TIDMUDG
RNS Number : 6639Y
UDG Healthcare Public Limited Co.
19 May 2016
UDG Healthcare plc
Interim Report 2016
Another period of strong growth
19 May 2016: UDG Healthcare plc ("UDG Healthcare" or "Group"), a
leading international healthcare services provider, announces its
results for the six months to 31 March 2016 after another period of
financial and strategic progress for the Group.
Constant
currency
increase Increase
IFRS based Adjustments(1) Adjusted on on 2015
2015
EUR'm EUR'm EUR'm % %
Continuing
operations
Revenue 472.4 - 472.4 2 6
Operating profit 40.3 8.1 48.4 9 15
Profit before
tax 33.1 8.1 41.2 10 18
Diluted earnings
per share
(cent) 9.86 2.91 12.77 8 15
Discontinued
operations(2)
Profit after tax 7.0 4.0 11.0 10 10
Diluted earnings
per share
(cent) 2.82 1.64 4.46 8 9
Total diluted
earnings
per share
(cent) 12.68 4.55 17.23 8 13
Dividend per
share
(cent) 3.05 - 3.05 5 5
----------------- ------------- ----------------- ------------------------ --------------- -----------
31
31 March 30 September March
2016 2015 2015
Net debt (EUR'm) 228.0 195.8 274.9
Net
debt/EBITDA(3)
(times) 1.63 1.42 2.02
----------------- ------------- ----------------- ------------------------ --------------- -----------
Non-GAAP information
The Group reports certain financial measures that are not
required under International Financial Reporting Standards (IFRS)
which represent the generally accepted accounting principles (GAAP)
under which the Group reports. The Group believes that the
presentation of these non-GAAP measures provides useful
supplemental information which, when viewed in conjunction with our
IFRS financial information, provides investors with a more
meaningful understanding of the underlying financial and operating
performance of the Group and its divisions. These measures are also
used internally to evaluate the historical and planned future
performance of the Group's operations and to measure executive
management's performance based remuneration. Reference to these
performance measurements throughout this report are to the adjusted
measurements unless otherwise stated.
(1) Adjusted operating profit, profit before tax and diluted EPS
from continuing operations are stated before the amortisation of
acquired intangible assets (EUR7.3m, pre-tax) and transaction costs
(EUR0.8m, pre-tax).
Adjusted profit after tax from discontinued operations is stated
after charging depreciation and amortisation of assets classified
as held for sale (EUR3.5m, net of tax) and adding back transaction
costs (EUR7.5m, net of tax). Profit after tax in the comparative
period reflected a depreciation and amortisation charge of EUR3.6m,
net of tax, relating to assets forming part of the discontinued
operations. Under IFRS, depreciation and amortisation are not
charged on assets classified as held for sale, therefore, no
equivalent depreciation and amortisation has been charged on these
assets in the current period's results. To provide comparable
information on the performance of the discontinued operations, an
estimated charge of EUR3.5m (net of tax) for depreciation and
amortisation in the current period has been reflected in the
adjustments column above.
(2) The discontinued operations include United Drug Supply Chain
Services, United Drug Sangers, TCP Group and MASTA. These
operations were included in the Group's proposed disposal which was
announced on 18 September 2015 and completed on 1 April 2016.
(3) EBITDA of continuing and discontinued operations before any
exceptional items and transaction costs for the preceding twelve
months, including annualised EBITDA of companies acquired and less
EBITDA of completed disposals. There were no exceptional items,
acquisitions or disposals in H1 2016.
Chief Executive's comment
Commenting on the interim performance, UDG Healthcare plc Chief
Executive Officer, Brendan McAtamney said:
"The Group's continuing business delivered another period of
strong growth during H1 2016. Profit before tax increased by 18%
(10% on a constant currency basis) and earnings per share increased
by 15% (8% on a constant currency basis) due to a combination of
robust underlying growth and the benefit of currency movements.
Sharp's operating profit increased by 38% during the period
while Ashfield increased operating profit by 7%. The continuing
Group operating margin increased from 9.4% to 10.2%, with each
division increasing its operating margin during the period.
We are reiterating our full year market guidance of 6-8% EPS(1)
growth for the continuing Group on a constant currency basis.
The Group's activities and strategy continue to be supported by
the strong growth outlook for the outsourced healthcare services
market. Following the completion of the disposal of the United Drug
Supply Chain businesses and MASTA in April, the Group is now in a
net cash position. Underpinned by our strong balance sheet and
diversified client base, UDG Healthcare remains well positioned to
continue to execute our international expansion strategy and meet
the growing demand for our specialist services from our global
healthcare clients."
Financial highlights (continuing Group only)
-- Adjusted operating profit(1) growth of 15% (9% on a constant
currency basis) to EUR48.4 million, with profit
before tax(1) up 18% (10% on a constant currency basis).
-- Adjusted diluted earnings per share(1) (EPS) from continuing
operations increased by 15% (8% on a constant
currency basis).
-- Revenue up 6%. Net revenue up 9% compared to prior period on
a constant currency basis, excluding pass
through costs and adjusting for disposals.
-- Operating margin(1) increased from 9.4% to 10.2%. Net
operating margin(2) increased from 11.1% to 11.6%.
-- 5% increase in interim dividend to 3.05 cent per share.
-- Reiterating our full year market guidance of 6-8% EPS growth
for the continuing Group on a constant
currency basis.
Strategic & operating highlights
-- Disposal of the United Drug Supply Chain businesses and MASTA completed on 1 April 2016.
-- Ashfield's operating profit increased by 7% (underlying
growth of 7%), with positive underlying growth
evident across the division.
-- The Group acquired Pegasus Public Relations Limited in April
2016, for an initial consideration of StgGBP10.1
million with an additional StgGBP6.7 million payable, based on
the achievement of agreed profit targets over the
next three years. Pegasus is a UK-based healthcare
communications business, complementing the existing
services provided by Ashfield Healthcare Communications.
-- Sharp Packaging's operating profit increased by 38%
(underlying growth of 25%) driven by continued strong
momentum in the US business.
-- Sharp US' capacity expansion has been completed providing an
additional 30% capacity once fully
validated.
-- The Group's Supply Chain Services businesses (including
discontinued operations) traded in line with
expectations.
(1) Before the amortisation of acquired intangible assets and transaction costs. (2) Operating margin as a percentage of net revenue. Net revenue represents gross revenue adjusted for revenue associated with pass-through costs for which the Group does not earn a margin.
Group development and outlook
The Group reiterates its full year guidance for constant
currency adjusted diluted EPS(1) growth for the continuing Group of
6 - 8% based on both the current momentum and positive outlook for
the remainder of 2016. EPS guidance is unchanged because the
positive impact from the acquisition of Pegasus is offset by the
impact of allocating an extra three months central administration
costs to the continuing Group in 2016, due to the earlier than
expected completion of the disposal of the United Drug Supply Chain
businesses and MASTA.
The Group is now in a net cash position after the receipt of the
disposal proceeds in April from the sale of the United Drug Supply
Chain businesses and MASTA.
To complement the underlying profit growth being generated by
the businesses, the Group remains active from a corporate
development perspective. The Group's focus will continue to be on
executing strategic M&A opportunities complementary to our
market leading, high-growth businesses, Ashfield and Sharp.
The build and fit out of Sharp's new packaging facility in
Allentown, Pennsylvania was completed in April 2016, and the first
phase of packaging suites will become operational during the second
half of 2016. Once fully validated and operational, the investment
at this site will increase US commercial packaging capacity by
approximately 30%.
The Group remains focused on ensuring that scalable
infrastructure is in place to support the future organic and
acquisition led growth of the business, through its "Future Fit"
initiatives. The first phase of this project will incorporate the
implementation of a Groupwide Human Resource Information System,
which is anticipated to go live during the second half of 2017 with
a total capital investment of EUR12 million. Further projects will
be focused on the Group's finance and IT infrastructure.
The average 2015 financial year exchange rates were EUR1 =
GBP0.7428 and $1.1482. The average exchange rates during H1 2016
were EUR1 = GBP0.7456 and $1.0986 (H1 2015 EUR1 = GBP0.7670 and
$1.1899).
As previously guided, the Group expects to continue its long
history of dividend growth in FY16. The Board has declared an
interim dividend of 3.05 cent per share, a 5% increase on the 2015
interim dividend.
Preliminary results:
The Group will issue preliminary results for the year to 30
September 2016 on Thursday, 24 November 2016.
(1) before the amortisation of acquired intangible assets and
transaction costs.
Analyst presentation:
A presentation for investors and analysts will be held at the
London Stock Exchange at 9.00 GMT today, Thursday, 19 May 2016. If
you wish to attend, please contact Powerscourt. Alternatively, to
dial into the conference call or webcast, the details are as
follows:
Audio webcast
http://edge.media-server.com/m/p/3w8qtbpi
Conference call
UK number: + 44-203-427-1907
Ireland number: + 353-1-246-5601
US number: + 1-212-444-0412
Participant code: 9775904
If you wish to ask questions, please do so via the conference
call.
A replay of the audio webcast can be accessed via the same
webcast link above.
Review of Operations
for the six months to 31 March 2016
Ashfield Commercial & Medical Services(1)
Six months to 31 March 2016 2015 Change
EUR'm EUR'm
------------------------------ ------ ------ -------
Gross revenue
UK 126.2 125.0 1%
North America 94.5 89.6 5%
Europe 70.5 69.0 2%
Total gross revenue 291.2 283.6 3%
Net revenue (2)
UK 98.3 97.4 1%
North America 77.1 60.9 27%
Europe 60.5 56.5 7%
Total net revenue 235.9 214.8 10%
Operating profit
UK (incl Japan) 15.8 14.2 11%
North America 7.4 7.6 (3%)
Europe 4.8 4.4 9%
Total operating profit 28.0 26.2 7%
Operating margin
Operating margin (on gross
revenue) 9.6% 9.2%
Net operating margin (on net
revenue) 11.9% 12.2%
------------------------------ ------ ------ -------
(1) Excludes MASTA in 2016 and 2015 as it was included in the
proposed disposal announced on 18 September 2015 and completed on 1
April 2016.
