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 36.85c Report of the Directors 104 $152.0m +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.

Read more on our strategy on pages 18 and 19

4 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

A positive impact on The way we work Our sustainable business all our stakeholders

Our culture and values We are committed to building influence how we behave a sustainable business for all of and operate. our stakeholders by focusing on the four core areas of our Shareholders sustainability strategy.

Quality We believe it underpins everything we say and do.

Clients People and Culture Partnership We build trust by delivering on our promises.

Healthcare Health and Safety professionals Ingenuity & patients We always think creatively to solve problems.

Environment Employees Expertise We bring a wealth of knowledge and skills to everything we do.

Community Communities Energy We achieve our clients’ goals with imagination and passion.

Read more on how we engaged Read more on our Read more on our with our stakeholders during business model on pages 14 and 15 sustainability strategy on pages 52 to 59 Covid-19 on pages 12 and 13

UDG Healthcare plc 5 Annual Report and Financial Statements 2020 Chair’s Statement

A year of strength and increased resilience

Dear Shareholder, To describe the year under review as circumstances. At the same time, we send our This is my first Annual Report since taking extraordinary is an understatement. We are deepest sympathies and a message of support on the role as Chair of UDG Healthcare plc experiencing the most remarkable of times, to all of those at UDG Healthcare and beyond and it is both an honour and a privilege to and witnessing events that none of us could who have been personally affected by this lead this great company. I must begin by have ever predicted. The World Health unprecedented situation. acknowledging Peter Gray for his commitment Organisation’s decision in March 2020 to over the past 16 years, including his last eight declare the Covid-19 outbreak a pandemic was Financial Performance years as Chair. Under Peter’s guidance, UDG a deeply sobering moment for us all. Ensuring From a financial perspective, the Group has Healthcare has been transformed into a global the health, safety and wellbeing of our people proven resilient despite the range of challenges leader in outsourced healthcare services. and their families quickly became our priority. presented by Covid-19. Overall, in FY2020 Peter has made an enormous contribution A global response team was established, and we delivered a strong financial performance. to the Group and on behalf of the Board and this team took timely and effective action to We experienced very strong growth during myself; I wish him and his family the best for ensure all our workers, especially our frontline the first half of the year and exceeded all our the future. workers, were operating in a safe manner targets. While the second half of the year and in line with all government and health was impacted by the pandemic, our broad authority guidelines. portfolio, diversified businesses, global footprint and resilience ensured we could The impact of the pandemic has tested us all. withstand the challenges presented. Group The Board and the Senior Executive Team net revenue increased by 5% and adjusted made some very difficult decisions. Drawing underlying operating profit increased by 7%, on our strong resilience and commitment, our both on a constant currency basis. people ensured the Group continues to deliver for all our stakeholders. I would like to thank all Ashfield’s field-based services were particularly our people, especially our frontline workers, for impacted by Covid-19, with the division’s their adaptability and commitment in getting adjusted operating profit decreasing by 4% the job done under the most challenging of Sharp delivered a very strong performance,

“It is at times like these that we are particularly proud to be working every day to help society to deal with the ravages of this dreadful pandemic, as well as come up with potential solutions.” Shane Cooke

6 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

generating revenue of $387.7 million and understand the views of key stakeholders. Peter Gray was not the only Board director adjusted operating profit of $60.1 million. In addition, the Board is now required, to leave us this year. In 2020, we said our Our strategic investments in Sharp over the through the section 172(1) statement, farewells to Chris Corbin, Chris Brinsmead past number of years enabled the division to demonstrate how our stakeholders and Nancy Miller-Rich. We thank them to take advantage of increased demand for influence some of our principal decisions. for their commitment, wise counsel and both traditional packaging and packaging of As highlighted throughout the report, we insightful contributions. I wish them all the serialised specialty and biotech products. continue to develop strong relationships best for the future. While accommodating with our full range of stakeholders. Our the aforementioned Board changes we also Adjusted earnings per share (EPS) increased Covid-19 response as outlined on pages 12 reviewed the membership of the Board by 1% to 47.71c. Total adjusted operating and 13 clearly demonstrates the Group’s Committees and expanded the remit of the profit margin increased to 14.3%. Return on engagement with all our stakeholders during Nominations and Governance Committee Capital Employed (ROCE), another important this turbulent time and our s.172(1) statement to include a sustainability focus. 2021 will be metric for the Board, increased to 13.5% can be found on page 60. the year in which we define our sustainability compared with 13.1% last year. strategy and establish actionable long-term With respect to workforce engagement, in targets for the Group. As a Board, we are As a Group, we have successfully transformed October 2019 Board members Lisa Ricciardi determined to do business in a sustainable and grown over the past decade through and Erik van Snippenberg were appointed manner and secure a sustainable future for organic growth and by regularly acquiring designated workforce engagement Board all our stakeholders. companies that complement our portfolio and members. In FY2020, we commenced our create further platforms for growth. During Board workforce engagement focus groups, Even the most smooth-running of engines the year, we completed several important the results of which are detailed on page 53. needs fine-tuning, and therefore we conducted acquisitions across both the Ashfield and an internal Board Evaluation during FY2020 Sharp businesses, deploying approximately The pandemic is not the only reason that most to evaluate Board processes and effectiveness. $74.9 million in capital. In 2020, cognisant of us will remember 2020. The political and Over the coming year, we will implement the of our strategic direction, we disposed of social movement dedicated to fighting racism recommendations of that review, details of Pharmacovigilance. We continue to focus on was a timely reminder that society should, which are outlined on page 71. higher growth, higher margin sectors and and must, do more to embrace difference. continue to deliver sustainable returns. UDG Healthcare has always welcomed Outlook people regardless of colour, gender or sexual As a Group, we have a diversified set In light of the uncertainty surrounding the orientation but we are now committing to of businesses which operate within the initial stages of the pandemic, in April 2020, take further steps to ensure that we continue healthcare industry; an industry, which is the Board took the decision to suspend the to respect and include all our people and our weathering the Covid-19 storm better than interim dividend for the first half of the year. clients. We have recently appointed our first others. The course of the pandemic has However, in August, taking into account full-time Equity, Diversity and Inclusion Officer shown us that making predictions is unusually the Group’s strong liquidity position and who will devise a roadmap for the organisation difficult at the moment. However, on the back improved visibility, we declared an interim to ensure that every part of UDG is both of a solid FY2020 performance, with strong dividend of 4.46 cents per share, in line with diverse and inclusive. I believe this is the right underlying revenue and operating profit, we the 2019 interim dividend. The Board has thing to do and I strongly believe it will have a look to the future with confidence. since evaluated the Group’s dividend for positive impact on all our stakeholders. I am FY2020 in light of the Covid-19 crisis and proud that we are moving in this direction and UDG Healthcare and our c. 9,000 employees has concluded that it is appropriate for UDG hope you welcome the move too. play a key role working with our clients to Healthcare to deliver on its final dividend provide important healthcare products for commitment. For FY2020, the Board has Board and Committee Changes the benefit of society as a whole. It is at times recommended a 1.6% increase in final 2020 has been a particularly busy year for like these that we are particularly proud to be dividend of 12.54 cent per share, subject to Board changes. As I mentioned earlier, the working every day to help society to deal with shareholder approval at the Annual General Board actively promotes equality and diversity the ravages of this awful pandemic, as well as Meeting on 26 January 2021. The Group’s in the workplace and, while we acknowledge assisting with potential solutions. I hope you total dividend per share for the year will be the importance of having a diverse board, we as shareholders also feel proud to be involved 17.00 cent per share. also reiterate our commitment to ensuring in this company for the same reason. Our that the best candidates are selected for board employees, management, investors, clients, Purpose and Governance positions. While reinforcing this commitment, healthcare professionals and patients are all in Purpose has been, and always will be, we have made significant progress on gender this together. That is why UDG Healthcare will fundamental to any company with long-term diversity with the recent appointments of Liz come out of this pandemic an even stronger aspirations or enduring ambition. At its core, Shanahan and Anne Whitaker. Liz and Anne’s organisation than it was before the crisis began. our purpose is to partner with our clients, extensive healthcare-industry experience deliver innovative solutions and improve as outlined on page 63, complements and patients’ lives. Last year, we welcomed the further expands the broad range of skills on changes to the U.K. Corporate Governance the Board. Code requiring companies to better

UDG Healthcare plc 7 Annual Report and Financial Statements 2020 Chief Executive’s Review

Focus on purpose, pride in people

In extraordinary times you need extraordinary health and safety of our people and their I want to praise all of our people for their people. Here at UDG Healthcare we are lucky families. Looking after our people and taking adaptability, resilience and commitment to have so many extraordinary people. As care of our clients was our primary focus. during this pandemic. I also want to thank Covid-19 continues to turn our world upside To this end, we immediately introduced a all those who have supported our frontline down, I am proud of my colleagues across range of additional measures and processes essential teams by learning to work the Group who have continued to deliver to prevent any risk of contracting or spreading collaboratively in new and different ways. for our clients and their patients, despite the the virus while carrying out essential work Every single person in the Group has been challenging circumstances. for clients and their patients. Our core tested in ways we would never have previously services were successfully maintained and we imagined, but it gives me huge pride to say We have been on the front foot since the adjusted other services accordingly, gradually that we have been able to adapt so successfully beginning of this crisis. Following the reinstating them once it was safe to do so. to the many challenges. announcement of ‘work from home’ guidance, the management team swiftly established a Our people worked tirelessly to deliver, Financial Performance global response team to concentrate on the adapting to the situation as needed with Prior to the outbreak of the virus, we were superb flexibility. Close to 2,000 Sharp experiencing very strong growth across employees were deemed essential workers. the Group as evidenced in our reported New working processes, cleaning regimes, H1 Interim financial results in May. While shift patterns and restrictions on non-essential Covid-19 impacted the second half of the visits to manufacturing sites were introduced. financial year, I am pleased to report a strong Those able to work from home were performance for FY2020. FY2020 adjusted supported to do so. We successfully secured earnings per share was in line with FY2019, the right personal protective equipment (PPE) a resilient performance in the context of the for those who needed it. Workplace protection pandemic. Group net revenue grew by 5% was put in place and we made the most of and adjusted underlying operating profit technology and digital platforms to ensure increased by 7%, both on a constant currency good lines of communication between teams. basis. Our cash flow performance, which is an important metric for the Group, was especially strong with net cash generated from operations of 230.7 million and a free cash flow conversion rate of 111%.

“I want to thank all of our people for their resilience, adaptability and commitment during this pandemic.” Brendan McAtamney

8 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Sharp delivered extremely strong revenue Our teams in Ashfield adapted rapidly to and operating profit growth. Over the ensure that they delivered virtual services to past number of years, and in line with our our clients to replace face-to-face services Thank you to strategy, we have invested heavily in Sharp’s such as field-based training, clinical education infrastructure and capabilities, especially our and patient support programs. We continue Peter Gray biotech and speciality services. This strategy to serve our clients remotely where possible, In December 2019, Peter Gray has delivered for the Group with revenue of although we have seen some project deferrals announced his intention to retire in $387.7 million, an 11% increase on the same and cancellations, specifically where face-to- September 2020. Peter joined the period last year. This strong performance face interactions are required. While face-to- Board of UDG Healthcare in 2004 was driven in particular by increasing face interactions will remain a core part of and was appointed Chair in 2012. demand for the packaging of serialised our approach in the future, a blended offering specialty and biotech products. Demand for including virtual engagement resonates more During his tenure UDG Healthcare has Sharp’s traditional packaging services also with our clients at this point been transformed and Peter’s depth remains strong. Sharp packages many critical in the pandemic cycle. of experience and knowledge has medicines and therefore was deemed a life- provided strong and focused Board sustaining business during the pandemic. For As a result of our solid financial performance, leadership. Key highlights under Peter’s this reason, it was allowed to operate, within robust financial position and our liquidity chairmanship include the disposal strict safety restrictions, throughout the position, I am pleased that the Board has of the supply chain business and the lockdown periods. proposed the reinstatement of a final dividend re-investment into the evolution of of 12.54 cents (FY2019: 12.34 cents). A further Ashfield from a U.K.-based contract Ashfield delivered a solid performance, review of our financial performance is detailed sales business to a global leader in despite some of its services being impacted on pages 30 to 33. healthcare, advisory, communications, by Covid-19. The onset of the virus forced commercial and clinical services. Peter us to quickly reimagine and realign elements Investments, Acquisitions and Disposals was also pivotal in the acquisition of of Ashfield’s business model and look at We completed three acquisitions during Sharp and its continued growth over accelerating our omnichannel reach, which FY2020. the last decade. was already well progressed. Ashfield Communications & Advisory now represents In November 2019, we completed the Peter has presided over a period of 72% of Ashfield’s operating profits. Net acquisition of Canale Communications, significant strategic transformation in revenue increased by 13% and operating a San Diego-based scientific strategic UDG Healthcare, and on behalf of the profit increased by 1%, reflecting the communications agency, providing a range Board and myself, I would like to thank continued strong demand for our services, of public relations, investor relations and him sincerely and to wish him and his including the benefit of acquisitions. Ashfield communications services to early stage and family the very best for the future. Commercial & Clinical performed in line emerging life science and biotech companies. with revised expectations. Net revenue and operating profit both declined compared to the same period last year.

$165.3m $230.7m $108.2m Adjusted operating profit Net cash flow from operating Profit before tax (2019: $154.8 million) activities (2019: $74.3 million) (2019: $129.3 million)

UDG Healthcare plc 9 Annual Report and Financial Statements 2020 Chief Executive’s Review (continued)

In August 2020, we acquired a 25% acquisition. The Group also took the strategic of accelerating the development of life saving shareholding in Berkshire Sterile Manufacturing decision to dispose of Pharmacovigilance from therapies. Other partners in this coalition (BSM). BSM is a Massachusetts-based sterile our Ashfield division. include Microsoft, Takeda, CSL Behring, drug manufacturing company. This investment Mayo Clinic, Octapharma and Uber Health. further expands Sharp’s capabilities into Supporting Our People, Our Clients sterile fill-finish manufacturing and is highly and Our Communities During the crisis, we have continued to complementary to our existing clinical trial, While our physical safety is of critical support communities where we operate. packaging and related services. The agreement importance, so too is our mental and physical Examples include foodbank donations, will allow Sharp’s Clinical division, via BSM, to wellbeing. To support our c. 9,000 people charitable fundraising, the donation of offer sterile fill-finish manufacturing and extend we have rolled out a number of health and personal protective equipment to hospitals and these services to Sharp Packaging’s rare disease wellbeing initiatives during the year, including financial support for www.feedtheheroes.com, and orphan drug customers where market the launch of a (‘WellSpace’) website offering which is an Irish initiative to provide essential demand is growing significantly. everything from mental health support to and nutritious meals to frontline workers cooking recipes and fitness activities. The fighting Covid-19. During the year, we also completed the launch of this website was an astute and timely acquisition of a packaging facility close initiative; one which continues to provide Strategy to Sharp’s existing campus in Allentown, great comfort to our people during this Our strategy is anchored in our three Pennsylvania. The facility offers primary challenging period. clear ambitions: to develop and expand and secondary pharmaceutical packaging, market leading positions; transform though including bottling, blistering and vial labelling. Despite the challenging impact of Covid-19, people; and remain focused on continuous the Group has continued to deliver for clients, improvement. The market fundamentals for This investment expands Sharp’s capacity by aided by significant investment in technology UDG Healthcare’s services remain strong. over 15%, and further enhances Sharp’s ability over recent years. We also continue to use Complementing our existing client base, we see to meet demand from new and existing clients our expertise to support our clients in their opportunities in the many emerging orphan, across all packaging formats. Sharp’s strong efforts to find a treatment for Covid-19, rare disease, oncology, and biotech companies pipeline of business, its robust market position including packaging, distribution and medical that are open to outsourcing several parts of and recently added additional capacity, leave information services on several related clinical their operations and want to work with global it well placed to meet future client demand trials. One such initiative is ‘The Fight Is in Us’ companies such as UDG Healthcare. and to deliver continued strong growth. campaign, working to mobilise people in the U.S. who have recovered from the infection to While our businesses are not immune to the All of the acquisitions are an excellent donate their blood plasma. Ashfield is proud impact of the pandemic, we have a resilient strategic fit with existing businesses and are in to provide contact centre support to the business model and we are accelerating line with our strategy to grow our portfolio of coalition’s national campaign seeking blood the implementation of key aspects of our services, both organically and through plasma donors with the coalition’s shared goal strategic priorities to support our clients

Acquisition Strategy timeline 2012–2020 Acquired

2012 2013 2014 2016

UnitedDrug Disposed

10 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

and their patients. This provides us with the Looking Ahead These have been challenging weeks and opportunity to quicken the pace at which The continuing pandemic has presented the months for all of us, and we know the ripples we provide some services and solutions to Group with a variety of challenges. How we from this crisis will likely continue for some meet increasing client demand. For example, responded to these challenges speaks to the time. As a Group, we have the financial in FY2020, Sharp launched multiple new essence of who we are as an organisation. As strength and the appropriate balance sheet products and indications. Many of these a healthcare services company, we are acutely to weather any further storms. launches received fast-tracked FDA approval. aware of our clients’ commitment to their Sharp’s clinical business is also involved in patients. In FY2020, we focused on the health In this changing world, we remain confident six Covid-19-related clinical trial programs and safety of our people and took bold steps in our ability to continue adapting and covering both antivirals and vaccines. to position the Group to meet the challenges developing for the benefit of our people, that the virus presented. The good news is that our clients and our shareholders alike. Following some new appointments to the we accomplished all of this while continuing to Senior Executive Team, whose expertise and deliver a resilient financial performance. experience are outlined on pages 64, we remain focused on executing our strategic The Group retains a robust financial position agenda, managing the short-term challenges with a strong balance sheet and liquidity and supporting our people. profile. Looking ahead, we remain a strong and well diversified business, supported The new divisional leaders will continue to by excellent long-term fundamentals, as realign our business model to support our evidenced by the solid financial performance innovation into the omnichannel playbook, in FY2020. While some parts of Ashfield which pervades into every part of our continue to be impacted by the pandemic, organisation. Digitalisation, data analysis, the Group’s resilient business model leaves and measuring outcomes are key parts of our UDG Healthcare well positioned for continued growth model. We believe that investment future growth. into these areas will be even more important as UDG Healthcare continues to build We will continue to focus on leveraging differentiated, compelling capabilities that our investments in people, technology and are attractive to our clients. facilities. By continuing to follow our Covid-19 business continuity plan, I am confident that our strong financial performance and sustainable value will endure.

2017 2018 2019 2020

Aquilant

UDG Healthcare plc 11 Annual Report and Financial Statements 2020 Covid-19

Our response to Covid-19

The Covid-19 pandemic has affected all of our lives in some way. UDG Healthcare’s swift action and clear engagement enabled the organisation to withstand challenging circumstances, while continuing to support its key stakeholders.

Our Senior Executive Team acted swiftly in WellSpace, has been a tremendous success Caring for Our Communities the early stages of the outbreak, setting up and provided the focal point for our Wellbeing Amid the disruption, we did not lose sight a cross-functional Global Response Team Week and Mental Health Awareness Month. of the devastating impact that Covid-19 was and implementing a robust plan of action. having on our communities. Our people and The Global Response Team remains in place More recently, we have been liaising with businesses have been extraordinarily generous as the pandemic continues to fluctuate across employees through our Reconnect initiative, with both their time and money in supporting the world. as we prepare to bring people back into our charitable causes. Donations to food banks, offices in the safest possible way. meals for essential workers and PPE for Protecting Our People hospitals are among the many examples of The Group’s first concern was for the health, Read more on page 56 our employees’ kindness and generosity. safety and wellbeing of our people and their families. An internal effort to protect our Supporting Our Clients Read more on page 58 people was our top priority. We supported Despite the personal and professional the smooth transition to remote working for challenges everyone faced during the Business Resilience the vast majority of employees and introduced pandemic, we are proud of our people’s hard The Group has adapted well to the challenges of additional safety measures for our Sharp work and commitment to meet the needs of the Covid-19 pandemic. Despite the economic employees who were involved in vital drug our clients, their customers and their patients. backdrop, the Group generated a net cash packaging and distribution. From continuing to package critical drugs and inflow from operations in the year of $230.7 services for patients, to engaging remotely million and delivered adjusted operating profit To support our colleagues we provided with healthcare professionals and providing of $165.3 million, an increase of 7% on the prior extra IT equipment and technical support, insightful thought leadership, we took a year. The Group is well positioned to navigate launched weekly communication to all staff, proactive approach to the challenge which through the uncertainty of the pandemic and and ensured effective and regular online we all faced. We actively worked with our there is significant liquidity headroom available team meetings and events. We also provided clients, minimised disruption and found new on our existing financing facilities. independent mental health training, helped and innovative ways to meet their needs. We leaders manage their teams remotely and, continued to win business with both existing Read more on page 30 most importantly of all, launched a dedicated and new clients. wellbeing website to provide free advice, resources and virtual activities. The site, Read more on page 45

Further information

Financial Review on pages 30 to 33 Operational Review on pages 34 to 45 Risk Management on pages 46 to 51 Governance on pages 61 to 86

1212 UDGUDG Healthcare plc Annual ReportReport and Financial Statements 2020 Strategic Report Governance Financial Statements

Our employees Our clients

Protecting the health, safety and wellbeing of our employees Despite the challenges of the pandemic, we continued to remains a top priority for the organisation. relentlessly deliver for our clients. Highlights include: • Onboarding ten new clients in the last number of months Some of the ways we have supported our c. 9,000 employees (Ashfield Communications). and their families during the pandemic include: • Ensuring the successful launch of six new drug products – • Following the WHO and local government guidelines in all sometimes ahead of schedule – despite Covid-19 restrictions 29 countries in which we operate. (Sharp Packaging U.S.). • Providing extra PPE, cleaning and social-distancing measures • Continuing to win new client projects (Ashfield Commercial to protect those at our Sharp Packaging sites. and Clinical). • Increasing support for colleagues working from home. • Pivoting seamlessly to virtual engagement with clients. • Bringing isolated colleagues together virtually for fun • Enabling reps to work remotely to support clients’ products. activities, such as movie nights and book clubs. • Transforming live events into successful virtual meetings • Launching a dedicated wellbeing website, WellSpace, (Ashfield Meetings & Events). with advice and resources available 24/7. • Supporting the development of potential Covid-19 vaccines • Offering a range of health and wellness activities during our and treatments (Sharp). own Wellbeing Week and Mental Health Awareness Month. • Supporting the rapid launch of three crucial oncology therapies (Sharp). • Providing well-received thought leadership pieces on the future of customer engagement.

Our communities

We have a long record of supporting communities around the Our investors world through fundraising and hands-on projects. During the pandemic, we redoubled efforts to help those affected by the crisis. We took swift and decisive action to mitigate the impact of the Some of the ways we’ve done this include: pandemic on trading performance and to protect the Group’s • Donating to local food banks. finances. We have done this by: • Launching the #MarkforHeroes social media campaign • Adapting the way we work to ensure seamless business to encourage people to give back to essential workers. continuity. • Donating to the #fuellingthefrontline campaign, which • Launching a dedicated Covid-19 Response Centre section provides meals to frontline workers fighting Covid-19 in of our website to keep investors up to date. Ireland. • Implementing cost-control measures to mitigate the potential • Delivering food parcels to elderly residents in Philadelphia. impacts of Covid-19. • Maintaining a robust financial position, with a strong balance sheet and liquidity position. • Implementing a temporary 20% salary cut for the Board and Senior Executive Team. Healthcare professionals & patients

Our purpose to partner with clients to deliver innovative healthcare solutions that improve patients’ lives is more important than ever during this pandemic. We have continued to support patients, and those who have faced extraordinary challenges in caring for them. We have done this by: • Carrying out more than 6,000 patient home visits and over 2,500 remote support calls. • Helping more patients leave hospital by providing care in their own homes. • Providing contact centre service support to Covid-19 survivors as part of the high-profile ‘The Fight is in Us’ plasma donation drive. • Supporting the development of potential Covid-19 treatments and vaccines. • Providing extra support, samples and educational tools to healthcare professionals. • Donating urgently needed PPE to hospitals. • Turning surplus raw materials into face shields.

UDGUDG Healthcare plc 1313 AnnualAnnual ReportReport and Financial Statements 2020 Our Business Model

The Group’s business model centres on the strategic development of our two growth platforms; Ashfield and Sharp. These platforms underpin our continued organic growth and acquisition strategy. Our disciplined approach to capital deployment allows us to pursue growth opportunities, complementary to our existing platforms.

What we do Our key strengths

We provide Skilled and experienced employees We are committed to building a culture that fosters the development of our people. c. 9,000 expert outsourced We reward talent, provide competitive salaries and invest in training and development. Number of employees healthcare services, Read more on pages 53 to 55 specialising in advisory, Capital Our strong balance sheet supports the delivery of continued growth through acquisitions $75m communications, to supplement organic growth. We are continuously identifying and acquiring highly M&A spend commercial, clinical complementary businesses that drive value and generate attractive returns. and packaging. Read more on pages 30 to 33

Facilities and infrastructure Our purpose is to We are well-positioned to execute our business model, having a robust operating $38m platform, a diverse geographical footprint and the capability to consistently improve Capital expenditure partner with clients our client offering through our state-of-the-art facilities. to deliver innovative Read more on pages 14 and 15 healthcare solutions that improve Long-standing relationships We proactively engage with all our stakeholders, including our clients, healthcare 300+ patients’ lives. professionals, patients, employees, communities and shareholders. We build strong Number of clients sustainable relationships and are a long-term business partner with the majority of our clients. Our core values represent the Read more on pages 12 and 13 foundation of our Diversified businesses culture. They help We have a diversified portfolio of businesses across different healthcare sectors and 10 geographies. We achieve significant synergies across our operations by combining data, Top 10 clients account us develop, grow integrating acquisitions and using technology to secure competitive advantage. for less than 50% of net and better serve all revenues. Read more on pages 34 to 45 our stakeholders. Sustainable operations Our business model is underpinned by our commitment to create a sustainable business AA for all our stakeholders. 2019 MSCI Rating

Read more on pages 52 to 60

Our divisions

Asheld Sharp

Read more on pages 34 to 39 Read more on pages 40 to 45

14 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

How we create value What we deliver

Committed clients Our focus is to be a leading international partner 30 of choice so that, together with our clients, We partner with we can help improve patients’ lives. the top 30 global P pharmaceutical ro companies. e Pa u y rt t l lit ne a a ua rs n v h d Q ip r e c Engaged employees a d We are committed to investing in our people l s $673.9m h o by offering rewarding salaries and investing in Remuneration

h g their development. to employees. e

e

r

Our n

a e

y

h E people

t r

i

S n a

u e t

n

r i Patient satisfaction

g e o y g n Our in-person and virtual service offerings 320,000 In provides patients with support and information Number of patient to help improve their lives. interactions through our support programmes. Expertise

C Growing earnings and dividends ap nt ital d oyme Strong asset and financial management help $42.1m epl ensure balanced capital and income growth, Dividend to supporting a progressive dividend policy. shareholders Our business model delivers sustainable long-term value for our shareholders and we operate a progressive dividend policy. Best-in-class talent and supporting infrastructure, combined with operational excellence, ingenuity and disciplined capital deployment, enable us to deliver value for all our stakeholders. A strong balance sheet Low financial leverage and active financial 0.1x management gives the Group resources to Net debt to EBITDA deliver on its current strategic objectives, as well as take on new opportunities.

Our strategy underpins our business model

Developing and Transforming Continuous growing market- through improvement leading positions people

UDG Healthcare plc 15 Annual Report and Financial Statements 2020 Market Opportunity

Capitalising on Global market market growth healthcare trends

The Covid-19 pandemic has proved that the global healthcare industry continues to innovate at pace.

Traditional healthcare models of delivery, engagement and execution are being reshaped by new opportunities arising from breakthroughs in science, technology, policy, and finance. These positive developments, present both challenges for existing players in the industry, 1. and more significantly, opportunities for UDG Healthcare and its client base. Rising healthcare costs

1. Rising Healthcare Costs 5. Technology and Data As life expectancy continues to increase Artificial Intelligence is increasingly being with the number of people aged over 65, applied across the healthcare industry to making up approximately 12% of the global drive efficiency, optimisation and improved population, and as more advanced therapies decision-making. By the end of 2020, are developed, global healthcare expenditure customers are expected to manage 85% of continues to rise and is projected to reach their relationships with the enterprise without $10 trillion by 2022, a growth rate of 5.4%1. interacting with a human3, with the global artificial intelligence market in healthcare 2. Continued Growth in Pharma expected to grow at a CAGR of 43.5% from 2. Globally, the pharma and emerging 2018 to 2025, to reach $27.6 billion by 20254. Continued growth biopharma industry continues to drive in pharma innovation with new launches and an 6. New Healthcare Delivery Models expanding product development pipeline, Healthcare is moving out of hospital and into coupled with the focus shifting towards the home and the hands of the consumer. specialty, orphan, rare, biologic and oncology Consumers are seeking a ‘connected’ health drugs. The global pharmaceutical market experience and are demanding advanced is projected to exceed $1.5 trillion by 2023, healthcare delivery models, such as wearable growing at a 3-6% CAGR2. devices and home diagnostic kits.

