinued operations(3) 
 Diluted earnings 
  per share (cent)                     -                  -            -          (100)          (100) 
 
 Total diluted earnings 
  per share (cent)                 28.83               8.29        37.12            (5)            (1) 
 
 Dividend per share 
  (cent)                           13.30                  -        13.30              7              7 
------------------------------  --------  -----------------  -----------  -------------  ------------- 
 
 
                                    2017               2016 
 
 Net (debt)/cash ($'m)            (53.3)              143.2 
 Net (debt)/cash/annualised 
  EBITDA (times)                  (0.32)               1.05 
------------------------------  --------  -----------------  -----------  -------------  --------------- 
 
 

Non-IFRS information

The Group reports certain financial measurements 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-IFRS measurements 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 measurements 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 measurements are explained on pages 34-37.

(1) Adjusted operating profit, profit before tax and diluted EPS are stated before the amortisation of acquired intangible assets ($22.1m, pre-tax) and transaction costs ($4.0m, pre-tax).

(2) Net revenue represents gross revenue adjusted for revenue associated with pass-through costs, for which the Group does not earn a margin.

(3) The Group has classified its joint venture arrangement with Magir Limited as a discontinued operation and an asset held for sale. The discontinued operations in 2016 also included United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA. The Group's disposal of these operations was completed on 1 April 2016.

Financial highlights (Continuing Group)

-- Adjusted diluted earnings per share(1) (EPS) from continuing operations increased by 17% (23% on a constant currency basis).

   --     Net revenue growth of 12% (16% on a constant currency basis) to $1,028.5 million. 

-- Adjusted operating profit(1) growth of 12% (17% on a constant currency basis) to $129.3 million. Adjusted net operating margin(3) stable at 12.6%.

   --     Adjusted profit before tax(1) up 17% (23% on a constant currency basis) driven by: 

o Underlying growth of 13% including the benefit of lower interest charges

o Acquisition growth of 10%

o Offset by adverse foreign exchange movements of 6%.

-- Proposed 7.5% increase in final dividend to $9.72c per share, yielding a full year dividend increase of 7% to $13.3c per share.

   --     Net debt of $53.3 million at 30 September 2017 (0.32x net debt to EBITDA). 

Strategic & operating highlights

-- Completed six acquisitions with a total capital commitment in excess of $270m, developing the Group's market leading positions and expanding its service offering.

-- Ashfield's operating profit(1) increased by 16% driven by a combination of underlying and acquisition growth (underlying growth(2) of

5% after a 3% additional Future Fit operating cost impact). Good performance by all acquired businesses since acquisition, with particularly strong growth from STEM Healthcare.

-- Significant progress enhancing the Ashfield service offering across advisory, communications, commercial and clinical services.

-- Sharp's operating profit(1) increased by 8% (underlying growth(2) of 11%), driven by Sharp Europe moving into profit and continued growth in Sharp US.

-- Continued development of the Sharp offering through investments in new facilities, across both the commercial and clinical packaging businesses in both the US and Europe.

-- Aquilant's underlying operating profit(2) increased by 4%, with reported performance negatively impacted by adverse currency translation movements.

-- Further progress on Future Fit investments in scalable infrastructure with the launch of Workday (Group HR system) and commencement of the implementation of Oracle Fusion (Ashfield finance system) to support continued sustainable growth.

-- Alan Ralph, UDG Healthcare's CFO, has signalled his intention to retire from his role by the end of 2018. A comprehensive process is underway to appoint a suitable successor.

Chief Executive's comment

Commenting on the performance, Chief Executive Officer, Brendan McAtamney said:

"2017 was another year of strong growth at UDG Healthcare, with adjusted earnings per share increasing by 17% (23% on a constant currency basis). All our divisions delivered good underlying profit growth, supplemented by the benefit of acquisitions.

We continued to transform UDG Healthcare, committing more than $270 million to six transactions during the year. These acquisitions enhance and broaden the range of capabilities we offer our healthcare clients. We are well positioned to continue to deliver organic growth and our strong balance sheet will enable us to execute further strategic acquisition opportunities as they arise.

UDG Healthcare's value proposition to our clients continues to expand and the Group also continues to benefit from the increasing trend in the healthcare industry to outsource specialist and non-core activities on an international basis."

(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.

Group development and outlook

Corporate development activity

In line with the Group's strategy of expanding into higher growth and higher margin areas, 2017 saw the Group commit more than $270 million to six acquisitions. The Group has now redeployed over two thirds of the net proceeds from the 2016 sale of the United Drug supply chain business to McKesson.

These acquisitions have a strong strategic fit with the Group's existing businesses and have added further capabilities for the Group's healthcare clients. All have performed well since acquisition and are:

-- STEM Healthcare, a leading global provider of commercial, marketing and medical audits, completed October 2016;

   --      A pharmaceutical-grade packaging facility in Bethlehem, PA, completed April 2017; 
   --      Sellxpert, a German and Swiss contract sales outsourcing business, completed July 2017; 
   --      Vynamic, a US-based healthcare management consultancy, completed July 2017; 

-- Cambridge BioMarketing, a US-based communications agency focused on orphan and rare diseases, completed July 2017;

-- MicroMass Communications, a US-based communications agency specialising in behavioural change, completed September 2017.

At year end, the Group's net debt was $53.3m (0.32x net debt to EBITDA), leaving it well placed to execute further strategic acquisition opportunities as they arise.

Board and Management changes

After almost 20 years with the Group, UDG Healthcare Chief Financial Officer, Alan Ralph, has informed the Board that he intends to retire from his role by the end of 2018. Chief Executive Officer, Brendan McAtamney, commented "Alan has made a substantial contribution to the evolution of UDG Healthcare, particularly in his current role as Chief Financial Officer. Over the years, Alan has held many roles within the Group, including Managing Director of the Supply Chain Division. At all times, Alan has been a model professional and has made a significant input into the formulation of the Group's strategy and its successful international expansion. On behalf of the Group, we are very thankful for Alan's contribution to UDG Healthcare and we wish him and his family the very best for the future. On a personal note, I would like to thank Alan for his wise counsel and firm support since my appointment as Chief Executive. Whilst there is no firm retirement date as yet, Alan will remain with the Group to ensure a smooth succession." Planning for Chief Financial Officer succession is in progress and a replacement will be announced in due course.

In May 2017, Jez Moulding was appointed Chief Operating Officer of the Group and Executive Vice President of Ashfield. This followed the announcement in September 2016 of Chris Corbin's intention to retire from the Group in April 2019. Chris has transitioned to the role of Chairman of Ashfield and remains a director of the Group.

Gerard van Odjik has informed the Chairman that, having recently taken on a demanding new role, he will be unable to give UDG Healthcare the time and attention that his non-executive director role requires. He has therefore indicated that he will not seek re-election at the upcoming AGM on 30 January 2018. In the light of this, the Board has asked Philip Toomey, who was going to step down at the AGM, to put himself forward for a further year.

Ashfield service offering & office expansion

Driven by five acquisitions during the year, Ashfield continued to broaden and enhance its service proposition. The acquisitions of STEM Healthcare and Vynamic have significantly expanded Ashfield's advisory offering. Together with Sellxpert, Cambridge BioMarketing and MicroMass Communications, these acquisitions enable Ashfield to deliver a full range of end-to-end advisory, communication, commercial and clinical services to its clients. Over the past five years, Ashfield has transitioned from a UK focused commercial and clinical services business, to become a global commercialisation partner for its healthcare clients.

To facilitate continued growth of the Ashfield business, Ashfield's commercial and clinical operations in the US moved to a new facility in Fort Washington, PA, in 2017. This is 60% larger than the previous office, enabling continued expansion in the strategically important US market. Ashfield Communications also doubled the size of its office in Scotland and opened new offices in Ireland and Japan.

Sharp investments

Sharp continued to invest in new facilities in the US and the UK. During the second half of the year, Sharp's US clinical business commenced its relocation to the Bethlehem packaging facility acquired in April 2017. The relocation is expected to be completed over the next 18 months. The facility will offer clients an integrated clinical development, packaging and distribution service. In the UK, the relocation of the clinical packaging business to the recently purchased facility in South Wales will commence once the refurbishment of the facility is completed in late 2018.

Future Fit

As well as successfully executing these acquisitions and facility improvements, the Group remains focused on investing in scalable infrastructure across HR, finance and IT. In April 2017, the Group launched Workday, its human resource information system and commenced the implementation of Ashfield's new Oracle Fusion finance system, which will be rolled-out on a phased basis over the next 18 months. These investments will ensure the Group has the right infrastructure to deliver long term sustainable growth and ensure the seamless integration of acquired businesses.

The rollout of both systems resulted in $2.5m additional operating costs during the second half of this year (primarily in Ashfield). In H1 2018, a further $3.5m increase in operating costs is expected (annualised impact of c. $6m) which will moderate organic growth during the first half of 2018.

Outlook

During 2017 the Group made significant progress in the execution of its strategy. The market opportunity for UDG Healthcare remains robust and the Group is well positioned to deliver sustainable future growth, both organically and through further strategic acquisitions.

2018 will benefit from the full year contribution of acquisitions made in 2017 and the Group expects organic growth to accelerate during the second half of the year, after the impact of the additional Future Fit operating costs have been absorbed.

Review of Operations

 
 
 
 

Ashfield

 
                                2017    2016   Actual   Underlying 
                                 $'m     $'m   Growth    Growth(2) 
----------------------------  ------  ------  -------  ----------- 
 Gross revenue 
 Commercial & Clinical         604.7   525.1      15%          18% 
 Communications (including 
  Advisory)                    216.7   159.9      36%           1% 
 Total gross revenue           821.4   685.0      20%          14% 
 
 Net revenue(1) 
 Commercial & Clinical         442.3   386.3      14%          17% 
 Communications (including 
  Advisory)                    187.8   135.3      39%           1% 
 Total net revenue             630.1   521.6      21%          13% 
 
 Operating profit 
 Commercial & Clinical          38.6    37.8       2%           5% 
 Communications (including 
  Advisory)                     43.0    32.8      31%           5% 
 Total operating profit         81.6    70.6      16%           5% 
 
 Operating margin 
 Operating margin (on gross 
  revenue)                      9.9%   10.3% 
 Net operating margin (on 
  net revenue)                 12.9%   13.5% 
----------------------------  ------  ------  -------  ----------- 
 

(1) 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.

(2) Underlying growth adjusts for the impact of currency translation movements and any acquisition or disposal activity.

Ashfield delivered a strong financial performance during the year, driven by good underlying growth and the benefit of acquisitions. Net revenue was up 21% to $630.1m and operating profit was up 16% to $81.6m.

Ashfield generated underlying net revenue growth of 13% and underlying operating profit growth of 5%, after adjusting for the negative impact of currency translation movements and the contribution of acquisitions.

Ashfield incurred additional operating costs during the second half of the year (expected to continue into the first half of 2018) related to the Future Fit investments. Ashfield generated 8% underlying operating profit growth during the year before these additional costs, which amounted to c. $2.5m in the second half of 2017.

Net operating margin (allowing for pass-through costs) declined from 13.5% to 12.9%. The positive margin impact of acquisitions was more than offset by the impact of the additional Future Fit operating costs and higher underlying revenue growth from the lower margin Commercial & Clinical business.

