REG - Uniphar PLC - 2022 Interim Results
30/08/2022 07:16
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220830:nRSd4702Xa&default-theme=true
RNS Number : 4702X Uniphar PLC 30 August 2022
Uniphar plc
2022 Interim Results
Uniphar plc, an international diversified healthcare services business
announces its half year results for the six months ended 30 June 2022,
performing in line with expectations and delivering EBITDA growth of 9.2% and
Adjusted EPS growth of 18.3%.
FINANCIAL HIGHLIGHTS
Growth
Six months ended 30 June(1) Reported Constant
2022 2021 currency(2)
€'000 €'000
Revenue 991,831 964,867 2.8% 2.4%
Gross profit 146,135 134,290 8.8% 7.6%
Commercial & Clinical 58,541 53,446 9.5% 7.9%
Product Access 21,818 20,051 8.8% 5.4%
Supply Chain & Retail 65,776 60,793 8.2% 8.2%
Gross profit margin (Group) % 14.7% 13.9%
EBITDA(1) 44,935 41,138 9.2% 8.1%
Operating profit 25,078 23,609 6.2% 5.2%
Profit before tax excluding exceptional items 26,125 23,766 9.9% 8.8%
Net bank debt(1) (73,807) (30,341)
Basic EPS (cent) 5.9 5.7
Adjusted EPS (cent)(1) 8.4 7.1
· Gross profit growth of 8.8% (4.9% organic(3)); growth across all
divisions with Supply Chain & Retail once again outperforming medium term
guidance, delivering 5.2% organic growth(3).
· Continued growth in gross profit margin from 13.9% to 14.7%,
reflecting ongoing focus on margin development in a challenging inflationary
environment.
· EBITDA growth of 9.2%, from €41.1m to €44.9m, demonstrating
the resilience of the business despite continued macroeconomic uncertainty and
inflationary pressures.
· 18.3% adjusted EPS growth to 8.4 cent (June 2021: 7.1 cent).
· The Group continued to execute its growth strategy with the
acquisition post period end of Orspec Pharma Pty Ltd. ("Orspec") which
provides entry into the strategically important Asia Pacific (APAC) region.
· Robust liquidity with net bank debt of €73.8m at 30 June 2022
(December 2021: €48.3m), leverage remaining low and free cash flow
conversion of 47.5% which reflects the unwind of December 2021 working capital
positions. Excluding the impact of the working capital movements, free cash
flow conversion is within our target range (60-70%).
· The Board have declared an interim dividend of €1.7m (€0.0061
per ordinary share) for the period up to 30 June 2022.
1. Additional information in relation to Alternative Performance
Measures (APMs) are set out below.
2. Constant currency growth is calculated by applying the prior
period's actual exchange rate to the current period's result.
3. Organic growth is calculated as the gross profit growth of the
underlying business in the period adjusting for the contribution from prior
period acquisitions and divestments to ensure a like-for-like comparison.
STRATEGIC AND OPERATIONAL HIGHLIGHTS
· Strong performance in the period leveraging the Group's scale and
leading market positions to mitigate inflationary headwinds.
· Organic gross profit growth of 4.9% driven by growth across all
divisions, with an outperformance in Supply Chain & Retail delivering
5.2%, Commercial & Clinical delivering 4.2% and Product Access delivering
5.7%.
· New five-year banking facility completed post period end which
more than doubles the revolving credit facility (RCF) to €400m with an
additional uncommitted accordion facility of €150m. Three international
banks, Barclays Bank, ING Bank and Citizens Bank joined the existing syndicate
increasing the syndicate to seven banks. This new facility provides the
platform to accelerate our ambitious growth strategy and acquisition pipeline.
· Robust cash flow performance with reported free cash flow
conversion of 47.5%. When adjusted for the impact of the planned unwind of
temporary timing benefits, free cash flow conversion is within our target
range of 60-70%.
· The Commercial & Clinical division delivered gross profit
growth of 9.5% off a very strong comparative period in 2021 where growth of
27.5% was recorded. The diversity of the MedTech portfolio ensured continued
growth in the period, while investment in our digital platforms and
omni-channel offerings supported our customers in the industry-shift towards a
hybrid model of both digital and in-person HCP (Healthcare Professional)
engagement.
· Product Access has recently signed its first US Expanded Access
Program (EAP) representing a significant milestone in the continued geographic
growth of the division. The division continues to target double-digit organic
growth in gross profit over the medium term.
· The Supply Chain & Retail division has commenced a strategic
investment programme in an Irish-based distribution facility. This multi-year
organic investment in a state-of-the-art facility will unlock further
operational efficiencies and provide the infrastructure to meet growing market
demands by doubling capacity levels and enhancing the division's market
leading service offering.
· Post period end, the Group completed the acquisition of Orspec
marking our entry into the strategically important APAC market. Orspec, an
Australian-headquartered company with additional hubs in Singapore and New
Zealand, specialises in the supply of unlicensed medicines and the delivery of
Expanded Access Programs across APAC. This acquisition represents our first
entrance into the APAC region and further advances our divisional strategy of
being a global leader in Product Access services.
· Integration of 2021 acquisitions including CoRRect Medical,
BESTMSLs Group, E4H and Devonshire Healthcare Services are progressing well
and delivering expected benefits. The acquisition of the Navi Group is subject
to approval by the Competition and Consumer Protection Commission (CCPC) and
is expected to close later this year.
· Sustainability and governance remain key objectives for the Group
and progress was made across all five sustainability pillars. The Group has
completed the assessment of its Scope 3 carbon footprint globally and this is
included in our 2022 CDP submission.
Ger Rabbette, Uniphar Group Chief Executive Officer said:
"The Group has performed strongly during the period delivering Adjusted
Earnings per Share growth of 18%. Each division has delivered organic gross
profit growth, underpinned by a strong team performance across the board, with
an outperformance in Supply Chain & Retail. The Group has leveraged its
scale and diverse service offering to help mitigate inflationary pressures
which continue to be a challenge across the globe.
Additionally, we have completed the acquisition of Orspec Pharma, marking our
entry into the strategically important Asia-Pacific region. Orspec,
headquartered in Australia, will support our goal of becoming a global leader
in Product Access services through the provision of Expanded Access Programs
and the delivery of unlicensed medicines.
We remain confident and are on track to achieve our strategic objective of
doubling 2018 pro-forma EBITDA within five years of IPO"
Analyst presentation
A conference call for investors and analysts will be held at 9am (BST), today,
30 August 2022. To register for the call please visit www.uniphar.ie
(http://www.uniphar.ie/) . (http://www.uniphar.ie/)
A copy of the presentation and announcement will be available on our website
at the time of the call.
Contact details
Uniphar Group Tel: +353 (0) 1 428 7777
Seamus Egan
Head of Corporate Development and Investor Relations investor.relations@Uniphar.ie (mailto:investor.relations@Uniphar.ie)
Davy Tel: +353 (0) 1 679 6363
(Joint Corporate Broker, Nominated Adviser and Euronext Growth Adviser)
Barry Murphy
Niall Gilchrist Lauren O'Sullivan
RBC Capital Markets (Joint Corporate Broker) Tel: +44 (0) 20 7653 4000
Jonathan Hardy
Jamil Miah
Stifel Nicolaus Europe Limited (Joint Corporate Broker) Tel: +44 (0) 20 7710 7600
Matt Blawat
Ben Maddison
Francis North
Q4 PR (Public Relations Adviser to Uniphar) Tel: +353 (0) 1 475 1444
or +353 (0) 87 235 6461
Iarla Mongey
Cautionary statement
This announcement contains certain projections and other forward-looking
statements with respect to the financial condition, results of operations,
businesses, and prospects of the Uniphar Group. These statements are based on
current expectations and involve risk and uncertainty because they relate to
events and depend upon circumstances that may or may not occur in the future.
There are a number of factors which could cause actual results or developments
to differ materially from those expressed or implied by these projections and
forward-looking statements. Any of the assumptions underlying these
projections and forward-looking statements could prove inaccurate or incorrect
and therefore any results contemplated in the projections and forward-looking
statements may not actually be achieved. Recipients are cautioned not to place
undue reliance on any projections and forward-looking statements contained
herein. Except as required by law or by any appropriate regulatory authority,
the Uniphar Group undertakes no obligation to update or revise (publicly or
otherwise) any projection or forward-looking statement, whether as a result of
new information, future events or other circumstances
About Uniphar plc
Headquartered in Dublin, Ireland, the Uniphar Group is an international
diversified healthcare services business servicing the requirements of more
than 200 multinational pharmaceutical and medical technology manufacturers
across three divisions - Commercial & Clinical, Product Access and Supply
Chain & Retail. The Group is active in Ireland, the UK, Europe, the US and
Australia.
The Company's vision is to improve patient access to pharmaco-medical products
and treatments by enhancing connectivity between manufacturers and healthcare
stakeholders. Uniphar represents a strong combination of scale, growth, and
profitability.
Commercial & Clinical
In Commercial & Clinical, the Group provides outsourced sales, marketing
& distribution solutions to multinational pharmaceutical and medical
device manufacturers. Active in Ireland, the UK, Benelux, the Nordics, Germany
and the US, the Group is growing with its clients to provide pan-European
solutions, with a targeted service offering in the US. Uniphar has built fully
integrated digitally enabled customer centric solutions that are supported by
our highly experienced and clinically trained teams, leveraging our digital
technology and insights which allows us to deliver consistently exceptional
outcomes for our clients.
Product Access
In Product Access, the Group is growing two distinct service offerings: 1) "On
Demand", which are pharmacy led solutions for sourcing and supplying
unlicensed medicines to meet the needs of both retail and hospital
pharmacists; and 2) "Exclusive Access", which are manufacturer led solutions
for controlling the release of speciality medicines for specifically approved
patient populations in agreed markets. The Group currently delivers product
access solutions on a global basis.
Supply Chain & Retail
Uniphar is an established market leader in Ireland with c. 53% market share in
the wholesale/hospital market, supported by a network of 381 owned, franchised
and symbol group pharmacies. The business supports the diverse customer base
through the provision of strong service levels coupled with innovative
commercial initiatives. Supply Chain & Retail is an Irish only business
for the Group, although the manufacturer relationships and infrastructure are
also utilised for the benefit of the Commercial & Clinical and Product
Access divisions.
Overview
Uniphar delivered a strong performance during the first six months of 2022
leveraging its scalable platforms to help mitigate the impact of inflationary
pressures and global economic uncertainty. Gross profit growth of 8.8% was
driven by organic growth of 4.9% with a particularly strong performance in the
Supply Chain & Retail division combined with the benefit of acquisitions
completed in 2021. We continue to deliver on our growth strategy, which
remains unchanged, of building out our pan-European and global platforms for
Commercial & Clinical and Product Access respectively, through acquisition
and organic growth, while at the same time investing in both infrastructure
and earnings accretive acquisition opportunities in our market leading Supply
Chain & Retail division.
Adjusted EPS increased from 7.1 cent to 8.4 cent delivering 18.3% growth.
EBITDA has increased by 9.2% (€3.8m) to €44.9m (June 2021: €41.1m)
benefitting from the impact of 2021 acquisitions and strong organic gross
profit growth across all divisions. EBITDA margin at 4.5% has remained
consistent with 2021 levels (June 2021: 4.3%) with growth in gross margin
being offset by inflationary challenges and continued investment in our teams
and infrastructure.
