REG - Uniphar PLC - 2023 Preliminary Results
27/02/2024 07:00
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RNS Number : 5228E Uniphar PLC 27 February 2024
Uniphar plc
2023 Preliminary Results
Uniphar plc, an international diversified healthcare services business,
announces its full year results for the year ended 31 December 2023,
delivering a strong performance with EBITDA growth of 17.7%, ROCE of 15.2% and
year-end leverage of 1.6x.
FINANCIAL HIGHLIGHTS
Growth
Year ended 31 December 2023 2022 Reported Constant
€'000 €'000 % Currency(2)
%
Revenue 2,553,062 2,070,669 23.3% 23.6%
Gross profit 389,984 306,744 27.1% 27.8%
Uniphar Supply Chain & Retail 186,927 139,012 34.5% 34.5%
Uniphar Medtech 99,870 90,931 9.8% 10.7%
Uniphar Pharma 103,187 76,801 34.4% 36.0%
Gross profit margin (Group) 15.3% 14.8%
EBITDA(1,4) 115,985 98,575 17.7% 17.9%
Operating profit 67,708 53,155 27.4% 27.8%
Profit before tax excluding exceptional items 53,321 57,900 (7.9%) (7.8%)
Net bank debt(1) (149,947) (91,217)
Basic EPS (cent) 16.4 16.7
Adjusted EPS (cent)(1,4) 18.3 18.6
· Gross profit growth of 27.1% (5.6% organic(3)), with organic
growth across all divisions.
· Continued progression in gross profit margin from 14.8% to 15.3%,
reflecting focus and growth in higher margin activities.
· EBITDA growth of 17.7% to €116.0m (2022: €98.6m), reflecting
the strong organic performance of the Group and the benefit of recent
acquisitions.
· Adjusted EPS of 18.3 cents representing a decline of 0.3 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.
McCauley are recognised as a market leader in the delivery of health,
wellbeing and beauty products.
· Net bank debt of €149.9m as at 31 December 2023 (2021:
€91.2m) and leverage at 1.6x.
· Total dividend for the year of €5.0m (€0.0183 per ordinary
share) representing an increase of 5.2% year-on-year, including a €1.8m
interim (€0.0064 per ordinary share) dividend paid in October and a final
dividend of €3.2m (€0.0119 per ordinary share) subject to approval at the
AGM.
· For 2024, Uniphar expects continued organic gross profit growth
across all divisions and is well positioned to deliver on expectations.
1. Additional information is set out in Alternative Performance
Measures (APMs) section.
2. Constant currency growth is calculated by applying the prior year's
actual exchange rate to the current year'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.
4. The definition of this APM has been changed in 2023 to add back
share-based payment expense as it is a non-cash expense with prior year
comparatives updated accordingly.
STRATEGIC AND OPERATIONAL HIGHLIGHTS
· The Group performed strongly in 2023, achieving its target of
doubling 2018 pro-forma EBITDA ahead of the timeframe committed to at the time
of IPO.
· The Group announced a new ambitious medium-term 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.
· The Group has created a new divisional structure to capitalise on
the attractive growth opportunities in our target markets and better aligns
with our customers and stakeholders during this next phase of growth:
§ Uniphar Supply Chain & Retail: This division remains unchanged in the
new divisional structure.
§ Uniphar Medtech: The Medtech business unit of Commercial & Clinical is
now a standalone division reflecting its position as a leading specialist
Medtech player in Europe.
§ Uniphar Pharma: The Pharma business unit of Commercial & Clinical has
been 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.
· Organic gross profit growth of 5.6% in 2023, driven by growth
across each of our three divisions:
§ Uniphar Supply Chain & Retail: 34.5% gross profit growth of which 5.9%
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.
§ Uniphar Medtech: 9.8% gross profit growth, all of which is organic. The
performance reflects strong market growth, the diversity of our business and
the teams' success in attracting clients to move into new markets.
§ Uniphar Pharma: Delivered 34.4% gross profit growth of which 1.2% is
organic growth. The On Demand business performed very well in 2023, while the
Pharma Services business is refocusing and investing to capitalise on the
market opportunities that the new divisional structure will enable it to
better capitalise on.
· Reported free cash flow conversion of 78.5%. When adjusted for
temporary favourable timing movements, the adjusted free cash flow is 69.3%
which is within our target range of 60-70%.
· We have commenced our multi-year strategic capital expenditure in
an IT and ERP investment programme and this is progressing to plan.
· The Group completed the acquisition of the McCauley Pharmacy
Group in January 2023. In August 2023, the Group completed the acquisition of
certain assets from Pivot Digital, an omni-channel and digital strategy
consulting business.
· Integration of 2022 acquisitions including BModesto Group,
Inspired Health and Orspec Pharma are complete and delivering expected
benefits.
· The Group made continued progress on Sustainability across all
five of our sustainability pillars. The Group's MSCI rating was upgraded to
"AAA" during 2023 and it maintained its CDP 'B' rating for a second
consecutive year. Furthermore, the Group formally submitted Science Based
Targets to SBTi for validation.
Ger Rabbette, Uniphar Group Chief Executive Officer said:
"The Group performed strongly throughout 2023, making further progress against
our financial and strategic objectives. Organic profit growth across all
divisions contributed to 17.7% growth in EBITDA and a 15.2% ROCE. Following
early delivery on our IPO targets, we have created a new divisional structure
to capitalise on our attractive growth opportunities and are now focused on
reaching our ambitious new target of €200m EBITDA over the medium-term"
Analyst presentation
A conference call for analysts and investors will be held at 9.00 am (GMT),
today, 27th February 2024. To register for the call please visit
www.uniphar.ie (http://www.uniphar.ie) .
The details for the conference call are as follows: Ireland: +353 (0) 169 178
42, United Kingdom: +44 (0) 20 3936 2999, United States: +1 646 664 1960, all
other locations +44 20 3936 2999.
Access code: 963047
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 IR
Davy (Joint Corporate Broker, Nominated Advisor and Tel: +353 (0) 1 679 6363
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 Tel: +353 (0) 1 475 1444
Iarla Mongey, Public Relations Advisor to Uniphar Group
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 - Uniphar Supply Chain & Retail, Uniphar Medtech
and Uniphar Pharma. The Group is active in Europe, North America, APAC and
MENA and delivers to 160+ countries.
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.
Uniphar Supply Chain & Retail
Uniphar Supply Chain & Retail is the leading pharmaceutical wholesaler in
Ireland with a growing symbol group offering of retail pharmacies. The Group's
strategy for Uniphar Supply Chain & Retail is to grow our wholesale market
share, our symbol group network and our own brand, in-licenced and consumer
products portfolio.
Uniphar Medtech
Uniphar Medtech is a leading pan-European medical device distributor and
solutions partner. The Group's strategy for Uniphar Medtech is to grow our
service offering across Europe and expand our addressable market by serving
new specialities and new manufacturers.
Uniphar Pharma
Uniphar Pharma operates a global business with high value services across the
lifecycle of a pharmaceutical product. We enable pharma and biotech companies
to bring innovative medicines to global markets and provide healthcare
professionals with access to medicines they cannot source through traditional
channels. Our strategy is to build a leading platform to provide the
specialist support and expertise needed to improve access to these medicines.
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.
Overview
Uniphar delivered a robust performance in 2023, achieving significant growth
in gross profit and EBITDA. Gross profit growth of 27.1% was driven by organic
growth of 5.6% in addition to the impact of recent acquisitions. The diversity
and geographic breadth of our service offering enables the business to deliver
consistent growth.
Uniphar Supply Chain & Retail delivered a very strong performance in a
market characterised by medicine shortages and inflationary pressure on costs.
Uniphar Medtech delivered an excellent performance and has been successful in
attracting clients to move into new markets. In Uniphar Pharma, the On Demand
business performed very well, underpinned by the acquisitions of BModesto and
Orspec Pharma. The Pharma Services business has been refocusing and aligning
its services behind the Uniphar Pharma brand.
Gross profit margin increased to 15.3% (2022: 14.8%), reflecting the continued
shift towards higher margin sectors and businesses.
EBITDA has increased by 17.7% (€17.4m) to €116.0m (2022: €98.6m)
reflecting organic growth achieved across all divisions and the positive
contribution of recent acquisitions. Adjusted EPS of 18.3 cents declined by
0.3 cent reflecting the impact of higher financing costs on the Group.
Return on capital employed (ROCE) for the rolling 12-month period closed at
15.2% (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 multi-year strategic capital expenditure programmes that will
deliver improved growth and returns in the medium-term.
The Group's Balance Sheet remains robust. Net bank debt at 31 December 2023
amounted to €149.9m (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 1.6x as at 31 December 2023
remains within its medium-term target of not exceeding 2.5x.
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 announced ambitious new medium-term targets and 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 recognise the importance of being an industry leader in operating in
the most sustainable and socially responsible way possible and places a high
priority on sustainability, sensitive to our impact on the planet, on our
communities and on our people. Our progress in 2023 was reflected in continued
strong external sustainability rankings; MSCI ESG rating improved to 'AAA'
from 'AA' and we maintained our CDP score of 'B' for the second consecutive
year.
The Unity@Uniphar initiative is an umbrella for inclusivity, community and
charitable activities that Uniphar colleagues get involved in across all
divisions and geographies. Our major initiative in 2023 was Unity for Hope
which collectively raised €150,000 for mental health charities in Ireland,
the USA and the UK.
Our teams also made progress under our environmental pillar, improving our
carbon footprinting initiatives and focusing on ways to decarbonise our
business. We completed the Group's third Group-wide carbon footprinting
exercise to assess our Scope 1 & 2 carbon emissions (based on 2022 data)
and we also completed our second assessment of our Scope 3 emissions.