Ashfield Commercial & Clinical delivered good underlying net revenue and operating profit growth of 17% and 5% respectively during the year. This was principally due to strong growth in the German business and a good performance in the US, driven by increased activity on contract wins from 2016. The acquisition of Sellxpert has further strengthened Ashfield's capabilities and established it as market leader in Germany.

Ashfield Communications (including Advisory) delivered strong growth during the year. Including the benefit of acquisitions, net revenue increased by 39% and operating profit increased by 31%. Underlying net revenue growth improved during the second half of the year compared to the first half of the year. Since its acquisition in October 2016, STEM Healthcare has performed strongly and continues to gain momentum.

In addition to continued organic progress, Ashfield is well positioned for growth in 2018 following the acquisitions of Sellxpert, Vynamic, Cambridge BioMarketing and MicroMass Communications during the final quarter of 2017.

Sharp

 
                             2017    2016   Actual   Underlying 
                              $'m     $'m   Growth    Growth(1) 
-------------------------  ------  ------  -------  ----------- 
 Revenue 
 US                         254.0   246.1       3%           2% 
 Europe                      48.1    49.9     (4%)           1% 
 Total revenue              302.1   296.0       2%           2% 
 
 Operating profit/(loss) 
 US                          40.9    39.6       3%           5% 
 Europe                       0.4   (1.4)        -            - 
 Total operating profit      41.3    38.2       8%          11% 
 
 Operating margin %         13.7%   12.9% 
-------------------------  ------  ------  -------  ----------- 
 

(1) Underlying growth adjusts for the impact of currency translation movements and any acquisition or disposal activity.

Sharp delivered a good performance in 2017, with operating profit increasing by 8% to $41.3m (11% on an underlying basis). Operating margins increased to 13.7% during the year.

Sharp US generated underlying operating profit growth of 5%, with biotech delivering particularly strong growth. This was in part driven by the completion of the fit out of the additional capacity in Allentown, PA, which contains 13 packaging suites fully dedicated to biotech clients.

In addition, a new US state-of-the-art packaging site was acquired in Bethlehem, PA, in April 2017 to expand the commercial and clinical offering to Sharp's US clients. Sharp's US clinical business is currently relocating to this facility.

Sharp Europe moved into operating profit following a number of years of operating losses. Underlying revenue growth was 1% as the business exited some unprofitable contracts and shifted its focus to higher margin business. Sharp Europe is increasingly well positioned to deliver future profitable growth given the improving business development pipeline, focused on injectable biotech and biosimilar products.

The ongoing investment in Sharp's facilities continues to improve capabilities and expand capacity. Notwithstanding the one year delay in enforcement of the serialisation 'Track & Trace' requirement by the U.S. Food and Drug Administration (FDA) and supply chain disruptions with some clients following the recent hurricane in Puerto Rico, Sharp is well positioned to deliver underlying operating profit growth in line with the Group's medium-term guidance into 2018 and beyond.

Aquilant

 
                       2017    2016   Actual   Underlying 
                        $'m     $'m   Growth    Growth(1) 
--------------------  -----  ------  -------  ----------- 
 Revenue               96.3   102.4     (6%)           2% 
 
 Operating profit       6.4     6.9     (7%)           4% 
 
 Operating margin %    6.6%    6.7% 
--------------------  -----  ------  -------  ----------- 
 

(1) Underlying growth adjusts for the impact of currency translation movements. There was no acquisition or disposal activity in 2016 or 2017.

Revenue was 6% behind the prior year. Adjusting for negative currency translation movements, underlying revenue was 2% ahead of 2016.

Underlying operating profit was 4% ahead of 2016 reflecting a continued improvement in sales mix, including capital equipment sales, and the full benefit of new business which came on stream in 2016. Reported operating profit was 7% behind the prior year due to adverse currency translation movements.

Analyst presentation

A presentation for investors and analysts will be held at the London Stock Exchange at 8.30 GMT today, Tuesday, 28 November 2017. If you wish to attend, please contact Powerscourt. Alternatively, to dial into the conference call or webcast, the details are as follows:

Audio webcast

https://edge.media-server.com/m6/p/ypnmwqt7

Conference call

UK number: +44-203-427-1916

Ireland number: + 353-1-246-5603

US number: +1-646-254-3366

Participant code: 9761269

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 
  Business / Financial media: 
  Lisa Kavanagh / Jack Hickey 
  Powerscourt 
  Tel: + 44-207-250-1446 
 

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 over 9,000 people with operations in 24 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 in the US and Europe.

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

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.

Finance Review

for the year ended 30 September 2017

Revenue

Revenue of $1,219.8 million for the year was 13% ahead of 2016. Underlying revenue growth was 10% ahead, excluding the impact of foreign exchange and acquisitions. Ashfield increased underlying revenue by 14% while Sharp and Aquilant both reported revenue 2% ahead of 2016 excluding the impact of foreign exchange and acquisitions.

Adjusted operating profit

Adjusted operating profit from continuing operations of $129.3 million is 12% ahead (17% on a constant currency basis) of 2016.

Adjusted net operating margin

The adjusted net operating margin for the year of 12.6% was the same as 2016. The positive margin effect of acquisitions was offset by the impact of additional Future Fit operating costs and relatively higher revenue growth in the lower margin Ashfield Commercial & Clinical business.

Adjusted profit before tax

Net interest costs for the year of $10.4 million are 26% lower than 2016, which is as a result of the repayment of the RCF bank facility in April 2016 and increased interest income following the disposal of the United Drug Supply Chain businesses in 2016. This delivered a profit before tax from operations of $118.9 million which is 17% ahead of 2016 (23% on a constant currency basis).

Taxation

The effective taxation rate has decreased from 22.7% in 2016 to 22.2% in 2017.

Adjusted diluted earnings per share

Earnings per share (EPS) from continuing operations is 17% ahead (23% on a constant currency basis) of 2016 at 37.12 $ cent. Underlying EPS increased by 13% excluding acquisitions completed during the year and unfavourable currency movements.

US Dollar reporting

In August 2016, the Group announced that it would change its reporting currency to US Dollar for the 2017 financial year as the majority of Group profits are now derived from the US. This Preliminary Announcement is presented in US Dollar and further details on the change in presentational currency are included in note 20.

The Group operates in 24 countries, with its primary foreign exchange exposure being the translation of local income statements and balance sheets into US Dollar for Group reporting purposes. The primary non-Dollar currencies are Sterling and Euro. The re-translation of overseas profits to US Dollar has decreased constant currency EPS growth of 23% to a reported EPS growth rate of 17%, which is primarily due to the weakness in Sterling in the first nine months of 2017 versus the same period in 2016.

The average 2017 exchange rates were $1:EUR0.9047 and $1:GBP0.7891 (2016 $1:EUR0.9002 and $1:GBP0.7045).

Discontinued operations

The Group has classified its joint venture arrangement with Magir Limited as a discontinued operation and asset held for sale. Discontinued operations in the prior year also included United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA, which were disposed of on 1 April 2016.

Cash flow

The Group moved from a net cash position of $143.2 million in 2016 to a net debt position of $53.3 million in 2017. This was primarily as a result of 2017 acquisition activity. The net cash inflow from operating activities was $107.8 million.

$51.4 million was invested 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 UK. $198.4 million was paid in initial consideration for the acquisition of STEM Healthcare, the Bethlehem packaging facility, Vynamic, Cambridge BioMarketing, Sellxpert and MicroMass while the Group also paid $14.3 million in deferred contingent consideration associated with current and prior year acquisitions. Dividend payments of $31.3 million relating to the final 2016 dividend and the 2017 interim dividend were made during the year.

Balance sheet

Net debt at the end of the year was $53.3 million ($187.5 million cash and $240.8 million debt). The net (debt)/cash to annualised EBITDA ratio is 0.32 times debt (2016: 1.05 times cash) and net interest is covered 16.3 times (2016: 10.6 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 retained its long term private placement debt as it expects to make acquisitions and other capital investments in the coming years. The Group made a scheduled repayment of $63.3 million in September 2017 of maturing private placement notes. At 30 September 2017, the Group also had $259.7 million of undrawn overdraft and loan facilities.

Return on capital employed (ROCE)

The ROCE for continuing operations was 12.8%, down from 13.6% at the end of 2016. Details on how this was calculated are on page 37. ROCE was 13.2% excluding the impact of acquisitions, most of which were acquired in the final quarter. ROCE has been impacted by the capital expenditure investment in 2017.

Dividends

The directors are proposing a final dividend of 9.72 $ cent per share representing an increase of 7.5% on the 2016 final dividend of 9.04 $ cent per share. This represents 7% growth in the total dividend for the year to 13.30 $ cent per share. This continues the Group's 30 year history of consistently increasing dividends.

Subject to shareholder approval at the Company's Annual General Meeting, the proposed final dividend of 9.72 $ cent per share will be paid on 5 February 2018 to ordinary shareholders on the Company's register at 5.00 p.m. on 12 January 2018.

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 focussed on increasing the awareness of the Group among the investor and analyst community.

We communicate regularly with our shareholders during the year, specifically following the release of our interim and preliminary results, and at the time of major developments including M&A transactions. During 2017, the executive management team attended and presented at eleven investor conferences, including four in the US, and conducted over 230 institutional investor one-on-one meetings. In addition, our Chairman Peter Gray, held a number of governance meetings with existing shareholders during the year, both in the UK and US. The number of independent equity analysts covering the Group increased to ten during the year reflecting the growing interest in UDG Healthcare from the equity markets.

The Board of Directors considers it important to understand the views of shareholders and receive regular updates on investor perceptions.

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.

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.

Group Income Statement

for the year ended 30 September 2017

 
 
 
                                                                                      As re-presented and restated 
                                                             Year ended               Year ended 30 September 2016 
                                                           30 September 
                                                                   2017 
                                    Note                          $'000                                      $'000 
 Continuing operations 
 Revenue                               4                      1,219,755                                  1,083,439 
 Cost of sales                                                (871,909)                                  (767,833) 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 
 Gross profit                                                   347,846                                    315,606 
 
   Selling and distribution 
   expenses                                                   (192,536)                                  (177,543) 
 Administration expenses                                       (23,313)                                   (20,854) 
 Other operating expenses                                      (25,450)                                   (18,213) 
 Transaction costs                                              (4,028)                                    (2,214) 
 Share of joint ventures' profit 
  after tax                            5                            667                                        798 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 
 Operating profit                                               103,186                                     97,580 
 
 Finance income                        6                         18,905                                      5,311 
 Finance expense                       6                       (29,257)                                   (19,349) 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 
 Profit before tax from 
  continuing operations                                          92,834                                     83,542 
 
   Income tax expense                                          (20,976)                                   (15,428) 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 
   Profit for the year from 
   continuing operations                                         71,858                                     68,114 
 
   Profit after tax for the year 
   from discontinued operations        7                              -                                    150,409 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 Profit for the financial year                                   71,858                                    218,523 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 
 Profit attributable to: 
 Continuing operations                                           71,858                                     68,114 
 Discontinued operations                                              -                                    150,409 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
                                                                 71,858                                    218,523 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 Earnings per ordinary share: 
 Basic - continuing operations         8                         28.97c                                     27.64c 
 Basic - discontinued operations       8                              -                                     61.04c 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 Basic                                                           28.97c                                     88.68c 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 
 Diluted - continuing operations       8                         28.83c                                     27.53c 
 Diluted - discontinued 
  operations                           8                              -                                     60.79c 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 Diluted                                                         28.83c                                     88.32c 
---------------------------------  -----  -----------------------------  ----------------------------------------- 
 