Return on capital employed (ROCE) for the rolling 12-month period closed at
16.6% (December 2021: 17.6%) performing ahead of the Group's medium term
target (12-15%) and reflecting both the increase in operating profit in the
period and strong performance from our 2021 acquisitions. The investments made
during 2021, both from a capital and acquisitions perspective, will deliver
further benefits and growth in the coming years.
The Group continues to maintain its solid financial position, with a robust
Balance Sheet, and strong liquidity which is driven by continued focus on
working capital management. Net bank debt was €73.8m (December 2021:
€48.3m) with low leverage providing a solid platform to support future
growth and investment.
A new five-year banking facility (with two one-year extension options) was
signed in August 2022. The new facility more than doubles the Group's
available facilities with a revolving credit facility of €400m and a €150m
uncommitted accordion facility. The banking syndicate has increased to seven
banks with the addition of three new international banking partners, Barclays
Bank, ING Bank and Citizens Bank joining the existing banking syndicate. The
new facility and enlarged banking syndicate provides the platform to
accelerate our ambitious growth strategy and acquisition pipeline.
The Group remains focused on delivering on its strategy in the Commercial
& Clinical division where we are focused on building a pan-European
offering, with a targeted service offering in the US, while in the Product
Access division we are targeting a global offering in providing a market
leading service in the delivery of Expanded Access Programs. Both enhance our
ability to develop new client relationships and achieve growth. In Supply
Chain & Retail, our management team have a track record of outperforming
the market. We will continue to leverage this valuable experience combined
with our digital technologies, hi-tech infrastructure and long-standing
manufacturer relationships to grow this division.
Sustainability
Sustainability continues to be a key focus for the Group with progress across
all five sustainability pillars in the first half of 2022. Equity, Diversity
and Inclusion has been a key focus during 2022 with the launch of our
Unity@Uniphar initiative and two employee resource groups - our Women's
Alliance and Rainbow Alliance.
On the environmental front, in line with our commitment to setting a
science-based carbon reduction target, we completed our first Scope 3
footprint in respect of our global business with the emissions data collected
included in our 2022 CDP submission. Having completed a global footprinting
data exercise across Scopes 1, 2 and 3, the Group's focus is now on finalising
our science-based targets and establishing a decarbonisation strategy to meet
our target of 50% reduction in carbon emissions by 2030 from a baseline of
2019.
Following the outbreak of the war in Ukraine, the Group launched the Unity for
Ukraine Initiative to provide much needed healthcare supplies and funds to
Ukraine. We are incredibly proud that with the dedication of Uniphar's teams,
customers and suppliers we saw much needed medical product donated to support
humanitarian efforts in Ukraine.
From a corporate governance perspective, in line with commitments made at the
time of the Group's IPO, in early 2022 the Board adopted the UK Corporate
Governance Code as the corporate governance code of the Group.
Current trading
In the first half of the year, Uniphar performed in line with expectations at
a group level, leveraging the scale of our platforms and the diversity of our
service offering to help mitigate unprecedented inflation in all markets.
Since the period end, the Group has continued to perform in line with
expectation notwithstanding continued cost inflationary challenges which the
management team are focused on mitigating.
The Group is in a strong position to continue to invest in growth
opportunities. Net bank debt was €73.8m (December 2021: €48.3m) at period
end and low leverage together with the new banking facility and enlarged
banking syndicate provide a solid platform to support future growth and
investment as opportunities arise.
The Group continues to deliver on the strategy and growth committed to at IPO
and is confident that it will continue to deliver long-term value for our
shareholders. Acquisitions, combined with strategic capital expenditure,
continue to play an important part in Uniphar's growth strategy, and the
Group's Balance Sheet is well placed to support our objectives.
Outlook
Uniphar is well positioned to drive gross profit growth across all divisions
and is confident of delivering on current trading expectations for the full
year. Cost inflation continues to be a concern and will remain a key focus for
management through the remainder of 2022 and into 2023. The business has
substantially mitigated the cost pressures experienced to date but given the
unprecedented levels of inflation being experienced in certain markets, the
Group remains focused on maintaining margins through the current inflationary
cycle.
While the Group expects Product Access to deliver mid-single digit organic
growth in 2022, the medium term guidance remains unchanged:
· Commercial & Clinical: Mid-single digit
· Product Access: Double-digit
· Supply Chain & Retail: Low-single digit
M&A will continue to play an important role in Uniphar's growth strategy,
and we will continue to have a disciplined approach to capital allocation. The
Group has an active pipeline of acquisition opportunities to add further scale
and breadth to the existing platform.
We are pleased with the progress we have made since IPO towards delivering our
target of doubling 2018 pro-forma EBITDA within five years. We are confident
we have built the team and platform which, combined with a compelling market
opportunity, will enable us to deliver this objective.
Acquisitions and integration update
Post period end, the Group completed the acquisition of Orspec marking our
entry into the strategically important APAC markets. Integration of the four
acquisitions completed in 2021 is progressing in line with expectations. The
acquisition of Navi Group is, as previously disclosed, subject to approval by
the CCPC and the Group expects the acquisition to close later this year.
Commercial & Clinical
Integration update
The integration of the 2021 acquisitions of CoRRect Medical, BESTMSLs Group
and E4H are progressing well into the Commercial & Clinical division, and
all have enhanced the division's ability to build connectivity between its
clients and key healthcare stakeholders with its best-in-class digital
capabilities. CoRRect Medical has enabled the provision of a fully integrated
offering across the important German and Swiss MedTech markets. BESTMSLs Group
expands the Group's US presence by providing outsourced medical affairs
services including the provision of contract MSL (Medical Science Liaison)
teams, recruiting, training, education, and a range of innovative digital
solutions for its pharma partners. E4H enhances Uniphar's value proposition by
creating a truly differentiated omni-channel offering for pharmaceutical
clients looking to commercialise their brands across Europe.
Product Access
Acquisition update
Orspec is an Australian-headquartered company which specialises in the
sourcing and procurement of pharmaceutical products for supply on a named
patient basis across the Asia Pacific Region. This acquisition represents our
first entrance into the APAC region and helps advance our divisional strategy
of being a global leader in Product Access services.
Integration update
The integration of the 2021 acquisition of Devonshire Healthcare Services into
our Product Access division is progressing well. Devonshire enables Uniphar to
expand its global access into key hospitals in the Middle East and North
Africa (MENA) region, for the benefit of both its On Demand and Exclusive
Access businesses. Devonshire is benefitting from Uniphar's existing
operational infrastructure and driving cross-selling opportunities.
Supply Chain & Retail
Acquisition update
In December 2021, the Group announced the acquisition of the Navi Group. The
acquisition remains subject to CCPC approval. On completion of this
acquisition, the unique technology and value proposition of the Navi Group
combined with Uniphar's scalable hi-tech distribution facilities and digital
platforms, should deliver an even stronger offering to our independent
community pharmacy customer base.
Strategic capital expenditure
The Supply Chain & Retail division has commenced a multi-year strategic
investment programme in an Irish-based distribution facility. The Group
recognises the strategic need to invest to meet the growing demands of the
market and to continue to grow market share. Once completed the facility will
incorporate the latest technologies to enable the business to drive
operational efficiencies and provide the infrastructure to double current
capacity levels. This will further strengthen our already strong position in
the Irish market and provide the platform for further growth. The project will
take four years to complete, after which it will start to deliver the expected
transformational benefits.
Principal Risks & Uncertainties
The Group's Risk Management Policy provides the framework to identify, assess,
monitor, and manage the risks associated with the Group's business. It is
designed to enable the Group to meet its business objectives by appropriately
managing, rather than eliminating, these risks. The principal risks &
uncertainties faced by the Group can be found in the 2021 Annual Report on
pages 27 to 31. A copy of the Annual Report can be downloaded from our website
www.uniphar.ie.
2022 Highlights
The Group continues to ensure that the risk management framework is integrated
in the day-to-day activities across the business. During the period ended 30
June 2022, the Group carried out the following:
· Reviewed the Group Risk Register, updating for all the key risks
facing the Group at this time; and
· Performed a review of emerging and new risks, in particular
economic & geopolitical risk with regards to the ongoing war in Ukraine
and global economic instability.
The key principal risks and uncertainties faced by the Group are summarised as
follows:
Strategic Risks
· Brexit - The post-Brexit environment poses several risks for the
Group due to uncertainty and complexities as to the future fiscal and
regulatory landscape in the UK. The Group has traded through the initial
Brexit uncertainty with Brexit plans in operation and this risk has decreased
year-on-year. The Group recognises the potential risk surrounding the
agreement of the Northern Ireland Protocol. Overall, this may have a negative
impact on EU-UK trade. Brexit also has the potential to create market
uncertainty and currency fluctuations which could impact the translation of
our UK operations into the Group reporting currency.
· Acquisitions - Growth through acquisitions continues to remain a
key strategy for the Group. Failure to identify, complete and integrate
acquisitions successfully may directly impact the Group's projected growth.
· Economic & geopolitical risk - The global macroeconomic,
regulatory, political, and legal environment may impact the markets in which
we operate and in turn our client and supplier base. This may adversely affect
the financial and operational results of the Group. The Group continues to
monitor the ongoing war in Ukraine, and the knock-on effects of this on
inflation and the cost base.
· Key personnel & succession planning - Failure to attract,
retain and develop the skills and expertise of its people may adversely impact
the Group's performance.
· Market perception & reputational risk - Failure to deliver in
line with market expectations may result in reputational damage, impacting the
Group's ability to achieve its strategic targets.
· Loss of competitive position - Failure of the Group to respond to
any changes in the environment in which it operates may result in loss of
market share, which may put pressure on profitability and margins.
· Environment & sustainability - The increasing global focus on
environmental and sustainability governance is recognised by the Group, and by
its stakeholders. Failure to appropriately assess, monitor and manage the
Group's impact on the environment and the communities in which it operates may
result in reputational damage, impacting the Group's ability to deliver
results.
Operational Risks
· Pandemic Risk - Covid-19 and its implications continue to evolve
and change. Business disruption arising from further waves and variants of the
Covid-19 virus, or other future pandemics may result in but is not limited to
the following: supply chain disruption, postponement of certain elective
surgeries, curtailment of travel and impact on staff.
· IT systems - Digital capabilities are a specific strategic
offering of Uniphar, interruption or downtime may have a negative impact on
the Group's operations, financial, and competitive positions.
· Cybercrime - Failure to protect against the ongoing threat of a
cyber-attack could lead to a breach in security, impacting operations,
financial transactions, and sensitive information. The knock-on impact from an
attack on one of our business partners is also an area of risk for the Group.
· Business interruption - External factors such as natural
disasters, environmental hazard or industrial disputes may result in potential
lost sales and loss of customer loyalty.
· Health & safety - Failure to implement and follow proper
health and safety procedures may have adverse effects on employees or
patients.
· Laws, regulations & compliance - Failure to operate under any
of the stringent laws and regulations the Group is subject to could result in
financial penalties, reputational damage, and a risk to business operations.
Financial Risks
· Foreign currency - The Group's reporting currency is Euro.
Exposure to foreign currency is present in the normal course of business,
together with the Group operating in jurisdictions outside of the Eurozone.
· Treasury - The Group is exposed to liquidity, interest rate and
credit risks. The Group may be exposed to increased interest rate and credit
risks from any changes to economic conditions.