(2) Net revenue represents gross revenue adjusted for revenue
associated with pass-through costs for which the Group does not
earn a margin. There are no pass-through costs in Sharp Packaging
Services or Supply Chain Services.
Trading across the Ashfield division was good, with H1 2016 net
revenue up 10% to EUR235.9m and operating profit up 7% to
EUR28.0m.
Adjusting for the benefit of favourable currency movements and
the impact of the 2015 disposal of the non-core Speaker Bureau
business, Ashfield generated underlying operating profit growth of
7% during the period. Operating margin in the period was 9.6%,
whilst net operating margin (allowing for pass-through costs) was
11.9%.
UK operating profit increased by 11% and net operating margin by
152bps during the period. This was primarily due to continued good
progress in healthcare communications and an increased contribution
from the Japanese joint venture, offsetting a weaker performance
from the UK commercial business which operates in a more mature
market.
Reported operating profit for North America was 3% behind the
prior period. Adjusting for the impact of the disposal of the
Speaker Bureau business during 2015, operating profit in North
America grew by 15% during the period including the benefit of
favourable currency movements.
European operating profit increased by 9% during H1 2016 with a
net operating margin of 7.9%.
Sharp Packaging Services
Six months to 31 March 2016 2015 Change
EUR'm EUR'm
------------------------- ------------------------ ------ -------
Revenue
US 108.2 84.7 28%
EU 24.2 25.7 (6%)
Total revenue 132.4 110.4 20%
Operating profit/(loss)
US 16.5 12.0 38%
EU (0.3) (0.3) -
Total operating profit 16.2 11.7 38%
Operating margin 12.2% 10.6%
------------------------- ------------------------ ------ -------
Sharp Packaging Services continued its strong financial
performance during H1 2016 with revenue increasing by 20% to
EUR132.4m and operating profit up 38% to EUR16.2m. The division
generated underlying constant currency operating profit growth of
25% and benefited from favourable currency movements during the
period. Operating margin increased significantly (+163bps) to 12.2%
during the period.
The Sharp US business continued to deliver strong growth.
Revenue increased by 28% compared to the prior period, while
operating profit increased by 38% to EUR16.5m due to continued
strong market demand dynamics across all packaging formats.
Operating margin in the US increased to 15.2% (+111bps) driven by
continued high utilisation rates.
The build and fit out of the new biotech packaging facility at
our Allentown campus in Pennsylvania has been completed. This will
provide an additional 30% capacity for the US commercial packaging
business once fully validated. The first phase of packaging suites
is becoming operational and this additional capacity will allow the
business to meet the growing market demand which is evident across
all packaging formats in the US business. The Group anticipates
that further capacity investments may be required into the medium
term to meet growing client demand.
Sharp Europe continues to trade close to a breakeven position.
Despite a realignment of the cost base and improved business
development efforts, the European packaging business continues to
have capacity in excess of current requirements. Addressing this
excess capacity remains a key priority for the business.
Demand for serialisation services continues to increase. We
continue to invest in serialisation capabilities in advance of the
regulatory requirement for prescription products to be serialised
from November 2017 in the US and Europe in 2019. We have now
enabled over 40% of our packaging lines with serialisation
capability and have worked on over 30 serialisation projects with
existing clients. We will continue to enable the remainder of the
US prescription packaging lines over the coming twelve months to
ensure the business is fully prepared to meet our clients'
serialisation requirements.
Supply Chain Services (continuing)(1)
Six months to 31 March 2016 2015 Change
EUR'm EUR'm
------------------------ ------ ------ -------
Revenue 48.8 52.2 (7%)
Operating profit 4.2 4.1 2%
Operating margin 8.6% 7.8%
------------------------ ------ ------ -------
(1) Excludes United Drug Supply Chain Services, United Drug
Sangers and TCP Group in 2016 and 2015 as they were included in the
proposed disposal announced on 18 September 2015 and completed on 1
April 2016.
Continuing operations include Aquilant and the joint venture
with Medicare.
Revenue was 7% behind the prior period, however, adjusting for
the closure of Aquilant's UK laboratory distribution business in
February 2015, underlying revenue was in line with the prior
period. Operating profit was 2% ahead of the prior period and
operating margin increased to 8.6%.
Aquilant renewed a number of important client contracts during
the period and continues to trade in line with expectations.
Discontinued operations
Six months to 31 March 2016 2015 Change
EUR'm EUR'm
------------------------ ------ ------ -------
Revenue 682.9 685.2 (0%)
Profit after tax(2) 11.0 10.0 10%
(2) Profit after tax from discontinued operations is stated
before amortisation of acquired intangible assets, transaction
costs and exceptional items. Profit after tax in the comparative
period reflected a depreciation and amortisation charge of EUR3.6m,
net of tax, relating to assets forming part of the discontinued
operations. Under IFRS, depreciation and amortisation are not
charged on assets classified as held for sale, therefore, no
equivalent depreciation and amortisation has been charged on these
assets in the current period's results. To provide comparable
information on the performance of the discontinued operations, an
estimated charge of EUR3.5m (net of tax) for depreciation and
amortisation in the current period has been reflected above. See
note 8 for further details.
On 1 April 2016 the Group completed the disposal of United Drug
Supply Chain Services, United Drug Sangers, TCP Group and MASTA.
These businesses are treated as discontinued operations and have
performed in line with expectations for the period.
Forward-looking information
Some statements in this announcement are forward looking. They
represent expectations for the Group's business, and involve risks
and uncertainties. The Group has based these forward-looking
statements on current expectations and projections about future
events. The Group believes that expectations and assumptions with
respect to these forward-looking statements are reasonable.
However, because they involve known and unknown risks,
uncertainties and other factors, which in some cases are beyond the
Group's control, actual results or performance may differ
materially from those expressed or implied by such forward-looking
statements.
For further information, please contact:
Investors and Analysts:
Alan Ralph Keith Byrne
CFO Head of Investor Relations
UDG Healthcare plc and Strategy
Tel: +353-1-463-2300 UDG Healthcare plc
Tel: + 353-1-463-7722
Media:
Business / Financial media:
Lisa Kavanagh / Jack Hickey
Powerscourt
Tel: +44-207-250-1446
About UDG Healthcare plc:
Listed on the London Stock Exchange, UDG Healthcare plc (LON:
UDG) is a leading international provider of services to the
healthcare industry, employing over 7,000 employees at operations
across 19 countries including the US, UK, Ireland and Germany.
UDG Healthcare plc operates across three divisions: Ashfield
Commercial & Medical Services, Sharp Packaging Services and
Supply Chain Services.
Ashfield Commercial & Medical Services is a global leader in
the provision of sales, marketing and healthcare communications
services to pharmaceutical clients. It focuses on supporting
healthcare professionals and patients at all stages of the product
life cycle enabling improved compliance and clinical outcomes. The
division provides sales teams, healthcare communications,
telesales, nurse educators, medical information, pharmacovigilance,
regulatory and event management services to over 300 healthcare
companies in 18 countries.
Sharp Packaging Services is a global leader in contract
packaging and clinical trial packaging services for pharmaceutical
clients, operating from state of the art facilities across the US
and Europe. Sharp is also a world leader in 'Track and Trace'
serialisation services, which will require all prescription drugs
to have a unique serial code for authentication and
traceability.
Supply Chain Services consists of Aquilant, a leading provider
of outsourced sales, marketing, distribution and engineering
services to the medical and scientific sectors in the UK, Ireland
and the Netherlands and our interest in Medicare, a pharmacy chain
in Northern Ireland.
The company is listed on the London Stock Exchange and is a
constituent of the FTSE 250.
For more information please go to: www.udghealthcare.com
Finance Review
for the six months to 31 March 2016
Revenue
Revenue from continuing operations of EUR472.4 million for the
six months to 31 March 2016 was 6% ahead (2% on a constant currency
basis) of the same period in 2015. Ashfield Commercial &
Medical Services reported revenue 3% ahead of the prior period (up
10% excluding pass through revenue) and Sharp Packaging Services
reported revenue 20% ahead of the prior period. The continuing
Supply Chain Services divisional revenue was 7% down on 2015 due to
the closure of Aquilant's UK laboratory distribution business in
February 2015.
Adjusted operating profit
Adjusted operating profit from continuing operations of EUR48.4
million is 15% ahead (9% on a constant currency basis) of H1
2015.
Adjusted operating margin
The adjusted operating margin for the continuing businesses for
the period of 10.2% was higher than the margin of 9.4% in H1 2015.
This continues the upward trend in operating margin in recent years
as the Group focuses on operating efficiencies and achieving faster
growth from businesses with higher operating margins.
Adjusted profit before tax
Net interest costs for the period of EUR7.1 million are 2%
higher than H1 2015. This delivered a profit before tax from
continuing operations of EUR41.2 million which is 18% ahead of 2015
(10% on a constant currency basis). Further details on the
principal exchange rates used are provided in note 17.
Taxation
The effective taxation rate(1) on continuing operations has
increased from 22.1% in H1 2015 to 23.5% in H1 2016. This is
because a larger proportion of profit has been generated in
countries with higher taxation rates.
Adjusted diluted earnings per share
Earnings per share from continuing operations is 15% ahead (8%
on a constant currency basis) of H1 2015 at 12.77 cent. On a
combined continuing and discontinued basis, adjusted diluted
earnings per share increased by 13% to 17.23 cent.
Cash flow
Net debt increased by EUR32.2 million in the period to EUR228.0
million (31 March 2015: EUR274.9 million). The net cash inflow from
operating activities was EUR26.3 million with EUR36.6 million being
generated by continuing operations and an outflow of EUR10.3
million from discontinued operations.