 

Group Statement of Comprehensive Income

for the year ended 30 September 2017

 
 
 
 
                                                                                   As re-presented 
                                                                                               and 
                                                                                          restated 
                                                               2017                           2016 
                                          Notes               $'000                          $'000 
 Profit for the financial 
  year                                                       71,858                        218,523 
 
 Other comprehensive income/(expense): 
  Items that will not be reclassified 
  to profit or loss: 
 Remeasurement gain/(loss) 
  on Group defined benefit 
  schemes                                  15 
 
        *    Continuing operations                           11,098                        (9,409) 
 
        *    Discontinued operations                              -                          1,177 
 Deferred tax on Group defined 
  benefit schemes 
 
        *    Continuing operations                            (599)                            599 
 
        *    Discontinued operations                              -                          (232) 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
                                                             10,499                        (7,865) 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
 Items that may be reclassified 
  subsequently to profit or 
  loss: 
 Foreign currency translation 
  adjustment                               11 
 
        *    Continuing operations                           10,109                       (60,031) 
 
        *    Discontinued operations                              -                        (2,045) 
 Reclassification on loss 
  of control of subsidiary 
  undertakings                             11                     -                          5,283 
 Group cash flow hedges: 
 - Effective portion of cash 
  flow hedges - movement into 
  reserve                                         (15,271)             (5,483) 
 - Effective portion of cash 
  flow hedges - movement out 
  of reserve                                        14,865               (896) 
                                                 ---------           --------- 
 Effective portion of cash 
  flow hedges                              11                 (406)                        (6,379) 
 - Movement in deferred tax 
  - movement into reserve                            1,909                 685 
 - Movement in deferred tax 
  - movement out of reserve                        (1,858)                 113 
                                                 ---------           --------- 
 Net movement in deferred 
  tax                                      11                    51                            798 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
                                                              9,754                       (62,374) 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
 Other comprehensive income/(expense), 
  net of tax                                                 20,253                       (70,239) 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
 Total comprehensive income, 
  net of tax, attributable 
  to equity holders of the 
  parent                                                     92,111                        148,284 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
 Total comprehensive income/(expense) 
  attributable to: 
 Continuing operations                                       92,111                        (6,308) 
 Discontinued operations                                          -                        154,592 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
                                                             92,111                        148,284 
---------------------------------------  ------  ---------  -------  ---------  ------------------ 
 

Group Statement of Changes in Equity

for the year ended 30 September 2017

 
 
 
 
 
                        Equity                                Other    Attributable to 
                         share     Share       Retained    reserves      owners of the   Non-controlling       Total 
                       capital   premium       earnings   (note 11)             parent          interest      equity 
                         $'000     $'000          $'000       $'000              $'000             $'000       $'000 
 
 At 1 October 2016      14,535   187,355        784,432   (179,446)            806,876                 -     806,876 
 
 Profit for the 
  financial year             -         -         71,858           -             71,858                 -      71,858 
 Other 
 comprehensive 
 income/(expense): 
 Effective portion 
  of cash flow 
  hedges                     -         -              -       (406)              (406)                 -       (406) 
 Deferred tax on 
  cash flow hedges           -         -              -          51                 51                 -          51 
 Translation 
  adjustment                 -         -              -      10,109             10,109                 -      10,109 
 Remeasurement gain 
  on defined 
  benefit schemes            -         -         11,098           -             11,098                 -      11,098 
 Deferred tax on 
  defined benefit 
  schemes                    -         -          (599)           -              (599)                 -       (599) 
 Total 
  comprehensive 
  income for the 
  year                       -         -         82,357       9,754             92,111                 -      92,111 
 Transactions with 
 shareholders: 
 New shares issued          46     3,129              -           -              3,175                 -       3,175 
 Issued in business 
  combination               39     6,012              -           -              6,051                 -       6,051 
 Share-based 
  payment expense            -         -              -       3,613              3,613                 -       3,613 
 Dividends paid to 
  equity holders             -         -       (31,279)           -           (31,279)                 -    (31,279) 
 Release from 
  share-based 
  payment reserve            -         -            577       (577)                  -                 -           - 
 Non-controlling 
  interest arising 
  on acquisition             -         -              -           -                  -               109         109 
 
   At 30 September 
   2017                 14,620   196,496        836,087   (166,656)            880,547               109     880,656 
-------------------  ---------  --------  -------------  ----------  -----------------  ----------------  ---------- 
 
 
 

for the year ended 30 September 2016

 
 
                                                                                             Other            Total equity as 
                                        Equity           Share         Retained           reserves               re-presented 
                                 share capital   premium $'000   earnings $'000    (note 11) $'000               and restated 
                                          $000                                                                          $'000 
 ---------------------------------------------  --------------  ---------------  -----------------  ------------------------- 
 
 
 At 1 October 2015                      14,430         183,000          600,793          (116,219)                    682,004 
 
 Profit for the financial year               -               -          218,523                  -                    218,523 
 Other comprehensive 
 income/(expense): 
 Effective portion of cash flow 
  hedges                                     -               -                -            (6,379)                    (6,379) 
 Deferred tax on cash flow hedges            -               -                -                798                        798 
 Translation adjustment 
 
        *    Continuing operations           -               -                -           (60,031)                   (60,031) 
 
        *    Discontinued operations         -               -                -            (2,045)                    (2,045) 
 Reclassification on loss of control 
  of subsidiary undertakings                 -               -                -              5,283                      5,283 
 Remeasurement (loss)/gain on defined 
 benefit schemes 
 
        *    Continuing operations           -               -          (9,409)                  -                    (9,409) 
 
        *    Discontinued operations         -               -            1,177                  -                      1,177 
 Deferred tax on defined benefit 
 schemes 
 
        *    Continuing operations           -               -              599                  -                        599 
 
        *    Discontinued operations         -               -            (232)                  -                      (232) 
-------------------------------------  -------  --------------  ---------------  -----------------  ------------------------- 
 Total comprehensive income/(expense) 
  for the year                               -               -          210,658           (62,374)                    148,284 
 Transactions with shareholders: 
 New shares issued                         105           4,355                -                  -                      4,460 
 Share-based payment expense                 -               -                -              2,184                      2,184 
 Dividends paid to equity holders            -               -         (30,056)                  -                   (30,056) 
 Release from share-based payment 
  reserve                                    -               -            3,037            (3,037)                          - 
-------------------------------------  -------  --------------  ---------------  -----------------  ------------------------- 
 
 At 30 September 2016                   14,535         187,355          784,432          (179,446)                    806,876 
-------------------------------------  -------  --------------  ---------------  -----------------  ------------------------- 
 
 
 

Group Balance Sheet

as at 30 September 2017

 
                                                                 As re-presented (note 20)   As re-presented (note 20) 
                                                                                      2016                        2015 
                                                                                     $'000                       $'000 
                                                          2017 
                                         Note            $'000 
 ASSETS 
 Non-current 
 Property, plant and equipment              9          168,403                     136,877                     132,087 
 Goodwill                                  10          542,554                     384,520                     401,306 
 Intangible assets                         10          227,617                     108,322                     113,927 
 Investment in joint ventures and 
  associates                               10            8,838                       9,067                      25,855 
 Derivative financial instruments          12            1,302                      13,185                      24,700 
 Deferred income tax assets                              4,025                       4,296                       4,463 
 Employee benefits                         15           12,379                      13,939                      14,639 
 Total non-current assets                              965,118                     670,206                     716,977 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 Current 
 Inventories                                            55,060                      54,941                      61,636 
 Trade and other receivables                           307,388                     233,791                     229,939 
 Cash and cash equivalents                 12          187,469                     428,729                     239,832 
 Current income tax assets                               2,464                       4,532                       1,806 
 Derivative financial instruments          12            2,450                       8,239                       5,321 
 Assets held for sale                       7                -                           -                     530,821 
 Total current assets                                  554,831                     730,232                   1,069,355 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 Total assets                                        1,519,949                   1,400,438                   1,786,332 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 EQUITY 
 Equity share capital                                   14,620                      14,535                      14,430 
 Share premium                                         196,496                     187,355                     183,000 
 Other reserves                            11        (166,656)                   (179,446)                   (116,219) 
 Retained earnings                                     836,087                     784,432                     600,793 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 Equity attributable to owners of the 
  parent                                               880,547                     806,876                     682,004 
 Non-controlling interest                                  109                           -                           - 
 Total equity                                          880,656                     806,876                     682,004 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 LIABILITIES 
 Non-current 
 Interest-bearing loans and 
  borrowings                               12          244,077                     242,108                     465,866 
 Provisions                                13           58,470                       6,084                       8,411 
 Employee benefits                         15            3,162                      20,442                      20,505 
 Deferred income tax liabilities                        54,279                      31,008                      31,424 
 Derivative financial instruments          12              352                           -                           - 
 Total non-current liabilities                         360,340                     299,642                     526,206 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 Current 
 Interest-bearing loans and 
  borrowings                               12               58                      64,882                      23,315 
 Trade and other payables                              248,145                     204,468                     214,831 
 Current income tax liabilities                         16,845                      14,587                       4,988 
 Provisions                                13           13,905                       9,983                      20,931 
 Liabilities held for sale                  7                -                           -                     314,057 
 Total current liabilities                             278,953                     293,920                     578,122 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 Total liabilities                                     639,293                     593,562                   1,104,328 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 Total equity and liabilities                        1,519,949                   1,400,438                   1,786,332 
-------------------------------------  ------  ---------------  --------------------------  -------------------------- 
 
 

Group Cash Flow Statement

for the year ended 30 September 2017

 
 