Operational overview
Commercial & Clinical
Growth
Six months ended 30 June 2022 2021 Reported Constant
€'000 €'000 currency
Revenue 162,322 157,816 2.9% 1.3%
Gross profit 58,541 53,446 9.5% 7.9%
Gross profit margin % 36.1% 33.9% 220bps
Overview
Commercial & Clinical provides outsourced sales, marketing and
distribution solutions to pharmaceutical and medical device manufacturers on a
pan-European basis with a targeted service offering in the US. The division is
focused on the commercialisation of speciality products for our manufacturer
clients. With an ability to serve 15 countries, we are able to deliver
flexible commercial solutions across multiple markets for our key customers.
The recent acquisitions of Diligent Health Solutions and BESTMSLs Group in the
US, together with E4H in the UK, have further enhanced our service offering by
broadening our range of services, with the acquisition of CoRRect Medical
enhancing our pan-European MedTech offering and strengthening our
interventional portfolio.
H1 2022 Performance
Commercial & Clinical delivered another very strong performance in H1
2022, with organic gross profit growth of 4.2% off a very strong comparative
period in 2021, reinforcing our role as a trusted partner to our clients and
customers across Europe and the US. The expertise and agility of our teams,
our speciality focus, the diversity of our product portfolio and our
multi-channel enabled sales teams ensured the business achieved a robust
performance in a challenging environment. Commercial & Clinical represents
40% of the Group's gross profit in the first half of 2022.
Key highlights from the six-month period include:
· Revenue growth of 2.9% achieved across the division, against a
strong comparative period.
· Gross profit generated from outside Ireland represents 60% of the
divisional gross profit.
· Increase in number of manufacturers represented in more than one
geography to 75 (June 2021: 59).
· Integration of the acquisitions of BESTMSLs Group, CoRRect
Medical and E4H is progressing well.
MedTech
Our Commercial & Clinical MedTech offering provides a fully integrated
solution for our clients in sales, marketing and distribution of medical
devices across interventional cardiology/radiology, orthopaedics,
ophthalmology, minimally invasive surgery, diagnostic imaging and critical
care.
The diversity of our MedTech portfolio enabled continued strong organic growth
during the Covid-19 pandemic. With the effects of the pandemic now subsiding,
our interventional and orthopaedic specialities in particular have helped fuel
incremental growth in H1 2022 against a strong comparative period. We have
leveraged our speciality expertise to enhance our technology offering by
expanding into the surgical robotics space and we see significant growth
opportunities in this area in future years. In addition, we have successfully
continued to leverage our existing manufacturer relationships to fuel our
geographical growth, with the number of manufacturers represented in more than
one geography increasing to 75 across Commercial & Clinical.
Our continued focus in expanding our geographic and client base means we are
now active in 15 markets. The acquisition of CoRRect Medical in July 2021,
with a significant presence in Germany and Switzerland, enhances our
pan-European offering and the integration of this business into the wider
MedTech business is progressing well.
Pharma
Our Pharma business unit focusses on providing insight-driven, digitally
enabled customer centric solutions for pharmaceutical manufacturers. This
allows Uniphar to engage with healthcare professionals (HCPs) with targeted
information by utilising the channel that is most convenient for them,
resulting in better outcomes for both HCPs and pharmaceutical companies.
Following the acquisition of BESTMSLs Group, their digital platform, The
Doctors Channel, further enhances our engagement capabilities, delivering
expert medical information condensed into short streaming videos.
The Covid-19 pandemic forced a rapid rethink in the sales and marketing
strategies of pharma companies with a shift away from traditional in-person
engagement to a significantly increased demand for digital engagement
offerings. Uniphar was able to drive growth through this transition by
supporting our customers with our digital propositions and omni-channel
offering. As the industry re-emerges from the pandemic it is clear that, while
there is a return of in-person engagement, there has been a marked shift and
that the future is a hybrid model of digital and in-person engagement which
Uniphar's omni-channel offering is well positioned to deliver. Our recent
acquisition of E4H builds on our capabilities to further support our customer
proposition and create a truly differentiated omni-channel offering in the
industry.
The acquisitions of Diligent Health Solutions (H2 2020), and BESTMSLs Group
(H2 2021) have extended our presence into the strategically important US
market, and significantly enhances the capabilities of the Pharma business
unit. While Diligent and BESTMSLs are US-based, our focus is to continue to
enable these service offerings across our Commercial & Clinical and
Product Access targeted geographies.
Product Access
Growth
Six months ended 30 June 2022 2021 Reported Constant
€'000 €'000 currency
Revenue 74,474 85,954 (13.4%) (15.2%)
Gross profit 21,818 20,051 8.8% 5.4%
Gross profit margin % 29.3% 23.3% 600bps
Overview
Uniphar's Product Access division works to provide equitable access to
medicines for patients on a worldwide basis. Partnering with manufacturers, we
provide the global reach and world class execution required to help them to
ensure patients can get access to their early stage, hi-tech or otherwise
difficult to source medicines. Our digital and regulatory capabilities
complimented by our expert multilingual teams enable us to offer a high
standard of service quality and implementation. Product Access represents
15% of the Group's gross profit in the first half of 2022.
H1 2022 Performance
Following an exceptionally strong 2021, Product Access reported positive gross
profit growth of 8.8% to €21.8m in the first six months of 2022. The
reduction in revenue during the period is reflective of a significant EAP
contract moving to the commercialisation stage of its development lifecycle.
Key highlights from the period include:
· Gross margin % improvement to 29.3% with focus on higher margin
opportunities.
· 56% of the division's gross profit is generated outside of
Ireland.
· Strong gross profit growth of 8.8% off the back of an
exceptionally strong 2021 performance.
· The integration of Devonshire Healthcare Services, which was
acquired in Q4 2021, is proceeding in accordance with plan and opening up
opportunities in the MENA region.
Exclusive Access
Expanded Access Programmes (EAPs) allow pharmaceutical companies to provide
medicines to patients when a product has not yet been licensed in a
jurisdiction, or has been licensed, but is not yet eligible for reimbursement
by the relevant authority. During the period, the business has secured four
additional global programmes across several new clients.
Patient centricity is at the heart of everything we do and our bespoke digital
platform developed by our team at Innerstrength, enhanced with the regulatory
knowledge and skillset of the team at RRD, enables exceptional execution
across all geographies.
The division recently signed its first EAP in the US which has been a key
strategic objective of the business. This represents a significant milestone
in becoming a global leader in this space.
On Demand
Uniphar is well positioned as a major supplier of unlicensed medicines to
specialist importers around the globe. While Pharmasource, our Irish based On
Demand business, continues to deliver record performance achieving double
digit growth in a mature market and our focus on expanding our market share
across the UK continues, we are also targeting non-EU markets, particularly
through our Q4 2021 acquisition of Devonshire Health Services.
During the period, the Devonshire business migrated to our Durbin UK Heathrow
facility to realise the commercial and operational scale identified at the
time of acquisition. The integration of Devonshire is progressing well with a
continued focus on identifying additional opportunities across the MENA region
to provide solutions to customers' sourcing challenges.
Acquisition
Post period end, the Group completed the acquisition of Orspec, marking our
entry into the strategically important APAC market. Orspec, an
Australian-headquartered company with hubs in Singapore and New Zealand,
specialises in the supply of unlicensed medicines and the delivery of Expanded
Access Programs across APAC. Orspec brings a strong management team to the
Group with region-specific expertise. This acquisition represents our first
entrance into the APAC region and further advances our divisional strategy of
being a global leader in Product Access services.
Supply Chain & Retail
Growth
Six months ended 30 June 2022 2021 Reported Constant
€'000 €'000 currency
Revenue 755,035 721,097 4.7% 4.7%
Gross profit 65,776 60,793 8.2% 8.2%
Gross profit margin % 8.7% 8.4% 30bps
Overview
The Supply Chain & Retail division comprises of our pre-wholesale and
wholesale pharmaceutical distribution business, with approximately 1,900
community pharmacy customers and a vertically integrated model with 381 owned,
franchised or supported pharmacies. Uniphar holds c.53% of the current market
share and is an essential part of the national health infrastructure in
Ireland.
H1 2022 performance
· 8.2% growth in gross profit of which 5.2% is organic growth.
· Six independent community pharmacies acquired in H1 2022.
· Continued growth of our consumer product offering supported by
the addition of the Dr Hauschka brand of natural skincare products in the
period.
· Digital innovation and transformation supporting our retail
pharmacy partners.
Wholesale
The wholesale business performed strongly in the period with robust underlying
volumes across all key categories. Growth was achieved through a combination
of market recovery compared to 2021 coming out of the Covid-19 pandemic aided
by a surge in Covid-19 related sales in the early part of 2022. Prescription
and OTC (Over The Counter) products continue to be at the core of what we
provide to our community pharmacy customers.
Pre-wholesale
The pre-wholesale business continued to experience growth in the period
despite macroeconomic headwinds. The continued investment in our
infrastructure to ensure operational excellence for our customers has ensured
several successful contract renewals in the period.
The new four-year IPHA (Irish Pharmaceutical Healthcare Association) agreement
came into effect in 2022, bringing with it market changes across our client
manufacturer portfolios due to the growing penetration of biosimilar products.
The new agreement gives pricing stability for the next four years, positioning
the pre-wholesale business strongly moving forward.
Retail
The business supports a network of 381 pharmacies either owned or franchised
through the Uniphar symbol group. Symbol group members are offered a range of
both front and back-office support, in addition to a dedicated team on the
ground to enable community pharmacies to better compete with the larger and
multi-national owned chains. The business acquired six independent community
pharmacies in the period which are being integrated into the division as
planned.
Retail pharmacies have performed well in the period recovering from the
Covid-19 pandemic which was a factor in the comparative period in 2021.
Mitigating the inflationary headwinds was a focus for the period and will
continue to be managed closely for the remainder of the year.
Online/Digital
We have brought our pharmacy customers on a journey with us in recent years in
digitising and automating processes for our pharmacy teams. During the period,
we launched the Hickey's B2C ecommerce platform and made further strides in
digital innovation in our supported pharmacies. Our symbol groups now offer
online doctor services, customer phone apps and online shopping.
Acquisitions
The acquisition of Navi Group is, as previously disclosed, subject to approval
by the CCPC and the Group expects the acquisition to close later this year.
This strategic acquisition brings market share in the form of additional
pharmacy customers, an innovative and experienced trading team and importantly
a number of innovative proprietary digital solutions for retail pharmacies.
This will accelerate our ability to support our customers to achieve a fully
connected pharmacy.
Strategic capital expenditure
The Supply Chain & Retail division has commenced a strategic investment
programme in an Irish-based distribution facility. This multi-year organic
investment in a state-of-the-art facility will unlock further operational
efficiencies and provide the infrastructure to meet growing market demands by
doubling capacity levels and enhancing the division's market leading service
offering.
Financial Review
Summary financial performance
Growth
Six months ended 30 June 2022 2021 Reported Constant
€'000 €'000 currency
IFRS measures
Revenue 991,831 964,867 2.8% 2.4%
Gross profit 146,135 134,290 8.8% 7.6%
Operating profit 25,078 23,609 6.2% 5.2%
Basic EPS (cent) 5.9 5.7
Alternative performance measures
Gross profit margin 14.7% 13.9%
EBITDA 44,935 41,138 9.2% 8.1%
Adjusted EPS (cent) 8.4 7.1
Net bank debt (73,807) (30,341)
Return on capital employed 16.6% 17.6%
Revenue
Revenue increased by 2.8%, which was achieved through a combination of organic
growth, driven by a strong performance in the Supply Chain & Retail and
Commercial & Clinical divisions together with the impact of the 2021
acquisitions.