3. Shifting Disease Focus 7. Industry Disruption Specialty medicines spending is projected Technological disruption is transforming to reach approximately $500 billion in every aspect of the future of healthcare; 3. developed markets by 2023, with share of from how patients are diagnosed, to how Shifting disease focus total medicine spending approaching 50% in they are treated. Cutting-edge technologies most developed markets2. However, specialty are increasingly prevalent in the healthcare is only part of the story and primary care market. remains a significant proportion of spending. 8. Consumerisation of Healthcare 4. New Science The definition of health is shifting from ‘sick- New science will be pharma and emerging care’ to ‘well-care’, with an increased focus on biopharmas growth engine with Next- the patient experience. Generation Biotherapeutics, such as stem cells and regenerative medicine, accelerating growth. Drug device and technology combination products are driving personalised care, better patient adherence, and medical 4. cost reductions. New science

1 Deloitte 2019 Global Health Care Outlook. 2 IQVIA Market Prognosis. Sept 2018. IQVIA Institute Dec 2018. https://www.grandviewresearch.com/industry-analysis/drug-device-combination-market. 3 Artificial Intelligence In Healthcare Market-Global Opportunity Analysis and Industry Forecast (2018-2025). 4 CB-Insights Gradually_then_Suddenly_FOH_2019.

16 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Ashfield Advisory Ashfield Commercial & Clinical

Key growth drivers: Key growth drivers: Increasing outsourcing penetration Increasing outsourcing penetration with growing demand for specialist 5. Demand for innovative models, advisory services Technology and data omnichannel offerings and Increasingly complex healthcare landscape, multi-country solutions specialty therapies and drug launches Increasing importance of patient support Growing demand for data and informed programmes and engagement to improve research to improve decision-making adherence and outcomes and support of complex patient journeys $2.9bn $6.1bn Estimated market size* Estimated market size* 6. New healthcare Ashfield Communications delivery models Key growth drivers: Growth in specialty, rare disease and orphan products leading to increased demand for education, omnichannel engagements, digital communications Expansion of direct patient engagement Increase in number of molecules in development and positive drug approval outlook 7. Industry disruption $7.3bn Estimated market size*

Sharp Commercial Sharp Clinical

Key growth drivers: Key growth drivers: Increasing outsourcing penetration Increasing outsourcing penetration 8. Increase in complexity of specialty Facility investments driving increasing Consumerisation and biotech leads pharma to seek demand across the client base for end-to- of healthcare more specialised providers end integrated service offerings Demand for secondary packaging Growth in specialty clinical of injectable products services for orphan and rare disease patient populations $5bn-7bn $6bn-8bn * Market sizes derived from BCG, Deloitte and UDG internal analysis. Estimated market size* Estimated market size*

UDG Healthcare plc 17 Annual Report and Financial Statements 2020 Our Strategy

Executing our Strategy

We have a clearly defined strategy to fulfil our purpose that creates value for, and brings benefits to, all our stakeholders. In turn, our five Strategic Objectives outlined below support the delivery of our strategic pillars, and provide clarity and direction on how we deliver our strategy and enable us to evaluate our progress.

Our Strategic Pillars

Developing and Transforming growing market- through leading positions people

Our Strategic Objectives

Geographic and Client focus and Talent and people service growth commercial excellence

Strategic linkage Strategic linkage Strategic linkage We aim to expand our activities Our high-quality, innovative, bespoke We focus on supporting the wellbeing organically across our priority healthcare solutions ensure we are the and growth of our people through the markets in the U.S., Europe and partner of choice in an increasingly provision of learning, more flexible Japan, and supplement this growth by complex operating environment. working and a focus on wellbeing. successfully acquiring and integrating complementary businesses, which strengthen our market positions.

Progress in 2020: Progress in 2020: Progress in 2020: Completed three acquisitions over There were multiple product launches We pivoted our training to virtual the past 12 months, one in Ashfield by Sharp during FY2020. We provided learning environments. We implemented (Canale Communications Inc) and medical information support for a specific wellbeing and diversity initiatives two in Sharp (Macungie and 25% of Covid-19 antiviral clinical trial and we to support our people through a Berkshire Sterile Manufacturing). supported a number of Covid-related turbulent year. advisory projects.

Key Performance Indicators Key Performance Indicators Key Performance Indicators 68% 14.3% 60% North American Revenues Adjusted Net Operating Margin Leaders who completed our values- based virtual leadership programme

18 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

“We have a clear strategy to capture the attractive

Continuous opportunities we see improvement developing within our sector.” Brendan McAtamney Chief Executive Officer

Quality and compliance Improve productivity

Strategic linkage Strategic linkage We enable our clients to outsource Our KPIs support the execution of our with confidence by exceeding their strategy and are important drivers of expectations, and provide the highest improved business performance over the quality standards possible. short, medium and long term. We have a strong track record of efficient capital allocation and deploy capital in areas where we identify the greatest strategic benefit and shareholder returns.

Progress in 2020: Progress in 2020: The Group’s ‘AA’ rating in the MSCI ESG Net operating margin improved to ratings assessment was reaffirmed in 14.3%. 2020. Our ESG rating by Sustainalytics is 17.5 (ranked 27th out of 483 healthcare companies). KPIs read more on page 20

Key Performance Indicators Key Performance Indicators Key risk information read more on page 48 100% 13.5% Regulatory inspections at Ashfield Return on Capital Employed & Sharp which were successful

UDG Healthcare plc 19 Annual Report and Financial Statements 2020 Key Performance Indicators

The Group has a range of Key Performance Indicators (‘KPIs’) which are used to monitor Group performance, operations and measure progress against our strategy.

Financial KPIs

Total Shareholder Return (TSR)

Definition Performance TSR is the total return to an investor, being The Group delivered a three-year average 25.7% the capital gain plus reinvested dividends. TSR of 25.7% in 2020, compared with 33.6% The return is measured as an average return in 2019. 2020 25.7% over three years. Link to remuneration 2019 33.6% Strategic linkage This is a performance metric for the LTIP, TSR is a key metric used to ensure the Group accounting for up to 50% of any awards is delivering returns on invested capital and made to key management personnel. maintaining strong cash flows to support the combined development of the Group and its dividend payment. Principally, it is used to tie executive management remuneration to shareholder returns by linking the vesting and quantum of awards under the Long Term Incentive Plan (LTIP) to performance relative to other FTSE 250 companies.

Adjusted Earnings Per Share (‘EPS’)

Definition Performance Growth in adjusted diluted EPS achieved in EPS increased by 1% in the year to 47.71 cent, 47.71c the year. despite the challenging economic background arising from the Covid-19 pandemic. Strong 2020 47.71c Strategic linkage operating results from the Sharp division contributed to a positive EPS growth. EPS 2019 47.31c EPS is an important financial measure of corporate profitability and the Group’s increased by 1% on a reported basis and financial progress. increased 1% on a constant currency basis.

Link to remuneration Adjusted EPS growth is a key measure of growth and a driver of TSR, which accounts for up to 50% of LTIP awards made to key management personnel.

Comparative financial KPIs are based on IFRS 15 metrics, consistent with the current year.

20 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Links to our strategic pillars

Developing and growing market leading positions

Transforming through people

Continuous improvement

Adjusted Net Operating Margin

Definition Performance Measures adjusted operating profit as a The overall Group net operating margin 14.3% percentage of net revenue. has increased from 2019. This is a result of the positive margin effect of acquisitions 2020 14.3% Strategic linkage and higher revenue growth in the higher margin businesses. 2019 14.0% Net operating margin is a key metric in measuring operating efficiency across the Group, divisions and business units. Link to remuneration Continued improvements in net operating Net operating margin is a key driver of margin demonstrate the successful execution adjusted profit before tax (‘PBT’) which of the Group’s strategy. represents a significant element of annual bonus potential.

Net Revenue

Definition Performance Comprises gross revenue as reported The Group’s net revenue increased 5% $1,153.5m in the Group Income Statement, adjusted compared to 2019, driven by strong growth for revenue associated with pass-through in Sharp of 11% and growth in Ashfield of 1%, 2020 $1,153.5m costs for which the Group does not earn where Covid-19 had an adverse impact on a margin. trading during the second half of the year. 2019 $1,102.9m Strategic linkage Link to remuneration Net revenue is a key metric in measuring Net revenue is a performance metric growth in operations across the Group, which accounts for a portion of annual divisions and business units. Continued bonus potential. growth in net revenue demonstrates the successful execution of the Group’s strategy.

Operating Cash Flow

Definition Performance Operating cash flow is net cash inflow from The Group has achieved operating cash flows $230.7m operating activities per the Group Cash Flow of $230.7 million. This has increased from Statement on page 119. 2019, driven by higher profit and a decrease 2020 $230.7m in working capital. Strategic linkage 2019 $129.3m The generation of cash from operations is Link to remuneration a key driver of shareholder returns and The ratio of operating cash flow to operating also enables the Group to invest in capital profit forms the basis of a performance metric expenditure and acquisitions to enhance for the LTIP, accounting for up to 50% of any future growth. awards made to key management personnel. Operating cash flow is also an annual bonus performance metric.

UDG Healthcare plc 21 Annual Report and Financial Statements 2020 Key Performance Indicators (continued)

Financial KPIs (continued)

Return on Capital Employed (‘ROCE’)

Definition Performance ROCE is profit before interest and tax The Group’s ROCE was 13.5%, which is an 13.5% expressed as a percentage of the Group’s increase from 13.1% in 2019. net assets employed. See page 186. 2020 13.5% Link to remuneration Strategic linkage 2019 13.1% ROCE is significantly influenced by Profit ROCE is a key financial benchmark which Before Central Interest and Tax and cash flow measures both the return from, and performance, both of which are key annual performance of, investments in our business. bonus performance metrics. The Group strives to consistently achieve returns well in excess of its cost of capital.

Non-Financial KPIs

Quality and Compliance

Definition Performance Our vision and values are underpinned by All regulatory inspections conducted on 100% our desire to maintain the highest ethical Ashfield & Sharp businesses resulted standards in everything that we do. We are in successful outcomes. There were no 2020 100% committed to always meeting our legal and regulatory breaches during this period. regulatory obligations. Our compliance 2019 100% programme sets out the system we have Link to remuneration adopted to help ensure that we meet this A key objective of the Quality and Compliance The percentage of regulatory inspections commitment. system is to ensure that when audited by conducted on Ashfield & Sharp businesses reporting authorities and clients we are which were successful. Strategic linkage compliant with their requirements. This means One of the measures for ensuring that adhering to both the regulatory requirements our Quality and Compliance systems and and the professional standards applied in our processes are providing a robust basis for our sector. Management all have objectives to business is through our performance in audits ensure successful audit outcomes. by regulators and professional standards bodies. 14 such audits were conducted throughout UDG Healthcare in 2020.

22 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Links to our strategic pillars

Developing and growing market leading positions

Transforming through people

Continuous improvement

Non-Financial KPIs

Environmental, Health and Safety (‘EHS’)

Definition Performance EHS audits comprise a comprehensive and Though our completion rate remains high, 80% structured review whereby information the Group’s audit programme was put on hold is collected relating to the efficiency, with the onset of Covid-19 in March 2020. 2020 80% effectiveness and reliability of our Our EHS resources were then repositioned businesses EHS management systems. to support the Group’s pandemic response. 2019 87.5% Our audit programme will recommence in Strategic linkage 2021 with risk-based virtual reviews combined EHS audit programme completion rate. Compliance with regulation and application of with on-site audits as and when permitted. industry standards are essential in the delivery of our strategy. Since the introduction of our Link to remuneration EHS audit programme in 2014, 80% of UDG The EHS audit programme has an indirect Healthcare businesses have been audited. impact on business revenue. Our audit results demonstrate our compliance with EHS regulatory requirements and industry best practice, supporting business development and retention.

Living Our Values

Definition Performance How we embed UDG Healthcare’s values During this period we focused our attention 60% into our people processes and the method on ensuring our managers could demonstrate of measurement for how we prioritise living our values by adapting to the challenges of 2020 60% the values in our organisation. Covid-19. We quickly implemented the ‘Art of Managing Remotely’ programme attended to 2019 98% Strategic linkage date by 60% of our managers. We pride ourselves in being a people focused Percentage of leaders who completed our business, driven by values that create a culture Link to remuneration values based leadership programme. to help guide our interaction with our clients. Our leadership programmes are key to In this exceptional year, our focus was to creating a cultural anchor that defines help leaders support their people in times of our interactions with clients and all our crisis. Our Inspire programme was put on stakeholders. This ensures we deliver hold due to Covid-19 restrictions, however we solutions underpinned by our values. adapted our training in May for our leadership population by implementing the ‘Art of Managing Remotely’.

UDG Healthcare plc 23 Annual Report and Financial Statements 2020 Moving Forward Together

Developing & Expanding We continue to grow our business through innovation, expansion, developing new services and adding to our portfolio through acquisitions.

Sharp adds capacity and key capabilities Sharp has also taken a minority 25% ownership in with two new acquisitions in 2020 Berkshire Sterile Manufacturing (BSM) with the support of UDG Healthcare, extending the existing preferred Due to the increasing demand on existing packaging partner agreement that has been in place between the capacity in Sharp U.S. and in line with the growth ambition two businesses since 2018. for the business, Sharp acquired a pharmaceutical packaging facility from QPSI in May 2020. BSM offers specialised isolator-based sterile filling of vials, syringes, cartridges and containers, as well The site, which is located in Macungie Pennsylvania, is as lyophilisation and terminal sterilisation to small, just six miles from the Sharp Allentown campus and it has medium and virtual pharma and biotech companies. added 160,000 sq. ft. to Sharp’s facility network, with potential for further expansion. Sharp Macungie The agreement will allow Sharp’s Clinical division, via BSM, offers primary and secondary pharmaceutical packaging, to offer sterile fill to finish manufacturing, and extend these including bottling, blistering, vial labelling and medical services to Sharp Packaging’s rare disease and orphan drug device kitting as well as serialisation services. customers where market demand is growing significantly.

“Our focus as always is to invest to better serve our clients and their patients, and the acquisition of the Macungie facility will help us to support their needs both immediately and for years to come.”

Kevin Orfan President, Sharp

24 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Ashfield’s CanaleComm acquisition expands U.S. healthcare communications offering 300 30 In November 2019, UDG Healthcare bought Canale Communications, an award-winning The team at CanaleComm have CanaleComm employs more San Diego-based strategic communications agency. worked with over 300 biotech, than 30 experts in their San Founded in 2010, CanaleComm employs over 30 medical device, digital health and Diego offices. experts who provide corporate communications, pharmaceutical organisations. public relations, investor relations and creative services to life sciences companies. The acquisition expands Ashfield Communications’ service offering, capabilities and client base.

Having worked with over 300 biotech, medical device, digital health and pharmaceutical organisations, the “U DG Healthcare’s focus on life team at CanaleComm is uniquely equipped to translate sciences, and strong employee-first their clients’ business objectives into communications strategies that build reputation, enhance visibility and culture were extremely attractive captivate audiences. to CanaleComm.” “As CanaleComm successfully grew, I was determined Carin Canale-Theakston to find a partner to help us strengthen and accelerate our strong growth trajectory, without compromising on who Founder and CEO we are as an organisation,” says founder and CEO Carin Canale-Theakston. “Becoming part of UDG Healthcare has provided the ideal platform to collaborate, expand and develop our service offering for our clients, and to continue to provide the strong employee-first culture we’ve successfully built over the last 10 years.”

UDG Healthcare plc 25 Annual Report and Financial Statements 2020 Moving Forward Together (continued)

Adapting our services to support clients during the Covid-19 pandemic As the healthcare industry rapidly mobilised to find ways to beat Covid-19, Ashfield Commercial and Clinical saw opportunities to adapt its existing services to support clients.

In the U.S., Ashfield provided contact centre support for the national ‘The Fight is in Us’ campaign, which encourages people who have recovered from Covid-19 to donate their blood plasma. Supported by many major national companies, research institutes, the Food and Drug Administration, and the White House, the goal is to accelerate the development of life-saving therapies.

Meanwhile in the U.K., Ashfield partnered with a forward- thinking pharmaceutical technology company to recruit medical laboratory technicians for a groundbreaking service that provides Covid-19 testing. Our teams play a vital role in the process, working in a compliant, safe and efficient laboratory environment.

“A shfield is extremely proud to be part of this collaborative partnership in the fight against Covid-19. Patients 315 are at the core of the healthcare We have received 315 calls since launching ‘The Fight services that we provide.” is in Us’ campaign in May 2020. Greg Flynn Global President, Ashfield Commercial and Patient solutions Adapting & Improving Our strategy is constantly evolving to adapt to the trends and forces shaping our markets and impacting all of our stakeholders.

26 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Adapting to a new normal: Supporting our clients with virtual tours Client audits of production environments are an essential part of conducting business in the contract pharmaceutical services industry. Sharp hosts on average 60-70 client audits annually with each one taking several days preparation. Barb Ost Each client would typically spend two days on-site observing VP Quality, processes and reviewing documentation. As the global Compliance and pandemic loomed in early 2020 and Sharp’s facility network was closed to all visitors, it was clear we had to immediately Regulatory Affairs adapt to ensure clients would continue to have visibility to production, as an essential part of their audit.

The solution was a blend of technology and ingenuity, including video conferencing, live camera footage and Sharp personnel acting as call hosts. The ‘virtual tour’ 60-70 offered the transparency and reassurance that clients needed, while we continued to maintain the safety of Sharp hosts 60-70 on-site our employees working at each facility. The virtual tour client audits annually. experience has allowed Sharp to continue to support new clinical trials and launch commercial products with minimal disruption. They are now – and are likely to remain – a regular feature of the ‘new normal’ at all Sharp sites, with our account executives and clients teams offering ‘virtual visits’ of production rooms so clients can see their 65 products as they are run live. The average number of documents reviewed during “Be ing creative and adaptable a client audit. meant looking for new ways of working with technology to continue to remain ‘open’ for client’s audits.” Barb Ost VP Quality, Compliance and Regulatory Affairs UDG Healthcare plc 27 Annual Report and Financial Statements 2020 Moving Forward Together (continued)

People & Purpose As we grow our business, now and in the future, there is no more important place to start than with our own people. At UDG Healthcare we are committed to contributing to a fairer and more socially inclusive world.

Mindful of our people’s health Launched during our Wellbeing Week (27 April – 1 May), and wellness the platform proved to be a welcome lifeline and focal point for many of the week’s activities, which included live In any crisis, it is commonplace for individuals to feel online fitness sessions, meditation classes, inspiring talks a level of stress, unease and concern. As the Covid-19 and children’s art classes and music workshops. outbreak intensified, UDG Healthcare’s Board and Senior Executive Team recognised the need to immediately The week proved so popular that the team turned June support the wellbeing and mental health of our employees into Mental Health Awareness Month, expanding the and their families. website and range of live activities.

A representative team from Communications, Marketing, Recognising the stresses emerging in people’s lives, Health and Safety and HR was established and tasked UDG Healthcare also partnered with Sanctus, a specialist with offering solutions to support our people’s wellbeing. mental health coaching company, to offer colleagues one- A combined and collaborative effort across our divisions, to-one support sessions. resulted in the creation of WellSpace, a website that became a vital repository of advice, support and resources These free online meetings provided a safe, confidential on themes such as working from home efficiency, physical space where colleagues could talk to professionals fitness, mental wellbeing, nutrition and family life. about their mental health, personal and professional development, and support employees with any challenges they were experiencing.

“T he wellbeing programme is one of the best centrally led initiatives we’ve ever done at UDG Healthcare. I am delighted the website and activities have been so helpful to so many of our colleagues during this difficult time and will continue to be so in the future.” Our WellSpace website had Brendan McAtamney more than 5,300 hits during Chief Executive Wellbeing Week and Mental Health Awareness Month.

2828 UDGUDG HealthcaHealthcarere pplclc Annual ReportReport and Financial Statements 2020 Strategic Report Governance Financial Statements

Celebrating diversity UDG Healthcare’s success is founded on our values, our sustainable business model and our ability to continuously develop and engage with our c. 9,000 66% 40% employees throughout the world. A total of 66% of all our UDG Healthcare’s Board now employees are female. comprises 40% female directors. In the wake of major social and political changes over the last number of years, UDG Healthcare has taken definitive steps to increase diversity, equity, and inclusion. In 2020, we reaffirmed our commitment to combining the individual backgrounds, perspectives and experiences of our people to build a more diverse and inclusive business.

Our first step was to create our DEI champion network, featuring self-nominated representatives from across “Thi s year we accelerated our commitment UDG Healthcare. Since its launch, the network has successfully laid the foundations with several critical to Diversity, Equity & Inclusion (DEI). As initiatives, including the rollout of a new policy and Senior Executive Team sponsor for UDG, training programme for all our employees. I am excited by the appointment of our Furthermore, with both Board and Senior Executive DEI officer. This is an important milestone sponsorship, the recent appointment of a Group Diversity, Equity & Inclusion Officer will drive future strategy and in our DEI commitments.” build a roadmap for managing UDG Healthcare’s DEI activities into the future Amar Urhekar President, Ashfield Communications and DEI Lead

UDG Healthcare plc 29 Annual Report and Financial Statements 2020 Financial Review

Strong trading performance

“T he Group delivered EPS growth of 1% driven by a very strong performance in our Sharp division and acquisitions. Despite the challenging economic backdrop from the pandemic, net revenue increased 5% and adjusted operating profit increased 7% to $165.3 million.” Nigel Clerkin

Adjusted diluted earning per share ($) +1% (2019: 47.31c)

Dividend per share ($) +1% (2019: 16.80c)

30 UDGUDG Healthcare plc Annual ReportReport and Financial StaStatementstements 2020 Strategic Report Governance Financial Statements

Finance Review for the year ended 30 September 2020

30 September 2020 30 September 2019 Increase/(decrease) IFRS based $’m $’m % Revenue 1,279.2 1,298.5 (1) Operating profit 125.0 78.3 60 Profit before tax 108.2 74.3 46 Diluted earnings per share (‘EPS’) (cent) 36.85 22.92 61 Dividend per share (cent) 17.00 16.80 1

Alternative performance measures1 Constant currency 30 September 2020 30 September 2019 Increase/(decrease) increase/(decrease) $’m $’m % % Revenue 1,279.2 1,298.5 (1) (1) Net Revenue 1,153.5 1,102.9 5 5 Adjusted operating profit 165.3 154.8 7 7 Adjusted profit before tax 152.0 146.7 4 4 Adjusted diluted earnings per share (‘EPS’) (cent) 47.71 47.31 1 1

1 Alternative performance measures (‘APMs’) are financial measurements that are not required under International Financial Reporting Standards (‘IFRS’) which represent the generally accepted accounting principles (‘GAAP’) under which the Group reports. APMs are presented to provide readers with additional financial information that is regularly reviewed by management. See ‘Additional Information’ on page 185 for more information and reconciliations to the closest respective equivalent GAAP measures. Comparative financial information for 2019 is presented based on IFRS 15, consistent with the current year.

Revenue Taxation Impairment of assets relating to impairment Revenue of $1,279.2 million for the year is The effective taxation rate has increased from of property, plant and equipment and 1% behind 2019 (1% on a constant currency 19.1% in 2019 to 20.9% in 2020, due to an impairment of right of use assets resulted in a basis). Ashfield revenue decreased by 6% increase in the proportion of profit earned charge of $2.5 million, net of tax, in the year. and Sharp revenue increased by 11%. Group in the U.S. net revenue is 5% ahead of 2019 and net During the year, Ashfield disposed of Ashfield revenue on an underlying basis is 1% ahead Adjusted Diluted Earnings Per Share Pharmacovigilance, a U.S. based subsidiary of prior year, excluding the impact of foreign Adjusted diluted earnings per share (‘EPS’) that provides safety and risk management exchange, acquisitions and disposals. is 1% ahead (1% on a constant currency basis) services supporting healthcare organisations. of 2019 at 47.71 $ cent. The business was not considered core to Adjusted Operating Profit Ashfield’s operations and the disposal resulted Adjusted operating profit of $165.3 million Exceptional Items in a gain of $5.3 million. The related tax is 7% ahead of 2019 (7% on a constant The Group incurred an exceptional loss of charge was $0.1 million. currency basis). $2.7 million after tax in the year. Deferred contingent consideration primarily Adjusted Net Operating Margin A charge of $8.1 million, net of tax, was in respect of Putnam Associates in Ashfield, The adjusted net operating margin for the incurred in relation to restructuring of increased during the year by $3.5 million. businesses for the year is 14.3%, ahead of Ashfield’s operations due to market conditions 14.0% in 2019. arising from the Covid-19 pandemic, primarily In the measurement of the Group’s current within the Meetings and Events business and tax liabilities, there are transactions and Adjusted Profit Before Tax the STEM business. The charge primarily calculations, for which the ultimate tax Net interest costs, pre-exceptional items, for relates to redundancy. determination can be both complex and the year of $13.3 million are higher than 2019, uncertain. During the year, the Group primarily due to the Group’s adoption of IFRS The Group completed the rationalisation of recognised a credit of $4.4 million on the 16 Leases on 1 October 2019. Interest income Sharp’s European operations with the closure remeasurement of current tax liabilities as a was also impacted by lower interest income of the plant in Oudehaske, Netherlands. The consequence of the resolution of a historic on U.S. cash deposits. This delivered an costs of the rationalisation were lower than uncertain tax position. adjusted profit before tax of $152.0 million. estimated in the prior year, resulting in an exceptional credit in the current year of $1.9 million, net of tax.

UDG Healthcare plc 31 Annual Report and Financial Statements 2020 Financial Review (continued)

Foreign Exchange The Group operates in 29 countries, with its primary foreign exchange exposure being the translation of local income statements and balance sheets into U.S. dollar for Group reporting purposes. The retranslation of non-U.S. dollar profits to U.S. dollar has resulted in a change to the reported adjusted diluted EPS growth of less than 1%. The average 2020 exchange rates were $1: £0.7844 and $1: €0.8924 (2019: $1: £0.7839 and $1: €0.8865).