                                                                        2016 (as re-presented) 
                                                     Continuing operations   Discontinued operations 
                                           2017                                                            Total 
                                          $'000                      $'000                     $'000       $'000 
 Cash flow from operating 
 activities 
 Profit before tax                          92,834                  83,542                   151,220     234,762 
 Finance income                           (18,905)                 (5,311)                       (8)     (5,319) 
 Finance expense                            29,257                  19,349                        64      19,413 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Operating profit                          103,186                  97,580                   151,276     248,856 
 Share of joint ventures' profit 
  after tax                                  (667)                   (798)                   (1,659)     (2,457) 
 Depreciation charge                        21,221                  20,032                         -      20,032 
 Loss/(profit) on disposal of 
  property, plant and equipment                 55                      71                      (12)          59 
 Impairment of intangible assets                 -                     798                     1,133       1,931 
 Amortisation of intangible assets          25,450                  18,213                         -      18,213 
 Share-based payment expense                 3,613                   2,184                         -       2,184 
 Decrease in inventories                     1,893                   3,452                     3,870       7,322 
 Increase in trade and other 
  receivables                             (24,612)                 (9,783)                  (10,074)    (19,857) 
 Increase/(decrease) in trade 
  payables, provisions and other 
  payables                                   2,934                 (8,663)                  (32,081)    (40,744) 
 Exceptional items paid                      (165)                 (2,564)                         -     (2,564) 
 Profit on disposal of discontinued 
  operations                                     -                       -                 (150,780)   (150,780) 
 Impairment of asset held for sale               -                       -                    18,842      18,842 
 Interest paid                            (10,608)                (12,201)                         -    (12,201) 
 Income taxes paid                        (14,522)                (13,716)                     (777)    (14,493) 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Net cash inflow/(outflow) from 
  operating activities                     107,778                  94,605                  (20,262)      74,343 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Cash flows from investing 
 activities 
 Interest received                           1,044                     663                         8         671 
 Purchase of property, plant and 
  equipment                               (29,466)                (31,736)                   (2,533)    (34,269) 
 Proceeds from disposal of property, 
  plant and equipment                          146                     435                        12         447 
 Investment in intangible assets - 
  computer software                       (21,884)                (10,926)                   (6,648)    (17,574) 
 Acquisitions of subsidiaries (net 
  of cash and cash equivalents 
  acquired)                              (198,439)                (14,446)                         -    (14,446) 
 Deferred contingent acquisition 
  consideration paid                      (14,265)                (17,331)                         -    (17,331) 
 Disposal of subsidiary undertakings 
  (net of cash and cash equivalents 
  disposed)                                      -                 447,112                  (21,389)     425,723 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Net cash (outflow)/inflow from 
  investing activities                   (262,864)                 373,771                  (30,550)     343,221 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Cash flows from financing 
 activities 
 Proceeds from issue of shares 
  (including share premium thereon)          3,175                   4,460                         -       4,460 
 Repayments of interest-bearing 
  loans and borrowings                    (63,266)               (178,696)                         -   (178,696) 
 Group transfers                                 -                   2,879                   (2,879)           - 
 Decrease in finance leases                    (3)                    (80)                         -        (80) 
 Dividends paid to equity holders of 
  the Company                             (31,279)                (30,056)                         -    (30,056) 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Net cash outflow from financing 
  activities                              (91,373)               (201,493)                   (2,879)   (204,372) 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Net (decrease)/increase in cash and 
  cash equivalents                       (246,459)                 266,883                  (53,691)     213,192 
 Translation adjustment                      5,199                                                      (24,295) 
 Cash and cash equivalents at 
  beginning of year                        428,729                                                       239,832 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 Cash and cash equivalents at end of 
  year                                     187,469                                                       428,729 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 
  Cash and cash equivalents is 
  comprised of: 
 Cash at bank and short term 
  deposits                                 187,469                                                       428,729 
------------------------------------  ------------  ----------------------  ------------------------  ---------- 
 
 

Notes to the Preliminary Announcement

for the year ended 30 September 2017

1. Reporting entity

UDG Healthcare plc (the "Company") is a company domiciled in Ireland. The preliminary consolidated financial information for the year ended 30 September 2017 is for 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 represent 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 2016 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 2017 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 our more fully in the Group's last Annual Report.

The accounting policies adopted are consistent with those of the previous year except for the change in the Group's presentation currency from Euro to US Dollar and the following new and amended IFRSs and International Financial Reporting Interpretations Committee (IFRIC) interpretations that were adopted by the Group as of 1 October 2016:

   --      Amendments to IAS 27: Equity method in Separate Financial Statements 
   --      Amendments to IAS 1: Disclosure initiative 
   --      Amendments to IFRS 11: Accounting for acquisitions of interests in Joint Operations 
   --      Annual Improvements to IFRSs 2012-2014 Cycle; 

-- Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation

These are effective for the Group's financial year ended 30 September 2017 but did not have a material effect on the results or financial position of the Group.

The IASB and the International Financial Reporting Interpretations Committee (IFRIC) have issued the following standards, amendments to existing standards and interpretations that are not yet effective for the Group:

   --      Annual Improvements to IFRSs 2014-2016 Cycle IFRS 14: Regulatory Deferral Accounts (*) 
   --      IFRIC Interpretation 23: Uncertainty over Income Tax Treatments (*) 
   --      IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (*) 
   --      Amendments to IAS 7: Disclosure Initiative 
   --      Amendments to IAS 12: Recognition of deferred tax assets for unrealised losses 
   --      Amendments to IAS 28: Long term interests in Associates and Joint Ventures (*) 
   --      Amendments to IAS 40: Transfers of Investment Property (*) 

-- Amendments to IFRS 2: Classification and measurement of share-based payment transactions (*)

   --      IFRS 9: Financial Instruments (2014) 

-- Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint ventures (*)

   --      Clarifications to IFRS 15: Revenue from Contracts with Customers (*) 
   --      IFRS 16: Leases (*) 

A number of the standards (*) set out above have not yet been EU endorsed. 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 the above interpretations and amendments.

3. Prior year reclassification

Reclassification of revenue

Pass-through revenues relate to the recharging of travel and other costs to customers at zero margin. There has been a reclassification of certain pass-through revenue from cost of sales to revenue. As a result, $35,771,000 (EUR32,200,000) has been reclassified from cost of sales to revenue so that the results are presented on a consistent basis in both 2017 and 2016. There is no impact on gross profit.

A summary of the impact on the previously reported figures is set out below:

 
                 As previously   Reclassification   As restated   As re-presented 
                        stated            EUR'000       EUR'000             $'000 
                       EUR'000 
--------------  --------------  -----------------  ------------  ---------------- 
 Revenue               943,080             32,200       975,280         1,083,439 
 Cost of 
  Sales              (658,981)           (32,200)     (691,181)         (767,833) 
 Gross profit          284,099                  -       284,099           315,606 
--------------  --------------  -----------------  ------------  ---------------- 
 

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 three broad areas of activity: advisory, communications and commercial & clinical 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 in the US and Europe.

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 2017 the Group has classified the joint venture investment in Magir Limited as a discontinued operation and an asset held for sale. Details of the discontinued operations are included in note 7. 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 by segment is as follows:

 
 
 Continuing operations 
                                                                                           2017   2016 as re-presented 
                                                                                          $'000                  $'000 
 Revenue 
 Ashfield                                                                               821,412                685,041 
 Sharp                                                                                  302,076                295,992 
 Aquilant                                                                                96,267                102,406 
-----------------------------------------------------------------------------------  ----------  --------------------- 
                                                                                      1,219,755              1,083,439 
-----------------------------------------------------------------------------------  ----------  --------------------- 
 Operating profit before amortisation of acquired intangibles, transaction costs 
 and exceptional 
 items 
 Ashfield                                                                                81,567                 70,653 
 Sharp                                                                                   41,304                 38,208 
 Aquilant                                                                                 6,409                  6,910 
-----------------------------------------------------------------------------------  ----------  --------------------- 
 Adjusted operating profit                                                              129,280                115,771 
 Amortisation of acquired intangibles                                                  (22,066)               (15,977) 
 Transaction costs                                                                      (4,028)                (2,214) 
-----------------------------------------------------------------------------------  ----------  --------------------- 
 Operating profit                                                                       103,186                 97,580 
 Finance income                                                                          18,905                  5,311 
 Finance expense                                                                       (29,257)               (19,349) 
-----------------------------------------------------------------------------------  ----------  --------------------- 
 
   Profit before tax                                                                     92,834                 83,542 
 Income tax expense                                                                    (20,976)               (15,428) 
-----------------------------------------------------------------------------------  ----------  --------------------- 
 Profit after tax for the year                                                           71,858                 68,114 
-----------------------------------------------------------------------------------  ----------  --------------------- 
 
 
 Geographical analysis of revenue 
                                          2017   2016 as re-presented 
                                         $'000                  $'000 
 Republic of Ireland                    42,178                 36,268 
 United Kingdom                        318,934                365,985 
 North America                         629,001                499,498 
 Rest of World                         229,642                181,688 
----------------------------------  ----------  --------------------- 
                                     1,219,755              1,083,439 
----------------------------------  ----------  --------------------- 
 

5. Share of joint ventures' profit after tax

 
 
                                                              2016 as re-presented 
                                                       2017 
                                                      $'000                  $'000 
 Revenue                                             61,883                 66,287 
 Expenses, inclusive of tax                        (60,549)               (64,690) 
------------------------------------------------  ---------  --------------------- 
 Profit after tax - continuing                        1,334                  1,597 
 Group's equity interest                             49.99%                 49.99% 
------------------------------------------------  ---------  --------------------- 
 Group's share of profit after tax - continuing         667                    798 
------------------------------------------------  ---------  --------------------- 
 

6. Finance income and expense

 
                                                                                                 2016 as re-presented 
                                                                                          2017 
                                                                                         $'000                  $'000 
 Finance income 
 Income arising from cash deposits                                                       1,057                    710 
 Fair value of deferred contingent consideration                                             -                    294 
 Fair value of cash flow hedges transferred from equity                                      -                    896 
 Fair value adjustment to guaranteed senior unsecured loan notes                         2,840                  3,157 
 Foreign currency gain on retranslation of guaranteed senior unsecured loan notes       14,865                      - 
 Ineffective portion of cash flow hedges                                                    76                    254 
 Net finance income on pension scheme obligations                                           67                      - 
 Finance income relating to continuing operations                                       18,905                  5,311 
 Finance income relating to discontinued operations                                          -                      8 
-----------------------------------------------------------------------------------  ---------  --------------------- 
                                                                                        18,905                  5,319 
-----------------------------------------------------------------------------------  ---------  --------------------- 
 Finance expense 
 Interest on overdrafts                                                                   (46)                   (31) 
 Interest on bank loans and other loans 
 -wholly repayable within 5 years                                                      (5,482)                (7,761) 
 -wholly repayable after 5 years                                                       (5,641)                (5,686) 
 Interest on finance leases                                                                (3)                    (1) 
 Unwinding of discount on provisions                                                     (380)                (1,158) 
 Fair value of deferred contingent consideration                                             -                  (647) 
 Fair value adjustments to fair value hedges                                           (2,840)                (3,157) 
 Fair value of cash flow hedges transferred to equity                                 (14,865)                      - 
 Foreign currency loss on retranslation of guaranteed senior unsecured loan notes            -                  (896) 
 Net finance cost on pension scheme obligations                                              -                   (12) 
-----------------------------------------------------------------------------------  ---------  --------------------- 
 Finance expense relating to continuing operations                                    (29,257)               (19,349) 
-----------------------------------------------------------------------------------  ---------  --------------------- 
 Finance expense on pension scheme obligations relating to discontinued operations           -                   (64) 
-----------------------------------------------------------------------------------  ---------  --------------------- 
                                                                                      (29,257)               (19,413) 
-----------------------------------------------------------------------------------  ---------  --------------------- 
 Net finance expense                                                                  (10,352)               (14,094) 
-----------------------------------------------------------------------------------  ---------  --------------------- 
 

7. Net result from discontinued operations, disposals and assets and liabilities classified as held for sale

On 1 April 2016, the Group completed the disposal of United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA. In accordance with IFRS 5, these businesses were considered to be discontinued. The respective profit and losses on the disposal of these businesses were recognised in the Group Income Statement within discontinued operations.

Profit from discontinued operations after tax included in the prior year Group Income Statement is summarised in the table below:

 
                                                                                 2016 as 
                                                                            re-presented 
                                                                                   $'000 
      Profit from discontinued operations 
       after tax 
        *    United Drug Supply Chain Services businesses and 
             MASTA                                                   (a)          16,812 
 
        *    Magir Limited                                       (c)               1,659 
Profit from disposal of discontinued 
 operations                                                      (b)             150,780 
Impairment of assets held for sale                               (c)            (18,842) 
--------------------------------------------------------------  --------  -------------- 
Profit from discontinued operations 
 after tax                                                                       150,409 
------------------------------------------------------------------------  -------------- 
 

The profit in the prior year from discontinued operations was fully attributable to the equity holders of the company.