Gross profit
Gross profit has increased by 8.8% due to a particularly strong performance in
the Supply Chain & Retail division combined with the impact of the 2021
acquisitions for the first six months. The Gross profit margin has increased
from 13.9% to 14.7% reflecting the continued expansion of the Group into
higher margin businesses and sectors.
Divisional gross profit
Growth
Six months ended 30 June Constant
2022 2021 Reported Currency
€'000 €'000
Commercial & Clinical 58,541 53,446 9.5% 7.9%
Product Access 21,818 20,051 8.8% 5.4%
Supply Chain & Retail 65,776 60,793 8.2% 8.2%
146,135 134,290
EBITDA
EBITDA has increased by €3.8m (9.2%) to €44.9m. The main drivers for this
are the growth in revenue, particularly of higher margin businesses, coupled
with the impact of the 2021 acquisitions. Overheads have increased to reflect
the business investment for future growth, combined with some inflationary
pressures on cost.
Exceptional items
Exceptional costs amounted to €5.5m for the period and primarily relate to
restructuring costs (€2.7m), professional fees associated with acquisitions
(€2.0m) and acquisition integration costs (€1.1m) offset by an associated
exceptional tax credit. Further details are provided in note 3.
Earnings per share
Basic earnings per share increased from 5.7 cent to 5.9 cent. The increase in
earnings has been partially offset by an increase in the weighted average
number of shares from 267,137,000 to 272,297,000. The weighted average number
of ordinary shares includes the effect of shares granted under the LTIP
arrangement that have met the share price performance conditions but will not
vest until 31 December 2024.
Adjusted earnings per share has increased from 7.1 cent to 8.4 cent reflecting
the strong performance in the business. Growth in adjusted earnings per share
is partially offset by an increase in the weighted average number of shares in
issue during the period.
On a like for like basis, adjusted earnings per share increased from 7.0 cent
to 8.4 cent by applying the weighted average number of shares as at June 2022
to both periods, to provide a more meaningful comparison.
Cash flow and net bank debt
The free cash flow conversion in the six months to 30 June 2022 was 47.5%
(2021: 69.6%) reflecting the unwind of working capital positions from 2021
with the Group's net bank debt position being €73.8m. This reflects an
increase in net bank debt of €25.5m primarily driven by investment in
acquisitions and strategic capital projects.
Six months ended 30 June 2022 2021
€'000 €'000
Net cash inflow from operating activities 10,708 18,328
Net cash outflow from investing activities (25,538) (4,618)
Net cash inflow/(outflow) from financing activities 5,541 (2,869)
Foreign currency translation movement (433) 1,104
(Decrease)/increase in cash and cash equivalents in the period (9,722) 11,945
Movement in restricted cash - (3,097)
Cash flow from movement in borrowings (15,788) (4,770)
Movement in net bank (debt)/cash (25,510) 4,078
The Group remains focused on strong working capital management, and this is
reflected in the cash generated from operating activities of €10.7m. Stock
balances have increased reflecting trading volumes and some increased stocking
as a result of supply chain challenges.
The net cash outflow from investing activities of €25.5m primarily consists
of payments for acquisitions of €14.2m and capital investments of €11.3m.
Of the capital investments, €7.1m is strategic in nature including €5m for
the commencement of investment in a new distribution facility.
The net cash inflow from financing activities of €5.5m was due to a further
drawdown of borrowings to support business growth offset by principal lease
payments and the payment of dividends.
Net banking facility
The Group has entered into a new five-year banking facility which more than
doubles the revolving credit facility (RCF) to €400m with an additional
uncommitted accordion facility of €150m. Three international banks, Barclays
Bank, ING Bank and Citizens Bank joined the existing syndicate increasing the
syndicate to seven banks. This new facility provides the platform to
accelerate our ambitious growth strategy and acquisition pipeline.
Taxation
The tax charge in the period is €4.5m and equates to an effective tax rate
of 17.3%. This compares to a charge of €5.4m in the same period last year
and an effective tax rate of 16.8% for the 2021 financial year. The increase
in the effective tax rate of 0.5% is attributable to the increased
contribution of profits from higher tax rate jurisdictions. The effective tax
rate is calculated as the income tax charge for the period as a percentage of
the profit before tax and exceptional items.
Foreign exchange
The Group's expansion into new geographies, and the continued growth in
existing geographies operating outside of the Eurozone, results in the primary
foreign exchange exposure for the Group being the translation of local Income
Statements and Balance Sheets into Euro for Group reporting purposes.
On a constant currency basis, revenue increased by 2.4% (vs 2.8% reported
growth), gross profit increased 7.6% (vs reported growth 8.8%) and operating
profit increased by 5.2% (vs 6.2% reported growth).
H1 2022 H1 2021
Average Average
GBP 0.8422 0.8681
US Dollar 1.0928 1.2055
Swedish Krona 10.476 10.129
Return on capital employed
Return on capital employed for the rolling 12-month period closed at 16.6%
(December 2021: 17.6%) performing in line with the Group's medium term target
and reflecting both the increase in operating profit in the period and strong
performance from our recent acquisitions. The investments made during 2021,
both from a capital and acquisitions perspective, will deliver further
benefits and growth in the coming years. The reduction since December 2021
reflects the impact of the Group's recent acquisitions where the Group has
expanded into new geographies and higher margin opportunities.
Dividends
A final dividend of €3m relating to 2021 was paid in May 2022. The Board has
committed to a progressive dividend policy and, reflective of this, a 2022
interim dividend of €1.7m (€0.0061 per ordinary share) has been declared.
It is proposed to pay the dividend on 6 October 2022 to ordinary shareholders
on the Company's register on 9 September 2022.
In accordance with company law and IFRS, these dividends have not been
provided for in the Balance Sheet at 30 June 2022.
Statement of Directors' responsibilities
The Directors confirm to the best of their knowledge that the condensed
consolidated interim financial statements have been prepared in accordance
with IAS 34 Interim Financial Reporting, as adopted by the EU, and to the best
of their knowledge and belief:
a) the condensed consolidated interim financial statements comprising the
Condensed Consolidated Group Income Statement, the Condensed Consolidated
Group Statement of Comprehensive Income, the Condensed Consolidated Group
Balance Sheet, the Condensed Consolidated Group Cash Flow Statement, the
Condensed Consolidated Group Statement of Changes in Equity and related notes
have been prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU, and are prepared in order to comply with the Euronext
Growth Market Rule Book and AIM Rules for Companies;
b) the interim results include a fair review of the important events that
have occurred during the first six months of the financial year and their
impact on the condensed consolidated interim financial statements for the half
year ended 30 June 2022.
Signed on behalf of the Board
M. Pratt G. Rabbette
29 August 2022
Independent review report to Uniphar Plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Uniphar Plc's condensed consolidated interim financial
statements (the "interim financial statements") in the 2022 Interim results of
Uniphar Plc for the six month period ended 30 June 2022 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting Standard 34,
'Interim Financial
Reporting', as adopted by the European Union.
The interim financial statements, comprise:
· the Condensed Consolidated Group Balance Sheet as at 30 June
2022;
· the Condensed Consolidated Group Income Statement for the period
then ended;
· the Condensed Consolidated Group Statement of Comprehensive
Income for the period then ended;
· the Condensed Consolidated Group Cash Flow Statement for the
period then ended;
· the Condensed Consolidated Group Statement of Changes in Equity
for the period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the 2022 Interim results have
been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union.
As disclosed in note 1 to the interim financial statements, the financial
reporting framework that has been applied in the preparation of the full
annual financial statements of the group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity' ("ISRE (Ireland) 2410") issued for use
in Ireland. A review of interim financial information consists of making
enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing
(Ireland) and, consequently, does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the 2022 Interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for
conclusion section of this report, nothing has come to our attention to
suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors have
identified material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (Ireland) 2410. However future events or conditions may cause the group
to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The 2022 Interim results, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the 2022 Interim results in accordance with
International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union. In preparing the 2022 Interim results, the
directors are responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend
to liquidate the group or to cease operations, or have no realistic
alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the 2022 Interim results based on our
review. Our conclusion, including our Conclusions relating to going concern,
is based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion paragraph of this report. This report,
including the conclusion, has been prepared for and only for the company for
management purposes and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers
Chartered Accountants
29 August 2022
Dublin
Notes:
(a) The maintenance and integrity of the Uniphar plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
(b) Legislation in the Republic of Ireland governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Condensed Consolidated Group Income Statement
for the six months ended 30 June 2022
Six months ended 30 June 2022 Six months ended 30 June 2021
Pre- Exceptional Total Pre- Exceptional Total
exceptional (note 3) exceptional (note 3)
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Notes €'000 €'000 €'000 €'000 €'000 €'000
Revenue 2 991,831 - 991,831 964,867 - 964,867
Cost of sales (845,696) - (845,696) (830,577) - (830,577)
Gross profit 146,135 - 146,135 134,290 - 134,290
Selling and distribution costs (34,747) - (34,747) (29,434) - (29,434)
Administrative expenses (80,545) (5,784) (86,329) (76,653) (4,680) (81,333)
Other operating income 19 - 19 86 - 86
Operating profit 30,862 (5,784) 25,078 28,289 (4,680) 23,609
Finance cost 4 (4,737) - (4,737) (4,523) 1,623 (2,900)
Profit before tax 26,125 (5,784) 20,341 23,766 (3,057) 20,709
Income tax expense (4,530) 284 (4,246) (5,381) - (5,381)
Profit for the financial period 21,595 (5,500) 16,095 18,385 (3,057) 15,328
Attributable to:
Owners of the parent 16,061 15,348
Non-controlling interests 34 (20)
Profit for the financial period 16,095 15,328
Attributable to:
Continuing operations 16,095 15,328
Profit for the financial period 16,095 15,328
Earnings per ordinary share (in cent):
Continuing operations 5.9 5.7
Basic and diluted earnings per share (in cent) 5 5.9 5.7
Condensed Consolidated Group Statement of Comprehensive Income
for the six months ended 30 June 2022
Six months ended Six months ended
30 June 30 June
2022 2021
(unaudited) (unaudited)
€'000 €'000
Profit for the financial period 16,095 15,328
Other comprehensive (expense)/income:
Items that may be reclassified to the Income Statement:
Unrealised foreign currency translation adjustments (1,302) 3,995
Items that will not be reclassified to the Income Statement:
Actuarial gain in respect of defined benefit pension schemes - 41
Total comprehensive income for the financial period 14,793 19,364
Attributable to:
Owners of the parent 14,759 19,384
Non-controlling interests 34 (20)
Total comprehensive income for the financial period 14,793 19,364
Attributable to:
Continuing operations 14,793 19,364
Total comprehensive income for the financial period 14,793 19,364
Condensed Consolidated Group Balance Sheet
as at 30 June 2022
30 June 31 December
2022 2021
(unaudited) (audited)
Notes €'000 €'000
ASSETS
Non-current assets
Intangible assets - goodwill 7 438,004 423,401
Intangible assets - other assets 7 23,196 22,968
Property, plant and equipment, and right-of-use assets 8 155,089 152,483
Financial assets - Investments in equity instruments 25 25
Deferred tax asset 2,622 1,734
Other receivables 426 388
Total non-current assets 619,362 600,999
Current assets
Assets held for sale 9 1,600 1,600
