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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Uniphar Plc | LSE:UPR | London | Ordinary Share | IE00BJ5FQX74 | ORD EUR0.08 (CDI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-4.00 | -1.74% | 226.00 | 222.00 | 230.00 | 226.00 | 226.00 | 226.00 | 75,448 | 08:00:06 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Drug & Proprietary Stores | 2.55B | 44.82M | 0.1641 | 13.77 | 617.01M |
TIDMUPR
RNS Number : 3802M
Uniphar PLC
14 September 2023
Uniphar plc
2023 Interim Results
Uniphar plc, an international diversified healthcare services business, announces its half year results for the six months ended 30 June 2023 together with new medium-term targets and a new divisional structure that reflects our strategic ambition.
FINANCIAL HIGHLIGHTS
Growth 2023 2022 Constant Six months ended 30 June(1) EUR'000 EUR'000 Reported currency(2) Revenue 1,239,582 991,831 25.0% 25.3% Gross profit 187,992 146,135 28.6% 29.4% Commercial & Clinical 62,041 58,541 6.0% 7.2% Product Access 37,762 21,818 73.1% 74.7% Supply Chain & Retail 88,189 65,776 34.1% 34.1% Gross profit margin (Group) % 15.2% 14.7% EBITDA (1) 51,126 44,935 13.8% 14.2% Operating profit 28,006 25,078 11.7% 12.2% Profit before tax excluding exceptional items 22,800 26,125 (12.7%) (12.2%) Net bank debt (1) (178,045) (73,807) Basic EPS (cent) 5.5 5.9 Adjusted EPS (cent) (1) 7.4 8.4 ================================== ========= ========= ======== ============
-- Gross profit growth of 28.6% (5.5% organic(3) ) reflecting growth across all divisions with Supply Chain & Retail continuing to outperform medium-term guidance with 7.7% organic growth(3) .
-- Continued progression in gross profit margin from 14.7% to 15.2%, reflecting focus and growth in higher margin activities.
-- EBITDA growth of 13.8%, from EUR44.9m to EUR51.1m, demonstrating the resilience of the business and continued focus on growth.
-- Adjusted EPS of 7.4 cents representing a decline of 1.0 cents primarily due to increased financing costs.
-- Acquisition of the McCauley Pharmacy Group ("McCauley") completed in January 2023 enhances our retail pharmacy footprint and service offering. McCauleys are recognised as a market leader in the delivery of health, wellbeing and beauty products.
-- Continuing strong normalised free cash flow conversion of 68% (30 June 2022: 70%) which is within our guided range.
-- Net bank debt of EUR178.0m at 30 June 2023 (December 2022: EUR91.2m) and leverage at 1.95x.
-- The Board have declared an interim dividend of EUR0.0064 per ordinary share for the period to 30 June 2023 representing growth of 5% in the period (30 June 2022: EUR0.0061 per ordinary share).
1. Additional information is set out in Alternative Performance Measures (APMs) section.
2. Constant currency growth is calculated by applying the prior period's actual exchange rate to the current period's result.
3. Organic growth is calculated as the gross profit growth of the underlying business in the period adjusting for the contribution from prior period acquisitions and divestments to ensure a like-for-like comparison.
STRATEGIC AND OPERATIONAL HIGHLIGHTS
-- The Group performed strongly during the period and has achieved its target of doubling 2018 pro forma EBITDA ahead of the timeframe committed to at the time of IPO.
-- The Group is pleased to announce an ambitious new target of growing Group EBITDA to EUR200m over the medium-term. This will be achieved through a combination of strong organic growth complemented with acquisitions that meet our disciplined strategic and financial criteria.
-- Technology investment is critical in enabling the Group to deliver on its strategic ambitions. The Group will invest c.EUR60m of strategic capital expenditure in an IT and ERP investment programme that will future proof our market leading Supply Chain and Retail division and enable us to scale our global Pharma platforms. The implementation will be delivered in a non-live environment which significantly reduces the risk on the programme.
-- The Group intends to create a new divisional structure (to be reported from FY23 onwards) to capitalise on the attractive growth opportunities in our target markets and better align with our customers and stakeholders during this next phase of growth:
-- Uniphar Medtech: the Medtech business unit of Commercial & Clinical will become a standalone division reflecting its position as a leading specialist Medtech provider in Europe.
-- Uniphar Pharma: the Pharma business unit of Commercial & Clinical will be combined with Product Access to create 'Uniphar Pharma'. This platform will enable Uniphar to provide an enhanced service offering across the entire lifecycle of an asset, providing patients with access to innovative medicines in global and often complex markets.
-- Uniphar Supply Chain & Retail: the Supply Chain & Retail division will remain unchanged in the new divisional structure.
-- Organic gross profit growth of 5.5% in H1 2023, driven by growth across each of our three divisions:
-- Supply Chain & Retail division: 34.1% gross profit growth of which 7.7% is organic growth. This outperformance highlights our strong market position, the resilience of the Irish market and supports our investment in the division to build future capacity to ensure continued growth.
-- Product Access delivered 73.1% gross profit growth of which 8.5% is organic growth. The growth in gross profit reflects strong underlying business performance combined with the acquisitions of BModesto Group and Orspec Pharma in 2022. These acquisitions demonstrate the Group's commitment to creating a market leading global platform and have provided increased scale across continental Europe and the APAC region.
-- Commercial & Clinical division delivered gross profit growth of 6.0% of which 1.0% is organic, driven by a strong performance in the MedTech business unit offset by the Pharma business unit that is refocusing and investing to address the market opportunities that can be capitalised on under the new divisional structure.
-- Reported free cash flow conversion of 25.9%. When adjusted for the unwinding of the temporary favorable timing positions in December 2022, the adjusted free cash flow is 67.8% which is within our target range of 60-70%.
-- The Group completed the acquisition of the McCauley Pharmacy Group in January 2023 which further enhances the Group's offering in the Irish retail pharmacy market with the addition of 34 retail pharmacies. In August 2023, the Group completed the acquisition of certain assets from Pivot Digital, an omni-channel and digital strategy consultancy business. These capabilities will be integrated into the consultancy arm of Uniphar's Pharma division broadening the Group's overall digital offering.
-- Integration of 2022 acquisitions including BModesto Group, Inspired Health and Orspec Pharma are progressing well and delivering expected benefits.
-- The Group made continued progress on Sustainability across all five of our sustainability pillars. The Group's MSCI rating has recently been upgraded to "AAA". Furthermore, the Group formally submitted Science Based Targets to SBTi for validation during the period.
Ger Rabbette, Uniphar Group Chief Executive Officer said:
"Just over four years post-IPO, I am pleased to announce that we have already achieved our IPO target of doubling EBITDA within five years. We are now focused on creating a strong foundation for our next phase of growth, reorganising our divisions to reflect our strategic ambitions and accelerating our progress in our target markets. As well as maintaining an active acquisition pipeline, we are also making a significant investment in our IT systems to further enhance the technological backbone of our business and reach our ambitious new target of EUR200m EBITDA over the medium-term."
Analyst presentation
A conference call for investors and analysts will be held at 9am (BST), today, 14 September 2023. Analysts and investors who wish to participate should visit www.uniphar.ie to register.
A copy of the presentation and announcement will be available on our website at the time of the call.
Contact details
Uniphar Group Tel: +353 (0) 1 428 7777 Allan Smylie Head of Strategy and Investor Relations investor.relations@Uniphar.ie Davy Tel: +353 (0) 1 679 6363 (Joint Corporate Broker, Nominated Adviser and Euronext Growth Listing Sponsor) Daragh O'Reilly Niall Gilchrist Ivan Murphy RBC Capital Markets (Joint Corporate Broker) Tel: +44 (0) 20 7653 4000 Jamil Miah Rupert Walford Stifel Nicolaus Europe Limited (Joint Tel: +44 (0) 20 7710 7600 Corporate Broker) Matt Blawat Ben Maddison Francis North Q4 PR (Public Relations Adviser to Uniphar) Tel: +353 (0) 1 475 1444 or +353 (0) 87 235 6461 Iarla Mongey
Cautionary statement
This announcement contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses, and prospects of the Uniphar Group. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these projections and forward-looking statements. Any of the assumptions underlying these projections and forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the projections and forward-looking statements may not actually be achieved. Recipients are cautioned not to place undue reliance on any projections and forward-looking statements contained herein. Except as required by law or by any appropriate regulatory authority, the Uniphar Group undertakes no obligation to update or revise (publicly or otherwise) any projection or forward-looking statement, whether as a result of new information, future events or other circumstances.
About Uniphar plc
Headquartered in Dublin, Ireland, the Uniphar Group is an international diversified healthcare services business servicing the requirements of more than 200 multinational pharmaceutical and medical technology manufacturers across three divisions - Commercial & Clinical, Product Access and Supply Chain & Retail. The Group has an established presence in Ireland, the UK, Europe, the US and Asia Pacific.
The Company's vision is to improve patient access to pharmaco-medical products and treatments by enhancing connectivity between manufacturers and healthcare stakeholders. Uniphar represents a strong combination of scale, growth, and profitability.
Commercial & Clinical
In Commercial & Clinical, the Group provides outsourced sales, marketing & distribution solutions to multinational pharmaceutical and medical device manufacturers. Active in Ireland, the UK, Benelux, the Nordics, Germany and the US, the Group is growing with its clients to provide pan-European solutions, with a targeted service offering in the US. Uniphar has built fully integrated digitally enabled customer centric solutions that are supported by our highly experienced and clinically trained teams, leveraging our digital technology and insights which allows us to deliver consistently exceptional outcomes for our clients.
Product Access
In Product Access, the Group is growing two distinct service offerings: 1) "On Demand", which are pharmacy led solutions for sourcing and supplying unlicensed medicines to meet the needs of both retail and hospital pharmacists; and 2) "Exclusive Access", which are manufacturer led solutions for controlling the release of speciality medicines for specifically approved patient populations in agreed markets. The Group currently delivers product access solutions on a global basis.
Supply Chain & Retail
Uniphar is an established market leader in Ireland with c. 53% market share in the wholesale/hospital market, supported by a network of 423 owned, franchised and symbol group pharmacies. The business supports the diverse customer base through the provision of strong service levels coupled with innovative commercial initiatives. Supply Chain & Retail is an Irish only business for the Group, although the manufacturer relationships and infrastructure are also utilised for the benefit of the Commercial & Clinical and Product Access divisions.
Overview
Uniphar delivered a robust performance during the first six months of 2023, achieving significant growth in gross profit and EBITDA. Gross profit growth of 28.6% was driven by organic growth of 5.5% in addition to the impact of the acquisitions completed in the past year. The diversity and geographic breadth of our service offering enables the business to deliver consistent growth.
The Supply Chain & Retail division delivered an excellent performance in a market characterised by medicine shortages and inflationary pressure on costs. Commercial and Clinical delivered a robust performance with the MedTech business unit performing strongly, offset by a Pharma business unit that is refocusing and investing to address the market opportunities that the new divisional structure will enable it to better capitalise on. The Group continues to develop its European medical affairs offering with expertise now available in 11 European countries. The Product Access division leveraged its global scale to support the heightened demand for medicines in short supply in addition to being awarded 8 new expanded access programs (EAPs) in the period. Gross profit margin increased to 15.2% (June 2022: 14.7%), reflecting the Group's ability to deliver growth at a time when input costs are increasing.