EUR19.0 million was invested in our continuing operations in
property, plant and equipment and computer software. This includes
IT investment to enable our businesses to grow in an efficient
manner and investment in the new facility in Sharp Packaging US.
EUR5.3 million was paid in deferred consideration associated with
prior year acquisitions while EUR19.9 million relating to the final
2015 dividend was paid during the period.
Balance sheet
Net debt at the end of the period was EUR228.0 million. The net
debt to annualised EBITDA ratio is 1.63 times and net interest is
covered 12.6 times by annualised EBITDA. Financial covenants in our
principal debt facilities are based on net debt to EBITDA being
less than 3.5 times and EBITDA interest cover being greater than
three times.
Return on capital employed
The ROCE for continuing operations was 13.6%, up from 13.5% at
the end of 2015.
The Group targets ROCE of 15% within three years for all
investments. The Group has invested significantly in acquisitions
and capital expenditure in recent years and we anticipate that
organic growth in future years will increase Group ROCE to the
targeted 15% level.
[1] Before the amortisation of acquired intangible assets,
transaction costs and 2015 exceptional items.
Dividends
The directors are proposing an interim dividend of 3.05 cent per
share representing an increase of 5% on the 2015 interim dividend.
The interim dividend is payable to shareholders on the Company's
register at 5.00 pm on 27 May 2016 and will be paid on 20 June
2016.
Investor relations
UDG Healthcare's senior management team spend a significant
amount of time meeting with shareholders and the international
financial community. We have invested in dedicated investor
relations resources and are focused on increasing the awareness of
the Company among the investor and analyst community.
We communicate regularly with our shareholders throughout the
year, specifically following the release of our interim and
preliminary results, and at the time of major developments. Our
website www.udghealthcare.com, is the primary method of
communication for the majority of our shareholders. We publish our
annual report, preliminary results and other public announcements
on our website. In addition, details of our conference calls and
presentations are available through our website.
The Board of Directors considers it important to understand the
views of shareholders and receive regular updates on investor
perceptions.
Our investor relations department provides a point of contact
for shareholders and full contact details are set out in the
investor relations section of our website. Shareholders can also
submit an information request through the shareholder services
section of our website.
Principal risks and uncertainties
The Transparency (Directive 2004/109/EC) Regulations 2007
require the disclosure of the principal risks and uncertainties
which could have a material impact on the Group's performance over
the remainder of the financial year.
The Group operates within a highly regulated environment and the
expectations of our key stakeholders, which include our clients and
regulators, are very high. Our services include communicating to
healthcare professionals, appropriate product use, pharmaceutical
packaging and the distribution of pharmaceutical products for
normal use or clinical trials. We focus on making sure that we
deliver these services correctly and in a compliant way. However,
failure to do so could result in adverse consequences for patients
and our clients, so the risks that we face in delivering our
services are potentially significant.
The Group's ability to avoid or mitigate these risks is
underpinned by detailed risk registers maintained by each of the
Group's divisions and business units. These risk registers identify
the risks, as well as the plans for addressing them, and the
consolidated Group risk register is reviewed by the executive
directors on a regular basis. The consolidated risk register is
also reviewed by the Risk, Investment and Finance Committee and the
Chairman of that committee reports to the Board on the outcome of
each review.
The principal risks and uncertainties identified by the risk
management process as facing the Group are detailed below:
Principal risk Mitigation
----------------------------------- --------------------------------------
Operational risks
----------------------------------- --------------------------------------
Acquisitive growth remains All potential acquisitions
a core element of the are assessed and evaluated
Group's strategy. A failure to ensure the Group's defined
to execute and properly strategic and financial
integrate acquisitions, criteria are met. A discreet
capitalise on the synergies integration process is
they bring and/or maintain developed for each acquisition.
and develop their talent This process is supported
pool, may adversely affect by experienced management
the Group. with a view to achieving
identified benefits, cultivating
talent and minimising general
and specific integration
risks.
----------------------------------- --------------------------------------
As the Group's activities At each business review
consolidate and further we monitor our client base
acquisitions are completed, and the threats and opportunities
the Group's client base that may arise, both from
may become more concentrated our clients' activities
making the Group more and any concentration of
susceptible to competitive, our client base. The impact
client merger or procurement that any potential acquisition
led threats. may have on client concentration
is considered as part of
the acquisition assessment
process.
----------------------------------- --------------------------------------
The Group has many legal Maintenance of legal, regulatory
and regulatory obligations, and quality standards is
including in respect of: a core value of the Group.
(a) protection of patient We continue to build and
information (such as HIPAA);(b) review our quality and
patient and employee health compliance management systems
and safety; and(c) promotional to ensure that they are
spend. In addition many fit for purpose in the
of the Group's activities context of the Group's
are subject to stringent strategy and its legal
licensing regulations. and regulatory obligations.
A failure to meet any These reviews are supported
of these could result by corporate audits on
in products and services compliance, quality and
being defective, harming environment, health and
patients and/or giving safety.
rise to very significant
liability.
----------------------------------- --------------------------------------
Throughout the Group medicines Packaging and supply activity
and medical devices can is carried out under licence
be packaged, supplied and a contract with the
or administered directly marketing authorisation
to patients. The risk holder (MAH). This requires
of inappropriate packaging, a regulated quality management
supply or administration system to ensure the integrity
could lead to a negative of the packaged product
patient experience. and the supply chain. Administration
of medicines to patients
is covered by a detailed
client contract with the
MAH and the local clinical
governance framework. All
of these processes are
subject to risk assessment,
training, management review,
internal and external audits.
The success of the Group The talent requirements
is built upon effective of the Group are monitored
management teams that to ensure its management
consistently deliver superior teams meet prevailing requirements
performance. If the Group in skills, competencies
cannot attract, retain and performance. Remuneration
or develop suitably qualified, policies, management development,
experienced and motivated succession planning and
employees, this could the systems for developing
have an impact on business talent inherited from our
performance. acquisitions are within
a programme of review and
redevelopment to ensure
that they remain relevant
and appropriate to the
Group's ongoing strategy.
Acquiring additional skill
and competencies may result
in external hires also
to build depth in the management
teams.
----------------------------------- --------------------------------------
The continued growth and At least once per year
evolution of the Group a thorough review on Strategy
requires its organisational is carried out. One element
design and infrastructure of strategy is whether
to be subject to review the organisational structure
and successful ongoing is fit for purpose. Each
development. A failure year the growth drivers
to do so could adversely for the business are reviewed
affect the Group's ability against the current organisation
to meet its objectives. to establish whether change
is required. If there is
a requirement to change,
a formal review process
such as the recently completed
Future Fit review will
ensue.
----------------------------------- --------------------------------------
The ability of the Group The Group's technology
to provide its services and information systems
effectively and competitively and infrastructure are
is dependent on technology the subject of an ongoing
and information systems strategic redesign to ensure
that are appropriately that they are capable of
integrated and that meet meeting the Group's strategic
current and anticipated intent and future requirements,
future business, regulatory whilst further mitigating
and security requirements. against systems failures
and the increasing threat
of external interference.
----------------------------------- --------------------------------------
Business continuity: The The Group is developing
Group is exposed to risks and reviewing its business
that, should they arise, continuity risks as part
may give rise to the interruption of the risk management
of critical business processes and the corporate audit
that could adversely impact processes. Mitigation strategies
the Group or its clients. and continuity plans are
part of a structured review
programme.
----------------------------------- --------------------------------------
The underlying terms of The Group has adopted processes
the Group's commercial for identifying and mitigating
relationships drive the against undue risks in
profitability of the Group. all prospective commercial
The nature of the Group's relationships, supported
business means that the by personnel with expertise
Group could be exposed and/or experience in key
to undue cost or liability commercial risk areas.
if it agrees inappropriate
terms.
----------------------------------- --------------------------------------
Financial risks
----------------------------------- --------------------------------------
The Group's resources The financial controls
and finances must be managed of the Group, as well as
in accordance with rigorous their effectiveness, are
standards and stringent monitored by the Board
controls. A failure to in the context of the standards
meet those standards or to which the Group is subject
implement appropriate and the expectations of
controls may result in its stakeholders. This
the Group's resources monitoring is supported
being improperly utilised by a dedicated internal
or its financial statements audit function. The Group's
being inaccurate or misleading. financial function, systems
and controls are also subject
to periodic review to ensure
that they remain robust
and fit for purpose.
----------------------------------- --------------------------------------
The group is exposed to The management of the financial
liquidity, interest rate, risks facing the Group
currency and credit risks. is governed by policies
reviewed and approved by
the Board. These policies
primarily cover liquidity
risk, interest rate risk,
currency risk and credit
risk. The primary objective
of the Group's policies
is to minimise financial
risk at a reasonable cost.
The Group does not trade
in financial instruments.
----------------------------------- --------------------------------------
UDG Healthcare plc's reporting The majority of the Group's
currency is the euro. activities are conducted
Given the nature of the in the local currency of
Group's businesses, exposure the country of operation.
arises in the normal course As a consequence, the primary
of business to other currencies, foreign exchange risk arises
principally sterling and from the fluctuating value
the US dollar. of the Group's net investment
in different currencies
and from translating non-euro
profits into euro for reporting
purposes.
----------------------------------- --------------------------------------
Statement of Directors
in respect of the half-yearly financial report
Each of the directors confirms that to the best of their
knowledge and belief:
-- the condensed set of interim financial statements comprising
the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of changes in equity, the condensed
consolidated balance sheet, the condensed consolidated cash flow
statement, and the related notes have been prepared in accordance
with IAS 34, Interim Financial Reporting as adopted by the EU;
-- the half-yearly financial report includes a fair review of the information required by:
(a) Regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) Regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during that period; and any changes in the related
party transactions described in the last Annual Report that could
do so.
The Group's auditor has not reviewed this condensed half-yearly
financial report.
