UDG Healthcare plc Preliminary Results Presentation FY17. London Stock Exchange, 28 th November 2017

Transcription

1 UDG Healthcare plc Preliminary Results Presentation FY17 London Stock Exchange, 28 th November 2017

2 Forward Looking Statements This Presentation has been prepared by UDG Healthcare plc and contains certain forward-looking statements, beliefs or opinions, including statements with respect to the Group's business, financial condition and results of operations. They represent expectations for the Group s business, including statements that relate to the Group s future prospects, developments and strategies, and involve risks and uncertainties both general and specific. The Group has based these forward-looking statements on assumptions regarding present and future strategies of the Group and the environment in which it will operate in the future. However, because they involve known and unknown risks, uncertainties and other factors including but not limited to general economic, political, financial and business factors, which in some cases are beyond the Group s control, actual results, performance, operations or achievements expressed or implied by such forward looking statements may differ materially from those expressed or implied by such forward-looking statements and accordingly you should not rely on these forward looking statements in making investment decisions. Except as required by applicable law or regulation, neither the Group nor any other party intends to update or revise these forward looking statements after the date these statements are published, whether as a result of new information, future events or otherwise. 2 : UDG Healthcare plc

3 Agenda > 2017 Overview Brendan McAtamney, Chief Executive Officer >2017 Financial Review Alan Ralph, Chief Financial Officer > Capital Allocation & Deployment and Summary Brendan McAtamney, Chief Executive Officer > Q&A 3 : UDG Healthcare plc

4 2017 Overview Brendan McAtamney, CEO

5 At a Glance UDG Healthcare is a leading international partner of choice delivering advisory, communication, commercial, clinical and packaging services to the healthcare industry. 3 OPERATING 9,000+ DIVISIONS EMPLOYEES Ashfield Sharp Aquilant 24 COUNTRIES 30 YEAR+ DIVIDEND GROWTH TOP 30 PHARMA COMPANIES AS CLIENTS FTSE 250 LISTED 5 : UDG Healthcare plc

6 2017 Strategic Highlights Completed six acquisitions with a total capital commitment in excess of $270m M&A ACTIVITY SHARP FACILITY INVESTMENTS Continued to develop the Sharp offering through investments in new facilities in the US & UK, across both the commercial and clinical packaging businesses Made significant progress broadening the Ashfield proposition across advisory, communication, commercial and clinical services ASHFIELD PROPOSITION INFRASTRUCTURE Future Fit - Launched Workday (Group HR system) and commenced the implementation of Oracle Fusion (Ashfield finance system) Commercial & Clinical business relocated to a new facility in Fort Washington, PA. Other office moves in Scotland, Ireland & Japan ASHFIELD OFFICE EXPANSION LEADERSHIP TRANSITIONS Appointed Jez Moulding as COO of UDG & EVP of Ashfield 6 : UDG Healthcare plc

7 2017 Financial Highlights* +23% on a constant currency basis +17 % EPS PROFIT BEFORE TAX +17% +23% on a constant currency basis Ashfield +16% Sharp +8% +12 % OPERATING PROFIT NET REVENUE +12% Ashfield +21% Sharp +2% Margin in line with FY % NET OPERATING MARGIN DIVIDEND +7 % Continued dividend growth * Continuing Group ^ Throughout this presentation, references to underlying growth are financial metrics adjusted for the impact of currency translation movements and any acquisition or disposal activity 7 : UDG Healthcare plc

8 Transformation since 2012 ONGOING TRANSFORMATION TO FOCUS ON HIGHER GROWTH, HIGHER MARGIN BUSINESSES Operating Profit Evolution Geographic Profit Split 5 % % % 32 % % 30 % 72 % 1 % % 9 % % North America UK & IRE 42 % ROW & EU 21 % Margins of the Group have more than doubled Supply Chain / Aquilant Ashfield Clinical & Commercial 33 % Ashfield Communications (inc. Advisory) Sharp % 12.6 % 8 : UDG Healthcare plc

