UDG Healthcare plc Interim Results Presentation FY17. London Stock Exchange, 23 rd May 2017

Transcription

1 UDG Healthcare plc Interim Results Presentation FY17 London Stock Exchange, 23 rd May 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 > H1 FY17 Overview Brendan McAtamney, Chief Executive Officer >H1 FY17 Financial Review Alan Ralph, Chief Financial Officer > Operations, Strategy & Closing Brendan McAtamney, Chief Executive Officer > Q&A 3 : UDG Healthcare plc

4 H1 FY17 Overview Brendan McAtamney, CEO

5 At a glance UDG Healthcare is a leading international partner of choice delivering commercial, clinical, communications, advisory and packaging services to the healthcare industry. 3 OPERATING 8,000+ DIVISIONS EMPLOYEES Ashfield Sharp Aquilant 23 COUNTRIES 30 YEAR DIVIDEND GROWTH TOP 30 PHARMA COMPANIES AS CLIENTS FTSE 250 LISTED 5 : UDG Healthcare plc

6 Positive Market Dynamics Global pharmaceutical market continues to show good growth with spending on medicines forecasted to grow at 4-7% p.a. to 2021 to reach $1.5 trillion^ 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 outlook - FDA approval of new drugs expected to remain high despite lower 2016 approvals* Increased complexity from growth of specialty and biotech By 2021, 35% of global spending expected to be on speciality medicines^ 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

7 H Financial highlights* Financial Financial EPS up +19% (+29% constant currency) Operating margin increased to 10.2% Net Operating margin increased to 12.0% Operating profit up +13% (+21% constant currency) Profit before tax up +19% (+29% constant currency) EPS guidance for FY17 increased by 2% to between 15% and 18% ahead of last year (constant currency) ROCE increased to 13.8% from 13.5% Proposed +5% increase in interim dividend Good performance and margin expansion across both Ashfield and Sharp: Ashfield operating profit +18% ahead (+8% underlying^) Ashfield net operating margin 12.6% Sharp operating profit +8% ahead (+8% underlying^) Sharp operating margin 12.6% * 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 H Strategic highlights Strategic M&A ACTIVITY Three acquisitions announced since the start of the financial year, deploying over $130m of capital: Acquisition of STEM completed in October 2016 (for up to $105m) Acquisition of a packaging facility in the US completed in April 2017 ($14m) Agreement to acquire Sellxpert, a German contract sales organisation announced in May 2017 for up to $14.4m, subject to competition clearance CAPACITY EXPANSION New site acquired to expand the Sharp clinical business in the UK LEADERSHIP TRANSITIONS New office facility for Ashfield Commercial & Clinical US Appointed Jez Moulding as COO UDG & EVP Ashfield NET CASH position of $91m at the end of March 2017 leaves the Group well placed to continue to execute strategic acquisition opportunities FUTURE FIT Financial HR system (Workday) launched in April 2017 Finance system (Oracle) rolling out over the next 18 months 8 : UDG Healthcare plc

9 H1 FY17 Financial Review Alan Ralph, CFO

10 H Financial summary H H Increase Constant FX Increase Revenue $538.0m $578.9m 8% 15% Operating profit (EBITA)* $52.2m $58.8m 13% 21% PBT* $44.4m $52.9m 19% 29% EPS (C)* % 29% DPS (C) % 5% ROCE% 13.5% 13.8% N/A N/A Net (debt)/cash / EBITDA (1.69x) 0.61x N/A N/A Average 2016 financial year exchange rates were $1 = and The average exchange rates during H were $1 = and (2016 H1 $1 = and ) * Before amortisation of acquired intangible assets, transaction costs and exceptional items (no exceptional items in either period) 10 : UDG Healthcare plc

11 H Divisional operating profit OPERATING PROFIT ($M) % % H H % Ashfield Sharp Aquilant NET OPERATING MARGIN Reported profit growth of 18%, underlying^ profit growth of 8% Good underlying profit growth across both business units Net operating margin of 12.6% Reported profit growth of 8%, underlying^ profit growth of 8% Divisional margin expansion to 12.6% EU business returned to profitability 12.6% 12.6% 7.0% ^ 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 Underlying^ operating profit up 6% Operating margin of 7%

12 H Operating profit ($m) Continuing Group CONTINUING GROUP OPERATING PROFIT +13% (+21% CONSTANT CURRENCY) 52.2 (3.5) (8%) 13% 8% 12 : UDG Healthcare plc

13 Cash flow ($m) EBITDA/NET CASH 0.61x (SEPTEMBER 2016: 1.03x); (28) (60) (11) (20) (4) : UDG Healthcare plc

14 30 year history of consistent dividend growth ($ cent) *Translated at FY16 fx rate from to $ 14 : UDG Healthcare plc