Inventory 129,352 112,312
Trade and other receivables 165,862 152,057
Cash and cash equivalents 68,303 78,025
Total current assets 365,117 343,994
Total assets 984,479 944,993
EQUITY
Capital and reserves
Called up share capital presented as equity 10 21,841 21,841
Share premium 176,501 176,501
Share based payment reserve 396 183
Other reserves 4,062 5,364
Retained earnings 60,615 47,555
Attributable to owners 263,415 251,444
Attributable to non-controlling interests 154 120
Total equity 263,569 251,564
LIABILITIES
Non-current liabilities
Borrowings 11 140,446 124,601
Provisions 12 91,357 90,401
Lease obligations 13 105,370 104,720
Total non-current liabilities 337,173 319,722
Current liabilities
Borrowings 11 1,664 1,721
Lease obligations 13 12,097 14,358
Trade and other payables 369,976 357,628
Total current liabilities 383,737 373,707
Total liabilities 720,910 693,429
Total equity and liabilities 984,479 944,993
Condensed Consolidated Group Cash Flow Statement
for the six months ended 30 June 2022
Six months ended Six months ended
30 June 30 June
2022 2021
Notes (unaudited) (unaudited)
€'000 €'000
Operating activities
Cash inflow from operating activities 15 19,166 26,075
Payment of deferred contingent consideration (1,250) (1,250)
Interest paid (1,828) (1,461)
Interest paid on lease liabilities 13 (1,824) (1,866)
Corporation tax payments (3,556) (3,170)
Net cash inflow from operating activities 10,708 18,328
Investing activities
Payments to acquire property, plant and equipment - Maintenance (3,489) (2,166)
Payments to acquire property, plant and equipment - Strategic projects (5,461) (1,480)
Receipts from disposal of property, plant and equipment 72 -
Receipts from disposal of assets held for sale - 350
Payments to acquire intangible assets - Maintenance (821) (3,061)
Payments to acquire intangible assets - Strategic projects (1,670) -
Payments to acquire subsidiary undertakings (11,874) (887)
Net working capital receipts from subsidiary undertakings - 3,428
Payment of deferred and deferred contingent consideration (2,295) (977)
Receipt of deferred consideration receivable - 175
Net cash outflow from investing activities (25,538) (4,618)
Financing activities
Proceeds from borrowings 15,133 19,000
Repayments of borrowings (57) (14,230)
Movement in restricted cash - 3,097
Payment of dividends 6 (3,001) (4,202)
Principal element of lease payments 13 (6,534) (6,534)
Net cash inflow/(outflow) from financing activities 5,541 (2,869)
(Decrease)/increase in cash and cash equivalents in the period (9,289) 10,841
Foreign currency translation of cash and cash equivalents (433) 1,104
Opening balance cash and cash equivalents 78,025 60,410
Closing balance cash and cash equivalents 14 68,303 72,355
Condensed Consolidated Group Statement of Changes in Equity
for the six months ended 30 June 2022
Share Share Share based payment reserve Foreign Revaluation Capital Retained Attributable Total
capital premium currency reserve redemption earnings to non- shareholders'
translation reserve controlling equity
reserve interests
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
At 1 January 2021 21,841 176,501 - (1,860) 700 60 5,218 75 202,535
Profit for the financial period - - - - - - 15,348 (20) 15,328
Other comprehensive income:
Re-measurement gain on pensions (net of tax) - - - - - - 41 - 41
Movement in foreign currency translation reserve - - - 3,995 - - - - 3,995
Transactions recognised directly in equity:
Dividends paid (Note 6) - - - - - - (4,202) - (4,202)
At 30 June 2021 (unaudited) 21,841 176,501 - 2,135 700 60 16,405 55 217,697
At 1 January 2022 21,841 176,501 183 4,604 700 60 47,555 120 251,564
Profit for the financial period - - - - - - 16,061 34 16,095
Movement in share-based payment reserve - - 213 - - - - - 213
Other comprehensive expense:
Movement in foreign currency translation reserve - - - (1,302) - - - - (1,302)
Transactions recognised directly in equity:
Dividends paid (Note 6) - - - - - - (3,001) - (3,001)
At 30 June 2022 (unaudited) 21,841 176,501 396 3,302 700 60 60,615 154 263,569
Notes to the Consolidated Financial Statements
1. General information
Basis of preparation
The condensed consolidated interim financial statements of Uniphar plc and its
subsidiaries (the 'Group') have been prepared in accordance with IAS 34,
Interim Financial Reporting, as endorsed by the European Union.
The financial information in the condensed interim consolidated financial
statements has been prepared on a basis consistent with that adopted for the
year ended 31 December 2021. The accounting policies applied in the interim
financial statements are the same as those applied in the 2021 Annual Report.
The Group's auditors have reviewed, not audited the condensed consolidated
interim financial statements contained in this report. These interim financial
statements are prepared in order to comply with the Euronext Growth Market
Rule Book and AIM Rules for Companies and are not statutory financial
statements as they do not include all of the information required for full
annual financial statements and should be read in conjunction with the Uniphar
Group Annual Report (statutory financial statements) for the year ended 31
December 2021. The audit report on those statutory financial statements was
unqualified and did not contain any matters to which attention was drawn by
way of emphasis.
The preparation of interim financial statements in compliance with IAS 34
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the interim financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. The areas involving a high degree of
judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in the Group's Annual
Report for the year ended 31 December 2021 in note 1 on pages 125 to 126.
The Group's interim financial statements are prepared for the six-month period
ended 30 June 2022. The interim financial statements incorporate the Company
and all of its subsidiary undertakings. A subsidiary undertaking is
consolidated by reference to whether the Group has control over the subsidiary
undertaking. The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of
the entity.
Uniphar plc is incorporated in the Republic of Ireland under registration
number 224324 with a registered office at 4045 Kingswood Road, Citywest
Business Park, Co. Dublin, D24 V06K.
Going Concern
The Group Condensed Consolidated Interim Financial Statements have been
prepared on the going concern basis of accounting. The Directors have made
appropriate enquiries and carried out a thorough review of the Group's
forecasts, projections, and available banking facilities, taking account of
possible changes in trading performance and considering geopolitical risk.
Uniphar plays a significant role in the healthcare sector, ensuring continuity
in the supply and distribution of much needed medicines, medical devices, and
related services.
The Group has a robust capital structure with strong liquidity at the end of
June 2022, supported by the recent renewal of our banking facility together
with the addition of three new international banking partners. This provides a
solid platform for the Group to deal with challenges that may arise caused by
geopolitical or macroeconomic risks.
Having regard to the factors outlined above and noting the financial impact of
the recently announced acquisition, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future, being a period of 12 months from the
date of approval of these interim financial statements. As a result, the
Directors consider that it is appropriate to continue to adopt the going
concern basis in preparing the interim financial statements.
New Standards, Amendments, and Interpretations
There have been no accounting standards, amendments and interpretations that
are effective for the first time in respect of the Group condensed interim
financial statements for the six months ended 30 June 2022.
New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 30 June 2022 reporting periods and have not been adopted
by the Group. These standards are not expected to have a material impact in
the current or future reporting periods and on foreseeable future
transactions.
2. Revenue and segments
2022 2021
€'000 €'000
Revenue 991,831 964,867
2022 2021
€'000 €'000
Commercial & Clinical - MedTech 118,873 112,082
Commercial & Clinical - Pharma 43,449 45,734
Commercial & Clinical 162,322 157,816
Product Access 74,474 85,954
Supply Chain & Retail 755,035 721,097
Total Revenue 991,831 964,867
Segmental information
Segmental information is presented in respect of the Group's geographical
regions and operating segments. The operating segments are based on the
Group's management and internal reporting structures.
Geographical analysis
The Group operates in two principal geographical regions being the Republic of
Ireland and the UK. The Group also operates in other European countries and
the US which are not material for separate identification.
The following is a geographical analysis presented in accordance with IFRS 8
"Operating Segments" which requires disclosure of information about the
country of domicile (Ireland) and countries with material revenue.
2022 2021
€'000 €'000
Ireland 853,798 815,259
UK 85,523 91,842
Rest of the World 52,510 57,766
991,831 964,867
Operating segments
IFRS 8 "Operating Segments" requires the reporting information for operating
segments to reflect the Group's management structure and the way the financial
information is regularly reviewed by the Group's Chief Operating Decision
Maker (CODM), which the Group has defined as the Board of Directors.
The Group operates with three divisions, being, Commercial & Clinical,
Product Access, and Supply Chain & Retail. These divisions align to the
Group's operational and financial management structures:
· Commercial & Clinical provide outsourced services,
specifically sales, marketing and multichannel account management to
pharmaco-medical manufacturers, and distribution and support services to
medical device manufacturers. Uniphar offers a fully integrated digitally
enabled customer centric solution that is supported through market data,
insights and digital programmes. We integrate these programmes with our supply
chain and distribution capability to provide a full end-to-end service to
manufacturers;
· Product Access consists of two service offerings, being: On
Demand and Exclusive Access. On Demand provides access to pharmaco-medical
products and treatments, by developing valuable relationships and interactions
between manufacturers and other healthcare stakeholders. This business
operates in both the retail and hospital markets in the Irish, UK and MENA
markets. Exclusive Access provides bespoke distribution partnerships to
pharmaceutical partners around key brands, with new programs focused on
speciality pharmaceutical products. The division delivers a unique patient
support program that allows healthcare professionals to connect with patients
on a global basis; and
· Supply Chain & Retail provides both pre-wholesale
distribution and wholesale distribution of pharmaceutical, healthcare and
animal health products to pharmacies, hospitals and veterinary surgeons in
Ireland. Uniphar operate a network of pharmacies under the Life, Allcare and
Hickey's brands. Additionally, through the extended Uniphar symbol group, the
business provides services and supports that help independent community
pharmacies to compete more effectively.
Operating segments results
The Group evaluates performance of the operational segments on the basis of
gross profit from operations.
Commercial Product Supply Chain
& Clinical Access & Retail Total
Six months ended 30 June 2022
€'000 €'000 €'000 €'000
Revenue 162,322 74,474 755,035 991,831
Gross profit 58,541 21,818 65,776 146,135
Six months ended 30 June 2021
€'000 €'000 €'000 €'000
Revenue 157,816 85,954 721,097 964,867
Gross profit 53,446 20,051 60,793 134,290
Assets and liabilities are reported to the Board at a Group level and are not
reported on a segmental basis.
3. Exceptional charge
2022 2021
€'000 €'000
Professional fees including acquisition costs 2,014 1,938
Acquisition integration costs 1,060 250
Redundancy and restructuring costs 2,710 920
Defined benefit pension scheme settlement loss and closure costs - 558
Foreign exchange revaluation of deferred contingent consideration - 1,014
Exceptional charge recognised in operating profit 5,784 4,680
Decrease in deferred contingent consideration - (1,623)
Exceptional credit recognised in finance costs - (1,623)
Exceptional credit recognised in income tax expense (284) -
Total exceptional charge 5,500 3,057
Professional fees including acquisition costs
Professional fees including acquisition costs incurred during 2022 are
primarily relating to costs relating to acquisitions disclosed in note 17
together with costs incurred on transactions currently under consideration.
Acquisition integration costs
Acquisition integration costs primarily relate to payments made to staff
agreed as part of the RRD International acquisition which do not qualify for
classification as consideration due to the continuing employment requirement
for the individuals.
Redundancy and restructuring costs
These costs include restructuring and reorganisation costs relating to group
entities and recent acquisitions.