On behalf of the Board(i)
P. Gray B. McAtamney
Director Director
18 May 2016
(i) The Board of UDG Healthcare plc is disclosed on the
Company's website, www.udghealthcare.com.
Condensed consolidated income statement
for the six months ended 31 March 2016
Six months Restated (note 7)
ended 31 March Six months ended 31 March 2015
2016
Notes Pre-
Total exceptional items
31 March 2016 (Unaudited)
(Unaudited)
EUR'000 EUR'000 Exceptional
items Total
(note 5) 31 March 2015
(Unaudited) (Unaudited)
EUR'000 EUR'000
Continuing
operations
Revenue 3 472,414 446,209 - 446,209
Cost of sales (303,821) (290,128) (2,050) (292,178)
-------------------- ------ ---------------- --- ------------------- ----------------------- -----------------
Gross profit 168,593 156,081 (2,050) 154,031
Selling and
distribution
expenses (111,737) (106,521) (4,221) (110,742)
Administration
expenses (8,618) (7,683) (1,600) (9,283)
Other operating
expenses (8,594) (7,931) (2,216) (10,147)
Transaction costs (834) (276) - (276)
Share of joint
ventures' profit
after tax 4 1,437 693 - 693
Profit on disposal
of subsidiary
undertakings 5 - - 268 268
-------------------- ------ ---------------- --- ------------------- ----------------------- -----------------
Operating profit 40,247 34,363 (9,819) 24,544
Finance income 6 5,493 40,853 - 40,853
Finance expense 6 (12,603) (47,792) - (47,792)
Profit before tax
from continuing
operations 33,137 27,424 (9,819) 17,605
Income tax
(expense)/credit (8,738) (6,775) 1,304 (5,471)
-------------------- ------ ---------------- --- ------------------- ----------------------- -----------------
Profit for the
period from
continuing
operations 24,399 20,649 (8,515) 12,134
Profit after tax
for the period
from discontinued
operations 7 6,967 9,798 (730) 9,068
-------------------- ------ ---------------- --- ------------------- ----------------------- -----------------
Profit for the
period 31,366 30,447 (9,245) 21,202
-------------------- ------ ---------------- --- ------------------- ----------------------- -----------------
Profit
attributable to:
Owners of the
parent 31,366 21,181
Non-controlling
interests - 21
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
31,366 21,202
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
Profit
attributable to:
Continuing
operations 24,399 12,134
Discontinued
operations 6,967 9,068
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
31,366 21,202
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
Earnings per
ordinary share:
Basic - continuing
operations 8 9.92c 4.98c
Basic -
discontinued
operations 8 2.83c 3.72c
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
Basic 12.75c 8.70c
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
Diluted -
continuing
operations 8 9.86c 4.95c
Diluted -
discontinued
operations 8 2.82c 3.70c
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
Diluted 12.68c 8.65c
-------------------- ------ ---------------- --- ------------------------------ ------ -----------------------
Condensed consolidated statement of
comprehensive income
for the six months ended 31 March 2016
Restated
(note
Six months 7)
ended Six
31 March months
2016 ended
31 March
2015
(Unaudited) (Unaudited)
Notes EUR'000 EUR'000
Profit for the period 31,366 21,202
Other comprehensive income/(expense):
Items that will not be reclassified
to profit or loss:
Remeasurement (loss)/gain
on Group defined benefit schemes 14
* Continuing operations (4,900) (14,156)
* Discontinued operations 469 (618)
Deferred tax on Group defined
benefit schemes
* Continuing operations 527 1,611
* Discontinued operations (94) 124
--------------------------------------- -------- -------- ------------- ----------- ------------
(3,998) (13,039)
--------------------------------------- -------- -------- ------------- ----------- ------------
Items that may be reclassified
subsequently to profit or
loss:
Foreign currency translation
adjustment 11
* Continuing operations (26,663) 66,310
* Discontinued operations (4,640) 4,205
Reclassification on loss of
control of subsidiary undertakings 11 - (165)
Gain/(loss) on hedge of net
investment in foreign operations 11 2,262 (21,722)
Group cash flow hedges:
- Effective portion of cash
flow hedges - movement into
reserve 3,424 37,517
- Effective portion of cash
flow hedges - movement out
of reserve (7,273) (32,891)
-------- -----------
Effective portion of cash
flow hedges 11 (3,849) 4,626
- Movement in deferred tax
- movement into reserve (428) (4,689)
- Movement in deferred tax
- movement out of reserve 909 4,111
-------- -----------
Net movement in deferred tax 11 481 (578)
--------------------------------------- -------- -------- ------------- ----------- ------------
(32,409) 52,676
--------------------------------------- -------- -------- ------------- ----------- ------------
Other comprehensive (expense)/income,
net of tax (36,407) 39,637
--------------------------------------- -------- -------- ------------- ----------- ------------
Total comprehensive (expense)/income,
net of tax (5,041) 60,839
--------------------------------------- -------- -------- ------------- ----------- ------------
Total comprehensive (expense)/income
attributable to:
Owners of the parent (5,041) 60,818
Non-controlling interests - 21
--------------------------------------- -------- -------- ------------- ----------- ------------
(5,041) 60,839
--------------------------------------- -------- -------- ------------- ----------- ------------
Total comprehensive (expense)/income
attributable to:
Continuing operations (7,743) 48,060
Discontinued operations 2,702 12,779
---------------------------------------- -------- -------
(5,041) 60,839
-------------------------------------- -------- -------
Condensed consolidated statement of changes in
equity
for the six months ended 31 March 2016
Equity Other
share Share Retained reserves Total
capital premium earnings (Note 11) equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 October 2015 12,621 152,164 433,912 10,077 608,774
Profit for the financial period - - 31,366 - 31,366
Other comprehensive income/(expense):
Effective portion of cash flow hedges - - - (3,849) (3,849)
Deferred tax on cash flow hedges - - - 481 481
Translation adjustment
* Continuing operations - - - (26,663) (26,663)
* Discontinued operations - - - (4,640) (4,640)
Gain on hedge of net investment in foreign operations - - - 2,262 2,262
Remeasurement (loss)/gain on defined benefit schemes
* Continuing operations - - (4,900) - (4,900)
* Discontinued operations - - 469 - 469
Deferred tax on defined benefit schemes
* Continuing operations - - 527 - 527
* Discontinued operations - - (94) - (94)
------------------------------------------------------- --------- -------- --------- ---------- ---------
Total comprehensive income/(expense) for the period - - 27,368 (32,409) (5,041)
Transactions with shareholders:
New shares issued 71 3,098 - - 3,169
Share-based payment expense - - - 824 824
Dividends paid to equity holders - - (19,867) - (19,867)
Release from share-based payment reserve - - 1,904 (1,904) -
------------------------------------------------------- --------- -------- --------- ---------- ---------
At 31 March 2016 - unaudited 12,692 155,262 443,317 (23,412) 587,859
------------------------------------------------------- --------- -------- --------- ---------- ---------
for the six months ended 31 March 2015 (restated)
Equity Other Attributable
share Share Retained reserves to owners Non-controlling Total
capital premium earnings (Note 11) of the parent interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 October 2014 12,485 147,176 404,212 (30,173) 533,700 (21) 533,679
Profit for the financial period - - 21,181 - 21,181 21 21,202
Other comprehensive
income/(expense):
Effective portion of cash flow
hedges - - - 4,626 4,626 - 4,626
Deferred tax on cash flow hedges - - - (578) (578) - (578)
Translation adjustment
* Continuing operations - - - 66,310 66,310 - 66,310
* Discontinued operations - - - 4,205 4,205 - 4,205
Reclassification on loss of control
of subsidiary undertakings - - - (165) (165) - (165)
Loss on hedge of net investment in
foreign operations - - - (21,722) (21,722) - (21,722)
Remeasurement loss on defined
benefit schemes
* Continuing operations - - (14,156) - (14,156) - (14,156)
* Discontinued operations - - (618) - (618) - (618)
Deferred tax on defined benefit
schemes
* Continuing operations - - 1,611 - 1,611 - 1,611
* Discontinued operations - - 124 - 124 - 124
------------------------------------ -------- -------- --------- ---------- -------------- ---------------- ------------
Total comprehensive income for the
period - - 8,142 52,676 60,818 21 60,839
Transactions with shareholders:
New shares issued 117 4,512 - - 4,629 - 4,629
Share-based payment expense - - - 965 965 - 965
Dividends paid to equity holders - - (18,061) - (18,061) - (18,061)
Release from share-based payment
reserve - - 2,134 (2,134) - - -
------------------------------------ -------- -------- --------- ---------- -------------- ---------------- ------------
At 31 March 2015 - unaudited 12,602 151,688 396,427 21,334 582,051 - 582,051
------------------------------------ -------- -------- --------- ---------- -------------- ---------------- ------------
Condensed consolidated balance sheet
as at 31 March 2016
As at 31 March As at 31 March As at 30 September 2015
2016 2015
(Unaudited) (Unaudited) (Audited)
Notes EUR'000 EUR'000 EUR'000
ASSETS
Non-current
Property, plant and equipment 9 121,702 193,902 117,903
Goodwill 10 345,962 381,384 358,213
Intangible assets 10 90,296 147,134 101,693
Investment in joint ventures and associates 10 23,734 21,752 23,079
Derivative financial instruments 12 13,386 29,601 22,048
Deferred income tax assets 4,101 10,374 3,984
Employee benefits 14 12,459 15,882 13,067
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Total non-current assets 611,640 800,029 639,987
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Current
Inventories 55,981 169,048 55,017
Trade and other receivables 197,845 431,943 205,248
Cash and cash equivalents 12 182,949 145,461 214,078
Current income tax assets 117 4,822 1,612
Derivative financial instruments 12 4,520 4,799 4,750
Assets held for sale 7 474,684 - 473,820
Total current assets 916,096 756,073 954,525
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Total assets 1,527,736 1,556,102 1,594,512
-------------------------------------------- ------ ----------------- ----------------- --------------------------
EQUITY
Equity share capital 12,692 12,602 12,621
Share premium 155,262 151,688 152,164
Other reserves 11 (23,412) 21,334 10,077
Retained earnings 443,317 396,427 433,912
