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UDG Healthcare Presentation
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www.udghealthcare.com1 : UDG Healthcare plc
UDG Healthcare plcAn International Healthcare Services Organisation
Proposed Sale of Distribution Business AssetsTransforming to focussed international healthcare services
www.udghealthcare.com: UDG Healthcare plc2
FORWARD LOOKING STATEMENTS
This Presentation has been prepared by UDG Healthcare plc (the "Company") and contains certain forward-
looking statements, beliefs or opinions, including statements with respect to the Company's business, financial
condition and results of operations. These statements are made by the Company in good faith based on the
information available to it at the date of this Presentation and reflect the beliefs and expectations of the
directors. By their nature these statements involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future. A number of factors could cause actual
results and developments to differ materially from those expressed or implied by the forward-looking
statements.
No representation or warranty is made that any of these statements or forecasts will come to pass or that any
forecast results will be achieved. Forward-looking statements may, and often do, differ materially from actual
results. Any forward-looking statements in this Presentation speak only as of their respective dates, reflect the
Company’s current view with respect to future events and are subject to risks relating to future events and
other risks, uncertainties and assumptions relating to the Company’s operations and growth strategy. Subject
to the requirements of the Financial Conduct Authority, the London Stock Exchange, the Listing Rules and the
Disclosure and Transparency Rules (and/or any regulatory requirements) or applicable law, the Company
explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-
looking statements in this Presentation that may occur due to any change in the Company’s expectations or to
reflect events or circumstances after the date of this Presentation.
www.udghealthcare.com: UDG Healthcare plc3
˃ Transaction Overview & Strategic Rationale Liam FitzGerald, CEO
˃ Continuing UDG Healthcare GroupBrendan McAtamney, COO
˃ Financial ImpactAlan Ralph, CFO
˃ SummaryLiam FitzGerald, CEO
˃ Appendix
AGENDA
www.udghealthcare.com: UDG Healthcare plc4
Transaction Overview and Strategic Rationale
Liam FitzGerald
Chief Executive Officer
www.udghealthcare.com: UDG Healthcare plc5
TRANSACTION OVERVIEW
Proposed disposal of Distribution businesses to McKesson
Aggregate Cash Consideration* of €407.5m
Price represents 13.4x Adjusted EBITA* for 12 months to September 2014
Subject to UDG Healthcare shareholder approval at EGM on 13 October 2015and clearance from relevant competition authorities
Accelerates Group’s transformation to a more focussed international healthcare services business
*See Definitions in Appendix
Leadership Transition as CEO, Liam FitzGerald, announces plans to retire in March 2016 and Board nominates COO, Brendan McAtamney, as his successor
www.udghealthcare.com: UDG Healthcare plc6
Revenue of €1,363m in 2014 and €685m in H1 2015
Adjusted EBITA** of €30.3m in 2014 and €13.6m in H1 2015
OVERVIEW OF DISTRIBUTION BUSINESS* ASSETS
*UD and TCP report financial results within the Supply Chain Services Division, MASTA reports under Ashfield Commercial & Medical Services Division
**See Definitions in Appendix
United Drug SCS is a leading pharmaceutical wholesale and pre-wholesale business in RoI and United Drug Sangers is a leading wholesaler in NI
TCP Group provides “direct to patient”and cold chain distribution services in the RoI
MASTA is a leading UK service provider in travel health and specialises in travel and flu vaccine distribution
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STRATEGIC & FINANCIAL RATIONALE FOR DISPOSAL
Proceeds will support Group’s future growth plans
– Driving further value creation by growing the existing Ashfield, Aquilant and Sharp market positions
4
The wholesale and distribution business in Ireland has been pressured in recent years despite gaining market share
– On-going international consolidation of the wholesale and pre-wholesale markets means greater scale is increasingly important to drive efficiencies