The integration of BModesto Group, acquired in late 2022, is progressing in line with plan with previously identified revenue synergies being realised. The acquisition provides the Group with increased scale and a gateway into key European markets. This investment, combined with the previous investments in the division, will enable pharma and biotech customers to bring innovative medicines to global markets across their product lifecycles.
EBITDA has increased by 13.8% (EUR6.2m) to EUR51.1m (June 2022: EUR44.9m) reflecting organic growth achieved across all divisions and the positive contribution of the 2022 acquisitions. Adjusted EPS of 7.4 cents declined by 1.0 cent reflecting the impact of higher interest rates on the Group.
Return on capital employed (ROCE) for the rolling 12-month period closed at 14.7% (December 2022: 17.3%) and is at the upper end of the Group's medium-term target of 12-15%. The change in ROCE is reflective of recent acquisitions and investment in strategic capital expenditure that will deliver improved growth and returns in future years.
Technology has been a key enabler of the Group's growth since IPO and continued investment in technology is critical to enabling the Group to deliver on our medium-term objectives. The Group will invest c.EUR60m in an IT and ERP investment programme. This investment will future proof our market leading Supply Chain and Retail division whilst enabling us to scale our Pharma platform. The implementation will be delivered in a non-live environment which significantly reduces the risk on the programme.
The Group's Balance Sheet remains robust. Net bank debt at 30 June 2023 amounted to EUR178.0m (31 December 2022: EUR91.2m) with the increase attributable to completing the McCauley acquisition and strategic capital investment. The Group's banking facility, renewed in August 2022, consists of a EUR400m revolving credit facility and EUR150m of an uncommitted accordion facility and provides a stable platform to support the Group's growth and investment strategy. The Group's leverage of 1.95x as at 30 June 2023 remains within its medium-term target range.
The Group remains focused on delivering its vision of improving patient access to innovative therapies and treatments by enhancing connectivity between manufacturers and stakeholders. Having achieved the commitments made at the time of IPO, the Group announces ambitious new medium-term targets and our intention to create a new divisional structure that reflects our strategic ambition. We are confident we have the right strategy, the best people and the market opportunity to continue to deliver for our stakeholders.
Sustainability
Uniphar is committed to continuing to make a positive impact across our five sustainability pillars and embedding this strategy within the culture of the Group.
The Group has recently had its MSCI ESG rating upgraded to "AAA" which reflects the Group's commitment to being a leader in sustainability initiatives. Furthermore, the Group formally submitted Science Based Targets to SBTi for validation during the period. This follows the completion of our first Scope 3 assessment during 2022 and is in line with our commitment to setting a science-based carbon reduction target. Pending validation of our SBTi targets, we have set an internal target to reduce our absolute Scope 1 & 2 emissions by 5% per annum between 2019 and 2030, in line with the SBTi 1.5˚C aligned pathway for targets. This would see the Group achieve our climate ambition of at least 50% reduction in our absolute Scope 1 & 2 emissions by 2030.
Current trading
In the first half of 2023, Uniphar performed in line with expectations delivering strong underlying growth offset by higher interest costs. Since the period end, the Group has continued to perform in line with the board's expectations.
Outlook and new targets
Uniphar remains well positioned to achieve continued gross profit growth in each division and is confident of delivering on expectations for the full year.
The Group is pleased to announce a new ambitious target of growing Group EBITDA to EUR200m over the medium-term. This will be achieved through a combination of strong organic growth across each division complemented by earnings accretive M&A. The Group expects the growth in EBITDA to be delivered through:
-- Continued strong organic growth in all three divisions driven by robust underlying market growth and continued market share gains underpinned by an investment programme in infrastructure, digital platforms, strategic capex and talent.
-- M&A remaining a key component of the Group's compounding growth story with a pipeline of acquisition opportunities continuing to be reviewed to add further scale and breadth to the existing platform with a focus on building out the Pharma platform.
Our medium-term guidance for gross profit growth for the new divisions is:
-- Uniphar Pharma: Double digit -- Uniphar Medtech: High-single digit -- Uniphar Supply Chain & Retail: Low-single digit
Disciplined capital allocation remains a focus for the Group and M&A is expected to continue to play an important role in Uniphar's growth strategy. The Group has an active pipeline of acquisition opportunities to add further capability to our existing platform.
In addition to the headline EBITDA growth target, the Group's broader medium-term guidance is as follows:
-- Target ROCE of 12% - 15% -- Focus on cash generation and target an adjusted free cash flow conversion of 60% - 70% -- Progressive dividend policy that seeks to return capital to shareholders each year -- Net bank debt / EBITDA not to exceed 2.5x
Acquisitions and integration update
Uniphar completed the acquisition of the McCauley Pharmacy Group in the period which added 34 pharmacies to the Group. The integration of the acquisitions completed during 2022 are progressing well and in line with expectation. The Group maintains a disciplined approach to capital allocation with an active pipeline of acquisition opportunities across all divisions and internationally to further expand our capability and geographic reach.
Commercial & Clinical
Acquisition update
In August 2023 the Group acquired certain assets and contracts from Pivot Digital. Pivot provide omni-channel consultancy, digital strategy and execution services to global pharma and biotech clients. Pivot's capabilities will be integrated into the consultancy arm of Uniphar's Pharma division broadening the group's digital offering.
Integration update
The Group acquired Inspired Health in September 2022 which increases Uniphar's capability to offer market research and commercialisation insights to pharmaceutical and MedTech manufacturers and further deepens our presence in the strategically important US market. The integration of the business into the wider Group is progressing well and in line with expectations.
Product Access
Integration update
The integration of the acquisitions of the BModesto Group in November 2022 and Orspec Pharma in August 2022 are progressing well delivering previously identified revenue synergies and creating cross-selling opportunities. The BModesto Group provides a wide range of services including the distribution of medicines on both an exclusive and on-demand basis, clinical trial services, market authorisation holder and medical device distribution. The acquisition broadens our European scale with a well-located facility in the Netherlands to supply mainland Europe.
Orspec Pharma provides the Group with physical infrastructure in the Asia Pacific region. Orspec Pharma specialises in the supply of unlicensed medicines and the delivery of EAP's across the Asia region from its locations in Australia, New Zealand and Singapore.
Supply Chain & Retail
Acquisition update
In January 2023, the Group completed the acquisition of the McCauley Pharmacy Group. This acquisition added 34 pharmacies net of three divestments which were completed as a requirement of the CCPC approval. The McCauley Pharmacy Group is widely recognised as a leading brand across health, wellbeing and beauty, and their expertise and advanced digital offering will complement our fast-growing consumer business in the Supply Chain & Retail division.
Strategic capital expenditure
Uniphar's track record of investment in technology has been a critical enabler of the Group's transformational growth journey to date. To continue to support sustainable growth into the future, Uniphar has committed to a multi-year ERP and IT investment programme. Through the previously announced investment in a new state of the art distribution facility, Uniphar have the unique ability to implement this investment programme in a non-live environment, significantly de-risking the programme. This investment will provide the foundation in which to future proof our market leading Supply Chain & Retail division and will enable us to scale our global Pharma platforms. Uniphar estimate this project will require c.EUR60m of strategic capex. This investment is a key component in achieving our new medium-term target of EUR200m EBITDA.
Principal Risks & Uncertainties
The Group's Risk Management Policy provides the framework to identify, assess, monitor, and manage the risks associated with the Group's business. It is designed to enable the Group to meet its business objectives by appropriately managing, rather than eliminating, these risks. The principal risks & uncertainties faced by the Group can be found in the 2022 Annual Report on pages 30 to 34. A copy of the Annual Report can be downloaded from our website www.uniphar.ie.
2023 Highlights
The Group continues to ensure that the risk management framework is integrated in the day-to-day activities across the business. During the period ended 30 June 2023, the Group carried out the following:
-- Reviewed the Group Risk Register, updating for all the key risks facing the Group at this time; and
-- Performed a review of emerging and new risks, in particular economic and geopolitical risk with regards to the ongoing war in Ukraine and global economic instability.
The key principal risks and uncertainties faced by the Group are summarised as follows:
Strategic Risks
-- Economic and geopolitical risk - The global macroeconomic, regulatory, political, and legal environment may impact the markets in which we operate and in turn our client and supplier base. This may adversely affect the financial and operational results of the Group. The Group continues to monitor the ongoing war in Ukraine and the challenges posed by higher inflation and interest rates on the Group and its stakeholders.
-- Acquisitions - Growth through acquisitions continues to remain a key strategy for the Group. Failure to identify, complete and integrate acquisitions successfully may directly impact the Group's projected growth.
-- Key personnel & succession planning - Failure to attract, retain and develop the skills and expertise of its people may adversely impact the Group's performance especially in constrained labour markets.
-- Market perception & reputational risk - Failure to deliver in line with market expectations may result in reputational damage, impacting the Group's ability to achieve its strategic targets.
-- Loss of competitive position - Failure of the Group to respond to any changes in the environment in which it operates may result in loss of market share, which may put pressure on profitability and margins.
-- Environment & sustainability - The increasing global focus on environmental and sustainability governance is recognised by the Group, and by its stakeholders. Failure to appropriately assess, monitor and manage the Group's impact on the environment and the communities in which it operates may result in reputational damage, impacting the Group's ability to deliver results. Furthermore, failure to comply with mandatory reporting obligations may impact the Group's financial and operational results.
-- Transformation project execution - The Group is embarking on several transformational projects that will provide the platform and capacity to grow over the coming years. Failure of the Group to effectively deliver such projects may result in cost overruns or reputational damage impacting the Group's ability to deliver strategic targets.
Operational Risks
-- Cybercrime - Failure to protect against the ongoing threat of a cyber-attack could lead to a breach in security, impacting operations, financial transactions, and sensitive information. The knock-on impact from an attack on one of our business partners is also an area of risk for the Group.
-- IT systems - Digital capabilities are a specific strategic offering of Uniphar, interruption or downtime may have a negative impact on the Group's operations, financial, and competitive positions.
-- Business interruption - External factors such as natural disasters, environmental hazard or industrial disputes may result in potential lost sales and loss of customer loyalty.
-- Health & safety - Failure to implement and follow proper health and safety procedures may have adverse effects on employees or patients.
-- Laws, regulations & compliance - Failure to operate under any of the stringent laws and regulations the Group is subject to could result in financial penalties, reputational damage, and a risk to business operations.
Financial Risks
-- Foreign currency - The Group's reporting currency is Euro. Exposure to foreign currency is present in the normal course of business, together with the Group operating in jurisdictions outside of the Eurozone.
-- Treasury - The Group is exposed to liquidity, interest rate and credit risks. The Group is exposed to increases in interest rates and credit risks from changes to economic conditions.
Business Reviews
Commercial & Clinical
Growth 2023 2022 Constant Six months ended 30 June EUR'000 EUR'000 Reported currency Revenue 154,839 162,322 (4.6%) (3.4%) Gross profit 62,041 58,541 6.0% 7.2% Gross profit margin % 40.1% 36.1% 400bps ========= ========= =========
Overview
Commercial & Clinical provides outsourced sales, marketing, distribution and consultancy solutions to pharmaceutical and medical device manufacturers on a pan-European basis, serving 15 European countries in H1 2023 compared to four at the time of IPO, with a targeted service offering in the US. The division is focused on the commercialisation of speciality products to ensure that patients and their physicians are offered the best treatments for their conditions. The division has two business units, MedTech and Pharma, both of which are driven by the mission of ensuring patients have access to the treatments they need when they need them.
