UDG Healthcare Presentation

UDG Healthcare plc
An International Healthcare Services Organisation

Proposed Sale of Distribution Business Assets
Transforming to focussed international healthcare services
1 : UDG Healthcare plc
www.udghealthcare.com
FORWARD LOOKING STATEMENTS

This Presentation has been prepared by UDG Healthcare plc (the "Company") and contains certain forwardlooking statements, beliefs or opinions, including statements with respect to the Company's business, financial
condition and results of operations. These statements are made by the Company in good faith based on the
information available to it at the date of this Presentation and reflect the beliefs and expectations of the
directors. By their nature these statements involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future. A number of factors could cause actual
results and developments to differ materially from those expressed or implied by the forward-looking
statements.
No representation or warranty is made that any of these statements or forecasts will come to pass or that any
forecast results will be achieved. Forward-looking statements may, and often do, differ materially from actual
results. Any forward-looking statements in this Presentation speak only as of their respective dates, reflect the
Companys current view with respect to future events and are subject to risks relating to future events and
other risks, uncertainties and assumptions relating to the Companys operations and growth strategy. Subject
to the requirements of the Financial Conduct Authority, the London Stock Exchange, the Listing Rules and the
Disclosure and Transparency Rules (and/or any regulatory requirements) or applicable law, the Company
explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forwardlooking statements in this Presentation that may occur due to any change in the Companys expectations or to
reflect events or circumstances after the date of this Presentation.
: UDG Healthcare plc
AGENDA
Transaction Overview & Strategic Rationale
Liam FitzGerald, CEO
Continuing UDG Healthcare Group

Brendan McAtamney, COO
Financial Impact
Alan Ralph, CFO
Summary
Liam FitzGerald, CEO
Appendix
Transaction Overview and

Strategic Rationale
Liam FitzGerald
Chief Executive Officer
TRANSACTION OVERVIEW
Proposed disposal of Distribution businesses to McKesson
Aggregate Cash Consideration* of 407.5m
Price represents 13.4x Adjusted EBITA* for 12 months to September 2014
Subject to UDG Healthcare shareholder approval at EGM on 13 October 2015
and clearance from relevant competition authorities
Accelerates Groups transformation to a more focussed international

healthcare services business
Leadership Transition as CEO, Liam FitzGerald, announces plans to retire in March
2016 and Board nominates COO, Brendan McAtamney, as his successor
*See Definitions in Appendix
OVERVIEW OF DISTRIBUTION BUSINESS* ASSETS

Revenue of 1,363m in 2014 and 685m in H1 2015
Adjusted EBITA** of 30.3m in 2014 and 13.6m in H1 2015
United Drug SCS is a leading pharmaceutical

wholesale and pre-wholesale business in RoI and
United Drug Sangers is a leading wholesaler in NI
TCP Group provides direct to patient

and cold chain distribution services in the RoI
MASTA is a leading UK service provider in
travel health and specialises in travel and
flu vaccine distribution
*UD and TCP report financial results within the Supply Chain Services Division, MASTA reports under Ashfield Commercial & Medical Services Division
**See Definitions in Appendix
STRATEGIC & FINANCIAL RATIONALE FOR DISPOSAL

1
Disposal will allow businesses to prosper under the ownership of

one of the leading international wholesaler and retailer Groups
The wholesale and distribution business in Ireland has been pressured in

recent years despite gaining market share
On-going international consolidation of the wholesale and pre-wholesale markets
means greater scale is increasingly important to drive efficiencies
Attractive price for assets
Proceeds will support Groups future growth plans

Driving further value creation by growing the existing Ashfield, Aquilant and Sharp
market positions
Consistent with group strategy to focus on higher growth, higher margin

international healthcare services businesses
7
STRATEGIC IMPACT
Remains Irish Headquartered, high growth, more focussed on international
healthcare services markets
Increases Group focus on higher growth and higher margin areas
Continuing Group increased Operating Profit* by 35% in H1 2015
Increases Continuing Group Net Operating Margin* to 11.1% in H1 2015
Gross proceeds of 407.5m will support continued growth and expansion of

Groups Ashfield, Aquilant and Sharp divisions
*See Definitions and reconciliation in Appendix, includes acquisition and disposal contributions
Continuing UDG Healthcare Group

Brendan McAtamney
Chief Operating Officer
BUSINESS MIX SHIFTS TO HIGHER GROWTH & HIGHER MARGIN

Operating Profit* (m)
70
60
40
70
+19%
50
Operating Profit
Continuing Group* (m)
60
53.6
50
20
+35%
30
30
20
20
10
10
15
10
40
45.0
42.0
31.1
H1 2015
H1 2015 Operating Profit *
5.0
H1 2014
H1 2015
H1 2015 Operating Profit