2
Attractive price for assets3
Disposal will allow businesses to prosper under the ownership of one of the leading international wholesaler and retailer Groups
1
Consistent with group strategy to focus on higher growth, higher margin international healthcare services businesses
www.udghealthcare.com: UDG Healthcare plc8
Remains Irish Headquartered, high growth, more focussed on internationalhealthcare services markets
Increases Group focus on higher growth and higher margin areas
Continuing Group increased Operating Profit* by 35% in H1 2015
Increases Continuing Group Net Operating Margin* to 11.1% in H1 2015
Gross proceeds of €407.5m will support continued growth and expansion of Group’s Ashfield, Aquilant and Sharp divisions
STRATEGIC IMPACT
*See Definitions and reconciliation in Appendix, includes acquisition and disposal contributions
www.udghealthcare.com: UDG Healthcare plc9
Continuing UDG Healthcare GroupBrendan McAtamney
Chief Operating Officer
www.udghealthcare.com: UDG Healthcare plc10
BUSINESS MIX SHIFTS TO HIGHER GROWTH & HIGHER MARGIN
Increased group focus on higher growth and higher margin businesses
H1 2015 Continuing Group Profile
– Operating Profit +35%
– Net Operating margin 11.1%
Operating Profit* (€m)
45.0
53.6
0
10
20
30
40
50
60
70
H1 2014 H1 2015
+19%
31.1
42.0
0
10
20
30
40
50
60
70
H1 2014 H1 2015
Operating Profit Continuing Group* (€m)
+35%
Net Operating Margin* (%)
5.0
11.1
0
5
10
15
20
H1 2015 -reported
H1 2015 -Continuing
Group
48%
22%
30%
Ashfield Sharp SCS/Aquilant
H1 2015 Operating Profit *
62%28%
10%
Ashfield Sharp Aquilant
H1 2015 Operating ProfitContinuing Group**
*See Definitions in Appendix. Operating profit is the same format as adjusted operating profit reported in UDG Healthcare’s interim and annual accounts
**Approximate split, H1 2015 Aquilant % includes Medicare (Magir Limited)
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POSITIVE MARKET DYNAMICS SUPPORTING DEMAND FOR SERVICES
INCREASING TRENDS TOHEALTHCARE OUTSOURCING
+ Positivemarket trends
amplifying demand in our growth areas
Increasing product approvals forecast
Increased complexity & importanceof specialty and biotech products
Increasing proportion of semi-virtual (specialty/biotech) companies
Positive healthcaremarket growth outlook
New approvals and increased product complexity are drivers of our businesses
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Address scale and geographic gaps
STRATEGIC PRIORITIES FOR PROCEEDS
Develop and strengthen existing market positions:
Ashfield Healthcare Communications Ashfield Commercial
Sharp Pharmaceutical packaging Aquilant Specialist Services
Acquire additional complementary services in our chosen markets
Re-align administrative functions to reflect the new focus of the Group
Capitalise on existing market positions as the demandfor specialist outsourced services in the healthcare sector increases
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Disciplined and patient approach to M&A
STRONG ACQUISITION AND INTEGRATION TRACK RECORD
Strong record of successful strategic acquisitions
Demonstrated record of delivering on strategic plan and shareholder value creation
Prior acquisitions confirm Group’s capability to successfully identify,execute and integrate strategic transactions and assets
Sharp (2008) Created US leadership positionPHARMEXX (2012) Established leading pan European CSO businessKnowledgePoint360 (2014) Added international footprint and capabilities
Balance sheet strength facilitates increased investment in ourhigher growth areas both organically and via acquisition
www.udghealthcare.com: UDG Healthcare plc14
Financial ImpactAlan Ralph
Chief Financial Officer
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KEY FINANCIAL IMPACTS
Earnings Guidance– No change to 2015 earnings guidance (including discontinued operations)
*See Definitions in Appendix
** Dividend increases linked to constant currency EPS growth, we expect to continue progressive dividend policy and for the 2016 dividend per share ("DPS")to increase over the 2015 DPS
Currency and geographic profile shifts
– Euro profits reduce from over 20% to less than 10%– Tax rate will increase by 1-2% as a result