H1 2023 Performance
Commercial & Clinical delivered organic gross profit growth of 1% in H1 2023. The MedTech business unit delivered strongly against their strategy and that growth was offset by the Pharma business unit which is refocussing and investing to address the market opportunities that the new divisional structure will enable it to capitalise on.
Key highlights from the six-month period ended 30 June 2023 include:
-- Gross profit growth of 6% against a strong comparative period driven by growth in the gross profit margin to 40.1%.
-- Gross profit generated from outside Ireland represents 52% of the divisional gross profit. -- Growth in gross profit margin from 36.1% (June 2022) to 40.1%
-- Rebrand of the MedTech entities under the brand 'Uniphar MedTech' further integrating the pan-European offering.
-- Increase in number of manufacturers represented in more than one geography to 83 (June 2022: 75).
-- Integration of the acquisition of Inspired Health is progressing well.
MedTech
The MedTech business unit provides a fully integrated solution for our clients in sales, marketing and distribution of medical devices across specialisms such as interventional cardiology and radiology, orthopaedics, ophthalmology, minimally invasive surgery, diagnostic imaging and critical care.
The business delivered strong growth in the period capitalising on our ability to deliver excellent service to our customers. Our business continued to partner with suppliers on supply chain constraints and improvement is being seen against the challenges experienced in 2022. A focus for the business in 2023 has been the continued integration of our pan-European service offering. The consolidation of our business unit under a single brand name of 'Uniphar MedTech' is the next step in that journey.
The strength of MedTech has been the geographic and clinical diversity of its portfolio combined with deep trusted relationships with manufacturers and customers. The opening of a US-based facility in mid-2023 gives the business the capability to support European MedTech manufacturers seeking to access the US market in addition to offering pharma solutions to US manufacturers.
Pharma
The Pharma business unit supports pharmaceutical partners in driving the commercialisation of their products leveraging data, insights and marketing solutions to deliver targeted omni-channel solutions. The pharmaceutical industry is constantly evolving as manufacturers develop innovative therapies and seek new methods of commercialising them.
Pharma delivered a solid performance in 2023 with the result reflective of a period of refocusing and investing to address the market opportunities that the new divisional structure will enable it to capitalise on. The business has capitalised on the emergence of the hybrid model of engagement with Healthcare Practitioners (HCP's) combining both in-person and virtual engagement. HCP's now seek information that is customised to their interests, delivered in a convenient medium at a time of their choice rather than mass marketing. Uniphar Pharma's suite of services across the product lifecycle enable us to support our customers reach their target markets and drive growth.
Our recently launched medical affairs capability across Europe is a valuable addition to the suite of services we can offer our customers. The division is developing local medical affairs expertise in 11 countries across Europe and the market response has been positive to date. This experienced team has launch experience in Rare Disease, Immunology, Oncology, Haematology, Neurology, Vaccines and Paediatrics and will support clients launching therapies in European markets that address unmet needs and deliver the best quality of care for patients.
Product Access
Growth 2023 2022 Constant Six months ended 30 June EUR'000 EUR'000 Reported currency Revenue 253,060 74,474 239.8% 242.0% Gross profit 37,762 21,818 73.1% 74.7% Gross profit margin % 14.9% 29.3% (1440bps) ======== ======== =========
Overview
The Product Access division is focussed on ensuring equitable access to medicines for patients. We partner with manufacturers to provide global reach and world class execution to get their medicines to the patients who need them with many of these being early stage, high tech or otherwise difficult to source medicines. The division operates through two business units being On Demand and Exclusive Access.
H1 2023 Performance
Product Access achieved transformational growth in the period driven by the acquisitions of BModesto Group and Orspec Pharma in the second half of 2022. Gross profit increased by 73.1% to EUR37.8m with organic gross profit growth of 8.5% achieved in the period.
Key highlights from the period include:
-- Gross profit growth of 73.1% of which 8.5% is organic growth. -- Gross profit margin declined to 14.9% due to the recent acquisition of the BModesto Group.
-- 8 new Expanded Access Programs (EAPs) awarded in the period with 83 in total compared to 42 at the time of IPO.
-- 73% of the division's gross profit is generated outside of Ireland.
-- The integration of BModesto Group and Orspec Pharma, both of which were acquired in the second half of 2022, is progressing according to plan and opening up opportunities in mainland Europe and in the Asia Pacific region.
On Demand
The On Demand business unit is a leading supplier of unlicenced and difficult to source medicines to healthcare providers globally. The business delivered a very strong performance in the period driven by global medicine shortages combined with the acquisitions of the BModesto Group and Orspec Pharma in 2022. The global shortages of medicines has created opportunities for specialist suppliers such as Uniphar to source and deliver them to where they are needed across the world.
The integration of the 2022 acquisitions of the BModesto Group and Orspec Pharma is progressing well and both businesses are performing strongly in the period post-acquisition. They have provided the Group with the platform to geographically extend the On Demand offering by providing a physical presence for the Group in mainland Europe and in key Asia Pacific markets.
A focus for the business is further developing our unlicenced medicines business utilising the infrastructure that the recent acquisitions provide combined with the deep logistics knowledge from our Supply Chain & Retail division.
Exclusive Access
The Exclusive Access business unit focusses on delivering Expanded Access Programmes (EAPs) for pharmaceutical manufacturers. EAPs allow patients gain access to innovative therapies that may not be available to them through other routes whilst enabling the manufacturer gain greater knowledge and understanding of the patient, the medicine and the market while refining their commercialisation strategy.
The Exclusive Access business unit delivered a solid performance and was awarded eight new Expanded Access Programs (EAPs) in the period. The drug development pipeline of our target customers remains strong and the strength of that pipeline will ultimately result in additional opportunities in future periods.
A particular focus for the business is in cell and gene therapy. These treatments are frequently complex to deliver from a clinical and manufacturing perspective and often have stringent distribution criteria. Our proprietary technology platform, Uniphi, continues to be developed to support patient enrolment and personalised patient education. This platform, combined with our experience in delivering such treatments, makes Uniphar a compelling partner for manufacturers considering an EAP as part of their launch strategy.
Supply Chain & Retail
Growth 2023 2022 Constant Six months ended 30 June EUR'000 EUR'000 Reported currency Revenue 831,683 755,035 10.2% 10.2% Gross profit 88,189 65,776 34.1% 34.1% Gross profit margin % 10.6% 8.7% 190bps ======== ======== ========
Overview
The Supply Chain & Retail division comprises of our pre-wholesale and wholesale pharmaceutical distribution business, with approximately 1,900 community pharmacy customers and a vertically integrated model with 423 owned, franchised or supported pharmacies. Uniphar holds c.53% of the current market share and is an essential part of the national health infrastructure in Ireland.
H1 2023 performance
-- 34.1% growth in gross profit of which 7.7% is organic growth. -- Continued growth in gross profit margin to 10.6% (2022: 8.7%). -- Strong gross profit growth is driven by volume growth in the market.
-- McCauley Pharmacy Group acquisition completed in January 2023 with the integration progressing in line with expectations.
-- New consumer products standalone distribution facility opened in 2023.
Wholesale
The Wholesale business delivered strong business volume growth in the period supported by demand from customers combined with overall growth in the market. Medicine shortages continue to challenge the business from an operational perspective in getting product distributed to customers in a timely and equitable manner. The business infrastructure has proven capable of responding to a strained supply chain with the continued growth highlighting the necessity of investing for the future. Progress is being made on our multi-year strategic investment programme in a new distribution facility. Once operational, this facility will encompass the latest technology enabling the doubling of existing capacity levels and ensuring that we continue to provide a market leading service offering to our customers.
Pre-wholesale
The pre-wholesale business performed well in the period and continues to be the partner of choice for manufacturers seeking pre-wholesale solutions in the Irish market. Cold chain pharmaceutical products continue to show volume growth and require more sophisticated capabilities that the business is experienced in delivering.
Retail
Our vertically integrated network of owned or franchised stores now amounts to 423 pharmacies that are supported through the Uniphar symbol group. Symbol group members are offered a range of both front and back-office support, in addition to a dedicated team on the ground to enable community pharmacies to better compete with the larger and multi-national owned chains.
Retail pharmacies performed strongly in the period driven by volume growth combined with the addition of the McCauley Group stores. Front-of-shop consumer products continue to be a growth opportunity and fits well with our existing distribution infrastructure. Our ambition is to continue to grow the consumer products category to become the go-to partner for brands seeking a presence on Irish pharmacy selves.
Acquisitions
The division completed the acquisition of the McCauley Pharmacy Group in January 2023 following approval from the CCPC. The McCauley Group brings an additional 34 pharmacies into the Group net of the three which were disposed to satisfy the CCPC agreed remedies. McCauley has built a strong consumer products offering that complements our existing estate and our ambition of becoming the go-to partner for brands seeking growth.
Financial Review
Summary financial performance
Growth 2023 2022 Constant Six months ended 30 June EUR'000 EUR'000 Reported currency IFRS measures Revenue 1,239,582 991,831 25.0% 25.3% Gross profit 187,992 146,135 28.6% 29.4% Operating profit 28,006 25,078 11.7% 12.2% Basic EPS (cent) 5.5 5.9 Alternative performance measures Gross profit margin 15.2% 14.7% EBITDA 51,126 44,935 13.8% 14.2% Adjusted EPS (cent) 7.4 8.4 Net bank debt (178,045) (73,807) Return on capital employed 14.7% 16.6%
Revenue
Revenue increased by 25.0%, which was achieved through a combination of organic growth, driven by a strong performance in the Supply Chain & Retail division together with the impact of the acquisitions completed since June 2022.
Gross profit
Gross profit has increased by 28.6% in the period primarily due to the factors impacting revenue outlined above. The Gross profit margin has increased from 14.7% to 15.2% reflecting the continued expansion of the Group into higher margin businesses and categories.
Divisional gross profit
Growth 2023 2022 Constant Six months ended 30 June EUR'000 EUR'000 Reported Currency Commercial & Clinical 62,041 58,541 6.0% 7.2% Product Access 37,762 21,818 73.1% 74.7% Supply Chain & Retail 88,189 65,776 34.1% 34.1% 187,992 146,135 ========== ============
EBITDA
EBITDA has increased by EUR6.2m (13.8%) to EUR51.1m. This is driven by the organic growth in revenue and gross profit together with the impact of the acquisitions completed in the past year. Overheads have increased as a result of increased investment in the cost base to facilitate future growth combined with some inflationary pressures on cost.
Exceptional items
Exceptional costs amounted to EUR3.8m for the period and primarily relate to acquisition integration costs (EUR1.7m), loss on disposal of businesses and assets (EUR1.4m), redundancy and restructuring costs (EUR1.0m), strategic business transformation costs (EUR0.9m), professional fees associated with acquisitions (EUR0.8m) and other costs (EUR0.2m). These costs are offset by a decrease in deferred contingent consideration (EUR1.7m) and an exceptional income tax expense credit (EUR0.6m). Further details are provided in note 3.
Earnings per share
Basic earnings per share decreased from 5.9 cent to 5.5 cent. The decrease in earnings is primarily attributable to a reduction in the profit attributable to owners of EUR1.0m due to increased financing costs in the period. The weighted average number of shares in the period is 272,815,000 (2022: 272,297,000). The weighted average number of ordinary shares includes the effect of shares granted under the LTIP arrangement that have met the share price performance conditions but will not vest until 31 December 2024.
