REG - Uniphar PLC - 2023 Interim Results
14/09/2023 07:15
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RNS Number : 3802M Uniphar PLC 14 September 2023
Uniphar plc
2023 Interim Results
Uniphar plc, an international diversified healthcare services business,
announces its half year results for the six months ended 30 June 2023 together
with new medium-term targets and a new divisional structure that reflects our
strategic ambition.
FINANCIAL HIGHLIGHTS
Growth
Six months ended 30 June(1) Reported Constant
2023 2022 currency(2)
€'000 €'000
Revenue 1,239,582 991,831 25.0% 25.3%
Gross profit 187,992 146,135 28.6% 29.4%
Commercial & Clinical 62,041 58,541 6.0% 7.2%
Product Access 37,762 21,818 73.1% 74.7%
Supply Chain & Retail 88,189 65,776 34.1% 34.1%
Gross profit margin (Group) % 15.2% 14.7%
EBITDA(1) 51,126 44,935 13.8% 14.2%
Operating profit 28,006 25,078 11.7% 12.2%
Profit before tax excluding exceptional items 22,800 26,125 (12.7%) (12.2%)
Net bank debt(1) (178,045) (73,807)
Basic EPS (cent) 5.5 5.9
Adjusted EPS (cent)(1) 7.4 8.4
· Gross profit growth of 28.6% (5.5% organic(3)) reflecting growth
across all divisions with Supply Chain & Retail continuing to outperform
medium-term guidance with 7.7% organic growth(3).
· Continued progression in gross profit margin from 14.7% to 15.2%,
reflecting focus and growth in higher margin activities.
· EBITDA growth of 13.8%, from €44.9m to €51.1m, demonstrating
the resilience of the business and continued focus on growth.
· Adjusted EPS of 7.4 cents representing a decline of 1.0 cents
primarily due to increased financing costs.
· Acquisition of the McCauley Pharmacy Group ("McCauley") completed
in January 2023 enhances our retail pharmacy footprint and service offering.
McCauleys are recognised as a market leader in the delivery of health,
wellbeing and beauty products.
· Continuing strong normalised free cash flow conversion of 68% (30
June 2022: 70%) which is within our guided range.
· Net bank debt of €178.0m at 30 June 2023 (December 2022:
€91.2m) and leverage at 1.95x.
· The Board have declared an interim dividend of €0.0064 per
ordinary share for the period to 30 June 2023 representing growth of 5% in the
period (30 June 2022: €0.0061 per ordinary share).
1. Additional information is set out in Alternative Performance
Measures (APMs) section.
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
· The Group performed strongly during the period and has achieved
its target of doubling 2018 pro forma EBITDA ahead of the timeframe committed
to at the time of IPO.
· The Group is pleased to announce an ambitious new target of
growing Group EBITDA to €200m over the medium-term. This will be achieved
through a combination of strong organic growth complemented with acquisitions
that meet our disciplined strategic and financial criteria.
· Technology investment is critical in enabling the Group to
deliver on its strategic ambitions. The Group will invest c.€60m of
strategic capital expenditure in an IT and ERP investment programme that will
future proof our market leading Supply Chain and Retail division and enable us
to scale our global Pharma platforms. The implementation will be delivered in
a non-live environment which significantly reduces the risk on the programme.
· The Group intends to create a new divisional structure (to be
reported from FY23 onwards) to capitalise on the attractive growth
opportunities in our target markets and better align with our customers and
stakeholders during this next phase of growth:
§ Uniphar Medtech: the Medtech business unit of Commercial & Clinical
will become a standalone division reflecting its position as a leading
specialist Medtech provider in Europe.
§ Uniphar Pharma: the Pharma business unit of Commercial & Clinical will
be combined with Product Access to create 'Uniphar Pharma'. This platform will
enable Uniphar to provide an enhanced service offering across the entire
lifecycle of an asset, providing patients with access to innovative medicines
in global and often complex markets.
§ Uniphar Supply Chain & Retail: the Supply Chain & Retail division
will remain unchanged in the new divisional structure.
· Organic gross profit growth of 5.5% in H1 2023, driven by growth
across each of our three divisions:
§ Supply Chain & Retail division: 34.1% gross profit growth of which 7.7%
is organic growth. This outperformance highlights our strong market position,
the resilience of the Irish market and supports our investment in the division
to build future capacity to ensure continued growth.
§ Product Access delivered 73.1% gross profit growth of which 8.5% is organic
growth. The growth in gross profit reflects strong underlying business
performance combined with the acquisitions of BModesto Group and Orspec Pharma
in 2022. These acquisitions demonstrate the Group's commitment to creating a
market leading global platform and have provided increased scale across
continental Europe and the APAC region.
§ Commercial & Clinical division delivered gross profit growth of 6.0% of
which 1.0% is organic, driven by a strong performance in the MedTech business
unit offset by the Pharma business unit that is refocusing and investing to
address the market opportunities that can be capitalised on under the new
divisional structure.
· Reported free cash flow conversion of 25.9%. When adjusted for the
unwinding of the temporary favorable timing positions in December 2022, the
adjusted free cash flow is 67.8% which is within our target range of 60-70%.
· The Group completed the acquisition of the McCauley Pharmacy
Group in January 2023 which further enhances the Group's offering in the Irish
retail pharmacy market with the addition of 34 retail pharmacies. In August
2023, the Group completed the acquisition of certain assets from Pivot
Digital, an omni-channel and digital strategy consultancy business. These
capabilities will be integrated into the consultancy arm of Uniphar's Pharma
division broadening the Group's overall digital offering.
· Integration of 2022 acquisitions including BModesto Group,
Inspired Health and Orspec Pharma are progressing well and delivering expected
benefits.
· The Group made continued progress on Sustainability across all
five of our sustainability pillars. The Group's MSCI rating has recently been
upgraded to "AAA". Furthermore, the Group formally submitted Science Based
Targets to SBTi for validation during the period.
Ger Rabbette, Uniphar Group Chief Executive Officer said:
"Just over four years post-IPO, I am pleased to announce that we have already
achieved our IPO target of doubling EBITDA within five years. We are now
focused on creating a strong foundation for our next phase of growth,
reorganising our divisions to reflect our strategic ambitions and accelerating
our progress in our target markets. As well as maintaining an active
acquisition pipeline, we are also making a significant investment in our IT
systems to further enhance the technological backbone of our business and
reach our ambitious new target of €200m EBITDA over the medium-term."
Analyst presentation
A conference call for investors and analysts will be held at 9am (BST), today,
14 September 2023. Analysts and investors who wish to participate should visit
www.uniphar.ie (http://www.uniphar.ie) to register.
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
Allan Smylie
Head of Strategy 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 Listing
Sponsor)
Daragh O'Reilly
Niall Gilchrist Ivan Murphy
RBC Capital Markets (Joint Corporate Broker) Tel: +44 (0) 20 7653 4000
Jamil Miah
Rupert Walford
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 has an established presence in Ireland, the UK,
Europe, the US and Asia Pacific.
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 423 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 robust performance during the first six months of 2023,
achieving significant growth in gross profit and EBITDA. Gross profit growth
of 28.6% was driven by organic growth of 5.5% in addition to the impact of the
acquisitions completed in the past year. The diversity and geographic breadth
of our service offering enables the business to deliver consistent growth.
The Supply Chain & Retail division delivered an excellent performance in a
market characterised by medicine shortages and inflationary pressure on costs.
Commercial and Clinical delivered a robust performance with the MedTech
business unit performing strongly, offset by a Pharma business unit that is
refocusing and investing to address the market opportunities that the new
divisional structure will enable it to better capitalise on. The Group
continues to develop its European medical affairs offering with expertise now
available in 11 European countries. The Product Access division leveraged its
global scale to support the heightened demand for medicines in short supply in
addition to being awarded 8 new expanded access programs (EAPs) in the period.