Furthermore, the Group formally submitted Science Based Targets to SBTi for
validation.
We are also actively preparing to align our sustainability reporting with the
Corporate Sustainability Reporting Directive (CSRD) to ensure compliance.
Current trading and outlook
Uniphar has entered the year with strong momentum and is trading in-line with
expectations.
The Group is well positioned to deliver organic gross profit growth across all
divisions and to deliver on expectations for the full year. Consistent with
its new medium-term targets, the Group is targeting organic gross profit
growth in 2024 as follows:
· Uniphar Supply Chain & Retail: Low single-digit
· Uniphar Medtech: High single-digit
· Uniphar Pharma: Double-digit
M&A will continue to play an important role in Uniphar's growth strategy,
and the Group continues to have a disciplined approach to capital allocation
while managing an active pipeline of acquisition opportunities to further
enhance the Group's growth potential.
Acquisitions and integration update
In January 2023, the Group completed the acquisition of the McCauley Pharmacy
Group. This acquisition added 34 pharmacies. 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.
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
are being integrated into the consultancy arm of Uniphar Pharma broadening the
group's digital offering.
The integration of the 2022 acquisitions, including BModesto Group, Orspec
Pharma and Inspired Health are complete and are performing in line with
expectations.
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.
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 year ended 31
December 2023, the Group carried out the following:
· Reviewed the Group Risk Register, updating for all the key risks
facing the Group at this time.
· Performed a review of emerging and new risks, including
considering the risks associated with ongoing geopolitical events.
· Reviewed the relevance of existing risks and identified the
current principal risks, noting some risks such as Brexit have reduced in
materiality.
· Continued to focus on Cybercrime related risks.
The key principal risks and uncertainties faced by the Group for the year
ended 31 December 2023 are summarised as follows:
Strategic Risks
· Economic, geopolitical and external environment 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 conflicts in Ukraine and the Middle East and
the challenges posed by elevated interest rates and inflation 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 and succession planning - Failure to attract,
retain and develop the skills and expertise of its people may adversely impact
the Group's performance.
· Market perception and 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 and sustainability - The increasing global focus on
environmental and sustainability governance is recognised by the Group, and by
its stakeholders. Failure to appropriately assess, monitor, report 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 environmental and climate change
regulations and legislation may negatively affect the Group.
· Transformational project execution - The Group has embarked 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.
· Pandemic risk - Global pandemics have the potential to cause
significant disruption to the Group and the wider global economy. Covid-19 no
longer represents an immediate threat but there is still a risk that other
variants or pandemics may arise in the future. Such a pandemic could severely
impact our financial results or cause supply chain disruption that would
impact the business and its operations.
· 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 and
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.
Operational overview
Uniphar Supply Chain & Retail
Growth
Year ended 31 December 2023 2022 Reported Constant
€'000 €'000 currency
Revenue 1,711,620 1,557,035 9.9% 9.9%
Gross profit 186,927 139,012 34.5% 34.5%
Gross profit margin 10.9% 8.9%
Performance highlights
- 34.5% growth in gross profit of which 5.9% is organic growth
- Wholesale volumes increased by 4% with growth seen in several
categories
- Continued growth in our consumer business with both our agency
and own brands performing well
- Acquisition of the McCauley Pharmacy Group completed in January
2023 with integration substantially complete and expected synergies being
realised
- Multi-year investment in a new state-of-the-art distribution
facility and IT infrastructure progressing to plan
Who we are
Uniphar Supply Chain & Retail is the integrated pharmaceutical
distribution and retail pharmacy division of the Group. Our mission is to make
a positive impact on the provision of healthcare in Ireland by supplying the
medicines patients need every day. The division comprises Pre-wholesale,
Wholesale and Retail pharmacy businesses that work together to supply
medicines, consumer products and value-adding pharmacy services to our
customers. Uniphar holds c.53% of the wholesale market and c.60% of the
hospital market.
What we do
Pre-wholesale
The pre-wholesale business unit supports pharmaceutical manufacturers with
tailored and innovative distribution solutions to bring their products to the
Irish market. Pre-wholesale is a key element of the vertically integrated
offering that Supply Chain & Retail brings to the market. The business has
continued to support manufacturers in navigating the challenges posed by
supply chain disruptions in recent years to ensure continued supply of product
into Ireland. The Pre-wholesale business performed strongly in 2023.
The business enters 2024 in a strong position with contract renewals completed
with a number of long-standing manufacturers and new business opportunities
being progressed with some key client partners. The increasing growth in
specialist medicines that require temperature-controlled storage and
distribution together with the expertise provided by the Pre-wholesale
business make it well positioned to meet the increasing demand from customers.
Wholesale
The Wholesale business supplies critical medicines to pharmacies and hospitals
in Ireland efficiently, reliably and securely to positively impact the health
of patients. The core of the business is the provision of prescription and OTC
(over the counter) products. Furthermore, we supply a wide range of consumer
products, which continue to be a source of strong growth, and provide
pharmacies with a reliable and integrated offering across a range of brands to
fully service the needs of the customer. Shortages of medicines continued to
be an issue in 2023 as manufacturers faced supply chain challenges but the
business was well positioned to respond to the challenge and support customers
with strong procurement know-how, market intelligence and flexible stock
levels.
Investment in next generation distribution and IT infrastructure continued
throughout 2023. This multi-year investment is essential to provide the
increased capacity required to deliver distribution excellence and
future-proof our market-leading Uniphar Supply Chain & Retail division,
whilst also enabling us to scale our Pharma platform. The investment will
deliver a state-of-the-art distribution facility supported by an upgraded ERP
platform that provides the necessary infrastructure to support the Group's
growth strategy.
Retail
Our Retail pharmacy business unit comprises 429 pharmacies that are owned,
franchised or supported by the Group. The business operates across four brands
- Hickeys, McCauleys, Allcare and Life Pharmacy - and together form one of the
largest pharmacy groups in Ireland. Community pharmacy plays a prominent role
as a trusted support to patients and increasingly as a primary care
destination in the provision of vaccinations and other services. During 2023,
the Allcare Pharmacy brand was voted number one retail brand in Ireland and
number two brand overall for Customer Experience both of which highlight the
commitment of our teams to servicing their customers and communities.
In January 2023, the division completed the acquisition of the McCauley
Pharmacy Group which added 34 pharmacies to the Uniphar network. McCauleys is
widely regarded as a leading brand across health, wellbeing and beauty and its
expertise and advanced digital offering complements our growing consumer
business. The integration of the McCauley acquisition is substantially
complete and the acquisition has performed to plan in 2023.
Performance in 2023
The Uniphar Supply Chain & Retail division delivered a very strong
performance in 2023 with gross profit growth of 34.5% of which 5.9% was
organic growth. This growth was achieved by robust volume growth in Wholesale
in addition to new business opportunities in the Pre-wholesale business. The
Retail division has performed strongly in 2023 against the backdrop of
increasing costs and ongoing supply challenges and was further enhanced by the
impact of the McCauley acquisition.
Outlook
The success of the Uniphar Supply Chain & Retail division continues to be
defined by its commitment to operational excellence and service delivery that
our customers rely on. The relationships we hold with manufacturers,
suppliers, community pharmacists and patients combined with the knowledge of
our people, are leveraged across the Group to enable us to offer a wide range
of services to clients. The focus for 2024 is to continue to provide an
essential service in the Irish market while using our deep market expertise to
respond to market challenges and identify the growth opportunities that these
challenges present. The medium-term organic gross profit growth target for the
division is low single-digit growth. The investment in our new distribution
facility and IT platform will deliver the infrastructure needed to scale the
division further and deliver the comprehensive range of products and services
that both community and hospital pharmacies are seeking in addition to
supporting the digital pharmacy of the future.
Uniphar Medtech
Growth
Year ended 31 December Reported Constant
2023 2022 currency
€'000 €'000
Revenue 249,216 233,204 6.9% 7.8%
Gross profit 99,870 90,931 9.8% 10.7%
Gross margin % 40.1% 39.0%
Performance highlights
- Gross profit growth of 9.8% all of which is organic.
- 72 manufacturers represented in more than one country
- Realigning and rebranding of the Uniphar Medtech business to
capitalise on the market opportunity in the European medtech market with a
number of new supplier contracts signed
- Establishment of a US facility that enables us to support our
medtech partners supply the US market
Who we are
Uniphar Medtech is the partner of choice for manufacturers seeking to bring
innovative Medtech products to market. We provide expertise across sales,
marketing, quality, compliance, regulatory and market access to the world's
top medical device manufacturers across a pan-European platform. The business
is headquartered in Ireland with a presence in 16 markets primarily across
Europe. During 2023, the business opened a facility in the US to support
clients seeking to access this market.
What we do
Uniphar Medtech was formerly a business unit within the Commercial &
Clinical division and in 2023 became a standalone division. This change allows
the Group to better showcase the role Medtech plays in delivering critical
products, innovative technology and transformative solutions at the forefront
of modern healthcare whilst positively impacting patients' health.
We are a high-growth diversified healthcare services provider, offering
best-in-class products and services across multiple specialities to both
public and private sectors. We are experts across a wide range of specialisms
with market leading positions in interventional cardiology/radiology,
orthopaedics, ophthalmology, minimally invasive surgery, diagnostic imaging
and critical care. Uniphar Medtech holds long-standing exclusive distribution
agreements with some of the worlds pre-eminent manufacturers of medical
devices.
Innovation
The Medtech sector has been at the forefront of the healthcare industry in
harnessing the power of innovation to improve the quality of patients' lives.