Adjusted earnings per share has decreased from 8.4 cent to 7.4 cent reflecting the increased financing costs in the period partially offset by increased operating profits arising from organic growth and acquisitions.
On a like for like basis, adjusted earnings per share decreased from 8.4 cent to 7.4 cent by applying the weighted average number of shares as at June 2023 to both periods, to provide a more meaningful comparison.
Cash flow and net bank debt
Reported free cash flow conversion in the six months to 30 June 2023 was 25.9% (2022: 47.5%) reflecting as expected the unwind of temporary favourable working capital positions from 2022 with the Group's net bank debt position being EUR178.0m. This reflects an increase in net bank debt of EUR86.8m primarily driven by investment in acquisitions and strategic capital projects.
2023 2022 Six months ended 30 June EUR'000 EUR'000 Net cash (outflow)/inflow from operating activities (12,996) 10,708 Net cash outflow from investing activities (62,829) (25,538) Net cash inflow from financing activities 27,585 5,541 Foreign currency translation movement 194 (433) ========= ========= (Decrease)/increase in cash and cash equivalents in the period (48,046) (9,722) ========= ========= Cash flow from movement in borrowings (38,782) (15,788) ========= ========= Movement in net bank (debt)/cash (86,828) (25,510) ========= =========
The cash outflow from operating activities of EUR12.9m is reflective of the unwind of temporary favourable working capital positions from 2022 combined with higher levels of interest payments and corporation tax payments compared to 2022. When adjusted for the unwind of the temporary timing positions in December 2022, the adjusted free cash flow is 67.8% which is within our target range of 60-70%.
The net cash outflow from investing activities of EUR62.8m primarily consists of payments for acquisitions of EUR23.4m (net of cash acquired), capital investments of EUR14.0m, deferred and contingent consideration payments of EUR4.1m and repayment of debt acquired on acquisition of EUR22.7m. Of the capital investments, EUR10.4m is strategic in nature primarily relating to the commencement of investment in a new distribution facility.
The net cash inflow from financing activities of EUR27.6m was due to a drawdown of borrowings to support business growth offset by principal lease payments and the payment of dividends.
Taxation
The tax charge excluding exceptional items in the period is EUR4.0m and equates to an effective tax rate of 17.5%. This compares to a charge of EUR4.5m in the same period last year with an effective tax rate of 17.3%. The increase in the effective tax rate of 0.2% is attributable to the increased contribution of profits from higher tax rate jurisdictions coupled with the increase in the UK corporation tax rate from April 2023. The effective tax rate is calculated as the income tax charge for the period as a percentage of the profit before tax and exceptional items.
Foreign exchange
The Group's expansion into new geographies, and the continued growth in existing geographies operating outside of the Eurozone, results in the primary foreign exchange exposure for the Group being the translation of local Income Statements and Balance Sheets into Euro for Group reporting purposes.
On a constant currency basis, revenue increased by 25.3% (vs 25.0% reported growth), gross profit increased 29.4% (vs reported growth 28.6%) and operating profit increased by 12.2% (vs 11.7% reported growth).
H1 2023 H1 2022 Average Average GBP 0.8764 0.8422 US Dollar 1.0804 1.0928 Swedish Krona 11.326 10.476 =============== ======== ========
Return on capital employed
Return on capital employed for the rolling 12-month period closed at 14.7% (December 2022: 17.3%) performing in line with the Group's medium-term target. The reduction of 2.6% since 2022 reflects the increased investment by the Group in strategic capital expenditure that will deliver growth to the Group in the medium term. The investments made during 2023, both from a capital and acquisitions perspective, will deliver further benefits and growth in the coming years.
Dividends
A final dividend of EUR3.1m relating to 2022 was paid in May 2023. The Board has committed to a progressive dividend policy and, reflective of this, a 2023 interim dividend of EUR0.0064 per ordinary share has been declared. It is proposed to pay the dividend on 20 October 2023 to ordinary shareholders on the Company's register on 29 September 2023.
In accordance with company law and IFRS, these dividends have not been provided for in the Balance Sheet at 30 June 2023.
Statement of Directors' responsibilities
The Directors confirm to the best of their knowledge that the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the EU, and to the best of their knowledge and belief:
a) the condensed consolidated interim financial statements comprising the Condensed Consolidated Group Income Statement, the Condensed Consolidated Group Statement of Comprehensive Income, the Condensed Consolidated Group Balance Sheet, the Condensed Consolidated Group Cash Flow Statement, the Condensed Consolidated Group Statement of Changes in Equity and related notes have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU, and are prepared in order to comply with the Euronext Growth Market Rule Book and AIM Rules for Companies;
b) the interim results include a fair review of the important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated interim financial statements for the half year ended 30 June 2023.
Signed on behalf of the Board
M. Pratt G. Rabbette
13 September 2023
Independent review report to Uniphar Plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Uniphar Plc's condensed consolidated interim financial statements (the "interim financial statements") in the 2023 Interim results of Uniphar Plc for the six month period ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
The interim financial statements, comprise:
-- the Condensed Consolidated Group Balance Sheet as at 30 June 2023; -- the Condensed Consolidated Group Income Statement for the period then ended;
-- the Condensed Consolidated Group Statement of Comprehensive Income for the period then ended;
-- the Condensed Consolidated Group Cash Flow Statement for the period then ended;
-- the Condensed Consolidated Group Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements in cluded in the 2023 Interim results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' ("ISRE (Ireland) 2410") issued for use in Ireland. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the 2023 Interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (Ireland) 2410. However future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The 2023 Interim results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the 2023 Interim results in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. In preparing the 2023 Interim results including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial statements in the 2023 Interim results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for management purposes and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers
Chartered Accountants
13 September 2023
Dublin
Notes:
(a) The maintenance and integrity of the Uniphar plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
(b) Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Condensed Consolidated Group Income Statement
for the six months ended 30 June 2023
Six months ended 30 June 2023 Six months ended 30 June 2022 Pre- Exceptional Total Pre- Exceptional Total exceptional (note 3) exceptional (note 3) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Notes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Revenue 2 1,239,582 - 1,239,582 991,831 - 991,831 Cost of sales (1,051,590) - (1,051,590) (845,696) - (845,696) ------------ ------------ ------------ ------------ ------------ ------------ Gross profit 187,992 - 187,992 146,135 - 146,135 Selling and distribution costs (38,912) - (38,912) (34,747) - (34,747) Administrative expenses (115,177) (4,643) (119,820) (80,545) (5,784) (86,329) Other operating (expense) / income 166 (1,420) (1,254) 19 - 19 ------------ ------------ ------------ ------------ ------------ ------------ Operating profit 34,069 (6,063) 28,006 30,862 (5,784) 25,078 Finance (cost) / income 4 (11,269) 1,654 (9,615) (4,737) - (4,737)
------------ ------------ ------------ ------------ ------------ ------------ Profit before tax 22,800 (4,409) 18,391 26,125 (5,784) 20,341 Income tax expense (3,987) 615 (3,372) (4,530) 284 (4,246) ------------ ------------ ------------ ------------ ------------ ------------ Profit for the financial period 18,813 (3,794) 15,019 21,595 (5,500) 16,095 ------------ ------------ ------------ ------------ ------------ ------------ Attributable to: Owners of the parent 15,012 16,061 Non-controlling interests 7 34 ------------ ------------ Profit for the financial period 15,019 16,095 ------------ ------------ Attributable to: Continuing operations 15,019 16,095 ------------ ------------ Profit for the financial period 15,019 16,095 Earnings per ordinary share (in cent): Continuing operations 5.5 5.9 ------------ ------------ Basic and diluted earnings per share (in cent) 5 5.5 5.9 ------------ ------------
Condensed Consolidated Group Statement of Comprehensive Income
for the six months ended 30 June 2023
Six months Six months ended ended 30 June 30 June 2023 2022 (unaudited) (unaudited) EUR'000 EUR'000 Profit for the financial period 15,019 16,095 Other comprehensive income/(expense): Items that may be reclassified to the Income Statement: Unrealised foreign currency translation adjustments 943 (1,302) Total comprehensive income for the financial period 15,962 14,793 -------------- ------------ Attributable to: Owners of the parent 15,955 14,759 Non-controlling interests 7 34 -------------- ------------ Total comprehensive income for the financial period 15,962 14,793 -------------- ------------ Attributable to: Continuing operations 15,962 14,793 -------------- ------------ Total comprehensive income for the financial period 15,962 14,793 -------------- ------------
Condensed Consolidated Group Balance Sheet
as at 30 June 2023
30 June 31 December 2023 2022 (unaudited) (audited) Notes EUR'000 EUR'000 ASSETS Non-current assets Intangible assets - goodwill 7 512,876 482,981 Intangible assets - other assets 7 37,867 24,459 Property, plant and equipment, and right-of-use assets 8 193,740 166,628 Financial assets - Investments in equity instruments 25 25 Deferred tax asset 10,781 9,020 Other receivables 1,755 509 Total non-current assets 757,044 683,622 ------------ ----------- Current assets Inventory 175,472 157,656 Trade and other receivables 213,662 164,212 Cash and cash equivalents 55,658 103,704 Assets held for sale 9 1,600 1,600 Total current assets 446,392 427,172 ------------ ----------- Total assets 1,203,436 1,110,794 ------------ ----------- EQUITY Capital and reserves Called up share capital presented as equity 10 21,841 21,841 Share premium 176,501 176,501 Share based payment reserve 2,203 718 Other reserves 2,951 2,008 Retained earnings 100,403 88,476 ------------ ----------- Attributable to owners 303,899 289,544 Attributable to non-controlling interests 246 239 ------------ ----------- Total equity 304,145 289,783 ------------ ----------- LIABILITIES Non-current liabilities Borrowings 11 216,997 187,431 Provisions 12 88,644 94,060 Lease obligations 13 123,487 105,919 Total non-current liabilities 429,128 387,410 ------------ ----------- Current liabilities Borrowings 11 16,706 7,490 Lease obligations 13 15,364 14,315 Trade and other payables 435,017 407,206 Corporation tax 3,076 4,590 Total current liabilities 470,163 433,601 ------------ ----------- Total liabilities 899,291 821,011 ------------ ----------- Total equity and liabilities 1,203,436 1,110,794 ------------ -----------
Condensed Consolidated Group Cash Flow Statement
for the six months ended 30 June 2023
Six months Six months ended ended 30 June 30 June 2023 2022 Notes (unaudited) (unaudited) EUR'000 EUR'000 Operating activities Cash inflow from operating activities 15 3,770 19,166 Payment of deferred contingent consideration - (1,250) Interest paid (6,889) (1,828) Interest paid on lease liabilities 13 (2,308) (1,824) Corporation tax payments (7,569) (3,556) ------------ ------------ Net cash (outflow)/inflow from operating activities (12,996) 10,708 ------------ ------------ Investing activities Payments to acquire property, plant and equipment - Maintenance (2,426) (3,489) Payments to acquire property, plant and equipment - Strategic projects (7,379) (5,461) Receipts from disposal of property, plant and equipment (net of disposal expenses) 1,061 72
Receipts from disposal of businesses (net of disposal expenses) 745 - Payments to acquire intangible assets - Maintenance (1,209) (821) Payments to acquire intangible assets - Strategic projects (2,990) (1,670) Payments to acquire subsidiary undertakings (net of cash acquired) (23,369) (11,874) Repayment of debt acquired on acquisition of subsidiary undertakings (22,664) - Payments on prior year acquisitions (561) - Payment of deferred and deferred contingent consideration (4,137) (2,295) Receipt of deferred consideration receivable 100 - ------------ ------------ Net cash outflow from investing activities (62,829) (25,538) ------------ ------------ Financing activities Proceeds from borrowings 30,000 15,133 Repayments of borrowings (434) (57) Increase in invoice discounting facilities 9,216 - Payment of dividends 6 (3,085) (3,001) Principal element of lease payments 13 (8,112) (6,534) ------------ ------------ Net cash inflow from financing activities 27,585 5,541 ------------ ------------ Decrease in cash and cash equivalents in the period (48,240) (9,289) Foreign currency translation of cash and cash equivalents 194 (433) Opening balance cash and cash equivalents 103,704 78,025 ------------ ------------ Closing balance cash and cash equivalents 14 55,658 68,303 ------------ ------------
Condensed Consolidated Group Statement of Changes in Equity
for the six months ended 30 June 2023
Share Share Share Foreign Revaluation Capital Retained Attributable Total capital premium based currency reserve redemption earnings to non- Equity payment translation reserve controlling reserve reserve interests EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 At 1 January 2022 21,841 176,501 183 4,604 700 60 47,555 120 251,564 Profit for the financial period - - - - - - 16,061 34 16,095 Movement in share-based payment reserve - - 213 - - - - - 213 Other comprehensive expenses: Movement in foreign currency translation reserve - - - (1,302) - - - - (1,302) Transactions recognised directly in equity: Dividends paid (Note 6) - - - - - - (3,001) - (3,001) At 30 June 2022 (unaudited) 21,841 176,501 396 3,302 700 60 60,615 154 263,569 -------- -------- -------- ----------- ----------- ---------- --------- ------------ ------- At 1 January 2023 21,841 176,501 718 1,248 700 60 88,476 239 289,783 Profit for the financial period - - - - - - 15,012 7 15,019 Movement in share-based payment reserve - - 1,485 - - - - - 1,485 Other comprehensive expense: Movement in foreign currency translation reserve - - - 943 - - - - 943 Transactions recognised directly in equity: Dividends paid (Note 6) - - - - - - (3,085) - (3,085) At 30 June 2023 (unaudited) 21,841 176,501 2,203 2,191 700 60 100,403 246 304,145 -------- -------- -------- ----------- ----------- ---------- --------- ------------ -------
Notes to the Consolidated Financial Statements
1. General information
Basis of preparation
The condensed consolidated interim financial statements of Uniphar plc and its subsidiaries (the 'Group') have been prepared in accordance with IAS 34, Interim Financial Reporting, as endorsed by the European Union.