 
                                                     2016 as 
                                                re-presented 
(a)                                                    $'000 
Revenue                                              750,206 
Cost of sales                                      (695,370) 
--------------------------------------------  -------------- 
Gross profit                                          54,836 
Selling and distribution expenses                   (37,281) 
Administration expenses                              (2,517) 
Settlement gain on defined benefit pension             2,641 
Operating profit                                      17,679 
Net finance expense                                     (56) 
--------------------------------------------  -------------- 
Profit from discontinued operations 
 before tax                                           17,623 
Income tax expense                                     (811) 
--------------------------------------------  -------------- 
Profit from discontinued operations 
 after tax                                            16,812 
--------------------------------------------  -------------- 
 

In accordance with IFRS 5, depreciation of property, plant and equipment and amortisation of intangibles was not charged on the assets disposed of during the prior year. If the assets had continued to be depreciated and amortised during the prior year, the respective pre-tax charges for the year would have been $3,873,000 and $791,000.

(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 as 
                                             re-presented 
                                                    $'000 
Total consideration                               463,939 
Working capital and related adjustments          (16,827) 
Cash received on completion                       447,112 
Cash and cash equivalents disposed of            (21,389) 
Disposal related costs paid                       (9,422) 
------------------------------------------  ------------- 
Net consideration received on completion          416,301 
------------------------------------------  ------------- 
 
 
  Assets and liabilities disposed of:                                                                          $'000 
Assets: 
Property, plant and equipment                                                                               96,734 
Goodwill                                                                                                    16,276 
Intangible assets                                                                                           53,331 
Deferred income tax assets                                                                                   1,126 
Inventories                                                                                                127,922 
Trade and other receivables                                                                                249,609 
---------------------------------------------------------------------------------------------------  ------------- 
Total assets                                                                                               544,998 
---------------------------------------------------------------------------------------------------  ------------- 
 
Liabilities: 
Deferred income tax liabilities                                                                              (391) 
Trade and other payables                                                                                 (287,088) 
Employee benefits                                                                                          (2,239) 
Current income tax liability                                                                                 (721) 
---------------------------------------------------------------------------------------------------  ------------- 
Total liabilities                                                                                        (290,439) 
---------------------------------------------------------------------------------------------------  ------------- 
 
Net identifiable assets and liabilities disposed of                                                      (254,559) 
 
Recycling of foreign exchange loss previously recognised in foreign currency translation reserves          (5,283) 
Provision for taxation                                                                                     (5,679) 
---------------------------------------------------------------------------------------------------      --------- 
Profit on disposal of discontinued operations after tax                                                    150,780 
---------------------------------------------------------------------------------------------------      --------- 
 
 

(c) During the current and prior year, the Group has treated the joint venture arrangement with Magir as a discontinued operation and asset held for sale in accordance with IFRS 5. Due to the absence of a power sharing administration in Northern Ireland a decision regarding historical and future drug reimbursement rates has not been made and agreeing a value on the business in the absence of this information has not been possible. It remains the intention of the Group to dispose of the asset once the valuation can be properly established.

The following table details the results of this discontinued operation included in the prior year Group Income Statement:

 
                                                 2016 as 
                                            re-presented 
                                                   $'000 
Share of joint ventures' profit after 
 tax                                               1,659 
Impairment charge                               (18,842) 
-----------------------------------------  ------------- 
Loss from discontinued operations after 
 tax                                            (17,183) 
-----------------------------------------  ------------- 
 

The assets and liabilities classified as held for sale in the Group Balance Sheet have a nil carrying value at 30 September 2017 (2016: nil).

8. Earnings per ordinary share

 
 
                                                                     Discontinued operations 
                                         Continuing operations as            as re-presented     Total as re-presented 
                                Total                re-presented 
                                 2017                        2016                       2016                      2016 
                                $'000                       $'000                      $'000                     $'000 
 Profit attributable to 
  the owners of the parent     71,858                      68,114                    150,409                   218,523 
 Adjustment for 
  amortisation of acquired 
  intangible assets (net 
  of tax)                      16,996                       8,413                          -                     8,413 
 Adjustment for 
  transaction costs (net 
  of tax)                       3,658                       2,123                          -                     2,123 
 Adjustment for profit on 
  disposal (net of tax)             -                           -                  (150,780)                 (150,780) 
 Adjustment for impairment 
  of asset held for sale 
  (net of tax)                      -                           -                     18,842                    18,842 
 
   Adjusted profit 
   attributable to owners 
   of the parent               92,512                      78,650                     18,471                    97,121 
--------------------------  ---------  --------------------------  -------------------------  ------------------------ 
 
 
                                                                      2017          2016 
                                                                    Number        Number 
                                                                 of shares     of shares 
 Weighted average number of shares                             248,001,114   246,405,955 
 Number of dilutive shares under option                          1,238,273     1,016,938 
------------------------------------------------------------  ------------  ------------ 
 
 Weighted average number of shares, including share options    249,239,387   247,422,893 
------------------------------------------------------------  ------------  ------------ 
 
 
                                                                            Discontinued 
                                          Continuing operations            operations as 
                                 Total          as re-presented             re-presented   Total as re-presented 
                                  2017                     2016                     2016                    2016 
 
 Basic earnings per share - 
  cent                           28.97                    27.64                    61.04                   88.68 
 Diluted earnings per share 
  - cent                         28.83                    27.53                    60.79                   88.32 
 Adjusted basic earnings 
  per share - cent            37.30(1)                 31.92(1)                  7.50(2)                   39.42 
 Adjusted diluted earnings 
  per share - cent            37.12(1)                 31.79(1)                  7.47(2)                   39.26 
 

Non-GAAP information

The Group reports certain financial measurements 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 measurements provide 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 measurements 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.

(1) Adjusted profit attributable to equity holders of the parent from continuing operations is stated before the amortisation of acquired intangible assets and transaction costs.

(2) Adjusted profit attributable to equity holders of the parent from discontinued operations is stated after deducting the profit on disposal of the discontinued operations ($150.8m, net of tax), and adding back the impairment of the investment in Magir Limited, an asset held for sale ($18.8m, 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. 2,567,081 (2016: 2,273,772) anti-dilutive share options have been excluded from the calculation of diluted 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.

9. Property, plant and equipment

 
                             Land and        Plant and                           Computer     Assets under        2017 
                            buildings        equipment   Motor vehicles         equipment     construction       Total 
                                $'000            $'000            $'000             $'000            $'000       $'000 
 Year ended 30 
 September 2017 
 Opening net book 
  amount (as 
  re-presented)                61,093           65,013              290            10,481                -     136,877 
 Additions in the 
  year                          4,151           20,780               30             3,414            1,091      29,466 
 Arising on 
  acquisition                  15,692            5,153                -               593                -      21,438 
 Depreciation                 (4,935)         (11,620)             (62)           (4,604)                -    (21,221) 
 Disposals in year               (97)             (14)                -              (90)                -       (201) 
 Transfer to 
  intangibles                       -                -                -             (393)                -       (393) 
 Reclassifications              (561)              163                -               398                -           - 
 Translation 
  adjustment                    1,120            1,089               13               215                -       2,437 
-------------------  ----------------  ---------------  ---------------  ----------------  ---------------  ---------- 
 At 30 September 
  2017                         76,463           80,564              271            10,014            1,091     168,403 
-------------------  ----------------  ---------------  ---------------  ----------------  ---------------  ---------- 
 
  At 30 September 
  2017 
 Cost or deemed 
  cost                        106,815          157,112              738            27,558            1,091     293,314 
 Accumulated 
  depreciation               (30,352)         (76,548)            (467)          (17,544)                -   (124,911) 
-------------------  ----------------  ---------------  ---------------  ----------------  ---------------  ---------- 
 Net book amount               76,463           80,564              271            10,014            1,091     168,403 
-------------------  ----------------  ---------------  ---------------  ----------------  ---------------  ---------- 
 

10. Movement in goodwill, intangible assets and investment in joint ventures and associates

 
 
                                                                                  Investment in joint ventures and 
                                                             Intangible                                 associates 
                                                Goodwill         assets 
                                                   $'000          $'000                                      $'000 
 
 Balance at 1 October 2016 (as 
  re-presented)                                  384,520        108,322                                      9,067 
 Investment in computer software                       -         21,884                                          - 
 Amortisation of acquired intangible 
 assets                                                -       (22,066)                                          - 
 Amortisation of computer software                     -        (3,384)                                          - 
 Arising on acquisitions - computer 
 software                                              -             77                                          - 
 Arising on acquisitions - other intangible 
  assets                                         140,626        114,693                                          - 
 Transfer from property, plant and 
 equipment                                             -            393                                          - 
 Share of joint ventures' profit after tax             -              -                                        667 
 Measurement period adjustment                     1,844        (1,005)                                          - 
 Translation adjustment                           15,564          8,703                                      (896) 
-------------------------------------------  -----------  -------------  ----------------------------------------- 
 At 30 September 2017                            542,554        227,617                                      8,838 
-------------------------------------------  -----------  -------------  ----------------------------------------- 
 

11. Other reserves

 
                                                     Share-based                                   Capital 
                                         Cash flow       payment       Foreign      Treasury    redemption 
                                             hedge                    exchange        shares       reserve       Total 
                                             $'000         $'000         $'000         $'000         $'000       $'000 
 
 At 1 October 2016 (as re-presented)      (12,499)         5,956     (165,574)       (7,676)           347   (179,446) 
 Effective portion of cash flow 
  hedges                                     (406)                                         -             -       (406) 
 Deferred tax on cash flow hedges               51             -             -             -             -          51 
 Share-based payment expense                     -         3,613             -             -             -       3,613 
 Release from share-based payment 
  reserve                                        -         (577)             -             -             -       (577) 
 Translation adjustment                          -             -        10,109             -             -      10,109 
------------------------------------  ------------  ------------  ------------  ------------  ------------  ---------- 
 At 30 September 2017                     (12,854)         8,992     (155,465)       (7,676)           347   (166,656) 
------------------------------------  ------------  ------------  ------------  ------------  ------------  ---------- 
 
                                                     Share-based                                   Capital 
                                         Cash flow       payment       Foreign      Treasury    redemption 
                                             hedge                    exchange        shares       reserve       Total 
                                             $'000         $'000         $'000         $'000         $'000       $'000 
 
 At 1 October 2015 (as re-presented)       (6,918)         6,832     (108,781)       (7,699)           347   (116,219) 
 Effective portion of cash flow 
  hedges                                   (6,379)             -             -             -             -     (6,379) 
 Deferred tax on cash flow hedges              798             -             -             -             -         798 
 Share-based payment expense                     -         2,184             -             -             -       2,184 
 Release from share-based payment 
  reserve                                        -       (3,037)             -             -             -     (3,037) 
 Translation adjustment 
 
        *    Continuing operations               -             -      (60,031)             -             -    (60,031) 
 