New products and technologies have been developed in recent years that deliver
operational and cost efficiencies for healthcare providers and better clinical
outcomes for patients. The use of robotics in surgery is one area that
continues to experience growth as physicians increasingly look to technology
to augment their skills with greater precision especially for routine
procedures. Uniphar Medtech is representing global robotic manufacturers in
the orthopaedic and minimal access surgery specialisms, further supporting the
acceleration of healthcare's digital transformation.
Relationships
People and the relationships they nurture are at the centre of Uniphar Medtech
and the business focuses on fostering and growing these connections. Supplier
expansion is a key strategic pillar of our growth strategy. The long-standing
relationships with manufacturers enables our growth into new geographical
regions as well as a number of other opportunities. Uniphar Medtech is one of
only a handful of companies in Europe that is fully accredited with service
licence agreements for several global brands. Our specialist teams work
hand-in-hand with our manufacturer partners to deliver tailored end-to-end
solutions for our customers.
Our manufacturers trust us to represent them in daily interactions with
healthcare professionals and so our relationships with the medical community
are critical. The majority of our sales representatives in the Medtech
division have a clinical background which enables them to engage with
customers in a peer-to-peer manner. Our specialist experts are trusted
partners in sourcing and supporting the delivery of innovative technology in
the clinical setting to meet the varying needs of patients. As Medtech
solutions become more sophisticated, decision-making is increasingly
physician-led as they seek to ensure the right solution for their patients'
circumstances. Our relationship's with these front-line professionals are a
critical asset for the business.
Performance in 2023
The business performed strongly in the year delivering continued growth in
earnings and executing its strategy of consolidating its position as a leading
pan-European medical device player. The division delivered gross profit growth
of 9.8% all of which was achieved through organic growth. This growth was
achieved due to a combination of market and supplier expansion across five
targeted growth specialisms.
The rebranding exercise completed in the year has simplified the division and
enables the team to focus on growing the service offering under a common brand
identity.
The business will continue to leverage its position as a leading distributor
of medical devices in Europe to offer manufacturers access to a broad network
of healthcare professionals in the market. Continued investment in our UK and
European infrastructure throughout 2023 further supports the platform to
facilitate strong growth in those markets in the future.
Outlook
The outlook is strong for Uniphar Medtech with organic gross profit growth of
high single-digit over the medium-term. The Medtech industry is a leader in
innovation and continues to experience high rates of growth as a result of
structural tailwinds. Such tailwinds include ageing populations with
associated chronic disease management needs, innovative emerging technologies
and an increasingly complex regulatory environment that specialists such as
Uniphar Medtech can support manufacturers in navigating through. Uniphar
Medtech has the market access, strong platform, leadership team, skilled
expertise and proven track record to capitalise on the opportunities before
it.
Uniphar Pharma
Growth
Year ended 31 December 2023 2022 Reported Constant
€'000 €'000 currency
Revenue 592,226 280,430 111.2% 112.8%
Gross profit 103,187 76,801 34.4% 36.0%
Gross profit margin 17.4% 27.4%
Performance highlights
- Gross profit growth of 34.4% achieved in 2023, of which 1.2% was
organic
- Gross profit generated from outside of Ireland representing 74%
of divisional gross profit
- New divisional structure that leverages common platforms and
infrastructure to better serve our clients
- Strong performance in the On Demand business responding to the
challenge of shortages in the market
- 14 new Expanded Access Programs (EAPs) onboarded in the year
Who we are
Uniphar Pharma unites what was previously our Product Access division and the
pharma services business unit of the former Commercial and Clinical division.
The division operates a global business, providing integrated high value
services across the lifecycle of a pharmaceutical product.
What we do
We work with pharma and biotech companies to meet the challenges of today's
healthcare market, whether it is bringing innovative medicines to global
markets or providing healthcare professionals with access to medicines they
cannot source through traditional channels.
Over recent years, we have increased our scale and geographical reach and
invested in our infrastructure and resources to create a global sourcing and
service platform that provides solutions to manufacturers and healthcare
professionals to the challenges of getting medicines to patients. We have
created a world-class set of capabilities across the pharma product lifecycle
to meet the needs of our global clients.
On Demand
Our On Demand teams performed strongly in 2023. The acquisitions of BModesto
Group and Orspec Pharma in late 2022 significantly expanded the business'
reach. Well established in Ireland and the UK, our On Demand business now has
a sizeable presence in Europe, along with a growing footprint in the important
US and Asia-Pacific markets. With this strong and growing platform with
worldwide reach, we are focused on providing medicines that are unlicenced,
difficult to source or in short supply to healthcare professionals on a global
basis.
Pharma Services
During 2023 we attracted a number of new major pharma clients as well as
biotechs, particularly in our Expanded Access business, where our unparalleled
experience in areas like cell and gene therapy is differentiating us in the
market. 2023 created a strong platform for growth in 2024 and beyond.
Our service platform supports pharma and biotech through high value-add
services across the lifecycle of a product globally, with particular strength
in Europe and the US. Our capabilities include Outsourced Product Development,
Regulatory Affairs, Clinical Trial Supply, Medical Affairs, Insights driven
Sales & Marketing, Quality and Supply Chain. We continue to build our
capabilities in this division both in Europe and the US. The business was
reorganised and rebranded during 2023 and we look forward to seeing the
benefit of these efforts in 2024.
Future of Pharma
There are a number of important changes in the pharmaceutical industry that
present challenges for both manufacturers and healthcare professionals and
their patients. New complex treatments, reduced production capacity, growing
regulatory burden and a focus on larger markets have changed the balance and
the flow of the healthcare sector. As a result, pharma/biotech companies are
seeking partners with the global expertise and reach to help them to supply
and commercialise their specialist products in smaller markets, and healthcare
professionals everywhere are looking for support to deal with ongoing
shortages in the medicines they need to treat their patients. We have built
the capabilities to meet these differing needs, right across the product
lifecycle.
Performance in 2023
Uniphar Pharma delivered a solid performance in 2023 with gross profit growth
of 34.4% and organic growth of 1.2% being reflective of a year of refocusing
and investing in the division's capabilities to address evolving market
opportunities. Growth was driven by On Demand, with the 2022 acquisitions of
BModesto Group and Orspec Pharma providing growth platforms into the
continental European and Asia Pacific markets. The gross profit margin of the
division has reduced to 17.4% in the year attributable to the differing margin
profile of the newly acquired BModesto Group. The Uniphar Pharma global
sourcing and service platform is well positioned to take advantage of market
opportunities.
Outlook
Uniphar Pharma has strengthened its service offering considerably in recent
years through acquisition and the development of new capabilities. Uniphar
Pharma's target for organic gross profit growth is to deliver double digit
growth over the medium-term. Our flexible and progressive approach to
providing solutions, combined with our enhanced scale and reach, will allow us
to take a leadership position in this market in the medium-term.
Financial Review
Summary Financial Performance
Growth
Year ended 31 December 2023 2022 Reported Constant
€'000 €'000 currency
IFRS measures
Revenue 2,553,062 2,070,669 23.3% 23.6%
Gross profit 389,984 306,744 27.1% 27.8%
Operating profit 67,708 53,155 27.4% 27.8%
Basic EPS (cent) 16.4 16.7
Alternative performance measures
Gross profit margin 15.3% 14.8%
EBITDA 115,985 98,575 17.7% 17.9%
EBITDA % 4.5% 4.8%
Adjusted EPS (cent) 18.3 18.6
Net bank debt (149,947) (91,217)
Return on capital employed 15.2% 17.3%
Revenue
Revenue exceeded €2.5bn in the year increasing by 23.3% (23.6% constant
currency). Revenue increased in all three divisions with the most significant
increase being in Uniphar Pharma which is attributable to the full year impact
of the acquisition of the BModesto Group.
Gross Profit
Gross profit growth of 27.1% (27.8% constant currency) was achieved in the
year through a mix of 5.6% organic growth and the impact of the McCauley
acquisition in early 2023 together with the acquisitions completed towards the
end of 2022. Growth was achieved across each of the divisions with Uniphar
Pharma delivering 34.4% gross profit growth largely due to the acquisition of
BModesto Group. Uniphar Medtech and Uniphar Supply Chain & Retail both
delivered strong organic gross profit growth of 9.8% and 5.9% respectively.
Gross profit margin increased from 14.8% to 15.3% reflecting a shift towards
higher margin sectors and businesses. In 2023, 30% (2022: 32%) of the Group's
gross profit was generated outside of Ireland.
Divisional gross profit
Growth
Year ended 31 December 2023 2022 Reported Constant Organic
€'000 €'000 Currency
Uniphar Medtech 99,870 90,931 9.8% 10.7% 9.8%
Uniphar Pharma 103,187 76,801 34.4% 36.0% 1.2%
Uniphar Supply Chain & Retail 186,927 139,012 34.5% 34.5% 5.9%
389,984 306,744 27.1% 5.6%
Administrative expenses
Administrative expenses have increased by €68.4m to €235.6m in 2023. This
increase is principally attributable to the full year impact of the 2022
acquisitions together with the acquisition of the McCauley Pharmacy Group in
early 2023.
EBITDA
EBITDA increased by €17.4m to €116.0m. This represents growth of 17.7% in
the year (constant currency 17.9%). The full year impact of 2022 acquisitions
including the BModesto Group, Orspec Pharma and Inspired Health together with
the 2023 acquisition of McCauley Pharmacy has driven an increase in EBITDA.
There has been a continued focus on cost management and this has been
particularly important given the inflationary challenges experienced in the
year.