Gross profit margin increased to 15.2% (June 2022: 14.7%), reflecting the
Group's ability to deliver growth at a time when input costs are increasing.
The integration of BModesto Group, acquired in late 2022, is progressing in
line with plan with previously identified revenue synergies being realised.
The acquisition provides the Group with increased scale and a gateway into key
European markets. This investment, combined with the previous investments in
the division, will enable pharma and biotech customers to bring innovative
medicines to global markets across their product lifecycles.
EBITDA has increased by 13.8% (€6.2m) to €51.1m (June 2022: €44.9m)
reflecting organic growth achieved across all divisions and the positive
contribution of the 2022 acquisitions. Adjusted EPS of 7.4 cents declined by
1.0 cent reflecting the impact of higher interest rates on the Group.
Return on capital employed (ROCE) for the rolling 12-month period closed at
14.7% (December 2022: 17.3%) and is at the upper end of the Group's
medium-term target of 12-15%. The change in ROCE is reflective of recent
acquisitions and investment in strategic capital expenditure that will deliver
improved growth and returns in future years.
Technology has been a key enabler of the Group's growth since IPO and
continued investment in technology is critical to enabling the Group to
deliver on our medium-term objectives. The Group will invest c.€60m in an IT
and ERP investment programme. This investment will future proof our market
leading Supply Chain and Retail division whilst enabling us to scale our
Pharma platform. The implementation will be delivered in a non-live
environment which significantly reduces the risk on the programme.
The Group's Balance Sheet remains robust. Net bank debt at 30 June 2023
amounted to €178.0m (31 December 2022: €91.2m) with the increase
attributable to completing the McCauley acquisition and strategic capital
investment. The Group's banking facility, renewed in August 2022, consists of
a €400m revolving credit facility and €150m of an uncommitted accordion
facility and provides a stable platform to support the Group's growth and
investment strategy. The Group's leverage of 1.95x as at 30 June 2023 remains
within its medium-term target range.
The Group remains focused on delivering its vision of improving patient access
to innovative therapies and treatments by enhancing connectivity between
manufacturers and stakeholders. Having achieved the commitments made at the
time of IPO, the Group announces ambitious new medium-term targets and our
intention to create a new divisional structure that reflects our strategic
ambition. We are confident we have the right strategy, the best people and the
market opportunity to continue to deliver for our stakeholders.
Sustainability
Uniphar is committed to continuing to make a positive impact across our five
sustainability pillars and embedding this strategy within the culture of the
Group.
The Group has recently had its MSCI ESG rating upgraded to "AAA" which
reflects the Group's commitment to being a leader in sustainability
initiatives. Furthermore, the Group formally submitted Science Based Targets
to SBTi for validation during the period. This follows the completion of our
first Scope 3 assessment during 2022 and is in line with our commitment to
setting a science-based carbon reduction target. Pending validation of our
SBTi targets, we have set an internal target to reduce our absolute Scope 1
& 2 emissions by 5% per annum between 2019 and 2030, in line with the SBTi
1.5˚C aligned pathway for targets. This would see the Group achieve our
climate ambition of at least 50% reduction in our absolute Scope 1 & 2
emissions by 2030.
Current trading
In the first half of 2023, Uniphar performed in line with expectations
delivering strong underlying growth offset by higher interest costs. Since the
period end, the Group has continued to perform in line with the board's
expectations.
Outlook and new targets
Uniphar remains well positioned to achieve continued gross profit growth in
each division and is confident of delivering on expectations for the full
year.
The Group is pleased to announce a new ambitious target of growing Group
EBITDA to €200m over the medium-term. This will be achieved through a
combination of strong organic growth across each division complemented by
earnings accretive M&A. The Group expects the growth in EBITDA to be
delivered through:
· Continued strong organic growth in all three divisions driven by
robust underlying market growth and continued market share gains underpinned
by an investment programme in infrastructure, digital platforms, strategic
capex and talent.
· M&A remaining a key component of the Group's compounding
growth story with a pipeline of acquisition opportunities continuing to be
reviewed to add further scale and breadth to the existing platform with a
focus on building out the Pharma platform.
Our medium-term guidance for gross profit growth for the new divisions is:
· Uniphar Pharma: Double digit
· Uniphar Medtech: High-single digit
· Uniphar Supply Chain & Retail: Low-single digit
Disciplined capital allocation remains a focus for the Group and M&A is
expected to continue to play an important role in Uniphar's growth strategy.
The Group has an active pipeline of acquisition opportunities to add further
capability to our existing platform.
In addition to the headline EBITDA growth target, the Group's broader
medium-term guidance is as follows:
· Target ROCE of 12% - 15%
· Focus on cash generation and target an adjusted free cash flow
conversion of 60% - 70%
· Progressive dividend policy that seeks to return capital to
shareholders each year
· Net bank debt / EBITDA not to exceed 2.5x
Acquisitions and integration update
Uniphar completed the acquisition of the McCauley Pharmacy Group in the period
which added 34 pharmacies to the Group. The integration of the acquisitions
completed during 2022 are progressing well and in line with expectation. The
Group maintains a disciplined approach to capital allocation with an active
pipeline of acquisition opportunities across all divisions and internationally
to further expand our capability and geographic reach.
Commercial & Clinical
Acquisition update
In August 2023 the Group acquired certain assets and contracts from Pivot
Digital. Pivot provide omni-channel consultancy, digital strategy and
execution services to global pharma and biotech clients. Pivot's capabilities
will be integrated into the consultancy arm of Uniphar's Pharma division
broadening the group's digital offering.
Integration update
The Group acquired Inspired Health in September 2022 which increases Uniphar's
capability to offer market research and commercialisation insights to
pharmaceutical and MedTech manufacturers and further deepens our presence in
the strategically important US market. The integration of the business into
the wider Group is progressing well and in line with expectations.
Product Access
Integration update
The integration of the acquisitions of the BModesto Group in November 2022 and
Orspec Pharma in August 2022 are progressing well delivering previously
identified revenue synergies and creating cross-selling opportunities. The
BModesto Group provides a wide range of services including the distribution of
medicines on both an exclusive and on-demand basis, clinical trial services,
market authorisation holder and medical device distribution. The acquisition
broadens our European scale with a well-located facility in the Netherlands to
supply mainland Europe.
Orspec Pharma provides the Group with physical infrastructure in the Asia
Pacific region. Orspec Pharma specialises in the supply of unlicensed
medicines and the delivery of EAP's across the Asia region from its locations
in Australia, New Zealand and Singapore.
Supply Chain & Retail
Acquisition update
In January 2023, the Group completed the acquisition of the McCauley Pharmacy
Group. This acquisition added 34 pharmacies net of three divestments which
were completed as a requirement of the CCPC approval. The McCauley Pharmacy
Group is widely recognised as a leading brand across health, wellbeing and
beauty, and their expertise and advanced digital offering will complement our
fast-growing consumer business in the Supply Chain & Retail division.
Strategic capital expenditure
Uniphar's track record of investment in technology has been a critical enabler
of the Group's transformational growth journey to date. To continue to support
sustainable growth into the future, Uniphar has committed to a multi-year ERP
and IT investment programme. Through the previously announced investment in a
new state of the art distribution facility, Uniphar have the unique ability to
implement this investment programme in a non-live environment, significantly
de-risking the programme. This investment will provide the foundation in which
to future proof our market leading Supply Chain & Retail division and will
enable us to scale our global Pharma platforms. Uniphar estimate this project
will require c.€60m of strategic capex. This investment is a key component
in achieving our new medium-term target of €200m EBITDA.
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 2022 Annual Report on
pages 30 to 34. A copy of the Annual Report can be downloaded from our website
www.uniphar.ie.
2023 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 2023, 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 and 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
· Economic and 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 challenges posed by higher
inflation and interest rates on the Group and its stakeholders.
· 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.