Cash Flow The following table displays cash flow information for the years ended 30 September 2020 and 2019:

2020 2019 $’000 $’000 Net cash inflow from operating activities 230,656 129,252 Net cash outflow from investing activities (105,245) (130,653) Net cash outflow from financing activities (21,031) (39,085) Net change in cash and cash equivalents 104,380 (40,486) Effect of exchange rate changes on cash and cash equivalents 6,437 (4,385) Cash and cash equivalents at beginning of year 135,228 180,099 Cash and cash equivalents end of year 246,045 135,228

Net Cash Inflow from Operating Activities The net cash inflow from operating activities is $230.7 million (2019: $129.3 million). 2020 2019 $’000 $’000 Adjusted EBITDA 218,084 189,776 Interest paid (12,324) (9,910) Income taxes paid (21,995) (25,329) Working capital decrease 62,984 6,516 Other cash outflows (16,093) (31,801) Net cash inflow from operating activities 230,656 129,252

Adjusted net operating margin Adjusted profit before tax ($’m)

+4% constant currency

2020 14.3% 2019 146.7 2019 14.0% Foreign Exchange 0.1 2018 13.1% Acquistions 10.5 2017 12.6% Disposals (0.3) 2016 12.6% Underlying (5.0) 2020 152.0

32 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Adjusted EBITDA in 2020 benefited from Net Cash Outflow from Financing Activities Return on Capital Employed (ROCE) the inclusion of $18.9 million due to the Net cash outflow from financing activities The Group’s ROCE is 13.5%, up from 13.1% adoption of IFRS 16 Leases on 1 October 2019. decreased by $18.1 million to $21.0 million in 2019. Details of this calculation are on Income taxes paid decreased mainly due to in the year. This was due to the issuance of page 186. overpayments in 2019 offsetting payments due $99.9 million private placement loan notes in 2020 and lower taxable profits in certain in August, net of a scheduled repayment of Dividends jurisdictions due to the impact of Covid-19. $63 million in September 2020 of maturing The directors are proposing a final dividend Working capital decreased by $63.0 million private placement notes. The Group’s of 12.54 $ cent per share representing an (2019: $6.5 million). The decrease in working adoption of IFRS 16 Leases during the increase of 1.6% on the 2019 final dividend capital is principally due to the impact of year also impacted financing activities by of 12.34 $ cent per share. This represents Covid-19 on customer billings, in addition $17.1 million relating to capital lease payments. 1.2% growth in the total dividend for the to improvements in cash management year to 17.00 $ cent per share. This continues underpinned by strong cash collection in the Balance Sheet the Group’s 30 year history of consistently year. Other cash outflows of $16.1 million Net debt at the end of the year was increasing dividends. relates to transaction costs paid of $2.0 million $16.2 million ($246.0 million cash and and exceptional items outflow of $14.1 million $262.2 million debt). The net debt to Subject to shareholder approval at the relating to both the 2020 and 2019 exceptional annualised EBITDA ratio is 0.1 times debt Company’s Annual General Meeting, the charge (2019 cash flows of $31.8 million relate (2019: 0.4 times debt) and net interest is proposed final dividend of 12.54 $ cent per to transaction costs paid of $2.5 million and covered 23.3 times (2019: 28.1 times) by share will be paid on 5 February 2021 to exceptional items outflow of $29.3 million). annualised EBITDA. Financial covenants in ordinary shareholders on the Company’s our principal debt facilities are based on net register at 5.00 p.m. on 8 January 2021. Net Cash Outflow from Investing Activities debt to EBITDA being less than 3.5 times and Net cash outflow from investing activities is EBITDA interest cover being greater than $105.2 million, compared to $130.7 million three times. in 2019. During the year, $37.9 million was invested in property, plant and equipment and computer software primarily for Sharp’s U.S. operations. Acquisition activity in the year resulted in net cash payments of $64.4 million, and deferred and contingent consideration outflows of $13.9 million. The Group received net cash of $9.9 million following the disposal of Ashfield Pharmacovigilance in the year.

UDG Healthcare plc 33 Annual Report and Financial Statements 2020 Operational Review Ashfield

Ashfield

Adapting and tailoring our services to deliver a resilient performance in a challenging market.

Ashfield delivered a strong performance in H1 FY2020, driven by good underlying growth and the benefit of acquisitions made in 2019 within Ashfield Communications and Advisory. The onset of Covid-19 resulted in a challenging H2. Our teams adapted rapidly to ensure we continued to deliver many of our client services in a virtual setting. We continued to execute our strategy of expanding our capabilities through acquisition, strengthening our business through the diversification of services, collaborating to expand our partnership with clients, and investing in organic growth opportunities.

Our locations Highlights

Argentina Norway Ashfield Communications & Advisory Australia Portugal Austria Republic of Belgium Ireland Brazil Russia $412.0m $383.7m $76.2m Canada Singapore (2019: $383.3 million) (2019: $339.2 million) (2019: $75.2 million) China South Korea Revenue Net Revenue Adjusted operating profit Denmark Spain Finland Sweden Ashfield Commercial & Clinical France Switzerland Germany Turkey Hong Kong U.K. India U.S. $479.5m $382.1m $29.0m Italy (2019: $566.9 million) (2019: 415.4 million) (2019: $34.8 million) Japan Revenue Net Revenue Adjusted operating profit Mexico Ashfield 11.8% 13.7% (2019: 11.6%) (2019: 14.6%) Operating margin (on revenue) Net operating margin (on net revenue)

3434 UDGUDG Healthcare plc AnnualAnnual ReportReport and Financial Statements 2020 Strategic Report Governance Financial Statements

Ashfield: At a glance

Advisory Communications Commercial & Clinical

Strategic and management Scientific communications Omnichannel sales consultancy Creative communications Patient engagement Healthcare brand advisory programmes Creative and advertising Market access services Medical information

Commercial audit services Public relations Market access

Digital marketing Meetings & Events

Market Size

Key Market Status Strong presence in U.S. market. Scientific communications Strong growth in U.S. due to Using Advisory network to leader in U.S. and E.U. diverse portfolio of services. strengthen European presence. Opportunity to strengthen E.U. and Japan growing as part position for creative and of strategy to diversify and commercial communications. broaden portfolio.

Potential Assets Attracted to assets that strengthen our service offering, expand our global footprint and provide a strong cultural fit.

UDGUDG HealthcareHealthcare plc 35 AnnualAnnual RReporteport anandd FiFinancialnancial StatStatementsements 22020 Operational Review Ashfield (continued)

Ashfield 2020 2019 Actual Underlying $’m $’m growth growth2 Revenue Communications & Advisory 412.0 383.3 7% (5%) Commercial & Clinical 479.5 566.9 (15%) (14%) Total 891.5 950.2 (6%) (10%)

Net revenue1 Communications & Advisory 383.7 339.2 13% (1%) Commercial & Clinical 382.1 415.4 (8%) (6%) Total 765.8 754.6 1% (4%)

Adjusted operating profit3 Communications & Advisory 76.2 75.2 1% (14%) Commercial & Clinical 29.0 34.8 (17%) (16%) Total 105.2 110.0 (4%) (15%)

Adjusted operating margin3 Operating margin (on revenue) 11.8% 11.6% Net operating margin (on net revenue) 13.7% 14.6%

1 Net revenue represents reported revenue adjusted for revenue associated with pass-through costs, for which the Group does not earn a margin. There are no pass-through revenues in Sharp. 2 Underlying growth adjusts for the impact of currency translation movements and any acquisition or disposal activity. 3 Adjusted operating profit is operating profit before amortisation of acquired intangible assets, transaction costs and exceptional items.

About Ashfield Financial Performance management consulting, data analytics and Ashfield is a global leader in commercialisation Following a strong H1 FY2020 performance, commercial audit services. services for the pharmaceutical and healthcare Covid-19 had an adverse impact on trading industry, operating across three business in Ashfield during H2 FY2020 particularly In the year under review, despite the units: Advisory, Communications, and in-field activities (including the Meetings and challenges presented by Covid-19, Ashfield Commercial & Clinical. Ashfield focuses on Events business, field-based representatives continued to make progress in strengthening supporting patients to access and adhere to and audit services in STEM). While the its Advisory pillar. Under the leadership their medications. It also enables engagement remainder of Ashfield experienced some of Colin Stanley, President of Ashfield between healthcare professionals and project deferrals and cancellations, the Advisory, our agility, capabilities and global patients. It provides strategic consulting, business has shown considerable resilience scale enabled us to continue to focus on advisory services, patient solutions, medical through the pandemic. productivity and efficiency in FY2020. and scientific communications, corporate communications, public and investor relations. Ashfield generated net revenue of $765.8 Due to the in-field nature of STEM Furthermore, the division offers brand and million and adjusted operating profit of $105.2 Healthcare’s services, the business launch strategy, digital marketing and solution million. While net revenue was 1% ahead of experienced disruption and reduced activity development, social media and influencer the same period last year, adjusted operating in H2 2020. However, STEM Healthcare management, creative and advertising profit was 4% behind. Adjusting for the impact has evolved its offering in an increasingly services, and event management services. of currency translation movements and the omnichannel environment. Our clients have It also provides field and contact centre sales contribution from acquisitions, underlying net adapted their services to overcome the teams and medical information. revenue and operating profit declined by 4% challenges presented by Covid-19 and now and 15% respectively, reflecting the impact access our services remotely. of the pandemic on the H2 FY2020 trading performance. Vynamic continued its strong growth trajectory and in February 2020, the business About Ashfield Advisory opened its fourth office in Durham, North Ashfield Advisory comprises: STEM Carolina. The expansion extends Vynamic’s Healthcare; Vynamic; SmartAnalyst; and footprint in the U.S. and with headquarters Putnam Associates. Our services include in Philadelphia, the new Durham office joins healthcare brand advisory, strategic Boston and London as part of the Company’s consulting, product commercialisation overall growth strategy. strategy, market access consulting services,

36 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

SmartAnalyst also continued to strengthen For more information on the integrated of healthcare challenges; from finding the its service offering and grow the business, Advisory offering, see page 38. solutions to the rarest diseases to creating resulting in an expansion in our delivery team new opportunities for blockbuster brands. in Gurgaon, India. We continue to focus on About Ashfield Communications Covid-19 forced us to reimagine the way we growing our services for new and existing Ashfield Communications is a fast-growing work and accelerated our client’s demand clients. Our most recent addition to the global network of specialist multi-award- for innovative, digital communications. This Advisory group, Putnam Associates, benefited winning agencies. We work with a wide range allowed us to demonstrate our full range from the broader Ashfield Advisory network. of healthcare organisations from emerging of strategic and execution capabilities. In February 2020, it announced the expansion biotech to big pharma, and increasingly with We adapted quickly, using technology to into London and New York as part of its nutrition, retail and technology innovators as collaborate as teams and with our clients, to drive to increase its global footprint and health and wellness reach all parts of our lives. produce some of our most exciting work yet. offer more localised support to current and prospective clients. In 2020, Amar Urhekar, a healthcare Ashfield Communications won a range of communications and advertising executive with awards across the network. Cambridge As well as supporting our acquisitions to more than 25 years of experience, joined as the BioMarketing, Create NYC and MicroMass deliver as standalone businesses, part of new President of Ashfield Communications. were all listed in Medical, Marketing & Media’s the Ashfield Advisory strategy is to deliver The business supports medical affairs, brand, Top 100 Agency list. Pegasus’ You VS. Train integrated services for our clients by marketing, communications and senior campaign, with the U.K. Network Rail, won collaborating across the four businesses. management teams as they face a range gold at the Global AMEC Awards.

Case Study Pegasus’ Network Rail safety campaign wins gold at the Global AMEC Awards

Network Rail in the U.K. engaged the services of Pegasus to develop a campaign to help decrease the number of young people trespassing on the rail network. Based on the simple insight that no teenager wants to let their mum down, the campaign’s strategy was to persuade young people to think about the impact it would have on their loved ones if they were seriously injured or killed.

Our confrontational campaign hit young people both in the heart and the head – presenting the rational facts in a highly emotional context. A hero film told the real story of a family Pegasus, an Ashfield devastated by a trackside accident, while out-of-home, social assets and a campaign website placed rational, educational Communications agency, messaging in the context of the impact on loved ones. delivered an award-winning The story appeared on every mainstream broadcast media channel at launch, generating 364 items of coverage. campaign for Network The campaign’s social content reach was 14 million people. Crucially, as a result of Pegasus’ awareness campaign, the Rail, halving the number number of trespass incidents halved, reversing a five-year of trespass incidents and trend and, as a result, the campaign won gold at the Global reversing a five-year trend. AMEC Awards.

UDG Healthcare plc 37 Annual Report and Financial Statements 2020 Operational Review Ashfield (continued)

Case Study Ashfield Clinical and MicroMass Communications collaborate to provide an integrated client solution

Providing innovative solutions and services is at the heart of what we do for our clients. In FY2020, a client was seeking a differentiated patient support programme. At the outset, the therapy area they required appeared to be crowded with a lot of generic alternatives, and the client’s patient group had a history of treatment failure and non-compliance.

To solve the client’s unique challenges, two of our businesses, Ashfield Clinical and MicroMass Communications, developed an outstanding patient experience strategy and won the project. Their solution included a clinical educator-led, omnichannel patient support programme.

Launched in 2020, the programme is being delivered by nurse clinical educators from Ashfield’s U.S.-based contact centre in Fort Washington, with support from MicroMass’ behavioural science programmes and insights.

Ashfield Advisory evolution Connecting our Advisory services to increase customer and employee engagement

The acquisition of STEM Healthcare in October 2016 heralded the Advisory services ambitions and was the first step of a highly successful acquisitive period for the division. Since then, we’ve added Vynamic (July 2017), SmartAnalyst (July 2018) and Putnam Associates (July 2019), which, alongside STEM Healthcare, continue to run independently with four unique brand identities.

In October 2019, we began to look at increasing collaboration and delivery across the Advisory portfolio. The Advisory management team, including leaders from each of the four companies, carried out a project to identify the optimal business model for growing the Advisory businesses.

Although each of the companies’ brands are strong, there is a clear opportunity to create an Advisory ‘ecosystem’ of connected services under an overarching Ashfield Advisory brand; one that will help improve market opportunities and increase customer and employee engagement.

Each of the Advisory companies will keep their brand, while creating a collective strategy that fosters collaboration and offers a wider range of complementary services to clients.

38 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

MicroMass’ #FtheList campaign was impacts on STEM during the second half of The meetings and events industry was hit shortlisted for an MM&M award and the year, offset by modest underlying growth hard from early on in the pandemic, and while four other programmes received finalist in the remainder of the business. we have successfully enabled many of our recognition from the DTC National leading global healthcare clients to quickly Advertising Awards. New acquisition, Canale About Ashfield Commercial & Clinical pivot their original face-to-face meetings Communications, won three Hermes creative Ashfield Commercial & Clinical is a global to virtual alternatives, many of the planned awards. We also had talented individuals provider of commercial, patient, medical meetings, live events and exhibits have had inducted into MM&M’s Hall of Femme and affairs, market access and meetings and to be cancelled or postponed. 40under40. events solutions to the healthcare industry. We provide omnichannel (field-based, contact The pandemic has accelerated client demand Our investment in our colleagues, clients, centre and digital) sales and clinical educator for many of our services, in particular our collaboration and communities enable us to solutions, patient engagement programmes, global omnichannel reach. The business play a meaningful role in healthcare solutions. medical information, medical science liaisons, has continued to secure new exciting We continue to win major global business, market access and live and virtual healthcare business opportunities and develop existing develop new capabilities and attract and meetings, events and exhibits throughout the relationships. Across all of our contact centres retain the highest calibre of talent in the product lifecycle. we have successfully on-boarded projects healthcare industry. across commercial, patient solutions and Financial Performance medical information. Alongside this, our Acquisitions Ashfield Commercial & Clinical performed in patient support programmes have been used We were joined in November 2019 by line with revised expectations. Net revenue to care for patients during uncertain times. Canale Communications, following and operating profit both declined compared their acquisition by the Group. Canale to the same period last year, including the We will continue to explore innovative new Communications is a San Diego-based disposal of Ashfield’s Pharmacovigilance solutions and target markets using technology scientific strategic communications agency, business. During the second half of FY2020 to create virtual and remote solutions that providing a range of public relations, investor in-field based activities (predominantly enable and differentiate our current and relations, and corporate communications in Meetings and Event and field-based expanding services. services to emerging life science companies. representatives) experienced reduced activity Canale Communications was acquired for a levels. However, having invested in omni- Ashfield Outlook total consideration of up to $31 million. For channel capabilities and digital engagement Ashfield continues to deliver on its strategy more information about this acquisition see prior to the pandemic, the business has been to diversify and expand its service offering, page 25. able to successfully adapt to ensure it can increase collaboration across the division and continue to deliver services such as training, execute strategic acquisitions to complement Financial Performance: Ashfield clinical educators, patient support programs existing business capabilities. Communications & Advisory and live virtual events for clients. Ashfield Communications & Advisory, now Our recent investments have positioned it well represents 72% of Ashfield’s operating profits. Greg Flynn took over as President of Ashfield for continued underlying growth in line with Net revenue increased by 13% and operating Commercial and Patient Solutions in October the Group’s medium-term outlook. profit increased by 1%, including the benefit 2019 and, with his global leadership team, of the FY2019 acquisitions of Putnam and they have continued to evolve as a business However, the Group anticipates some parts Incisive Health. On an underlying basis, net by diversifying, broadening and digitising of the business will continue to be impacted revenue declined by 1% and operating profit the service portfolio. The U.S. business has in the near term as Covid-19 restrictions declined by 14% principally due to Covid-19 experienced continued strong growth. While continue and it continues to adjust to new the joint venture, Ashfield CMIC, has delivered hybrid models of working. its best ever performance.

During the Covid-19 pandemic, we successfully continued to serve our clients where possible with sales representatives and clinical educators using our state-of-the-art remote technology to maintain relationships with patients and healthcare professionals.

We continue to support clients across the globe in their efforts to find a treatment for Covid-19 (see page 13} for more information).

Covid-19 forced us to reimagine the way we work and accelerated our client’s appetite for innovative, digital and virtual solutions, allowing us to demonstrate our full range of strategic capabilities.

UDG Healthcare plc 39 Annual Report and Financial Statements 2020 Operational Review Sharp

Sharp

Two acquisitions, significant capacity investments and steady organic growth deliver strong results for Sharp.

Sharp had a busy and productive year as we added capacity and capabilities to better serve our customers. We opened state-of-the-art clinical services facilities in Bethlehem, PA and Rhymney, U.K., added much needed commercial packaging capacity through the acquisition of the assets and a facility in Macungie, PA and hired 125 people from that site in the process. We also made a minority investment in Berkshire Sterile Manufacturing (BSM) in Massachusetts creating the opportunities to offer broader services to our customers. Despite the second half of the year being dominated by Covid-19, Sharp delivered an excellent performance in FY2020.

Our locations Highlights

Belgium Netherlands Republic of Ireland $387.7m $60.1m U.K. (2019: $348.3 million) (2019: $44.8 million) U.S. Revenue Adjusted operating profit

4040 UDGUDG Healthcare plc Annual ReportReport and Financial Statements 2020 Strategic Report Governance Financial Statements

Sharp: At a glance

Sharp Packaging Sharp Clinical

Primary & Secondary Development commercial packaging Clinical manufacturing Assembly & labelling of injectable devices Packaging & labelling

Kitting & package design Storage & distribution

Packaging technology services

Market Size $5-7bn $6-8bn

Key Growth Markets Biotech – vials & injectables Gene therapy services Sterile Fill Finish Direct-to-Patient distribution Specialty distribution Clinical IRT Solutions

“ 2020 was of course the year of Covid-19, but for Sharp it was a year of exceptional execution and continued investment in our facilities, equipment and our people.” Kevin Orfan President, Sharp

UDGUDG Healthcare pplclc 4141 AnnualAnnual ReportReport and Financial Statements 2020 Operational Review Sharp (continued)

Sharp 2020 2019 Actual Underlying $’m $’m growth growth1 Revenue 387.7 348.3 11% 10% Adjusted operating profit2 60.1 44.8 34% 34% Adjusted operating margin %2 15.5% 12.9%

1 Underlying growth adjusts for the impact of currency translation movements and any acquisition or disposal activity. 2 Adjusted operating profit is operating profit before amortisation of acquired intangible assets, transaction costs and exceptional items.

About Sharp Sharp is a leader in clinical supply chain services and contract pharmaceutical packaging. Working in partnership with our pharma and biotech clients, we deliver solutions and support for phase I trials all the way through to drug commercialisation and rapid launch.

We have over 1,900 employees working in eight state-of-the-art facilities across our network which extends to the U.S., U.K., Belgium and the Netherlands. We also reach over 32 clinical depots globally, covering every region of the world.

Our clinical services offering includes a complete range of trial supply and management solutions from formulation development and manufacturing through to clinical supplies packaging, labelling, IRT solutions, storage and distribution. On the commercial packaging side, we offer support for a complete range of packaging formats including blisters, bottles, pouches, stick packs and thin film strips.

Sharp Clinical supports multiple The secondary packaging of injectables is a trials for the treatment of Covid-19 particular focus for Sharp, where we offer specialist support in vial labelling, pre-filled During the second half of 2020, as the global pandemic surged, Sharp syringe labelling and assembly, auto-injector clinical received a number of requests from clients to support them pen assembly and labelling, as well as in their efforts to combat Covid-19. Our facilities in Pennsylvania are packaging design for multi-component kits. currently involved in multiple Covid-19 treatment projects. For most of In the E.U., Sharp also offers QP release for these clients, Sharp is offering services for each phase of a trial. However European distribution. for one client, we are providing manufacturing, packaging and storage and distribution of a placebo for a trial in the U.S., Philippines and Through our partnership with Berkshire Romania. For another U.S.-based study, Sharp is providing secondary Sterile Manufacturing, we also offer specialist packaging, labelling, kitting, storage and distribution in a randomised, isolator-based filling of vials, syringes, double-blind, placebo-controlled, multi-institutional trial. We are cartridges and containers, as well as extremely proud to be able to play our part in helping our clients lyophilisation and terminal sterilisation. provide essential treatments for patients during this critical time. All of our services from design origination to commercial delivery are supported by highly experienced project management and

42 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

customer service teams that include experts This strategy has delivered for the business as Sharp Europe in package design and engineering, pre- evidenced by strong growth across all parts of During 2020, Sharp Europe made substantial production, implementation and serialisation. the division. progress on its two areas of strategic focus: growing share of the biotech segment of Sharp Performance Supporting this growth in FY2020, Sharp the market and stabilising the operational Sharp delivered a very strong performance expanded capacity in Allentown and footprint of the Sharp Europe business. As during the year despite the multiple challenges Conshohocken and in May 2020 acquired was the intention this year, the team oversaw presented by the pandemic. Revenue grew to a commercial U.S. packaging facility in the closure of our facility in Oudehaske $387.7 million with adjusted operating profit Macungie, PA. Together these investments (Netherlands) in July. The last shipment of $60.1 million, 11% and 34% respectively leave Sharp well placed to meet the increasing of client products were delivered out of ahead of the same period last year. Sharp’s demand from new and existing clients across the facility in early September, with the operating margin improved from 12.9% to all packaging formats. final decommissioning activities due to be 15.5%. This growth was driven by increased completed by the end of the calendar year. demand, improved mix and operational Additionally, in August 2020, Sharp’s Our facility in Belgium saw an increase in improvements, resulting in increased capacity investment in Berkshire Sterile Manufacturing, the demand for its injectables packaging utilisation in particular during the second half a Massachusetts based sterile packaging and services during FY2020, while also driving of FY2020. manufacturing services business, has further improvements in all operational metrics, expanded its capabilities into sterile fill/finish despite the enormous challenge of the Over the past number of years, we have manufacturing and is highly complementary Covid-19 pandemic. Notwithstanding the invested in our technology, infrastructure to its existing clinical trial, packaging and challenges, the site managed to increase the and capabilities, especially in our biotech related services. available capacity for one of its key customers and speciality services. who had encountered supply chain issues related to Covid-19.

“One of our key priorities remains the health and welfare of our people all of whom, whether working from home or at our production facilities, allow us to deliver our essential services for our global pharma clients.” Kevin Orfan President, Sharp

UDG Healthcare pplclc 43 Annual Report and Financial Statements 2020 Operational Review Sharp (continued)

With a renewed management team in place in We continued to make investments in We also expanded our support for gene Sharp Europe, the decision was taken to offer equipment suited for smaller batch size therapy services at our Sharp Bethlehem new clients the opportunity to avail of capacity biologics, including orphan drugs and facility in direct support of client’s therapy at our single-client facility in Heerenveen, the those for rare diseases, as well as additional products. In Europe, our site in Rhymney Netherlands. This resulted in the introduction equipment for auto-injector assembly, and expanded their service offering to include of one additional customer to the facility high-speed bottling and high-speed cartoning. bottling and blistering of commercial in August. Similar to our Belgian site, all products, enabling us to support our operational metrics and production output in The U.S. sites supported over 60 customer customers from clinical development all Heerenveen improved throughout the year, as audits and regulatory inspections, many of the way through commercial launch. the team managed to scale demand from the which were conducted virtually. With the incumbent customer as well as adding new additional people, equipment, capabilities and Finally, through the acquisition of a minority business and capabilities to the site. capacity, the U.S. Commercial business is well ownership in Berkshire Sterile Manufacturing, positioned to support our customers and their we have filled a gap in our end-to-end Overall, 2020 saw Sharp Europe return to patients in 2021 and beyond. clinical service offering, which will allow us sustained profitability as the entire team built to participate in the biologics and sterile upon the momentum achieved in the second Sharp Clinical manufacturing market, a market that is half of 2019. As we move into 2021, the focus FY2020 was a strong year for Sharp Clinical, experiencing double-digit growth. will be to add scale by continuing to build which saw an excellent performance despite and expand our capabilities across both sites, the on-going challenge of the Covid-19 Outlook 2021 increase brand awareness and win business pandemic and the continuing uncertainty Sharp has a clear mission and vision which from both new and existing clients. surrounding Brexit. Our facilities were able are underpinned by our strategic imperatives. to remain open for business and continued to They include ongoing strategic investments Sharp Packaging manage production on behalf of our clinical and network optimization to better support 2020 was an outstanding year for the U.S. clients. Indeed, this year we were proud to be our clients and their patients. Commercial packaging business. In addition able to offer support for the clinical packaging to strong financial performance, Sharp added of a number of Covid-19-related studies, both numerous new customers and began many treatments and potential vaccines. new development programs to support the future growth of the business. Sharp also Employee health and safety was the main supported multiple product launches in priority at each facility. New health and 2020, including a number of new-to-market safety policies and cleaning procedures medicines, several of which had extremely were developed that enabled us to mitigate short approval to launch timelines. We the worst impact of the pandemic on embarked on a substantial renovation of our our employees, our facilities and our Conshohoken, PA facilities to contemporise manufacturing and packaging operations. the site and create several new packaging suites which will house new primary and secondary blistering equipment.

“Bot h European facilities drove improvements in operational metrics and won incremental business despite the significant challenges of 2020.” Robert O’Beirn Managing Director, Sharp Europe

44 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

These and other strategic imperatives will ensure Sharp delivers long-term sustainable “W e continued to innovate, revenue. offering new and expanded Looking ahead to 2021, we will continue executing on our growth strategy through services to our clients during the addition of new capacity and capabilities 2020, while remaining across our facility network. intensely focused on the health We will continue to operate a blend of site- based and home office-based working for and safety of our employees.” the foreseeable future, as we continue to make our people’s safety and wellbeing Frank Lis a top priority. President, Sharp Clinical

As the pharma’ industry responds to the challenge of Covid-19 into FY2021, Sharp forsees strong demand for its services, supported by positive market dynamics, and is well positioned to deliver continued strong growth in line with the division’s medium-term underlying operating profit growth outlook.

Commitment and resilience: Sharp U.S. Packaging delivers multiple rapid product launches despite Covid-19 crisis

Sharp Packaging client support teams have an excellent reputation for the successful delivery of rapid product launches. 2020 proved no exception, as our colleagues in Allentown supported the rapid launch of multiple new and innovative therapies for patients, despite the enormous challenges presented by the global pandemic.

Commercial packaging launch projects demand meticulous planning and an intense level of collaboration across multiple functions within Sharp, as well as with the client. Teams from project management, operations, quality, validation, documentation, technical services, engineering, specialty distribution and warehousing all work together to meet demanding time schedules in order to achieve launch deadlines.

Our clients this year repeatedly acknowledged the resilience and professionalism shown by Sharp team members who continued to work throughout the Covid-19 crisis to ensure support for these important drug launches. All of us at Sharp understand we are working to benefit the patient, some of whom may have no other treatment options available to them.