The financial information in the condensed interim consolidated financial statements has been prepared on a basis consistent with that adopted for the year ended 31 December 2022. The accounting policies applied in the interim financial statements are the same as those applied in the 2022 Annual Report.
The Group's auditors have reviewed, not audited, the condensed consolidated interim financial statements contained in this report. These interim financial statements are prepared in order to comply with the Euronext Growth Market Rule Book and AIM Rules for Companies and are not statutory financial statements as they do not include all of the information required for full annual financial statements and should be read in conjunction with the Uniphar Group Annual Report (statutory financial statements) for the year ended 31 December 2022. 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 preparation of interim financial statements in compliance with IAS 34 requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in the Group's Annual Report for the year ended 31 December 2022 in note 1 on pages 142 to 143.
The Group's interim financial statements are prepared for the six-month period ended 30 June 2023. The interim financial statements incorporate the Company and all of its subsidiary undertakings. A subsidiary undertaking is consolidated by reference to whether the Group has control over the subsidiary undertaking. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Uniphar plc is incorporated in the Republic of Ireland under registration number 224324 with a registered office at 4045 Kingswood Road, Citywest Business Park, Co. Dublin, D24 V06K.
Going Concern
The Group Condensed Consolidated Interim Financial Statements have been prepared on the going concern basis of accounting. The Directors have made appropriate enquiries and carried out a thorough review of the Group's forecasts, projections, and available banking facilities, taking account of possible changes in trading performance and considering business risk.
The Group has strong liquidity supported into the future by a banking facility with a remaining term extending to August 2027 (with two options to extend by a further one year). The Group renewed and expanded its banking facility during 2022 to provide it with the platform to fund continued growth.
Having regard to the factors outlined above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being a period of 12 months from the date of approval of these interim financial statements. As a result, the Directors consider that it is appropriate to continue to adopt the going concern basis in preparing the interim financial statements.
New Standards, Amendments, and Interpretations
The following standards and interpretations are effective for the Group from 1 January 2023 but do not have a material effect on the results or financial position of the Group:
- Amendments to IAS 1, 'Presentation of Financial Statements' - Amendments to IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors' - Amendments to IAS 12, 'Income Taxes'
New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2023 reporting periods and have not been adopted by the Group. These standards are not expected to have a material impact in the current or future reporting periods and on foreseeable future transactions.
2. Revenue and segments
2023 2022 EUR'000 EUR'000 Revenue 1,239,582 991,831 --------- -------- 2023 2022 EUR'000 EUR'000 Commercial & Clinical - MedTech 128,835 118,873 Commercial & Clinical - Pharma 26,004 43,449 --------- ------- Commercial & Clinical 154,839 162,322 Product Access 253,060 74,474 Supply Chain & Retail 831,683 755,035 --------- ------- Total Revenue 1,239,582 991,831 --------- -------
Segmental information
Segmental information is presented in respect of the Group's geographical regions and operating segments. The operating segments are based on the Group's management and internal reporting structures.
Geographical analysis
The Group operates in two principal geographical regions being the Republic of Ireland and Europe (including UK). The Group also operates in the US and Asia Pacific region which are not material for separate identification.
The following is a geographical analysis presented in accordance with IFRS 8 "Operating Segments" which requires disclosure of information about the country of domicile (Ireland) and countries with material revenue.
2023 2022 EUR'000 EUR'000 Ireland 947,387 853,798 Rest of Europe, including UK 223,522 110,313 Rest of the World 68,673 27,720 --------- ------- 1,239,582 991,831 --------- -------
Operating segments
IFRS 8 "Operating Segments" requires the reporting information for operating segments to reflect the Group's management structure and the way the financial information is regularly reviewed by the Group's Chief Operating Decision Maker (CODM), which the Group has defined as the Board of Directors.
The Group operates with three divisions, being, Commercial & Clinical, Product Access, and Supply Chain & Retail. These divisions align to the Group's operational and financial management structures:
-- Commercial & Clinical provide outsourced services, specifically sales, marketing and multichannel account management to pharmaco-medical manufacturers, and distribution and support services to medical device manufacturers. Uniphar offers a fully integrated digitally enabled customer centric solution that is supported through market data, insights and digital programmes. We integrate these programmes with our supply chain and distribution capability to provide a full end-to-end service to manufacturers;
-- Product Access consists of two service offerings, being: On Demand and Exclusive Access. On Demand provides access to pharmaco-medical products and treatments, by developing valuable relationships and interactions between manufacturers and other healthcare stakeholders. This business operates in both the retail and hospital markets in the Irish, UK, Netherlands and MENA markets. Exclusive Access provides bespoke distribution partnerships to pharmaceutical partners around key brands, with new programs focused on speciality pharmaceutical products. It delivers a unique patient support program that allows healthcare professionals to connect with patients, on a global basis; and
-- Supply Chain & Retail provides both pre-wholesale and wholesale distribution of pharmaceutical, healthcare and animal health products to pharmacies, hospitals and veterinary surgeons in Ireland. Uniphar operate a network of pharmacies under the Life, Allcare, Hickey's and McCauley brands. Additionally, through the extended Uniphar symbol group, the business provides services and supports that help independent community pharmacies to compete more effectively.
Operating segments results
The Group evaluates performance of the operational segments on the basis of gross profit from operations.
Commercial Product Supply Chain & Clinical Access & Retail Total Six months ended 30 June 2023 EUR'000 EUR'000 EUR'000 EUR'000 Revenue 154,839 253,060 831,683 1,239,582 Gross profit 62,041 37,762 88,189 187,992 ----------- ------- ------------ --------- Six months ended 30 June 2022 EUR'000 EUR'000 EUR'000 EUR'000 Revenue 162,322 74,474 755,035 991,831 Gross profit 58,541 21,818 65,776 146,135
Assets and liabilities are reported to the Board at a Group level and are not reported on a segmental basis.
3. Exceptional charge
2023 2022 EUR'000 EUR'000 Professional fees including acquisition costs 824 2,014 Acquisition integration costs 1,729 1,060 Redundancy and restructuring costs 1,007 2,710 Strategic business transformation 860 - Loss on disposal of businesses and assets 1,420 - Other exceptional costs 223 - Exceptional charge recognised in operating profit 6,063 5,784 ------- ------- Decrease in deferred contingent consideration (1,654) - Exceptional credit recognised in finance costs (1,654) - ------- ------- Exceptional credit recognised in income tax expense (615) (284) ------- ------- Total exceptional charge 3,794 5,500 ------- -------
Professional fees including acquisition costs
Professional fees including acquisition costs incurred during 2023 are primarily relating to costs relating to the acquisition disclosed in note 17 together with costs incurred on transactions currently under consideration.
Acquisition integration costs
Acquisition integration costs primarily relate to costs incurred on the integration of recent acquisitions into the expanded Group. They also include professional fees relating to specialist industry and market insights to optimise the integration of recent acquisitions.
Redundancy and restructuring costs
Redundancy and restructuring costs are primarily redundancy and ex-gratia termination costs arising on reorganisations and recent acquisitions.
Strategic business transformation
Strategic business transformation are costs incurred associated with reorganising and establishing a strategic presence in the US market. The costs include initial setup costs, relocation costs and a long term incentive plan associated with building a strategically significant business in the US market.
Exceptional credit recognised in tax charge
The tax credit recognised in the tax charge is the tax impact of the components of the Exceptional charge listed above.
Loss on disposal of businesses and assets
Notes Businesses Assets Total 2023 2023 2023 EUR'000 EUR'000 EUR'000 Property, plant and equipment, and right-of-use assets 8 (810) (538) (1,348) Goodwill 7 (1,097) (887) (1,984) Inventories (308) (216) (524) Trade and other receivables (222) (388) (610) Cash Disposed (133) (2) (135) Trade and other payables 305 209 514 Other non-current liabilities 598 193 791 ---------- ------- ------- (1,667) (1,629) (3,296) ---------- ------- ------- Consideration Cash received 878 1,526 2,404 Disposal related costs - (528) (528) ---------- ------- ------- 878 998 1,876 ---------- ------- ------- Loss on disposal of businesses and assets (789) (631) (1,420) ---------- ------- ------- Net cash inflow on disposal: Businesses Assets Total 2023 2023 2023 EUR'000 EUR'000 EUR'000 Cash received 878 1,526 2,404 Less: Cash disposed (133) (2) (135) Less: Disposal related costs paid - (528) (528) ---------- -------- -------- Net cash inflow on disposal 745 996 1,741 ---------- -------- --------
Loss on disposal of businesses
On 31 May 2023 the Group disposed of 100% of the share capital of McHugh's Pharmacy Limited and Sam McCauley Chemists (Bunclody) Limited both of which traded as retail pharmacies. These disposals were completed as a binding commitment from Uniphar to the CCPC associated with the acquisition of the McCauley Pharmacy Group. The combined consideration from these disposals amounted to EUR878,000 resulting in a loss on disposal of these businesses of EUR789,000.