15 Divisional Review & Operations Brendan McAtamney, CEO

16 Ashfield H overview OPERATING PROFIT ($M) % Commercial & Clinical 35% Communications (including Advisory) NET OPERATING MARGIN* H H % Totals 8.6% 8.3% 21.6% 23.6% 11.9% 12.6% 36.4 Division operating profit +18% to $36.4m Underlying profit growth +8% Net operating margin of 12.6% Commercial & Clinical operating profit +4% Underlying profit growth of +8% Strong performance in US, largely due to increased activity levels from one client New US office facility in Fort Washington Good European growth, particularly in Germany Acquisition of Sellxpert announced in May 2017 Communications (including Advisory) operating profit +35% Underlying profit growth of +7% Strong H1 performance from STEM during seasonally strong first half * Net operating margin adjusts for pass-through revenues. Pass through revenues of $79.7m in H and $90.9m in H : UDG Healthcare plc

17 Ashfield: Positioning for Growth Ashfield has transitioned from a Commercial & Clinical focused business (c. 80% of profits 4 years ago) to become a key commercialisation advisor and execution partner for pharma clients (Communications including Advisory currently accounts for c. 50% of profits) BENEFITS OF REPOSITIONING THE ASHFIELD BUSINESS: Offers a complete commercial solution for pharma clients including the delivery of a full suite of advisory, communications and execution capabilities Higher margin, higher opportunity areas for Ashfield ADVISORY Advisory, commercial & marketing audits, strategic consultancy services COMMUNICATIONS Scientific, medical & commercial communications and patient centred services COMMERCIAL & CLINICAL Commercialisation and clinical services including sales representatives, nursing services and contact centres 17 : UDG Healthcare plc

18 Sharp H overview OPERATING PROFIT ($M) H H % 8% US EUR Totals OPERATING MARGIN 15.3% 15.3% 0.6% 12.2% 12.6% Division operating profit +8% to $19.2m Underlying operating profit growth also +8% Divisional margins improved to 12.6% US operating profit +5% Underlying growth of +5% over strong H1 FY16 Good biotech growth Acquired a new packaging site in April 2017 to expand commercial & clinical offering and supplement the new commercial packaging facility opened in 2016 in Allentown Positioning business for mandatory US serialisation from November 2017 EUR operating profit of $0.2m Continued improvement in business development pipeline Acquired new site in the UK to expand clinical business 18 : UDG Healthcare plc

19 Aquilant H overview OPERATING PROFIT ($M) 10 8 H H Division operating profit -11% to $3.2m Adjusting for the impact of negative currency movements, operating profit on an underlying basis was +6% % 3.2 Improved sales mix Benefited from new business wins in 2016 Improving capital sales profile 0 Aquilant OPERATING MARGIN 6.8% 7.0% 19 : UDG Healthcare plc

20 M&A M&A REMAINS A KEY PRIORITY FOR THE GROUP: Strategic Fit / Capabilities ROCE 15%+ within 3 years People & Cultural Fit KEY FOCUS AREAS INCLUDE: ASHFIELD COMMERCIAL & CLINICAL Strengthen contract sales capabilities Extend clinical / nurse services Expand medical information and commercial call centres ASHFIELD COMMUNICATIONS (INC ADVISORY) Extension of healthcare communications capabilities incorporating: Health Communications Digital solutions Patient focused Market Access Public Relations Strategic Consultancy Commercial & Marketing Audits SHARP Continued capacity expansion via capex Addition of complementary services to existing platforms in commercial and clinical packaging 20 : UDG Healthcare plc

21 Investment in scalable infrastructure and platforms FUTURE FIT CAPACITY INVESTMENTS RATIONALE: Supporting continued delivery of sustainable future growth, both organic and M&A Ensure current infrastructure is fit for purpose KEY PROJECTS INCLUDE: HR Finance IT HR system (Workday) launched in April 2017 Finance system (Oracle) rolling out over the next 18 months SHARP US COMMERCIAL & CLINICAL ASHFIELD OFFICES SHARP CLINICAL UK 21 : UDG Healthcare plc

22 Summary Brendan McAtamney, CEO

23 Summary Strong H1 performance driven by continued underlying growth, supplemented by M&A Market dynamics remain favourable Raised full year earnings guidance by 2% to between 15%-18% EPS growth (constant currency) Diversified client base with limited exposure to drug pricing Corporate development a key focus Continued investment in infrastructure to deliver sustainable future growth Continued increase in margins and ROCE Underpinned by a strong balance sheet and cash generation 23 : UDG Healthcare plc