Exceptional credit recognised in tax charge
The tax credit recognised in the tax charge is the tax impact of the
components of the Exceptional charge listed above.
4. Finance cost
2022 2021
€'000 €'000
Interest on lease obligations 1,824 1,866
Interest payable on borrowings and non-recourse costs 1,848 1,479
Fair value adjustment of deferred and deferred contingent consideration 953 1,074
Amortisation of refinancing transaction fees 133 121
Interest receivable (21) (17)
Finance cost before exceptional credit 4,737 4,523
Decrease in deferred contingent consideration (note 3) - (1,623)
Exceptional credit recognised in finance cost - (1,623)
Total Finance cost 4,737 2,900
5. Earnings per share
Basic earnings per share and diluted earnings per share for the six months
ended 30 June have been calculated by reference to the following:
2022 2021
Profit for the financial period attributable to owners (€'000) 16,061 15,348
Weighted average number of shares ('000) 272,297 267,137
Earnings per ordinary share (in cent):
- Basic 5.9 5.7
- Diluted 5.9 5.7
Adjusted earnings per share has been calculated by reference to the following:
2022 2021
€'000 €'000
Profit for the financial period attributable to owners 16,061 15,348
Exceptional charge recognised in operating profit (note 3) 5,784 4,680
Exceptional credit recognised in finance costs (note 3) - (1,623)
Exceptional credit recognised in income tax (note 3) (284) -
Tax credit on acquisition related intangibles (178) -
Amortisation of acquisition related intangibles (note 7) 1,423 673
Profit after tax excluding exceptional items 22,806 19,078
Weighted average number of shares in issue in the period (000's) 272,297 267,137
Adjusted basic and diluted earnings per ordinary share (in cent) 8.4 7.1
The weighted average number of ordinary shares includes the effect of shares
granted under the LTIP arrangement that have met the share price performance
conditions during the period but will not vest until 31 December 2024.
6. Dividends
A final dividend of €3.0m (€0.011 per ordinary share) relating to 2021 was
declared and paid in May 2022 (June 2021: €4.2m). Continuing with the
Board's commitment to a progressive dividend policy, the Board declared a 2022
interim dividend of €1.7m (€0.0061 per ordinary share). It is proposed to
pay the dividend on 6 October 2022 to ordinary shareholders on the Company's
register on 9 September 2022.
In accordance with company law and IFRS, these dividends have not been
provided for in the Balance Sheet at 30 June 2022.
7. Intangible assets, and right-of-use assets
Computer Trademark Goodwill Technology asset Brand Customer Relationships Total
software €'000 Name €'000
€'000 €'000 €'000 €'000 €'000
Cost
At 1 January 2022 36,180 153 442,110 2,914 11,238 3,126 495,721
FX movement (15) 1 2,915 166 - 243 3,310
Acquisitions - - 11,688 - - - 11,688
Additions 2,491 - - - - - 2,491
Disposals/retirements (62) - - - - - (62)
At 30 June 2022 38,594 154 456,713 3,080 11,238 3,369 513,148
Accumulated Amortisation
At 1 January 2022 28,127 153 18,709 419 1,215 729 49,352
FX movement (4) 1 - 16 - 69 82
Amortisation 1,153 - - 537 562 324 2,576
Disposals/retirements (62) - - - - - (62)
At 30 June 2022 29,214 154 18,709 972 1,777 1,122 51,948
Net book amounts
At 31 December 2021 8,053 - 423,401 2,495 10,023 2,397 446,369
At 30 June 2022 9,380 - 438,004 2,108 9,461 2,247 461,200
Intangible assets 8,051 - 438,004 2,108 9,461 2,247 459,871
Right-of-use assets 1,329 - - - - - 1,329
At 30 June 2022 9,380 - 438,004 2,108 9,461 2,247 461,200
Reconciliation to Balance Sheet 30 June 31 December
2022 2021
€'000 €'000
Intangible assets- goodwill 438,004 423,401
Intangible assets- other assets 23,196 22,968
Intangible assets total 461,200 446,369
Impairment testing of goodwill
Goodwill is not amortised but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses. An
impairment loss is recognised for the amount by which the carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an
asset's fair value less costs of disposal and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are largely independent
of the cash inflows from other assets or groups of assets (CGUs).
There is no material change to the circumstances that existed at 31 December
2021 and consequently no impairment indicators were identified. The Group's
annual impairment assessment will be performed at 31 December 2022.
8. Property, plant and equipment, and right-of-use assets
Land and Leasehold Plant and Fixtures and Computer Motor Instruments Total
buildings improvements equipment fittings equipment vehicles
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Cost
At 1 January 2022 135,705 14,149 29,620 13,037 7,099 8,336 5,012 212,958
Foreign exchange movement (22) (17) (63) (51) 13 (48) 1 (187)
Additions 987 251 6,513 381 792 999 879 10,802
Acquisitions 3,229 189 - 175 17 - - 3,610
Disposals/retirements (450) - (459) (51) (699) (1,454) (354) (3,467)
Reclassification - 1,738 (1,970) 232 - - - -
At 30 June 2022 139,449 16,310 33,641 13,723 7,222 7,833 5,538 223,716
Accumulated depreciation
At 1 January 2022 24,930 3,139 15,843 5,847 4,271 4,052 2,393 60,475
Foreign exchange movement (29) (11) (51) (27) (4) (28) - (150)
Charge for the period 5,572 726 1,702 909 545 1,260 783 11,497
Disposals/retirements (429) - (450) (38) (659) (1,277) (342) (3,195)
Reclassification - - - - - - - -
At 30 June 2022 30,044 3,854 17,044 6,691 4,153 4,007 2,834 68,627
Net book value
At 31 December 2021 110,775 11,010 13,777 7,190 2,828 4,284 2,619 152,483
At 30 June 2022 109,405 12,456 16,597 7,032 3,069 3,826 2,704 155,089
Reconciliation to Balance Sheet
Property, plant and equipment 4,995 12,456 16,165 7,032 3,069 96 2,704 46,517
Right-of-use assets 104,410 - 432 - - 3,730 - 108,572
Net book value at 30 June 2022 109,405 12,456 16,597 7,032 3,069 3,826 2,704 155,089
Included in property, plant and equipment are assets under construction to the
net book value of €5,462,000 (2021: €1,555,000). Depreciation has not
commenced on these assets.
9. Assets held for sale
Properties Total
€'000 €'000
At 1 January 2022 1,600 1,600
Disposals - -
At 30 June 2022 1,600 1,600
Properties held for sale relate to properties acquired on completion of the
acquisition of Bradley's Pharmacy Group. These properties are presented in the
Balance Sheet at the lower of their carrying amount and fair value less any
costs to sell. Uniphar plc acquired Bradley's Pharmacy Group from examinership
in November 2018, and in accordance with the application of the examinership
scheme arrangement acquired non-recourse borrowings which are secured by these
properties.
The properties held for sale are available for immediate sale in their present
condition subject to terms that are usual and customary for properties of this
nature. The properties are being actively marketed and the Group is committed
to its plan to sell these properties in an orderly manner.
10. Called up share capital presented as equity
30 June
2022
€'000
Authorised:
453.2 million (2021: 453.2 million) ordinary shares of 8c each 36,256
16.0 million (2021: 16.0 million) "A" ordinary shares of 8c each 1,280
37,536
Movement in the period in issued share capital presented as equity
2022
Allotted, called up and fully paid ordinary shares
At 1 January - 273,015,254 ordinary shares of 8c each 21,841
At 30 June - 273,015,254 ordinary shares of 8c each 21,841
Total allotted share capital:
At 30 June - 273,015,254 (2021: 273,015,254) ordinary shares 21,841
11. Borrowings
Bank loans are repayable in the following periods:
30 June 31 December
2022 2021
€'000 €'000
Amounts falling due within one year 1,664 1,721
Amounts falling due between one and five years 140,446 124,601
142,110 126,322
The Group's total bank loans at 30 June 2022 were €142,110,000 (2021:
€126,322,000). Bank loans falling due within one year include €1,600,000
(2021: €1,600,000) arising on the acquisition of the Bradley's Pharmacy
Group which is secured by a property acquired on the acquisition which is
classified as held for sale. Following the disposal of this property the loan
is required to be repaid (note 9).
At 30 June 2022, the Group's revolving credit facility loans in use were
subject to an interest rate of Euribor +1.5% (2021: Euribor +1.5%).
Bank security
Bank overdrafts (including invoice discounting) and bank loans of
€142,110,000 (2021: €126,322,000) are secured by cross guarantees and
fixed and floating charges from the Company and certain subsidiary
undertakings.
12. Provisions
Deferred Lease Warranty Other Total
contingent dilapidation provision
consideration
€'000 €'000 €'000 €'000 €'000
At 1 January 2022 88,918 523 77 883 90,401
Recognised during the period - - 74 801 875
Unwinding of discount 918 - - - 918
Utilised during the period (3,188) (116) - (915) (4,219)
Foreign currency movement 3,323 - (4) 63 3,382
At 30 June 2022 89,971 407 147 832 91,357
Deferred contingent consideration
Deferred contingent consideration represents the present value of deferred
contingent consideration which would become payable based on pre-defined
profit thresholds being met. During the period, payments of €3,188,000 were
made in respect of prior periods acquisitions.
Lease dilapidation
The lease dilapidation provision covers the cost of reinstating certain Group
properties at the end of the lease term. This is based on the terms of the
individual leases which set out the conditions relating to the return of
property. The timing of the outflows will match the ending of the relevant
leases with various dates up to 2049.
Warranty provision
The warranty provision relates to a product warranty provided to customers on
certain medical devices. The estimated cost of the warranty is provided for
upon recognition of the sale of the product. The costs are estimated based on
actual historical experience of expenses incurred and on estimated future
expenses related to current sales and are updated periodically. Actual
warranty costs are charged against the warranty provision.
Other
Other provisions relate to a management retention bonus payable in relation to
the acquisition of RRD International in 2020.
13. Leases
(i) Amounts recognised in the Balance Sheet
The Balance Sheet shows the following amounts relating to leases:
30 June 31 December
2022 2021
€'000 €'000
Right-of-use assets:
Buildings 104,410 105,766
Plant and equipment 432 686
Motor vehicles 3,730 4,196
Computer 1,329 1,519
Software
Net book value of right-of-use assets 109,901 112,167
Lease liabilities:
Current 12,097 14,358
Non-current 105,370 104,720
Total lease liabilities 117,467 119,078
Right-of-use assets are included in the lines 'Intangible assets' and
'Property, plant and equipment' on the Balance Sheet, and are presented in
note 7 and 8.
Additions to the right-of-use assets during the period ended 30 June 2022 were
€1,959,000 (2021: €4,498,000).
Lease liabilities are presented separately on the face of the Balance Sheet.