· Key personnel & succession planning - Failure to attract,
retain and develop the skills and expertise of its people may adversely impact
the Group's performance especially in constrained labour markets.
· 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. Furthermore, failure to comply with mandatory reporting obligations
may impact the Group's financial and operational results.
· Transformation project execution - The Group is embarking on
several transformational projects that will provide the platform and capacity
to grow over the coming years. Failure of the Group to effectively deliver
such projects may result in cost overruns or reputational damage impacting the
Group's ability to deliver strategic targets.
Operational Risks
· 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.
· 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.
· 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 is exposed to increases in interest rates and credit
risks from changes to economic conditions.
Business Reviews
Commercial & Clinical
Growth
Six months ended 30 June 2023 2022 Reported Constant
€'000 €'000 currency
Revenue 154,839 162,322 (4.6%) (3.4%)
Gross profit 62,041 58,541 6.0% 7.2%
Gross profit margin % 40.1% 36.1% 400bps
Overview
Commercial & Clinical provides outsourced sales, marketing, distribution
and consultancy solutions to pharmaceutical and medical device manufacturers
on a pan-European basis, serving 15 European countries in H1 2023 compared to
four at the time of IPO, with a targeted service offering in the US. The
division is focused on the commercialisation of speciality products to ensure
that patients and their physicians are offered the best treatments for their
conditions. The division has two business units, MedTech and Pharma, both of
which are driven by the mission of ensuring patients have access to the
treatments they need when they need them.
H1 2023 Performance
Commercial & Clinical delivered organic gross profit growth of 1% in H1
2023. The MedTech business unit delivered strongly against their strategy and
that growth was offset by the Pharma business unit which is refocussing and
investing to address the market opportunities that the new divisional
structure will enable it to capitalise on.
Key highlights from the six-month period ended 30 June 2023 include:
· Gross profit growth of 6% against a strong comparative period
driven by growth in the gross profit margin to 40.1%.
· Gross profit generated from outside Ireland represents 52% of the
divisional gross profit.
· Growth in gross profit margin from 36.1% (June 2022) to 40.1%
· Rebrand of the MedTech entities under the brand 'Uniphar MedTech'
further integrating the pan-European offering.
· Increase in number of manufacturers represented in more than one
geography to 83 (June 2022: 75).
· Integration of the acquisition of Inspired Health is progressing
well.
MedTech
The MedTech business unit provides a fully integrated solution for our clients
in sales, marketing and distribution of medical devices across specialisms
such as interventional cardiology and radiology, orthopaedics, ophthalmology,
minimally invasive surgery, diagnostic imaging and critical care.
The business delivered strong growth in the period capitalising on our ability
to deliver excellent service to our customers. Our business continued to
partner with suppliers on supply chain constraints and improvement is being
seen against the challenges experienced in 2022. A focus for the business in
2023 has been the continued integration of our pan-European service offering.
The consolidation of our business unit under a single brand name of 'Uniphar
MedTech' is the next step in that journey.
The strength of MedTech has been the geographic and clinical diversity of its
portfolio combined with deep trusted relationships with manufacturers and
customers. The opening of a US-based facility in mid-2023 gives the business
the capability to support European MedTech manufacturers seeking to access the
US market in addition to offering pharma solutions to US manufacturers.
Pharma
The Pharma business unit supports pharmaceutical partners in driving the
commercialisation of their products leveraging data, insights and marketing
solutions to deliver targeted omni-channel solutions. The pharmaceutical
industry is constantly evolving as manufacturers develop innovative therapies
and seek new methods of commercialising them.
Pharma delivered a solid performance in 2023 with the result reflective of a
period of refocusing and investing to address the market opportunities that
the new divisional structure will enable it to capitalise on. The business has
capitalised on the emergence of the hybrid model of engagement with Healthcare
Practitioners (HCP's) combining both in-person and virtual engagement. HCP's
now seek information that is customised to their interests, delivered in a
convenient medium at a time of their choice rather than mass marketing.
Uniphar Pharma's suite of services across the product lifecycle enable us to
support our customers reach their target markets and drive growth.
Our recently launched medical affairs capability across Europe is a valuable
addition to the suite of services we can offer our customers. The division is
developing local medical affairs expertise in 11 countries across Europe and
the market response has been positive to date. This experienced team has
launch experience in Rare Disease, Immunology, Oncology, Haematology,
Neurology, Vaccines and Paediatrics and will support clients launching
therapies in European markets that address unmet needs and deliver the best
quality of care for patients.
Product Access
Growth
Six months ended 30 June 2023 2022 Reported Constant
€'000 €'000 currency
Revenue 253,060 74,474 239.8% 242.0%
Gross profit 37,762 21,818 73.1% 74.7%
Gross profit margin % 14.9% 29.3% (1440bps)
Overview
The Product Access division is focussed on ensuring equitable access to
medicines for patients. We partner with manufacturers to provide global reach
and world class execution to get their medicines to the patients who need them
with many of these being early stage, high tech or otherwise difficult to
source medicines. The division operates through two business units being On
Demand and Exclusive Access.
H1 2023 Performance
Product Access achieved transformational growth in the period driven by the
acquisitions of BModesto Group and Orspec Pharma in the second half of 2022.
Gross profit increased by 73.1% to €37.8m with organic gross profit growth
of 8.5% achieved in the period.
Key highlights from the period include:
· Gross profit growth of 73.1% of which 8.5% is organic growth.
· Gross profit margin declined to 14.9% due to the recent
acquisition of the BModesto Group.
· 8 new Expanded Access Programs (EAPs) awarded in the period with
83 in total compared to 42 at the time of IPO.
· 73% of the division's gross profit is generated outside of
Ireland.
· The integration of BModesto Group and Orspec Pharma, both of
which were acquired in the second half of 2022, is progressing according to
plan and opening up opportunities in mainland Europe and in the Asia Pacific
region.
On Demand
The On Demand business unit is a leading supplier of unlicenced and difficult
to source medicines to healthcare providers globally. The business delivered a
very strong performance in the period driven by global medicine shortages
combined with the acquisitions of the BModesto Group and Orspec Pharma in
2022. The global shortages of medicines has created opportunities for
specialist suppliers such as Uniphar to source and deliver them to where they
are needed across the world.
The integration of the 2022 acquisitions of the BModesto Group and Orspec
Pharma is progressing well and both businesses are performing strongly in the
period post-acquisition. They have provided the Group with the platform to
geographically extend the On Demand offering by providing a physical presence
for the Group in mainland Europe and in key Asia Pacific markets.
A focus for the business is further developing our unlicenced medicines
business utilising the infrastructure that the recent acquisitions provide
combined with the deep logistics knowledge from our Supply Chain & Retail
division.
Exclusive Access
The Exclusive Access business unit focusses on delivering Expanded Access
Programmes (EAPs) for pharmaceutical manufacturers. EAPs allow patients gain
access to innovative therapies that may not be available to them through other
routes whilst enabling the manufacturer gain greater knowledge and
understanding of the patient, the medicine and the market while refining their
commercialisation strategy.
The Exclusive Access business unit delivered a solid performance and was
awarded eight new Expanded Access Programs (EAPs) in the period. The drug
development pipeline of our target customers remains strong and the strength
of that pipeline will ultimately result in additional opportunities in future
periods.
A particular focus for the business is in cell and gene therapy. These
treatments are frequently complex to deliver from a clinical and manufacturing
perspective and often have stringent distribution criteria. Our proprietary
technology platform, Uniphi, continues to be developed to support patient
enrolment and personalised patient education. This platform, combined with our
experience in delivering such treatments, makes Uniphar a compelling partner
for manufacturers considering an EAP as part of their launch strategy.
Supply Chain & Retail
Growth
Six months ended 30 June 2023 2022 Reported Constant
€'000 €'000 currency
Revenue 831,683 755,035 10.2% 10.2%
Gross profit 88,189 65,776 34.1% 34.1%
Gross profit margin % 10.6% 8.7% 190bps
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 423 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 2023 performance
· 34.1% growth in gross profit of which 7.7% is organic growth.