Loss on disposal of assets
During the period, the Group disposed of the assets of a retail pharmacy in Navan further to a binding commitment to the CCPC associated with the acquisition of the McCauley Pharmacy Group. In addition, the Group disposed of a legacy distribution facility in Limerick that is included in property, plant and equipment. The combined consideration from these disposals amounted to EUR1.5m resulting in a net loss on disposal of EUR631,000.
4. Finance cost / (income)
2023 2022 EUR'000 EUR'000 Interest on lease obligations 2,308 1,824 Interest payable on borrowings and non-recourse costs 7,633 1,848 Fair value adjustment of deferred and deferred contingent consideration 1,283 953 Amortisation of refinancing transaction fees 215 133 Interest receivable (170) (21) Finance cost before exceptional credit 11,269 4,737 ------- ------- Decrease in deferred contingent consideration (note 3) (1,654) - Exceptional credit recognised in finance cost (1,654) - ------- ------- Total Finance cost / (income) 9,615 4,737 ------- -------
5. Earnings per share
Basic earnings per share and diluted earnings per share for the six months ended 30 June have been calculated by reference to the following:
2023 2022 Profit for the financial period attributable to owners (EUR'000) 15,012 16,061 --------- ------- Weighted average number of shares ('000) 272,815 272,297 --------- ------- Earnings per ordinary share (in cent): - Basic 5.5 5.9 --------- ------- - Diluted 5.5 5.9 --------- -------
Adjusted earnings per share has been calculated by reference to the following:
2023 2022 EUR'000 EUR'000 Profit for the financial period attributable to owners 15,012 16,061 Exceptional charge recognised in operating profit (note 3) 6,063 5,784 Exceptional credit recognised in finance costs (note 3) (1,654) - Exceptional credit recognised in income tax (note 3) (615) (284) Tax credit on acquisition related intangibles (174) (178) Amortisation of acquisition related intangibles (note 7) 1,636 1,423 ------- ------- Profit after tax excluding exceptional items 20,268 22,806 Weighted average number of shares in issue in the period (000's) 272,815 272,297 ------- ------- Adjusted basic and diluted earnings per ordinary share (in cent) 7.4 8.4 ------- -------
The weighted average number of ordinary shares includes the effect of shares granted under the LTIP arrangement that have met the share price performance conditions during the period but will not vest until 31 December 2024.
6. Dividends
A final dividend of EUR3.1m (EUR0.0113 per ordinary share) relating to 2022 was declared and paid in May 2023 (June 2022: EUR3.0m). Continuing with the Board's commitment to a progressive dividend policy, the Board declared a 2023 interim dividend of EUR0.0064 per ordinary share. It is proposed to pay the dividend on 20 October 2023 to ordinary shareholders on the Company's register on 29 September 2023.
In accordance with company law and IFRS, these dividends have not been provided for in the Balance Sheet at 30 June 2023.
7. Intangible assets, and right-of-use assets
Computer Trademark Goodwill Technology Brand Customer Total software asset Names Relationships EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Cost At 1 January 2023 41,947 189 501,690 3,047 11,238 3,322 561,433 FX movement 20 - (531) (57) - (83) (651) Acquisitions - - 32,410 - 10,947 - 43,357 Additions 6,704 15 - - - - 6,719 Disposals/retirements (2,896) - (1,984) - - - (4,880) --------- --------- -------- -------------- ------------ -------------- -------- At 30 June 2023 45,775 204 531,585 2,990 22,185 3,239 605,978 --------- --------- -------- -------------- ------------ -------------- -------- Accumulated Amortisation At 1 January 2023 30,033 154 18,709 1,319 2,339 1,439 53,993 FX movement 6 - - (19) - (40) (53) Amortisation 1,600 5 - 290 1,018 328 3,241 Disposals/retirements (1,946) - - - - - (1,946) --------- --------- -------- -------------- ------------ -------------- -------- At 30 June 2023 29,693 159 18,709 1,590 3,357 1,727 55,235 --------- --------- -------- -------------- ------------ -------------- -------- Net book amounts At 31 December 2022 11,914 35 482,981 1,728 8,899 1,883 507,440 --------- --------- -------- -------------- ------------ -------------- -------- At 30 June 2023 16,082 45 512,876 1,400 18,828 1,512 550,743 --------- --------- -------- -------------- ------------ -------------- -------- Intangible assets 16,082 45 512,876 1,400 18,828 1,512 550,743 Right-of-use assets - - - - - - - --------- --------- -------- -------------- ------------ -------------- -------- At 30 June 2023 16,082 45 512,876 1,400 18,828 1,512 550,743 --------- --------- -------- -------------- ------------ -------------- --------
Included in intangible assets are assets under construction to the net book value of EUR 5,453,000 (2022: EUR2,323,000). Amortisation has not commenced on these assets.
Reconciliation to Balance Sheet 30 June 31 December 2023 2022 EUR'000 EUR'000 Intangible assets- goodwill 512,876 482,981 Intangible assets- other assets 37,867 24,459 ------- ----------- Intangible assets total 550,743 507,440 ------- -----------
Impairment testing of goodwill
Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (CGUs).
There is no material change to the circumstances that existed at 31 December 2022 and consequently no impairment indicators were identified. The Group's annual impairment assessment will be performed at 31 December 2023.
8. Property, plant and equipment, and right-of-use assets
Land and Leasehold Plant and Fixtures Computer Motor Instruments Total buildings improvements equipment and equipment vehicles fittings EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Cost At 1 January 2023 149,672 16,183 39,662 14,192 6,742 7,825 6,568 240,844 Foreign exchange movement 16 19 24 68 9 30 - 166 Additions 1,838 84 8,705 472 558 1,341 837 13,835 Acquisitions 20,567 6,592 - 1,328 704 12 - 29,203 Disposals/retirements (3,355) (417) (25) (1,131) (403) (1,859) (449) (7,639) At 30 June 2023 168,738 22,461 48,366 14,929 7,610 7,349 6,956 276,409 ---------- ------------ ---------- ----------- ---------- --------- ----------- ------- Accumulated depreciation At 1 January 2023 34,557 4,622 17,397 6,245 4,097 3,851 3,447 74,216 Foreign exchange movement 66 11 50 54 13 10 - 204 Charge for the period 7,313 852 1,595 1,122 876 1,164 894 13,816 Disposals/retirements (1,695) (227) (23) (1,054) (394) (1,732) (442) (5,567) At 30 June 2023 40,241 5,258 19,019 6,367 4,592 3,293 3,899 82,669 ---------- ------------ ---------- ----------- ---------- --------- ----------- ------- Net book value At 31 December 2022 115,115 11,561 22,265 7,947 2,645 3,974 3,121 166,628 ---------- ------------ ---------- ----------- ---------- --------- ----------- ------- At 30 June 2023 128,497 17,203 29,347 8,562 3,018 4,056 3,057 193,740 ---------- ------------ ---------- ----------- ---------- --------- ----------- ------- Reconciliation to Balance Sheet Property, plant and equipment 7,505 17,203 29,164 8,562 3,018 529 3,057 69,038 Right-of-use assets 120,992 - 183 - - 3,527 - 124,702 ---------- ------------ ---------- ----------- ---------- --------- ----------- ------- Net book value at 30 June 2023 128,497 17,203 29,347 8,562 3,018 4,056 3,057 193,740 ---------- ------------ ---------- ----------- ---------- --------- ----------- -------
Included in property, plant and equipment are assets under construction to the net book value of EUR 18,659 ,000 (31 December 2022: EUR10,708 ,000). Depreciation has not commenced on these assets.
9. Assets held for sale
Properties Total EUR'000 EUR'000 At 1 January 2023 1,600 1,600 At 30 June 2023 1,600 1,600 ---------- -------
Properties held for sale relate to properties acquired on completion of the acquisition of Bradley's Pharmacy Group in November 2018. These properties are presented in the Balance Sheet at the lower of their carrying amount and fair value less any costs to sell. Uniphar plc acquired Bradley's Pharmacy Group from examinership in November 2018, and in accordance with the application of the examinership scheme arrangement acquired non-recourse borrowings of EUR4,000,000 which are secured by these properties. These borrowings have a carrying value of EUR1,600,000 at 30 June 2023 (31 December 2022: EUR1,600,000).
The properties held for sale are available for immediate sale in their present condition subject to terms that are usual and customary for properties of this nature. The properties are being actively marketed and the Group is committed to its plan to sell these properties in an orderly manner.
10. Called up share capital presented as equity
30 June 2023 EUR'000 Authorised: 453.2 million (31 December 2022: 453.2 million) ordinary shares of 8c each 36,256 16.0 million (31 December 2022: 16.0 million) "A" ordinary shares of 8c each 1,280 -------- 37,536 -------- Movement in the period in issued share capital presented 30 June as equity 2023 EUR'000 Allotted, called up and fully paid ordinary shares At 1 January - 273,015,254 ordinary shares of 8c each 21,841 At 30 June - 273,015,254 ordinary shares of 8c each 21,841 -------- Total allotted share capital: At 30 June - 273,015,254 (31 December 2022: 273,015,254) ordinary shares 21,841 ----------
11. Borrowings
Bank loans are repayable in the following periods:
30 June 31 December 2023 2022 EUR'000 EUR'000 Amounts falling due within one year 16,706 7,490 Amounts falling due between one and five years 216,997 187,431 -------- ----------- 233,703 194,921 -------- -----------
The Group's total bank loans at 30 June 2023 were EUR233,703,000 (31 December 2022: EUR194,921,000). Bank loans falling due within one year include EUR1,600,000 (31 December 2022: EUR1,600,000) arising on the acquisition of the Bradley's Pharmacy Group which is secured by a property acquired on the acquisition which is classified as held for sale. Following the disposal of this property the loan is required to be repaid (note 9).
At 30 June 2023, the Group's revolving credit facility loans in use were subject to an interest margin of +1.5% (2022: +1.5%) on inter-bank interest rates (EURIBOR, GBP SONIA and USD SOFR).
Bank security
Bank overdrafts (including invoice discounting) and bank loans of EUR233,703,000 (31 December 2022: EUR194,921,000) are secured by cross guarantees and fixed and floating charges from the Company and certain subsidiary undertakings.
12. Provisions
Deferred Lease Warranty Other Total contingent dilapidation provision consideration EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 At 1 January 2023 91,798 488 133 1,641 94,060 Recognised during the period - - 110 - 110 Unwinding of discount 1,281 - - - 1,281 Utilised during the period (4,328) - - - (4,328) Released during the period (1,654) (30) - - (1,684) Arising on acquisition - 350 - - 350 Foreign currency movement (1,110) - 6 (41) (1,145) -------------- ------------- ---------- ------- ------- At 30 June 2023 85,987 808 249 1,600 88,644 -------------- ------------- ---------- ------- -------
Deferred contingent consideration
Deferred contingent consideration represents the present value of deferred contingent consideration which would become payable based on pre-defined profit thresholds being met. During the period, EUR4,328,000 of the provision was utilised in respect of prior periods acquisitions of which payments of EUR3,713,000 were made and EUR615,000 transferred to accruals pending payment. Deferred contingent consideration of EUR1,654,000 in respect of acquisitions completed in prior years were released in the period following a review of expected performance against earn-out targets.