Exceptional Items
Exceptional items in the year amounted to a charge of €0.4m before tax
(2022: €3.2m). This includes costs of €10.0m primarily relating to
acquisition, integration, redundancy, restructuring, loss on disposal of
businesses and assets and strategic business transformation costs. This was
offset by a release of deferred contingent consideration of €9.6m, following
a review of the expected performance against earn-out targets and contractual
obligations. Further details can be found in Note 3.
Earnings per Share
Basic earnings per share for the year at 16.4 cent is a reduction of 0.3 cent
on 2022 which reflects strong growth in operating profit being offset by an
increase in finance costs due to increased levels of borrowing together with
the impact of significantly higher interest rates. The weighted average number
of shares also marginally increased in 2023, reflecting the full year impact
of LTIP shares on which the performance conditions were satisfied.
Adjusted earnings per share is calculated after adjusting for amortisation of
acquisition related intangibles, exceptional costs and share-based payment
expenses. The Group's adjusted earnings per share for 2023 was 18.3 cent
(2022: 18.6 cent). Underlying earnings have decreased marginally by 1.3% from
€50.6m in 2022 to €50.0m in 2023. There was a 0.2% increase in the
weighted average number of shares in issue compared to 2022.
Cash Flow and Net Bank Debt
The Group delivered a strong cash performance during the year, with a free
cash flow conversion of 78.5% and a net bank debt position of €149.9m (2022:
€91.2m).
Year ended 31 December 2023 2022
€'000 €'000
Net cash inflow from operating activities 52,511 82,831
Net cash outflow from investing activities (90,428) (106,332)
Net cash inflow from financing activities 19,630 50,405
Foreign currency translation movement 235 (1,225)
(Decrease)/increase in cash and cash equivalents in the year (18,052) 25,679
Movement in restricted cash 173 -
Non-cash movement in borrowings 577 14,423
Cash flow from movement in borrowings (41,428) (83,022)
Movement in net bank debt (58,730) (42,920)
The Group continues to maintain a strong focus on working capital management,
and this is reflected in the cash generated from operating activities of
€52.5m. The main year on year movements in cash generated from operating
activities reflects higher interest and tax paid in the year together with a
one off increase of €15m in 2022 relating to an increase in our non-recourse
facility. Free cash flow conversion for the period was 78.5%, which exceeds
the medium-term free cash flow conversion target of 60-70%.
The net cash outflow from investing activities of €90.4m principally
consisted of acquisitions completed during the year of €29.8m (net of cash
acquired), capital investment of €32.0m (including strategic capital
invested), deferred and deferred contingent consideration payments of €9.4m
and repayment of debt acquired on the McCauley acquisition of €22.7m. This
is offset by receipts from disposals of property, plant and equipment and
businesses (net of cash disposed and disposal expenses) of €1.7m and
receipts from disposal of assets held for sale of €1.6m.
The net cash inflow from financing activities of €19.6m was due to a net
increase in borrowings and invoice discounting facilities offset by principal
lease payments and the payment of dividends.
Debt Facility
In August 2022, we entered a new five-year debt facility (with one option
remaining to extend by a further one year) which provides a revolving credit
facility of €400m with an additional uncommitted accordion facility of
€150m. There are seven international banks in the current banking syndicate.
Net bank debt was €149.9m (2022: €91.2m) at year-end and leverage remained
modest at 1.6x. The expanded facility combined with modest leverage and strong
free cash flow provides the Group with the platform to support future growth
and investment.
Taxation
The Group's tax charge has decreased by €1.2m to €7.8m driven largely by
the reduction in pre-exceptional profits on account of the higher global
interest rates environment. The effective tax rate before exceptional items
has decreased from 17.4% to 16.6% reflective of the financial performance over
multiple tax jurisdictions. The effective tax rate is calculated as the
pre-exceptional income tax charge for the year as a percentage of the profit
before tax and exceptional items.
Currency Exposure
The Group continues to expand into new geographies which, together with the
continued growth in existing geographies outside of the Eurozone, results in a
foreign exchange exposure for the Group being the translation of local income
statements and balance sheets into Euro for consolidation purposes.
On a constant currency basis, revenue increased by 23.6% vs 23.3% reported
growth, gross profit increased 27.8% vs 27.1% reported growth and operating
profit increased by 27.8% vs 27.4% reported growth.
2023 2022
Average Average
GBP 0.870 0.852
US Dollar 1.081 1.051
Swedish Krona 11.473 10.623
Return on Capital Employed (ROCE)
Group ROCE in 2023 of 15.2% (2022: 17.3%) is lower than prior year but ahead
of the Group's target of 12% - 15%. The reduction from 2022 reflects the
impact of the multi-year investment in a new high-tech distribution facility
in Ireland. This facility will be operational in the second half of 2026
delivering efficiencies and supporting growth in the longer term. The
investments made during 2023 are performing well and will deliver further
benefits and growth in the future.
Details on how this was calculated are included in the APMs section.
Dividends
The Board remains committed to a progressive dividend policy as stated at the
time of IPO. The Directors are proposing a final dividend of €3.2m
(€0.0119 per ordinary share), subject to approval at the Company's AGM. It
is proposed to pay the dividend on 14 May 2024 to ordinary shareholders on the
Company's register at 5pm on 19 April 2024. Together with the interim dividend
of €1.8m (€0.0064 per ordinary share) paid in October 2023 this brings the
total dividend for the year to €5m (€0.0183 per ordinary share)
representing an increase of 5.2% on 2022.
Group Income Statement
for the year ended 31 December 2023
2023 2023 2023 2022 2022 2022
Pre- Exceptional Total Pre- Exceptional Total
exceptional (Note 3) exceptional (Note 3)
Notes €'000 €'000 €'000 €'000 €'000 €'000
Revenue 2 2,553,062 - 2,553,062 2,070,669 - 2,070,669
Cost of sales (2,163,078) - (2,163,078) (1,763,925) - (1,763,925)
Gross profit 389,984 - 389,984 306,744 - 306,744
Selling and distribution costs (76,976) - (76,976) (70,055) - (70,055)
Administrative expenses (235,648) (8,865) (244,513) (167,275) (16,415) (183,690)
Other operating income/(expense) 395 (1,182) (787) 156 - 156
Operating profit 77,755 (10,047) 67,708 69,570 (16,415) 53,155
Finance cost 4 (25,024) 9,624 (15,400) (11,766) 13,191 1,425
Finance income 4 590 - 590 96 - 96
Profit before tax 53,321 (423) 52,898 57,900 (3,224) 54,676
Income tax expense (8,834) 1,084 (7,750) (10,076) 1,106 (8,970)
Profit for the financial year 44,487 661 45,148 47,824 (2,118) 45,706
Attributable to:
Owners of the parent 44,815 45,587
Non-controlling interests 333 119
Profit for the financial year 45,148 45,706
Attributable to:
Continuing operations 45,148 45,706
Profit for the financial year 45,148 45,706
Earnings per ordinary share (in cent):
Continuing operations 16.4 16.7
Basic and diluted earnings per share (in cent) 5 16.4 16.7
Group Statement of Comprehensive Income
for the year ended 31 December 2023
2023 2022
€'000 €'000
Profit for the financial year 45,148 45,706
Other comprehensive income/(expense)
Items that may be reclassified to the Income Statement:
Unrealised foreign currency translation adjustments 697 (3,356)
Total comprehensive income for the financial year 45,845 42,350
Attributable to:
Owners of the parent 45,512 42,231
Non-controlling interests 333 119
Total comprehensive income for the financial year 45,845 42,350
Attributable to:
Continuing operations 45,845 42,350
Total comprehensive income for the financial year 45,845 42,350
Group Balance Sheet
As at 31 December 2023
2023 2022
ASSETS Notes €'000 €'000
Non-current assets
Intangible assets - goodwill 7 517,087 482,981
Intangible assets - other assets 7 44,565 24,192
Property, plant and equipment, and right-of-use assets 8 206,700 166,628
Financial assets - Investments in equity instruments 25 25
Deferred tax asset 11,792 9,020
Other receivables 1,458 509
Total non-current assets 781,627 683,355
Current assets
Inventory 184,549 157,673
Trade and other receivables 237,560 164,462
Cash and cash equivalents 85,652 103,704
Restricted cash 173 -
Assets held for sale 9 - 1,600
Total current assets 507,934 427,439
Total assets 1,289,561 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 3,542 718
Other reserves 2,705 2,008
Retained earnings 128,213 88,476
Attributable to owners 332,802 289,544
Attributable to non-controlling interests 818 239
Total equity 333,620 289,783
LIABILITIES
Non-current liabilities
Borrowings 11 222,604 187,431
Deferred contingent consideration 12 31,538 56,683
Provisions 13 1,752 2,262
Lease obligations 14 126,083 105,919
Total non-current liabilities 381,977 352,295
Current liabilities
Borrowings 11 13,168 7,490
Deferred contingent consideration 12 43,523 35,115
Lease obligations 14 20,134 14,315
Trade and other payables 490,283 407,206
Corporation tax 6,856 4,590
Total current liabilities 573,964 468,716
Total liabilities 955,941 821,011
Total equity and liabilities 1,289,561 1,110,794
Group Cash Flow Statement
Year ended 31 December 2023
2023 2022
Notes €'000 €'000
Operating activities
Cash inflow from operating activities 16 82,149 82,704
Proceeds from non-recourse financing - 15,000
Interest paid (16,186) (5,293)
Interest received 590 96
Interest paid on lease liabilities 14 (4,884) (3,644)
Corporation tax payments (9,158) (6,032)
Net cash inflow from operating activities 52,511 82,831
Investing activities
Payments to acquire property, plant and equipment - Strategic projects (14,066) (5,657)
Payments to acquire property, plant and equipment - Maintenance (7,192) (8,299)
Receipts from disposal of property, plant and equipment (net of disposal 991 128
expenses)
Receipts from disposal of businesses (net of cash disposed and disposal 718 -
expenses)
Payments to acquire intangible assets - Strategic projects (6,925) (2,517)
Payments to acquire intangible assets - Maintenance (3,771) (3,448)
Receipts from disposal of assets held for sale 9 1,600 -
Payments to acquire subsidiary undertakings (net of cash acquired) (29,809) (67,248)
Repayment of debt acquired on acquisition of subsidiary undertakings (22,664) (9,420)
Payments on prior year acquisitions (842) (937)
Payment of deferred and deferred contingent consideration (8,568) (9,282)
Receipt of deferred consideration receivable 100 348