· Continued growth in gross profit margin to 10.6% (2022: 8.7%).
· Strong gross profit growth is driven by volume growth in the
market.
· McCauley Pharmacy Group acquisition completed in January 2023
with the integration progressing in line with expectations.
· New consumer products standalone distribution facility opened in
2023.
Wholesale
The Wholesale business delivered strong business volume growth in the period
supported by demand from customers combined with overall growth in the market.
Medicine shortages continue to challenge the business from an operational
perspective in getting product distributed to customers in a timely and
equitable manner. The business infrastructure has proven capable of responding
to a strained supply chain with the continued growth highlighting the
necessity of investing for the future. Progress is being made on our
multi-year strategic investment programme in a new distribution facility. Once
operational, this facility will encompass the latest technology enabling the
doubling of existing capacity levels and ensuring that we continue to provide
a market leading service offering to our customers.
Pre-wholesale
The pre-wholesale business performed well in the period and continues to be
the partner of choice for manufacturers seeking pre-wholesale solutions in the
Irish market. Cold chain pharmaceutical products continue to show volume
growth and require more sophisticated capabilities that the business is
experienced in delivering.
Retail
Our vertically integrated network of owned or franchised stores now amounts to
423 pharmacies that are supported 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.
Retail pharmacies performed strongly in the period driven by volume growth
combined with the addition of the McCauley Group stores. Front-of-shop
consumer products continue to be a growth opportunity and fits well with our
existing distribution infrastructure. Our ambition is to continue to grow the
consumer products category to become the go-to partner for brands seeking a
presence on Irish pharmacy selves.
Acquisitions
The division completed the acquisition of the McCauley Pharmacy Group in
January 2023 following approval from the CCPC. The McCauley Group brings an
additional 34 pharmacies into the Group net of the three which were disposed
to satisfy the CCPC agreed remedies. McCauley has built a strong consumer
products offering that complements our existing estate and our ambition of
becoming the go-to partner for brands seeking growth.
Financial Review
Summary financial performance
Growth
Six months ended 30 June 2023 2022 Reported Constant
€'000 €'000 currency
IFRS measures
Revenue 1,239,582 991,831 25.0% 25.3%
Gross profit 187,992 146,135 28.6% 29.4%
Operating profit 28,006 25,078 11.7% 12.2%
Basic EPS (cent) 5.5 5.9
Alternative performance measures
Gross profit margin 15.2% 14.7%
EBITDA 51,126 44,935 13.8% 14.2%
Adjusted EPS (cent) 7.4 8.4
Net bank debt (178,045) (73,807)
Return on capital employed 14.7% 16.6%
Revenue
Revenue increased by 25.0%, which was achieved through a combination of
organic growth, driven by a strong performance in the Supply Chain &
Retail division together with the impact of the acquisitions completed since
June 2022.
Gross profit
Gross profit has increased by 28.6% in the period primarily due to the factors
impacting revenue outlined above. The Gross profit margin has increased from
14.7% to 15.2% reflecting the continued expansion of the Group into higher
margin businesses and categories.
Divisional gross profit
Growth
Six months ended 30 June Constant
2023 2022 Reported Currency
€'000 €'000
Commercial & Clinical 62,041 58,541 6.0% 7.2%
Product Access 37,762 21,818 73.1% 74.7%
Supply Chain & Retail 88,189 65,776 34.1% 34.1%
187,992 146,135
EBITDA
EBITDA has increased by €6.2m (13.8%) to €51.1m. This is driven by the
organic growth in revenue and gross profit together with the impact of the
acquisitions completed in the past year. Overheads have increased as a result
of increased investment in the cost base to facilitate future growth combined
with some inflationary pressures on cost.
Exceptional items
Exceptional costs amounted to €3.8m for the period and primarily relate to
acquisition integration costs (€1.7m), loss on disposal of businesses and
assets (€1.4m), redundancy and restructuring costs (€1.0m), strategic
business transformation costs (€0.9m), professional fees associated with
acquisitions (€0.8m) and other costs (€0.2m). These costs are offset by a
decrease in deferred contingent consideration (€1.7m) and an exceptional
income tax expense credit (€0.6m). Further details are provided in note 3.
Earnings per share
Basic earnings per share decreased from 5.9 cent to 5.5 cent. The decrease in
earnings is primarily attributable to a reduction in the profit attributable
to owners of €1.0m due to increased financing costs in the period. The
weighted average number of shares in the period is 272,815,000 (2022:
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 decreased from 8.4 cent to 7.4 cent reflecting
the increased financing costs in the period partially offset by increased
operating profits arising from organic growth and acquisitions.
On a like for like basis, adjusted earnings per share decreased from 8.4 cent
to 7.4 cent by applying the weighted average number of shares as at June 2023
to both periods, to provide a more meaningful comparison.
Cash flow and net bank debt
Reported free cash flow conversion in the six months to 30 June 2023 was 25.9%
(2022: 47.5%) reflecting as expected the unwind of temporary favourable
working capital positions from 2022 with the Group's net bank debt position
being €178.0m. This reflects an increase in net bank debt of €86.8m
primarily driven by investment in acquisitions and strategic capital projects.
Six months ended 30 June 2023 2022
€'000 €'000
Net cash (outflow)/inflow from operating activities (12,996) 10,708
Net cash outflow from investing activities (62,829) (25,538)
Net cash inflow from financing activities 27,585 5,541
Foreign currency translation movement 194 (433)
(Decrease)/increase in cash and cash equivalents in the period (48,046) (9,722)
Cash flow from movement in borrowings (38,782) (15,788)
Movement in net bank (debt)/cash (86,828) (25,510)
The cash outflow from operating activities of €12.9m is reflective of the
unwind of temporary favourable working capital positions from 2022 combined
with higher levels of interest payments and corporation tax payments compared
to 2022. When adjusted for the unwind of the temporary timing positions in
December 2022, the adjusted free cash flow is 67.8% which is within our target
range of 60-70%.
The net cash outflow from investing activities of €62.8m primarily consists
of payments for acquisitions of €23.4m (net of cash acquired), capital
investments of €14.0m, deferred and contingent consideration payments of
€4.1m and repayment of debt acquired on acquisition of €22.7m. Of the
capital investments, €10.4m is strategic in nature primarily relating to the
commencement of investment in a new distribution facility.
The net cash inflow from financing activities of €27.6m was due to a
drawdown of borrowings to support business growth offset by principal lease
payments and the payment of dividends.
Taxation
The tax charge excluding exceptional items in the period is €4.0m and
equates to an effective tax rate of 17.5%. This compares to a charge of
€4.5m in the same period last year with an effective tax rate of 17.3%. The
increase in the effective tax rate of 0.2% is attributable to the increased
contribution of profits from higher tax rate jurisdictions coupled with the
increase in the UK corporation tax rate from April 2023. 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 25.3% (vs 25.0% reported
growth), gross profit increased 29.4% (vs reported growth 28.6%) and operating
profit increased by 12.2% (vs 11.7% reported growth).
H1 2023 H1 2022
Average Average
GBP 0.8764 0.8422
US Dollar 1.0804 1.0928
Swedish Krona 11.326 10.476
Return on capital employed
Return on capital employed for the rolling 12-month period closed at 14.7%
(December 2022: 17.3%) performing in line with the Group's medium-term target.
The reduction of 2.6% since 2022 reflects the increased investment by the
Group in strategic capital expenditure that will deliver growth to the Group
in the medium term. The investments made during 2023, both from a capital and
acquisitions perspective, will deliver further benefits and growth in the
coming years.
Dividends
A final dividend of €3.1m relating to 2022 was paid in May 2023. The Board
has committed to a progressive dividend policy and, reflective of this, a 2023
interim dividend of €0.0064 per ordinary share has been declared. It is
proposed to pay the dividend on 20 October 2023 to ordinary shareholders on
the Company's register on 29 September 2023.
