UDG Healthcare Plc Peo Ple
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UDG Healthcare plc Peo ple UDG Healthcare plc Part n ers Annual Report Accounts and 2019 Purpose Pr o gr e ss Annual Report and Accounts 2019 We are a global leader in healthcare advisory, communications, commercial, clinical and packaging services. We are 8,700 people operating in 26 countries, across two divisions. We are united by our purpose to partner with clients to deliver innovative healthcare solutions that improve patients’ lives. Our core values, unique culture and robust business model enable us to deliver our strategy and build a sustainable organisation for the benefit of all our stakeholders. UDG Healthcare plc is listed on the London Stock Exchange. Strategic Report Directors’ Report Financial Statements People We are proud of our people who are at the core of our business and who shape our values-based culture. Read more on page 23 Part ners We build trust with our partners by delivering on our promises and we achieve our clients’ goals with energy and ingenuity. Read more on page 24 Purpose We are united by our purpose to partner with clients to deliver innovative healthcare solutions that improve patients’ lives. Read more on page 27 Pr o gr ess We have developed our organisation through organic and acquisitive growth resulting in our expansion into new geographies and service offerings. Read more on page 29 Strategic Report Directors’ Report Financial Statements UDG Healthcare at a Glance 2 Board of Directors 60 Independent Auditor’s Report 104 Highlights of 2019 3 Chairman’s Introduction to Group Income Statement 110 Corporate Governance 62 Our Strategy and Values 4 Group Statement of Comprehensive Income 111 Corporate Governance 63 Chairman’s Statement 6 Group Statement of Changes in Equity 112 Nominations & Governance Committee Report 72 Chief Executive’s Review 8 Group Balance Sheet 113 Audit Committee Report 75 Our Business Model 12 Group Cash Flow Statement 114 Risk, Investment & Financing Committee Report 79 Market Opportunity 14 Notes forming part of the Directors’ Remuneration Report 81 Group Financial Statements 115 Our Strategy 16 Report of the Directors 100 Company Statement of Comprehensive Income 172 Key Performance Indicators 18 Company Statement of Changes in Equity 173 Strategy in Action 22 Company Balance Sheet 174 Financial Review 30 Company Cash Flow Statement 175 Operational Review 34 Notes forming part of the Risk Management 46 Company Financial Statements 176 Principal Risks and Uncertainties 48 Financial Calendar 181 Sustainability 52 Additional Information 182 Glossary 187 Contacts for Shareholders 188 UDG Healthcare plc 1 Annual Report and Accounts 2019 UDG Healthcare at a Glance Our Global Divisions Asheld Sharp A global leader in healthcare A global leader in contract advisory, communications, packaging, clinical, manufacturing commercial and clinical services. and technology services. Services: Services: Advisory Packaging Healthcare brand advisory, strategic consulting, product Commercial packaging solutions in multiple formats including commercialisation strategy, market access, analytics and bottles, blisters, specialty and secondary packaging of injectables. commercial audit services. Clinical Communications A comprehensive and integrated clinical trial supply Scientific and creative communications, digital and patient-centred and management service, from pre-clinical through content for medical affairs and brand commercialisation with areas to commercialisation. of specialty including behavioural science, rare disease, PR and on-demand advertising services. Manufacturing Clinical manufacturing services including analytical Commercial & Clinical services, formulation development, over-encapsulation Commercialisation and clinical services including sales and placebo manufacture. representatives, patient support and adherence services, contact centres, medical affairs and meetings and events. Technology Technology services to support both commercial and clinical packaging including design, serialisation solutions and clinical IRT. 68% 32% Percentage of Group operating profit Percentage of Group operating profit 14.4% 13.9% Net operating margin Net operating margin 2 UDG Healthcare plc Annual Report and Accounts 2019 Strategic Report Directors’ Report Financial Statements Highlights of 2019 Financial Highlights Group operating profit Ashfield Sharp 16.80c Aquilant Proposed dividend $158.4m +5% (2018: 16.00c) Group operating profit* +7% (2018: $147.5m) 108.4 98.4 $150.3m Adjusted profit before tax* 81.6 +8% (2018: $138.8m) 70.6 68.3 14.2% Adjusted net operating margin* 50.0 45.8 41.3 +110bps (2018: 13.1%) 38.2 34.0 8.3 6.9 6.4 3.3 2015 