Net cash outflow from investing activities (90,428) (106,332)
Financing activities
Proceeds from borrowings 35,750 98,174
Repayments of borrowings (1,600) (19,769)
Increase/(decrease) in invoice discounting facilities 7,278 (9,806)
Movement in restricted cash (173) -
Payment of dividends (4,832) (4,666)
Principal element of lease payments (16,604) (13,192)
Acquisition of further equity in subsidiaries (189) (336)
Net cash inflow from financing activities 19,630 50,405
(Decrease)/increase in cash and cash equivalents in the year (18,287) 26,904
Foreign currency translation on cash and cash equivalents 235 (1,225)
Opening balance cash and cash equivalents 103,704 78,025
Closing balance cash and cash equivalents 15 85,652 103,704
Group Statement of Changes in Equity
for the year ended 31 December 2023
Share Share Share- Foreign Revaluation Capital Retained Attributable Total
capital premium based currency reserve redemption earnings to non- shareholders'
payment translation reserve controlling equity
reserve 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 year - - - - - - 45,587 119 45,706
Other comprehensive expense
Movement in foreign currency translation reserve - - - (3,356) - - - - (3,356)
Transactions recognised directly in equity:
Movement in share-based payment reserve - - 535 - - - - - 535
Dividends paid - - - - - - (4,666) - (4,666)
At 31 December 2022 21,841 176,501 718 1,248 700 60 88,476 239 289,783
At 1 January 2023 21,841 176,501 718 1,248 700 60 88,476 239 289,783
Profit for the financial year - - - - - - 44,815 333 45,148
Other comprehensive income
Movement in foreign currency translation reserve - - - 697 - - - - 697
Transactions recognised directly in equity:
Movement in share-based payment reserve - - 2,824 - - - - - 2,824
Purchase of non-controlling interest - - - - - - (246) 246 -
Dividends paid - - - - - - (4,832) - (4,832)
At 31 December 2023 21,841 176,501 3,542 1,945 700 60 128,213 818 333,620
Notes to the Consolidated Financial Statements
1. General information
Basis of preparation
The 2023 financial statements have been audited, with an unqualified audit
report and have been approved by the Board of Directors. The financial
information set out in this document does not constitute full statutory
financial statements but has been derived from the Group financial statements
for the year ended 31 December 2023. In accordance with the AIM and Euronext
Growth Rules the consolidated financial statements of Uniphar plc and its
subsidiaries (the 'Group') have been prepared in accordance with International
Financial Reporting Standards (IFRS) and interpretations issued by the IFRS
Interpretations Committee (IFRS IC) applicable to companies reporting under
IFRS, as adopted by the EU and as applied in accordance with the Companies
Acts 2014.
The financial information in the consolidated financial statements has been
prepared on a basis consistent with that adopted for the year ended 31
December 2022.
The Group's consolidated financial statements are prepared for the year ended
31 December 2023. The consolidated 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.
The statutory financial statements will be filed with the Companies
Registration Office in line with the Annual Return date.
Going Concern
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 committed outflows including deferred contingent
consideration and committed capital expenditure. Consideration was also given
to possible changes in trading performance and potential business risk. The
forecasts indicate significant liquidity headroom will be maintained above the
Group's borrowing facilities and applicable financial covenants will be met
throughout the period.
The Group has a robust capital structure with strong liquidity, supported into
the future by the banking facility with a remaining term extending to August
2027 (with one option remaining 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 financial statements. As a result, the Directors
consider that it is appropriate to continue to adopt the going concern basis
in preparing the financial statements.
New Standards, Amendments, and Interpretations
The Group has applied the following standards and amendments for the first
time for its annual reporting period commencing 1 January 2023:
· Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of
Accounting Policies
· Amendments to IAS 8 - Definition of Accounting Estimate
· Amendment to IAS 12 - Deferred tax related to assets and
liabilities arising from a single transaction
· IFRS 17 Insurance Contracts
· Amendment to IAS 12 - International tax reform - Pillar two model
rules.
The amendments listed above did not have any impact on the amounts recognised
in prior periods and are not expected to significantly affect the current or
future periods.
New standards and interpretations not yet adopted
The following accounting standards and interpretations have been published but
are not mandatory for 31 December 2023 reporting periods and have not been
early adopted by the Group:
· Agenda Discussion - Definition of a Lease - Substitution Rights
(IFRS 16)
· Classification of Liabilities as Current or Non-current -
Amendments to IAS 1 Non-current Liabilities with Covenants - Amendments to IAS
1
· Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
· Supplier finance arrangements - Amendments to IAS 7* and IFRS 7
· Amendments to IAS 21* to clarify the accounting when there is a
lack of exchangeability
· Amendments to IAS 1, 'Presentation of financial statements', on
classification of liabilities
· Amendments to IAS 1, Non-current Liabilities with Covenants.
*These amendments have not yet been endorsed by the European Union
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 2,553,062 2,070,669
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 three principal geographical regions being the Republic
of Ireland, the Netherlands and the UK. The Netherlands became material in
2023 and therefore we have included the Netherlands split in 2022 for
comparison purposes. The Group also operates in several other European
countries, the US and the 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 1,952,604 1,765,064
UK 186,820 142,157
The Netherlands 205,905 49,396
Rest of the World 207,733 114,052
2,553,062 2,070,669
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
changed its operating segments with effect from 1 January 2023 and comparative
amounts have been restated.
The Group operates with three divisions: Uniphar Medtech, Uniphar Pharma, and
Uniphar Supply Chain & Retail. These divisions align to the Group's
operational and financial management structures:
· Uniphar Medtech provides outsourced services, specifically sales,
distribution and support services to medical device manufacturers. Uniphar
Medtech was a business unit within the former Commercial & Clinical
division but became a standalone division in 2023. The business is
headquartered in Ireland with a presence in 16 markets primarily across
Europe. During 2023, the business opened a facility in the US to support
clients seeking to access the North American market.
· Uniphar Pharma operates a global business with high value
services across the lifecycle of a pharmaceutical product. The business
enables pharma and biotech companies to bring innovative medicines to global
markets and provide healthcare professionals with access to medicines they
cannot source through traditional channels. Our strategy is to build a leading
platform to provide the specialist support and expertise needed to improve
access to these medicines. The division operates through its On Demand and
Pharma Services business units; and
· Uniphar 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
operates a network of pharmacies under the Life, Allcare, Hickey's and
McCauleys 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.
2023 2023 2023 2023
Uniphar Medtech Uniphar Pharma Uniphar Supply Chain Total
€'000 €'000 & Retail
€'000 €'000
Revenue 249,216 592,226 1,711,620 2,553,062
Gross profit 99,870 103,187 186,927 389,984
2022 2022 2022 2022
Uniphar Medtech Uniphar Pharma Uniphar Supply Chain Total
€'000 €'000 & Retail
€'000 €'000
Revenue 233,204 280,430 1,557,035 2,070,669
Gross profit 90,931 76,801 139,012 306,744
Assets and liabilities are reported to the Board at a Group level and are not
reported on a segmental basis.
3. Exceptional income/(charge)
2023 2022
€'000 €'000
Professional fees including acquisition costs (2,206) (6,607)
Redundancy and restructuring costs (2,679) (6,165)
Acquisition integration costs (2,611) (3,337)
Strategic business transformation (1,413) -
Loss on disposals of businesses and assets (1,182) -
Other exceptional income/(costs) 44 (306)
Exceptional charge recognised in operating profit (10,047) (16,415)
Decrease in deferred contingent consideration 9,624 12,030
Decrease in deferred acquisition consideration - 109
Change in discount rates on deferred contingent consideration - 1,405
Refinancing costs impairment - (353)
Exceptional credit recognised in finance cost 9,624 13,191
Exceptional credit recognised in income tax 1,084 1,106
Total exceptional income/(charge) 661 (2,118)
Professional fees including acquisition costs:
Professional fees including acquisition costs incurred during 2023 are
primarily costs relating to the acquisitions disclosed in note 18 together
with costs incurred on transactions under consideration in the year.
Redundancy and Restructuring:
Redundancy and restructuring costs include redundancy, ex gratia and
termination costs and other costs arising on reorganisations and recent
acquisitions.
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.
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.
Deferred contingent consideration:
Deferred contingent consideration relates to a release of €6,768,000
following a review of expected performance against contractual earn out
targets in relation to US-based acquisitions completed in prior years. A
further amount of €2,856,000 was released in respect of three other
acquisitions that have reached the end of their contractual earn out periods.
In the prior year, deferred contingent consideration relates to a release of
€12,030,000 following a review of expected performance against earn out
contractual targets in relation to Diligent Health Solutions, LLC and the EPS
Group.
Deferred acquisition consideration:
In 2022, an amount of €109,000 was released from deferred acquisition
consideration for one independent community pharmacy.
Change in discount rates on deferred contingent consideration:
The discount rates used to compute the present value of the deferred
contingent consideration liability are reviewed periodically. At 31 December
2022, the discount rates were increased resulting in a credit of €1,405,000
to the Income Statement. The discount rates remain unchanged at 31 December
2023.