In accordance with company law and IFRS, these dividends have not been
provided for in the Balance Sheet at 30 June 2023.
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 2023.
Signed on behalf of the Board
M. Pratt
G. Rabbette
13 September 2023
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 2023 Interim results of
Uniphar Plc for the six month period ended 30 June 2023 (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
2023;
● 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 2023 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 2023 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 2023 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 2023 Interim results in accordance with
International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union. In preparing the 2023 Interim results including
the interim financial statements, 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 2023 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
13 September 2023
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 2023
Six months ended 30 June 2023 Six months ended 30 June 2022
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 1,239,582 - 1,239,582 991,831 - 991,831
Cost of sales (1,051,590) - (1,051,590) (845,696) - (845,696)
Gross profit 187,992 - 187,992 146,135 - 146,135
Selling and distribution costs (38,912) - (38,912) (34,747) - (34,747)
Administrative expenses (115,177) (4,643) (119,820) (80,545) (5,784) (86,329)
Other operating (expense) / income 166 (1,420) (1,254) 19 - 19
Operating profit 34,069 (6,063) 28,006 30,862 (5,784) 25,078
Finance (cost) / income 4 (11,269) 1,654 (9,615) (4,737) - (4,737)
Profit before tax 22,800 (4,409) 18,391 26,125 (5,784) 20,341
Income tax expense (3,987) 615 (3,372) (4,530) 284 (4,246)
Profit for the financial period 18,813 (3,794) 15,019 21,595 (5,500) 16,095
Attributable to:
Owners of the parent 15,012 16,061
Non-controlling interests 7 34
Profit for the financial period 15,019 16,095
Attributable to:
Continuing operations 15,019 16,095
Profit for the financial period 15,019 16,095
Earnings per ordinary share (in cent):
Continuing operations 5.5 5.9
Basic and diluted earnings per share (in cent) 5 5.5 5.9
Condensed Consolidated Group Statement of Comprehensive Income
for the six months ended 30 June 2023
Six months ended Six months ended
30 June 30 June
2023 2022
(unaudited) (unaudited)
€'000 €'000
Profit for the financial period 15,019 16,095
Other comprehensive income/(expense):
Items that may be reclassified to the Income Statement:
Unrealised foreign currency translation adjustments 943 (1,302)
Total comprehensive income for the financial period 15,962 14,793
Attributable to:
Owners of the parent 15,955 14,759
Non-controlling interests 7 34
Total comprehensive income for the financial period 15,962 14,793
Attributable to:
Continuing operations 15,962 14,793
Total comprehensive income for the financial period 15,962 14,793
Condensed Consolidated Group Balance Sheet
as at 30 June 2023
30 June 31 December
2023 2022
(unaudited) (audited)
Notes €'000 €'000
ASSETS
Non-current assets
Intangible assets - goodwill 7 512,876 482,981
Intangible assets - other assets 7 37,867 24,459
Property, plant and equipment, and right-of-use assets 8 193,740 166,628
Financial assets - Investments in equity instruments 25 25
Deferred tax asset 10,781 9,020
Other receivables 1,755 509
Total non-current assets 757,044 683,622
Current assets
Inventory 175,472 157,656
Trade and other receivables 213,662 164,212
Cash and cash equivalents 55,658 103,704
Assets held for sale 9 1,600 1,600
Total current assets 446,392 427,172
Total assets 1,203,436 1,110,794
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 2,203 718
Other reserves 2,951 2,008
Retained earnings 100,403 88,476
Attributable to owners 303,899 289,544
Attributable to non-controlling interests 246 239
Total equity 304,145 289,783
LIABILITIES
Non-current liabilities
Borrowings 11 216,997 187,431
Provisions 12 88,644 94,060
Lease obligations 13 123,487 105,919
Total non-current liabilities 429,128 387,410
Current liabilities
Borrowings 11 16,706 7,490
Lease obligations 13 15,364 14,315
Trade and other payables 435,017 407,206
Corporation tax 3,076 4,590
Total current liabilities 470,163 433,601
Total liabilities 899,291 821,011
Total equity and liabilities 1,203,436 1,110,794
Condensed Consolidated Group Cash Flow Statement
for the six months ended 30 June 2023
Six months ended Six months ended
30 June 30 June
2023 2022
Notes (unaudited) (unaudited)
€'000 €'000
Operating activities
Cash inflow from operating activities 15 3,770 19,166
Payment of deferred contingent consideration - (1,250)
Interest paid (6,889) (1,828)
Interest paid on lease liabilities 13 (2,308) (1,824)
Corporation tax payments (7,569) (3,556)
Net cash (outflow)/inflow from operating activities (12,996) 10,708
Investing activities
Payments to acquire property, plant and equipment - Maintenance (2,426) (3,489)
Payments to acquire property, plant and equipment - Strategic projects (7,379) (5,461)
Receipts from disposal of property, plant and equipment (net of disposal 1,061 72
expenses)
Receipts from disposal of businesses (net of disposal expenses) 745 -
Payments to acquire intangible assets - Maintenance (1,209) (821)
Payments to acquire intangible assets - Strategic projects (2,990) (1,670)
Payments to acquire subsidiary undertakings (net of cash acquired) (23,369) (11,874)
Repayment of debt acquired on acquisition of subsidiary undertakings (22,664) -
Payments on prior year acquisitions (561) -
Payment of deferred and deferred contingent consideration (4,137) (2,295)
Receipt of deferred consideration receivable 100 -
Net cash outflow from investing activities (62,829) (25,538)
Financing activities
Proceeds from borrowings 30,000 15,133
Repayments of borrowings (434) (57)
Increase in invoice discounting facilities 9,216 -
Payment of dividends 6 (3,085) (3,001)
Principal element of lease payments 13 (8,112) (6,534)
Net cash inflow from financing activities 27,585 5,541
Decrease in cash and cash equivalents in the period (48,240) (9,289)
Foreign currency translation of cash and cash equivalents 194 (433)
Opening balance cash and cash equivalents 103,704 78,025
Closing balance cash and cash equivalents 14 55,658 68,303
Condensed Consolidated Group Statement of Changes in Equity
for the six months ended 30 June 2023
Share Share Share based payment reserve Foreign Revaluation Capital Retained Attributable Total
capital premium currency reserve redemption earnings to non- Equity
translation reserve controlling
reserve interests
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
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 expenses:
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
At 1 January 2023 21,841 176,501 718 1,248 700 60 88,476 239 289,783
Profit for the financial period - - - - - - 15,012 7 15,019
Movement in share-based payment reserve - - 1,485 - - - - - 1,485
Other comprehensive expense:
Movement in foreign currency translation reserve - - - 943 - - - - 943
Transactions recognised directly in equity:
Dividends paid (Note 6) - - - - - - (3,085) - (3,085)
At 30 June 2023 (unaudited) 21,841 176,501 2,203 2,191 700 60 100,403 246 304,145
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 2022. The accounting policies applied in the interim
financial statements are the same as those applied in the 2022 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 2022. 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 2022 in note 1 on pages 142 to 143.
The Group's interim financial statements are prepared for the six-month period
ended 30 June 2023. 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 business risk.
The Group has strong liquidity supported into the future by a banking facility
with a remaining term extending to August 2027 (with two options to extend by
a further one year). The Group renewed and expanded its banking facility
during 2022 to provide it with the platform to fund continued growth.
