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Annual Report 2009 FROM DISTRIBUTION TO GLOBAL HEALTHCARE United Drug plc Annual Report 2009 About Us United Drug is a leading international healthcare services provider, employing over 3,800 people in 32 businesses across Europe and the US. United Drug operates through three divisions... HEALTHCARE PACKAGING & CONTRACT SALES & SUPPLY CHAIN SPECIALITY MARKETING SERVICES BLACKHALL ENESTIA ALLIANCE HEALTHCARE CRAIG & HAYWARD EUROPEAN PACKAGING CENTRE ASHFIELD IN2FOCUS ENDOSCOPY UK MASTA ASHFIELD IRELAND INTRA PHARMA MEDCO HEALTH SOLUTIONS ASHFIELD USA INTRA VENO SHARP BEST JVA ANALYTICAL TEMPERATURE CONTROLLED PHARMACEUTICALS UNIVERSALPROCON MANTIS SURGICAL TD PACKAGING NEW SPLINT PEMBERTON PRESEARCH PYRAMED SANGERS THE SPECIALS LABORATORY UNIDRUG DISTRIBUTION GROUP (UDG) UNITECH UNITED DRUG DISTRIBUTORS UNITED DRUG WHOLESALE ULSTER ANAESTHETICS VEROTECH Our Purpose Excellent manufacturer solutions, better patient care. Ambition Our ambition is to be a dynamic, leading international healthcare services company, fostering enhanced patient outcomes through partnerships with healthcare manufacturers, government agencies, providers and payors. HIGHLIGHTS CONTENTS Revenue Operating Highlights and Overview 1 Financial Highlights profit 2 Business Overview OVERVIEW €1,717.9m €76.8m AND HIGHLIGHTS constant currency increase 5% constant currency increase 5% Profit Dividend before tax per share Business Review 4 Chairman’s Statement €66.9m 8.00 cent 6 Chief Executive’s Review constant currency increase 2% 2008: 8.00 cent 8 Operations Review 20 Finance Review 24 Corporate Social Responsibility REVIEW BUSINESS Amortisation of intangible Constant assets and Increase/ currency * IFRS exceptional (decrease) increase/ based item Adjusted on 2008 (decrease) €’mn €’mn €’mn % % Revenue 1,717.9 - 1,717.9 2 5 Operating profit 49.0 27.8 76.8 (2) 5 Profit before tax 39.1 27.8 66.9 (5) 2 Diluted earnings per share (cent) 14.22 9.20 23.42 (9) (2) 2009 2008 Governance Dividend per share (cent) 8.00 8.00 26 Board of Directors Net debt 162.5 159.1 28 Directors’ Report 32 Directors’ Statement on Corporate Net debt/EBITDA** (times) 1.78 1.65 GOVERNANCE Governance 39 Report of the Remuneration Committee on * all constant currency figures are based on retranslating current year figures at prior year exchange rates Directors’ Remuneration ** EBITDA before exceptional item including annualised EBITDA of companies acquired during the year 46 Statement of Directors’ Responsibilities United Drug believes that the adjusted operating profit, adjusted profit before tax and adjusted diluted earnings per share are more appropriate measures of the underlying group performance than those measurements set out in the primary financial statements, as this information is in a format communicated to and reviewed by the investment community. Financial Statements COMPOUND AVERAGE 47 Independent Auditor’s Report 49 Group Income Statement ANNUAL GROWTH RATES 50 Group Statement of Recognised Income and Expense 51 Group Balance Sheet 52 Group Cash Flow Statement 53 Significant Accounting Policies STATEMENTS FINANCIAL 62 Notes forming part of the Group % % % % Financial Statements 5 year 10 year 15 year 20 year 101 Company Statement of Recognised Revenue 7 11 15 18 Income and Expense Profit before tax 10 17 18 18 102 Company Balance Sheet 103 Company Cash Flow Statement Diluted earnings per share 8 14 14 12 104 Notes forming part of the Company Dividend per share 11 13 13 12 Financial Statements 116 Shareholder and Other Information 1 United Drug plc Annual Report 2009 BUSINESS OVERVIEW DIVISION HEALTHCARE SUPPLY CHAIN DESCRIPTION The Healthcare Supply Chain division combines all of the Group’s healthcare logistics based businesses. Overall revenues for the division in the year of €1.45 billion are 2% lower than revenues in 2008. On a constant currency basis, revenues are 1% higher than 2008. LOCATIONS STRUCTURE United Drug Wholesale Unitech/Intra Veno/Intra Pharma Provides time-critical Provide contract distribution pharmaceutical delivery services, services, sales and marketing together with complementary and technical support to medical pharmacy products to retail and and scientific equipment and hospital pharmacies, throughout the consumable manufacturers in the Republic of Ireland. Republic of Ireland. Sangers Mantis Surgical/New Splint/Ulster Provides time-critical Anaesthetics pharmaceutical delivery services, Provide contract distribution together with complementary services, sales and marketing and pharmacy products to retail and technical support to medical and hospital pharmacies, throughout scientific equipment and consumable Northern Ireland. manufacturers in the UK. Craig & Hayward Presearch Provides time-critical delivery Provides