Improved growth and margin profile
– Continuing Group increased Operating Profit* 35% in H1 2015– Net Operating Margin* of 11.1% in H1 2015– Increased % of Group costs will lower margin post completion
Dividend– Expect to maintain progressive dividend** policy
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KEY FINANCIAL IMPACTS (2)
*See Definitions in Appendix
Proforma Net Cash* of €102.6m post transaction
– Pay down RCF and maintain facility - lower interest expense– Maintain long term private placement debt
Working capital – Distribution businesses cash generative, expect a reduction in cash generation from
working capital
Capex
– Continued on-going investment in Sharp capacity expansion
Pension – Republic of Ireland defined benefit pension scheme will remain with UDG Healthcare,
will look to de-risk it over time
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*See Appendix Definitions
FINANCIAL IMPACT –DISPOSAL & CONTINUING GROUP H1 2015
H1 2015
DISTRIBUTIONASSETSDISPOSED
CONTINUING GROUPH1 2015
CHANGECONTINUING GROUP
Revenue €1,131m €685m €446m 25%
Operating Profit* €53.6m €11.6m €42.0m 35%
Net Operating*
Margin 5.0% 1.7% 11.1% +609 bp
Net Cash (€274.9m) €377.5m €102.6m
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EXPECTED TIMETABLE AND PROCESS
Sale of Distribution businesses announced 18/09/2015
Expected Circular posting to shareholders 23/09/2015
EGM – Shareholder vote 13/10/2015
Competition approval (anticipated) by 31/03/2016
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SummaryLiam FitzGerald
Chief Executive Officer
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SUMMARY
Accelerates Group’s transformation to a more focussed international healthcare services business
Significantly improves growth potential and margin profile
Disposed businesses can prosper under the ownership of a leading international wholesale and retail Group
Attractive price provides balance sheet strength for significant investment in our higher growth areas both organically and via acquisition
Opportunity to develop and strengthen existing market positions and capitalise on the increasing demand for healthcare services
Transforming to a more focussed international healthcare services business
Recognise the long-standing loyalty of the staff and customers of these businesses
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Appendix
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EBITA RECONCILIATION
Disposed Assets
Continuing Group
Disposed Assets
Continuing Group
Disposed Assets
Continuing Group
Year to September (€m)
H12014
H1 2014
H1 2014
FY2014
FY2014
FY2014
H1 2015
H1 2015
H1 2015
Revenue 1,041 685 357 2,127 1,363 764 1,131 685 446
Net Revenue 995 685 310 2,021 1,363 658 1,063 685 378
*Adjusted EBITA - 14.9 - - 30.3 - - 13.6 -
Adjustments - (1.0) - - (3.0) - - (2.0) -
*Operating Profit 45.0 13.9 31.1 102.6 27.3 75.3 53.6 11.6 42.0
*Net Operating Margin
4.5% 2.0% 10.0% 5.1% 2.0% 11.4% 5.0% 1.7% 11.1%
*See Appendix Definitions
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DEFINITIONS
"Adjusted EBITA" Earnings before interest, tax, administrative expenses allocated from UDG Healthcare, amortisation of acquired intangible assets, acquisition costs and exceptional items (page 20 of Circular)
"Continuing Group" The Group excluding the Disposed Businesses
"Cash Consideration" Aggregate cash consideration on a cash and debt free basis
"Distribution Businesses" Together (1) United Drug Supply Chain Services (2) United Drug Sangers (3) TCP Group and (4) the MASTA Business. The United Drug Supply Chain Services businesses to be disposed of do not include the Aquilant Business
"Net Operating Margin" Operating profit margin on Net Revenue
"Net Revenue" Revenue less Ashfield pass through costs recorded as revenues
"Operating Profit" Earnings before interest, tax, amortisation of acquired intangible assets, acquisition costs and exceptional Items. Operating profit is the same format as adjusted operating profit reported in UDG Healthcare’s interim and annual financial statements
"Proforma Net Cash" Combined net cash position of cash consideration received and UDG Healthcare net debt position at 31 March 2015
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