(ii) Amounts recognised in the Income Statement:
The Income Statement shows the following amounts relating to leases:
Six months ended Six months ended
30 June 30 June
2022 2021
€'000 €'000
Buildings 5,481 5,368
Plant and equipment 254 277
Motor vehicles 1,241 1,349
Right-of-use assets depreciation charge 6,976 6,994
Computer Software 190 190
Right-of-use assets amortisation charge 190 190
Interest on lease obligations (note 4) 1,824 1,866
Principal repayments 6,534 6,534
Total cash outflow in respect of leases 8,358 8,400
14. Analysis of net debt
30 June 31 December 30 June
2022 2021 2021
€'000 €'000 €'000
Cash and cash equivalents 68,303 78,025 72,355
68,303 78,025 72,355
Bank loans repayable within one year (1,664) (1,721) (2,083)
Bank loans payable after one year (140,446) (124,601) (100,613)
Bank loans (142,110) (126,322) (102,696)
Net bank debt (73,807) (48,297) (30,341)
Current lease obligations (12,097) (14,358) (12,779)
Non-current lease obligations (105,370) (104,720) (106,912)
Lease obligations (117,467) (119,078) (119,691)
Net debt (191,274) (167,375) (150,032)
15. Reconciliation of operating profit to cash flow from operating activities
Six months ended Six months ended
30 June 30 June
2022 2021
€'000 €'000
Operating profit before exceptional items 30,862 28,289
Cash related exceptional items (5,081) (7,305)
25,781 20,984
Depreciation 11,497 10,860
Amortisation of intangible assets 2,576 1,989
Increase in inventory (16,270) (561)
Increase in receivables (13,195) (22,479)
Increase in payables 8,755 14,744
Foreign currency translation adjustments 22 538
Cash inflow from operating activities 19,166 26,075
16. Financial instruments
Financial instruments by category
The accounting policies for financial instruments have been applied to the
line items below:
Financial Financial Total Fair
assets at assets at value
FVOCI* amortised
cost
€'000 €'000 €'000 €'000
Financial assets
30 June 2022:
Investments in equity instruments 25 - 25 25
Trade and other receivables ** - 143,318 143,318 143,328
Deferred consideration receivable - 450 450 451
Cash and cash equivalents - 68,303 68,303 68,303
25 212,071 212,096 212,107
* Fair value through other comprehensive income.
** Excluding prepayments and accrued income.
Financial Financial Total Fair
liabilities at liabilities at value
FVTPL*** amortised
cost
€'000 €'000 €'000 €'000
Financial liabilities
30 June 2022:
Borrowings - 142,110 142,110 149,371
Deferred acquisition consideration - 3,977 3,977 4,009
Trade and other payables **** - 213,215 213,215 213,215
Deferred contingent consideration 89,971 - 89,971 89,971
Lease liabilities - 117,467 117,467 117,467
89,971 476,769 566,740 574,033
*** Fair value through profit and loss.
**** Excluding non-financial liabilities.
Measurement of fair values
In the preparation of the financial statements, the Group finance department,
which reports directly to the Chief Financial Officer (CFO), reviews and
determines the major methods and assumptions used in estimating the fair
values of the financial assets and liabilities which are set out below:
Investments in equity instruments
Investments in equity instruments are measured at fair value through other
comprehensive income (FVOCI).
Long-term receivables
The fair value of long-term receivables is determined by discounting future
cash flows at market rates of interest at the period end.
Trade and other receivables/trade and other payables
For receivables and payables with a remaining life of less than 12 months or
demand balances, the carrying value less impairment provision where
appropriate, is deemed to reflect fair value.
Cash and cash equivalents, including short-term bank deposits
For short-term bank deposits and cash and cash equivalents, all of which have
a remaining maturity of less than three months, the carrying amount is deemed
to reflect fair value.
Interest-bearing loans and borrowings
For floating rate interest-bearing loans and borrowings with a contractual
repricing date of less than six months, the nominal amount is deemed to
reflect fair value. For loans with repricing dates of greater than six months,
the fair value is calculated based on the present value of the expected future
principal and interest cash flows discounted at appropriate market interest
rates (level 2) effective at the Balance Sheet date and adjusted for movements
in credit spreads.
Deferred acquisition consideration
Discounted cash flow method was used to capture the present value of the
expected future economic benefits that will flow out of the Group arising from
the deferred acquisition consideration.
Deferred contingent consideration
The fair value of the deferred contingent consideration is calculated by
discounting the expected future payment to the present value. The expected
future payment represents the deferred contingent consideration which would
become payable based on pre-defined profit thresholds being met and is
calculated based on management's best estimates of the expected future cash
outflows using current budget forecasts. The provision for deferred contingent
consideration is principally in respect of acquisitions completed from 2015 to
2021.
The significant unobservable inputs are:
· Pre-defined profit thresholds which have not been disclosed due
to their commercial sensitivities; and
· Risk adjusted discount rate of between 2% and 3% (2021: between
2% and 3%).
For the fair value of deferred contingent consideration, a 1% increase in the
risk adjusted discount rate at 30 June 2022, holding the other inputs constant
would reduce the fair value of the deferred contingent consideration by
€1.5m. A 1% decrease in the risk adjusted discount rate would result in an
increase of €1.5m in the fair value of the deferred contingent
consideration.
Fair value hierarchy
The following table sets out the fair value hierarchy for financial
instruments which are measured at fair value.
Level 1 Level 2 Level 3 Total
€'000 €'000 €'000 €'000
Recurring fair value measurements
At 30 June 2022
Investments in equity instruments - - 25 25
Deferred contingent consideration - - (89,971) (89,971)
- - (89,946) (89,946)
There were no transfers between the fair value levels for recurring fair value
measurements during the period. The Group's policy is to recognise transfers
into and transfers out of fair value hierarchy levels as at the end of the
reporting period.
Level 1: The fair value of financial instruments traded in active markets is
based on quoted market prices at the end of the reporting period. The quoted
market price used for financial assets held by the Group is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an
active market is determined using valuation techniques which maximise the use
of observable market data and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value an instrument are
observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable
market data, the instrument is included in level 3.
Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the period ended
30 June 2022:
Shares in Deferred Total
unlisted contingent
companies consideration
€'000 €'000 €'000
At 1 January 2022 25 (88,918) (88,893)
Recognised during the period - 3,188 3,188
Unwinding of discount* - (918) (918)
Released during the period* - - -
Foreign currency movement - (3,323) (3,323)
At 30 June 2022 25 (89,971) (89,946)
* These amounts have been credited/(charged) to the Income Statement in
finance income/costs.
Financial risk management
The Group's operations expose it to various financial risks. The Group has a
risk management programme in place which seeks to limit the impact of these
risks on the financial performance of the Group and it is the Group's policy
to manage these risks in a non-speculative manner.
The Group has exposure to the following risks from its use of financial
instruments: credit risk, liquidity risk, currency risk, interest risk and
price risk. The condensed consolidated financial statements do not include all
financial risk management information and disclosures required in the annual
financial statements; they should be read in conjunction with the Group's 2021
Annual Report.
17. Acquisitions of subsidiary undertakings
A key strategy of the Group is to expand into higher growth, higher margin
sectors and businesses. In line with this strategy, the Group completed the
following acquisitions during the financial period:
· Chansey Holdings Limited & Edenmore Pharmacy Limited
The Group acquired 100% of the issued share capital of Chansey Holdings
Limited & Edenmore Pharmacy Limited in January 2022. Both entities
currently operate three independent retail pharmacies in Ireland.
· Boxted Limited
The Group acquired 100% of the issued share capital of Boxted Limited in
February 2022. Boxted Limited currently operates an independent retail
pharmacy in Ireland.
· Dr Hauschka Limited
The Group acquired 100% of the issued share capital of Dr Hauschka Limited in
March 2022. Dr Hauschka Limited currently holds a distribution agreement for
skincare products in Ireland.
· Lanesra Pharmacy Limited
The Group acquired 100% of the issued share capital of Lanesra Pharmacy
Limited in May 2022. Lanesra Pharmacy Limited currently operates an
independent retail pharmacy in Ireland.
· Mainarch Limited
The Group acquired 100% of the issued share capital of Mainarch Limited, in
June 2022. Mainarch Limited currently operates an independent retail pharmacy
in Ireland.
Goodwill is attributable to the future economic benefits arising from assets
which are not capable of being individually identified and separately
recognised. The significant factors giving rise to the goodwill include the
value of the teams within the business acquired, the enhancement of the
competitive position of the Group in the marketplace and the strategic premium
paid by Uniphar Group to create the combined Group.
The initial assignment of fair values to net assets acquired has been
performed on a provisional basis in respect of the acquisitions completed
during 2022, due to their recent acquisition dates. The Group has 12 months
from the date of acquisition to finalise the fair value of the
assets/liabilities acquired, and any amendments to these fair values within
the 12-month period from the date of acquisition will be disclosable in the
2022 Annual Report as stipulated by IFRS 3, Business Combinations.
The acquisitions completed in 2022 have contributed €3.0m to revenue and
€1.4m of gross profit for the period since the date of acquisition. The
proforma revenue and operating profit before exceptional items for the Group
for the period ended 30 June 2022 would have been €994.1m and €31.4m
respectively had the acquisitions been completed at the start of the current
reporting period.
The provisional fair value of the assets and liabilities acquired as part of
the acquisitions completed during the financial period are set out below:
€'000
ASSETS
Non-current assets
Property, plant and equipment 3,610
3,610
Current assets
Inventory 771
Trade and other receivables 1,264
Cash and cash equivalents 1,552
3,587
Total assets 7,197
LIABILITIES
Non-current liabilities
Lease liabilities 2,983
2,983
Current liabilities
Lease liabilities 246
Trade and other payables 1,617
1,863
Total liabilities 4,846
Identifiable net assets acquired 2,351
Group share of net assets acquired 2,351
Goodwill arising on acquisition 11,688
Consideration 14,039
None of the business combinations completed during the period were considered
sufficiently material to warrant separate disclosure of the fair values
attributable to those combinations.
The gross contractual value of the trade and other receivables as at the
respective dates of acquisition amounted to €1.3m. The fair value of these
receivables is estimated at €1.3m (all of which is expected to be
recoverable).
In the period to 30 June 2022, the Group incurred acquisition costs of €2.0m
relating to acquisitions completed during the period together with costs
incurred on transactions currently under consideration (2021: €1.9m). These
have been included in administrative expenses in the Group Income Statement.
2021 Acquisitions
The initial assessment of the fair values of the major classes of assets
acquired and liabilities assumed in respect of the acquisitions which were
completed in 2021 were performed on a provisional basis. The fair values
attributable to the assets and liabilities of these acquisitions remain
provisional with the exception of CoRRect Medical GmbH and BESTMSLs Group
which were both purchased in July 2021. The amendments to these fair values
were made to the comparative figures during the subsequent reporting window
within the measurement period imposed by IFRS 3. The provisional fair value of
these assets and liabilities recorded at 31 December 2021, together with the
adjustments made in 2022 to those carrying values to arrive at the revised
fair values are as follows:
Provisional fair value of 2021 acquisitions Measurement Total
period adjustment
€'000 €'000 €'000
ASSETS
Non-current assets
Intangible assets 25 2,191 2,216
Deferred tax asset - (432) (432)
Property, plant and equipment 1,570 - 1,570
1,595 1,759 3,354
Current assets
Inventory 472 - 472
Trade and other receivables 4,943 - 4,943
Cash and cash equivalents 5,718 - 5,718
11,133 - 11,133
Total assets 12,728 1,759 14,487
LIABILITIES
Non-current liabilities
Lease liabilities 1,181 - 1,181
Bank borrowings 352 - 352
Other non-current liabilities 162 - 162
1,695 - 1,695
Current liabilities
Lease liabilities 248 - 248
Trade and other payables 3,509 - 3,509
3,757 - 3,757
Total liabilities 5,452 - 5,452
Identifiable net assets acquired 7,276 1,759 9,035
Non-controlling interest arising on acquisition - - -
Group share of net assets acquired 7,276 1,759 9,035
Goodwill arising on acquisition 55,296 (1,759) 53,537
Consideration 62,572 - 62,572
18. Post balance sheet events
On 23 August 2022, the Group reached agreement to acquire Orspec Pharma Pty
Ltd. headquartered in Australia. This is the first acquisition for the Group
in the strategically important APAC market and is consistent with the Group's
strategy of building a global presence in the Product Access division.