        *    Discontinued operations             -             -       (2,045)             -             -     (2,045) 
 Reclassification on loss of control             -             -         5,283             -             -       5,283 
 Release of treasury shares on 
  vesting                                        -          (23)             -            23             -           - 
------------------------------------  ------------  ------------  ------------  ------------  ------------  ---------- 
 At 30 September 2016                     (12,499)         5,956     (165,574)       (7,676)           347   (179,446) 
------------------------------------  ------------  ------------  ------------  ------------  ------------  ---------- 
 

12. Net (debt)/cash

 
 
                                           2017   As represented 2016 
                                          $'000                 $'000 
 Current assets 
 Cash and cash equivalents              187,469               428,729 
 Derivative financial instruments         2,450                 8,239 
 Non-current assets 
 Derivative financial instruments         1,302                13,185 
 Current liabilities 
 Interest bearing loans                      72              (64,724) 
 Finance leases                           (130)                 (158) 
 Non-current liabilities 
 Interest bearing loans               (244,043)             (242,099) 
 Finance leases                            (34)                   (9) 
 Derivative financial instruments         (352)                     - 
----------------------------------   ----------  -------------------- 
 Net (debt)/cash at 30 September       (53,266)               143,163 
-----------------------------------  ----------  -------------------- 
 
 
 13. Provisions 
                                  Deferred 
                                contingent                      Restructuring and                           Total as 
                             consideration   Onerous leases           other costs   2017 Total     re-presented 2016 
                                     $'000            $'000                 $'000        $'000                 $'000 
 
 At the beginning of 
  the year                          15,419              359                   289       16,067                29,342 
 Release to income 
  statement                              -                -                     -            -               (1,022) 
 Arising on 
  acquisitions                      65,939                -                     -       65,939                 8,581 
 Utilised during the 
  year                            (14,265)             (52)                 (113)     (14,430)              (19,895) 
 Unwinding of 
  discount                             380                -                     -          380                 1,158 
 Measurement period 
  adjustment                           999                -                     -          999                     - 
 Translation 
  adjustment                         3,406               17                   (3)        3,420               (2,097) 
---------------------  -------------------  ---------------  --------------------  -----------  -------------------- 
 
 At end of year                     71,878              324                   173       72,375                16,067 
---------------------  -------------------  ---------------  --------------------  -----------  -------------------- 
 
 Non-current                        58,136              269                    65       58,470                 6,084 
 Current                            13,742               55                   108       13,905                 9,983 
 
   Total                            71,878              324                   173       72,375                16,067 
---------------------  -------------------  ---------------  --------------------  -----------  -------------------- 
 

14. Acquisition of subsidiary undertakings

On 21 October 2016, the Group acquired STEM Marketing Limited ("STEM"), a leading global provider of commercial, marketing and medical audits to pharmaceutical companies. The Group has agreed to pay the sellers an additional amount over the next three years if predefined financial thresholds are met. The Group has included contingent consideration related to the additional consideration, which represents its fair value at the date of acquisition.

On 3 April 2017, the Group acquired Steel Eagle LLC, a pharmaceutical packaging facility in Pennsylvania, USA.

On 1 July 2017, the Group acquired Vynamic LLC, a US-based healthcare industry management consulting firm. The Group has agreed to pay the sellers an additional amount over the next three years if predefined financial thresholds are met. The Group has included contingent consideration related to the additional consideration, which represents its fair value at the date of acquisition.

On 10 July 2017, the Group acquired Sellxpert GmbH, a German contract sales organisation. The Group has agreed to pay the sellers an additional amount over the next three years if predefined financial thresholds are met. The Group has included contingent consideration related to the additional consideration, which represents its fair value at the date of acquisition. On 10 July 2017, the Group also acquired a 50% stake in Sellxpert AG, a contract sales organisation based in Switzerland.

On 12 July 2017, the Group acquired Cambridge BioMarketing LLC, a US-based healthcare communications business. The Group has agreed to pay the sellers an additional amount over the next twelve months, if predefined financial thresholds are met. The Group has included contingent consideration related to the additional consideration, which represents its fair value at the date of acquisition.

On 13 September 2017, the Group acquired MicroMass Communications Inc ("MicroMass"), a US-based healthcare communications agency specialising in behavioural change. The Group has agreed to pay the sellers an additional amount over the next three years, if predefined financial thresholds are met. The Group has included contingent consideration related to the additional consideration, which represents its fair value at the date of acquisition.

The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of the above listed acquisitions. Any amendments to these acquisition fair values within the twelve-month timeframe from the date of acquisition will be disclosed in the relevant annual report as stipulated by IFRS 8 (revised 2008), Business Combinations.

In the prior financial year Pegasus Public Relations Limited, a healthcare communications company based in the UK, was acquired on 18 April 2016. The Group has revised its estimate of the acquisition date fair value of intangibles, deferred contingent consideration and trade and other receivables in respect of this acquisition. This has resulted in a corresponding increase in goodwill relative to the amount previously recorded. On the basis that this adjustment was not deemed to be material, it was accounted for in the current year as a measurement period adjustment.

The fair value of the assets and liabilities acquired in the year ended 30 September 2017 (excluding net cash acquired), determined on a provisional basis are set out below:

 
 
 
                                                                            Measurement                           2016 
                                                                                 period       2017               Total 
                               STEM     MicroMass      Other      Total     adjustments      Total     As re-presented 
                              $'000         $'000      $'000      $'000           $'000      $'000               $'000 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Assets 
Non-current assets 
Property, plant and 
 equipment                      122           540     20,776     21,438               -     21,438                 584 
Intangible assets 
 - computer software              -             -         77         77               -         77                   - 
Intangible assets 
 - other intangible 
 assets                      55,332        28,300     31,061    114,693         (1,005)    113,688              10,482 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Total non-current 
 assets                      55,454        28,840     51,914    136,208         (1,005)    135,203              11,066 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
 
Current assets 
Inventories                       -             -        800        800               -        800                   - 
Trade and other 
 receivables                  9,459         6,320     18,814     34,593            (11)     34,582               6,215 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Total current assets          9,459         6,320     19,614     35,393            (11)     35,382               6,215 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
 
Non-current liabilities 
Deferred income tax 
 liabilities                (9,406)      (10,754)          -   (20,160)             171   (19,989)             (1,782) 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Total non-current 
 liabilities                (9,406)      (10,754)          -   (20,160)             171   (19,989)             (1,782) 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
 
Current liabilities 
Trade and other payables    (3,758)       (3,362)   (15,282)   (22,402)               -   (22,402)             (3,542) 
Current income tax 
 liabilities                  1,167             -      (293)        874               -        874               (540) 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Total current liabilities   (2,591)       (3,362)   (15,575)   (21,528)               -   (21,528)             (4,082) 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
 
Identifiable net assets 
 acquired                    52,916        21,044     55,953    129,913           (845)    129,068              11,417 
Intangible assets 
 - goodwill                  50,779        53,170     36,677    140,626           1,844    142,470              11,610 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Total consideration 
 (enterprise value)         103,695        74,214     92,630    270,539             999    271,538              23,027 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
 
Satisfied by: 
Cash                         63,247        63,683     78,715    205,645               -    205,645              16,843 
Net cash acquired           (3,358)       (1,120)    (2,728)    (7,206)               -    (7,206)             (2,397) 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Net cash outflow             59,889        62,563     75,987    198,439               -    198,439              14,446 
Equity Instruments 
 (724,997 ordinary 
 shares)                      6,051             -          -      6,051               -      6,051                   - 
Deferred contingent 
 acquisition consideration   37,755        11,651     16,533     65,939             999     66,938               8,581 
Non-controlling interest          -             -        110        110               -        110                   - 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
Total consideration         103,695        74,214     92,630    270,539             999    271,538              23,027 
--------------------------  -------  ------------  ---------  ---------  --------------  ---------  ------------------ 
 

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, customer relationships, technology and customer contracts.

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 $4,028,000 (2016: $2,214,000). 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 met. On an undiscounted basis, the future payments for which the Group may be liable in respect of current year acquisitions ranges from nil to $64,420,000 at 30 September 2017 (2016: nil to $8,776,000).

The Group's results for the year ended 30 September 2017 and 30 September 2016 includes the following amounts in respect of the businesses acquired during the year:

 
                                              2017      2016 
                                             Total     Total 
                                             $'000     $'000 
 
 Revenue                                    69,630     9,268 
 Gross profit                               32,850     3,191 
 Selling and distribution expenses        (21,263)   (1,585) 
 Other operating expenses*                 (8,365)     (629) 
---------------------------------------  ---------  -------- 
 
 Operating profit                            3,222       977 
 Net interest expense                      (1,120)         4 
---------------------------------------  ---------  -------- 
 
 Profit before tax                           2,102       981 
 Income tax                                  (467)     (197) 
---------------------------------------  ---------  -------- 
 
 Profit after tax                            1,635       784 
---------------------------------------  ---------  -------- 
 

*Other operating expenses represent amortisation of intangible assets.

Had these acquisitions been effected on 1 October 2017, the combined Group would have recorded total revenues of $1,315,507,000 and profit after interest and tax for the financial year of $78,525,000.

15. Employee benefits

 
                                                                           Employee    Employee   Employee 
                                                                            benefit     benefit    benefit 
                                                                              asset   liability      total 
                                                                              $'000       $'000      $'000 
 
 Employee benefit asset/(liability) at 1 October 2016 (as re-presented)      13,939    (20,442)    (6,503) 
 Current service cost                                                       (2,387)           -    (2,387) 
 Settlement gain                                                                  -       2,728      2,728 
 Interest                                                                       276       (209)         67 
 Contributions paid                                                               -       4,218      4,218 
 Remeasurement gain                                                             551      10,547     11,098 
 Translation adjustment                                                           -         (4)        (4) 
------------------------------------------------------------------------  ---------  ----------  --------- 
 Employee benefit asset/(liability) at 30 September 2017                     12,379     (3,162)      9,217 
------------------------------------------------------------------------  ---------  ----------  --------- 
 
 
                                                                           Employee    Employee   Employee 
                                                                            benefit     benefit    benefit 
                                                                              asset   liability      total 
                                                                              $'000       $'000      $'000 
 
 Employee benefit asset/(liability) at 1 October 2015 (as re-presented)      14,639    (24,161)    (9,522) 
 Current service cost                                                       (2,186)       (259)    (2,445) 
 Curtailment gain                                                                 -         367        367 
 Settlement gain                                                                  -       4,069      4,069 
 Interest                                                                       394       (470)       (76) 
 Contributions paid                                                               -       6,870      6,870 
 Remeasurement gain/(loss)                                                    1,092     (9,324)    (8,232) 
 Disposal of liabilities                                                          -       2,240      2,240 
 Translation adjustment                                                           -         226        226 
------------------------------------------------------------------------  ---------  ----------  --------- 
 Employee benefit asset/(liability) at 30 September 2016                     13,939    (20,442)    (6,503) 
------------------------------------------------------------------------  ---------  ----------  --------- 
 

As set out in the consolidated financial statements for the year ended 30 September 2016, the Group operates a number of defined benefit pension schemes which are funded by the payments of contribution 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) pension schemes. The Republic of Ireland schemes had a remeasurement gain in the current year which primarily relates to an increase in the discount rate. The change in the discount rate within the schemes is reflective of changes in bond yields during the year. The United States scheme had a remeasurement gain in the current year arising from a higher than expected return on plan assets. In the Republic of Ireland schemes, there is no longer a salary increase assumption due to the accrual of pension benefits ceasing from 1 December 2015.