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Total equity 587,859 582,051 608,774
LIABILITIES
Non-current
Interest-bearing loans and borrowings 12 409,577 453,925 415,840
Provisions 13 7,167 15,593 7,508
Employee benefits 14 13,921 34,896 18,303
Deferred income tax liabilities 27,305 33,613 28,050
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Total non-current liabilities 457,970 538,027 469,701
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Current
Interest-bearing loans and borrowings 12 19,293 837 20,811
Trade and other payables 183,694 420,601 191,758
Current income tax liabilities 7,403 4,851 4,452
Provisions 13 11,406 9,735 18,683
Liabilities held for sale 7 260,111 - 280,333
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Total current liabilities 481,907 436,024 516,037
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Total liabilities 939,877 974,051 985,738
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Total equity and liabilities 1,527,736 1,556,102 1,594,512
-------------------------------------------- ------ ----------------- ----------------- --------------------------
Condensed consolidated cash flow statement
for the six months ended 31 March 2016
Restated (note 7)
Six months ended 31 March 2016 Six months ended 31 March 2015
(Unaudited) (Unaudited)
--------------------------------------- -------------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cash flows from
operating activities
Profit before tax 33,137 8,546 41,683 17,605 10,426 28,031
Finance income (5,493) (7) (5,500) (40,853) (5) (40,858)
Finance expense 12,603 58 12,661 47,792 60 47,852
Exceptional items - - - 9,819 844 10,663
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Operating profit
(pre-exceptional items) 40,247 8,597 48,844 34,363 11,325 45,688
Share of joint ventures' profit
after tax (1,437) - (1,437) (693) - (693)
Depreciation charge 8,785 - 8,785 8,143 3,575 11,718
Loss/(profit) on disposal of
property, plant and equipment 2 (11) (9) 3 (18) (15)
Impairment of intangible assets - 1,031 1,031 - - -
Amortisation of intangible
assets 8,594 - 8,594 8,307 900 9,207
Share-based payment expense 824 - 824 965 - 965
(Increase)/decrease in
inventories (2,838) 3,523 685 (1,936) 5,161 3,225
Decrease/(increase) in trade and
other receivables 2,072 (9,170) (7,098) (4,952) (10,888) (15,840)
Decrease in trade payables,
provisions and other payables (8,940) (20,413) (29,353) (215) (7,414) (7,629)
Exceptional items paid (2,076) - (2,076) (4,633) (946) (5,579)
Increase in transaction costs
accrued 672 6,819 7,491 - - -
Interest paid (5,969) - (5,969) (6,226) - (6,226)
Income taxes paid (3,299) (707) (4,006) (5,438) (1,720) (7,158)
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Net cash inflow/(outflow) from
operating activities 36,637 (10,331) 26,306 27,688 (25) 27,663
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Cash flows from
investing activities
Interest received 220 7 227 197 5 202
Purchase of property, plant and
equipment (17,027) (2,306) (19,333) (16,890) (3,805) (20,695)
Proceeds from disposal of
property, plant and equipment 267 11 278 46 153 199
Investment in intangible assets
- computer software (1,984) (6,051) (8,035) (684) (10,117) (10,801)
Deferred contingent acquisition
consideration paid (5,281) - (5,281) (210) - (210)
Disposal of subsidiary
undertakings (net of cash and
cash equivalents disposed) - - - 343 - 343
Investment in joint ventures - - - (6,124) - (6,124)
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Net cash outflow from investing
activities (23,805) (8,339) (32,144) (23,322) (13,764) (37,086)
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Cash flows from
financing activities
Proceeds from issue of shares
(including share premium
thereon) 3,169 - 3,169 4,629 - 4,629
Proceeds from interest-bearing
loans and borrowings - - - 11,558 - 11,558
Repayments of interest-bearing
loans and borrowings (649) - (649) (12,673) - (12,673)
Group transfers 10,567 (10,567) - 14,573 (14,573) -
(Decrease)/increase in finance
leases (23) - (23) 2 - 2
Dividends paid to equity holders
of the Company (19,867) - (19,867) (18,061) - (18,061)
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Net cash (outflow)/inflow from
financing activities (6,803) (10,567) (17,370) 28 (14,573) (14,545)
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Net increase/(decrease) in cash
and cash equivalents 6,029 (29,237) (23,208) 4,394 (28,362) (23,968)
Translation adjustment (7,921) 12,174
Cash and cash equivalents at
beginning of period 214,078 157,255
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Cash and cash equivalents at end
of period 182,949 145,461
--------------------------------- ----------- ------------- ----------- --- ----------- ------------- ---------
Cash and cash
equivalents is
comprised of:
Cash at bank and short term
deposits 182,949 145,461
Notes to the condensed interim financial statements
for the six months ended 31 March 2016
1. Reporting entity
UDG Healthcare plc (the "Company") is a company domiciled in
Ireland. The unaudited condensed consolidated interim financial
information of the Company for the six months ended 31 March 2016,
are comprised of the Company and its subsidiaries (together
referred to as the "Group") and the Group's interest in joint
ventures and associates.
The financial information presented herein does not amount to
statutory financial statements that are required by Section 347 of
the Companies Act, 2014 to be annexed to the annual return of the
Company. The financial information does not include all the
information and disclosures required in the annual financial
statements. The statutory financial statements for the year ended
30 September 2015 will be annexed to the annual return and filed
with the Registrar of Companies. The audit report on those
statutory financial statements was unqualified and did not contain
any matters to which attention was drawn by way of emphasis.
2. Statement of compliance
These unaudited condensed consolidated interim financial
statements ("the interim accounts") for the six months ended 31
March 2016 have been prepared in accordance with IAS 34, Interim
Financial Reporting, as endorsed by the European Union. These
interim accounts do not include all of the information required for
full annual financial statements and should be read in conjunction
with the most recent published consolidated financial statements of
the Group. The accounting policies applied in the interim accounts
are the same as those applied in the 2015 Annual Report.
The Group has adopted the following standards and
interpretations during the period but these did not have a material
effect on the results or the financial position of the Group:
* Annual Improvements to IFRSs 2011-2013 Cycle
* Annual improvements to IFRSs 2010-2012 Cycle
* Amendments to IAS 19 Defined Benefit Plans: Employee
Contributions
The following standards, amendments to existing standards, and
interpretations published by IASB are not yet effective for the
period ended 31 March 2016 and have not been early adopted in
preparing the financial statements:
* Amendments to IFRS 11: Accounting for acquisitions of
interests in Joint Operations
* Amendments to IAS 16 and IAS 38: Clarification of
acceptable methods of depreciation and amortisation
* Amendments to IAS 16: Property, Plant and Equipment
and IAS 41: Bearer Plants
* Amendments to IAS 27: Equity method in Separate
Financial Statements
* Amendments to IAS 1: Disclosure Initiative
* Annual Improvements to IFRSs 2012-2014 Cycle
* Amendments to IFRS 10, IFRS 12 and IAS 28: Investment
Entities: Applying the consolidation exception*
* IFRS 14: Regulatory Deferral Accounts*
* Amendments to IAS 7: Disclosure Initiative*
* Amendments to IAS 12: Recognition of deferred tax
assets for unrealised losses*
* IFRS 15: Revenue from contracts with customers*
* IFRS 9: Financial Instruments*
* IFRS 16: Leases*
* Amendments to IFRS 10 and IAS 28: Sale or
contribution of assets between an investor and its
associate or joint venture*
A number of the standards (*) set out above have not yet been
endorsed by the EU. These standards, interpretations and amendments
to existing standards will be applied for the purposes of the Group
and Company financial statements with effect from their respective
effective dates. The Group is currently considering the impact of
these accounting standards.
The preparation of interim financial statements requires the use
of certain critical accounting estimates, judgements and
assumptions. The areas involving a high degree of judgement or
complexity, or areas where assumptions and estimates are
significant to the financial statements, relate primarily to
goodwill impairment testing, revenue recognition, valuation and
ownership of inventory, recoverability of trade receivables and
valuation of provisions. The nature of the assumptions and
estimates made in the preparation of the interim accounts are the
same as those identified in our most recent annual report. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources. There
was no significant change to any of these key estimates or
judgements in the six month period, other than a change to certain
actuarial assumptions as set out in note 14.
The income tax expense for the six month period is calculated by
applying the directors' best estimate of the annual effective tax
rate to the profit for the period.
The directors have a reasonable expectation that the Company,
and the Group as a whole, have adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
condensed consolidated interim financial statements.
As permitted by the Transparency (Directive 2004/109/EC)
Regulations 2007 this Interim Report is available on
www.udghealthcare.com. However, if a physical copy is required,
please contact the Company Secretary.
3. Segmental analysis
The Group's operations are divided into the following operating
segments:
Ashfield Commercial & Medical Services - The Ashfield
Commercial and Medical Services segment provides sales and
marketing services ('CSO'), healthcare communications, event
management and medical affairs & regulatory services to
healthcare companies.
Sharp Packaging Services - The Sharp Packaging Services segment
provides outsourced commercial and clinical trial packaging
services to healthcare companies.
Supply Chain Services - The Supply Chain Services segment
combines all of the Group's healthcare logistics based
companies.
On 18 September 2015 the Group announced the proposed disposal
of United Drug Supply Chain Services, United Drug Sangers, TCP
Group and MASTA. This has resulted in a change in the composition
of the operating segments during the year ended 30 September 2015.