9 2017 Financial Review Alan Ralph, CFO

10 2017 Financial Summary 10 : UDG Healthcare plc Increase Constant FX Increase Net Revenue $920.0m $1,028.5m 12% 16% Operating profit* $115.8m $129.3m 12% 17% PBT* $101.7m $118.9m 17% 23% EPS (C)* % 23% DPS (C) % 7% ROCE%^ 13.6% 12.8% N/A N/A Net cash / (debt) to EBITDA 1.05x (0.32x) N/A N/A The average 2017 exchange rates were $1: and $1: (2016 $1: and $1: ) * Before amortisation of acquired intangible assets, transaction costs and exceptional items (no exceptional items in either period) ^ ROCE is 13.2% excluding the impact of acquisitions, most of which were acquired in the final quarter of the financial year

11 2017 Divisional Operating Profit OPERATING PROFIT ($M) % % % Ashfield Sharp Aquilant UNDERLYING GROWTH RATE Reported operating profit growth +16%. Underlying^ operating profit growth +5% after additional Future Fit operating costs (+8% pre-future Fit costs) Good underlying operating profit growth across both business units Net operating margin of 12.9% Reported operating profit growth +8%. Underlying^ operating profit growth +11% Divisional margin expansion to 13.7% EU business returned to profitability +5% +11% +4% NET OPERATING MARGIN* 13.5% 12.9% 12.9% 13.7% 6.7% 6.6% Underlying^ operating profit growth +4% Operating margin of 6.6% ^ Throughout this presentation, references to underlying growth are financial metrics adjusted for the impact of currency translation movements and any acquisition or disposal activity 11 : UDG Healthcare plc

12 Ashfield 2017 Overview OPERATING PROFIT ($M) % Commercial & Clinical +31% Communications (including Advisory) UNDERLYING GROWTH RATE % 70.6 Totals +5% +5% +5% NET OPERATING MARGIN* 9.8% 8.7% 24.3% 22.9% 13.5% 12.9% * Net operating margin adjusts for pass-through revenues. Pass through revenues of $163.5m in 2016 and $191.3m in Division operating profit growth +16% to $81.6m Underlying operating profit growth +5% after Future Fit operating costs (+8% pre-future Fit costs) Net operating margin of 12.9% (acquisition benefits offset by increased Future Fit operating costs and business mix impact) Commercial & Clinical operating profit growth +2% (underlying growth +5%) Strong growth in Germany and good performance in US driven by increased activity from 2016 contract wins Acquisition of Sellxpert completed in July 2017 Communications (including Advisory) operating profit growth +31% STEM has performed well since acquisition in October 2016 Completed the acquisitions of Vynamic, Cambridge BioMarketing and MicroMass Communications during the final quarter of : UDG Healthcare plc

13 Sharp 2017 Overview OPERATING PROFIT ($M) % +8% US EUR Totals UNDERLYING GROWTH RATE +5% N/A +11% OPERATING MARGIN 16.1% 16.1% 0.8% 12.9% 13.7% Division operating profit growth +8% to $41.3m Underlying operating profit growth +11% Divisional margins improved to 13.7% US operating profit growth +3% Underlying operating profit growth +5% Biotech delivered strong growth Continued investment in facilities to improve capabilities and expand capacity Serialisation enforcement delayed until November 2018 EUR operating profit of $0.4m Returned to profitability Well positioned to deliver continued profitable growth driven by the improving business development pipeline 13 : UDG Healthcare plc

14 Aquilant 2017 Overview OPERATING PROFIT ($M) Division operating profit -7% to $6.4m % 6.4 Underlying operating profit +4% ahead of the prior period reflecting a continued improvement in sales mix, including capital sales, and the full benefit of new business which came on stream in 2016 Reported operating profit was 7% behind the prior period primarily due to adverse currency translation movements 0 Aquilant UNDERLYING GROWTH RATE +4% OPERATING MARGIN 6.7% 6.6% 14 : UDG Healthcare plc