Lease dilapidation
The lease dilapidation provision covers the cost of reinstating certain Group properties at the end of the lease term. This is based on the terms of the individual leases which set out the conditions relating to the return of property. The timing of the outflows will match the ending of the relevant leases with various dates up to 2049.
Warranty provision
The warranty provision relates to a product warranty provided to customers on certain medical devices. The estimated cost of the warranty is provided for upon recognition of the sale of the product. The costs are estimated based on actual historical experience of expenses incurred and on estimated future expenses related to current sales and are updated periodically. Actual warranty costs are charged against the warranty provision.
Other
Other provisions relate to a management retention bonus payable in relation to the acquisition of RRD International, LLC in 2020.
13. Leases
(i) Amounts recognised in the Balance Sheet
The Balance Sheet shows the following amounts relating to leases:
30 June 31 December 2023 2022 EUR'000 EUR'000 Right-of-use assets: Buildings 120,992 107,268 Plant and equipment 183 278 Motor vehicles 3,527 3,441 Computer Software - 1,139 ------- ----------- Net book value of right-of-use assets 124,702 112,126 ------- ----------- Lease liabilities: Current 15,364 14,315 Non-current 123,487 105,919 ------- ----------- Total lease liabilities 138,851 120,234 ------- -----------
Right-of-use assets are included in the lines 'Intangible assets' and 'Property, plant and equipment' on the Balance Sheet, and are presented in note 7 and 8.
Additions to the right-of-use assets during the period ended 30 June 2023 were EUR2,608,000 (30 June 2022: EUR1,959,000).
Lease liabilities are presented separately on the face of the Balance Sheet.
(ii) Amounts recognised in the Income Statement:
The Income Statement shows the following amounts relating to leases:
Six months Six months ended ended 30 June 30 June 2023 2022 EUR'000 EUR'000 Buildings 7,113 5,481 Plant and equipment 95 254 Motor vehicles 1,090 1,241 ---------- ---------- Right-of-use assets depreciation charge 8,298 6,976 ---------- ---------- Computer Software 190 190 ---------- ---------- Right-of-use assets amortisation charge 190 190 ---------- ---------- Interest on lease obligations (note 4) 2,308 1,824 Principal repayments 8,112 6,534 ---------- ---------- Total cash outflow in respect of leases 10,420 8,358 ---------- ----------
14. Analysis of net debt
30 June 31 December 30 June 2023 2022 2022 EUR'000 EUR'000 EUR'000 Cash and cash equivalents 55,658 103,704 68,303 55,658 103,704 68,303 --------- ----------- --------- Bank loans repayable within one year (16,706) (7,490) (1,664) Bank loans payable after one year (216,997) (187,431) (140,446) --------- ----------- --------- Bank loans (233,703) (194,921) (142,110) --------- ----------- --------- Net bank debt (178,045) (91,217) (73,807) --------- ----------- --------- Current lease obligations (15,364) (14,315) (12,097) Non-current lease obligations (123,487) (105,919) (105,370) --------- ----------- --------- Lease obligations (138,851) (120,234) (117,467) --------- ----------- --------- Net debt (316,896) (211,451) (191,274) --------- ----------- ---------
15. Reconciliation of operating profit to cash flow from operating activities
Six months Six months ended ended 30 June 30 June 2023 2022 EUR'000 EUR'000 Operating profit before exceptional items 34,069 30,862 Cash related exceptional items (12,145) (5,081) ---------- ---------- 21,924 25,781 Depreciation 13,816 11,497 Amortisation of intangible assets 3,241 2,576 Increase in inventory (8,114) (16,270) Increase in receivables (44,298) (13,195) Increase in payables 15,357 8,755 Share based payment expense 1,485 - Foreign currency translation adjustments 359 22 ---------- ---------- Cash inflow from operating activities 3,770 19,166 ---------- ----------
16. Financial instruments
Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
Financial Financial Total Fair assets at assets at value FVOCI* amortised cost EUR'000 EUR'000 EUR'000 EUR'000 Financial assets 30 June 2023: Investments in equity instruments 25 - 25 25 Trade and other receivables ** - 186,883 186,883 186,893 Cash and cash equivalents - 55,658 55,658 55,658 25 242,541 242,566 242,576 ---------- ---------- ------- ------- * Fair value through other comprehensive income. ** Excluding prepayments and accrued income. Financial Financial Total Fair liabilities liabilities value at at FVTPL*** amortised cost EUR'000 EUR'000 EUR'000 EUR'000 Financial liabilities 30 June 2023: Borrowings - 233,703 233,703 233,703 Deferred acquisition consideration - 100 100 100 Trade and other payables **** - 268,777 268,777 268,777 Deferred contingent consideration 85,987 - 85,987 85,987 Lease liabilities - 138,851 138,851 138,851 85,987 641,431 727,418 727,418 ------------ ------------ ------- ------- *** Fair value through profit and loss.
**** Excluding non-financial liabilities.
Measurement of fair values
In the preparation of the financial statements, the Group finance department, which reports directly to the Chief Financial Officer (CFO), reviews and determines the major methods and assumptions used in estimating the fair values of the financial assets and liabilities which are set out below:
Investments in equity instruments
Investments in equity instruments are measured at fair value through other comprehensive income (FVOCI).
Long-term receivables
The fair value of long-term receivables is determined by discounting future cash flows at market rates of interest at the period end.
Trade and other receivables/trade and other payables
For receivables and payables with a remaining life of less than 12 months or demand balances, the carrying value less impairment provision where appropriate, is deemed to reflect fair value.
Cash and cash equivalents, including short-term bank deposits
For short-term bank deposits and cash and cash equivalents, all of which have a remaining maturity of less than three months, the carrying amount is deemed to reflect fair value.
Interest-bearing loans and borrowings
For floating rate interest-bearing loans and borrowings with a contractual repricing date of less than six months, the nominal amount is deemed to reflect fair value. For loans with repricing dates of greater than six months, the fair value is calculated based on the present value of the expected future principal and interest cash flows discounted at appropriate market interest rates (level 2) effective at the Balance Sheet date and adjusted for movements in credit spreads.
Deferred acquisition consideration
Discounted cash flow method was used to capture the present value of the expected future economic benefits that will flow out of the Group arising from the deferred acquisition consideration.
Deferred contingent consideration
The fair value of the deferred contingent consideration is calculated by discounting the expected future payment to the present value. The expected future payment represents the deferred contingent consideration which would become payable based on pre-defined profit thresholds being met and is calculated based on management's best estimates of the expected future cash outflows using current budget forecasts. The provision for deferred contingent consideration is principally in respect of acquisitions completed from 2015 to 2022.
The significant unobservable inputs are:
-- Pre-defined profit thresholds which have not been disclosed due to their commercial sensitivities; and
-- Risk adjusted discount rate of between 2.5% and 4% (2022: between 2.5% and 4%).
For the fair value of deferred contingent consideration, a 1% increase in the risk adjusted discount rate at 30 June 2023, holding the other inputs constant would reduce the fair value of the deferred contingent consideration by EUR1.2m. A 1% decrease in the risk adjusted discount rate would result in an increase of EUR1.2m in the fair value of the deferred contingent consideration.
Fair value hierarchy
The following table sets out the fair value hierarchy for financial instruments which are measured at fair value.
Level 1 Level 2 Level 3 Total EUR'000 EUR'000 EUR'000 EUR'000 Recurring fair value measurements At 30 June 2023 Investments in equity instruments - - 25 25 Deferred contingent consideration - - (85,987) (85,987) ------- ------- -------- -------- - - (85,962) (85,962) ------- ------- -------- --------
There were no transfers between the fair value levels for recurring fair value measurements during the period. The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the period ended 30 June 2023:
Shares in Deferred Total unlisted contingent companies consideration EUR'000 EUR'000 EUR'000 At 1 January 2023 25 (91,798) (91,773) Recognised during the period - 3,713 3,713 Unwinding of discount* - (1,281) (1,281) Released during the period* - 2,269 2,269 Foreign currency movement - 1,110 1,110 ---------- -------------- -------- At 30 June 2023 25 (85,987) (85,962) ---------- -------------- --------
* These amounts have been credited/(charged) to the Income Statement in finance income/costs.
Financial risk management
The Group's operations expose it to various financial risks. The Group has a risk management programme in place which seeks to limit the impact of these risks on the financial performance of the Group and it is the Group's policy to manage these risks in a non-speculative manner.
The Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk, currency risk, interest risk and price risk. The condensed consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's 2022 Annual Report.
17. Acquisitions of subsidiary undertakings
A key strategy of the Group is to expand into higher growth sectors and extend the capabilities the Group can offer our clients. In line with this strategy, the Group completed the following acquisition during the financial period:
-- McCauley Pharmacy Group
The Group acquired 100% of the ordinary share capital of LXV Remedies Holdings Limited for consideration of EUR26,743,000. LXV Remedies Holdings Limited operates a network of retail pharmacies in Ireland.
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 teams within the business acquired, the enhancement of the competitive position of the Group in the marketplace and the strategic premium paid by Uniphar Group to create the combined Group.
The initial assignment of fair values to net assets acquired has been performed on a provisional basis in respect of the acquisition completed during 2023, due to its recent acquisition date. The Group has 12 months from the date of acquisition to finalise the fair value of the assets/liabilities acquired, and any amendments to these fair values within the 12-month period from the date of acquisition will be disclosable in the 2023 Annual Report as stipulated by IFRS 3, Business Combinations.
The acquisition completed in 2023 has contributed EUR34.2m to revenue and EUR14.6m of gross profit for the period since the date of acquisition. The proforma revenue and operating profit before exceptional items for the Group for the period ended 30 June 2023 would have been EUR1,246.4m and EUR28.0m respectively had the acquisitions been completed at the start of the current reporting period.
The provisional fair value of the assets and liabilities acquired as part of the acquisitions completed during the financial period are set out below:
EUR'000 ASSETS Non-current assets Intangible assets 10,947 Property, plant and equipment 8,636 Property, plant and equipment - Right of use assets 20,567 Other non-current assets 1,320 41,470 ------- Current assets Inventory 10,225 Trade and other receivables 5,707 Other current assets 105 Cash and cash equivalents 2,874 18,911 ------- Total assets 60,381 ------- LIABILITIES Non-current liabilities Lease obligations 22,304 Bank borrowings 22,664 44,968 ------- Current liabilities Trade and other payables 16,406 Lease obligations 3,901 Deferred tax liability 773 21,080 ------- Total liabilities 66,048 ------- Identifiable net liabilities acquired (5,667) ------- Group share of net liabilities acquired (5,667) Goodwill arising on acquisition 32,410 ------- Consideration 26,743 -------
The acquisition in the 2023 financial year of the McCauley Pharmacy Group has been determined to be a substantial transaction and separate disclosure of the fair values of the identifiable assets and liabilities has therefore been made. There were no other business combinations completed during the period.
The gross contractual value of the trade and other receivables as at the respective dates of acquisition amounted to EUR5.7m. The fair value of these receivables is estimated at EUR5.7m (all of which is expected to be recoverable).
In the period to 30 June 2023, the Group incurred acquisition costs of EUR0.8m relating to acquisitions completed during the period together with costs incurred on transactions currently under consideration (30 June 2022: EUR2.0m). These have been included in administrative expenses in the Group Income Statement.