During the current and prior year, a general offer was made to the 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 $2,728,000 (2016: $4,069,000, $2,641,000 of which related to discontinued operations). Related professional fees amount to $180,000 (2016: $261,000).

The principal assumptions and associated changes are as follows:

 
 
 
                                     Republic of Ireland Schemes             United States Scheme 
                        ----------------------------------------  ---------------------------------------- 
                                        2017      2016      2015          2017         2016         2015 
 
 Rate of increase in 
 salaries                                n/a       n/a     2.75%    2.75-4.00%   2.75-4.00%   2.75-4.00% 
 Rate of increase in 
  pensions                           0-1.65%   0-1.75%   0-1.75%         0.00%        0.00%        0.00% 
 Inflation rate                        1.65%     1.50%     1.75%         2.75%        2.75%        2.75% 
 Discount rate                         2.05%     1.25%     2.70%         3.60%        3.30%        4.00% 
 
 

16. 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 2017, are as follows:

 
                                        Carrying      Fair 
                                           value     value 
                                           $'000     $'000 
 Financial assets 
 Trade and other receivables             239,261   239,261 
 Derivative financial 
  assets                                   3,752     3,752 
 Cash and cash equivalents               187,469   187,469 
------------------------------  ----              -------- 
                                         430,482   430,482 
------------------------------  ----   ---------  -------- 
 
 Financial liabilities 
 Trade and other payables                 70,739    70,739 
 Derivative financial 
  liabilities                                352       352 
 Interest-bearing 
  loans                                  243,971   248,987 
 Finance leases                              164       164 
 Deferred contingent 
  consideration                           71,878    71,878 
                                         387,104   392,120 
-------------------------------   ---  ---------  -------- 
 
 

Trade and other receivables/payables

For receivables and payables, the carrying value less impairment provision is deemed to reflect fair value where appropriate.

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    Level    Level 
                                   1        2        3    Total 
                               $'000    $'000    $'000    $'000 
Assets measured 
 at fair value 
Designated as hedging 
 instruments 
Cross currency interest 
 rate swaps                        -    3,752        -    3,752 
---------------------------  -------  -------  -------  ------- 
                                   -    3,752        -    3,752 
   ------------------------  -------  -------  -------  ------- 
 
Liabilities measured 
 at fair value 
At fair value through 
 profit or loss 
Deferred contingent 
 consideration                     -        -   71,878   71,878 
 
Designated as hedging 
 instruments 
Cross currency interest 
 rate swaps                        -      352        -      352 
                                   -      352   71,878   72,230 
   ------------------------  -------  -------  -------  ------- 
 
 

Summary of derivatives:

 
 
                               Amount of 
                               financial    Related amounts                      Amount of    Related amounts 
                      assets/liabilities      not offset in                      financial      not offset in 
                         as presented in        the balance     2017    assets/liabilities        the balance     2016 
                       the balance sheet              sheet      Net       as presented in              sheet      Net 
                                                                         the balance sheet 
                                    $000              $'000    $'000                 $'000              $'000    $'000 
 
 Derivative 
  financial assets                 3,752                  -    3,752                21,424                  -   21,424 
 Derivative 
  financial 
  liabilities                        352                  -      352                     -                  -        - 
------------------  --------------------  -----------------  -------  --------------------  -----------------  ------- 
 

All derivatives entered into by the Group are included in Level 2 of the fair value hierarchy 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, where appropriate, adjustments to take account of the credit risk of the Group entity and counterparty.

Deferred contingent consideration

Deferred contingent consideration is included in Level 3 of the fair value hierarchy. Details of the movement in the year are included in note 13. 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 contingent consideration is in respect of acquisitions completed during 2012, 2016 and 2017.

The significant unobservable inputs are:

   --     forecasted average annual net revenue growth rate 13% (2016: 6%); 
   --     forecast average EBIT growth rate 22% (2016: 10%); and 
   --     risk adjusted discount rate 0.02% - 1.55% (2016: 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 rate 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 2017, holding the other inputs constant, would have the following effects:

 
                                     Increase   Decrease 
                                        $'000       $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)                       293      (212) 
----------------------------------  ---------  --------- 
 

Financial ratios

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.

 
                                               2017     2016 
                                              Times    Times 
 
 Net (debt)/cash to annualised EBITDA        (0.32)     1.05 
 Annualised EBITDA interest cover              16.3     10.6 
------------------------------------------  -------  ------- 
 

17. Dividends

The Board has proposed a final dividend of 9.72 $ cent per share which gives a total dividend of 13.30 $ cent for 2017. This dividend has not been provided for in the balance sheet at 30 September 2017 as there was no present obligation to pay the dividend at year end. During the financial year, the final dividend for 2016 (9.04 $ cent per share) and the interim dividend for 2017 (3.58 $ cent per share) were paid giving rise to a reduction in shareholders' funds of $31,279,000.

18. Foreign currency

The principal exchange rates used in translating sterling and dollar balance sheets and income statements were as follows:

 
 
                                           2017         2016 
                                    -----------  ----------- 
                                      $1=StgGBP    $1=StgGBP 
 Balance sheet (closing rate)            0.7469       0.7715 
 Income statement (average rate)         0.7891       0.7045 
 
                                     $1=EuroEUR   $1=EuroEUR 
 Balance sheet (closing rate)            0.8470       0.8960 
 Income statement (average rate)         0.9047       0.9002 
 

19. 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 2017. The Group has provided a guarantee to Magir's bankers for an amount of StgGBP9,500,000 and a loan, gross of interest, of StgGBP10,997,000.

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 senior 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 $10,587,000 for the year ended 30 September 2017 (2016: $11,652,000).

20. Change in Presentation Currency

Following the disposal of the United Drug Supply Chain and Masta businesses in April 2016, the geographic profile of the Group's businesses has changed considerably and the vast majority of the Group's profits are now generated in currencies other than Euro. Half of the Group's profits are currently generated in US Dollars, the Group's US based businesses are demonstrating the greatest growth opportunities and future corporate development activity is likely to be US focused. Consequently, on 4 August 2016 the Group announced that from 1 October 2016, the financial results will be presented in US Dollars. The change in presentation currency has been applied retrospectively.

In re-presenting the Group Financial Statements for the year ended 30 September 2016, the reported information was converted to US Dollars from Euro using the following procedures:

-- Assets and liabilities were translated to US Dollars at the closing rates of exchange at each respective balance sheet date (30 September 2016: $1:EUR0.8960; 30 September 2015: $1:EUR0.8926).

-- Share capital, share premium and other reserves were translated at the historic rates prevailing at the dates of transactions.

-- Income and expenses were translated to US Dollars at an average rate at each of the respective reporting periods. This has been deemed to be a reasonable approximation (30 September 2016: $1:EUR0.9002; 30 September 2015: $1:EUR0.8709).

   --      Differences resulting from the retranslation were taken to reserves. 

To assist shareholders during this change, the impacts on the 2016 results, closing balance sheets and the numerator for the earnings per share as originally reported are set out below:

Group Income Statement

 
                                                          As re-presented 
                                            As restated      and restated 
                                                  (note             (note 
                                                     3)                3) 
                                             year ended        year ended 
                                           30 September      30 September 
                                                   2016              2016 
                                                EUR'000             $'000 
Continuing operations 
 Revenue                                        975,280         1,083,439 
Cost of sales                                 (691,181)         (767,833) 
---------------------------------------  --------------  ---------------- 
Gross profit                                    284,099           315,606 
Selling and distribution expenses             (159,820)         (177,543) 
Administration expenses                        (18,771)          (20,854) 
Other operating expenses                       (16,395)          (18,213) 
Transaction costs                               (1,993)           (2,214) 
Share of joint ventures' profit 
 after tax                                          718               798 
---------------------------------------  --------------  ---------------- 
Operating profit                                 87,838            97,580 
Finance income                                    4,781             5,311 
Finance expense                                (17,417)          (19,349) 
---------------------------------------  --------------  ---------------- 
Profit before tax from continuing 
 operations                                      75,202            83,542 
Income tax expense                             (13,888)          (15,428) 
---------------------------------------  --------------  ---------------- 
Profit for the year from continuing 
 operations                                      61,314            68,114 
---------------------------------------  --------------  ---------------- 
Profit after tax for the year 
 from discontinued operations                   131,958           150,409 
---------------------------------------  --------------  ---------------- 
Profit for the financial year                   193,272           218,523 
---------------------------------------  --------------  ---------------- 
 
Profit attributable to: 
Continuing operations                            61,314            68,114 
Discontinued operations                         131,958           150,409 
---------------------------------------  --------------  ---------------- 
                                                193,272           218,523 
   ------------------------------------  --------------  ---------------- 
Earnings per ordinary share: 
Basic - continuing operations                    24.88c            27.64c 
Basic - discontinued operations                  53.56c            61.04c 
---------------------------------------  --------------  ---------------- 
Basic                                            78.44c            88.68c 
---------------------------------------  --------------  ---------------- 
 
Diluted - continuing operations                  24.78c            27.53c 
Diluted - discontinued operations                53.33c            60.79c 
---------------------------------------  --------------  ---------------- 
Diluted                                          78.11c            88.32c 
---------------------------------------  --------------  ---------------- 
 

Group Statement of Comprehensive Income

 
                                                                              As originally       As re-presented 
                                                                                   reported            year ended 
                                                                                 year ended          30 September 
                                                                               30 September                  2016 
                                                                                       2016 
                                                                                    EUR'000                 $'000 
 
Profit for the financial year                                                       193,272               218,523 
 
Other comprehensive income/(expense): 
Items that will not be reclassified 
 to profit or loss: 
Remeasurement (loss)/gain on 
 Group defined benefit schemes 
 
        *    Continuing operations                                                  (8,468)               (9,409) 
 
        *    Discontinued operations                                                  1,057                 1,177 
Deferred tax on Group defined 
 benefit schemes 
 
        *    Continuing operations                                                      539                   599 
 
        *    Discontinued operations                                                  (211)                 (232) 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
                                                                                    (7,083)               (7,865) 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
Items that may be reclassified 
 subsequently to profit or loss: 
Foreign currency translation 
 adjustment 
 
        *    Continuing operations                                                 (45,373)              (60,031) 
 
        *    Discontinued operations                                                (7,109)               (2,045) 
Reclassification on loss of control 
 of subsidiary undertakings                                                           4,640                 5,283 
Gain on hedge of net investment                                                                                 - 
 in foreign operations                                                                2,262 
Group cash flow hedges: 
 
        *    Effective portion of cash flow hedges - movement into 
             reserve                                                    (4,936)               (5,483) 
 
        *    Effective portion of cash flow hedges - movement out 
             of reserve                                                   (806)                 (896) 
                                                                     ----------              -------- 
Effective portion of cash flow 
 hedges                                                                             (5,742)               (6,379) 
 
        *    Movement in deferred tax - movement into reserve               617                   685 
 
        *    Movement in deferred tax - movement out of reserve             101                   113 
                                                                     ----------              -------- 
Net movement in deferred tax                                                            718                   798 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
                                                                                   (50,604)              (62,374) 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
 
Other comprehensive expense, 
 net of tax                                                                        (57,687)              (70,239) 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
 
