UDG Healthcare plc Interim Results Presentation FY17 London Stock Exchange, 23 rd May 2017
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 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
H1 FY17 Overview Brendan McAtamney, CEO
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 8,000+ TOP 30 OPERATING DIVISIONS EMPLOYEES PHARMA COMPANIES AS CLIENTS Ashfield Sharp Aquilant 30 YEAR FTSE 250 23 COUNTRIES DIVIDEND GROWTH LISTED 5 : UDG Healthcare plc
Positive Market Dynamics Growing trend of healthcare outsourcing Increased complexity Positive from growth of Increasing trend specialty and biotech product approvals Total global volume to outsource to larger, outlook - Global pharmaceutical use of medicines By 2021, 35% of global more global partners market continues to forecasted to reach c. FDA approval of spending expected to show good growth 4.5tr doses by 2021, new drugs expected to be on speciality up from c. 4tr doses remain high despite with spending on medicines^ medicines forecasted in 2016^ lower 2016 approvals* to grow at 4-7% p.a. to 2021 to reach $1.5 trillion^ ^ 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 2017 6 : UDG Healthcare plc
H1 2017 Financial highlights* Financial Operating margin increased to 10.2% EPS up +19% ↑ Financial ↑ Net Operating margin increased to 12.0% (+29% constant currency) Operating profit up +13% ↑ ↑ Proposed +5% increase in interim dividend (+21% constant currency) Profit before tax up +19% (+29% constant currency) Good performance and margin expansion ↑ across both Ashfield and Sharp: EPS guidance for FY17 increased by 2% to between ↑ 15% and 18% ahead of last year (constant Ashfield operating profit Sharp operating profit + 18% ahead +8% ahead currency) (+8% underlying^) (+8% underlying^) Ashfield net operating margin Sharp operating margin ↑ ROCE increased to 13.8% from 13.5% 12.6% 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
H1 2017 Strategic highlights Strategic M&A ACTIVITY CAPACITY EXPANSION Three acquisitions announced since the start of the financial New site acquired to New office facility for year, deploying over $130m of capital: expand the Sharp clinical Ashfield Commercial • Acquisition of STEMcompleted in October 2016 (for up business in the UK & Clinical US to $105m) • Acquisition of a packaging facility in the US completed in April 2017 ($14m) LEADERSHIP TRANSITIONS • Agreement to acquire Sellxpert , a German contract Appointed Jez Moulding as COO UDG & EVP Ashfield sales organisation announced in May 2017 for up to $14.4m, subject to competition clearance FUTURE FIT Financial Finance system ( Oracle ) HR system ( Workda y) NET CASH position of $9 $91m 1m at the end of March 2017 rolling out over the next 18 ↑ launched in April 2017 leaves the Group well placed to continue to execute months strategic acquisition opportunities 8 : UDG Healthcare plc
H1 FY17 Financial Review Alan Ralph, CFO
H1 2017 Financial summary H1 2016 H1 2017 Increase Constant FX Increase $538.0m $578.9m ↑8 % ↑15% Revenue $52.2m $58.8m ↑13 % ↑21 % Operating profit (EBITA)* $44.4m $52.9m ↑ 19% ↑ 29% PBT* 13.63 16.23 ↑ 19% ↑ 29% EPS (C)* 3.41 3.58 ↑ 5% ↑ 5% DPS (C) 13.5% 13.8% N/A N/A ROCE% (1.69x) 0.61x N/A N/A Net (debt)/Cash / EBITDA Average 2016 financial year exchange rates were $1 = €0.9002 and £0.7045. The average exchange rates during H1 2017 were $1 = €0.9330 and £0.8066 (2016 H1 $1 = €0.9102 and £0.6787) * Before amortisation of acquired intangible assets, transaction costs and exceptional items (no exceptional items in either period) 10 : UDG Healthcare plc
H1 2017 Divisional operating profit OPERATING PROFIT ($M) ● H1 2016 ● H1 2017 18% ↗ • Reported profit growth of 18% , underlying^ profit 40 growth of 8% • Good underlying profit growth across both 36.4 30 business units 30.8 8% ↗ • Net operating margin of 12.6% 20 19.2 17.8 10 11% ↘ • Reported profit growth of 8%, underlying^ profit 3.6 3.2 0 growth of 8% Ashfield Sharp Aquilant • Divisional margin expansion to 12.6% • EU business returned to profitability NET OPERATING MARGIN 12.6% 12.6% 7.0% • Underlying^ operating profit up 6% • Operating margin of 7% ^ 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
H1 2017 Operating profit ($m) – Continuing Group CONTINUING GROUP OPERATING PROFIT +13% (+21% CONSTANT CURRENCY) 52.2 (3.5) 6.3 3.8 58.8 8% (8%) 13% 12 : UDG Healthcare plc
Cash flow ($m) EBITDA/NET CASH 0.61x (SEPTEMBER 2016: 1.03x); 70 1 (28) 143 (60) 91 (11) (20) (4) 13 : UDG Healthcare plc
30 year history of consistent dividend growth ($ cent) 12.83 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 *Translated at FY16 fx rate from € to $ 14 : UDG Healthcare plc
Divisional Review & Operations Brendan McAtamney, CEO
Ashfield H1 2017 overview OPERATING PROFIT ($M) ● H1 2016 ● H1 2017 Division operating profit +18% to $36.4m Underlying profit growth +8% 18% ↗ 40.0 Net operating margin of 12.6% 36.4 30.0 Commercial & Clinical operating profit +4% 30.8 4 % ↗ 35% ↗ • Underlying profit growth of +8% • Strong performance in US, largely due to 20.0 increased activity levels from one client 19.1 17.3 16.6 • New US office facility in Fort Washington 14.2 10.0 • Good European growth, particularly in Germany • Acquisition of Sellxpert announced in May 2017 0.0 Communications (including Advisory) operating Commercial & Clinical Communications Totals profit +35% (including Advisory) • Underlying profit growth of +7% • Strong H1 performance from STEM during NET OPERATING MARGIN* seasonally strong first half 8.6% 8.3% 21.6% 23.6% 11.9% 12.6% * Net operating margin adjusts for pass-through revenues. Pass through revenues of $79.7m in H1 2016 and $90.9m in H1 2017 16 : UDG Healthcare plc
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 COMMUNICATIONS COMMERCIAL & CLINICAL Commercialisation and clinical services Advisory, commercial & Scientific, medical & including sales representatives, nursing marketing audits, strategic commercial communications consultancy services services and contact centres and patient centred services 17 : UDG Healthcare plc
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