Refinancing costs:
The Group entered a new and enlarged borrowing facility in August 2022 ahead
of the expiration of the previous facility. As the previous facility has been
superseded, the remaining fees capitalised in respect of it have been charged
to the Income Statement in the prior year.
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 (1,230) (118) (1,348)
Goodwill 7 (1,984) - (1,984)
Inventories (523) - (523)
Trade and other receivables (229) - (229)
Cash disposed (135) - (135)
Trade and other payables 522 - 522
Other non-current liabilities 791 - 791
(2,788) (118) (2,906)
Consideration
Cash received 1,436 968 2,404
Disposal related costs (583) (97) (680)
853 871 1,724
(Loss)/Profit on disposal of businesses and assets (1,935) 753 (1,182)
Net cash inflow on disposal: Businesses Assets Total
2023 2023 2023
€'000 €'000 €'000
Cash received 1,436 968 2,404
Less: Cash disposed (135) - (135)
Less: Disposal related costs paid (583) (97) (680)
Net cash inflow on disposal 718 871 1,589
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 together with
the assets of a retail pharmacy in Navan, Co. Meath all 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 loss on disposal of these businesses was €1,935,000.
Profit on disposal of assets
During the period, the Group disposed of a property included in property,
plant and equipment. The consideration from this disposal amounted to
€968,000 resulting in a net profit on disposal of €753,000.
4. Finance cost and Finance income
2023 2022
€'000 €'000
Finance income
Interest income (590) (96)
(590) (96)
Finance cost
Interest on lease obligations (Note 14) 4,884 3,644
Interest payable on borrowings and non-recourse financing 17,199 5,646
Fair value adjustment to deferred and deferred contingent consideration 2,510 2,137
Amortisation of refinancing transaction fees 431 339
Finance cost before exceptional credit 25,024 11,766
Decrease in fair value of deferred contingent consideration (Note 3) (9,624) (13,544)
Release of refinancing transaction fees (Note 3) - 353
Exceptional credit recognised in finance cost (9,624) (13,191)
Finance cost/(income) 15,400 (1,425)
Finance costs do not include capitalised borrowing costs of €791,000 (2022:
€66,000) on qualifying assets (Notes 7 and 8). Interest is capitalised at
the Group's weighted average interest rate for the period 5.3% (2022: 2.1%).
5. Earnings per share
Basic and diluted earnings per share have been calculated by reference to the
following:
2023 2022
Profit for the financial year attributable to owners (€'000) 44,815 45,587
Weighted average number of shares ('000) 273,015 272,557
Earnings per ordinary share (in cent):
- Basic 16.4 16.7
- Diluted 16.4 16.7
In 2023, the weighted average number of shares in the year equalled the number
of issued ordinary shares of the Company. In 2022, the weighted average number
of ordinary shares includes the effect of 6,543,620 shares (2022: 2,822,264 on
a weighted basis) granted under the LTIP that have met the share price
performance conditions, but will not vest until 31 December 2024. There is no
impact on the weighted average number of ordinary shares granted under new
senior management share option schemes in the year (2022: nil shares).
Adjusted earnings per share is an Alternative Performance Measure (APM).
Adjusted earnings per share supports the understanding of performance by
excluding the impact of exceptional items and non-cash items that may not
correlate to the underlying performance of the business. During 2023, the
Group amended the definition of Adjusted earnings per share to addback
share-based payment expense since it is a non-cash expense arising from the
grant of share-based awards to employees. This change enhances the
understanding and comparability of the financial statements as such non-cash
expenses may not correlate to the underlying performance of the business.
Comparative amounts for 2022 have been updated accordingly for comparability.
Adjusted earnings per share has been calculated by reference to the following:
2023 2022
€'000 €'000
Profit for the financial year attributable to owners 44,815 45,587
Exceptional (credit)/charge recognised in Income Statement (Note 3) (661) 2,118
Share-based payments 2,824 535
Amortisation of acquisition related intangibles 3,341 2,708
Tax credit on acquisition related intangibles (363) (329)
Profit after tax excluding exceptional items 49,956 50,619
Weighted average number of shares in issue in the year (000's) 273,015 272,557
Adjusted basic and diluted earnings per ordinary share (in cent) 18.3 18.6
6. Dividends
The Directors have proposed a final dividend of €3.2m (€0.0119 per
ordinary share), subject to approval at the AGM. This results in a total
shareholders dividend of €5.0m (€0.0183 per ordinary share) in respect of
the year ended 31 December 2023 as the Board declared and paid a 2023 interim
dividend of €1.8m (€0.0064 per ordinary share). If approved, the proposed
dividend will be paid on 14 May 2024 to ordinary shareholders on the Company's
register on 19 April 2024. This dividend has not been provided for in the
Balance Sheet at 31 December 2023, as there was no present obligation to pay
the dividend at year end.
A final dividend of €3.1m (€0.0113 per ordinary share) relating to 2022
was paid in May 2023.
7. Intangible assets
Computer Trademark & licences Goodwill Technology assets Brand names Customer relationships Total
software €'000 €'000 €'000 €'000
€'000 €'000 €'000
Cost
At 1 January 2023 41,680 189 501,690 3,047 11,238 3,322 561,166
FX movement 14 - (1,760) (83) - (115) (1,944)
Acquisitions (note 18) - - 37,850 468 10,947 - 49,265
Additions 16,829 15 - - - - 16,844
Disposals/retirements (3,805) - (1,984) - - - (5,789)
At 31 December 2023 54,718 204 535,796 3,432 22,185 3,207 619,542
Amortisation
At 1 January 2023 30,033 154 18,709 1,319 2,339 1,439 53,993
FX movement 4 - - (33) - (64) (93)
Amortisation 2,853 10 - 558 2,127 656 6,204
Disposals/retirements (2,214) - - - - - (2,214)
At 31 December 2023 30,676 164 18,709 1,844 4,466 2,031 57,890
Net book amounts
At 31 December 2022 11,647 35 482,981 1,728 8,899 1,883 507,173
At 31 December 2023 24,042 40 517,087 1,588 17,719 1,176 561,652
Intangible assets 24,042 40 517,087 1,588 17,719 1,176 561,652
Right-of-use assets - - - - - - -
At 31 December 2023 24,042 40 517,087 1,588 17,719 1,176 561,652
Included in computer software are assets under construction with a net book
value of €16,663,000. Amortisation has not commenced on these assets.
Included in the cost of additions are borrowing costs and payroll costs
capitalised into computer software amounting to €194,000 (2022: €9,000)
and €2,245,000 (2022: €753,000) respectively.
8. Property, plant and equipment, and right-of-use assets
Freehold Leasehold Plant and Fixtures and Computer Motor Instruments Total
land and improvements equipment fittings equipment vehicles
buildings
€'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 (151) (45) (9) 49 1 32 - (123)
Additions 12,910 2,998 14,927 2,106 1,464 3,650 1,758 39,813
Acquisitions (note 18) 23,531 4,092 349 3,182 1,059 12 - 32,225
Disposals/retirements (4,079) (289) (413) (949) (899) (3,280) (595) (10,504)
Reclassification 679 3,599 (69) (3,243) 22 (1) - 987
At 31 December 2023 182,562 26,538 54,447 15,337 8,389 8,238 7,731 303,242
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 26 8 37 39 13 15 - 138
Charge for the year 15,283 2,056 3,096 2,392 1,741 2,599 2,035 29,202
Disposals/retirements (2,187) (122) (409) (830) (873) (3,001) (579) (8,001)
Reclassification 679 1,218 - (922) 12 - - 987
At 31 December 2023 48,358 7,782 20,121 6,924 4,990 3,464 4,903 96,542
Net book amounts
At 31 December 2022 115,115 11,561 22,265 7,947 2,645 3,974 3,121 166,628
At 31 December 2023 134,204 18,756 34,326 8,413 3,399 4,774 2,828 206,700
Property, plant & equipment 7,305 18,756 34,187 8,413 3,399 494 2,828 75,382
Right-of-use assets 126,899 - 139 - - 4,280 - 131,318
Net book value at 31 December 2023 134,204 18,756 34,326 8,413 3,399 4,774 2,828 206,700
Included in property, plant and equipment are assets under construction with a
net book value of €23,703,000 (2022: €10,708,000). Depreciation has not
commenced on these assets.
Included in the cost of additions is borrowing costs and payroll costs
capitalised into assets amounting to €597,000 (2022: €57,000) and
€73,000 (2022: €310,000) respectively.
9. Assets held for sale
Properties
€'000
At 1 January 2022 1,600
At 31 December 2022 1,600
At 1 January 2023 1,600
Disposals (1,600)
At 31 December 2023 -
During 2023, the Group disposed of €1,600,000 (2022: €nil) of property
which was previously classified as held for sale. 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 were secured by this property.
These borrowings had a carrying value of €1,600,000 at the date of disposal
(2022: €1,600,000) and the disposal proceeds were used to settle the
borrowings.
10. Called up share capital
2023
€'000
Authorised:
453.2 million (2022: 453.2 million) ordinary shares of 8c each 36,256
16.0 million (2022: 16.0 million) "A" ordinary shares of 8c each 1,280
37,536
Movement in the year in issued share capital presented as equity
Allotted, called up and fully paid ordinary shares
At 1 January - 273,015,254 ordinary shares of 8c each 21,841
At 31 December - 273,015,254 ordinary shares of 8c each 21,841
Total allotted share capital:
At 31 December - 273,015,254 (2022: 273,015,254) ordinary shares 21,841
There have been no changes to the authorised or issued share capital in either
2023 or 2022.