2016 2017 2018 2019 48.44c Adjusted diluted earnings per share* (‘EPS’) +5% (2018: 45.94c) Forward-looking information Some statements in this Annual Report are or may be forward-looking statements. They represent IFRS based highlights expectations for the Group’s business, including statements that relate to the Group’s future prospects, developments and strategies, and involve risks and uncertainties both general and specific. The Group has based these forward-looking statements on assumptions regarding present and future strategies of the Group and the environment in which it will operate in the future. However, because they involve known and unknown risks, uncertainties and other factors including but not limited to general economic, political, financial and business factors, which in some cases are $1,298.5m beyond the Group’s control, actual results, performance, operations or achievements expressed or Revenue implied by such forward-looking statements may differ materially from those expressed or implied by such forward-looking statements, and accordingly you should not rely on these forward looking -1% (2018: $1,315.2m) statements in making investment decisions. Except as required by applicable law or regulation, neither the Group nor any other party intends to update or revise these forward-looking statements after the date these statements are published, whether as a result of new information, future events or otherwise. *Alternative performance measures (‘APMs’) are financial measurements that are not required $78.3m under International Financial Reporting Standards (‘IFRS’) which represent the generally accepted accounting principles (‘GAAP’) under which the Group reports. APMs are presented to provide Operating profit readers with additional financial information that is regularly reviewed by management. The Group believes that the presentation of these non-IFRS measurements provides useful supplemental (2018: $5.5m) 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. APMs are presented on an IAS 18 basis to enable like-for-like analysis with the comparative period. APMs should not be considered in isolation or as a substitute for an analysis of results as reported under IFRS. See “Additional Information” on page 182 for definitions and reconciliations to the closest respective equivalent GAAP measure. IFRS 15 was adopted on 1 October 2018 for our statutory reporting, without restating prior year figures. 22.92c As a result, the discussion of our operating results is primarily on an IAS 18 basis for all periods presented. Diluted earnings per share The impact of IFRS 15 which is outlined in Note 34 of the Group financial statements was not significant for the Group. (2018: 1.52c) UDG Healthcare plc 3 Annual Report and Accounts 2019 Our Strategy and Values Strategic Highlights Our strategy is to grow and improve our organisation by providing market-leading outsourced services to our clients; outstanding development opportunities for our people; and long-term sustainable value for our shareholders. We execute this strategy through three core pillars: 1. 2. 3. Developing and Transforming Continuous growing market through people improvement leading positions As a global leader in the healthcare Our greatest strength is the quality Our experience, capabilities and industry, we focus on expanding our and commitment of our people. global scale drive increased productivity positions in our core markets through We deliver our strategy through and efficiency across our businesses a combination of organic growth our talented, experienced and motivated and facilities. Our focus on cash flow and strategic acquisitions. In FY2019, people, who are supported by conversion and margin expansion we acquired two businesses which continuing developmental programmes, measured by our KPIs, were key further enhanced our capabilities in effective processes and technology to our success in FY2019. Ashfield Communications and Advisory. investments. Read more on pages 14-15 Read more on pages 54-57 Read more on pages 18-21 14.2% 100% 48.44c Adjusted net operating margin (IAS 18) Percentage of core business development Adjusted diluted earnings per share (2018: 13.1%) (‘BD’) leaders who attended the Inspire (2018: 45.94c) BD programme 13.4% 98% 64% Return on capital employed (IAS 18) Percentage of leaders who completed our North American revenues (2018: 12.7%) values -based leadership programme 4 UDG Healthcare plc Annual Report and Accounts 2019 Strategic Report Directors’ Report Financial Statements Our values are what set us apart Our culture and values influence how we behave and operate. “We take great pride in our culture and values which are Quality Partnership Ingenuity