Continuing Group**
10%
28%
H1 2015 - H1 2015 reported Continuing

Group
H1 2015 Continuing Group Profile

Operating Profit +35%
30%
48%
11.1
H1 2014
Net Operating Margin* (%)
62%
Net Operating margin 11.1%
22%
Ashfield
Sharp
SCS/Aquilant
Ashfield
Sharp
Aquilant
Increased group focus on higher growth and higher margin businesses

*See Definitions in Appendix. Operating profit is the same format as adjusted operating profit reported in UDG Healthcares interim and annual accounts
**Approximate split, H1 2015 Aquilant % includes Medicare (Magir Limited)
POSITIVE MARKET DYNAMICS SUPPORTING DEMAND FOR SERVICES

INCREASING TRENDS TO
HEALTHCARE OUTSOURCING
Positive healthcare
market growth outlook
+ Positive
market trends
amplifying demand in
our growth areas
Increasing product approvals forecast
Increased complexity & importance

of specialty and biotech products
Increasing proportion of semi-virtual

(specialty/biotech) companies
New approvals and increased product complexity are drivers of our businesses
STRATEGIC PRIORITIES FOR PROCEEDS

Develop and strengthen existing market positions:
Ashfield Healthcare Communications
Ashfield Commercial
Sharp Pharmaceutical packaging
Aquilant Specialist Services
Address scale and geographic gaps

Acquire additional complementary services in our chosen markets
Re-align administrative functions to reflect the new focus of the Group
Capitalise on existing market positions as the demand

for specialist outsourced services in the healthcare sector increases
STRONG ACQUISITION AND INTEGRATION TRACK RECORD

Disciplined and patient approach to M&A
Strong record of successful strategic acquisitions
Sharp (2008)
PHARMEXX (2012)
KnowledgePoint360 (2014)
Created US leadership position

Established leading pan European CSO business
Added international footprint and capabilities
Prior acquisitions confirm Groups capability to successfully identify,

execute and integrate strategic transactions and assets
Demonstrated record of delivering on strategic plan and shareholder value creation
Balance sheet strength facilitates increased investment in our

higher growth areas both organically and via acquisition
Financial Impact
Alan Ralph
Chief Financial Officer
KEY FINANCIAL IMPACTS

Improved growth and margin profile
Continuing Group increased Operating Profit* 35% in H1 2015
Net Operating Margin* of 11.1% in H1 2015
Increased % of Group costs will lower margin post completion
Currency and geographic profile shifts
Euro profits reduce from over 20% to less than 10%
Tax rate will increase by 1-2% as a result
Dividend
Expect to maintain progressive dividend** policy
Earnings Guidance
No change to 2015 earnings guidance (including discontinued operations)

** Dividend increases linked to constant currency EPS growth, we expect to continue progressive dividend policy and for the 2016 dividend per share ("DPS")to
increase over the 2015 DPS
KEY FINANCIAL IMPACTS (2)

Proforma Net Cash* of 102.6m post transaction
Pay down RCF and maintain facility - lower interest expense

Maintain long term private placement debt
Capex
Continued on-going investment in Sharp capacity expansion

Working capital
Distribution businesses cash generative, expect a reduction in cash generation from
working capital
Pension
Republic of Ireland defined benefit pension scheme will remain with UDG Healthcare,
will look to de-risk it over time
FINANCIAL IMPACT DISPOSAL & CONTINUING GROUP H1 2015
H1 2015
DISTRIBUTION
ASSETS
DISPOSED
CONTINUING
GROUP
H1 2015
CHANGE
CONTINUING
GROUP
Revenue
1,131m
685m
446m
25%
Operating
Profit*
53.6m
11.6m
42.0m
35%
Net Operating*
Margin
5.0%
1.7%
11.1%
+609 bp
Net Cash
(274.9m)
377.5m
102.6m
*See Appendix Definitions
EXPECTED TIMETABLE AND PROCESS
Sale of Distribution businesses announced
18/09/2015
Expected Circular posting to shareholders
23/09/2015
EGM Shareholder vote
13/10/2015
Competition approval (anticipated)
by 31/03/2016
Summary
Liam FitzGerald
Chief Executive Officer
SUMMARY
Accelerates Groups transformation to a more focussed international healthcare
services business
Significantly improves growth potential and margin profile
Disposed businesses can prosper under the ownership of a leading international
wholesale and retail Group
Recognise the long-standing loyalty of the staff and customers of these businesses
Attractive price provides balance sheet strength for significant investment in our
higher growth areas both organically and via acquisition
Opportunity to develop and strengthen existing market positions and capitalise on
the increasing demand for healthcare services
Transforming to a more focussed international healthcare services business