Having regard to the factors outlined above, 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
The following standards and interpretations are effective for the Group from 1
January 2023 but do not have a material effect on the results or financial
position of the Group:
- Amendments to IAS 1, 'Presentation of Financial Statements'
- Amendments to IAS 8, 'Accounting Policies, Changes in Accounting
Estimates and Errors'
- Amendments to IAS 12, 'Income Taxes'
New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 30 June 2023 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
2023 2022
€'000 €'000
Revenue 1,239,582 991,831
2023 2022
€'000 €'000
Commercial & Clinical - MedTech 128,835 118,873
Commercial & Clinical - Pharma 26,004 43,449
Commercial & Clinical 154,839 162,322
Product Access 253,060 74,474
Supply Chain & Retail 831,683 755,035
Total Revenue 1,239,582 991,831
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 Europe (including UK). The Group also operates in the US and Asia
Pacific region 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.
2023 2022
€'000 €'000
Ireland 947,387 853,798
Rest of Europe, including UK 223,522 110,313
Rest of the World 68,673 27,720
1,239,582 991,831
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, Netherlands
and MENA markets. Exclusive Access provides bespoke distribution partnerships
to pharmaceutical partners around key brands, with new programs focused on
speciality pharmaceutical products. It 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 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, Hickey's and McCauley
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 2023
€'000 €'000 €'000 €'000
Revenue 154,839 253,060 831,683 1,239,582
Gross profit 62,041 37,762 88,189 187,992
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
Assets and liabilities are reported to the Board at a Group level and are not
reported on a segmental basis.
3. Exceptional charge
2023 2022
€'000 €'000
Professional fees including acquisition costs 824 2,014
Acquisition integration costs 1,729 1,060
Redundancy and restructuring costs 1,007 2,710
Strategic business transformation 860 -
Loss on disposal of businesses and assets 1,420 -
Other exceptional costs 223 -
Exceptional charge recognised in operating profit 6,063 5,784
Decrease in deferred contingent consideration (1,654) -
Exceptional credit recognised in finance costs (1,654) -
Exceptional credit recognised in income tax expense (615) (284)
Total exceptional charge 3,794 5,500
Professional fees including acquisition costs
Professional fees including acquisition costs incurred during 2023 are
primarily relating to costs relating to the acquisition disclosed in note 17
together with costs incurred on transactions currently under consideration.
Acquisition integration costs
Acquisition integration costs primarily relate to costs incurred on the
integration of recent acquisitions into the expanded Group. They also include
professional fees relating to specialist industry and market insights to
optimise the integration of recent acquisitions.
Redundancy and restructuring costs
Redundancy and restructuring costs are primarily redundancy and ex-gratia
termination costs arising on reorganisations and recent acquisitions.
Strategic business transformation
Strategic business transformation are costs incurred associated with
reorganising and establishing a strategic presence in the US market. The costs
include initial setup costs, relocation costs and a long term incentive plan
associated with building a strategically significant business in the US
market.
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.
Loss on disposal of businesses and assets
Notes Businesses Assets Total
2023 2023 2023
€'000 €'000 €'000
Property, plant and equipment, and right-of-use assets 8 (810) (538) (1,348)
Goodwill 7 (1,097) (887) (1,984)
Inventories (308) (216) (524)
Trade and other receivables (222) (388) (610)
Cash Disposed (133) (2) (135)
Trade and other payables 305 209 514
Other non-current liabilities 598 193 791
(1,667) (1,629) (3,296)
Consideration
Cash received 878 1,526 2,404
Disposal related costs - (528) (528)
878 998 1,876
Loss on disposal of businesses and assets (789) (631) (1,420)
Net cash inflow on disposal: Businesses Assets Total
2023 2023 2023
€'000 €'000 €'000
Cash received 878 1,526 2,404
Less: Cash disposed (133) (2) (135)
Less: Disposal related costs paid - (528) (528)
Net cash inflow on disposal 745 996 1,741
Loss on disposal of businesses
On 31 May 2023 the Group disposed of 100% of the share capital of McHugh's
Pharmacy Limited and Sam McCauley Chemists (Bunclody) Limited both of which
traded as retail pharmacies. These disposals were completed as a binding
commitment from Uniphar to the CCPC associated with the acquisition of the
McCauley Pharmacy Group. The combined consideration from these disposals
amounted to €878,000 resulting in a loss on disposal of these businesses of
€789,000.
Loss on disposal of assets
During the period, the Group disposed of the assets of a retail pharmacy in
Navan further to a binding commitment to the CCPC associated with the
acquisition of the McCauley Pharmacy Group. In addition, the Group disposed of
a legacy distribution facility in Limerick that is included in property, plant
and equipment. The combined consideration from these disposals amounted to
€1.5m resulting in a net loss on disposal of €631,000.
4. Finance cost / (income)
2023 2022
€'000 €'000
Interest on lease obligations 2,308 1,824
Interest payable on borrowings and non-recourse costs 7,633 1,848
Fair value adjustment of deferred and deferred contingent consideration 1,283 953
Amortisation of refinancing transaction fees 215 133
Interest receivable (170) (21)
Finance cost before exceptional credit 11,269 4,737
Decrease in deferred contingent consideration (note 3) (1,654) -
Exceptional credit recognised in finance cost (1,654) -
Total Finance cost / (income) 9,615 4,737
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:
2023 2022
Profit for the financial period attributable to owners (€'000) 15,012 16,061
Weighted average number of shares ('000) 272,815 272,297
Earnings per ordinary share (in cent):
- Basic 5.5 5.9
- Diluted 5.5 5.9
Adjusted earnings per share has been calculated by reference to the following:
2023 2022
€'000 €'000
Profit for the financial period attributable to owners 15,012 16,061
Exceptional charge recognised in operating profit (note 3) 6,063 5,784
Exceptional credit recognised in finance costs (note 3) (1,654) -
Exceptional credit recognised in income tax (note 3) (615) (284)
Tax credit on acquisition related intangibles (174) (178)
Amortisation of acquisition related intangibles (note 7) 1,636 1,423
Profit after tax excluding exceptional items 20,268 22,806
Weighted average number of shares in issue in the period (000's) 272,815 272,297
Adjusted basic and diluted earnings per ordinary share (in cent) 7.4 8.4
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 €3.1m (€0.0113 per ordinary share) relating to 2022
was declared and paid in May 2023 (June 2022: €3.0m). Continuing with the
Board's commitment to a progressive dividend policy, the Board declared a 2023
interim dividend of €0.0064 per ordinary share. It is proposed to pay the
dividend on 20 October 2023 to ordinary shareholders on the Company's register
on 29 September 2023.
In accordance with company law and IFRS, these dividends have not been
provided for in the Balance Sheet at 30 June 2023.
7. Intangible assets, and right-of-use assets
Computer Trademark Goodwill Technology asset Brand Customer Relationships Total
software €'000 Names €'000
€'000 €'000 €'000 €'000 €'000
Cost
At 1 January 2023 41,947 189 501,690 3,047 11,238 3,322 561,433
FX movement 20 - (531) (57) - (83) (651)
Acquisitions - - 32,410 - 10,947 - 43,357
Additions 6,704 15 - - - - 6,719
Disposals/retirements (2,896) - (1,984) - - - (4,880)
At 30 June 2023 45,775 204 531,585 2,990 22,185 3,239 605,978
Accumulated Amortisation
At 1 January 2023 30,033 154 18,709 1,319 2,339 1,439 53,993
FX movement 6 - - (19) - (40) (53)
Amortisation 1,600 5 - 290 1,018 328 3,241
Disposals/retirements (1,946) - - - - - (1,946)
At 30 June 2023 29,693 159 18,709 1,590 3,357 1,727 55,235
Net book amounts
At 31 December 2022 11,914 35 482,981 1,728 8,899 1,883 507,440
At 30 June 2023 16,082 45 512,876 1,400 18,828 1,512 550,743
Intangible assets 16,082 45 512,876 1,400 18,828 1,512 550,743
Right-of-use assets - - - - - - -
At 30 June 2023 16,082 45 512,876 1,400 18,828 1,512 550,743
Included in intangible assets are assets under construction to the net book
value of €5,453,000 (2022: €2,323,000). Amortisation has not commenced on
these assets.
