UDG Healthcare plc FY18 Interim Results Presentation London Stock Exchange, 22 nd May 2018
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, results, performance, operations or achievements including statements that relate to the Group’s future expressed or implied by such forward looking statements prospects, developments and strategies, and involve risks may differ materially from those expressed or implied by and uncertainties both general and specific. The Group has such forward-looking statements and accordingly you based these forward-looking statements on assumptions should not rely on these forward looking statements in regarding present and future strategies of the Group and making investment decisions. Except as required by the environment in which it will operate in the future. applicable law or regulation, neither the Group nor any However, because they involve known and unknown risks, other party intends to update or revise these forward uncertainties and other factors including but not limited to looking statements after the date these statements are general economic, political, financial and business factors, published, whether as a result of new information, future which in some cases are beyond the Group’s control, actual events or otherwise. 2 : UDG Healthcare plc
Agenda H1 2018 Overview Brendan McAtamney, Chief Executive Officer H1 2018 Financial Review Alan Ralph, Outgoing Chief Financial Officer Divisional Update Brendan McAtamney, Chief Executive Officer Outlook & Summary Brendan McAtamney, Chief Executive Officer Q&A 3 : UDG Healthcare plc
H1 2018 Overview Brendan McAtamney
UDG Healthcare Overview UDG Healthcare is a leading international partner of choice delivering advisory, communication, commercial, clinical and packaging services to the healthcare industry. 3 OPERATING DIVISIONS 9,000 TOP 30 EMPLOYEES PHARMA COMPANIES AS CLIENTS 24 30 YEAR+ FTSE 250 COUNTRIES DIVIDEND GROWTH LISTED 5 : UDG Healthcare plc
H1 2018 Financial Highlights +24 % +17 % +15 % 11.8 % +19 % +19% EPS NET OPERATING NET OPERATING DIVIDEND PROFIT REVENUE PROFIT MARGIN BEFORE TAX +21% on a +11% on a Ashfield +25% Declined +16% on a Continued constant constant Sharp -2% marginally from constant dividend growth currency basis currency basis 12.0% currency basis 6 : UDG Healthcare plc
H1 2018 Operational Updates LEADERSH LEA SHIP TRAN TRANSITI TIONS INV NVESTMENTS TS Reinvestment to support sustainable growth including: Future Fit (HR, Finance, IT) Nigel Clerkin Doug Burcin Rob Wood due to complete by December 2018 Appointed as CFO of Appointed as President Appointed as Global UDG on 1st May 2018 of Ashfield Healthcare President of Ashfield Sharp facility investments Communications in Advisory Services & across the Commercial February 2018 Business Development and Clinical businesses in April 2018 7 : UDG Healthcare plc
H1 2018 Financial Review Alan Ralph
H1 2018 Financial Summary H1 2017 H1 2018 Increase Con Constant t FX Incr ncrease $488.0m $568.7m ↑17 % ↑11% Net Revenue $58.8m $67.4m ↑15 % ↑11 % Operating profit* $52.9m $63.2m ↑ 19% ↑16 % PBT* 16.23 20.19 ↑24 % ↑21 % EPS (C)* 3.58 4.25 ↑19 % ↑19 % DPS (C) 12.8%^ 12.9% N/A N/A ROCE% (0.32x)^ (0.28x) N/A N/A Net cash / (debt) to EBITDA The average H1 2018 exchange rates were $1:€0.8310 and $1:£0.7357 (H1 2017 $1:€0.9330 and $1:£0.8066) * Before amortisation of acquired intangible assets, transaction costs and exceptional items ^ At 30 th September 2017 9 : UDG Healthcare plc
H1 2018 Divisional Operating Profit • Reported operating profit growth +25% . OPERATING PROFIT ($M) ● H1 2017 ● H1 2018 . • Underlying^ operating profit growth -1% after +25% ↗ additional Future Fit operating costs ( +6% pre-Future 50 Fit costs) 45.6 • Net operating margin of 12.3% 40 -2% ↘ 36.4 30 20 • Reported operating profit growth -2%. Underlying^ 19.2 18.9 operating profit growth -2% - 11% ↘ 10 • Good Q2 performance did not fully offset Q1 performance 3.2 2.9 0 • Net operating margin of 13.3% Ashfield Sharp Aquilant UNDERLYING GROWTH RATE^ -1% -2% -19% • Underlying^ operating profit growth -19% NET OPERATING MARGIN* • Decline driven primarily by the exit of contracts 12.6% 12.3% 12.6% 13.3% 7.0% 5.3% with VSI & Link ^ Throughout this presentation, references to underlying growth are financial metrics adjusted for the impact of currency translation movements and any acquisition or disposal activity. * Net operating margin adjusts for pass-through revenues upon which no margin is earned 10 : UDG Healthcare plc