UDGUDG HealthcareHealthcare pplclc 45 AnnualAnnual ReportReport and Financial StatementsStatements 2020 Risk Management

Our Risk Management

chain dependencies. Economic, Legal, Political and Tax concerns are elevated however with the political and legislative impacts of the U.S. The risk management process at UDG election results and the economic and legal Healthcare is centrally co-ordinated and locally uncertainties associated with Brexit. managed. UDG’s divisional heads and senior The 2019-identified risk themes of acquisitive growth, talent and cyber security continued teams maintain their local Risk Registers and to be prevalent in 2020 and through the Covid-19 crisis. Our three acquisitions not only drive risk mitigation plans. supported the Group’s strategic pillars but also helped to mitigate select principal risks and uncertainties including innovation and insight and client diversification. Talent identification, rd oversig retention and development are key priorities Boa ht across all businesses. With an eye on Covid-19 and business continuity, senior level succession planning was a focus for the Group in 2020. entific isk id ation R assessme and nt On the cyber front, initiatives continue to mitigate the Group’s exposure to attacks. Technical solutions are important, but governance and training are also key mitigants Risk in preventing increasingly sophisticated

Management t and frequent cyber threats. The Group’s

m n

E e

i information security forum is jointly led by the x t Process

i m e g c p Heads of IT and Risk & Compliance to ensure a Business and u o g t l i t n o i functional e i that threats and controls are tracked and o v n n n expertise e user behaviour is improved. A cyber security p n o d a la f n l n o p update detailing near misses, incidents, if s ti d ga n any, and prevailing themes is delivered twice iti a M per year to the RIF for their assessment of the Group’s cyber controls adequacy. Also E x in 2020, training, followed-up by phishing e ew cu vi simulation tests gauged employee awareness ti re and behaviour throughout the Group. ve d monitoring an Viability Statement In accordance with the relevant provisions set out in the U.K. Corporate Governance Code, the Board has carried out a robust assessment of the principal risks facing the Group, including those which would threaten its business model, future performance, solvency Risk Management Overview With the emergence of Covid-19 in H1 2020, or liquidity. The nature of and the strategies, UDG Healthcare’s risk management process pandemic risk was identified as a Group practices and controls to mitigate those risks was further embedded both within our existing principal risk and uncertainty, and reported are addressed in the Principal Risks and and recently acquired businesses in 2020. as such in our Interim Results. Though Uncertainties section on pages 48 to 51. certain Ashfield businesses were particularly For the purposes of risk management, impacted by the pandemic, the Group’s Using the Group’s Long Term Strategic Ashfield is considered three separate divisions: business continuity processes by-and-large Plan (the ‘Strategic Plan’) which is reviewed Commercial & Clinical, Communications, and met the challenge of lockdown measures. and approved by the Board annually, the Advisory. Sharp is considered a single division. Indeed, business continuity learnings were prospects of the Group have been assessed Through the Group’s Risk Register process, incorporated into our real-time plans and over the three-year period to 30 September the key risks for each division are identified and improvements to our processes are on-going. 2023. The Strategic Plan considers the market mitigation plans put in place. These key risks opportunities within the healthcare sector, are amalgamated to identify the key risks of the In H1 2020, the potential effects of Brexit the Group’s cash flows, committed funding whole organisation, known as the Group Risks. were also amalgamated into the Group’s and liquidity positions, forecast future funding The Group Risks are reviewed by both the Economic, Legal, Political and Tax principal requirements, banking covenants and other Senior Executive Team and the Risk Investment risk and uncertainty category. The Group’s key financial ratios. and Finance Committee. The connected and predominant U.K. activities are services- coordinated nature of our process reduces the oriented, which in our view will be less risk of omitting potential threats to the Group’s impacted by a hard Brexit than product- strategic objectives. oriented businesses with value and supply

46 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

The Strategic Plan assumes no material 4. a combination of both scenarios 1 and 3 for managing its capital; its financial risk impact from Covid-19 on the Group from above occurring simultaneously; and management objectives; details of its financial 1 October 2021. 5. as a result of the increased pressures instruments and hedging activities; and its on global financial markets due to the exposures to credit, currency, cash flow and The Strategic Plan is built on a business by Covid-19 pandemic, the Group included liquidity risks. business basis and the model is subjected to an additional scenario in FY2020. The sensitivity analysis. Appropriate stress testing scenario assumes Covid-19 continues The Group has considerable financial of certain key performance, solvency and to impact international travel and social resources and a large number of customers liquidity assumptions underlying the Strategic distancing until the end of FY2021. The and suppliers across different geographic Plan has been conducted taking account of Group conducted additional financial areas and industries. The diversified nature the principal risks and uncertainties faced and stress testing and sensitivity analysis, of the Group’s businesses, our robust balance possible severe but plausible combinations of considering revenues and cost mitigations. sheet, and the market fundamentals that those risks and uncertainties. The sensitivity underpin our businesses inherently provide analyses focused on five scenarios where As a result of this assessment, the directors mitigation to the Group from the Covid-19 changes to the economic environment or confirm that they have a reasonable pandemic risk. The Group’s projected cash compliance issues could have an impact. expectation that the Group will continue to flows have been stress tested to include These scenarios have been incorporated operate and meet its liabilities as they fall due downside scenarios resulting from continued into the Risk Management Framework and for the next three years to 30 September 2023. international travel and social distancing until are reviewed and managed in line with the the end of FY2021 and these projections allow Group’s risk appetite. Going Concern time for our businesses to recover. Even with The Group’s business activities, together these negative sensitivities, the Group’s cash These scenarios can be summarised as follows: with the factors likely to affect its future position is considered to remain strong. 1. the largest site by profit generation development, performance and position, are becomes inoperable for an extended set out in the Strategic Report. The financial The directors have a reasonable expectation period of time; position of the Group, its cash flows and that the Group has adequate resources to 2. a large-scale acquisition significantly liquidity position are described in the Finance continue in operational existence for the underperforms; Review on page 30. In addition, Note 31 to the foreseeable future. For this reason, they 3. there is an imposition of price controls or Consolidated Financial Statements includes continue to adopt the going concern basis price reductions in the U.S. healthcare the Group’s objectives, policies and processes in preparing the Financial Statements. market;

Emerging Risks Considered Within Our and divisional teams were educated on pertaining to these risks. The RIF then Risk Management Process (‘RMP’) how emerging risks differ from our more agrees the emerging risks most likely to UDG Healthcare continues to embed the current, principal risks and uncertainties. have a Group-wide relevance. risk management requirements of the As with our principal risks and uncertainties, Financial Reporting Council’s 2018 U.K. emerging risks identified by the businesses As UDG Healthcare considered our Corporate Governance Code (the ‘New and Group are assigned a risk owner, emerging risks in 2020, we discovered that Code’), which were applicable to the Group and are formally monitored and further those identified were at times an unknown, from 1 October 2019. The New Code mitigated if possible and as necessary. longer-term element of our existing requires the Group to carry out a robust principal risks and uncertainties. For assessment of principal and emerging risks, The Risk and Controls Sub-Committee (the example, while we have a high confidence to explain the procedures that are in place ‘Sub-Committee’) drives the consolidation the U.S. elections and Brexit will result to identify emerging risks, and finally to of our business and divisional Risk in political change, we are uncertain if explain how these emerging risks will be Registers, including both our principal and our clients and hence ourselves will be managed or mitigated. emerging risks. The Sub-Committee then impacted by any related and subsequent informs the Risk, Investment & Financing legislative change. We are thus listing our In 2020, an explicit consideration of Committee of the principal and emerging emerging risks while noting the principal emerging risks was embedded within our risks identified through the consolidation risks and uncertainties related to them. Group Risk Register process. Our business process, and of the mitigation plans

UDG Healthcare’s emerging risks identified during our FY2020 Group Risk Register process are as follows:

Emerging risks Related PRUs 1. Medium term impacts arising from imminent political change on legislation relevant to the a. Economic, political, legislative, commercial activities of our pharma industry customers regulatory and tax b. Client outsourcing strategy

2. Evolving work practices and workforce expectations: fundamental shifts in where and how a. Pandemic risk employees work and what they seek from an employer b. Talent management c. Business continuity

3. Insufficient environment and social governance ultimately resulting in a material level of lost a. Innovation and insight business or reputational effects on the Group b. Client outsourcing strategy

UDG Healthcare plc 47 Annual Report and Financial Statements 2020 Principal Risks and Uncertainties

High Level Summary UDG’s principal risks are categorised as Strategic, Operational and Financial and are developed from a review of the Group Risk Register, performance of our businesses and prevailing global trends including emerging risks.

Developing and Transforming Continuous growing market through improvement leading positions people

Key considerations Key considerations Key considerations

To develop and establish scale in In order to attract, develop and retain Operational efficiencies are major markets both acquisitions and the talent needed to transform our enhanced by a continued investment organic growth are key. Continued business we are emphasising our in infrastructure and major software client focus, both on service and values-based culture as the basis projects. Combined and supported on diversification supports organic for behaviour. People are key to by the application of operational growth. Acquisition activity remains delivering on our targets and the excellence methodologies across the focused on synergies with existing continuous focus on how results are Group we are making progress on businesses and diversifying our delivered ensures compliance with margin expansion. offering to match the outsourcing all requirements and a right first requirement of our clients. time expectation.

Principal Risks Principal Risks Principal Risks and Uncertainties and Uncertainties and Uncertainties

Value generation from acquisitions Talent management Value generation from acquisitions

Innovation and insight Innovation and insight Innovation and insight

Client diversification Regulatory compliance IT systems

Cyber security

Contract risk

Business continuity

Financial controls

48 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Links to our strategic pillars

Developing and growing market leading positions

Transforming through people

Continuous improvement

Individual Strategic, Operational and Financial Risks

Risk Impact Mitigation Update Strategic

Value Acquisitive growth is a core element of the All potential acquisitions are assessed and evaluated to generation Group’s strategy. A failure to execute and ensure that the Group’s defined strategic and financial No change from properly integrate acquisitions may impact criteria are met. A discrete integration process and post acquisitions the Group’s projected revenue growth and its integration review is developed for each acquisition. This ability to capitalise on the synergies they bring process is supported by experienced management with and/or to maintain and develop the associated a view to achieving identified benefits, cultivating talent talent pool. and minimising general and specific integration risks.

Innovation The continued success of the Group has been Innovation and insight is central to the business and and insight dependent upon the development and delivery acquisition strategies set down by the Senior Executive No change of innovative solutions to our clients. Examples Team. At a divisional level, each management team has include serialised packaging, omnichannel a responsibility to monitor market changes and identify contract sales and contact centre solutions. current and projected client and market demands for An inability to predict client and market trends, new service offerings. The divisions have designated and develop and deliver such innovation roles within their business units tasked to deliver on would be a risk to our market leading positions these responsibilities. in the various sectors in which we operate.

Client As the Group’s activities consolidate and In individual business units where there is a high diversification further acquisitions are completed, the dependence on a small number of key clients, the No change Group’s client base may become more threats and opportunities are reviewed by divisional concentrated, making the Group more management at each business review. The impact susceptible to competitive, client merger that any potential acquisition may have on client or procurement led threats. concentration is also considered as part of the acquisition assessment process.

Client The Group’s activities may be impacted by In order to maintain or develop a preferred vendor outsourcing changes to pharma company outsourcing relationship with our target clients, acquisitions No change strategy strategy, such as pharma companies reducing can be used to fill any key gaps in client coverage or their roster of preferred vendors, or the service offering. The key is to maintain strong client wholesale outsourcing to holding companies relationships and to keep abreast of potential changes that meet all of their service requirements. in their business strategies. We have developed an agile Business Development strategy to maximise UDG Healthcares value to our clients.

Talent The success of the Group is built upon Talent requirements of the Group are monitored to management effective management teams that consistently ensure businesses meet prevailing and anticipated No change deliver superior performance. If the Group requirements in term of skills, competencies and cannot attract, retain and develop suitably performance. There is strong focus on key talent qualified, experienced and motivated management practices including leadership and employees, this could have an impact management development, succession planning and on business performance. performance management. A formal talent review process is implemented globally and local talent reviews are conducted and linked to the global process.

Economic, The global macroeconomic, political, The Group continues to review its portfolio of Political, regulatory, legislative and taxation investments through the annual strategic review Increased risk Legislative, environment may have a detrimental impact process and through constant challenge at a Senior Regulatory on our client base, the markets in which Executive Team and Board level. Acquisitions and Heightened and Tax they operate, the services we can offer them new service offerings are sought which improve the likelihood of and our operations in those markets. Such balance of our investments and give greater exposure near-term detrimental impacts could result from Brexit, to innovative and growing market segments. While the political for example. Additional impacts could arise likelihood and immediacy of a ‘hard’ Brexit is increasing, change, then from potential legislative changes following the our reduced U.K. exposures and other steps taken by secondary U.S. election result, or trade tensions, which the Group significantly mitigate the potential impact of effects remain elevated in many parts of the world. Brexit to the Group as a whole.

UDG Healthcare plc 49 Annual Report and Financial Statements 2020 Principal Risks and Uncertainties (continued)

Individual Strategic, Operational and Financial Risks (continued)

Risk Impact Mitigation Update Operational

Pandemic risk The Covid-19 outbreak is an unprecedented The diversified nature of the Group’s businesses, our global event whose impacts and duration are robust balance sheet, and the market fundamentals that No change not yet fully known. While the Group now underpin our businesses inherently provide mitigation more clearly understands the impacts of to the Group from Pandemic risk. Our Group business the pandemic (pages 12 and 13), we expect continuity plans have provided an additional layer of Covid-19 to continue to affect our operations mitigation through the Covid-19 crisis. Additionally, and performance, and to result in further the Group continues to monitor and assess the potential uncertainty for the Group, its clients and the and realised impacts of Covid-19. wider global economy.

Patient risk Medicines and medical devices can be The level of automation within the Group’s packaging packaged, supplied or administered directly facilities continues to increase. The serialisation to patients by certain Group businesses. The of packaging processes continues and in addition, No change risk of inappropriate advice, packaging, supply the utilisation of electronic batch records improves or administration could lead to a negative assurance and reduces the risk of human error in patient experience. packaging. The embedding of validated software in our patient support programs continues with our Health Cloud CRM and the utilisation of an electronic quality management system. Administration of medicines to patients or providing patient support is covered by a detailed client contract with the Marketing Authorisation Holder (MAH), fully approved scripts, and a divisional clinical governance framework.

Regulatory The Group has many legal and regulatory Maintenance of legal, regulatory and quality standards compliance obligations, including in respect of: (a) is a core value of the Group. The Sharp Division is No change protection of patient information (such as subjected to routine FDA, EMEA and national agency HIPAA and GDPR); and (b) patient and inspections and so is required to be ‘audit ready’ at all employee health and safety. In addition, many times. Patient education and information programmes of the Group’s activities are subject to stringent are reviewed to ensure compliance with regulation and licensing regulations, for example, FDA, codes of practice and are subject to regular assessment EMEA and national agency manufacturing, by the Quality and Risk & Compliance teams. Data packaging and promotional regulations and protection training, gap analyses and auditing continues the serialisation requirements under the across our global locations with a focus on the Group’s Falsified Medicines Directive (FMD). A failure requirements and local personal data protection to meet any of these could result in regulatory compliance. restrictions, financial penalties, the inability to operate, or products and services being defective, harming patients and potentially giving rise to very significant liability.

IT systems The ability of the Group to support operations The Group’s technology and information systems and and provide its services effectively and infrastructure are the subject of an ongoing programme No change competitively is dependent on technology and to ensure that they are capable of meeting the Group’s information systems that are appropriately strategic intent and future requirements. Enhanced integrated and that meet current and governance procedures are in place to ensure anticipated future business, regulatory alignment with the strategic direction of the Group. and security requirements.

Contract risk The underlying terms of the Group’s The Group has adopted processes for identifying commercial relationships drive the profitability and mitigating against undue risks in all prospective No change of the Group. The nature of the Group’s commercial relationships, supported by personnel business means that the Group could be with expertise and/or experience in key commercial exposed to undue cost or liability if it agrees risk areas. onerous terms with its clients or suppliers.

50 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Links to our strategic pillars

Developing and growing market leading positions

Transforming through people

Continuous improvement

Risk Impact Mitigation Update

Cyber security The global threat is increasing due to the The Group has implemented multi-layered information activities of criminal organisations and security defences to identify vulnerabilities and protect No change nation states targeting valuable business and against attacks. To meet the increasing cyber threat, our personal information through increasingly systems, procedures and resources are continuously sophisticated means. These advanced and being reviewed and enhanced to detect and respond persistent threats are targeted at business- effectively to cyber events. Cyber simulation software critical data using, for example, phishing has been sourced and implemented to ensure attempts, impersonation, and ransomware continuous user awareness. for financial and other gain.

Business The Group is exposed to risks that, should they Group business continuity plans have been activated to continuity arise, may lead to the interruption of critical varying degrees based upon the Covid-19 impacts on Reduced risk business processes that could adversely impact individual businesses. Our Covid-19 business continuity the Group or its clients. Covid-19 has resulted responses have included enhanced health and safety Business in such interruptions with varying impacts measures, the use of technology to enable remote continuity across Group businesses. working across much of the organisation and the processes virtual delivery of services to clients, as well as cost have control measures. demonstrated resilience through the Covid-19 crisis

Financial

Financial The Group’s resources and finances must The financial controls of the Group, as well as their controls be managed in accordance with rigorous effectiveness, are monitored by the Board in the context No change standards and stringent controls. A failure of the standards to which the Group is subject and the to meet those standards or implement expectations of its stakeholders. This monitoring is appropriate controls may result in the supported by a dedicated internal audit function. The Group’s resources being improperly Group’s financial function, systems and controls are utilised or its financial statements being also subject to periodic review to ensure they remain inaccurate or misleading. robust and fit for purpose.

Liquidity, The Group is exposed to liquidity, interest rate The management of the Group’s financial risks is interest rates and credit risks. governed by policies reviewed and approved by the No change and credit Board. These policies primarily cover liquidity risk, interest rate risk, currency risk and credit risk. The primary objective of the Group’s policies is to minimise financial risk at a reasonable cost. The Group does not trade in financial instruments.

Foreign The Group’s reporting currency is the U.S. The majority of the Group’s activities are conducted exchange dollar. Given the nature of the Group’s in the local currency of the country of operation. Increased risk businesses, exposure arises in the normal As a consequence, the primary foreign exchange course of business to other currencies, risk arises from the fluctuating value of the Group’s Increased principally sterling and euro. net investment in different currencies. Our strategic potential FX intent is to proportionally grow the U.S. as a source of volatility with earnings at a faster rate than other markets, which will U.S. elections reduce the Group’s foreign exchange risk. and Brexit

UDG Healthcare plc 51 Annual Report and Financial Statements 2020 Sustainability

Our Sustainability Approach

At UDG Healthcare, we are working towards building a fully sustainable business, one that balances the needs of all our stakeholders.

The Board and our management team What does sustainability healthcare companies). Whilst good progress understand that sustainability is a fundamental has been made in enhancing our sustainability aspect of our business strategy and is mean for UDG? efforts, we acknowledge that more needs to be The term sustainability (or ESG) is wide- essential for our long-term success. In done and we look forward to updating readers ranging and can mean different things to recognition of this, the Board have agreed on our continued progress in our FY2021 different organisations. At UDG Healthcare, that the responsibilities of the Nominations report. In this sustainability review, we describe sustainability means doing the right thing, & Governance Committee would be the efforts undertaken during the year in taking into account the interests of all of our extended to include a specific responsibility creating a sustainable business for our people, stakeholders when making business decisions for sustainability. The Board also agreed to the environment and our community. and, where we can, making changes to appoint a Board sustainability sponsor to our business to address their needs. At support the Group’s sustainability team and, a more granular level, we intend to focus to act as a conduit between the Board and the our sustainability priorities on areas that create Nominations, Governance & Sustainability the biggest impact for our business. Committee, particularly in relation to We will continue to review these priorities stakeholder engagement. Liz Shanahan, to ensure that we deliver positive outcomes Economic contribution to all independent non-executive director, has for all our stakeholders. agreed to fulfil this role. our stakeholders We are cognisant that our continued growth Whilst ‘Social’ and ‘Governance’ issues affect In September 2020, we commissioned an and economic performance are crucial to both Ashfield and Sharp in equal measure, external review of the Group’s sustainability our many stakeholders and to each of the the work of our Sharp Packaging division strategy. The purpose of this review was to communities in which we operate. In the impacts our ‘Environment’ in a more examine our strengths and weaknesses against financial year to 30 September 2020, UDG substantial way. In the years ahead, the healthcare industry, our peers and our Healthcare added economic value of $839.2 we aim to intensify our efforts to further own internal stakeholders. This will inform million (being revenue of $1,279.2 million less minimise our environmental impact and our management how we, as a Group, can enhance $440.0 million of input costs paid to suppliers). sustainability priorities will include specific and better co-ordinate our efforts to achieve a Remuneration to employees of $673.9 targets to help us achieve these goals. fully sustainable business. million, corporate taxes of $31.8 million, net interest paid to lenders of $13.3 million and The results of this review and associated Our sustainability review dividends paid to shareholders of $42.1 million recommendations are being considered by In 2019, UDG Healthcare received an AA rating resulted in 91% of total value generated being management and will be presented to the from MSCI, an upgrade from our previous redistributed to our economic community. Nominations, Governance & Sustainability A rating. We also received a rating of 17.5 Committee early in the new year. from Sustainalytics (ranked 27th out of 483 UN Sustainable Development Goals (SDGs) As we have noted in previous reports, we support the UN Sustainable Development Goals and we have outlined below the SDGs most relevant to our business.

People and Culture Health and Safety Environment Community We are proud of our people We are committed to We are committed to We want to have a positive who are at the core of our providing a workplace conducting our business impact on the communities services and who shape our where our people’s health in a way that protects in which we operate. values-based culture. and safety is of paramount the environment. importance.

52 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

People Relevant SDGs and Culture Now more than ever, this changing world has reinforced our commitment to building a culture that creates a sustainable organisation for our people and communities.

Key events in 2020, such as Covid-19 and the Focus on Culture Our UDG Healthcare CEO awards this year highlighting of societal injustices through Our culture is key to our success. Our continued to highlight examples of employees the Black Lives Matter movement, have corporate values of Quality, Partnership, who demonstrated our values and went reminded all of us of the vital role we at UDG Ingenuity, Expertise, and Energy represent beyond expectations to role model those play in influencing society. Although a year the guiding principles of our organisation’s values across the globe. The number of of disruption, in many ways this was also a culture. The behaviours which underpin people recognised in the nomination process year of reflection for UDG Healthcare. Led these values guide our people’s priorities increased by 15% in FY2020, with some by our Senior Executive Team, we reinforced and actions as they go about their day-to-day outstanding examples of excellence in role- our positive commitments to our people, our working lives. modelling our values. society and our environment.

Board Workforce Engagement Findings In FY2020, we commenced our Board Workforce Engagement focus groups. Wellbeing Our people welcomed the opportunity to discuss their views on development • This was considered a strong area across the opportunities, culture, wellbeing and ethical business behaviours across UDG, Group, particularly during the pandemic. with the two designated workforce engagement Board members, Lisa Ricciardi • Communications from the Senior Executive and Erik van Snippenberg. Team and Group functions are important and there is a desire to stay connected. Five focus groups were held in FY2020 and the key themes that emerged • Good work is being done on promoting the are detailed here. Relevant updates are also provided below. wellbeing of our people.

Updates in FY2020 Culture Development Opportunities • Active engagement from the Senior • There is potential to create more career • Whilst there are different cultures at Executive Team with our people has development opportunities in some parts local level, there is a strong alignment increased, especially with the onset of of the business, and to increase the visibility with the UDG Group, particularly through Covid-19. of available opportunities to support the our values. • Launched a wellbeing portal, ‘Wellspace’, growth of our people. • There was broad support and enthusiasm aimed at supporting our people, • Employees would like to know more for more opportunities to work together particularly through the challenges about other parts of the business and across UDG businesses as a way to presented by Covid-19. the initiatives that are underway. strengthen relationships and reinforce • Training is highly valued but there is a mixed a positive culture. experience in accessing formal development. Ethical Business Behaviours Updates in FY2020 • Onboarding and post-promotion support • Consistent and positive feedback that were identified as areas for improvement. • We have commenced a project to review ethical business behaviours were evident how the UDG brand connects with across the Group. Updates in FY2020 individual businesses, to ensure there • People believe the culture is open, ethical • In August, we commenced a project is clarity on our internal narrative. and feel free to speak up. to implement a Learning Management • A culture workstream project is underway, • Positive feedback on ComplianceCentre System to provide access to learning led by the Group Head of HR. and the support provided by the content to all employees across the Group. Compliance team. • Career opportunities are now advertised on our internal HR platform, to which all Update in FY2020 staff have access. • The response from our employees was reassuring, that our managers are providing an atmosphere where people feel safe speaking out.

UDG Healthcare plc 53 Annual Report and Financial Statements 2020 Sustainability (continued) People and Culture (continued)

In early 2019, many of our businesses Our senior business leaders placed a significant Programme articulates the Group’s ethical implemented local pulse surveys and focus focus on keeping our employees connected business control processes. Furthermore groups to track employee engagement. The throughout this period through regular weekly our Compliance Programme describes our results of these surveys were reassuring and communications and video messages. expectations of our suppliers and follows confirmed that our activities were broadly the principles of ethical business, as set out aligned with our employees’ own values. As Through the initial phases of Covid-19, we in the Group’s Supplier Code of Conduct. 2020 unfolded, our attention switched to were aware of the sacrifices that frontline All these polices are available to view on our developing a specific understanding of the workers across the globe were making to website: www.udghealthcare.com impacts of Covid-19 on our workforce, and ensure our employees and their families were how we could support our people. safe. In June, we launched a global social Human Rights & Anti-Slavery media campaign engaging our employees Our business model strives to fully comply As the pandemic hit, we were acutely aware in recognising the courage of frontline with applicable human rights legislation in of the challenges posed for many of our workers everywhere. Our #MarkForHeroes the countries in which we operate. UDG colleagues from both a work and personal campaign involved our people showing Healthcare is completely opposed to slavery perspective. Our people adapted quickly, their appreciation for their local heroes in and human trafficking and will not knowingly and within a two-week period, the majority of any frontline activity and making a pledge support or conduct business with any our employees adjusted their lives to remote to support them through various acts of organisation involved in such activities. working. In order to support our people, kindness. We were extremely proud to regular pulse surveys were implemented see how our employees engaged with this Diversity, Equity and Inclusion to understand how remote working was initiative, making a positive impact to others This year we committed to injecting fresh impacting our employees, with a focus on in their communities. energy, focus and perspective into our their wellbeing. We sought further feedback Diversity, Equity and Inclusion (DEI) activities to understand their views on returning to the Ethical Business Behaviours with a commitment to looking for additional office environment. Obtaining this feedback UDG Healthcare does not tolerate bribery ways to learn, to improve and to identify enabled our businesses to create appropriate or corruption in any form. Our approach areas where we can create real change and and agile working policies to facilitate the new is summarised in our Anti-Bribery and opportunity. The worrying trend of social world of work for our employees, giving them Corruption policy, which states that injustice in our key markets was commented greater flexibility to balance both their work bribery, corrupt payments and any other on by our Senior Executive Team who issued and personal commitments. form of unethical business practice are an open letter in June to our employees and strictly prohibited. Together with the stakeholders, unequivocally demanding an Group’s Code of Conduct, our Compliance absence of racism in our communities. Our leaders committed to do everything they can as leaders of a global company, to ensure equality, dignity and inclusion without any compromise, in our workplaces.

Pegasus’ celebration of Brighton Pride.

Sharp Bethlehem celebrating World Day for Cultural Diversity 2019. Employee Statistics

Age distribution of employees Gender composition – senior leadership UDG Healthcare head count by division Ashfield 7,074 <222020169 Male 44 1% Sharp 1,810 23-402019 4,462 Female 21 20% UDG Head Office 70 41-51 2,252 52+ 2,071 79%

Gender composition – all leaders Gender composition – UDG Healthcare head count by location and managers all employees Europe 3,678 Americas 4,402 Male 560 Male 3,049 10% Australasia 874 Female 804 Female 5,905 41% 49%

54 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

We progressed the DEI agenda across the is a standing item on our Senior Executive Group this year, with some key tangible Team’s meeting agenda and also integrated Our employee microsite, initiatives. At a global level, we appointed a this topic into our regular business reviews. ‘Wellspace’, contains new internal Senior Executive Team sponsor This approach places our people, their and UDG Healthcare DEI Council to create development and the overall management free webinars, useful our 2021 strategy and deliver a roadmap of talent activities on an equal footing with resources, activities and for activities. We also recently hired a DEI our business performance discussions. Our Officer for the group globally, whose key rationale for doing so was to reinforce the classes to support physical responsibility will be driving our strategy. Our interdependence of performance and people. Diversity and Inclusion Champions Network and mental wellbeing. delivered local initiatives marking international Despite the disruption caused by Covid-19, events such as PRIDE and International the development of our people remained high Women’s Day with enthusiasm. on our agenda. We quickly developed and bring our Inspire leadership programme to launched ‘The Art of Managing Remotely’ India and in December 2019 the first cohort At a business level, across the globe we saw and in an eight-week period we were able of people leaders from India attended the some great achievements, our Vynamic to deliver the programme virtually to 60% programme in New Delhi. business was voted one of the Fortune 2020 of people managers globally. We completed best places to work for women. Canale the pivoting of our new first line managers The high level of satisfaction we achieved on Communications announced in June 2020 programme ‘LEAP’, from face-to-face to all these programmes is a testament to the an internship programme to address racial virtual delivery, and in September our internal ingenuity of our people who enable these inequality in biotech careers targeting faculty of ‘LEAP’ trainers completed their activities and the partners who we choose African Americans. Cambridge BioMarketing internal accreditation training. to support us, and are fully aligned with our implemented an active social media campaign culture and values. to highlight disparities in the provision of healthcare and, across all our businesses, we Wellbeing were proud to see the renewed determination The physical and mental wellbeing of our by our leaders and employees to create employees is of key importance to our awareness of injustice in our society. organisation. While we ordinarily mark all important international health days, in At Board level, we are delighted that the In addition, we continued to support our 2020 the arrival of Covid-19 created an even Board now comprises 40% female Board business development community through greater focus on employee wellbeing. In April members. However, we are equally cognisant the virtual delivery of our Inspire Business we launched an employee wellbeing portal that diversity has many forms and the Board’s Development curriculum in a virtual format ‘Wellspace’ to support our people through policy on diversity (available on page 72) and added a further programme to support this challenging time. Our Mental Health states that it will continue to take into account our sales people. Awareness Month in June enabled our people all forms of diversity when considering to access advice and interactive sessions with appointments to the Board. During this year, we also commenced our both physical and mental health experts. We InspireTalks series which provided access to also provided mental health coaching support Talent virtual bite-sized learning for all managers, to employees to help them cope with the Identifying and developing talent continues delivered by external and internal expert challenges they were experiencing. to be a key priority across our businesses. We hosts. Furthermore, we were delighted to reward talent by providing our people with prospects to grow and develop their careers, and we offer them the opportunity to make a difference. Annually, we review and test the robustness of our talent process and this year we refined it to ensure the topic of talent

UDGUDG Healthcare plc 55 AnnualAnnual ReportReport and Financial Statements 2020 Sustainability (continued)

Health Relevant SDGs and Safety At UDG Healthcare, we are committed to providing a workplace where our people’s health and safety is of paramount importance.