Reconciliation to Balance Sheet 30 June 31 December
2023 2022
€'000 €'000
Intangible assets- goodwill 512,876 482,981
Intangible assets- other assets 37,867 24,459
Intangible assets total 550,743 507,440
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
2022 and consequently no impairment indicators were identified. The Group's
annual impairment assessment will be performed at 31 December 2023.
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 2023 149,672 16,183 39,662 14,192 6,742 7,825 6,568 240,844
Foreign exchange movement 16 19 24 68 9 30 - 166
Additions 1,838 84 8,705 472 558 1,341 837 13,835
Acquisitions 20,567 6,592 - 1,328 704 12 - 29,203
Disposals/retirements (3,355) (417) (25) (1,131) (403) (1,859) (449) (7,639)
At 30 June 2023 168,738 22,461 48,366 14,929 7,610 7,349 6,956 276,409
Accumulated depreciation
At 1 January 2023 34,557 4,622 17,397 6,245 4,097 3,851 3,447 74,216
Foreign exchange movement 66 11 50 54 13 10 - 204
Charge for the period 7,313 852 1,595 1,122 876 1,164 894 13,816
Disposals/retirements (1,695) (227) (23) (1,054) (394) (1,732) (442) (5,567)
At 30 June 2023 40,241 5,258 19,019 6,367 4,592 3,293 3,899 82,669
Net book value
At 31 December 2022 115,115 11,561 22,265 7,947 2,645 3,974 3,121 166,628
At 30 June 2023 128,497 17,203 29,347 8,562 3,018 4,056 3,057 193,740
Reconciliation to Balance Sheet
Property, plant and equipment 7,505 17,203 29,164 8,562 3,018 529 3,057 69,038
Right-of-use assets 120,992 - 183 - - 3,527 - 124,702
Net book value at 30 June 2023 128,497 17,203 29,347 8,562 3,018 4,056 3,057 193,740
Included in property, plant and equipment are assets under construction to the
net book value of €18,659,000 (31 December 2022: €10,708,000).
Depreciation has not commenced on these assets.
9. Assets held for sale
Properties Total
€'000 €'000
At 1 January 2023 1,600 1,600
At 30 June 2023 1,600 1,600
Properties held for sale relate to properties acquired on completion of the
acquisition of Bradley's Pharmacy Group in November 2018. 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 of
€4,000,000 which are secured by these properties. These borrowings have a
carrying value of €1,600,000 at 30 June 2023 (31 December 2022:
€1,600,000).
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
2023
€'000
Authorised:
453.2 million (31 December 2022: 453.2 million) ordinary shares of 8c each 36,256
16.0 million (31 December 2022: 16.0 million) "A" ordinary shares of 8c each 1,280
37,536
Movement in the period in issued share capital presented as equity 30 June
2023
€'000
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 (31 December 2022: 273,015,254) ordinary shares 21,841
11. Borrowings
Bank loans are repayable in the following periods:
30 June 31 December
2023 2022
€'000 €'000
Amounts falling due within one year 16,706 7,490
Amounts falling due between one and five years 216,997 187,431
233,703 194,921
The Group's total bank loans at 30 June 2023 were €233,703,000 (31 December
2022: €194,921,000). Bank loans falling due within one year include
€1,600,000 (31 December 2022: €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 2023, the Group's revolving credit facility loans in use were
subject to an interest margin of +1.5% (2022: +1.5%) on inter-bank interest
rates (EURIBOR, GBP SONIA and USD SOFR).
Bank security
Bank overdrafts (including invoice discounting) and bank loans of
€233,703,000 (31 December 2022: €194,921,000) 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 2023 91,798 488 133 1,641 94,060
Recognised during the period - - 110 - 110
Unwinding of discount 1,281 - - - 1,281
Utilised during the period (4,328) - - - (4,328)
Released during the period (1,654) (30) - - (1,684)
Arising on acquisition - 350 - - 350
Foreign currency movement (1,110) - 6 (41) (1,145)
At 30 June 2023 85,987 808 249 1,600 88,644
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, €4,328,000 of the provision
was utilised in respect of prior periods acquisitions of which payments of
€3,713,000 were made and €615,000 transferred to accruals pending payment.
Deferred contingent consideration of €1,654,000 in respect of acquisitions
completed in prior years were released in the period following a review of
expected performance against earn-out targets.
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, LLC 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
2023 2022
€'000 €'000
Right-of-use assets:
Buildings 120,992 107,268
Plant and equipment 183 278
Motor vehicles 3,527 3,441
Computer Software - 1,139
Net book value of right-of-use assets 124,702 112,126
Lease liabilities:
Current 15,364 14,315
Non-current 123,487 105,919
Total lease liabilities 138,851 120,234
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 2023 were
€2,608,000 (30 June 2022: €1,959,000).
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
2023 2022
€'000 €'000
Buildings 7,113 5,481
Plant and equipment 95 254
Motor vehicles 1,090 1,241
Right-of-use assets depreciation charge 8,298 6,976
Computer Software 190 190
Right-of-use assets amortisation charge 190 190
Interest on lease obligations (note 4) 2,308 1,824
Principal repayments 8,112 6,534
Total cash outflow in respect of leases 10,420 8,358
14. Analysis of net debt
30 June 31 December 30 June
2023 2022 2022
€'000 €'000 €'000
Cash and cash equivalents 55,658 103,704 68,303
55,658 103,704 68,303
Bank loans repayable within one year (16,706) (7,490) (1,664)
Bank loans payable after one year (216,997) (187,431) (140,446)
Bank loans (233,703) (194,921) (142,110)
Net bank debt (178,045) (91,217) (73,807)
Current lease obligations (15,364) (14,315) (12,097)
Non-current lease obligations (123,487) (105,919) (105,370)
Lease obligations (138,851) (120,234) (117,467)
Net debt (316,896) (211,451) (191,274)
15. Reconciliation of operating profit to cash flow from operating activities
Six months ended Six months ended
30 June 30 June
2023 2022
€'000 €'000
Operating profit before exceptional items 34,069 30,862
Cash related exceptional items (12,145) (5,081)
21,924 25,781
Depreciation 13,816 11,497
Amortisation of intangible assets 3,241 2,576
Increase in inventory (8,114) (16,270)
Increase in receivables (44,298) (13,195)
Increase in payables 15,357 8,755
Share based payment expense 1,485 -
Foreign currency translation adjustments 359 22
Cash inflow from operating activities 3,770 19,166
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 2023:
Investments in equity instruments 25 - 25 25
Trade and other receivables ** - 186,883 186,883 186,893
Cash and cash equivalents - 55,658 55,658 55,658
25 242,541 242,566 242,576
* 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 2023:
Borrowings - 233,703 233,703 233,703
Deferred acquisition consideration - 100 100 100
Trade and other payables **** - 268,777 268,777 268,777
Deferred contingent consideration 85,987 - 85,987 85,987
Lease liabilities - 138,851 138,851 138,851
85,987 641,431 727,418 727,418
*** 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
2022.
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 2.5% and 4% (2022: between
2.5% and 4%).
For the fair value of deferred contingent consideration, a 1% increase in the
risk adjusted discount rate at 30 June 2023, holding the other inputs constant
would reduce the fair value of the deferred contingent consideration by
€1.2m. A 1% decrease in the risk adjusted discount rate would result in an
increase of €1.2m 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 2023
Investments in equity instruments - - 25 25
Deferred contingent consideration - - (85,987) (85,987)
- - (85,962) (85,962)
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 2023:
Shares in Deferred Total
unlisted contingent
companies consideration
€'000 €'000 €'000
At 1 January 2023 25 (91,798) (91,773)
Recognised during the period - 3,713 3,713
Unwinding of discount* - (1,281) (1,281)
Released during the period* - 2,269 2,269
Foreign currency movement - 1,110 1,110
At 30 June 2023 25 (85,987) (85,962)
* 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 2022
Annual Report.