H1 2018 Profit Before Tax* GROUP PBT ($M) +19% (+16% CONSTANT CURRENCY) 63.2 1.4 7.0 1.9 +3% 52.9 +13% +4% 11 : UDG Healthcare plc *Adjusted for amortisation of acquired intangible assets, transaction costs, and exceptional items
H1 FY18 Exceptional Items Category Description $m H1 FY 2018 Impairm rment of of Goo oodwill Net charge in relation to the impairment of goodwill on ($49.7m) Aquilant, in part offset by one-off payments received relating to the exit of contracts with VSI and Link in the period, for which contract termination payments were received (total contract net exit payments of $14.5m) De Defe ferr rred Tax Tax Cre Credit t Gain reflecting a one- off benefit from a reduction in the Group’s $9.7m deferred tax liabilities following US tax changes De Defe ferr rred Co Conti tingent t Co Considerati tion Release in respect of Cambridge BioMarketing following a $3.5m review of performance against expected earn-out targets Ne Net exc exceptional item tems af after r tax tax ($36.6m) The total cash inflow during H1 FY18 in respect of exceptional items was $13.5m 12 : UDG Healthcare plc
Cash Flow ($m) EBITDA/NET DEBT 0.28x (SEPTEMBER 2017 EBITDA/NET DEBT: 0.32x); 13 83 (19) (24) (24) (3) (12) (23) (9) (47) (53) * Includes deferred consideration payments 13 : UDG Healthcare plc
Capital Allocation Priorities Progressive dividend policy 30 year+ history of consistent dividend growth Strong balance Reinvestment to support sheet to support continued sustainable growth continued Future Fit (HR, Finance and IT) and investment Sharp capacity investments priorities Capex expected to reduce from FY19 Acquisitions in line with strategic priorities ROCE of 15%+ within 3 years 14 : UDG Healthcare plc
Acquisitions completed since the United Drug disposal Total acquisition consideration of up up to o $1 $135 35m ADVISORY Total acquisition consideration of up to up o $1 $130 30m COMMUNICATIONS Total acquisition consideration of COMMERCIAL up to up o $14m $14m & CL CLINICAL Total acquisition Acquisition of pharmaceutical consideration of packaging facility $14m $14m 15 : UDG Healthcare plc
Progressive Dividend Policy 13.3 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Historic dividends translated at FY16 fx rate from € to $ 16 : UDG Healthcare plc
Divisional Update Brendan McAtamney
Ashfield H1 2018 Overview OPERATING PROFIT ($M) ● H1 2017 ● H1 2018 +25% ↗ 50.0 40.0 +0% 45.6 +48% ↗ 30.0 36.4 28.3 20.0 19.1 17.3 17.3 10.0 0.0 Communications (including Advisory) Commercial & Clinical Totals UNDERLYING GROWTH RATE +5% -7% -1% NET OPERATING MARGIN* 23.6% 20.7% 8.3% 7.3% 12.6% 12.3% Communications (including Advisory) now accounts for 62% of Ashfield’s operating profit Division operating profit growth +25% to $45.6m. Underlying operating profit growth -1% after Future Fit operating costs ( +6% pre- Future Fit costs). Net operating margin of 12.3% (acquisition benefits offset by increased Future Fit operating costs impact) * Net operating margin adjusts for pass-through revenues. Pass through revenues of $90.9m in H1 2017 and $106.6m in H1 2018 18 : UDG Healthcare plc
Sharp H1 2018 Overview OPERATING PROFIT ($M) ● H1 2017 ● H1 2018 -2% ↘ -3% ↘ 20.0 19.2 18.9 19.0 18.4 15.0 10.0 +191% ↗ 5.0 0.5 0.2 0.2 0.0 US EUR Totals UNDERLYING GROWTH RATE -4% +261% -2% OPERATING MARGIN 15.3% 15.5% 0.6% 1.9% 12.6% 13.3% Underlying operating profit -2% driven by higher churn in the US commercial business during the second half of FY17 which impacted the first half of FY18 Improving momentum in Q2 FY18 vs Q1 FY18 19 : UDG Healthcare plc
Sharp Update & Outlook OUTLOOK SUMMARY UPDATE Q1 FY18 behind prior year (as per Q1 IMS) Double digit-growth expected in H2 FY18 vs prior year Q2 FY18 double-digit growth vs prior year However, due to slower project ramp up, mid-single digit underlying operating profit growth expected for FY18 -- Experienced higher churn in H2 FY17 & Q1 FY18 but has since reduced Well positioned to deliver strong underlying operating profit growth in FY19 Project timing and ramp up delays due to FDA approvals and client timing issues Reiterate medium term guidance of 10%+ underlying operating profit growth Pipeline continues to improve including significant single large wins coming through 20 : UDG Healthcare plc
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