We demonstrate our commitment to Unfortunately, Covid-19 resulted in the FY2020 v 2019 incident rate/100 colleagues health and safety by regularly monitoring deferment of physical on-site EHS audits performance, completing due diligence on 0.55 0.53 scheduled from March 2020 and the re- 0.50 potential acquisitions, and ensuring our 0.47 assignment of the Group EHS Leader to our health and safety programme continues to be 0.45 Global Response Team. One EHS audit was 0.40 appropriate for each of our businesses. Industry average 0.35 completed pre-March 2020. Notwithstanding 0.35 0.34 0.31 this, select audit action completion reviews 0.30 0.28 0.28 0.28 0.27 0.26 continued through the pandemic with five Incident Management Process 0.25 Our Incident Management Process allows us 0.2 0.2 0.21 0.23 being completed in 2020, in line with the 0.20 0.21 0.22 to monitor, analyse and investigate our health 0.19 0.19 previous year. 0.15 0.18 0.16 0.15 and safety incidents. Set out below are details 0.10 0.09 of the total number of incidents during the 0.05 0.08 In addition to our corporate audit year, the total number of lost time accidents, 0.00 programme, three client-led EHS audits the total number of days lost as a result of lost FY2020 Linear (FY2020) FY2019 were facilitated by the Group in 2020. time accidents and our FY2020 Incidence rate. Driver safety The 2020 figures demonstrate a significant Near Miss Reporting Driving safely remains one of our key areas decrease in the number of incidents across A near miss is an unplanned event that did not of focus. Our ever-evolving driver safety all categories, largely due to the increase in result in a health and safety incident but had programme is designed to give our drivers remote working across the Group. the potential to do so. For us, identifying and tools to help prevent adverse driving investigating near misses is a key element to incidents. We know from the Network of Total number of incidents discovering and controlling risks before they Employer Traffic Safety data analytics that become an incident. companies that provide driver training for 2020 229 employees have lower collision and injury per 20191 319 The top three causes of incidents during million-mile rates compared with companies 2020 were: that do not. 2018 293 2017 322 CAUSE In 2019, we reviewed and sourced a suitable online driver safety training platform. This SLIPS, TRIPS AND FALLS platform has now been implemented in over Lost time accidents 40% of our fleet locations with the rest of our CONTACT WITH SHARPS locations soon to follow. 2020 31 AND ABRASIVES 20191 46 STRIKE BY 2018 60 2017 47 EHS audit Our corporate Environmental, Health and Total days lost NETS is a collaborative group of companies Safety (EHS) audit programme comprises dedicated to road safety. The organisation a comprehensive review of adherence with 2020 197 was founded by the National Highway regulations, standards, and practices. Traffic Safety Administration (NHTSA) as 20191 501 EHS audits allow us to identify any deficiencies an employer-led road safety organisation. 2018 941 in EHS management and plan preventative UDG Healthcare is a member of NETS. actions. Since the programme implementation 2017 601 in 2014 we have seen improvement across our portfolio. 1 2019 figures amended upwards from FY2019 Annual Report due to three non-material incidents reported after the publication deadline.

56 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Environment Relevant SDGs

Minimising UDG’s environmental footprint is a fundamental part of our sustainability strategy.

Environmental performance Renewable energy This year, we have added waste to our KPI listing. We are confident that if we can UDG Healthcare is a growing business with In April 2019, a 250kWp roof-mounted solar accurately measure both the volume and an ever expanding geographical footprint, panel system, consisting of 888 individual waste stream types leaving all of our locations therefore our environmental performance panels, was successfully installed in our we will be able to reduce the volume of waste remains a key pillar of our organisational Rhymney site. Using the latest solar panel and continue to increase the number of sites sustainability. technology, this system is expected to make diverting waste from landfill. We expect this over 1,700 tonnes of carbon savings over process will also generate financial savings and We are committed to identifying and its 25-year lifespan. In its first year of facilitate case study- driven shared learning. controlling the environmental impact of installation this system has exceeded its our activities and services whilst continually projected carbon savings. improving our environmental performance. CDP We have adopted a systematic approach to In addition, we are pleased to announce The Carbon Disclosure Project (‘CDP’) setting environmental objectives, to achieving that all of our Sharp sites in the U.S. are provides a globally recognised disclosure these and to demonstrating that they have now sourcing their electricity supply from a system that enables companies to measure and been achieved. green electricity supplier. Green electricity is manage their environmental impacts. In January generated using renewable energy sources, 2020, CDP awarded UDG a score of B- for its Fossil free commitment such as hydro, solar and wind. 2019 submission (based on 2018 data). In conjunction with one of our clients, Biogen, For CDP 2020 (based on 2019 data), Sharp has recently pledged to become fossil Reducing our waste UDG Healthcare disclosed emissions and fuel free by 2040. The Sharp management team Our Environmental KPI programme has been environmental data across the Group covering in conjunction with the Group sustainability in place since 2017. The objectives of this all countries. The results of this submission will team are exploring the practical steps we will programme are to: improve the quality and not be available until early 2021. An overview of need to take to deliver upon this commitment. consistency of environmental data; establish our 2020 submission (pertaining to 2019 data) business specific environmental initiatives; is included in the following table. and, to deliver savings through reduced consumption and resource efficiency.

CDP 2020 summarised as follows: 14 10% 11% submission 1,2,3 We reported emissions Scope 1, 2 and 3 Scope 1 and 2 emissions We reported on Scope from 14 countries, emissions increased increased by 11% per Our CDP submission 1,2,3 emissions. the same as the by 10% compared with unit of revenue when this year (based on previous year. the previous year. compared with the 2019 data) can be previous year 2018.

The increase in emissions is due to CO emissions by scope (tonnes) CO emissions by business unit improvements in the methodology of 2 2 (Scope 1 and 2) emissions calculations and the quality of data collection compared with prior years. We Scope 1 Ashfield are now using local country emission factors 18,825 Scope 1 3% compared to a generic emissions factor. Scope 2 and Scope 2

18,329 = 17,294 tCO2e Refer to the glossary on page 183 for 49% Scope 3 46% Sharp 48% 54% definitions of scope 1, scope 2 and 1,246 Scope 1 scope 3 emissions. and Scope 2 = 19,860

tCO2e

UDG Healthcare plc 57 Annual Report and Financial Statements 2020 Sustainability (continued)

Community Relevant SDGs

As employees, we are aware of our wider communities and the contribution that we can make to them.

As a global organisation, we have a desire and financial contribution to each of our charities. may have undiagnosed conditions. Jack & Jill responsibility to make a positive contribution Furthermore, since the beginning of 2020, also provide end of life care for children under to civic society. We recognise the needs of as the gravity of the pandemic unfolded, the age of 5, regardless of diagnosis. our local communities around us and are UDG has encouraged and supported our committed to offering our time and energies employees to become involved with those to support them. communities negatively impacted by Covid-19.

Getting Involved and Giving Back Our Corporate Charities of Choice As part of our commitment to living our As an Irish-headquartered organisation, values, UDG Healthcare encourages all our UDG Healthcare worked with three Irish Pieta House provides freely accessible, employees to support their local communities, healthcare-related charities in 2020 – each professional services to anyone in suicidal through fundraising or by donating their time one offering critical community support for crisis or engaging in self-harm. Since 2016, and energy to worthy causes. While UDG one of the main stages of life – in childhood, the charity also provides suicide bereavement Healthcare sometimes leads these activities, in adult years and in the older years. counselling. Pieta House has 15 centres very often our own employees instigate across Ireland and has seen over 58,000 involvement in community projects and clients to date. initiatives. Since 2012, UDG Healthcare has supported various charities across the globe, raising in excess of $600,000.

The UDG Healthcare Annual Golf Day held each September, is our primary fundraising event of the year, attracting more than 100 The Jack and Jill Children’s Foundation The Alzheimer Society of Ireland works across golfers. The outbreak of Covid-19 forced the provides in-home nursing care and respite the country in local communities providing cancellation of the Golf Day in 2020, which support for children up to the age of five, dementia-specific services and support. had a major impact on our ability to fundraise with a range of neurodevelopmental issues The charity advocates for the rights and for our corporate charities. Despite the including brain injury, genetic diagnosis and needs of all people living with dementia, cancellation of the event, UDG made a direct severe cerebral palsy. Many of these children and their carers.

Our Employees’ Charitable Initiatives

For the fifth consecutive year, UDG Healthcare has offered its support to employee’s charitable initiatives around the world. Through the UDG Healthcare CSR Fund, employees can apply for financial donations to be made to charitable causes, with whom they have a direct involvement. Employees themselves also undertook multiple charitable activities and challenges, including marathons, abseiling, coffee mornings and virtual fundraisers.

With UDG Healthcare’s support, our employees also supported donations of toys to the children’s toy appeal at Christmas, participated in the annual Christmas ‘Shoebox Appeal’ in aid of children in Africa and Syria, as well as taking part in a food drive which aimed to donate over 10,000 non-perishable food items to families in need.

58 UDGUDG Healthcare plc AnnualAlRdFiilS Report and Financial Statementsts 20202020 Strategic Report Governance Financial Statements

Ashfield community support

Ashfield continued its support of many Throughout the year, our teams have national and local charities, something come together either in person or virtually, that every part of the Ashfield family takes to host fundraising events such as quizzes, pride in. Award-winning social media competitions and sporting events. Many campaigns, developed by our healthcare charitable events have focused on supporting communications agencies, raised awareness those affected most by the Covid-19 pandemic. of the communities requiring support. Initiatives of note included: • MicroMass’ ‘FtheList’ campaign designed to emphasise the importance of self-care. • Cambridge BioMarketing’s Hold on for Humanity petitioning for a rare disease patient who was faced with the possibility of losing life-saving treatment due to deportation. • Putnam Associates’ partnership with BuildOn to help build a primary school in Malawi. • CanaleComm’s ‘BE in Biotech Internship Programme’ striving for black empowerment, education and equality. • Vynamic’s partnership with Hosts for Hospitals to offer accommodation to the families of patients travelling to Greater Philadelphia for urgent medical care during the pandemic.

Sharp community support

During 2020, Sharp continued to offer a local hospital in Heerenveen, on behalf learn more about life and careers inside support and donations to charities in their of employees. manufacturing facilities. This year, the Sharp local communities. This year, our employees project from Spring House Junior High won again supported World Cancer Day, in Sharp Allentown also participated in ‘What’s the viewer’s choice award. Bethlehem through the ‘Share the Joy, Give so cool about Manufacturing’ again this year, a Toy’ campaign. Employees donated toys to an annual industry outreach programme the Lehigh Valley Reilly Children’s Hospital, that invites local high school students to and in Sharp Rhymney, through the Sparkle Appeal, our colleagues donated toys to disadvantaged children for Christmas.

In Allentown, an employee-led food drive was organised for the benefit of local charity Second Harvest Food Bank during the Christmas holidays.

Since February, the Covid-19 pandemic has focused support to more local needs and, in particular, to healthcare-related causes. Our Conshohocken facility organised to donate surplus materials for the manufacture of plastic face shields, which were then donated to local healthcare workers. In the Netherlands, Sharp management arranged for full-body PPE equipment to be donated to

UDGUDG HealthcareHealthcare pplclc 59 Annual Report and Financial Statements 2020 Sustainability (continued)

Non-financial Information Statement

In compliance with the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017, the table below is designed to help stakeholders navigate to the relevant sections in this Annual Report to understand UDG Healthcare’s approach to these non-financial matters. Many of our policies can be viewed on our website and a summary of the policies is detailed below.

Reporting requirements Policies and programmes Risk management and that govern our approach additional information Environmental matters • Environmental Sustainability Policy Sustainability page 57

Social and employee matters • Diversity, Equity and Inclusion Policy Employees page 54 and Diversity and Inclusion Champion Network Health & Safety page 56 • Driver Safety Management Policy Confidential Reporting page 84 • Health and Safety Policy • Community support programme • Code of Conduct • Confidential Reporting Policy and programme Human rights • Anti-Modern Slavery Policy Employees page 54

Anti-bribery and corruption • Code of Conduct Business Conduct page 54 • Compliance Policy • Anti-Bribery & Corruption policy Description of the business model • Business model Business model pages 14 and 15

Non-Financial Key Performance • Quality and Compliance programmes KPIs pages 20 to 23 Indicators • Employee leadership programmes

Our Policies Code of Conduct Environmental sustainability UDG Healthcare’s Code of Conduct confirms the importance of Our Environmental Sustainability Policy seeks to ensure that acting ethically and responsibly in our day-to-day working lives, our business activities do not result in adverse environmental demonstrating our values in everything we do. impacts and that we embed environmentally sound business practices throughout our organisation. Confidential Reporting Policy and Programme The Group has an independent and confidential reporting Diversity, Equity and Inclusion Policy and Diversity and procedure which allows employees to raise any concerns Inclusion Champion Network about business practices in a confidential manner. We have a wide range of employment policies that are designed to protect and support our workforce, including Anti-Modern Slavery our Diversity, Equity and Inclusion Policy. Our Anti-Slavery & Human Trafficking policy requires the implementation and enforcement of effective systems and Driver Safety Management controls to ensure modern slavery is not taking place anywhere Our driver safety programme is constantly evolving to within our own business and supply chain. meet our business needs and prevent adverse driving incidents. Compliance Policy Health and Safety Our Compliance Policy describes how our Compliance We are committed to providing a workplace where our people’s Management System ensures that we meet our fundamental health and safety is of paramount importance. Our Health and compliance commitments across the UDG Group. Safety programmes are tailored to ensure they are appropriate for each of our individual businesses. Anti-Bribery & Corruption policy UDG Healthcare’s Anti-Bribery and Corruption Policy provides a series of detailed guidelines that our employees must adhere to to prevent any breach of anti-bribery and corruption laws.

60 UDGUDG Healthcare pplclc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Governance

Governance Board of Directors 62 Senior Executive Team 64 Chair’s Introduction to Corporate Governance 65 Corporate Governance Report 66 Nominations, Governance & Sustainability Committee Report 78 Audit Committee Report 81 Risk, Investment & Financing Committee Report 85 Directors’ Remuneration Report 88 Report of the Directors 104

UDG Healthcare plc 61 Annual Report and Financial Statements 2020 Board of Directors

Committee Membership Key

Audit Committee Remuneration Committee

Nominations, Governance Indicates Committee Chair & Sustainability Committee

Risk, Investment & Financing Committee

1. 2.

3. 4.

5. 6.

7. 8.

9. 10.

62 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

1. Shane Cooke 5. Linda Wilding 8. Peter Chambré Chair (58) Independent Non-Executive Director (61) Independent Non-Executive Director (65)

Appointed: 1 February 2019 Appointed: 16 December 2013 Appointed: 1 February 2019 Skills and experience: Shane Cooke was President Skills and experience: Linda Wilding’s career Skills and experience: Peter was Chief Executive of Alkermes plc, from September 2011 until his includes 12 years at Mercury Asset Management Officer of Cambridge Antibody Group plc until retirement in March 2018. Prior to this, Shane where she held the position of Managing Director 2006 and, before that, held the roles of Chief spent ten years as Chief Financial Officer of Elan in the Private Equity division. Prior to this, Linda Operating Officer of Celera Genomics Group and Corporation plc and, from 2007 he also was Head of qualified as a chartered accountant while working Chief Executive Officer of Bespak plc (later Consort Elan Drug Technologies. Prior to Elan, he held the role with Ernst & Young. Medical plc). More recently, Peter was a non-executive of Chief Executive Officer of Pembroke Capital Ltd, an director of Spectris plc until December 2016, and of External appointments: Linda is a non-executive aviation leasing company of which he was a founder. director of BMO Commercial Property Trust, the Touchstone Innovations plc until January 2017. External appointments: Shane serves as a non- Wesleyan Assurance Society, Skagen Conscience External appointments: Peter is Chair of NASDAQ executive director on the Board of Alkermes plc, Capital and Electra plc. listed Immatics N.V and a Trustee of Cancer Research Prothena Corporation plc and Endo International plc, U.K. all publicly-quoted companies. 6. Lisa Ricciardi Independent Non-Executive Director (60) 9. Liz Shanahan 2. Brendan McAtamney Independent Non-Executive Director (56) Chief Executive Officer (58) Appointed: 14 June 2013 Skills and experience: Lisa Ricciardi has been CEO Appointed: 1 February 2020 Appointed: 16 December 2013 & Chief Business Officer with sell-side experience in Skills and experience: Liz is a life sciences Skills and experience: Brendan McAtamney was VC-backed life science companies (biotech, genomics, entrepreneur with extensive experience advising appointed Group Chief Executive Officer on 2 February medical devices) and buy-side experience as Global leading global pharmaceutical and healthcare 2016, having previously served as the Group’s Chief Licensing SVP of Pfizer and SVP of U.S. International organisations on their communications. Until 2014, Operating Officer since 1 September 2013. Before and business development at Medco Health Solutions. she was Global Head of Healthcare & Lifesciences joining UDG Healthcare, Brendan held various senior She has led significant and transformational deals at the NYSE-listed management consultancy, FTI management positions with Abbott, latterly as Vice at both Pfizer and Medco. From 1 October 2019, Consulting Inc., which had in 2007 acquired the President Commercial and Corporate Officer within Lisa was appointed as a Designated NED for UDG communications business, Santé Communications, the Established Pharmaceuticals division. Healthcare plc. which she had founded in 1995. External appointments: Brendan is a non-executive External appointments: Lisa advises various External appointments: Liz is a non-executive director of Scapa Group plc. biotechnology companies across the industry. director of AIM listed, Inspiration Healthcare Group plc. She is also a Trustee of CW+, the charitable arm of Chelsea & Westminster Foundation Trust Hospital, 3. Nigel Clerkin 7. Erik van Snippenberg and a member of the organisation’s Innovations Chief Financial Officer (47) Independent Non-Executive Director (56) Advisory Board.

Appointed: 15 May 2018 Appointed: 2 July 2018 Skills and experience: Prior to joining UDG Skills and experience: Erik van Snippenberg spent 10. Anne Whitaker Healthcare plc on 1 May 2018, Nigel held the position almost 30 years with GlaxoSmithKline (‘GSK’). Independent Non-Executive Director (53) of CFO with ConvaTec Group plc where he worked During this time, Erik held the position of Senior Vice for three years. Before this, he worked with Elan President and Area Head for Europe and Canada Appointed: 1 October 2020 Corporation plc both in the U.S. and Europe, holding and was a member of GSK’s Global Pharmaceutical Skills and experience: Anne has more than 25 years the position of Executive Vice President and CFO. Management Team. He also held a number of senior of experience in the life sciences industry, including Nigel started his career at KPMG and is a fellow of executive roles such as Senior Vice-President and senior leadership roles with large pharmaceutical, the Institute of Chartered Accountants of Ireland. Director of U.K. and Ireland. Erik was appointed biotech, and speciality pharma companies. Since Designated NED for UDG Healthcare plc from External appointments: None. October 2018, she has served as the Chief Executive 1 October 2019. Officer of Aerami Therapeutics, a clinical stage External appointments: Erik is a non-executive pharmaceutical and medical device company. 4. Myles Lee director of Eurovite Group. External appointments: Anne is a non-executive Senior Independent Director (67) director of Cree, Inc., Caladrius Biosciences, Inc. (both NASDAQ traded companies) and NYSE- listed Appointed: 1 April 2017 Mallinckrodt plc. Skills and experience: Myles was Group Chief Executive of CRH plc, a FTSE 100 and Fortune 500 company, prior to retiring in December 2013. With more than 30 years’ experience at senior financial and managerial level, Myles has extensive global experience in management, M&A and finance. He is a qualified civil engineer and a Fellow of the Institute of Chartered Accountants in Ireland. External appointments: Myles is a non-executive director of both Babcock International Group plc and Trane Technologies plc. Damien Moynagh General Counsel & Company Secretary Damien joined UDG as General Counsel & Company Secretary in October 2016. He is responsible for the Group’s Legal, Company Secretarial and Risk & Compliance functions and is also the SET’s ESG sponsor. Before joining UDG, Damien was Chief Operating Officer & General Counsel at technology firm, Sysnet Global Solutions. Prior to this, Damien was a senior lawyer in Freshfields’ Corporate/M&A team, working in their London, Tokyo and New York offices and subsequently in Maples’ Dublin office.

UDG Healthcare plc 63 Annual Report and Financial Statements 2020 Senior Executive Team

The following individuals comprise our Senior Executive Team:

Brendan McAtamney Chief Executive Officer

Nigel Clerkin Chief Financial Officer

Damien Moynagh General Counsel & Company Secretary

Biographies for the above can be found on page 63. Ryan Quigley Eimear Kenny Liam Logue Chief Operating Officer EVP, Human Resources EVP, Corporate Development

Ryan joined UDG in September 2020. Eimear joined UDG in September Liam joined UDG Healthcare in 2003, He is responsible for providing strategic 2014. She is responsible for UDG’s managing corporate development in leadership for the Ashfield and Sharp people strategy including culture, talent the United Drug distribution business. divisions globally by working with management, employee engagement, During his career at UDG he has held the executive management teams to learning and development and roles responsible for the creation of establish and deliver long-term strategic remuneration. Prior to joining UDG, UDG’s Sharp division, and Ashfield’s growth plans. Ryan has over 25 years’ Eimear was Executive Vice President global expansion, while diversifying experience in the pharmaceutical of Human Resources in ICON plc for its services into Communications and industry in commercial leadership 15 years. Advisory. Prior to UDG, Liam worked roles. Prior to joining UDG, he was for KPMG and IBI Corporate Finance, Regional Vice President Region South, Ireland’s leading investment bank. Immunology and HCV lead for AbbVie Western Europe and Canada.

Colin Stanley Greg Flynn Amar Urhekar Kevin Orfan President of Ashfield Advisory President of Ashfield Clinical President of Ashfield President, Sharp & Commercial Communications Corporation

Colin joined UDG in September 2019 as Greg joined Ashfield in 2005, starting Amar joined UDG in March 2020 as Kevin joined Sharp in March 2019 to President of Advisory. Prior to joining as a Regional Account Director in the Global President of Ashfield Healthcare lead the Sharp Packaging business UDG, Colin was a member of the U.K. and has worked in the U.K., Japan Communications and is also the SET’s in the U.S. before being appointed Senior Executive Team at ICON plc, and the U.S. during his career with the Diversity, Equity and Inclusion sponsor. to the position of Global President responsible for a business unit of 3,000 business. He established and ran the Prior to joining UDG, Amar worked of Sharp in March 2020. Prior to employees globally, providing strategic Ashfield CMIC joint venture in Japan with McCann Health since 2000 where joining UDG, Kevin spent 30 years resourcing and functional services. before moving to the U.S in 2017 to lead he was responsible for developing in the pharmaceutical and medical Colin held a number of roles during his the Ashfield Commercial and Patient and leading businesses in China and device industry in numerous domestic 20-year career at ICON, including Chief Solutions business. Greg was appointed Japan. In 2014, he was appointed as the and international roles with Abbot Operating Officer of DOCS and Vice President of Ashfield Commercial and President of the Americas and had been Laboratories, Hospira and Pfizer. President of Clinical Operations in Asia. Patient Solutions in September 2019. in that role for the previous five years before joining UDG.

64 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Chair’s Introduction to Corporate Governance

Dear Shareholder On behalf of the Board, I am pleased to introduce the Group’s Corporate Governance Report for FY2020.

Changes to the Board During the Year There have been a number of changes to the Board’s composition during 2020. I succeeded Peter Gray as Chair on 1 October 2020 following his retirement after eight years as Chair and 16 years as a non-executive director of UDG. Chris Brinsmead, Chris Corbin and Nancy-Miller Rich also retired at our 2020 AGM. On behalf of the Board, I would like to express our sincere thanks to these board colleagues for the contributions they have made to the business. During the year, we welcomed Liz Shanahan to the Board in February and more recently, Anne Whitaker in October. Both Liz and Anne have extensive experience in the healthcare industry which will be hugely beneficial to the UDG Board. Today, the Board comprises 10 directors: myself, two executives and seven independent non-executives, four of whom are female.

As a result of the various Board changes, the newly renamed Nominations, Governance & Sustainability Committee will, during FY2021, take the opportunity to review and refresh the memberships of the Board Committees to ensure the appropriate balance is maintained and meetings remain effective. A full list of Board and Committee changes that occurred during the year is set out on page 70.

Sustainability In recent years we have seen an increased focus from a number of stakeholders including our shareholders and employees, on sustainability. Whilst the Board has always been responsive to sustainability matters, we believe there is an opportunity for us, during FY2021, to define more precisely UDG’s sustainability strategy and to set some targets to enable us to measure and track our progress “Our Board is united in the years ahead. To support management in doing this, the Board expanded the responsibilities of the Nominations and Governance Committee to include the role of overseeing the implementation of in its view that good the Group’s sustainability strategy. The Nominations and Governance Committee has now been renamed the Nominations, Governance & governance comes Sustainability Committee. We look forward to updating you on our progress in next year’s report. from having clarity of Corporate Governance This year we are reporting under the 2018 U.K. Corporate Governance purpose, a values-based Code for the first time. The Corporate Governance Report on pages 66 to 77 sets out how we comply with and have applied the Code during culture and focusing on the year. We remain committed to maintaining the highest standards of Corporate Governance across the Group to support the delivery of our strategy and provide long-term sustainable value to our our responsibilities to shareholders and other stakeholders. our stakeholders, our A key part of my role as Chair is to ensure the Board and its individual members operate effectively. During the year, the Board completed an internal Board Evaluation and a number of helpful recommendations shareholders and the were put forward on how we can improve our effectiveness going forward. In FY2021, I will look to meet with each of the directors to community and society discuss their views and implement the recommendations. of which we are part.” Looking Forward During the coming year, the Board will continue to focus on • Supporting the Group as it continues to manage the impact of the Covid-19 pandemic; and • Supporting the management team in achieving the Group’s strategic objectives. Shane Cooke Chair

UDG Healthcare plc 65 Annual Report and Financial Statements 2020 Corporate Governance Report

UDG Healthcare Governance Framework

Chair – Shane Cooke

Chief Executive – Board of Directors Brendan McAtamney

Audit Remuneration Nominations, Governance Risk, Investment & Senior Committee Committee & Sustainability Committee Financing Committee Executive Team

Myles Lee Linda Wilding Shane Cooke Shane Cooke (Chair) (Chair) (Chair) (Chair)

Read our Read our Read our Read our Committee Report Committee Report Committee Report Committee Report on pages 81 to 84 on pages 87 to 103 on pages 78 to 80 on pages 85 to 86

Risk & Controls Quality & Compliance Sub-Committee Sub-Committee

Recent Governance Changes to Comply with the 2018 Corporate Governance Code The following changes were made to UDG Healthcare’s governance processes to comply with the recent changes to the 2018 U.K. Corporate Governance Code. Page Code changes UDG’s response references Stakeholder Engagement and • Reviewed the Group’s key stakeholder groups and undertook an analysis of the Page 73 s.172 U.K. Companies Act 2006 current engagement mechanisms in place. Workforce Engagement & Culture • In FY2019, the Board appointed two Designated NEDs (Erik van Snippenberg and Page 53 Lisa Ricciardi) to lead the Board’s engagement with UDG’s global workforce. • While the impact of Covid-19 meant that UDG Healthcare’s Inspire programme, (through which the workforce engagement meetings were originally intended to be facilitated) could no longer happen, a number of virtual workforce engagement meetings were arranged instead. UDG’s culture was one of the topics for discussion. Chair tenure • After 16 years as a director of UDG Healthcare plc and eight years as Chair, Peter Gray Page 79 retired from the Board on 30 September. • Shane Cooke, an independent non-executive director who joined the Board in February 2019 was appointed as the new Chair, effective from 1 October 2020. Emerging risks • In November 2019, the RIF Committee agreed a process to identify emerging risks. Page 47 This process involved expanding the remit of the new Risk & Controls Sub-Committee to include the responsibility for identifying and assessing emerging risks and reporting their findings to the RIF Committee on a bi-annual basis. Remuneration • Executive director new joiners’ pension contribution rates will match those available Page 90 to the wider workforce in the executive’s local market. • Agreed that pension contribution rates for incumbent executive directors would also be reduced from 1 October 2022 and furthermore, from 1 October 2020 shall be frozen at FY2020 levels. • Enhanced the description of the work of the Remuneration Committee in the Remuneration Committee Report to comply with Provisions 40 & 41.