Appendix
EBITA RECONCILIATION
Disposed
Assets
Continuing
Group
Disposed
Assets
Continuing
Group
Disposed
Assets
Continuing
Group
Year to
September (m)
H1
2014
H1
2014
H1
2014
FY
2014
FY
2014
FY
2014
H1
2015
H1
2015
H1
2015
Revenue
1,041
685
357
2,127
1,363
764
1,131
685
446
Net Revenue
995
685
310
2,021
1,363
658
1,063
685
378
*Adjusted EBITA
14.9
30.3
13.6
Adjustments
(1.0)
(3.0)
(2.0)
*Operating Profit
45.0
13.9
31.1
102.6
27.3
75.3
53.6
11.6
42.0
*Net Operating
Margin
4.5%
2.0%
10.0%
5.1%
2.0%
11.4%
5.0%
1.7%
11.1%
*See Appendix Definitions
DEFINITIONS
"Adjusted EBITA"
Earnings before interest, tax, administrative expenses allocated from

UDG Healthcare, amortisation of acquired intangible assets, acquisition costs
and exceptional items (page 20 of Circular)
"Continuing Group"
The Group excluding the Disposed Businesses
"Cash Consideration"
Aggregate cash consideration on a cash and debt free basis
"Distribution Businesses"
Together (1) United Drug Supply Chain Services (2) United Drug
Sangers (3) TCP Group and (4) the MASTA Business. The United Drug
Supply Chain Services businesses to be disposed of do not include the
Aquilant Business
"Net Operating Margin"
Operating profit margin on Net Revenue
"Net Revenue"
Revenue less Ashfield pass through costs recorded as revenues
"Operating Profit"
Earnings before interest, tax, amortisation of acquired intangible assets,

acquisition costs and exceptional Items. Operating profit is the same
format as adjusted operating profit reported in UDG Healthcares interim and
annual financial statements
"Proforma Net Cash"
Combined net cash position of cash consideration received and UDG

Healthcare net debt position at 31 March 2015

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UDG Healthcare plc

An International Healthcare Services Organisation

1 : UDG Healthcare plc

FORWARD LOOKING STATEMENTS

: UDG Healthcare plc

Continuing UDG Healthcare Group

: UDG Healthcare plc

Transaction Overview and

4 : UDG Healthcare plc

Accelerates Groups transformation to a more focussed international

: UDG Healthcare plc

OVERVIEW OF DISTRIBUTION BUSINESS* ASSETS

Adjusted EBITA** of 30.3m in 2014 and 13.6m in H1 2015

United Drug SCS is a leading pharmaceutical

TCP Group provides direct to patient

: UDG Healthcare plc

STRATEGIC & FINANCIAL RATIONALE FOR DISPOSAL

Disposal will allow businesses to prosper under the ownership of

The wholesale and distribution business in Ireland has been pressured in

Attractive price for assets

Proceeds will support Groups future growth plans

Consistent with group strategy to focus on higher growth, higher margin

: UDG Healthcare plc

Increases Group focus on higher growth and higher margin areas

Continuing Group increased Operating Profit* by 35% in H1 2015

Increases Continuing Group Net Operating Margin* to 11.1% in H1 2015

Gross proceeds of 407.5m will support continued growth and expansion of

: UDG Healthcare plc

Continuing UDG Healthcare Group

9 : UDG Healthcare plc

BUSINESS MIX SHIFTS TO HIGHER GROWTH & HIGHER MARGIN

H1 2015 Operating Profit *

H1 2015 Operating Profit

H1 2015 - H1 2015 reported Continuing

H1 2015 Continuing Group Profile

Net Operating Margin* (%)

Net Operating margin 11.1%

Increased group focus on higher growth and higher margin businesses

10 : UDG Healthcare plc

POSITIVE MARKET DYNAMICS SUPPORTING DEMAND FOR SERVICES

Increasing product approvals forecast

Increased complexity & importance

Increasing proportion of semi-virtual

STRATEGIC PRIORITIES FOR PROCEEDS

Sharp Pharmaceutical packaging

Aquilant Specialist Services

Address scale and geographic gaps

Capitalise on existing market positions as the demand

STRONG ACQUISITION AND INTEGRATION TRACK RECORD

Created US leadership position

Prior acquisitions confirm Groups capability to successfully identify,

Balance sheet strength facilitates increased investment in our

14 : UDG Healthcare plc

KEY FINANCIAL IMPACTS

*See Definitions in Appendix

15 : UDG Healthcare plc

KEY FINANCIAL IMPACTS (2)

Pay down RCF and maintain facility - lower interest expense

Continued on-going investment in Sharp capacity expansion

*See Definitions in Appendix

16 : UDG Healthcare plc

FINANCIAL IMPACT DISPOSAL & CONTINUING GROUP H1 2015

*See Appendix Definitions

17 : UDG Healthcare plc