2022 Acquisitions
The initial assessment of the fair values of the major classes of assets acquired and liabilities assumed in respect of the acquisitions which were completed in 2022 were performed on a provisional basis. The fair values attributable to the assets and liabilities of these acquisitions remain provisional with the exception of Dr Hauschka Limited, Orspec Pharma Group, Inspired Health and four ICP acquisitions which were purchased prior to October 2022. There were no fair value adjustments made to the comparative figures during the subsequent reporting window within the measurement period imposed by IFRS 3.
18. Post balance sheet events
On 3 July 2023, the Group reached agreement to acquire a further shareholding in Innerstrength Limited which increases the Group's shareholding from 82.3% to 99.0%.
On 4 August 2023, the Group reached agreement to acquire part of the business and assets of Pivot Digital Health Limited. This acquisition further expands our digital offering in the omni-channel consultancy and healthcare practitioner (HCP) engagement areas.
There have been no other material events subsequent to 30 June 2023 that would require adjustment to or disclosure in this report.
19. Approval by the Board of Directors
The Directors approved the interim financial statements on 13 September 2023.
Additional Information
ALTERNATIVE PERFORMANCE MEASURES
The Group reports certain financial measurements that are not required under IFRS. These key alternative performance measures (APMs) represent additional measures in assessing performance and for reporting both internally, and to shareholders and other external users. The Group believes that the presentation of these APMs 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.
None of these APMs should be considered as an alternative to financial measurements derived in accordance with IFRS. The APMs 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 APMs used by the Group, together with reconciliations where the APMs are not readily identifiable from the financial statements, are as follows:
Definition Why we measure it EBITDA Earnings before exceptional EBITDA provides management items, net finance expense, with an assessment of the underlying income tax expense, depreciation, trading performance of the and intangible assets amortisation. Group and excludes transactions & that are not reflective of the ongoing operations of the business, allowing comparison of the trading performance of the business across periods Adjusted Earnings before exceptional and/or with other businesses. EBITDA items, net finance expense, income tax expense, depreciation, Adjusted EBITDA is used for and intangible assets amortisation, leverage calculations. adjusted for the impact of IFRS 16 and the pro-forma EBITDA of acquisitions. ===================================== ======================================= Net bank Net bank debt represents Net bank debt is used by management debt the net total of current as it gives a summary of the and non-current borrowings, Group's current leverage which cash and cash equivalents, management will consider when and restricted cash as presented evaluating investment opportunities, in the Group Balance Sheet. potential acquisitions, and internal resource allocation. ===================================== ======================================= Net debt Net debt represents the total Net debt is used by management of net bank debt, plus current as it gives a complete picture and non-current lease obligations of the Group's debt including as presented in the Group the impact of lease liabilities Balance Sheet. recognised under IFRS 16. ===================================== ======================================= Leverage Net bank debt divided by Leverage is used by management adjusted EBITDA for the period. to evaluate the Group's ability to cover its debts. This allows management to assess the ability of the company to use debt as a mechanism to facilitate growth. ===================================== ======================================= Adjusted This comprises of operating Adjusted operating profit is Operating profit as reported in the used to assess the underlying Profit Group Income Statement before operating performance excluding amortisation of acquired the impact of non-operational intangible assets and exceptional items. This is a key measure items (if any). used by management to evaluate the businesses operating performance. ===================================== ======================================= Adjusted This comprises of profit Adjusted EPS is used to assess earnings for the financial period the after-tax underlying performance per share attributable to owners of of the business in combination the parent as reported in with the impact of capital the Group Income Statement structure actions on the share before exceptional items base. This is a key measure (if any) and amortisation used by management to evaluate of acquisition related intangibles, the businesses operating performance, divided by the weighted average generate future operating plans, number of shares in issue and make strategic decisions. in the period. ===================================== ======================================= Like for Like for like adjusted earnings Like for like adjusted EPS Like adjusted per share is calculated for is used to assess the after-tax earnings both the current and prior underlying performance of the per share period by dividing the profit business assuming a constant of the relevant period attributable share base. to owners of the parent as reported in the Group Income Statement before exceptional items (if any) and amortisation of acquisition related intangibles, by the weighted average number of shares in issue in the current period. ===================================== ======================================= Free cash Free cash flow conversion Free cash flow represents the flow conversion calculated as EBITDA, less funds generated from the Group's investment in working capital, ongoing operations. These funds less maintenance capital are available for reinvestment, expenditure, less foreign and for future acquisitions exchange translation adjustment, as part of the Group's growth divided by EBITDA. strategy. A high level of free cash flow conversion is key to maintaining a strong, liquid
Balance Sheet. ===================================== ======================================= Return ROCE is calculated as the This measure allows management on capital 12 months rolling operating to monitor business performance, employed profit before the impact review potential investment of exceptional costs and opportunities and the allocation amortisation of acquisition of internal resources. related intangibles, expressed as a percentage of the adjusted average capital employed for the same period. The average capital employed is adjusted to ensure the capital employed of acquisitions completed during the period are appropriately time apportioned. ===================================== =======================================
EBITDA
Six months ended/as at Six months ended/as at 30 June 30 June 2023 2022 EUR'000 EUR'000 Operating profit Income Statement 28,006 25,078 Exceptional charge recognised in operating profit Note 3 6,063 5,784 Depreciation Note 8 13,816 11,497 Amortisation Note 7 3,241 2,576 ---------------------- ---------------------- EBITDA 51,126 44,935 ---------------------- ---------------------- Adjust for the impact of IFRS 16 (10,421) (8,349) Pro-forma EBITDA of acquisitions 33 454 ---------------------- ---------------------- Adjusted EBITDA 40,738 37,040 ---------------------- ----------------------
Net bank debt
30 June 31 December 30 June 2023 2022 2022 EUR'000 EUR'000 EUR'000 Cash and cash equivalents Balance Sheet 55,658 103,704 68,303 Bank loans repayable within one year Balance Sheet (16,706) (7,490) (1,664) Bank loans payable after one year Balance Sheet (216,997) (187,431) (140,446) --------- ----------- --------- Net bank debt (178,045) (91,217) (73,807) --------- ----------- ---------
Net debt
30 June 31 December 30 June 2023 2022 2022 EUR'000 EUR'000 EUR'000 Net bank debt APMs (178,045) (91,217) (73,807) Current lease obligations Balance Sheet (15,364) (14,315) (12,097) Non-current lease obligations Balance Sheet (123,487) (105,919) (105,370) --------- ----------- --------- Net debt (316,896) (211,451) (191,274) --------- ----------- ---------
Leverage
30 June 31 December 30 June 2023 2022 2022 EUR'000 EUR'000 EUR'000 Net bank debt APMs (178,045) (91,217) (73,807) Rolling 12 months adjusted EBITDA 91,182 91,370 75,999 --------- ----------- -------- Leverage (times) 1.95 1.0 0.97 --------- ----------- --------
Adjusted operating profit
30 June 30 June 2023 2022 EUR'000 EUR'000 Operating profit Income Statement 28,006 25,078 Amortisation of acquisition related intangibles Note 7 1,636 1,423 Exceptional charge recognised in operating profit Note 3 6,063 5,784 Adjusted operating profit 35,705 32,285 ------- -------
Adjusted earnings per share
Six months ended Six months ended 30 June 30 June 2023 2022 EUR'000 EUR'000 Adjusted earnings per share has been calculated by reference to the following: Profit for the financial period attributable to owners 15,012 16,061 Exceptional charge recognised in operating profit (note 3) 6,063 5,784 Exceptional credit recognised in finance costs (note 3) (1,654) - Exceptional credit recognised in income tax (note 3) (615) (284) Tax credit on acquisition related intangibles (174) (178) Amortisation of acquisition related intangibles (note 7) 1,636 1,423 Profit after tax excluding exceptional items 20,268 22,806 Weighted average number of shares in issue in the period (000's) 272,815 272,297 ---------------- ---------------- Adjusted basic and diluted earnings per ordinary share (in cent) 7.4 8.4 ---------------- ---------------- Like for like weighted average number of shares (000's) 272,815 272,815 ---------------- ---------------- Like for like adjusted earnings per ordinary share (in cent) 7.4 8.4 ---------------- ----------------
Free cash flow conversion
Six months ended Six months ended 30 June Year ended 30 June 2023 31 December 2022 2022 EUR'000 EUR'000 EUR'000 EBITDA APMs 51,126 98,040 44,935 Increase in inventory Note 15 (8,114) (15,130) (16,270) (Increase)/decrease in receivables Note 15 (44,298) 2,934 (13,195) Increase in payables Note 15 15,357 2,700 8,755 Share based payment expense Note 15 1,485 535 - Foreign currency translation adjustments Note 15 359 1,393 22 Payments to acquire property, plant and equipment - maintenance Cash Flow (2,426) (8,299) (3,489) Payments to acquire intangible assets maintenance Cash Flow (1,209) (3,448) (821)
Settlement of acquired financial liabilities* 938 2,138 1,429 ---------------- -------------------- ---------------- Free cash flow 13,218 80,863 21,366 ---------------- -------------------- ---------------- EBITDA 51,126 98,040 44,935 ---------------- -------------------- ---------------- Free cash flow conversion 25.9% 82.5% 47.5% ---------------- -------------------- ----------------
* The adjustment to free cash flow ensures that payments made after an acquisition to settle loans with former shareholders of acquired companies, or other similar financial liabilities, are excluded from the movement in payables in the free cash flow conversion calculation.
Return on capital employed
30 June 30 June 30 June 2023 2022 2021 EUR'000 EUR'000 EUR'000 Rolling 12 months operating profit 56,084 46,616 43,503 Adjustment for 12 months exceptional costs 16,694 15,508 10,871 Acquisition related 12 months intangible amortisation 2,921 2,813 897 --------- ---------- ---------- Adjusted 12 months rolling operating profit 75,699 64,937 55,271 --------- ---------- ---------- Total equity 304,146 263,569 217,697 Net bank debt/(cash) 178,045 73,807 30,341 Deferred contingent consideration 85,987 89,971 81,455 Deferred consideration payable 100 3,977 4,244 --------- ---------- ---------- Total capital employed 568,278 431,324 333,737 --------- ---------- ---------- Average capital employed 499,801 382,531 Adjustment for acquisitions (note A / B below) 14,258 7,909 --------- ---------- Adjusted average capital employed 514,059 390,440 --------- ---------- Return on capital employed 14.7% 16.6% --------- ---------- Note A: Adjustment for acquisitions Capital Completion Adjustment (2023) employed Date EUR'000 EUR'000 McCauley Pharmacy Group 49,407 Feb-23 (4,117) BModesto Group 41,901 Nov-22 6,984 Other acquisitions completed during 2022 and 2023 33,532 Various 11,391 Adjustment for acquisitions 14,258 ---------- Note B: Adjustment for acquisitions Capital Completion Adjustment (2022) employed Date EUR'000 EUR'000 Dr Hauschka 1,541 Mar-22 (257) Other acquisitions completed during 2021 and 2022 53,909 Various 8,166 ---------- Adjustment for acquisitions 7,909 ----------
The adjustment ensures that the capital employed of acquisitions completed during the period are appropriately time apportioned. The adjustment includes cash consideration, deferred and deferred contingent consideration, debt acquired, cash acquired, and any cash impact of shareholder loans or other similar financial liabilities repaid post-acquisition.
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September 14, 2023 02:00 ET (06:00 GMT)
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