Moving Forward Together
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UDG Healthcare plc Moving forward together Annual Report and Financial Statements 2020 This year may have had its challenges, but what hasn’t changed is our unwavering commitment across UDG Healthcare to partner with clients to deliver innovative healthcare solutions that improve patients’ lives. Through our strength, adaptability and resilience we continue to make good strategic progress, driven by the significant dedication of our people. Developing & Growing Market- Leading Positions We have a global footprint which continues to expand through organic growth and strategic acquisitions. This gives us a diversified exposure to key markets in North America, Europe and the U.K., with strong long-term growth prospects. Read more on page 16 Transforming Through People Our people are our most important asset and are crucial to our success. As a Group, we are driven by values that guide us to deliver a strong culture, focused on: Quality, Partnership, Ingenuity, Expertise and Energy. Read more on page 53 Continuous Improvement We continue to evolve and expand our capabilities, efficiencies and productivity across the Group in order for us to deliver for our clients. Read more on pages 34 to 45 Strategic Report Governance Financial Statements We are a global leader in healthcare advisory, Strategic Report UDG Healthcare at a Glance 2 communications, commercial, clinical and Our purpose-led strategy 4 packaging services. We are c. 9,000 people Chair’s Statement 6 operating in 29 countries, across two divisions. Chief Executive’s Review 8 Our response to Covid-19 12 Our dedicated people, values-based culture Our Business Model 14 and diverse business model enable us to Market Opportunity 16 deliver our strategy and build a sustainable Our Strategy 18 Key Performance Indicators 20 organisation for the benefit of all our Strategy-in-Action 24 stakeholders. UDG Healthcare plc is Financial Review 30 listed on the London Stock Exchange. Operational Review 34 Risk Management 46 Financial Highlights IFRS based Highlights Principal Risks and Uncertainties 48 Sustainability 52 Group operating profit Proposed dividend Revenue Governance $165.3m 17.00c $1,279.2m Board of Directors 62 +7% (2019: $154.8 million) +1% (2019: 16.80c) -1% (2019: $1,298.5 million) Senior Executive Team 64 Chair’s Introduction to Adjusted net Adjusted diluted Operating profit Corporate Governance 65 operating margin* earnings per share* Corporate Governance Report 66 $125.0m Nominations, Governance & Sustainability Committee Report 78 14.3% 47.71c +60% (2019: $78.3 million) +30bps (2019: 14.0%) +1% (2019: 47.31c) Audit Committee Report 81 Diluted earnings per share Risk, Investment & Financing Committee Report 85 Adjusted profit before tax* Directors’ Remuneration Report 88 $152.0m 36.85c Report of the Directors 104 +61% (2019: 22.92c) +4% (2019: 146.7 million) Financial Statements Forward-looking information Independent Auditor’s Report 109 Some statements in this announcement are or may be forward looking statements. In particular, any statements Group Income Statement 115 that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability Group Statement of Comprehensive Income 116 of financing, anticipated cost savings and synergies and the execution of the Group’s strategy, are forward looking statements. They represent expectations for the Group’s business, including statements that relate to the Group’s Group Statement of Changes in Equity 117 future prospects, developments and strategies, and involve risks and uncertainties both general and specific, because they relate to events and depend upon circumstances that will occur in the future. The Group has based these forward Group Balance Sheet 118 looking statements on assumptions regarding present and future strategies of the Group and the environment in which it will operate in the future. Group Cash Flow Statement 119 However, because they involve known and unknown risks, uncertainties and other factors including but not limited Notes Forming Part of The to general economic, political, financial, health, security and business factors, as well as international, national and Group Financial Statements 120 local conditions which are beyond the Group’s control, actual results, performance, operations or achievements expressed or implied by such forward looking statements may differ materially from those expressed or implied by Company Statement of such forward looking statements and accordingly you should not rely on these forward looking statements in making Comprehensive Income 175 investment decisions. Company Statement of Changes in Equity 176 Any forward looking statements speak only as of the date they are made and, except as required by applicable law or regulation, neither the Group nor any other party intends to update or revise these forward-looking statements Company Balance Sheet 177 after the date these statements are published, whether as a result of new information, future events or otherwise. Nothing in this document should be construed as a profit forecast. UDG Healthcare plc and its directors accept Company Cash Flow Statement 178 no liability to third parties. Notes Forming Part of The * All references to ‘operating profit’ and ‘earnings per share’ included in the Strategic Report are stated excluding the Company Financial Statements 179 amortisation of acquired intangible assets, transaction costs and exceptional items, and relate to the Group’s continuing operations. The Group reports certain financial measures that are not required under International Financial Reporting Financial Calendar 184 Standards (IFRS) which represent the generally accepted accounting principles (GAAP) under which the Group reports. Additional Information 185 Visit the UDG Healthcare website Glossary 189 udghealthcare.com Contacts for Shareholders 190 UDG Healthcare plc 1 Annual Report and Financial Statements 2020 UDG Healthcare at a Glance Our global divisions Asheld A global leader in healthcare 64% advisory, communications, Percentage of Group commercial and clinical services. operating profit Services: Advisory Healthcare brand advisory, strategic and management 13.7% consulting, product commercialisation strategy, market Net operating margin access, analytics and commercial audit services. Communications Medical and scientific communications, corporate communications, public and investor relations, brand and launch strategy, digital marketing and solution development, social media and influencer management, and creative and advertising services. Commercial & Clinical Omnichannel (field-based, contact centre and digital) sales and clinical educator solutions, patient engagement programmes, medical information, and live and virtual healthcare meetings and events. Read more about Ashfield on pages 34 to 39 2 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements Sharp A global leader in contract 36% packaging, clinical, manufacturing Percentage of Group and technology services. operating profit Services: Packaging Commercial packaging solutions in multiple formats, 15.5% including bottles, blisters, specialty and secondary Net operating margin packaging of injectables. Clinical A comprehensive and integrated clinical trial supply and management service, from pre-clinical through to commercialisation. Manufacturing Clinical manufacturing services including analytical services, formulation development, over-encapsulation and placebo manufacture, and sterile fill finish. Technology Technology services to support both commercial and clinical packaging including design, serialisation solutions and clinical IRT solutions. Read more about Sharp on pages 40 to 45 UDG Healthcare plc 3 Annual Report and Financial Statements 2020 UDG Healthcare at a Glance (continued) Our purpose-led strategy Why we exist Our growth strategy Our strategy is to grow and improve our organisation by We are united by our providing market-leading outsourced services to our clients; purpose to partner outstanding development opportunities for our people; and long-term sustainable value for shareholders. We achieve with clients to deliver this strategy through three core pillars: innovative healthcare solutions that improve 1. Developing and growing patients’ lives. market-leading positions As a global leader in the healthcare industry, we focus on expanding our position in our core markets through a combination of organic growth and strategic acquisitions. In 2020, we acquired Canale Communications Inc. which further enhanced our capabilities in Ashfield Communications, we also acquired a new site for Sharp’s commercial business in the U.S. and we purchased a minority interest in Berkshire Sterile Manufacturing, a Massachusetts-based sterile drug manufacturing company. 2. Transforming through people Our greatest strength is the quality and commitment of our people. We deliver our strategy through our talented, experienced and motivated people, who are supported by continuing developmental programmes, effective processes and technology investments. 3. Continuous improvement Our experience, capabilities and global scale drive increased productivity and efficiency across our businesses and facilities. Our focus on cash flow and margin expansion, measured by our KPIs, were key to our success in FY2020 despite the macro challenges.