Compliance with the 2018 U.K. Corporate Governance Code A copy of the Financial Reporting Council’s 2018 U.K. Corporate Governance Code can be found at www.frc.org.uk.

During the year ended 30 September 2020, we are pleased to report that UDG Healthcare plc applied all the principles of the Code and has complied with all the provisions except for Provision 38. Provision 38 provides that executive director pension contribution rates should be in line with those available to the workforce. Our Remuneration Policy, which was approved by shareholders on 28 January 2020, stipulates that executive director new joiners’ pension contribution rates will be in line with rates available in the wider workforce in the executive’s local market. The Remuneration Committee confirms that incumbent executive director pension contribution rates will also reduce from 1 October 2022 and furthermore, from 1 October 2020, shall be frozen at FY2020 levels.

66 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

The table below summarises our key governance highlights throughout the year:

Page Code section Key governance highlights during the year references 1. Leadership & • Successfully led the Group during the onset of the Covid-19 pandemic and continues to do so as Pages 8 Company Purpose the pandemic evolves. to 13 • Facilitated several workforce engagement meetings with Designated NEDs in attendance and have started to work on the feedback received. Page 53 • Expanded the remit of the Nominations & Governance Committee to include responsibility for sustainability. Page 80 • The Board held two half-day strategy sessions in May and September. Page 67 • The Board continued to align the Group’s strategy with our purpose and values. Page 5 2. Division of • Appointed new Independent Non-Executive Chair, Shane Cooke, on 1 October 2020. Page 79 Responsibilities 3. Composition, • Initiated various Board changes to enhance composition and skill set, to continue into FY2021. Page 79 Succession & • Improved gender diversity on the Board by appointing two female NEDs in FY2020. Page 72 Evaluation • Conducted an Internal Board Evaluation. Page 71 4. Audit, Risk and • Implemented a process for identifying and assessing emerging risks. Page 47 Internal Controls • Commenced a review of the Terms of Reference for both the Audit Committee and the RIF Committee to provide clarification on the responsibility for reviewing the risk management framework and acquisition/ disposal proposals. 5. Remuneration • Agreed that pension contribution rates for incumbent executive directors would also be reduced Page 90 from 1 October 2022 and furthermore, from 1 October 2020, shall be frozen at FY2020 levels. • Implemented Board and SET temporary pay reductions in response to Covid-19 crisis. Page 87

Board Leadership & Company Purpose

Board Engagement with Major Shareholders The Board, led by the Chair, sets the Group’s Schedule of Matters Reserved and Other Stakeholders strategic direction and is responsible to UDG The Board has reserved certain items Institutional investors and analysts receive Healthcare’s stakeholders for the leadership, for its review, including the approval of: regular communications from the Company, oversight and long-term success of the Group. • Group strategy; through investor relations events, the AGM, The Board also has ultimate responsibility for • Annual budgets; one-to-one and group meetings with the corporate governance, which it discharges • Full year results, interim results and Chair, executive directors and the Head of either directly, or through its Committees and the Annual Report; Investor Relations. structures, as further described in this Report. • Significant acquisitions and disposals in excess of €50 million; The Chair is committed to ensuring that The Group’s overarching purpose is to • Significant capital expenditure shareholder views, both positive and negative, partner with clients to deliver innovative proposals in excess of €10 million; are relayed back to the Board and is assisted by healthcare solutions that improve patients’ • Dividends; and the executive directors in doing so. In addition lives. Our purpose and values guide our • Board appointments. to the Chair’s efforts, the Chief Executive people, including our Board members, in includes an update on investor relations our day-to-day activities and influence our activities in his regular CEO Board Report. decision-making. In FY2020, our investment Strategy Meetings in Berkshire Sterile Manufacturing, a company In May and September, the Board held two, For details of the Company’s wider which specialises in high-quality sterile half-day strategy sessions. These strategy stakeholder engagement programme, manufacturing services, demonstrated meetings are structured to provide the please refer to page 53. the Board’s ethos of supporting investment executive directors and the non-executive into businesses that deliver innovative directors in particular, with an opportunity Conflicts of Interest healthcare solutions that improve patients’ to focus on the development and execution The directors are required to avoid a situation lives. For further information on this of, and provide challenge to, the Company’s in which they have, or could have, a direct investment, see page 24. corporate strategy. or indirect conflict with the interests of the Company. The Board has established a The executive directors, senior executives and procedure whereby the directors are required other senior management delivered a number to notify the Chair and the General Counsel of presentations, providing in-depth analysis & Company Secretary of all potential new on each of the divisions and the underlying outside interests and actual or perceived business units. The meetings were carefully conflicts of interest that may affect them structured to achieve a balance between in their roles as directors of the Company. presentations, debate and discussion. All potential conflicts of interest are authorised by the Board.

UDG Healthcare plc 67 Annual Report and Financial Statements 2020 Corporate Governance Report (continued)

Culture

Leading by Example Cultural Indicators Our directors and senior management The Board regularly receives Health and Safety metrics act with integrity and lead by example, and employee turnover numbers, with a breakdown of promoting our culture to our employees the reasons given why employees have left the Group. through living our values. Our annual This allows trends and changes in the culture of the CEO awards event is an opportunity to Group to be monitored. recognise employees who live our values. Retention of key talent is another means of measuring the Group’s culture and it is a component of the executive directors’ non-financial objectives which underpin their annual bonus award. The achievement of these objectives is reviewed by the Remuneration Committee each year and reported in the How the Remuneration Committee Report. Board Listening to our People monitors Ethics, Whistleblowing, culture Fraud & Anti-Bribery

In FY2020, the Board’s designated non-executive Mechanisms are in place to facilitate employees directors participated in several virtual workforce reporting incidents of wrongdoing on a named engagement meetings. Feedback from those sessions or anonymous basis. The RIF and Audit Committees, was positive and participants welcomed the opportunity regularly monitor and review the Company’s to interact with the Board members. The key findings are policies, incidents and trends arising from any reported on page 53. such incidents and provides the Board with updates. Further information is available on page 54. Communications from the SET to employees increased significantly during the Covid-19 crisis and continues to be prevalent as the Group works through the challenges of preparing for employees to return to the office environment.

Roles and Responsibilities

Chair Chief Executive Non-Executive directors Shane Cooke Brendan McAtamney The role of the non-executive directors is to: The Chair leads the Board, ensuring The role of the Chief Executive is to maintain • constructively challenge and debate its effectiveness by: a close working relationship with the Chair, management proposals; • providing a sounding board for the shareholders and wider stakeholders to • bring external perspectives and insight Chief Executive; promote the culture and values of the Group. to the deliberations of the Board and its • setting the agenda, style and tone of The Chief Executive is responsible for and Committees; Board meetings; accountable to the Board for: • examine and review management • promoting a culture of openness and • the management and operation of the performance in meeting agreed debate, ensuring constructive relations Group; objectives and targets; between executive and non-executive • the development of strategic proposals • assess risk and the integrity of financial directors; and annual plans for recommendation to information and controls; • demonstrating ethical leadership and the Board; • determine the appropriate levels of promoting the highest standards of • the resourcing of the Group to achieve its remuneration of executive directors integrity throughout the Group; strategic goals, including development and ensure appropriate succession • ensuring that directors receive accurate, of the required organisational structure, plans are in place; and relevant, timely and clear information; process and systems; and • input their knowledge and experience • ensuring the effective operation, • the implementation through the Senior in respect of any challenges facing leadership and governance of the Board; Executive Team of the Group’s strategy the Group, and in particular, to the and and plans as agreed by the Board. development of strategy and strategic • ensuring effective communication plans. with shareholders.

68 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Division of Composition, Succession Responsibilities and Evaluation Chair & Chief Executive The current membership of each Committee, We believe that the Board’s composition gives The roles of Chair and Chief Executive are details of attendance and each member’s us the necessary balance of diversity, skills, separate, with a clear division of responsibility tenure are set out in the individual Committee experience, independence and knowledge between them. The Chair is responsible for reports. to ensure we continue to run the business the leadership and governance of the Board effectively and deliver long-term growth for as a whole, and the Chief Executive for the During the year, the Board expanded all of our stakeholders. management of the Group and the successful the responsibilities of the Nominations implementation of the Group’s strategy. & Governance Committee to include Directors’ Appointments, Induction The Board has delegated some of its sustainability. Further details are available and Training responsibilities to Board Committees, details on page 79. Non-executive directors are engaged under of which are set out in the Committee Reports. the terms of a Letter of Appointment, a copy Time Commitment of Non-executive of which is available on request from the Independence Directors & External Appointments General Counsel & Company Secretary. Excluding the Chair, the Board currently Non-executive directors are required For details of executive directors’ service comprises seven independent non-executive to devote sufficient time to fulfil their contracts and termination arrangements, directors. responsibilities to the Group, to prepare for please refer to our Remuneration Policy meetings, and to regularly refresh and update which is located on our website. Board Committees their skills and knowledge. Each director’s The Board has established four Committees other significant commitments are disclosed Since the 2020 AGM, both Liz Shanahan and to assist in the execution of its responsibilities. to the Board at the time of their appointment Anne Whitaker were appointed non-executive An overview of these Committees is provided and they are required to notify the Board of directors and will offer themselves for election in the Governance Framework diagram on any subsequent changes. Each director is also at the forthcoming AGM on 26 January page 66 and further details are also included required to seek permission from the Chair 2021. All other directors are required to seek in each Committee report. of the Company prior to accepting any other re-election on an annual basis unless they directorships of publicly quoted companies. are retiring from the Board. Details of the Each Board Committee has specific terms of directors’ length of service are set out on reference under which authority is delegated The Chair has reviewed the availability of the page 80. to it by the Board. These terms of reference non-executive directors and considers that are reviewed regularly and are available each of them is able to, and in practice does, On appointment, directors receive a formal on the Group’s website. The Chair of each devote the necessary amount of time to the induction and are given a series of briefing Committee reports to the Board on its Group’s business. materials to assist with their understanding of activities, attends the AGM and is available the Group and its operations. New directors to answer questions from shareholders. meet with Board members and the Senior Executive Team as part of the induction process. Due to Covid-19 restrictions, scheduled visits for the new directors to the Group’s main site locations were not possible, however virtual meetings with senior management in those locations was arranged. One of the actions from the Internal Board General Counsel & Company Senior Independent Director (‘SID’) Evaluation is to enhance the current induction process for newly appointed directors. Secretary Myles Lee Further details is available on page 71. Damien Moynagh The SID’s role is to: The General Counsel & Company Secretary • provide a sounding board for the Chair; assists the Chair in ensuring the effective • conduct an annual review of the Each year, non-executive directors receive operation of the Board, is a member of the performance of the Chair; additional training and presentations Group’s Senior Executive Team and has the • make himself available to shareholders from across the businesses to update their following responsibilities: who have concerns that cannot be knowledge and develop their understanding • to ensure good information flows addressed through the Chair, Chief of the Group. During the year, the Board between the Board and its Committees, Executive or Chief Financial Officer; and received refresher training on the U.K.’s senior management and non-executive • be available to act as an intermediary for Financial Conduct Authority Listing Rules, directors; non-executive directors, if necessary. the E.U.’s Market Abuse Regulation and • to ensure that Board procedures are the 2018 U.K. Corporate Governance followed; Code. In addition to this, members of the • to facilitate director induction and assist Board Committees receive regular updates with director training and professional on technical developments at scheduled development; and Committee meetings. • to advise the Board on corporate governance obligations and developments in best practice.

UDG Healthcare plc 69 Annual Report and Financial Statements 2020 Corporate Governance Report (continued)

Board Attendance Number of Number scheduled of ad hoc meetings meetings Directors attended attended Total Shane Cooke1 8/8 0/1 8/9 Board composition as at Brendan McAtamney 8/8 1/1 9/9 30 September 2020 Nigel Clerkin 8/8 1/1 9/9 Executive directors Myles Lee 8/8 1/1 9/9 1 2 Non- Lisa Ricciardi1 8/8 0/1 8/9 executive directors Linda Wilding 8/8 1/1 9/9 Chair Erik van Snippenberg 8/8 1/1 9/9 7 Peter Chambré 8/8 1/1 9/9 Liz Shanahan2 6/6 1/1 7/7 Anne Whitaker3 ––– Years of service as at 30 September 2020 Former Directors Who Served During the Year Number of Number scheduled of ad hoc <1 year meetings meetings Directors attended attended Total 1-3 years 3-6 years Peter Gray1 8/8 0/1 8/9 2 3 6-9 years Chris Corbin 2/2 0 2/2 4 Chris Brinsmead 2/2 0 2/2 1 Nancy Miller-Rich 2/2 0 2/2

1 Shane Cooke, Lisa Ricciardi and Peter Gray missed one ad hoc meeting that was called at short notice. In each case, they had been separately briefed on the business of the meeting and had communicated their views beforehand. 2 Joined the Board on 1 February 2020. 3 Joined the Board on 1 October 2020.

Changes to the Board and Committee composition during the year

During the year to 30 September 2020, the following changes to the Board and Committees occurred:

New Chair Peter Gray retired from the Board on 30 September 2020 and Shane Cooke was appointed the new Chair effective from 1 October 2020.

Appointments The following directors were appointed to the Board: 1. Liz Shanahan – 1 February 2020 2. Anne Whitaker – 1 October 2020

Retirements The following directors retired from the Board: 1. Chris Brinsmead retired on 28 January 2020 2. Chris Corbin retired on 28 January 2020 3. Nancy Miller-Rich retired on 28 January 2020 4. Peter Gray retired on 30 September 2020

Committee Changes RIF Committee Shane Cooke was appointed Chair of the RIF Committee on 28 January 2020, and Erik van Snippenberg became a member of this Committee on the same date.

Audit Committee Lisa Ricciardi was appointed a member of the Audit Committee on 30 January 2020.

Remuneration Committee Following the retirement of Peter Gray from the Board, Shane Cooke was appointed a member of the Remuneration Committee on 1 October 2020.

Nominations, Governance & Sustainability Committee Shane Cooke replaced Peter Gray as the Chair of the Nominations, Governance & Sustainability Committee on 1 October 2020.

70 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

2019 Board Evaluation – Progress Update Last year’s external evaluation was described in the 2019 Annual Report on page 66. As a result of this evaluation, the Board identified a number of areas which it wanted to focus upon during 2020. Below is a summary of the progress made to date in addressing the issues raised:

Recommendations Actions taken/progress Refine the strategic planning process The strategic planning process continues to be refined, with discussions commencing earlier in the year, to ensure the Board and management and additional focus on making the presentations more concise and forward-looking. In addition to the are fully aligned as acquisition main strategy session held in May, the planning process now includes a follow up session in September, opportunities arise. allowing the directors and management an opportunity to ensure continued alignment both in relation to the organic and inorganic development and growth of the Group as each year draws to a close. Continue to focus on talent Two talent management reviews were held at Board level during the year where the executive directors management to enhance the number and the Executive Vice President, Human Resources updated the NEDs on a selection of the Group’s of high-calibre individuals available high-calibre individuals. Talent management has also been included as a standing agenda item at the for senior appointments. Senior Executive Team meetings and is integrated into our regular business reviews. Build upon the new workforce Prior to March 2020, UDG’s Inspire programme had been identified as a suitable forum for the engagement model to enable better Designated NEDs to engage with a selection of UDG Healthcare’s global workforce. The Covid-19 engagement with the Group’s restrictions resulted in the cancellation of the Inspire programme for 2020, and a series of virtual employees and improve insights into engagement sessions were arranged instead. The Designated NEDs participated in these sessions, other stakeholder relationships. which focused on culture, wellbeing, ethical business behaviours and development opportunities. Hold independent non-executive Due to the challenges of Covid-19, there were no in-person Board or Committee meetings held since director sessions more frequently December 2019. This hindered our attempts at arranging more frequent independent non-executive after Board meetings, with feedback director only meetings which would, under normal circumstances, have taken place informally after provided to the CEO and CFO as Board or Committee meetings. While the use of video technology has been effective in enabling virtual appropriate. meetings, it has limitations in facilitating more informal discussions between Board members.

2020 Board Evaluation

Following last year’s external Board evaluation, an internal evaluation was conducted this year by the General Counsel & Company Secretary. The review focused on the following aspects of Board effectiveness: • Board Composition • Board Engagement • Board & Committee Meetings • Board & Committee Support • Stakeholder Engagement

A report was prepared by the General Counsel & Company Secretary and the output from this review was presented to the Board at its August meeting. The Board concluded that its own performance, the performance of the Committees and the performance of individual directors was satisfactory, at the same time noting a number of recommendations, details of which are set out below: Board evaluation areas Recommendations Board Engagement • While virtual Board and Committee meetings have proven very effective during the year, the general consensus was that virtual meetings inhibit more informal discussions between Board members. The General Counsel & Company Secretary has agreed to work with the Chair to consider how more informal discussions can be facilitated in the current Covid-19 environment. • Requests for further NED-only sessions were made. Board & Committee Meetings • A review of the Terms of Reference of both the Audit Committee and the RIF Committee was requested to clarify the responsibilities of the RIF Committee with regard to the risk management framework and the review of potential acquisitions and disposals. A review of both Committees’ Terms of Reference is currently underway. Board & Committee Support • To enhance the induction process for new directors by arranging more site visits (where possible given Covid-19 restrictions) and more informal meetings with the Chair/CEO/ Committee Chairs in advance or immediately following a Board or Committee meeting to build institutional knowledge and awareness. • To provide more regular training to the NEDs on specific issues.

Throughout FY2021, the General Counsel and Company Secretary in conjunction with the Chair of the Board will follow up on these recommendations and work to address them.

The performance of individual directors was primarily assessed through discussions held by the Chair with directors on an individual basis.

UDG Healthcare plc 71 Annual Report and Financial Statements 2020 Corporate Governance Report (continued)

In FY2020, the SID did not perform an The Board has established formal and assessment of the Chair’s performance given transparent policies and procedures which Remuneration that Peter Gray was scheduled to step down ensure that the external auditor and Internal The Company’s remuneration policies from the Board on 30 September. Instead, Audit function are independent, effective and practices are designed to support the a Succession Committee was established, and accountable to the Audit Committee. Group’s strategy and promote the long-term comprising independent non-executive The Board also monitors the integrity of the sustainable success of the business. directors to manage the Chair’s succession. financial statements of the Company and any For further information on this, see page 79. other formal announcement relating to its In our Director’s Remuneration Report, financial performance via the Audit Committee. we explain our approach to incentivise and reward the executive directors and, Audit, Risk and The Board is responsible for preparing the in conjunction with the Chief Executive, to Annual Report and confirms in the directors’ approve remuneration for the remaining Internal Control Responsibilities Statement set out on page 106 members of the Group’s Senior Executive that it believes the Annual Report, taken as a Team, in each case to deliver UDG’s strategy Audit whole, is fair, balanced and understandable. whilst also managing the business on a day- The basis on which the Company creates to-day basis. We also explain how we create Board Diversity Policy and preserves value over the long-term is alignment with shareholders and measure our The Board believes that diversity is an described in the Strategic Report. essential foundation for building a long- performance over the longer term. term sustainable business. A diverse Internal Controls Our current Remuneration Policy was Board introduces different perspectives The responsibility for reviewing the Group’s supported and approved by shareholders into the Board debate. internal financial controls and financial risk at the 2020 AGM. management systems, and monitoring the While it is the Board’s policy to ensure integrity of the Group’s financial statements, the best candidate for any position is has been delegated by the Board to the selected, we recognise the importance Audit Committee. Details of how these of diversity in all forms (including age, responsibilities have been discharged gender, ethnicity, educational and throughout the year are set out in the professional backgrounds), and will Audit Committee Report on pages 81 to 84. ensure that diversity continues to be taken into account when considering Risk Management all new appointments to the Board. We Responsibility for reviewing the Group’s also intend to only use the services of risk management and risk evaluation executive search firms who have signed procedures has been delegated by the up to the Voluntary Code of Conduct on Board to the RIF Committee. Details of how Gender Diversity. these responsibilities have been discharged throughout the year are set out in the RIF Pages 62 and 63 detail our directors’ Committee Report on pages 85 and 86. gender, age, and professional background. The diagram below sets The Quality & Compliance Sub-Committee out the gender diversity of the Board oversees the Group’s performance in as at 1 October 2020. Health and Safety, Quality and Compliance, and ensures that a culture of continuous Board gender diversity as at improvement is encouraged and measured 1 October 2020 throughout the Group.

Female The Board receives regular updates from the directors Chair of each Committee at each scheduled 40% Board meeting. Male 60% 40% directors 60%

72 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Engaging with our Stakeholders

Clients Shareholders Employees

Who engagedengaged Who engagedengaged Who engagedengaged Divisional leadersleadershiphip in each businesss unitunit.. Head of Investor Relations, CCEO,E CFO, GGCC & CEO, CFO, Presidents of AAshfield Why do we engage Company Secretary and Board. and Sharp, Designated NEDs, GC Building trusted partnerships with our Why do we engage & Company Secretary, EVP, Human clients is critical for our success as it enables Shareholders are the owners of our business. Resources and Board. us to deliver high-quality and innovative How we engaged Why do we engage healthcare services and solutions. • Our AGM remains the primary method of Our experienced and dedicated How we engaged communication with our retail investors. workforce is a key asset of our business. • Client engagement audits conducted in • We frequently engage with our institutional How we engaged our Ashfield businesses. shareholders and seek their views on • The Board and its Committees routinely • ‘Voice of Customer’ survey conducted pertinent matters. invite members of the management for clients of Sharp, to gather qualitative • Presentation to the Board during the year team to attend meetings to present on and quantitative insights on the by one of the Group’s corporate brokers. the matters being discussed, enabling customer experience. Outcomes their input into discussions. • The Board receives regular updates • The Head of Investor Relations, executive • Designated NEDs Lisa Ricciardi and from the Chief Executive on directors and the Chair of the Board will Erik van Snippenberg attended a series business development and strategic continue to engage with shareholders. of workforce engagement meetings. management activities. • We will also continue to report in line • Bi-monthly newsletter from the CEO Outcomes with best practice disclosure on progress to the Group leadership team. • Findings from customer surveys are towards meeting our financial targets, • Regular Covid-19 company updates. used to drive improved customer strategic goals and meeting governance Outcomes experiences and identify market regulations.regulations. • We will continue to act on the growth opportunities. feedback received from the workforce • We understand how our business is engagement meetings and other perceived relative to our competition engagement sources. and the implications on our branding. Board engagement with our key stakeholders

Communities HealthcareHealthcare professionalspr (HCPs) & patients

Who engagedengaged WhoWho engagedengaged CCEO,EO, the SSeniorenior Executive TeamTea and employees across the Group.roup. DivisionalDivisional leaders and employeesemployees across the GGroup.roup. Why do we engage Why do we engage We recognise the importance of building a sustainable business Our purpose is to partner with clients to deliver innovative healthcare for our people, our environment and our community. solutions that improve patients’ lives. We cannot run our business How we engaged without addressing the needs of HCPs and their patients. • We support communities, both locally and nationally, through How we engaged our charitable work, including financially and giving time, • The Board received detailed information on healthcare trends, energy and leadership to support local efforts. including what the key focus points are for healthcare professionals Outcomes and their patients. This information feeds into the Board’s strategy • Since 2012, we raised circa. $600,000 for community initiatives. discussions. • Established the building blocks for our Group sustainability • Engaged with HCPs and patients in clinical trials we run for strategy with specific reference to our impact on the our clients. environment. • Engaged with patients, care partners and HCPs through our clients’ patient support programmes and medical information services. We also engaged with HCPs through our clients’ omnichannel sales teams and medical science liaisons. Outcomes • Increasing the use of digital channels to deliver a more personalised and effective sharing of information to patients, care partners and HCPs. • HCP, care partner and patient feedback is used to improve standards for our interactions.

UDG Healthcare plc 73 Annual Report and Financial Statements 2020 Corporate Governance Report (continued)

Relations with Shareholders

Shareholder Engagement One of the key methods of communicating The 2021 AGM will be held on Tuesday, The Board recognises the importance of with the company’s shareholders is through the 26 January 2021 at UDG’s head offices regular dialogue with shareholders and AGM. The company’s AGM is an opportunity at 20 Riverwalk, Citywest Business Campus, accordingly, executive management maintain for the Chair, the Senior Independent Director, Dublin 24. Further details will be provided an ongoing investor relations program. While the Committee Chairs and the rest of the during December 2020. the Chair takes overall responsibility for Board to meet with shareholders, hear their ensuring that the views of our shareholders views and answer their questions about the are communicated to the Board and that Group and its business. The Notice of AGM, UDG Healthcare wins two all directors are made aware of major the Form of Proxy and the Annual Report are Investor Relations awards shareholders’ issues and concerns, contact with issued to shareholders at least 20 working days major shareholders is principally maintained by before the meeting. At the meeting, resolutions UDG Healthcare scooped two top the Chief Executive, the Chief Financial Officer are voted on by a show of hands of those awards at the IR Magazine Awards- and the Group’s Head of Investor Relations. shareholders attending, in person or by proxy. Europe 2020. Our Group website contains information If validly requested, resolutions can be voted on the business of the company, corporate by way of a poll. Details of proxy votes received The Group won the coveted awards governance, all regulatory announcements, are also made available on the company’s for the best overall investor relations key dates in the financial calendar and other website following the meeting. for a mid-cap company and Keith Byrne, important shareholder information. The company specifies record dates for UDG Healthcare’s Group Head of Investor Relations and Communications, A programme of meetings with institutional general meetings, by which date shareholders also took home the award for the best shareholders, fund managers and analysts must be registered on the company’s Register investor relations officer for a mid- takes place each year. During FY2020, a total of Members to be entitled to attend. Record cap company. The dual accolades of 220 meetings were held with institutional dates are specified in the Notice of AGM. were described by the judges as ‘an shareholders, fund managers and analysts. Shareholders may exercise their right to vote impressive result for a company winning Management also attended ten investor by appointing a proxy, by electronic means or its first IR Magazine Awards.’ conferences – five in person (pre-Covid-19) in writing, to vote some or all of their shares. and five virtual meetings. The requirements for the receipt of valid proxy forms are also set out in the Notice of AGM.

74 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Settlement of UDG Securities There are significant differences between from March 2021 EB and CREST service offerings and these CREST has been the depository for the differences are set out in a shareholder circular settlement of Irish issuers’ equity securities which will be circulated to all shareholders in trading in Dublin and/or London since the December 2020. introduction of the system in 1996. However, as a result of Brexit, the Irish market has been In order to facilitate the migration of UDG’s informed that as it currently stands, after securities from CREST to EB, a number 15 March 2021, CREST will no longer of shareholder resolutions must be be available to any Irish incorporated issuers. approved at an Extraordinary General This is irrespective of whether they are listed Meeting of the Company, scheduled to in Ireland, London or both, and all Irish issuers take place immediately after the AGM must migrate from CREST to the market’s on 26 January 2021. chosen replacement system, Euroclear Bank Belgium (EB). UDG’s securities will therefore need to migrate to EB prior to 15 March 2021.