11. Borrowings
Bank loans are repayable in the following periods after 31 December:
2023 2022
€'000 €'000
Amounts falling due within one year 13,168 7,490
Amounts falling due between one and five years 222,604 187,431
235,772 194,921
The Group's total bank loans at 31 December 2023 were €235,772,000 (2022:
€194,921,000). Borrowing under invoice discounting (recourse) as at the
balance sheet date was €13,168,000 (2022: €5,890,000).
During 2023, the Group disposed of the property acquired with the Bradley's
Pharmacy Group which was previously classified as held for sale. The
associated non-recourse borrowings with a carrying value of €1,600,000 at
the date of disposal were repaid in conjunction with the property disposal
(Note 9).
The Group entered into a new facility in August 2022. The total loan value of
the revolving credit facility available for use within this agreement is
€400,000,000, with an additional uncommitted accordion facility of
€150,000,000. This facility runs for five years to 2027 with one option
remaining to extend by a further one year with repayment of all loans on
termination of the facility in August 2027.
At 31 December 2023, the Group's revolving credit facility loans in use were
at an interest margin of +1.9% (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
€235,772,000 (2022: €194,921,000) are secured by cross guarantees and
fixed and floating charges from the Company and certain subsidiary
undertakings.
12. Deferred contingent consideration
2023 2022
€'000 €'000
At 1 January 2023 91,798 88,918
Unwinding of discount 2,506 2,073
Arising on acquisition - 17,519
Utilised during the year (8,234) (5,127)
Released during the year (9,624) (12,030)
Change in discount rate - (1,405)
Foreign currency movement (1,385) 1,850
At 31 December 2023 75,061 91,798
Current 43,523 35,115
Non-current 31,538 56,683
Total deferred contingent consideration 75,061 91,798
Deferred contingent consideration
Deferred contingent consideration represents the present value of deferred
contingent acquisition consideration which would become payable based on
pre-defined performance thresholds being met. During the year payments of
€8,234,000 (2022: €5,127,000) were made in respect of prior year
acquisitions. Deferred contingent consideration of €9,624,000 (2022:
€12,030,000) in respect of prior year acquisitions were released in the year
following a review of expected performance against earn-out targets. The
discount rates used to discount the provisions to present value did not
require update at 31 December 2023 resulting in no change arising from changes
in discount rates (2022: €1,405,000). Further details on the measurement of
deferred contingent consideration is provided in note 17.
13. Provisions
Lease Warranty Other Total Total
dilapidation provision
2023 2023 2023 2023 2022
€'000 €'000 €'000 €'000 €'000
GROUP
At 1 January 488 133 1,641 2,262 1,483
Recognised during the year - 28 - 28 1,729
Arising on acquisition 350 - - 350 -
Utilised during the year - - (789) (789) (952)
Released during the year (62) - - (62) (35)
Foreign currency movement - 3 (40) (37) 37
At 31 December 776 164 812 1,752 2,262
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.
14. Leases
(i) Amounts recognised in the Balance Sheet
As at 31 December, the Balance Sheet shows the following amounts relating to
leases:
2023 2022
€'000 €'000
Right-of-use assets:
Buildings 126,899 107,268
Plant and equipment 139 278
Motor vehicles 4,280 3,441
Computer software - 1,139
Net book value of right-of-use assets 131,318 112,126
Lease liabilities:
Current 20,134 14,315
Non-current 126,083 105,919
Total lease liabilities 146,217 120,234
Right-of-use assets are included in the lines 'Intangible assets' and
'Property, plant and equipment, and right-of-use assets' on the Balance Sheet,
and are presented in notes 7 and 8.
Additions to the right-of-use assets during the year ended 31 December 2023
were €16,498,000 (2022: €7,961,000).
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:
2023 2022
€'000 €'000
Depreciation/amortisation charge on right-of-use assets:
Buildings 14,893 11,131
Plant and equipment 191 414
Motor vehicles 2,452 2,434
Right-of-use assets depreciation charge 17,536 13,979
Computer software 189 380
Right-of-use assets amortisation charge 189 380
Interest on lease obligations (note 4) 4,884 3,644
Principal repayments 16,604 13,192
Total cash outflow in respect of leases 21,488 16,836
15. Analysis of net debt
2023 2022
€'000 €'000
Cash and cash equivalents 85,652 103,704
Restricted cash 173 -
85,825 103,704
Bank loans repayable within one year (13,168) (7,490)
Bank loans payable after one year (222,604) (187,431)
Bank loans (235,772) (194,921)
Net bank debt (149,947) (91,217)
Lease obligations (146,217) (120,234)
Net debt (296,164) (211,451)
16. Reconciliation of operating profit to cash flow from operating activities
2023 2022
€'000 €'000
Operating profit before operating exceptional items 77,755 69,570
Cash related exceptional items (17,784) (7,768)
59,971 61,802
Depreciation 29,202 23,356
Amortisation 6,204 5,114
Increase in inventory (16,868) (15,130)
(Increase)/decrease in receivables (67,073) 2,934
Increase in payables 67,717 2,700
Share-based payment expense 2,824 535
Foreign currency translation adjustments 172 1,393
Cash inflow from operating activities 82,149 82,704
17. 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
31 December 2023:
Investments in equity instruments 25 - 25 25
Trade and other receivables ** - 213,202 213,202 213,215
Cash and cash equivalents - 85,652 85,652 85,652
Restricted cash - 173 173 173
25 299,027 299,052 299,065
* Fair value through other comprehensive income.
** Excluding prepayments, accrued income and deferred consideration
receivable.
Financial Financial Total Fair
liabilities at liabilities at value
FVTPL*** amortised
cost
€'000 €'000 €'000 €'000
Financial liabilities
31 December 2023:
Borrowings - 235,772 235,772 235,772
Deferred acquisition consideration - 100 100 100
Trade and other payables **** - 465,350 465,350 465,350
Deferred contingent consideration 75,061 - 75,061 75,061
Lease liabilities - 146,217 146,217 146,217
75,061 847,439 922,500 922,500
*** 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).
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 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 6 months, the nominal amount is deemed to reflect
fair value. For loans with repricing dates of greater than 6 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:
· Expected future profit forecasts which have not been disclosed
due to their commercial sensitivities; and
· Risk adjusted discount rate of between 2.5% and 4.0% (2022: 2.5%
and 4.0%).
For the fair value of deferred contingent consideration, a 1% increase in the
risk adjusted discount rate at 31 December 2023, holding the other inputs
constant would reduce the fair value of the deferred contingent consideration
by €1.0m. A 1% decrease in the risk adjusted discount rate would result in
an increase of €1.0m 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 31 December 2023
Investments in equity instruments - - 25 25
Deferred contingent consideration - - (75,061) (75,061)
- - (75,036) (75,036)
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 year ended
31 December 2023:
Shares in Deferred Total
unlisted contingent
companies consideration
€'000 €'000 €'000
At 1 January 2023 25 (91,798) (91,773)
Utilised during the year - 8,234 8,234
Unwinding of discount* - (2,506) (2,506)
Released during the year * - 9,624 9,624
Foreign currency movement - 1,385 1,385
At 31 December 2023 25 (75,061) (75,036)
* These amounts have been credited/(charged) to the Income Statement in
finance (income)/costs.
Deferred contingent consideration is provided based on management's assessment
of the fair value of the liability taking into account the expected
profitability of the acquisition. The maximum amount of additional deferred
contingent consideration not provided for in the financial statements is
€67,608,000 assuming the acquisitions satisfy all performance conditions as
set out in their acquisition.
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. These 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
Annual Report.
Under the terms of the invoice discounting non-recourse agreement, the Group
has transferred substantially all credit risk and control of certain trade
receivables. The balance of the facility as at 31 December 2023 is
€111,765,000 (2022: €111,765,000). The Group has recognised an asset
within trade and other receivables of €16,765,000 (2022: €16,765,000),
being the fair value of the amount receivable from the financial institutions,
representing 15% of the trade receivables transferred to the financial
institutions in accordance with the terms of the receivables purchase
arrangement. The total interest expense associated with this receivables
purchase agreement during the year ended 31 December 2023 was €4,765,000
(2022: €1,866,000).
18. Acquisitions of subsidiary undertakings and business assets
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 acquisitions during the financial year:
· McCauley Pharmacy Group
The Group acquired 100% of the ordinary share capital of LXV Remedies Holdings
Limited in January 2023 for consideration of €26,613,000. LXV Remedies
Holdings Limited operates a network of retail pharmacies in Ireland.
· Pivot Digital Health
The Group acquired part of the business and assets of Pivot Digital Health
Limited in August 2023 for consideration of €382,000.
· Kieran Hughes Pharmacy Limited
The Group acquired 100% of the ordinary share capital of Kieran Hughes
Pharmacy Limited in November 2023 for consideration of €2,346,000. Kieran
Hughes Pharmacy Limited currently operates an independent retail pharmacy in
Ireland.
· Katari Artane Limited and Katari Coolock Limited
The Group acquired 100% of the ordinary share capital of Katari Artane Limited
and Katari Coolock Limited in November 2023 for consideration of €3,649,000.
Katari Artane Limited and Katari Coolock Limited currently operate as
independent 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 businesses 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 fair value of the deferred and contingent consideration recognised at the
date of acquisition is calculated by discounting the expected future payment
to present value at the acquisition date. In general, for deferred contingent
consideration to become payable, pre-defined profit thresholds must be
exceeded. On an undiscounted basis, the future payments for which the Group
may be liable in respect of acquisitions completed in the current year range
from €nil to €0.1m.