contract distribution services of specially prepared services, sales and marketing and products manufactured to meet technical support to laboratory specific patients’ prescription instrumentation and consumable requirements. manufacturers in the UK. The Specials Laboratory Endoscopy UK Manufactures unlicensed medicines Provides medical distribution for the retail pharmaceutical and services, specialising in the sales hospital markets. and technical support of flexible endoscopy equipment. United Drug Distributors Provides contract distribution and Pyramed other services to pharmaceutical and Provides medical distribution animal health manufacturers in the services, specialising in surgical Republic of Ireland. products in the cardiology, radiology, neuroradiology and cardiothoracic UniDrug Distribution Group (UDG) sectors. Provides contract distribution and other services to pharmaceutical JVA Analytical and animal health manufacturers Provides contract distribution, sales in the UK. and marketing and technical support services to Ireland’s analytical, Pemberton/Blackhall environmental, educational and regulatory laboratories. Provide sales, marketing and contract distribution services to consumer products and health Verotech and beauty manufacturers in the Provides contract distribution, sales Republic of Ireland. and marketing and technical support services to Sweden’s analytical, environmental, educational and regulatory laboratories. 2 PACKAGING & CONTRACT SALES & SPECIALITY MARKETING SERVICES OVERVIEW In the Packaging & Speciality division, United The Contract Sales & Marketing Services division Drug provides outsourced packaging solutions for provides contract sales outsourcing and related pharmaceutical manufacturers through facilities marketing services to healthcare manufacturers AND HIGHLIGHTS in the US, the UK, The Netherlands and Belgium. in the UK, Ireland and the US. Revenues for the Overall revenues for the division of €118 million year of €153 million are 13% higher than revenues are 66% higher than revenues in 2008 including a in 2008. Revenue growth is 26% on a constant full year contribution from Sharp. currency basis. TD Packaging MASTA Ashfield In2Focus Alliance Healthcare Provides primary and secondary Healthcare service provider in the Provides contract sales outsourcing Provides sales and marketing packaging solutions to the travel field, specialising in the sale and sales and marketing services services to pharmaceutical healthcare industry specialising and distribution of vaccines, medical to pharmaceutical manufacturers manufacturers in the US. in nutraceutical and generic information and provision of clinical in the UK. production. services. UniversalProcon Ashfield Ireland Provides event management Enestia Medco Health Solutions Provides contract sales outsourcing services to the pharmaceutical Provides customised packaging Provides specialty and homecare and sales and marketing services to sector. solutions to the healthcare industry. services to the NHS and the UK pharmaceutical manufacturers in pharmaceutical industry. the Republic of Ireland. BEST European Packaging Centre (EPC) Provides sales force effectiveness Temperature Controlled Ashfield USA training services to the Provides primary and secondary Pharmaceuticals packaging solutions to the generic Provides contract sales outsourcing pharmaceutical sector. Provides nurse-led homecare and sales and marketing services pharmaceutical industry. services to the Irish healthcare to pharmaceutical manufacturers sector. in the US. Sharp Provides primary and secondary packaging solutions to the healthcare industry. 3 United Drug plc Annual Report 2009 CHAIRMAN’S STATEMENT Financial Performance market and the systems that have been developed by them will be important to AGAINST A VERY DIFFICULT ECONOMIC the successful development of this new BACKGROUND, PRE-TAX PROFITS BEFORE business. AMORTISATION OF INTANGIBLE ASSETS AND THE EXCEPTIONAL ITEM WERE 2% AHEAD OF LAST People The skills, experience and dedication of YEAR, ON A CONSTANT CURRENCY BASIS. THIS our people are critical to the success of PERFORMANCE WAS ASSISTED BY THE SWIFT our group and are particularly important ACTION TAKEN BY THE EXECUTIVE TEAM TO in the current environment. I would like to express the thanks of the Board to our ACCELERATE THE INTRODUCTION OF A PLANNED talented team of more than 3,800 people RESTRUCTURING AND COST REDUCTION for their dedication and hard work. PROGRAMME. Board In April, we welcomed Hugh Friel to the Our trading within the Group enjoyed mixed Marketing Services UK businesses Board as a non-executive director. Hugh fortunes. Contract Sales & Marketing are now operating out of the division’s is a former Chief Executive of Kerry Services had an outstanding year while headquarters in