Following this change, we have revised our segmental reporting and
restated the prior year segmental disclosures as required by IFRS
8. Details of the discontinued operations are included in note 7.
The segmental analysis of the business corresponds with the Group's
organisational structure and the Group's internal reporting for the
purpose of managing the business and assessing performance as
reviewed by the Group's Chief Operating Decision Maker (CODM),
which the Group has defined as Brendan McAtamney (Chief Executive
Officer).
The amount of revenue and operating profit under the Group's
operating segments is as follows:
Six months Six months
ended ended
Continuing operations 31 March 31 March
2016 2015
EUR'000 EUR'000
Revenue
Ashfield Commercial & Medical Services 291,189 283,602
Sharp Packaging Services 132,388 110,438
Supply Chain Services 48,837 52,169
472,414 446,209
---------------------------------------------------------------------------------------- ------------- -------------
Operating profit before acquired intangible amortisation, transaction costs and
exceptional
items
Ashfield Commercial & Medical Services 28,012 26,181
Sharp Packaging Services 16,187 11,760
Supply Chain Services 4,191 4,052
48,390 41,993
Amortisation of acquired intangibles (7,309) (7,354)
Exceptional items - (9,819)
Transaction costs (834) (276)
---------------------------------------------------------------------------------------- ------------- -------------
Operating profit 40,247 24,544
Finance income 5,493 40,853
Finance expense (12,603) (47,792)
---------------------------------------------------------------------------------------- ------------- -------------
Profit before tax 33,137 17,605
Income tax expense (8,738) (5,471)
---------------------------------------------------------------------------------------- ------------- -------------
Profit after tax for the period 24,399 12,134
---------------------------------------------------------------------------------------- ------------- -------------
Geographical analysis of revenue
United Kingdom and Republic of Ireland 188,782 190,475
North America 202,667 175,401
Continental Europe 80,965 80,333
---------------------------------------------------------------------------------------- ------------- -------------
472,414 446,209
---------------------------------------------------------------------------------------- ------------- -------------
4. Share of joint ventures' profit after tax
Six months Six months
ended ended
31 March 31 March
2016 2015
EUR'000 EUR'000
Group share of revenue 32,416 28,303
Group share of expenses, inclusive of tax (30,979) (27,610)
------------------------------------------- ----------- -----------
Group share of profit after tax 1,437 693
------------------------------------------- ----------- -----------
5. Exceptional items
Six months Six months
ended ended
31 March 31 March
2016 2015
EUR'000 EUR'000
Restructuring costs and other - 4,618
Impairment of assets - 4,266
Onerous leases - 1,203
Profit on disposal of subsidiary undertakings - (268)
Exceptional items relating to continuing operations - 9,819
Exceptional items relating to discontinued operations - 844
------------------------------------------------------- ------------- -------------
- 10,663
Exceptional tax credit - (1,418)
------------------------------------------------------- ------------- -------------
Net exceptional items after taxation - 9,245
------------------------------------------------------- ------------- -------------
Restructuring costs and other, included in the six months to 31
March 2015, primarily included redundancy costs of EUR4,499,000 in
relation to recently acquired and existing Group businesses. The
closure of Aquilant Scientific (UK) Limited (a UK based distributor
of laboratory equipment) was announced on 28 February 2015. This
resulted in non-cash impairment charges in respect of goodwill
(EUR2,216,000) and other assets (EUR2,050,000). Onerous lease costs
were incurred in relation to the recently acquired and existing
portfolio of leased properties that are no longer in use.
Discontinued operations incurred redundancy costs of EUR844,000
during the prior period.
During the prior period, the Group disposed of its shareholding
in Ashfield KK as part of the Group entering into a joint venture
agreement with CMIC Holdings Co., Ltd. The Group also disposed of
its shareholding in Pharmaceutical Trade Services, Inc. The
disposals resulted in a net profit of EUR268,000.
Reconciliation to Group Income Statement - six months ended 31
March 2015
Other Disposal of Total
Cost of sales Distribution Administration operating subsidiary exceptional
expenses expenses expenses undertakings items
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Restructuring
costs and
other - 4,162 456 - - 4,618
Impairment of
assets 2,050 - - 2,216 - 4,266
Onerous leases - 59 1,144 - - 1,203
Loss on
disposal of
subsidiary
undertakings - - - - (268) (268)
---------------- --------------- -------------- ---------------- -------------- -------------- ---------------
2,050 4,221 1,600 2,216 (268) 9,819
Discontinued
operations - 844 - - - 844
---------------- --------------- -------------- ---------------- -------------- -------------- ---------------
2,050 5,065 1,600 2,216 (268) 10,663
--------------- --------------- -------------- ---------------- -------------- -------------- ---------------
6. Finance income and expense
Six months Six months
ended ended
31 March 31 March
2016 2015
EUR'000 EUR'000
Finance income
Income arising from cash deposits 264 197
Fair value of cash flow hedges transferred from equity - 32,891
Fair value adjustments to fair value hedges - 7,702
Fair value adjustment to guaranteed senior unsecured notes 1,654 -
Foreign currency gain on retranslation of guaranteed senior unsecured loan notes 3,424 -
Ineffective portion of cash flow hedges 93 63
Net finance income on pension scheme obligations 58 -
---------------------------------------------------------------------------------- ----------- -----------
5,493 40,853
---------------------------------------------------------------------------------- ----------- -----------
Finance expense
Interest on bank loans and other loans
-wholly repayable within 5 years (4,853) (3,165)
-wholly repayable after 5 years (2,289) (3,491)
Interest on finance leases (1) (2)
Interest on overdrafts (13) (106)
Unwinding of discount on provisions (369) (409)
Fair value adjustments to fair value hedges (1,654) -
Fair value of cash flow hedges transferred from equity (3,424) -
Fair value adjustments to guaranteed senior unsecured loan notes - (7,702)
Foreign currency loss on retranslation of guaranteed senior unsecured loan notes - (32,891)
Net finance cost on pension scheme obligations - (26)
---------------------------------------------------------------------------------- ----------- -----------
(12,603) (47,792)
---------------------------------------------------------------------------------- ----------- -----------
Net finance expense relating to continuing operations (7,110) (6,939)
Net finance expense relating to discontinued operations (51) (55)
---------------------------------------------------------------------------------- ----------- -----------
Net finance expense (7,161) (6,994)
---------------------------------------------------------------------------------- ----------- -----------
7. Net result from discontinued operations and assets and
liabilities classified as held for sale
On 18 September 2015 the Group announced the proposed disposal
of United Drug Supply Chain Services, United Drug Sangers, TCP
Group and MASTA for an aggregate cash consideration of EUR407.5
million before adjustments in respect of working capital, taxation
and costs. The disposal was approved by shareholders at an EGM on
13 October 2015 and on 1 April 2016 the Group completed the
disposal of these businesses. The Group has treated these
operations as discontinued operations and assets held for sale in
accordance with IFRS 5. The comparative Group Income Statement,
Group Statement of Comprehensive Income and Group Cash Flow to 31
March 2015 have been restated to show the discontinued operations
separately from continuing operations.
The following table details the results of discontinued
operations included in the Group Income Statement:
31 March 31 March
2016 2015
EUR'000 EUR'000
Revenue 682,875 685,231
Cost of sales (632,961) (636,448)
------------------------------------------- --------- ---------
Gross profit 49,914 48,783
Selling and distribution expenses (33,921) (33,788)
Administration expenses (2,266) (2,770)
Other operating expenses - (900)
Settlement gain on defined benefit pension 2,404 -
Transaction costs (7,534) -
------------------------------------------- --------- ---------
Operating profit 8,597 11,325
Net finance expense (51) (55)
------------------------------------------- --------- ---------
Profit before exceptional items and
tax 8,546 11,270
Exceptional items - (844)
------------------------------------------- --------- ---------
Profit from discontinued operations
before tax 8,546 10,426
Income tax expense (1,579) (1,358)
------------------------------------------- --------- ---------
Profit from discontinued operations
after tax 6,967 9,068
------------------------------------------- --------- ---------
In accordance with IFRS 5, depreciation of property, plant and
equipment and amortisation of intangibles has not been charged on
the assets held for sale. If the assets had continued to be
depreciated and amortised, the respective pre-tax charges for the
current period would have been EUR3,526,000 and EUR720,000.
The profit for the year from discontinued operations is fully
attributable to the equity holders of the company.
The following table details the assets and liabilities
classified as held for sale in the Group Balance Sheet:
Carrying Carrying
value value
31 March 30 September
2016 2015
EUR'000 EUR'000
Assets
Property, plant and equipment 85,023 84,867
Goodwill 14,296 15,629
Intangible assets 46,894 40,426
Deferred income tax assets 429 527
Inventories 112,377 117,155
Trade and other receivables 215,665 215,021
Current income tax asset - 195
Assets held for sale 474,684 473,820
----------------------------------- ---------- --------------
Liabilities
Deferred income tax liabilities (381) (387)
Trade and other payables (256,869) (276,682)
Employee benefits (2,527) (3,264)
Current income tax liabilities (334) -
-------------------------------- ---------- --------------
Liabilities held for sale (260,111) (280,333)
---------------------------------- ---------- --------------
Net assets 214,573 193,487
----------------------------------- ---------- --------------
8. Earnings per ordinary share
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2016 2016 2016 2015 2015 2015
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Profit
attributable to
the owners of
the parent 24,399 6,967 31,366 12,113 9,068 21,181
Adjustment for
amortisation of
acquired
intangible
assets (net of
tax) 6,347 - 6,347 6,366 206 6,572
Adjustment for
transaction
costs (net of
tax) 834 7,534 8,368 276 - 276
Adjustment for
exceptional
items (net of
tax) - - - 8,515 730 9,245
Adjustment for
amortisation and
depreciation on
assets
classified as
held for sale
(net of
tax) - (3,456) (3,456) - - -
Adjusted profit
attributable to
owners of the
parent 31,580(1) 11,045(2) 42,625 27,270 10,004 37,274
------------------ ----------------- ----------------- ---------- ------------------ ----------------- ---------
2016 2015
Number Number
of shares of shares
Weighted average number of shares 246,079,718 243,529,382
Number of dilutive shares under option 1,299,770 1,286,719
------------------------------------------------------------ ------------ ------------
Weighted average number of shares, including share options 247,379,488 244,816,101
------------------------------------------------------------ ------------ ------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2016 2016 2016 2015 2015 2015
Basic earnings per share - cent 9.92 2.83 12.75 4.98 3.72 8.70
Diluted earnings per share - cent 9.86 2.82 12.68 4.95 3.70 8.65
Adjusted basic earnings per share -
cent 12.83(1) 4.49(2) 17.32 11.20 4.11 15.31
Adjusted diluted earnings per share -
cent 12.77(1) 4.46(2) 17.23 11.14 4.09 15.23
Non-GAAP information
The Group reports certain financial measures that are not
required under International Financial Reporting Standards (IFRS)
which represent the generally accepted accounting principles (GAAP)
under which the Group reports. The Group believes that the
presentation of these non-GAAP measures provides useful
supplemental information which, when viewed in conjunction with our
IFRS financial information, provides investors with a more
meaningful understanding of the underlying financial and operating
performance of the Group and its divisions. These measures are also
used internally to evaluate the historical and planned future
performance of the Group's operations and to measure executive
management's performance based remuneration.