Compliance with s.172 U.K. Companies Act 2006

Page Section 172 matters How has the Board had regard to these matters references The 2018 U.K. Corporate Governance Code (a) The likely consequences • Board Strategy discussions. Page 67 provides that outside of shareholders, of any decision in the • Approval of the Viability Statement. Pages 46 the Board should understand the views long term and 82 of the company’s other key stakeholders (b) The interests of the • Protecting our employees throughout the Page 13 and describe how their interests and the company’s employees Covid-19 pandemic. matters set out in section 172 of the U.K. • Workforce engagement meetings. Page 53 Companies Act 2006 (‘s.172’) have been considered in Board discussions and (c) The need to foster the • Partnering with our clients to deliver Page 73 decision-making. While s.172 is a provision company’s business innovative healthcare solutions that of U.K. company law, and there is no direct relationships with improve patients’ lives. comparator in the Irish Companies Act suppliers, customers • The Group works closely with our 2014, the Committee acknowledges that, and others strategic suppliers to ensure a positive as a premium listed issuer on the FTSE and transparent working relationship. 250, it is important to address the spirit Monthly and quarterly business reviews intended by these provisions. are scheduled to ensure continued and open engagement, which benefits both the The directors are confident that they Group and the supplier. have acted to promote the success (d) The impact of the • Various community initiatives undertaken Pages 58 of the company for the benefit of company’s operations throughout the year. and 59 shareholders, whilst having regard on the community and • Initial work carried out on establishing the to the provisions of s.172: the environment Group’s sustainability strategy. Page 52 (e) The desirability of the • Refreshed the Group’s confidential Page 84 company maintaining reporting line. a reputation for high • Employee Code of Conduct. Page 54 standards of business • We ask all our key suppliers to sign Page 54 up to our Supplier Code of Conduct and to abide by it for the duration of our relationship with them.

(f) The need to act fairly • Shareholder engagement practices. Page 74 between members of the company

UDG Healthcare plc 75 Annual Report and Financial Statements 2020 Corporate Governance Report (continued)

What the Board did in FY2020

The Board continued to Strategy and Corporate Operational and focus on strategy, growth Development Financial Performance and succession planning Trading updates Budget process during FY2020. • Regularly considered the trading • Approved the FY2021 budget. performance of the business and, from Each Board meeting follows a carefully • Considered actual performance against March 2020, the impact of Covid-19 on tailored agenda agreed in advance by the the strategic plan and budget, including our business and strategy. Chair, Chief Executive and the General implications on long-term performance Counsel and Company Secretary. The Board Strategic initiatives and future investments. receives reports from the Chief Executive on • Reviewed the Group’s 2020 – 2024 strategy, Cash flow and dividend the performance of the business, the Chief which included receiving presentations • Temporarily withdrew the Group’s market Financial Officer on financial performance, from the divisional leaders and updates an M&A update from the Head of Corporate guidance and suspended the interim from senior management within both dividend in response to the Covid-19 crisis Development and, where relevant, an update Ashfield and Sharp. from each of the Board Committees. In and then re-instated market guidance and addition to these regular matters, specific areas • Ongoing updates from the divisional the interim dividend post the publication of focus by the Board during 2020 included: leaders on the implementation of strategy of the Group’s Q3 Trading Statement. throughout the year. Funding • Agreed priorities for capital investment across the Group. • Approved the issue of Private Placement Number of Meetings (PP) notes amounting to $100 million to • The Nominations, Governance & provide additional funding for M&A activity Sustainability Committee agreed to expand 9 Board and to replace the €53 million PP notes due its remit to include the Group’s sustainability to mature in September 2020. 7 Audit Committee strategy. 5 Risk, Investment & Financing Committee Acquisitions 5 Remuneration Committee • Approved the acquisition of Canale Communications Inc. in November 2019. 4 Nominations, Governance & Sustainability Committee • Approved the acquisition of a pharmaceutical packaging facility in Macungie, Pennsylvania, in May 2020. • Approved the purchase of a minority investment in Berkshire Sterile Manufacturing in August 2020. Timeline Key

Audit Committee Remuneration Committee

Nominations, Governance & Sustainability Committee Board Meeting

Risk, Investment & Financing Committee AGM

October November December January February March

76 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Governance Stakeholders Risk Management and Legal Engagement Board succession and Committee People & Culture • Delegated responsibility to the RIF Committee to oversee the Group’s Risk composition • Designated NEDs participated in five Management Framework and to determine • Approved the appointment of Shane Cooke workforce engagement meetings. the Group’s principal risks and uncertainties as the new Chair of the Board, replacing including considering emerging risks when Peter Gray who retired from the Board on Clients they arise. 30 September. • Received regular updates from the CEO and Senior Executive Team on • Delegated the responsibility of the Group’s • Approved the appointment of two new client developments. Viability Statement to the Audit Committee. non-executive directors, Liz Shanahan and Anne Whitaker. Investor relations • Received regular reports on health and safety matters particularly in relation to • Commenced refreshing the composition • Updated the market regularly on financial Covid-19. of the Board Committees to ensure that performance. the correct non-executive directors are • Received regular updates from the RIF appointed to the relevant Committee(s) Healthcare professionals and patients Committee on cyber security reviews conducted during the year. which best reflects their skill set. • Evaluated management updates on industry Board evaluation trends and insights. • Undertook an Internal Board Evaluation Communities where a number of recommendations • Supported the Group’s involvement in local were suggested to enhance Board and community partnerships. Committee effectiveness. Legal and regulatory • On the recommendation of the Audit Committee, reviewed and approved the Annual Report and Financial Statements, and the Half and Full Year Results announcements. • Monitored regulatory and legislative developments and considered any potential impact on the Group’s operations.

Board Meeting in October 2020.

April May June July August September

UDG Healthcare plc 77 Annual Report and Financial Statements 2020 Nominations, Governance & Sustainability Committee Report

“Expanding the remit of the Committee to reinforce the importance of sustainability to the Group.”

Shane Cooke Chair of the Nominations, Governance & Sustainability Committee

Attendance Record and Tenure Number of meetings held Number of Committee Members when director was a member meetings attended tenure Shane Cooke (Chair)1 0<1 year Myles Lee 4 2 years Linda Wilding 4 2 years Peter Gray2 4 13 years Chris Brinsmead3 1 8 years

1 Shane Cooke joined the Committee and succeeded Peter Gray as Chair on 1 October 2020. 2 Peter Gray retired from the Board on 30 September 2020. 3 Chris Brinsmead retired from the Board on 28 January 2020. Key Responsibilities The key responsibilities of the Nominations, Governance and Sustainability Composition as at 30 September 2020 Committee are: Shane Cooke (Chair) • to evaluate the balance of skills, knowledge, experience and diversity Linda Wilding of the Board and Committees, and make recommendations to the Myles Lee Board with regard to any changes; • to consider succession planning for directors and other senior executives, taking into account what skills and expertise are needed for the future; • to identify, and nominate for the approval of the Board, candidates for appointment as directors; • to consider the re-appointment of any non-executive director at the conclusion of their specified term of office and recommend their re-appointment to the Board; • to review corporate governance developments and ensure the Group remains compliant with all aspects of governance applicable to it; and • to consider and recommend to the Board the Group’s sustainability strategy and oversee the implementation of this strategy having regard to its key stakeholders.

78 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Meetings The Committee met four times during the year ended 30 September 2020. Individual attendance at these meetings is set out on the opposite page. The Committee is chaired by the Chair of the Board and apart from the Chair, comprises independent non-executive directors.

Key Activities of the Committee During 2020 1. Established a Succession Committee led by Myles Lee to lead the selection process for the appointment of a new Chair; 2. Considered and recommended, the appointment of Liz Shanahan and Anne Whitaker as independent non-executive directors; and 3. Reviewed the Committee’s Terms of Reference and agreed to expand the Committee’s remit to include responsibility for reviewing the Group’s sustainability strategy and overseeing its implementation.

Chair Succession Peter Gray retired as Chair on 30 September 2020. The process that resulted in my appointment as Chair was led by Myles Lee, Senior Independent Director. Myles chaired the Committee and the Board when the Chair’s succession was being considered.

Note from Senior Independent Director: Myles Lee Over the last number of years the UDG Board has placed particular emphasis on the identification and selection of suitably qualified individuals for appointment as non-executive directors. The over-riding principle in making these appointments was to ensure Board diversity in gender, geography and experience and to enable orderly succession aligned with evolving corporate governance best practice in relation to board tenure. The selection process was also guided by the impending retirement of Peter Gray who had been appointed Chair in February 2012.

In December 2019, Peter informed the Board of his intention to step down as Chair and to retire from the Board in September 2020. To facilitate the selection of a successor a Sub-Committee of the Nominations, Governance and Sustainability Committee, headed by myself and comprising three other non-executive directors, was established.

Having determined the competencies, skills, experience and characteristics required for the role, the Sub-Committee was fortunate to receive expressions of interest from a number of existing Board members all of whom were highly rated relative to the role specifications. Accordingly, the Sub-Committee concluded that it was not necessary to undertake an external candidate search.

The Sub-Committee conducted a series of interviews with each of the candidates and concluded their deliberations by recommending the appointment of Shane Cooke as Chair designate. An announcement to this effect was made on 5 August 2020 and Shane succeeded Peter as Chair on 1 October 2020.

New Non-executive Director Appointments During FY2020, the Committee recommended to the Board that the following be appointed as independent non-executive directors: 1. Liz Shanahan (effective from 1 February 2020). 2. Anne Whitaker (effective from 1 October 2020).

Liz Shanahan is a life sciences entrepreneur with extensive experience advising leading global pharmaceutical and healthcare organisations on their communications. Until 2014, she was Global Head of Healthcare & Lifesciences at the NYSE- listed management consultancy, FTI Consulting Inc. Her background and knowledge of the global pharmaceutical industry will be an important addition to the collective skills and experience of the Board.

Anne Whitaker, formally the Chief Executive Officer of Aermi Therapeutics, is an independent non-executive director of Cree, Inc, and Caladrius Biosciences, Inc. both NASDAQ traded companies. She is also an independent non-executive director of NYSE-listed Mallinckrodt plc. She has more than 25 years’ experience in the life sciences industry, including senior leadership roles with large pharmaceutical, biotech and specialty pharma companies. Anne’s broad experience in the U.S. pharmaceutical market will further inform the Group’s strategic development in the U.S.

In assisting with its succession planning, the Committee had used the services of external search agents, including Korn Ferry and PwC in the past and, most recently, Spencer Stuart. All such firms have no other connection with UDG.

UDG Healthcare plc 79 Annual Report and Financial Statements 2020 Nominations, Governance & Sustainability Committee Report (continued)

Board Appointment and Tenure

Length of tenure as at 30 September 2020 Date of next Date of election or re- Director name Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9+ appointment election Shane Cooke 01-Feb-19 26-Jan-21 Brendan McAtamney 16-Dec-13 26-Jan-21 Nigel Clerkin 15-May-18 26-Jan-21 Myles Lee 01-Apr-17 26-Jan-21 Linda Wilding 16-Dec-13 26-Jan-21 Lisa Riccardi 14-Jun-13 26-Jan-21 Erik van Snippenberg 02-Jul-18 26-Jan-21 Peter Chambré 01-Feb-19 26-Jan-21 Liz Shanahan 01-Feb-20 26-Jan-21 Anne Whitaker – 01-Oct-20 26-Jan-21

Committee Composition During the year, the Committee considered and made recommendations to the Board regarding changes to the composition of the Board’s Committees. Shane Cooke was appointed the Chair of the RIF Committee, and Erik van Snippenberg was appointed a member of the same committee on 28 January 2020. Lisa Ricciardi was appointed a member of the Audit Committee on 30 January 2020. Since my appointment as Chair of the Board, I have replaced Peter Gray as Chair of this Committee and a member of the Remuneration Committee. Together with the other members of the Committee, and in light of the new members to the Board and with succession in mind, I will be reviewing the composition of the Committees in FY2021 to ensure that each has the right balance and mix of skills and experience.

The current committee memberships of each director are set out on pages 62 to 63 and a table summarising the changes during the year is set out on page 70.

Succession Planning for the Senior Executive Team During the year, the Committee also considered succession planning for the Senior Executive Team, facilitated by input from the Chief Executive and the Group Head of HR. As a result of these succession planning discussions, there were a number of appointments to the Senior Executive Team during FY2020. Biographies of each of the Senior Executive Team members are included on page 64.

Diversity The Board’s policy on diversity is set out in the Corporate Governance Report on page 72. Information on diversity, equity and inclusion initiatives across the Group and our gender composition statistics are also included on pages 54 to 55.

Board Evaluation The results from the internally facilitated 2020 Board evaluation confirmed that the performance of the Board and its Committees was satisfactory. Details of the recommendations arising from this evaluation are set out on page 71. The Chair of the Board, in conjunction with the executive directors and the General Counsel & Company Secretary will focus on implementing the recommendations arising from the evaluation during the year. All agreed actions from the externally facilitated evaluation process in 2019 were implemented during the year.

The next externally facilitated Board evaluation will take place in 2022.

Corporate Governance Matters The Committee is responsible for reviewing the independence of Board members and has recommended to the Board that all of the non-executive directors continue to be independent. The Committee also monitors developments in best practice in relation to corporate governance and makes recommendations to the Board in relation to changes and enhancements to current procedures.

Sustainability In response to the Board’s increasing awareness of the importance of sustainability to the Group and our stakeholders, the Board agreed that the responsibilities of this Committee would be expanded to include a specific responsibility for the Group’s sustainability strategy. The Committee’s Terms of Reference were updated to include these additional responsibilities. The work of the Committee on discharging these additional responsibilities has commenced and an update will be included in next years’ report.

Priorities for 2021 • Consider the Group’s sustainability strategy and recommend its approval to the Board; • Further develop our governance practices to enable full compliance with the New Code; and • Support the General Counsel & Company Secretary with the continued induction for Anne Whitaker and Liz Shanahan.

Shane Cooke Chair of the Nominations, Governance & Sustainability Committee

80 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Audit Committee Report

“Maintaining focus on effective governance and financial reporting during a year of unprecedented uncertainty.”

Myles Lee Chair of the Audit Committee

Attendance Record and Tenure Number of meetings held Number of Committee Members when director was a member meetings attended tenure Myles Lee (Chair) 7 3 years Erik van Snippenberg 7 2 years Linda Wilding 7 7 years Lisa Ricciardi1 4 <1 year 1 Lisa Ricciardi joined the Committee on 30 January 2020 but was unable to attend one ad hoc Audit Committee meeting due to a pre-arranged commitment.

Composition as at 30 September 2020 Myles Lee (Chair) Meetings Erik van Snippenberg The Committee met seven times during the year ended 30 September Linda Wilding 2020. Individual attendance at these meetings, along with the tenure of Lisa Ricciardi each member, is set out above. As set out in the biographical details on pages 62 and 63, The Chief Executive, the Chief Financial Officer, the Chief Operating the members of the Committee have a strong mix of skills, Officer, the Group’s Head of Finance and Head of Internal Audit together expertise and experience from a variety of industries and, with representatives of the external auditor are invited to attend each as a whole, have the relevant competencies for the sector meeting of the Committee. In addition, the Chair of the Board attends in which we operate. The Board has determined that meetings at the invitation of the Committee. The Committee regularly both Myles Lee, a member of the Institute of Chartered meets separately with the Head of Internal Audit and with the external Accountants in Ireland, and Linda Wilding, a member of auditor without management being present. the Institute of Chartered Accountants in England and Wales, are the Committee’s financial experts. The Chair of the Committee reports to the Board, as part of a separate agenda item at Board meetings, on all significant matters reviewed by the Committee.

UDG Healthcare plc 81 Annual Report and Financial Statements 2020 Audit Committee Report (continued)

Role and Responsibilities The Committee supports the Board in fulfilling its responsibilities in relation to financial reporting and reviewing the effectiveness of the Group’s internal financial control and financial risk management systems. The Committee also monitors and reviews the effectiveness of the Group’s Internal Audit function and, on behalf of the Board, manages the appointment and remuneration of the external auditor and, monitors their performance and independence. The Group has an independent and confidential reporting procedure and the Committee monitors the operation of this facility.

The Board again requested that the Committee advise it on both the long-term viability of the Group and also its compliance with the Directors’ Compliance Policy and Directors’ Compliance Statement pursuant to section 225 of the Companies Act, 2014. Details of this review of long-term viability and the Group’s Viability Statement are set out on page 46, and details of the Directors’ Compliance Policy and Directors’ Compliance Statement are included on page 105.

The activities undertaken by the Committee in fulfilling its key responsibilities in respect of the year to 30 September 2020 are detailed below.

Financial Reporting The Group’s financial statements are prepared by finance personnel with the appropriate level of qualifications and expertise. The Committee is responsible for monitoring the integrity of the Group’s financial statements and reviewing the significant financial reporting judgements contained therein.

In respect of the year to 30 September 2020, the Committee reviewed the Group’s trading updates issued in January, April and August 2020, the Interim Report for the six months to 31 March 2020 and the Preliminary Announcement and Annual Report for the year to 30 September 2020.

In carrying out these reviews, the Committee considered: • whether the Group had applied appropriate accounting policies and practices; • the significant areas in which judgement had been applied in preparation of the financial statements in accordance with the accounting policies set out on pages 120 to 129; • whether the Annual Report and Accounts taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s performance, business model and strategy; • the clarity and completeness of disclosures and compliance with relevant financial reporting standards and corporate governance and regulatory requirements; and • the consistency of accounting policies across the Group and on a year-on-year basis.

With the onset of Covid-19, the Committee also considered the implications of the pandemic on the Group’s trading and reporting as well as on the Group’s internal financial controls and risk management systems.

The significant areas of judgement considered by the Committee in relation to the financial statements for the year to 30 September 2020 and how these were addressed are outlined below.

Revenue Recognition The area of judgement from a revenue perspective is the determination of the proportion of completion of each revenue contract to ensure revenue is being recognised in line with the accounting policies of the Group, and that revenue is not recognised in an incorrect period or otherwise accelerated so as to achieve revenue targets or forecasts. The Committee, through discussions with management and the external auditors noted that there were no revenue related audit adjustments during the audit procedures conducted.

Goodwill Impairment The Committee considered the carrying value of goodwill in the 2020 financial statements together with the recoverability of such carrying value through future cash flows. As part of the annual impairment testing process, management prepare detailed models assessing the recoverable amount of each cash generating unit, based on a value in use approach. The Committee reviewed these models and, having considered the underlying judgements and assumptions, was satisfied with the methodology used and the results of the assessment. Details of the impairment testing process, including the underlying assumptions, are set out in Note 13 to the financial statements.

Each of these areas received particular focus from the external auditor, and the external auditor provided detailed analysis and assessment of the matters in their report to the Committee.

Going Concern and Viability Statement The Audit Committee reviewed the draft Going Concern and Viability Statements before recommending them for approval to the Board. Under all five scenarios, described in the Viability Statement, the Group remained viable. For further details, please refer to pages 46 and 47.

82 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Internal Financial Controls The Committee is responsible, on behalf of the Board, for reviewing the effectiveness of the Group’s internal financial controls and financial risk management systems. Details of the Group’s risk management system and internal controls are set out in pages 46 to 51.

In carrying out these responsibilities, the Committee reviewed reports issued by both Internal Audit and the external auditor, and held regular discussions with the Head of Internal Audit and representatives of the external auditor. The Committee also reviewed the outcome of an assessment of the Group’s internal financial controls which had been co-ordinated by Internal Audit.

This overall process, which has been in place throughout the financial year up to the date of the approval of the Annual Report and financial statements, accords with the FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting and is regularly reviewed by the Board. This system of internal controls is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

Internal Audit The Committee is responsible for monitoring and reviewing the operation and effectiveness of the Internal Audit function including its focus, plans, activities and resources.

At the beginning of the financial year, the Committee reviewed and approved the Internal Audit plan for the year, having considered the adequacy of staffing levels and expertise within the function. During the year, the Committee received regular reports from the Head of Internal Audit summarising findings from the work of Internal Audit and the responses from management to address these findings. Given the onset of Covid-19, the Committee noted the move to remote auditing by the Internal Audit team. Some inefficiencies were to be expected but the Committee noted that the team had continued to make progress against the internal audit plan. An additional review had been carried out by the team to determine the impact of remote working on the Group’s key financial and IT controls. No specific risks were identified and these systems were acknowledged as holding up well. The Committee continues to monitor progress on the implementation of the action plans on significant findings to ensure these are completed satisfactorily.

The Committee also actively monitors the resourcing requirements of the Internal Audit function and noted that an additional staff member was appointed to the team shortly after year end.

External Audit Appointment, Independence and Performance The Committee manages the relationship with the Group’s external auditor on behalf of the Board.

The Committee carried out its annual assessment of the external auditor, including a review of the external auditor’s internal policies and procedures for maintaining independence and objectivity and consideration of their approach to audit quality and materiality. The Committee reviewed and approved the external audit plan as presented by the external auditor. The Committee also reviewed the performance of the external auditor and assessed the qualifications and expertise of their resources. The Committee concluded that the external auditor was independent of the Group and it was satisfied with the performance of the external auditor. The Committee also considered the execution of the audit and were satisfied with the assurances received from EY on the robustness and effectiveness of the audit process.

The Committee reviewed the external auditor’s engagement letter and recommended the level of remuneration of the external auditor to the Board, having reviewed the scope and nature of the work to be performed. Details of the remuneration of the external auditor are set out in Note 5 to the financial statements.

In accordance with the Group’s policy on the hiring of former employees of the external auditor, the Committee reviews and approves any appointment of an individual, within three years of having previously been employed by the external auditor, to a senior managerial position in the Group.

In accordance with the Companies Act 2014, the Group has committed to rotate its external auditor at least every ten years. Following a tender process conducted in July 2016, EY were appointed external auditors with effect from the financial year ending 30 September 2017. Breffni Maguire has been the Group’s lead audit engagement partner with effect from that date and in accordance with regulatory guidance on audit partner rotation, Breffni Maguire will rotate off UDG at the conclusion of the 2021 audit. There are no contractual obligations that restrict the Committee’s choice of external auditor.

Non-audit Services The Committee has a formal policy governing the engagement of the external auditor to provide non-audit services and this policy is reviewed on an annual basis. The policy is designed to safeguard the objectivity and independence of the external auditor and prevents the provision of services which would result in the external auditor auditing its own firm’s work, conducting activities that would normally be undertaken by management, having a mutuality of financial interest with the Group or acting in an advocacy role for the Group.

UDG Healthcare plc 83 Annual Report and Financial Statements 2020 Audit Committee Report (continued)

External Audit continued Non-audit Services continued The external auditor is permitted to provide non-audit services that are not, or are not perceived to be, in conflict with auditor independence, provided it has the skill, experience, competence and integrity to carry out the work and is considered by the Committee to be the most appropriate to provide such services in the best interests of the Group. The engagement of the external auditor to provide non-audit services must be pre-approved by the Committee or entered into pursuant to pre-approved policies and procedures established by the Committee and approved by the Board.

The nature, extent and scope of non-audit services provided to the Group by the external auditor and the economic importance of the Group to the external auditor were also monitored to ensure that independence and objectivity were not impaired. The Group adopted the E.U. Directive such that the fees for non-audit services payable to the auditors would be no more than 70% of the average audit fee for the previous three years. During FY2020, the external auditor performed the following non-audit services:

Non-audit services performed Fee (USD) Independent Accountant’s Reports for Summary Approval Procedures €10,000 11,200 Cyber Review Update Project €26,500 29,700 Total €36,500 40,900

EY confirmed that the services detailed in the table above did not conflict with EY’s independence and the Committee approved the non-audit services to be undertaken. For further information, please refer to Note 5 to the financial statements.

Confidential Reporting Procedures In line with best practice, the Group has an independent and confidential reporting procedure which allows employees to raise any concerns about business practices. During the year, management refreshed the Group’s confidential reporting line and issued Group wide communications to remind employees that the reporting line was available and that any issues raised would be taken seriously with confidentiality respected.

The Committee reviewed the operation of the procedures in place to allow employees to raise matters in a confidential manner and concluded that this facility continued to operate effectively.

Myles Lee Chair of the Audit Committee

84 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Risk, Investment & Financing Committee Report

“The Committee focused on updating the Group’s risk management processes in response to the requirements of the 2018 U.K. Corporate Governance Code.”

Shane Cooke Chair of the Risk, Investment & Financing Committee

Attendance Record and Tenure Number of meetings held Number of Committee Members when director was a member meetings attended tenure Shane Cooke (Chair) 5 >1 year Erik van Snippenberg1 2 <1 year Lisa Ricciardi 5 7 years Nancy Miller-Rich2 3 3 years Chris Brinsmead2 3 9 years 1 Erik van Snippenberg joined the Committee on 28 January 2020. 2 Chris Brinsmead and Nancy Miller-Rich retired from the Board on 28 January 2020.

RIF Committee Reporting Structure Composition as at 30 September 2020 There are two executive Sub-Committees in place, the Risk & Controls Shane Cooke (Chair) Sub-Committee and the Quality & Compliance Sub-Committee, both of Lisa Ricciardi which report their activities to this Committee. Erik van Snippenberg The Risk & Controls Sub-Committee is a cross-divisional, cross- functional team responsible for oversight of the Group’s risk and controls environments, tasked with ensuring significant risks are monitored and managed with appropriate controls.

The Quality & Compliance Sub-Committee, meets bi-annually to review quality and compliance performance across the Group, with particular focus on the key metrics, quality management systems and people within these functions. I also attend this Sub-Committee.

UDG Healthcare plc 85 Annual Report and Financial Statements 2020 Risk, Investment & Financing Committee Report (continued)

Meetings The Committee met five times during the year ended 30 September 2020. Individual attendance at these meetings along with the tenure of each member is set out on page 85. The Chief Executive, Chief Financial Officer, Group Operating Officer, Group Head of Risk & Compliance and the Global Head of IT are not members of the Committee but regularly attend meetings at the invitation of the Committee Chair.

Key Responsibilities • To review the Group’s risk management and internal controls systems; • To oversee the identification and assessment of the Group’s principal risks and uncertainties and emerging risks, as well as their associated mitigation strategies, and recommend them to the Board for approval; • To review the Group’s overall risk appetite and tolerance levels for each of the categories of principal risks; • To consider, review and authorise the commencement of due diligence on potential M&A transactions; • To review and approve potential transactions to be made by the Group which have a consideration value of up to €50 million or foreign exchange equivalent and to conduct one-year and three-year post acquisition reviews; and • To evaluate, and recommend to the Board for approval, any proposed capital expenditure requests not exceeding $10 million or foreign exchange equivalent.

Main Activities During the Year Risk Management The Committee understands that the management of risk is critical to the success and viability of the Group. It is in this context that the Group has incorporated viability reviews within the risk management process, ensuring that the risks associated with what the Group does are addressed in the most appropriate way. To support this, the Group has developed and implemented a risk management system that facilitates the identification of the principal and emerging risks that face the Group, and which allows those risks and their associated resolutions to be actively monitored. The Group’s principal risks and uncertainties are set out on pages 49 to 51. While the responsibility for the Group’s Viability Statement sits with the Audit Committee, the scenario selection undertaken by the Audit Committee considers the principal risks and uncertainties identified by the Committee while members of the Committee also sit on the Audit Committee.

The identification and assessment of the Group’s emerging risks is principally carried out by the Risk & Controls Sub-Committee, which report their findings to the Committee on a bi-annual basis. Details of the emerging risks identified are included on page 47.

Our risk management system is dynamic and continually evolving. During the year, the Group’s new Head of Risk & Compliance conducted a review of the Group’s processes and, while identifying some opportunities to introduce improvements, he concluded that, overall, the Group’s processes were robust and wide ranging. As such, the Committee is satisfied that the Group’s risk management system is effective.

The Committee also received regular cyber security updates during the year, including a report from EY who conducted a follow-up on findings previously identified by EY during their last cyber security review. The results from this report were positive, with the majority of actions rated as complete or near complete. The Committee considered whether it would be a worthwhile exercise to conduct a fresh deep dive of the Group’s cyber security controls against the increasing cyber threat landscape, and management agreed that such an exercise would be worthwhile.

Investment As was the case in previous years, and in accordance with its terms of reference, the Committee was involved in reviewing requests to proceed to due diligence for potential acquisitions. During the year, the Committee reviewed and assessed three potential acquisitions for approval, including Canale Communications, Inc. In addition to this, several potential acquisitions were also discussed at Board level.

The Committee is also authorised to approve capital expenditure requests of up to $10 million. During the year, the Committee approved capital expenditure requests to invest in important additional equipment for Sharp and considered the acquisition of the trade and assets of a U.S. based pharmaceutical facility at Macungie, Pennsylvania, adjacent to Sharp’s existing packaging facility in Conshohocken. This facility provides further primary, secondary and tertiary packaging space, warehouse facilities and additional capacity to expand.

At the close of FY2020, the Committee undertook a number of one and three-year post-transaction reviews, including a one-year review of Canale Communications Inc, and a three-year review of MicroMass Communications, Inc, Vynamic LLC, Sellxpert GmbH Co & KG and Cambridge BioMarketing LLC.

