UDG Healthcare plc Interim Results Presentation FY17 London Stock - - PowerPoint PPT Presentation

UDG Healthcare plc Interim Results Presentation FY17

London Stock Exchange, 23rd May 2017

2 : UDG Healthcare plc

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

• ther 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.

3 : 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

H1 FY17 Overview

Brendan McAtamney, CEO

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At a glance

OPERATING DIVISIONS

Ashfield Sharp Aquilant

UDG Healthcare is a leading international partner of choice delivering commercial, clinical, communications, advisory and packaging services to the healthcare industry.

3 8,000+

EMPLOYEES

TOP 30

PHARMA COMPANIES AS CLIENTS

23 COUNTRIES 30 YEAR

DIVIDEND GROWTH

FTSE 250

LISTED

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Positive Market Dynamics

Growing trend of healthcare outsourcing Increasing trend to outsource to larger,

more global partners

Positive

product approvals

• utlook -

FDA approval of new drugs expected to remain high despite lower 2016 approvals* 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^ Increased complexity from growth of specialty and biotech By 2021, 35% of global spending expected to be on speciality medicines^ Total global volume use of medicines forecasted to reach c. 4.5tr doses by 2021, up from c. 4tr doses in 2016^

^ 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

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H1 2017 Financial highlights*

Financial

↑ ↑

EPS up +19%

(+29% constant currency)

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%

↑

Operating profit up +13%

(+21% constant currency)

Profit before tax up +19%

(+29% constant currency)

Operating margin increased to 10.2% Net Operating margin increased to 12.0%

↑ ↑

ROCE increased to 13.8% from 13.5%

Financial

* 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

EPS guidance for FY17 increased by 2% to between

15% and 18% ahead of last year (constant

currency)

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H1 2017 Strategic highlights

Strategic

NET CASH position of $9 $91m 1m at the end of March 2017 leaves the Group well placed to continue to execute strategic acquisition opportunities

↑

CAPACITY EXPANSION

New site acquired to expand the Sharp clinical business in the UK New office facility for Ashfield Commercial & Clinical US

M&A ACTIVITY Three acquisitions announced since the start of the financial year, deploying over $130m of capital:

• Acquisition of STEMcompleted 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

Financial

FUTURE FIT HR system (Workday) launched in April 2017 Finance system (Oracle) rolling out over the next 18 months LEADERSHIP TRANSITIONS Appointed Jez Moulding as COO UDG & EVP Ashfield

H1 FY17 Financial Review

Alan Ralph, CFO

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H1 2017 Financial summary

H1 2016 H1 2017 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)*

13.63 16.23 ↑19% ↑29%

DPS (C)

3.41 3.58 ↑5% ↑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 = €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)

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30.8 17.8 3.6 36.4 19.2 3.2

10 20 30 40 Ashfield Sharp Aquilant

18% ↗ 8% ↗ 11% ↘

H1 2017 Divisional operating profit

^ Throughout this presentation, references to underlying growth are financial metrics adjusted for the impact of currency translation movements and any acquisition or disposal activity

• Reported profit growth of 18%, underlying^ profit

growth of 8%

• Good underlying profit growth across both

business units

• Net operating margin of 12.6%
• H1 2016 ● H1 2017
• Reported profit growth of 8%, underlying^ profit

growth of 8%

• Divisional margin expansion to 12.6%
• EU business returned to profitability
• Underlying^ operating profit up 6%
• Operating margin of 7%

OPERATING PROFIT ($M)

NET OPERATING MARGIN

12.6% 12.6% 7.0%

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H1 2017 Operating profit ($m) – Continuing Group

CONTINUING GROUP OPERATING PROFIT +13%

(+21% CONSTANT CURRENCY)

(3.5) 52.2 6.3 3.8 58.8 (8%) 13% 8%

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Cash flow ($m)

EBITDA/NET CASH 0.61x (SEPTEMBER 2016: 1.03x);

143 70 1 (28) (60) (11) (20) (4) 91

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30 year history of consistent dividend growth ($ cent)

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 $

12.83

Divisional Review & Operations

Brendan McAtamney, CEO

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18% ↗ 4% ↗

16.6 14.2 30.8 17.3 19.1 36.4

0.0 10.0 20.0 30.0 40.0

Commercial & Clinical Communications (including Advisory) Totals

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

Ashfield H1 2017 overview

35% ↗

• H1 2016 ● H1 2017

OPERATING PROFIT ($M)

* Net operating margin adjusts for pass-through revenues. Pass through revenues of $79.7m in H1 2016 and $90.9m in H1 2017

NET OPERATING MARGIN*

8.6% 8.3% 21.6% 23.6% 11.9% 12.6%

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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

COMMERCIAL & CLINICAL

Commercialisation and clinical services including sales representatives, nursing services and contact centres

COMMUNICATIONS

Scientific, medical & commercial communications and patient centred services

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Sharp H1 2017 overview

• H1 2016 ● H1 2017

5% ↗ 8% ↗

OPERATING PROFIT ($M)

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

–0.3 0.2

OPERATING MARGIN

15.3% 15.3% – 0.6% 12.2% 12.6% 18.1

• 0.3

17.8 19.0 19.2

• 1

4 9 14 19 US EUR Totals

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Aquilant H1 2017 overview

11% ↘

OPERATING PROFIT ($M)

Division operating profit -11% to $3.2m Adjusting for the impact of negative currency movements, operating profit on an underlying basis was +6%

• Improved sales mix
• Benefited from new business wins in 2016
• Improving capital sales profile

3.6 3.2

2 4 6 8 10 Aquilant

OPERATING MARGIN

6.8% 7.0%

• H1 2016 ● H1 2017

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M&A

KEY FOCUS AREAS INCLUDE: ROCE 15%+ within 3 years People & Cultural Fit Strategic Fit / Capabilities

M&A REMAINS A KEY PRIORITY FOR THE GROUP:

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

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Investment in scalable infrastructure and platforms

RATIONALE:

• Supporting continued delivery of sustainable future growth,

both organic and M&A

• Ensure current infrastructure is fit for purpose

FUTURE FIT CAPACITY INVESTMENTS

SHARP US COMMERCIAL & CLINICAL ASHFIELD OFFICES SHARP CLINICAL UK

HR Finance IT

• HR system (Workday) launched in April 2017
• Finance system (Oracle) rolling out over the next 18 months

KEY PROJECTS INCLUDE:

Summary

Brendan McAtamney, CEO

23 : UDG Healthcare plc

Summary

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