(1) Adjusted profit attributable to owners of the parent from
continuing operations is stated before the amortisation of acquired
intangible assets and transaction costs.
(2) Adjusted profit attributable to owners of the parent from
discontinued operations is stated after charging depreciation and
amortisation of assets classified as held for sale (EUR3.5m, net of
tax) and adding back transaction costs (EUR7.5m, net of tax).
Adjusted profit attributable to owners of the parent in the
comparative period reflected a depreciation and amortisation charge
of EUR3.6m, net of tax, relating to assets forming part of the
discontinued operations. Under IFRS, depreciation and amortisation
are not charged on assets classified as held for sale, therefore,
no equivalent depreciation and amortisation has been charged on
these assets in the current period's results. To provide comparable
information on the performance of the discontinued operations, an
estimated charge of EUR3.5m (net of tax) for depreciation and
amortisation in the current period has been reflected in the
adjustments above.
Treasury shares have been excluded from the weighted average
number of shares in issue used in the calculation of earnings per
share.
The average market value of the Company's shares for the
purposes of calculating the dilutive effect of share options was
based on quoted market prices for the year.
9. Property, plant and equipment
Land and Plant and Computer Assets under
buildings equipment Motor vehicles equipment construction Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 1 October 2015 72,817 86,990 995 20,456 10,017 191,275
Additions in
period 461 7,955 126 2,704 5,781 17,027
Disposals in
period (16) (2,961) (64) (298) - (3,339)
Transfer to assets
held for sale - (1,163) - - - (1,163)
Reclassifications - 8 (79) 71 - -
Translation
adjustment (2,145) (1,949) (94) (1,141) (363) (5,692)
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 31 March 2016 71,117 88,880 884 21,792 15,435 198,108
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
Depreciation
At 1 October 2015 20,929 41,294 666 10,483 - 73,372
Depreciation
charge for the
period 2,094 4,632 27 2,032 - 8,785
Eliminated on
disposal (12) (2,738) (63) (257) - (3,070)
Transfer to assets
held for sale - (238) - - - (238)
Reclassifications - 8 (73) 65 - -
Translation
adjustment (658) (1,057) (73) (655) - (2,443)
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 31 March 2016 22,353 41,901 484 11,668 - 76,406
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
Carrying amount
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 31 March 2016 48,764 46,979 400 10,124 15,435 121,702
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
At 30 September
2015 51,888 45,696 329 9,973 10,017 117,903
------------------- ---------------- ---------------- --------------- ---------------- ---------------- --------
10. Movement in goodwill, intangible assets and investment in
joint ventures and associates
Investment
in joint ventures
Intangible and associates
Goodwill assets
EUR'000 EUR'000 EUR'000
Balance at 1 October 2015 358,213 101,693 23,079
Investment in computer software - 1,984 -
Amortisation of acquired intangible assets - (7,309) -
Amortisation of computer software - (1,285) -
Share of joint ventures' profit after tax - - 1,437
Transfer to assets held for sale - (1,679) -
Translation adjustment (12,251) (3,108) (782)
Balance at 31 March 2016 345,962 90,296 23,734
---------------------------------------------- ----------- ----------- -------------------
11. Other reserves
Capital
Cash flow Share-based Foreign Treasury redemption
hedge payment exchange shares reserve Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 October 2015 (4,357) 4,762 15,182 (5,760) 250 10,077
Effective portion of cash flow
hedges (3,849) - - - - (3,849)
Deferred tax on cash flow hedges 481 - - - - 481
Share-based payment expense - 824 - - - 824
Release from share-based payment
reserve - (1,904) - - - (1,904)
Gain on hedge of net investment in
foreign operations - - 2,262 - - 2,262
Translation adjustment
* Continuing operations - - (26,663) - - (26,663)
* Discontinued operations - - (4,640) - - (4,640)
Balance at 31 March 2016 (7,725) 3,682 (13,859) (5,760) 250 (23,412)
------------------------------------ ------------ ------------- ------------ ------------ ------------ ---------
Share-based Capital
Cash flow Foreign Treasury redemption
hedge payment Exchange shares reserve Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 October 2014 (11,891) 5,964 (18,738) (5,758) 250 (30,173)
Effective portion of cash flow
hedges 4,626 - - - - 4,626
Deferred tax on cash flow hedges (578) - - - - (578)
Share-based payment expense - 965 - - - 965
Release from share-based payment
reserve - (2,134) - - - (2,134)
Loss on hedge of net investment in
foreign operations - - (21,722) - - (21,722)
Translation adjustment
* Continuing operations - - 66,310 - - 66,310
* Discontinued operations - - 4,205 - - 4,205
Reclassification on loss of control
of subsidiary undertakings - - (165) - - (165)
Balance at 31 March 2015 (7,843) 4,795 29,890 (5,758) 250 21,334
------------------------------------ ------------ ------------- ------------ ------------ ------------ ---------
12. Net debt
As at As at As at
31 March 31 March 30 Sept
2016 2015 2015
EUR'000 EUR'000 EUR'000
Current assets
Cash at bank and short term deposits 182,949 145,461 214,078
Derivative financial instruments 4,520 4,799 4,750
Non-current assets
Derivative financial instruments 13,386 29,601 22,048
Current liabilities
Interest bearing loans and borrowings (19,106) (767) (20,605)
Finance leases (187) (70) (206)
Non-current liabilities
Interest bearing loans and borrowings (409,565) (453,904) (415,824)
Finance leases (12) (21) (16)
(228,015) (274,901) (195,775)
--------------------------------------- ---------- ---------- ----------
13. Provisions
Deferred contingent
consideration Onerous leases Restructuring and other
costs Total
EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 October 2015 22,029 372 3,790 26,191
Charge/(release) to income
statement 324 - (369) (45)
Utilised during the period (5,281) (26) (2,050) (7,357)
Unwinding of discount 369 - - 369
Translation adjustment (587) - 2 (585)
----------------------------- --------------------------- ----------------- --------------------------- --------
Balance at 31 March 2016 16,854 346 1,373 18,573
----------------------------- --------------------------- ----------------- --------------------------- --------
Non-current 7,167
Current 11,406
Total 16,854 346 1,373 18,573
----------------------------- --------------------------- ----------------- --------------------------- --------
14. Employee benefits
Employee Employee Employee
benefit benefit benefit
asset liability total
EUR'000 EUR'000 EUR'000
Employee benefit asset/(liability) at 1 October 2015 13,067 (21,567) (8,500)
Current service cost (994) (233) (1,227)
Curtailment gain - 328 328
Settlement gain - 3,663 3,663
Interest costs 238 (238) -
Contributions paid - 6,187 6,187
Remeasurement gain/(loss) 343 (4,774) (4,431)
Translation adjustment (195) 186 (9)
------------------------------------------------------- --------- ---------- ---------
Employee benefit asset/(liability) at 31 March 2016 12,459 (16,448) (3,989)
------------------------------------------------------- --------- ---------- ---------
Analysed as:
Assets and liabilities associated with continuing operations 12,459 (13,921) (1,462)
Liabilities held for sale(1) - (2,527) (2,527)
-------------------------------------------------------------- ------- --------- --------
12,459 (16,448) (3,989)
-------------------------------------------------------------- ------- --------- --------
(1) This scheme relates to United Drug Sangers which is included
in liabilities associated with assets classified as held for sale
at 30 September 2015 and 31 March 2016.
Employee Employee Employee
benefit benefit benefit
asset liability total
EUR'000 EUR'000 EUR'000
Employee benefit asset/(liability) at 1 October 2014 13,553 (19,780) (6,227)
Current service cost (855) (326) (1,181)
Interest on scheme obligations 213 (299) (86)
Contributions paid - 1,170 1,170
Remeasurement gain/(loss) 633 (15,407) (14,774)
Translation adjustment 2,338 (254) 2,084
------------------------------------------------------- --------- ---------- ---------
Employee benefit asset/(liability) at 31 March 2015 15,882 (34,896) (19,014)
------------------------------------------------------- --------- ---------- ---------
As set out in the consolidated financial statements for the year
ended 30 September 2015, the Group operates a number of defined
benefit pension schemes which are funded by the payments of
contributions to separately administered trust funds. The employee
benefit asset relates to the United States pension scheme and the
employee benefit liability relates to the Republic of Ireland (ROI)
and Northern Ireland (NI) pension schemes. The remeasurement loss
during the current period primarily relates to a decrease in the
discount rates in respect of the Republic of Ireland schemes. The
change in the discount rate within the schemes is reflective
of changes in bond yields during the period. The United States
scheme has an actuarial gain in the current period arising from a
higher than expected return on plan assets. Accrual of pension
benefits within the ROI schemes ceased with effect from 31 December
2015.