The initial assignment of fair values to net assets acquired has been
performed on a provisional basis in respect of the acquisitions completed
during 2023 (apart from the McCauley Pharmacy Group which has been finalised),
due to their recent acquisition dates. The Group has 12 months from the date
of acquisition to finalise the fair value of the assets/liabilities acquired,
and any amendments to these fair values within the twelve-month period from
the date of acquisition will be disclosable in the 2024 Annual Report as
stipulated by IFRS 3, Business Combinations.
The acquisitions completed in 2023 have contributed €82.4m to revenue and
€34.6m of gross profit for the year since the date of acquisition. The
proforma revenue and operating profit for the Group for the year ended 31
December 2023 would have been €2,565m and €68m respectively had the
acquisitions been completed at the start of the current reporting year.
The provisional fair value of the assets and liabilities acquired as part of
the acquisitions completed during the financial year (apart from the McCauley
Pharmacy Group which has been finalised) are set out below:
McCauley's Others Total
€'000 €'000 €'000
ASSETS
Non-current assets
Intangible assets 10,947 468 11,415
Property, plant and equipment 8,636 58 8,694
Property, plant and equipment - Right of use assets 20,567 2,964 23,531
Other receivables 1,000 - 1,000
41,150 3,490 44,640
Current assets
Inventory 10,225 306 10,531
Trade and other receivables 5,705 486 6,191
Other current assets 48 - 48
Cash and cash equivalents 2,874 206 3,080
18,852 998 19,850
Total assets 60,002 4,488 64,490
LIABILITIES
Non-current liabilities
Lease liabilities 22,304 2,703 25,007
Bank borrowings 22,664 - 22,664
44,968 2,703 47,671
Current liabilities
Lease liabilities 3,901 260 4,161
Trade and other payables 16,406 248 16,654
Deferred tax liability 773 91 864
21,080 599 21,679
Total liabilities 66,048 3,302 69,350
Identifiable (net liabilities)/net assets acquired (6,046) 1,186 (4,860)
Non-controlling interest arising on acquisition - - -
Group share of (net liabilities)/net assets acquired (6,046) 1,186 (4,860)
Goodwill arising on acquisition 32,659 5,191 37,850
Consideration 26,613 6,377 32,990
The acquisition in the 2023 financial year of 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.
None of the remaining business combinations completed during the period were
considered sufficiently material to warrant separate disclosure of the fair
values attributable to those combinations.
The gross contractual value of the trade and other receivables as at the
respective dates of acquisition amounted to €6.2m. The fair value of these
receivables is €6.2m, all of which is expected to be recoverable. In 2023,
the Group incurred acquisition costs of €2.2m (2022: €6.6m). 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 was performed on a provisional basis. The fair values
attributable to the assets and liabilities of these acquisitions have now been
finalised. The amendments to these fair values were made to the comparative
figures during the subsequent reporting window within the measurement period
imposed by IFRS 3. The provisional fair value of these assets and liabilities
recorded at 31 December 2022, together with the adjustments made to those
carrying values to arrive at the final fair values are detailed in the Annual
Report.
19. Post balance sheet events
On 14 February 2024, the Group acquired the remaining 20% shareholding in
Dialachemist Limited resulting in the entity becoming a wholly owned
subsidiary of the Group.
There were no other material events subsequent to 31 December 2023 that would
require adjustment to or disclosure in this report.
20. Comparative amounts
The comparative amounts have been updated for amendments to the fair value of
assets and liabilities acquired
during 2022, these amendments were within the measurement period imposed by
IFRS 3. Certain balances from 2022 have been restated to allow for consistent
presentation with the current year.
21. Approval by the Board of Directors
The preliminary results announcement was approved by the Board of Directors on
26 February 2024.
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.
During 2023, the Group amended the definition of EBITDA and Adjusted earnings
per share to add back share-based payment expense. Share-based payment expense
is a non-cash expense arising from the grant of share-based awards to
employees. This change enhances the understanding and comparability of the
financial statements as such non-cash expenses may not correlate to the
underlying performance of the business.
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, intangible assets amortisation and share-based payment expense. 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, intangible assets amortisation and share-based payment expense,
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 an input into the Group's current
cash and cash equivalents, and restricted cash as presented in the Group leverage calculation 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 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 profit for the financial period attributable to owners of the Adjusted EPS is used to assess the after-tax underlying performance of the
parent as reported in the Group Income Statement before exceptional items (if business in combination with the impact of capital structure actions on the
any), amortisation of acquisition related intangibles (and related tax share base. This is a key measure used by management to evaluate the
thereon) and share-based payment expense, divided by the weighted average businesses operating performance, generate future operating plans, and make
number of shares in issue in the period. strategic decisions.
& Like-for-like adjusted earnings per share is calculated for both the current
and prior period by dividing the profit of the relevant period attributable to
owners of the parent as reported in the Group Income Statement before Like-for-like adjusted EPS is used to assess the after-tax underlying
exceptional items (if any), amortisation of acquisition related intangibles performance of the business assuming a constant share base.
and share-based payment expense, by the weighted average number of shares in
issue in the current period.
Like-for-Like adjusted earnings per share
Free cash flow conversion Free cash flow conversion is calculated as EBITDA, less investment in working Free cash flow represents the funds generated from the Group's ongoing
capital, less maintenance capital expenditure and foreign currency translation operations. These funds are available for reinvestment, and for future
adjustments, 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) 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 is appropriately time
apportioned.
EBITDA
2023 2022
€'000 €'000
Operating profit Income Statement 67,708 53,155
Exceptional charge recognised in operating profit Note 3 10,047 16,415
Depreciation Note 8 29,202 23,356
Amortisation Note 7 6,204 5,114
Share-based payment expense 2,824 535
EBITDA 115,985 98,575
Adjust for the impact of IFRS 16 (21,666) (16,837)
Pro-forma EBITDA of acquisitions 543 10,167
Adjusted EBITDA 94,862 91,905
Net bank debt
2023 2022
€'000 €'000
Cash and cash equivalents Balance Sheet 85,652 103,704
Restricted cash Balance Sheet 173 -
Bank loans repayable within one year Balance Sheet (13,168) (7,490)
Bank loans payable after one year Balance Sheet (222,604) (187,431)
Net bank debt (149,947) (91,217)
Net debt
2023 2022
€'000 €'000
Net bank debt Alternative Performance Measures (149,947) (91,217)
Current lease obligations Balance Sheet (20,134) (14,315)
Non-current lease obligations Balance Sheet (126,083) (105,919)
Net debt (296,164) (211,451)
Leverage
2023 2022
€'000 €'000
Net bank debt Alternative Performance Measures (149,947) (91,217)
Adjusted EBITDA Alternative Performance Measures 94,862 91,905
Leverage (times) 1.6 1.0
Adjusted operating profit
2023 2022
€'000 €'000
Operating profit Income Statement 67,708 53,155
Amortisation of acquisition related intangibles 3,341 2,708
Exceptional charge recognised in operating profit Note 3 10,047 16,415
Adjusted operating profit 81,096 72,278
Adjusted earnings per share
2023 2022
€'000 €'000
Adjusted earnings per share has been calculated by reference to the following:
Profit for the financial year attributable to owners 44,815 45,587
Exceptional (credit)/charge recognised in Income Statement (Note 3) (661) 2,118
Amortisation of acquisition related intangibles 3,341 2,708
Tax credit on acquisition related intangibles (363) (329)
Share-based payments expense 2,824 535
Profit after tax excluding exceptional items 49,956 50,619
Weighted average number of shares in issue in the year (000's) 273,015 272,557
Adjusted basic and diluted earnings per ordinary share (in cent) 18.3 18.6
Like-for-like weighted average number of shares (000's) 273,015 273,015
Like-for-like adjusted earnings per ordinary share (in cent) 18.3 18.5
Free cash flow conversion
2023 2022
€'000 €'000
EBITDA Alternative Performance Measures 115,985 98,575
Increase in inventory Note 16 (16,868) (15,130)
(Increase)/decrease in receivables Note 16 (67,073) 2,934
Increase in payables Note 16 67,717 2,700
Foreign currency translation adjustments Note 16 172 1,393
Payments to acquire property, plant and equipment - Maintenance Cash Flow Statement (7,192) (8,299)
Payments to acquire intangible assets - Cash Flow Statement (3,771) (3,448)
Maintenance
Free cash flow 88,970 78,725
Adjustment for settlement of acquired 2,068 2,138
financial liabilities*
91,038 80,863
EBITDA 115,985 98,575
Free cash flow conversion 78.5% 82.0%
*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
2023 2022 2021
€'000 €'000 €'000
Rolling 12 months operating profit 67,708 53,155
Adjustment for exceptional costs 10,047 16,415
Amortisation of acquisition related intangibles 3,341 2,708
Adjusted 12 months rolling operating profit 81,096 72,278
Total equity 333,620 289,783 251,564
Net bank debt 149,947 91,217 48,297
Deferred contingent consideration (Note 12) 75,061 91,798 88,918
Deferred consideration payable 100 523 4,295
Total capital employed 558,728 473,321 393,074
Average capital employed 516,025 433,198
Adjustment for acquisitions (Note A / B below) 18,556 (15,552)
Adjusted average capital employed 534,581 417,646
Return on capital employed 15.2% 17.3%
Note A: Adjustment for acquisitions (2023) Capital employed Completion Adjustment
€'000 Date
€'000
McCauley Pharmacy Group 49,407 February 2023 20,586
Other acquisitions completed during 2023 6,564 Various (2,030)
Adjustment for acquisitions during 2023 18,556
Note B: Adjustment for acquisitions (2022) Capital employed Completion Adjustment
€'000 Date
€'000
BModesto Group 41,901 November 2022 (13,967)
Other acquisitions completed during 2022 47,464 Various (1,585)
Adjustment for acquisitions during 2022 (15,552)
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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