Total comprehensive income, net 
 of tax, attributable to equity 
 holders of the parent                                                              135,585               148,284 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
 
Total comprehensive income/(expense) 
 attributable to: 
Continuing operations                                                                 5,250               (6,308) 
Discontinued operations                                                             130,335               154,592 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
                                                                                    135,585               148,284 
-------------------------------------------------------------------  ----------------------  --------  ---------- 
 
 
 
 
  Group Balance Sheet 
 
                                          As at 30 September                As at 30 September 
                                                 2016                              2015 
                                   As originally                     As originally 
                                        reported   As re-presented        reported   As re-presented 
                                         EUR'000             $'000         EUR'000             $'000 
ASSETS 
Non-current 
Property, plant and equipment            122,638           136,877         117,903           132,087 
Goodwill                                 344,521           384,520         358,213           401,306 
Intangible assets                         97,054           108,322         101,693           113,927 
Investment in joint ventures 
 and associates                            8,124             9,067          23,079            25,855 
Derivative financial instruments          11,814            13,185          22,048            24,700 
Deferred income tax assets                 3,849             4,296           3,984             4,463 
Employee benefits                         12,489            13,939          13,067            14,639 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total non-current assets                 600,489           670,206         639,987           716,977 
---------------------------------  -------------  ----------------  --------------  ---------------- 
 
Current 
Inventories                               49,226            54,941          55,017            61,636 
Trade and other receivables              209,472           233,791         205,248           229,939 
Cash and cash equivalents                384,131           428,729         214,078           239,832 
Current income tax assets                  4,061             4,532           1,612             1,806 
Derivative financial instruments           7,382             8,239           4,750             5,321 
Assets held for sale                           -                 -         473,820           530,821 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total current assets                     654,272           730,232         954,525         1,069,355 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total assets                           1,254,761         1,400,438       1,594,512         1,786,332 
---------------------------------  -------------  ----------------  --------------  ---------------- 
 
Equity 
Equity share capital                      12,715            14,535          12,621            14,430 
Share premium                            156,084           187,355         152,164           183,000 
Other reserves                          (41,295)         (179,446)          10,077         (116,219) 
Retained earnings                        595,449           784,432         433,912           600,793 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total equity                             722,953           806,876         608,774           682,004 
---------------------------------  -------------  ----------------  --------------  ---------------- 
 
LIABILITIES 
Non-current 
Interest-bearing loans and 
 borrowings                              216,923           242,108         415,840           465,866 
Provisions                                 5,451             6,084           7,508             8,411 
Employee benefits                         18,315            20,442          18,303            20,505 
Deferred income tax liabilities           27,782            31,008          28,050            31,424 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total non-current liabilities            268,471           299,642         469,701           526,206 
---------------------------------  -------------  ----------------  --------------  ---------------- 
 
Current 
Interest-bearing loans and 
 borrowings                               58,133            64,882          20,811            23,315 
Trade and other payables                 183,190           204,468         191,758           214,831 
Current income tax liabilities            13,070            14,587           4,452             4,988 
Provisions                                 8,944             9,983          18,683            20,931 
Liabilities held for sale                      -                 -         280,333           314,057 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total current liabilities                263,337           293,920         516,037           578,122 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total liabilities                        531,808           593,562         985,738         1,104,328 
---------------------------------  -------------  ----------------  --------------  ---------------- 
Total equity and liabilities           1,254,761         1,400,438       1,594,512         1,786,332 
---------------------------------  -------------  ----------------  --------------  ---------------- 
 

21. Capital commitments

Capital expenditure authorised but not contracted for amounted to $18,900,000 (2016: $29,668,000) at the balance sheet date. This primarily relates to the Group's UK clinical facility move and the Group's investment in Future Fit IT initiatives.

22. Events after the balance sheet date

There have been no significant events after the balance sheet date which require disclosure.

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 27 November 2017.

Additional Information

Key performance indicators and non-IFRS performance measures

The Group reports certain financial measurements 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-IFRS measurements provides useful supplemental information which, when viewed in conjunction with IFRS financial information, provides stakeholders with a more meaningful understanding of the underlying financial and operating performance of the Group and its divisions. These measurements 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-IFRS measurements should be considered as an alternative to financial measures derived in accordance with IFRS. The non-IFRS measurements 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 IFRS.

The principal non-IFRS measurements used by the Group, together with reconciliations where the non-IFRS 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.

 
                                                   2017       2016 
              Calculation                         $'000      $'000 
-------------------------  -----------------  ---------  --------- 
Revenue (continuing)        Income Statement  1,219,755  1,083,439 
Pass - through revenue                        (191,269)  (163,490) 
--------------------------------------------  ---------  --------- 
Net revenue (continuing)                      1,028,486    919,949 
--------------------------------------------  ---------  --------- 
 

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 (if any).

 
                                                        2017     2016 
                     Calculation                       $'000    $'000 
--------------------------------  -----------------  -------  ------- 
Operating profit (continuing)      Income Statement  103,186   97,580 
Transaction costs (continuing)     Income Statement    4,028    2,214 
Amortisation of acquired 
 intangible assets (continuing)              Note 4   22,066   15,977 
--------------------------------  -----------------  -------  ------- 
Adjusted operating profit 
 (continuing)                                        129,280  115,771 
---------------------------------------------------  -------  ------- 
 

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 (if any).

 
                                                                   2017     2016 
 Calculation                                                      $'000    $'000 
-------------------------------------------  -----------------  -------  ------- 
Profit before tax (continuing)                Income Statement   92,834   83,542 
Transaction costs (continuing)                Income Statement    4,028    2,214 
Amortisation of acquired intangible assets 
 (continuing)                                           Note 4   22,066   15,977 
Adjusted profit before tax (continuing)                         118,928  101,733 
--------------------------------------------------------------  -------  ------- 
 

Adjusted operating margin (continuing)

Definition

Measures the adjusted operating profit as a percentage of revenue.

 
                                                                  2017       2016 
                            Calculation                          $'000      $'000 
---------------------------------------  ------------------  ---------  --------- 
Adjusted operating profit (continuing)            Per above    129,280    115,771 
Revenue (continuing)                       Income Statement  1,219,755  1,083,439 
---------------------------------------  ------------------  --------- 
Adjusted operating margin (continuing)                           10.6%      10.7% 
 
 

Adjusted net operating margin (continuing)

Definition

Measures the adjusted operating profit as a percentage of net revenue.

 
                                                          2017     2016 
                            Calculation                  $'000    $'000 
---------------------------------------  ----------  ---------  ------- 
Adjusted operating profit (continuing)    Per above    129,280  115,771 
Net revenue (continuing)                  Per above  1,028,486  919,949 
---------------------------------------  ----------  --------- 
Net operating margin (continuing)                        12.6%    12.6% 
                                                     --------- 
 

Adjusted diluted 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 (if any).

 
                                                                  2017    2016 
                                          Calculation            $'000   $'000 
                                                                        ------ 
Adjusted earnings per share - US cent (continuing)      Note 8   37.12   31.79 
Adjusted earnings per share - US cent (discontinued)    Note 8       -    7.47 
                                                                        ------ 
Adjusted earnings per share                                      37.12   39.26 
                                                                        ------ 
 

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.

 
                                                                                                         2017     2016 
                                   Calculation                                                          $'000    $'000 
                                                                                   -----------------  ------- 
Tax charge (continuing)                                                             Income Statement   20,976   15,428 
Tax relief with respect to transaction costs (continuing)                                                 370       91 
Deferred tax credit with respect to acquired intangible amortisation (continuing)                       5,070    7,564 
 
Income tax expense before exceptional, transaction costs and deferred tax attaching to amortisation 
 of acquired intangible assets                                                                         26,416   23,083 
 
Adjusted profit before tax (continuing)                                                    Per above  118,928  101,733 
Effective tax rate (continuing)                                                                         22.2%    22.7% 
 

Annualised EBITDA

Definition

Annualised EBITDA is continuing and discontinued earnings before net interest, tax, depreciation, amortisation of intangible assets, exceptional items for the previous twelve months adjusted for the share of joint venture profits, dividends received from joint ventures, profit/(loss) on disposal of property, plant and equipment, impairment of intangible assets, the annualisation of the EBITDA of companies acquired during the year and the EBITDA of completed disposals.

 
                                                                                   2017      2016 
                                             Calculation                          $'000     $'000 
--------------------------------------------------------                        -------  -------- 
Operating profit (continuing)                                 Income Statement  103,186    97,580 
Operating profit (discontinued)                                         Note 7        -    19,338 
Depreciation (continuing)                                  Cash Flow Statement   21,221    20,032 
Amortisation of computer software (continuing)                         Note 10    3,384     2,236 
Amortisation of acquired intangible assets (continuing)                 Note 4   22,066    15,977 
Joint venture profit share (continuing)                       Income Statement    (667)     (798) 
Joint venture profit share (discontinued)                               Note 7        -   (1,659) 
Loss on disposal of property, plant and equipment          Cash Flow Statement       55        59 
EBITDA of completed disposals                                           Note 7        -  (17,679) 
Annualised EBITDA of acquisitions(1)                                             14,827     1,735 
------------------------------------------------------------------------------  -------  -------- 
Annualised EBITDA                                                               164,072   136,821 
                                                                                -------  -------- 
 

(1) Includes EBITDA for acquisitions which were not part of the Group for the full financial year.

Financial ratios

Definition

The net (debt)/cash to EBITDA and EBITDA interest cover ratios disclosed are calculated using annualised EBITDA and adjusted net finance expense (net finance expense excluding interest on pension scheme obligations and the unwinding of discount on provisions, see note 6). Net (debt)/cash 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 and as calculated in note 12.

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 year excluding net debt/(cash) adjusted for the historical amortisation of acquired intangible assets and restructuring charges.

 
                                                          2017       2016 
                            Calculation                  $'000      $'000 
                                                     --------- 
                                            Balance 
Net assets                                    Sheet    880,656    806,876 
Net debt/(cash)                             Note 12     53,266  (143,163) 
Assets before net debt/(cash)                          933,922    663,713 
Historical intangible amortisation                     176,997    146,467 
Historical restructuring costs                          47,494     45,144 
Total capital employed                               1,158,413    855,324 
 
Average total capital employed                       1,006,869    849,580 
Adjusted operating profit (continuing)    Per above    129,280    115,771 
Return on capital employed                               12.8%      13.6% 
 

Measurements removed from the additional information section that are shown elsewhere in the preliminary announcement are as follows:

   --      Adjusted operating profit (discontinued) - this measurement is shown in note 8 
   --      Net interest - this measurement is shown in note 6 
   --      EBITDA Interest cover - this measurement is shown in note 16 
   --      Net (debt)/cash - this measurement is shown in note 12 
   --      Net (debt)/cash to EBITDA - this measurement is shown in note 16 

A number of measurements have been removed from the additional information section. The Group believes these are not necessary to provide stakeholders with a more meaningful understanding of the underlying financial operating performance of the Group and its divisions as other performance measures are deemed more appropriate. Measurements removed are as follows:

   --      Adjusted profit before tax (discontinued) 
   --      EBITDA (continuing) 
   --      EBITDA (discontinued) 
   --      Working capital (continuing) 

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR DMMZMNNVGNZM

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November 28, 2017 02:00 ET (07:00 GMT)

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