15 2017 Profit Before Tax GROUP PBT ($M) +17% (+23% CONSTANT CURRENCY) (5.2) * Including $3.7m lower interest charge 15 : UDG Healthcare plc

16 Cash Flow ($m) EBITDA/NET DEBT 0.32x (SEPTEMBER 2016 EBITDA/NET CASH: 1.05x); * Includes deferred consideration payments 16 : UDG Healthcare plc

17 Capital Allocation & Deployment Brendan McAtamney, CEO

18 Capital Allocation Priorities Reinvestment to support continued sustainable growth Future Fit (HR, Finance and IT) and Sharp capacity investments Capex expected to reduce from FY19+ Progressive dividend policy 30 year+ history of consistent dividend growth Acquisitions in line with strategic priorities ROCE of 15%+ within 3 years Strong balance sheet to support continued investment priorities 18 : UDG Healthcare plc

19 Reinvestment to support continued sustainable growth ASHFIELD OFFICE EXPANSION SHARP FACILITY INVESTMENTS ASHFIELD EXPANSION & NEW PREMISES SHARP CONTINUED TO INVEST IN NEW FACILITIES ACROSS THE US & UK Fort Washington, PA, US Glasgow, UK Sharp Clinical US relocating to new pharmaceutical grade facility acquired in April 2017 Sharp Clinical UK relocating to recently purchased facility in South Wales FUTURE FIT RATIONALE: Ensure infrastructure is fit for purpose and to support the continued delivery of sustainable future growth KEY PROJECTS INCLUDE: HR Finance IT HR system (Workday) launched in April 2017 Finance system (Oracle Fusion) rolling out over the next 18 months 19 : UDG Healthcare plc

20 Progressive Dividend Policy 30 year+ history of consistent dividend growth ($ cent) Historic dividends translated at FY16 fx rate from to $ 20 : UDG Healthcare plc

21 Redeployment of Supply Chain Disposal Proceeds Announced the disposal of the United Drug Supply Chain business Total acquisition consideration of up to 16.8m Total acquisition consideration of up to $14.4m Total acquisition consideration of up to $35m Total acquisition consideration of up to $75.8m FY15 FY16 FY17 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Completed the disposal of the United Drug Supply Chain business for 407.5m Total acquisition consideration of up to 84m Acquisition of pharmaceutical packaging facility, total consideration of $14m Total acquisition consideration of up to $32m 21 : UDG Healthcare plc

22 Summary Brendan McAtamney, CEO

23 Positive Market Dynamics MARKET GROWTH Global pharmaceutical market growth - spending on medicines forecasted to grow at 4-7% p.a. to 2021 to reach $1.5 trillion^ VOLUME GROWTH Total global volume use of medicines forecasted to reach c. 4.5tr doses by 2021, up from c. 4tr doses in 2016^ POSITIVE PRODUCT APPROVALS Positive product approvals outlook - FDA approval of new drugs expected to remain high despite lower 2016 approvals* INCREASED COMPLEXITY Increased complexity from growth of specialty and biotech By 2021, 35% of global spending expected to be on specialty medicines^ INCREASED OUTSOURCING Growing trend of healthcare outsourcing Increasing trend to outsource to larger, more global partners ^ Outlook for Global Medicines through 2021, Balancing Cost and Value, QuintilesIMS Institute, December 2016 *Medicines Use and Spending in the US, A Review of 2016 and Outlook to 2021, QuintilesIMS Institute, May : UDG Healthcare plc

24 2017 Summary Strong FY17 performance driven by continued underlying growth, supplemented by acquisitions Market dynamics remain favourable EPS growth of +17% (+23% on a constant currency basis) Diversified client base with limited exposure to drug pricing Completed six acquisitions with a total capital commitment in excess of $270m Continued investment in infrastructure to deliver sustainable future growth Expansion of Ashfield service proposition across advisory, communications, commercial and clinical Underpinned by a strong balance sheet and cash generation 24 : UDG Healthcare plc