17. Acquisitions of subsidiary undertakings
A key strategy of the Group is to expand into higher growth sectors and extend
the capabilities the Group can offer our clients. In line with this strategy,
the Group completed the following acquisition during the financial period:
· McCauley Pharmacy Group
The Group acquired 100% of the ordinary share capital of LXV Remedies Holdings
Limited for consideration of €26,743,000. LXV Remedies Holdings Limited
operates a network of retail pharmacies 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 acquisition completed
during 2023, due to its recent acquisition date. 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 2023 Annual Report as
stipulated by IFRS 3, Business Combinations.
The acquisition completed in 2023 has contributed €34.2m to revenue and
€14.6m 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 2023 would have been €1,246.4m and €28.0m
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
Intangible assets 10,947
Property, plant and equipment 8,636
Property, plant and equipment - Right of use assets 20,567
Other non-current assets 1,320
41,470
Current assets
Inventory 10,225
Trade and other receivables 5,707
Other current assets 105
Cash and cash equivalents 2,874
18,911
Total assets 60,381
LIABILITIES
Non-current liabilities
Lease obligations 22,304
Bank borrowings 22,664
44,968
Current liabilities
Trade and other payables 16,406
Lease obligations 3,901
Deferred tax liability 773
21,080
Total liabilities 66,048
Identifiable net liabilities acquired (5,667)
Group share of net liabilities acquired (5,667)
Goodwill arising on acquisition 32,410
Consideration 26,743
The acquisition in the 2023 financial year of the McCauley Pharmacy Group has
been determined to be a substantial transaction and separate disclosure of the
fair values of the identifiable assets and liabilities has therefore been
made. There were no other business combinations completed during the period.
The gross contractual value of the trade and other receivables as at the
respective dates of acquisition amounted to €5.7m. The fair value of these
receivables is estimated at €5.7m (all of which is expected to be
recoverable).
In the period to 30 June 2023, the Group incurred acquisition costs of €0.8m
relating to acquisitions completed during the period together with costs
incurred on transactions currently under consideration (30 June 2022:
€2.0m). These have been included in administrative expenses in the Group
Income Statement.
2022 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 2022 were performed on a provisional basis. The fair values
attributable to the assets and liabilities of these acquisitions remain
provisional with the exception of Dr Hauschka Limited, Orspec Pharma Group,
Inspired Health and four ICP acquisitions which were purchased prior to
October 2022. There were no fair value adjustments made to the comparative
figures during the subsequent reporting window within the measurement period
imposed by IFRS 3.
18. Post balance sheet events
On 3 July 2023, the Group reached agreement to acquire a further shareholding
in Innerstrength Limited which increases the Group's shareholding from 82.3%
to 99.0%.
On 4 August 2023, the Group reached agreement to acquire part of the business
and assets of Pivot Digital Health Limited. This acquisition further expands
our digital offering in the omni-channel consultancy and healthcare
practitioner (HCP) engagement areas.
There have been no other material events subsequent to 30 June 2023 that would
require adjustment to or disclosure in this report.
19. Approval by the Board of Directors
The Directors approved the interim financial statements on 13 September 2023.
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
2023 2022
€'000 €'000
Operating profit Income Statement 28,006 25,078
Exceptional charge recognised in operating profit Note 3 6,063 5,784
Depreciation Note 8 13,816 11,497
Amortisation Note 7 3,241 2,576
EBITDA 51,126 44,935
Adjust for the impact of IFRS 16 (10,421) (8,349)
Pro-forma EBITDA of acquisitions 33 454
Adjusted EBITDA 40,738 37,040
Net bank debt
30 June 31 December 30 June
2023 2022 2022
€'000 €'000 €'000
Cash and cash equivalents Balance Sheet 55,658 103,704 68,303
Bank loans repayable within one year Balance Sheet (16,706) (7,490) (1,664)
Bank loans payable after one year Balance Sheet (216,997) (187,431) (140,446)
Net bank debt (178,045) (91,217) (73,807)
Net debt
30 June 31 December 30 June
2023 2022 2022
€'000 €'000 €'000
Net bank debt APMs (178,045) (91,217) (73,807)
Current lease obligations Balance Sheet (15,364) (14,315) (12,097)
Non-current lease obligations Balance Sheet (123,487) (105,919) (105,370)
Net debt (316,896) (211,451) (191,274)
Leverage
30 June 31 December 30 June
2023 2022 2022
€'000 €'000 €'000
Net bank debt APMs (178,045) (91,217) (73,807)
Rolling 12 months adjusted EBITDA 91,182 91,370 75,999
Leverage (times) 1.95 1.0 0.97
Adjusted operating profit
30 June 30 June
2023 2022
€'000 €'000
Operating profit Income Statement 28,006 25,078
Amortisation of acquisition related intangibles Note 7 1,636 1,423
Exceptional charge recognised in operating profit Note 3 6,063 5,784
Adjusted operating profit 35,705 32,285
Adjusted earnings per share
Six months ended Six months ended
30 June 30 June
2023 2022
€'000 €'000
Adjusted earnings per share has been calculated by reference to the following:
Profit for the financial period attributable to owners 15,012 16,061
Exceptional charge recognised in operating profit (note 3) 6,063 5,784
Exceptional credit recognised in finance costs (note 3) (1,654) -
Exceptional credit recognised in income tax (note 3) (615) (284)
Tax credit on acquisition related intangibles (174) (178)
Amortisation of acquisition related intangibles (note 7) 1,636 1,423
Profit after tax excluding exceptional items 20,268 22,806
Weighted average number of shares in issue in the period (000's) 272,815 272,297
Adjusted basic and diluted earnings per ordinary share (in cent) 7.4 8.4
Like for like weighted average number of shares (000's) 272,815 272,815
Like for like adjusted earnings per ordinary share (in cent) 7.4 8.4
Free cash flow conversion
Six months ended Six months ended
30 June Year ended 30 June
2023 31 December 2022
2022
€'000 €'000 €'000
EBITDA APMs 51,126 98,040 44,935
Increase in inventory Note 15 (8,114) (15,130) (16,270)
(Increase)/decrease in receivables Note 15 (44,298) 2,934 (13,195)
Increase in payables Note 15 15,357 2,700 8,755
Share based payment expense Note 15 1,485 535 -
Foreign currency translation adjustments Note 15 359 1,393 22
Payments to acquire property, plant and equipment - maintenance Cash Flow (2,426) (8,299) (3,489)
Payments to acquire intangible assets maintenance Cash Flow (1,209) (3,448) (821)
Settlement of acquired financial liabilities* 938 2,138 1,429
Free cash flow 13,218 80,863 21,366
EBITDA 51,126 98,040 44,935
Free cash flow conversion 25.9% 82.5% 47.5%
*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
2023 2022 2021
€'000 €'000 €'000
Rolling 12 months operating profit 56,084 46,616 43,503
Adjustment for 12 months exceptional costs 16,694 15,508 10,871
Acquisition related 12 months intangible amortisation 2,921 2,813 897
Adjusted 12 months rolling operating profit 75,699 64,937 55,271
Total equity 304,146 263,569 217,697
Net bank debt/(cash) 178,045 73,807 30,341
Deferred contingent consideration 85,987 89,971 81,455
Deferred consideration payable 100 3,977 4,244
Total capital employed 568,278 431,324 333,737
Average capital employed 499,801 382,531
Adjustment for acquisitions (note A / B below) 14,258 7,909
Adjusted average capital employed 514,059 390,440
Return on capital employed 14.7% 16.6%
Note A: Adjustment for acquisitions (2023) Capital Completion Adjustment
employed Date
€'000 €'000
McCauley Pharmacy Group 49,407 Feb-23 (4,117)
BModesto Group 41,901 Nov-22 6,984
Other acquisitions completed during 2022 and 2023 33,532 Various 11,391
Adjustment for acquisitions 14,258
Note B: 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
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.
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