As this is a recent acquisition, the fair values of the major classes of
assets acquired and liabilities assumed will be disclosed in the 2022 Group
Annual Report as the initial accounting for these business combinations are
incomplete at the time of issuing our interim financial statements.
On 19 August 2022, the Group completed the renewal of its banking facility for
a further five years more than doubling the revolving credit facility (RCF) to
€400m with an additional uncommitted accordion facility of €150m. As part
of the renewal, three new international banking partners, Barclays Bank, ING
Bank and Citizens Bank, have joined the banking syndicate. This new enlarged
facility further strengthens the banking platform to support the Group's
future growth and investment.
There have been no other material events subsequent to 30 June 2022 that would
require adjustment to or disclosure in this report.
19. Comparative amounts
The comparative amounts have been updated for amendments to the fair value of
assets and liabilities acquired during 2021, these amendments were within the
measurement period imposed by IFRS 3.
20. Approval by the Board of Directors
The Directors approved the interim financial statements on 29 August 2022.
Additional Information
ALTERNATIVE PERFORMANCE MEASURES
The Group reports certain financial measurements that are not required under
IFRS. These key alternative performance measures (APMs) represent additional
measures in assessing performance and for reporting both internally, and to
shareholders and other external users. The Group believes that the
presentation of these APMs provides useful supplemental information which,
when viewed in conjunction with IFRS financial information, provides
stakeholders with a more meaningful understanding of the underlying financial
and operating performance of the Group and its divisions. These measurements
are also used internally to evaluate the historical and planned future
performance of the Group's operations.
None of these APMs should be considered as an alternative to financial
measurements derived in accordance with IFRS. The APMs can have limitations as
analytical tools and should not be considered in isolation or as a substitute
for an analysis of results as reported under IFRS.
The principal APMs used by the Group, together with reconciliations where the
APMs are not readily identifiable from the financial statements, are as
follows:
Definition Why we measure it
EBITDA Earnings before exceptional items, net finance expense, income tax expense, EBITDA provides management with an assessment of the underlying trading
depreciation, and intangible assets amortisation. performance of the Group and excludes transactions that are not reflective of
the ongoing operations of the business, allowing comparison of the trading
performance of the business across periods and/or with other businesses.
Adjusted EBITDA is used for leverage calculations.
&
Earnings before exceptional items, net finance expense, income tax expense,
depreciation, and intangible assets amortisation, adjusted for the impact of
IFRS 16 and the pro-forma EBITDA of acquisitions.
Adjusted EBITDA
Net bank debt Net bank debt represents the net total of current and non-current borrowings, Net bank debt is used by management as it gives a summary of the Group's
cash and cash equivalents, and restricted cash as presented in the Group current leverage which management will consider when evaluating investment
Balance Sheet. opportunities, potential acquisitions, and internal resource allocation.
Net debt Net debt represents the total of net bank debt, plus current and non-current Net debt is used by management as it gives a complete picture of the Group's
lease obligations as presented in the Group Balance Sheet. debt including the impact of lease liabilities recognised under IFRS 16.
Leverage Net bank debt divided by adjusted EBITDA for the period. Leverage is used by management to evaluate the Group's ability to cover its
debts. This allows management to assess the ability of the company to use debt
as a mechanism to facilitate growth.
Adjusted Operating Profit This comprises of operating profit as reported in the Group Income Statement Adjusted operating profit is used to assess the underlying operating
before amortisation of acquired intangible assets and exceptional items (if performance excluding the impact of non-operational items. This is a key
any). measure used by management to evaluate the businesses operating performance.
Adjusted earnings per share This comprises of profit for the financial period attributable to owners of Adjusted EPS is used to assess the after-tax underlying performance of the
the parent as reported in the Group Income Statement before exceptional items business in combination with the impact of capital structure actions on the
(if any) and amortisation of acquisition related intangibles, divided by the share base. This is a key measure used by management to evaluate the
weighted average number of shares in issue in the period. businesses operating performance, generate future operating plans, and make
strategic decisions.
Like for Like adjusted earnings per share Like for like adjusted earnings per share is calculated for both the current Like for like adjusted EPS is used to assess the after-tax underlying
and prior period by dividing the profit of the relevant period attributable to performance of the business assuming a constant share base.
owners of the parent as reported in the Group Income Statement before
exceptional items (if any) and amortisation of acquisition related
intangibles, by the weighted average number of shares in issue in the current
period.
Free cash flow conversion Free cash flow conversion calculated as EBITDA, less investment in working Free cash flow represents the funds generated from the Group's ongoing
capital, less maintenance capital expenditure, less foreign exchange operations. These funds are available for reinvestment, and for future
translation adjustment, divided by EBITDA. acquisitions as part of the Group's growth strategy. A high level of free cash
flow conversion is key to maintaining a strong, liquid Balance Sheet.
Return on capital employed ROCE is calculated as the 12 months rolling operating profit before the impact This measure allows management to monitor business performance, review
of exceptional costs and amortisation of acquisition related intangibles, potential investment opportunities and the allocation of internal resources.
expressed as a percentage of the adjusted average capital employed for the
same period. The average capital employed is adjusted to ensure the capital
employed of acquisitions completed during the period are appropriately time
apportioned.
EBITDA
Six months ended/as at Six months ended/as at
30 June 30 June
2022 2021
€'000 €'000
Operating profit Income Statement 25,078 23,609
Exceptional charge recognised in operating profit Note 3 5,784 4,680
Depreciation Note 8 11,497 10,860
Amortisation Note 7 2,576 1,989
EBITDA 44,935 41,138
Adjust for the impact of IFRS 16 (8,349) (8,400)
Pro-forma EBITDA of acquisitions 454 6
Adjusted EBITDA 37,040 32,744
Net bank debt
30 June 31 December 30 June
2022 2021 2021
€'000 €'000 €'000
Cash and cash equivalents Balance Sheet 68,303 78,025 72,355
Bank loans repayable within one year Balance Sheet (1,664) (1,721) (2,083)
Bank loans payable after one year Balance Sheet (140,446) (124,601) (100,613)
Net bank debt (73,807) (48,297) (30,341)
Net debt
30 June 31 December 30 June
2022 2021 2021
€'000 €'000 €'000
Net bank debt APMs (73,807) (48,297) (30,341)
Current lease obligations Balance Sheet (12,097) (14,358) (12,779)
Non-current lease obligations Balance Sheet (105,370) (104,720) (106,912)
Net debt (191,274) (167,375) (150,032)
Leverage
30 June 31 December 30 June
2022 2021 2021
€'000 €'000 €'000
Net bank debt APMs (73,807) (48,297) (30,341)
Rolling 12 months adjusted EBITDA 75,999 71,703 65,988
Leverage (times) 0.97 0.67 0.46
Adjusted operating profit
30 June 30 June
2022 2021
€'000 €'000
Operating profit Income Statement 25,078 23,609
Amortisation of acquisition related intangibles Note 7 1,423 673
Exceptional charge recognised in operating profit Note 3 5,784 4,680
Adjusted operating profit 32,285 28,962
Adjusted earnings per share
Six months ended Six months ended
30 June 30 June
2022 2021
€'000 €'000
Adjusted earnings per share has been calculated by reference to the following:
Profit for the financial period attributable to owners 16,061 15,348
Exceptional charge recognised in operating profit (note 3) 5,784 4,680
Exceptional credit recognised in finance costs (note 3) - (1,623)
Exceptional credit recognised in income tax (note 3) (284) -
Tax credit on acquisition related intangibles (178) -
Amortisation of acquisition related intangibles (note 7) 1,423 673
Profit after tax excluding exceptional items 22,806 19,078
Weighted average number of shares in issue in the period (000's) 272,297 267,137
Adjusted basic and diluted earnings per ordinary share (in cent) 8.4 7.1
Like for like weighted average number of shares (000's) 272,297 272,297
Like for like adjusted earnings per ordinary share (in cent) 8.4 7.0
Free cash flow conversion
Six months ended Six months ended
30 June Year ended 30 June
2022 31 December 2021
2021
€'000 €'000 €'000
EBITDA APMs 44,935 86,481 41,138
(Increase)/decrease in inventory Note 15 (16,270) 3,726 (561)
Increase in receivables Note 15 (13,195) (26,169) (22,479)
Increase in payables Note 15 8,755 13,388 14,744
Foreign currency translation adjustments Note 15 22 22 538
Payments to acquire property, plant and equipment - maintenance Cash Flow (3,489) (8,795) (2,166)
Payments to acquire intangible assets - maintenance Cash Flow (821) (3,904) (3,061)
Settlement of acquired financial liabilities* 1,429 1,513 487
Free cash flow 21,366 66,262 28,640
EBITDA 44,935 86,481 41,138
Free cash flow conversion 47.5% 76.6% 69.6%
*The adjustment to free cash flow ensures that payments made after an
acquisition to settle loans with former shareholders of acquired companies, or
other similar financial liabilities, are excluded from the movement in
payables in the free cash flow conversion calculation.
Return on capital employed
30 June 30 June 30 June
2022 2021 2020
€'000 €'000 €'000
Rolling 12 months operating profit 46,616 43,503 32,315
Adjustment for 12 months exceptional costs 15,508 10,871 10,437
Acquisition related 12 months intangible amortisation 2,813 897 60
Adjusted 12 months rolling operating profit 64,937 55,271 42,812
Total equity 263,569 217,697 186,590
Net bank debt/(cash) 73,807 30,341 (1,386)
Deferred contingent consideration 89,971 81,455 77,102
Deferred consideration payable 3,977 4,244 6,072
Total capital employed 431,324 333,737 268,378
Average capital employed 382,531 301,058
Adjustment for acquisitions (note A / B below) 7,909 12,406
Adjusted average capital employed 390,440 313,464
Return on capital employed 16.6% 17.6%
Note A: Adjustment for acquisitions (2022) Capital Completion Adjustment
employed Date
€'000 €'000
Dr Hauschka 1,541 Mar-22 (257)
Other acquisitions completed during 2021 and 2022 53,909 Various 8,166
Adjustment for acquisitions 7,909
Note B: Adjustment for acquisitions (2021) Capital Completion Adjustment
employed Date
€'000 €'000
Hickey's 54,428 Nov-20 4,536
Other acquisitions completed during 2020 and 2021 45,506 Various 7,870
Adjustment for acquisitions 12,406
The adjustment ensures that the capital employed of acquisitions completed
during the period are appropriately time apportioned. The adjustment includes
cash consideration, deferred and deferred contingent consideration, debt
acquired, cash acquired, and any cash impact of shareholder loans or other
similar financial liabilities repaid post-acquisition.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UKVWRUUUWUARRecent news on Uniphar
See all newsREG - Uniphar PLC - Holding(s) in Company
AnnouncementREG - Uniphar PLC - Notice of AGM & Annual Report
AnnouncementREG - Uniphar PLC - Transaction in Own Shares
AnnouncementREG - Uniphar PLC - Holding(s) in Company
AnnouncementREG - Uniphar PLC - Transaction in Own Shares
Announcement