On 18 September 2015 the Group announced the proposed disposal
of United Drug Supply Chain Services, United Drug Sangers, TCP
Group and MASTA for an aggregate cash consideration of EUR407.5
million. The disposal was approved by shareholders at an EGM on 13
October 2015 and on 1 April 2016 the Group completed the disposal
of these businesses. Following completion of the disposal, the
future funding obligations in respect of the NI scheme have ceased
to be the responsibility of the Group. Responsibility for the
funding requirements in respect of the ROI schemes remain within
the Group.
During the current period, a general offer was made to the
current members of the ROI schemes to transfer their accrued
benefits from the schemes in exchange for a fixed monetary amount.
Acceptance of the offer was at the discretion of individual members
and resulted in a settlement gain of EUR3,663,000. Related
professional fees amounted to EUR238,000, resulting in a net income
statement gain of EUR3,425,000. EUR2,404,000 of this gain related
to discontinued operations.
The principal assumptions and associated changes are as
follows:
Republic of Ireland Schemes United States Northern Ireland
Scheme Scheme(1)
As at As at As at As at As at As at
31 March 30 Sept 31 March 30 Sept 31 March 30 Sept
2016 2015 2016 2015 2016 2015
Rate of increase in salaries 1.75% 2.75% 2.75%-4.00% 2.75-4.00% 0.00% 0.00%
Rate of increase in pensions 0-1.75% 0-1.75% 0.00% 0.00% 1.80-3.20% 1.80-3.30%
Inflation rate 1.75% 1.75% 2.75% 2.75% 2.40% 2.50%
Discount rate 2.00% 2.70% 3.60% 4.00% 3.80% 4.00%
(1) This scheme relates to United Drug Sangers which is included
in liabilities associated with assets classified as held for sale
at 30 September 2015 and 31 March 2016.
15. Financial instruments
The fair values of financial assets and financial liabilities,
together with the carrying amounts in the condensed consolidated
balance sheet at 31 March 2016, are as follows:
Continuing
operations Held for sale
Total Total
Carrying Fair Carrying Fair carrying fair
value value value value value value
Financial assets EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Trade and other
receivables 197,845 197,845 215,665 215,665 413,510 413,510
Derivative financial
instruments 17,906 17,906 - - 17,906 17,906
Cash and cash
equivalents 182,949 182,949 - - 182,949 182,949
----------------------- --------- -------- --------- -------- ---------- --------
398,700 398,700 215,665 215,665 614,365 614,365
----------------------- --------- -------- --------- -------- ---------- --------
Financial liabilities
Trade and other
payables 183,694 183,694 256,869 256,869 440,563 440,563
Interest bearing
loans and borrowings 428,671 432,411 - - 428,671 432,411
Finance lease
liabilities 199 199 - - 199 199
Deferred contingent
consideration 16,854 16,854 - - 16,854 16,854
629,418 633,158 256,869 256,869 886,287 890,027
----------------------- --------- -------- --------- -------- ---------- --------
The fair values of the financial assets and liabilities
disclosed in the above tables have been determined using the
methods and assumptions set out below.
Trade and other receivables/payables
For receivables and payables, the carrying value less impairment
provision, is deemed to reflect fair value where appropriate.
Cash and cash equivalents
For cash and cash equivalents, the nominal amount is deemed to
reflect fair value.
Interest-bearing loans and borrowings
The fair value of interest-bearing loans and borrowings is based
on the fair value of the expected future principal and interest
cash flows discounted at interest rates effective at the balance
sheet date and adjusted for movements in credit spreads.
Finance lease liabilities
For finance lease liabilities, the fair value is the present
value of future cash flows discounted at current market rates.
Valuation techniques and significant unobservable inputs
Fair value hierarchy of assets and liabilities measured at fair
value
The Group has adopted the following fair value hierarchy in
relation to its financial instruments that are carried in the
balance sheet at fair value as at the period end:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs, other than quoted prices included within
Level 1, that are observable for the asset or liability either
directly (as prices) or indirectly (derived from prices); and
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
The following table sets out the fair value of all financial
assets and liabilities that are measured at fair value:
Level Level Level
Total 1 2 3
EUR'000 EUR'000 EUR'000 EUR'000
Assets measured
at fair value
Designated as hedging
instruments
Cross currency interest
rate swaps 17,906 - 17,906 -
--------------------------- -------- --------- ---------- ---------
17,906 - 17,906 -
------------------------ -------- --------- ---------- ---------
Liabilities measured
at fair value
At fair value through
profit or loss
Deferred contingent
consideration 16,854 - - 16,854
16,854 - - 16,854
------------------------ -------- --------- ---------- ---------
Summary of derivatives:
Amount of Related
financial amounts not Amount of Related
assets/liabilities offset in 31 March financial amounts not 31 March
as presented in the balance 2016 assets/liabilities offset in 2015
the balance sheet sheet Net as presented in the balance Net
the balance sheet sheet
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Derivative
financial
assets 17,906 - 17,906 34,400 - 34,400
Derivative
financial
liabilities - - - - - -
-------------- -------------------- ------------- ------------- -------------------- ------------- -------------
All derivatives entered into by the Group are included in Level
2 and consist of cross currency interest rates swaps. The fair
values of cross currency interest rate swaps are calculated as the
present value of the estimated future cash flows based on the terms
and maturity of each contract and using forward currency rates and
market interest rates as applicable for a similar
instrument at the measurement date. Fair values reflect the
credit risk of the instrument and include adjustments to take
account of the credit risk of the Group entity and counterparty
where appropriate.
Deferred contingent consideration
Details of movements in the period are included in note 13. The
deferred contingent consideration liability arose from acquisitions
completed by the Group. The fair value is determined considering
the expected payment, discounted to present value using a risk
adjusted discount rate. The expected payment is determined
separately in respect of each individual earnout agreement taking
into consideration the expected level of profitability of each
acquisition. As there were no acquisitions completed in the current
period or prior year, the provision for deferred consideration is
in respect of acquisitions completed during 2012 and 2014.
The significant unobservable inputs have not changed since the
last annual report and are as follows:
-- forecasted average annual net revenue growth rate 9%;
-- forecast average EBIT growth rate 2%; and
-- risk adjusted discount rate 6.5%.
Inter-relationship between significant unobservable inputs and
fair value measurement:
The estimated fair value would increase/(decrease) if:
-- the annual net revenue growth was higher/(lower);
-- the EBIT growth rate was higher/(lower); and
-- the risk adjusted discount rate was lower/(higher).
For the fair value of deferred contingent consideration, a
reasonable possible change to one of the significant unobservable
inputs at 31 March 2016, holding the other inputs constant, would
have the following effects:
Increase Decrease
EUR'000 EUR'000
------------------------------- --------- ---------
Effect of change in assumption
on income statements
Annual EBIT growth rate
(1% movement) - -
Annual net revenue growth
rate (1% movement) - -
Risk-adjusted discount
rate (1% movement) 47 (49)
---------------------------------- --------- ---------
16. Dividends
The Board has proposed an interim dividend of 3.05 cent per
share. This dividend has not been provided for in the balance sheet
at 31 March 2016 as there was no present obligation to pay the
dividend at the reporting date. During the first half of the
financial year, the final dividend for 2015 (8.10 cent per share),
was paid giving rise to a reduction in shareholders' funds of
EUR19,867,000.
17. Foreign currency
The principal exchange rates used in translating sterling and
dollar balance sheets and income statements were as follows:
31 March 31 March
2016 2015
EUR1=StgGBP EUR1=StgGBP
Balance sheet (closing rate) 0.7916 0.7295
Income statement (average rate) 0.7456 0.7670
EUR1=US$ EUR1=US$
Balance sheet (closing rate) 1.1385 1.0741
Income statement (average rate) 1.0986 1.1899
18. Related parties .
The Group trades in the normal course of business with its joint
venture undertakings. The aggregate value of these transactions is
not material in the context of the Group's financial results.
The amount due from Magir Limited, the Group's joint venture
investment, at 31 March 2016 was EUR7,099,000 which represents 3.0%
of total gross trade receivables classified as assets held for
sale. The Group has also provided a guarantee to Magir's bankers
for an amount of StgGBP12,000,000 and a loan of
StgGBP8,600,000.
IAS 24 Related Party Disclosures requires the disclosure of
compensation paid to the Group's key management personnel. Key
management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group. UDG Healthcare classifies directors, the
Company Secretary and members of its executive team as key
management personnel. This executive team is the body of senior
executives that formulates business strategy along with the
directors, follows through on the implementation of that strategy
and directs and controls the activities of the Group on a day to
day basis.
Key management personnel receive compensation in the form of
short-term employee benefits, post-employment benefits and equity
compensation benefits. Key management personnel received total
compensation of EUR5,897,000 for the six months ended 31 March 2016
(2015: EUR4,856,000).
19. Events after the balance sheet date
On 1 April 2016 the Group completed the disposal of United Drug
Supply Chain Services, United Drug Sangers, TCP Group and
MASTA.
On 18 April 2016 the Group acquired Pegasus Public Relations
Limited, a healthcare communications company based in the United
Kingdom. The acquisition consideration of StgGBP16.8 million was
comprised of a StgGBP10.1 million upfront payment and StgGBP6.7
million earn out payable for performance over three years. The
initial cash payment was financed from the Group's internal
resources and debt facilities.
Based on initial assessment, the fair value of the net assets
and liabilities acquired are estimated to be EUR5.4 million
(StgGBP4.3 million) and consist primarily of property, plant and
equipment, trade and other receivables, cash, and trade and other
payables.
20. Board Approval
This interim report was approved by the Board of Directors of
UDG Healthcare plc on 18 May 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFLDEAITLIR
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