Financing During the year, the Committee reviewed the financial position of the Group with the Chief Financial Officer and the Group Head of Tax and Treasury. These reviews included an analysis of the Group’s banking and available financing facilities, cash balances and also involved a review of the Group’s acquisition capacity. In June, the Committee considered the terms of a new Private Placement facility which was later approved by the Board.

Shane Cooke Chair of the Risk, Investment & Financing Committee

86 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements Remuneration at a glance

Despite the challenges presented by Covid-19, UDG Healthcare delivered a strong and resilient performance in the year ended 30 September 2020, and this performance is reflected in the directors’ short and long term remuneration. Our performance during the year +7% +5% +1.2% +1% Adjusted operating profit* Group Net Revenue* Full Year Dividend Adjusted diluted EPS * on a constant currency basis. TSR since 2010

Value (£) UDG Healthcare F TSE 250 600

500

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300

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100

0 30 Sep 10 30 Sep 11 30 Sep 12 30 Sep 13 30 Sep 14 30 Sep 15 30 Sep 16 30 Sep 1730 Sep 18 30 Sep 19 30 Sep 20 Source: Thomson Reuters

The chart shows the value of £100 invested in UDG Healthcare plc on 30 September 2010 compared with the value of £100 invested in the FTSE 250. Values at each year-end date are calculated on a three-month average basis and show that £100 invested in the FTSE 250 as at 30 September 2010 would be worth £228 while £100 invested over the same period in UDG Healthcare plc would be worth £459.

Annual bonus Weighting Actual Alignment to strategy and performance Measure % % The Group employs a range of KPIs to monitor the Group’s performance and operations, measure progress against our Group basic PBT 35.0 23.0 strategy and ensure alignment with our stakeholders. These Stretch PBT 30.0 0.0 KPIs, both financial and non-financial in nature, link directly and Underlying Group Net Revenue Growth 5.0 0.0 indirectly to short and long term remuneration measures such as PBT, revenue, cash flow and the directors’ personal, strategic Group cash flow 15.0 15.0 and operational objectives. Non-financial targets 15.0 15.0 See KPIs on pages 20 to 23 Total bonus 100.0 53.0 2020 remuneration outcomes

Response to Covid-19 CEO With the onset of Covid-19, the Group’s swift action and clear Salary engagement enabled the organisation not only to withstand Total €1,782k Bonus Benefits these challenging circumstances financially and operationally 37% 20% 3% 31% 9% 2020 but also, to prioritise the protection of its people and the support LTIPs 30% 24% 2% 36% 8% of its clients in the provision of essential healthcare services. The 2019 Pensions Group continued to support communities through charitable efforts and implemented a temporary 20% pay reduction for CFO Salary the Board and the SET. Total €860k Bonus Benefits 54% 31%2020 4% 11% LTIPs 49% 38% 4% 9% 2019 Pensions LTIP outcomes The 2017 LTIP was assessed by the Committee, who reviewed the associated performance metrics, being TSR and cash flow Pension contributions performance and determined that, in the aggregate, 62.85% of In previous years, the Group has been steadily reducing contribution this award would vest on its prescribed vesting date. In relation levels. Last year, the Group confirmed that pension contributions to TSR, the Group ranked in the 50th percentile, resulting in for new executives will be in line with rates available in the wider 25.7% of this portion of the award vesting, while strong cash flow workforce in such executive’s local market. This year, the Group can conversion resulted in targets being fully met and accordingly also confirm that pension contributions for incumbent executive 100% of this portion vesting. directors will also reduce from 1 October 2022, and furthermore, from 1 October 2020, shall be frozen at FY2020 levels.

UDG Healthcare plc 87 Annual Report and Financial Statements 2020 Directors’ Remuneration Report

“Following adoption of the Group’s new Remuneration Policy at the 2020 AGM, the Committee has focused on implementation.”

Linda Wilding Chair of the Remuneration Committee

Attendance Record and Tenure The following table details the members of the Committee, their attendance at meetings held during the year to 30 September 2020 and their tenure. Number of meetings held Number of Committee Members when director was a member meetings attended tenure Linda Wilding (Chair) 5 5 6 years Shane Cooke 0 0 < 1 year Chris Brinsmead1 229 years Peter Gray2 557 years Lisa Ricciardi 556 years Peter Chambré 543 1 year 1 Chris Brinsmead retired from the Board on 28 January 2020. 2 Peter Gray retired from the Board on 30 September 2020. Shane Cooke replaced Peter Gray on the Committee from 1 October 2020. 3 Peter Chambré was unable to attend a meeting in December 2019 due to a prior engagement, but provided input to the Chair in advance of the meeting.

Composition as at 30 September 2020 Linda Wilding (Chair) Peter Gray Lisa Ricciardi Key Responsibilities Peter Chambré The Committee’s responsibilities include: • setting, reviewing and recommending to the Board the remuneration policy for executive directors and certain other senior executives; • setting, reviewing and approving the remuneration arrangements of executive directors and senior executives; and • reviewing and approving the rules of any incentive plans subject to final approval by the Board and shareholders.

88 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Dear Shareholder I am pleased to present, on behalf of the Board, our Directors’ Remuneration Report for the year ended 30 September 2020. This year, in addition to this Introduction by the Chair, and the Annual Report on Remuneration (pages 90 to 103), a new Remuneration at a Glance has been included on page 87 and it is intended that the information set out on that page will bring additional clarity and simplicity to the report as a whole.

Following a thorough review by the Committee of the Directors’ Remuneration Policy and of remuneration in the markets in which we operate, and following a consultation and engagement process with stakeholders, UDG Healthcare submitted its revised Directors’ Remuneration Policy (the Policy) to shareholders for approval at the AGM in January 2020 in accordance with the three-year timeframe set out in Directors’ Remuneration Reporting regulations. No major changes had been proposed to the previous policy. However, the Committee was mindful that the Group had grown and changed fundamentally in the previous three years. With this growth came increased complexity right across the business and the Committee believed that a limited number of changes were appropriate. The Committee believed, and continues to believe, that these changes ensure that the Policy remains competitive and appropriate to support the business, in particular the Group’s strategy as outlined on pages 18 and 19. Furthermore, the Committee believes the Policy is aligned with shareholders’ interests and reflects evolving best practice and regulatory developments. While these views were consistent with the majority of the feedback received during our consultation process, we are pleased to note that, at the AGM, the Policy was approved and supported by 91.7% of our shareholders by way of an advisory vote. In the interests of succinct reporting the Policy is not reproduced in this Report but can be found on our website at www.udghealthcare.com. A summary of these changes can be found at page 83 of UDG Healthcare’s 2019 Annual Report.

Overall Performance and Context In the face of Covid-19, the Group delivered a strong financial performance for the year ending 30 September 2020, with adjusted earnings per share increasing by 1% (1% on a constant currency basis) for the year. Group adjusted operating profit also grew 7% (on a constant currency basis) versus 2019 and free cash flow conversion, a key metric for the Group, increasing to 111% (2019: 8.3%) during the year. As a result of this performance, in addition to the interim dividend of $4.46 cent per share which was paid in September 2020, the Board has proposed a final dividend of $12.54 cent per share, giving a total dividend for the year of $17.00 cent per share, representing an increase of 1.2% over 2019. Our relative Total Shareholder Return (‘TSR’) tested against the constituents of the FTSE 250 index over the last three years to 30 September 2020 ranked the Company in the 50th percentile with TSR performance of 25.7% over the three years. Over 10 years (and as can be seen on the TSR chart on page 87) UDG Healthcare has significantly outperformed the FTSE 250 during this period. The Committee is satisfied that the Policy is operating as intended in terms of company performance and quantum and that the executive directors’ short and long term remuneration, as detailed further below, properly reflects the Group’s strong performance during the year.

Engagement Shareholder Engagement During late 2019 we undertook an engagement and consultation process with both our shareholders and a number of shareholder advisory groups in relation to remuneration matters and the changes proposed in our revised Policy. The Committee regularly takes into account the views of proxy voting agencies and in putting both our Policy to an advisory vote at last year’s AGM and our Report to an advisory vote each year including at the upcoming AGM, the Committee acknowledges the shareholder voice in relation to remuneration matters. Details of shareholders’ proxy voting on the Report and also the Policy in 2019 are set out on page 102.

Workforce Engagement UDG Healthcare appointed Lisa Ricciardi and Erik van Snippenberg to be Designated NEDs (as further described on page 53), bringing both a European and a U.S. perspective to this process. During the year we arranged a series of workforce engagement meetings that were attended by full and part time employees, contractors to the Group and our Designated NEDs. As noted on page 53, and due to Covid-19 restrictions, a number of these meetings were held virtually. Despite this, each group examined and considered identical topics for discussion; namely culture, career development, wellbeing and ethical business behaviours and as such we were able to hear from a wide cross-section of our people on a consistent agenda of topics.

U.K. Corporate Governance Code, U.K. Companies Reporting (Miscellaneous Reporting) Regulations 2018, and Shareholder Rights Directive II UDG Healthcare plc is an Irish incorporated company and was therefore not subject to the U.K. company law requirement to submit its Directors’ Remuneration Policy to a binding vote at the AGM in January 2020. However, UDG Healthcare takes corporate governance very seriously and, noting changes being proposed to the Policy to reflect updates to the 2018 U.K. Corporate Governance Code, submitted the Policy to an advisory vote last year. This year, in accordance with the Shareholders Rights Directive II, which took effect in Ireland on 30 March 2020, we submit our annual report on remuneration for an advisory vote as required. The Committee continues to monitor best practice developments in remuneration and once again presents this year’s report in accordance with the requirements of the U.K. Companies Act 2006 and the U.K. Companies Reporting (Miscellaneous Reporting) Regulations 2018. The Committee also notes that the 2018 U.K. Corporate Governance Code has been applicable to UDG Healthcare since 1 October 2019 and, save as further described on page 66 in relation to Provision 38 of the 2018 U.K. Corporate Governance Code, is pleased to confirm that we have followed its provisions during FY2020.

UDG Healthcare plc 89 Annual Report and Financial Statements 2020 Directors’ Remuneration Report (continued)

Executive Remuneration for 2020 Annual Bonus Annual bonus targets are primarily set by reference to challenging internal financial targets, principally profit before tax and cash flow, together with a non-financial element based on personal objectives and also objectives which the Committee considers to be strategically important for the Group. For the year to 30 September 2020, the financial performance of the Group resulted in an actual bonus achievement (as a percentage of their maximum opportunity) of 53% for both Brendan McAtamney and Nigel Clerkin. Details of this assessment are on pages 93 to 96.

LTIP Awards The Committee has assessed the performance against targets for the December 2017 LTIP awards, which performance period runs from 1 October 2017 to 30 September 2020 (the 2017 LTIP Award). The cash flow element constitutes 50% of the 2017 LTIP Award and the performance of the Group (as outlined on page 97) results in 100% vesting of this element for the three-year period to 30 September 2020. The TSR element constitutes 50% of the 2017 LTIP Award and is tested against the constituents of the FTSE 250 index over the three-year period. With the Group ranking at the 50th percentile, this results in 25.7% of the TSR Element of the award vesting. When combined with the cash flow element this means that, in total, 62.85% of the overall 2017 LTIP Award will vest on its prescribed vesting date in December 2020 and will be held until in December 2022, subject to the fulfilment of all other conditions of the LTIP scheme.

Following shareholder approval of the revised Policy at the 2020 AGM and as noted in last year’s Annual Report, the Committee considered and approved a balancing grant of 50% and 25% of base salary to Brendan McAtamney and Nigel Clerkin respectively in relation to FY2020. This grant was made on 25 November 2020.

Priorities and Executive Remuneration for 2021 As noted above, the Committee considers the Policy, approved by shareholders at the 2020 AGM, to be appropriate in supporting the Group’s strategy, and that it remains aligned with shareholders’ interests and reflects evolving best practice and regulatory developments. Mindful of the uncertainty brought upon by Covid-19, the Committee considered executive remuneration arrangements to ensure that this continued to be the case, and following such review, the Committee concluded that, on balance, the executive remuneration arrangements continued to be appropriate. In the coming year, the Committee will therefore prioritise implementation of approved Policy and will also continue to take into account the outputs of engagement with stakeholders, including as to important matters such as sustainability. The Committee will also maintain a watching brief on the impact of Covid-19 during FY2021, reserving the right to take account of this on executive remuneration arrangements if the Committee considers this appropriate.

Salary We have agreed an increase in salary for executive directors of 2% which is consistent with the average increase awarded across the wider workforce. This increase is effective from 1 October 2020.

Annual Bonus We intend to retain the same mix of financial and non-financial goals in relation to bonus arrangements for executive directors in FY2021. Further details are set out on pages 94 and 95.

LTIP Scheme In relation to the LTIP for FY2021 (which is usually granted in early December), Brendan McAtamney and Nigel Clerkin will participate in the LTIP scheme at 200% and 175% of base salary respectively in line with current policy. At this time, no changes to the performance measures for awards to be granted in FY2021 are envisaged. However, in light of Covid-19, the Committee will consider this in due course and, if it determines that changes are appropriate, we will issue an updated disclosure.

Pension In last year’s Annual Report, we noted that, for the past number of years, UDG Healthcare has independently been reducing the level of pension contributions for its executive directors, with both incumbents at levels lower than their predecessors. The previous CEO originally participated in a defined benefit scheme before moving to a pension contribution benefit of 40% of base salary. The current CEO received a pension contribution of 25% of base salary in FY2019. Similarly, whereas the previous CFO participated in a defined benefit scheme before moving to a pension contribution of 25%, the current CFO received a pension contribution of 20% of base salary in FY2019. Pension contributions for new executive directors will be in line with rates available in the wider workforce in such executive’s local market and, for incumbent executive directors, pension contributions will also be reduced from 1 October 2022. Furthermore, pension contributions for the incumbent CEO and CFO shall be frozen at FY2020 levels (i.e., 24.5% and 19.6% respectively) from 1 October 2020, as further set out on page 99.

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Conclusion 2020 has been an extraordinary year and it would be remiss to report without acknowledging the global impact of Covid-19 not just on performance but on our people. As noted below, and despite Covid-19, the Committee commends the management team on its strong performance this year. Following an exceptionally strong H1 2020, a number of the Group’s (principally in-field) businesses were hit hard by the impact of Covid-19. Due to businesses across the Group pulling together and numerous areas of outperformance, despite the significant challenges presented by Covid-19, UDG Healthcare delivered a strong performance and this is reflected in the directors’ remuneration as further set out on page 87 and in this Annual Report on Remuneration.

Accordingly, I am satisfied that the Remuneration Committee has implemented the Group’s new Policy in a manner that reflects the performance of the Group in the year and would recommend that shareholders vote in favour of the Remuneration Report at the 2021 AGM.

Linda Wilding Chair of the Remuneration Committee

UDG Healthcare plc 91 Annual Report and Financial Statements 2020 Directors’ Remuneration Report (continued)

Directors’ Remuneration (Audited) The following table sets out the total remuneration for directors for the year ending 30 September 2020 and the prior year.

Long-term Total Fixed Total Variable Salary and fees(a) Benefits(b) Annual bonus(c) incentives(d) Pensions(e) Remuneration Remuneration Total €’000 20201 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Executive directors Nigel Clerkin 469 485 37 44 260 374 – – 94 97 600 626 260 374 860 1,000 Brendan 655 676 47 60 363 522 553 783 164 169 866 905 916 1,305 1,782 2,210 McAtamney 1,466 1,531 1,176 1,679

Non-executive directors Chris Brinsmead2 30 91 – – – – – – – – 30 91 Peter Chambré5 67 46 – – – – – – – – 67 46 Chris Corbin2 24 70 – – – – – – – – 24 70 Shane Cooke5 76 46 – – – – – – – – 76 46 Peter Gray 176 212 – – – – – – – – 176 212 Myles Lee 91 88 – – – – – – – – 91 88 Nancy Miller-Rich2 25 69 – – – – – – – – 25 69 Liz Shanahan6 43 – – – – – – – – – 43 – Erik van 72 70 – – – – – – – – 72 70 Snippenberg4 Lisa Ricciardi4 72 69 – – – – – – – – 72 69 Philip Toomey3 – 24 – – – – – – – – – 24 Linda Wilding 83 86 – – – – – – – – 83 86 1,883 2,032 84 104 623 896 553 783 258 266 3,401 4,081

1 Directors voluntarily reduced their salaries and fees by 20% during May, June and July 2020 in solidarity with colleagues in the Group impacted by furloughs and reduced working hours on account of the Covid-19 pandemic. 2 Chris Brinsmead, Chris Corbin and Nancy Miller-Rich retired from the Board at the 2020 AGM. 3 Philip Toomey retired from the Board at the 2019 AGM 4 Erik van Snippenberg and Lisa Ricciardi became Designated NEDs for the purposes of UDG Healthcare’s workforce engagement program from 1 October 2019. 5 Peter Chambré and Shane Cooke joined on 1 February 2019. 6 Liz Shanahan joined on 1 February 2020.

Details on the valuation methodologies applied are set out in Notes (a) to (e) below. These valuation methodologies are as required by the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and are different from those applied within the financial statements which have been prepared in accordance with International Financial Reporting Standards (‘IFRS’). The total expense relating to the directors recognised within the income statement in respect of long-term incentives is €963,421 (2019: €590,460) and in respect of pension benefits is €257,720 (2019: €265,965).

Notes to Directors’ Remuneration Table (a) Salary and fees: This is the amount earned in respect of the financial year, whilst a director. (b) Benefits: This is the taxable value of benefits paid in respect of the financial year. These benefits principally relate to death in service, disability and medical insurance, club subscriptions, the provision of a company car, or cash allowances taken in lieu of such benefits, and personal tax return preparation. Note: certain amounts relating to club subscriptions and personal tax return preparation were not captured and accordingly the 2019 figure has been restated to reflect this. (c) Annual bonus: This is the total bonus earned under the annual bonus scheme in respect of the financial year. For details of performance against targets set for the year see pages 93 to 96. (d) Long-term incentives: For the year ended 30 September 2020, this is the market value of the LTIP awards earned based on performance to 30 September 2020. These LTIP awards (structured as nominally priced options) were granted in December 2017 and the performance period was the three-year period from 1 October 2017 to 30 September 2020. They are subject to an additional two-year holding period, vesting in December 2022. These awards are also entitled to dividend equivalents during the vesting period. The value above only includes dividend equivalents earned to 30 September 2020.

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The Committee has assessed performance for these awards and determined that 62.85% of the original award will vest at the end of the five-year vesting period. See page 97 for details. The share price at the date of vesting is not available at this time and therefore the number of shares that will vest has been multiplied by the difference between the average share price over the quarter ending 30 September 2020 (£7.26) and the exercise price per share option (€0.05) to calculate a representation of the value attributed to these options. An estimate of the amount of the award that is attributable to share price depreciation in relation to this award (using the average share price referred to above) is £82,729.

For the year ended 30 September 2019, this is the market value of the LTIP awards (structured as nominally priced options) that were granted in December 2016 and the performance period was the three-year period from 1 October 2016 to 30 September 2019. The Committee reviewed actual performance relative to the performance targets in November 2019 and determined that 67.95% of the original award should vest at the end of the five-year vesting period. The difference between the share price on the third anniversary of the grant date (being £8.05) and the exercise price per share option (€0.05) was multiplied by the number of options that vested to calculate the value attributed to the options for each director. This has been updated from the 2019 report where the disclosure was based on the average share price over the quarter ended 30 September 2019 (£7.78). This gave a value of €758,058 for Brendan McAtamney. The value of dividend equivalents accrued during the period and up to the third anniversary of the grant date is also included. The amount of the award that is attributable to share price appreciation in relation to this award is £110,418. (e) Pension: Please see page 99 for further information.

Discussion of Individual Remuneration Elements The following sections set out details on each element of remuneration for the year to 30 September 2020 and details how we intend to operate our policy with respect to each element of remuneration for the year to 30 September 2021.

Salary The base salaries of executive directors are reviewed annually having regard to personal performance, divisional or Group performance, significant changes in responsibilities and competitive market practice in their area of operation as well as the pay and conditions in the wider Group. The principal external comparator group against which executive directors’ reward is currently reviewed comprises the FTSE 250.

In relation to both Brendan McAtamney and Nigel Clerkin, the Committee determined that their base salaries for FY2021 will increase by 2%, consistent with the average increases awarded across the wider Group. Changes to base salary are generally effective from 1 October.

The following table sets out the salaries for the executive directors at the start of each financial year. 1 October 1 October 2020 2019 €’000 €’000 Brendan McAtamney 704 690 Nigel Clerkin 504 494

Benefits Employment-related benefits for executive directors principally relate to death in service, disability and medical insurance, club subscriptions, the provision of a company car or cash allowances taken in lieu of such benefits and personal tax return preparation. In the case of recruitment, benefits may include relocation allowances or other benefits considered appropriate by the Committee to facilitate recruitment. Any such benefits are in line with our recruitment remuneration policy.

Annual Bonus Bonus for the Year Ended 30 September 2020 For the year ended 30 September 2020, the maximum bonus opportunity, as a percentage of salary, was 100% for each of Brendan McAtamney and Nigel Clerkin.

The following table sets out the performance measures applied for executive directors for the year ended 30 September 2020. % of maximum bonus Financial targets Profit 65% Underlying Group Net Revenue Growth 5% Cash flow 15% 85% Non-financial targets 15% 100%

The performance targets were set by the Committee at the start of the financial year.

UDG Healthcare plc 93 Annual Report and Financial Statements 2020 Directors’ Remuneration Report (continued)

Financial Performance Subsequent to the end of the financial year, the Committee reviewed actual performance against the targets set for each executive director.

Based on this review, the Committee determined that the executive directors should be awarded bonuses based on the achievement of financial targets as illustrated in the table below.

Weighting Actual Measure % % Group basic PBT 35.0 23.0 Stretch PBT 30.0 0.0 Underlying Group Net Revenue Growth 5.0 0.0 Group cash flow 15.0 15.0 Total bonus for financial performance 85.0 38.0

The following table summarises performance against target for each of the financial objectives.

Measure Definition Performance targets Actual performance Group basic PBT is defined as profit before tax, Budget PBT was $156.1 million and Reported PBT excluding currency, PBT exceptional items, amortisation if achieved, leads to a pay-out of the unbudgeted acquisitions and disposals of acquired intangibles and relevant Group basic PBT bonus. gives PBT of $149.6 million. The transaction costs. Committee also made an adjustment of Threshold performance equates to $3.1 million in respect of Covid-related It is measured against budget on a $148.3 million or 95% of budget PBT. items (discussed in further detail below) constant currency basis to remove 20% of the potential Group PBT bonus resulting in a PBT for bonus purposes of foreign exchange translation pays out when actual PBT reaches $152.7 million. As the results were 2.2% impacts. It excludes the impact of 95% of budget, and then increases below budget (or 97.8% of target) this unbudgeted acquisitions and is to reach 100% pay-out when 100% resulted in 65% of the bonus % attributed adjusted for unbudgeted disposals. of Group PBT budget is achieved. to Group basic PBT being achieved. No portion of basic bonus is paid where actual PBT is below threshold The Covid-related adjustment related to performance. government furlough supports voluntarily repaid or foregone. Payment for performance between threshold and budget is on a pro-rata basis. Stretch PBT The stretch PBT measure is the Achievement of stretch PBT bonus Including the contributions of $3.1 million Group basic PBT including the requires PBT of up to 115% of budget of unbudgeted acquisitions the result was contribution of unbudgeted or $179.5 million. $155.8 million. As the results were not acquisitions. above the 100% threshold, no bonus is payable in relation to stretch targets. Underlying Reported Group Revenue compared Underlying Group Net Revenue The Committee determined that Group Net to prior year and excluding (a) growth to exceed 4%. Underlying Group Net Revenue Revenue Growth any revenues from acquisitions Growth was 1% for the purposes of this included in one of the periods only performance target. Accordingly, this (i.e. current year or prior year) and element of the bonus was not achieved. (b) any pass-through revenues, on a constant currency basis. Group cash flow Cash flow is defined as net cash The Group’s cash flow target is Actual cash flow of $241.4 million (being inflow from operating activities less based on budgeted cash flow of $243.0 million operating cash flows less capital expenditure and excludes $139.5 million. Threshold performance capex, less $1.6 million from acquisitions) exceptional items, transaction costs, equates to 95% of budgeted cash flow. exceeded the budget target of $139.5 interest and tax. Cash flow generated No bonus is paid if actual cash flow is million. Accordingly, 100% of this element by acquisitions is excluded from the at or below threshold target. of the bonus was achieved. actual cash flow performance. 100% of bonus is paid if budget cash Cash flow benefited from a $40 million flow is reached or exceeded. Covid-19 impact, which is expected to reverse in 2021. Excluding this benefit, Payment between threshold and cash flow performance was still ahead budget performance is on a pro-rata of budget for the year. basis.

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Non-financial Performance 15% of the annual bonus for each executive director was based on the achievement of personal objectives and objectives considered strategically important by the Committee. These objectives include the achievement of operational goals, the executive’s contribution to Group strategy as a member of the Board, and specific goals related to their functional role. 2020 objectives were set for each executive at the beginning of the financial year, and performance against these objectives was assessed by the Committee at its November 2020 meeting.

Executive Director Area 2020 objective Assessment Brendan McAtamney M&A The evaluation and acquisition In relation to the evaluation and acquisition of appropriate of appropriate businesses that businesses, approximately 12 potential acquisitions, would add shareholder value. investments and disposals had been thoroughly evaluated and four of these, namely Canale Communications, the Macungie site, the strategic acquisition of 25% of Berkshire Sterile Manufacturing and the disposal of Ashfield Pharmacovigilence, had been all delivered. Strategy Redefining the strategic The Committee noted the detailed and interactive strategy roadmap for the Group. sessions delivered to the Board in both May and again in September and felt that the strategic roadmap had been well-defined and well-articulated, with input from the Board acknowledged and reflected. Succession Ensuring the successful It was noted that the four new members of the SET had settled onboarding of four new in well to their new roles, had been well supported during members of the SET. the year and this was especially apparent during the strategy sessions with the Board. Committee Overall The Committee acknowledged the strategic importance of each of these objectives to the long term success of the Assessment Group. As an acquisitive company, it is important to include an objective related to M&A, while it was also appropriate in this year to review and redefine the Group’s strategic roadmap and, given new leaders, to help onboard and embed them in their roles to best ensure delivery and execution against the roadmap.

The Committee assessed performance against these objectives and noting the long term value and strategic importance of these objectives, judged that a strong performance had been achieved with respect to all objectives, especially in light of the impact of Covid-19 on the Group.

Considering all objectives, the Committee considered these to have been met and recommended that the full 15% bonus allocable to personal objectives should be payable.

Executive Director Area 2020 objective Assessment Nigel Clerkin Strategic/ The management and oversight In relation to the management and oversight of Ashfield Operational of the Ashfield Healthcare Communications, the Committee noted that performance of Communications during the Ashfield Healthcare Communications had been strong during leadership transition period. the period. Operational/ Ensuring the successful The implementation of the Group’s new ERP system continues Functional implementation of certain stages to be on track and an IT improvement plan has been of the Group’s new ERP system implemented and delivered within an agreed timeframe. The and implementing improvements Committee, therefore determined that these objectives had within the IT function. been achieved. Committee Overall The Committee acknowledged the strategic importance of each of these objectives to the long term success of Assessment the Group. It noted, in particular, the strong performance in supporting the Ashfield Healthcare Communications business during its transition period and in helping establish an environment to support the long term success of the business post the transition.

The implementation of the Group’s new ERP system continued to be on track and the Committee noted again the long term strategic importance of the system and the need for improvements within the IT function.

The Committee, therefore determined that these objectives had been achieved and recommended that the full 15% allocable to personal objectives should be payable.

UDG Healthcare plc 95 Annual Report and Financial Statements 2020 Directors’ Remuneration Report (continued)

Total Bonus Payable and Remuneration Committee Considerations The above results in a total bonus payable of 53% of maximum for both Brendan McAtamney and Nigel Clerkin for the year ending 30 September 2020. The Committee was mindful of strong operational and financial performance during the year. The Committee felt it was appropriate to make the adjustment in assessing profit performance in relation to the furlough monies voluntarily repaid or foregone. Overall, the Committee considers that this level of bonus pay out (53% of the maximum) is a fair reflection of the performance achieved during the year and is appropriate in the context of both the shareholder and employee experience.

Bonus for the Year Ending 30 September 2021 For the year ending 30 September 2021, the bonus is intended to operate in broadly the same way as for the previous year. The maximum bonus opportunity for the executive directors remains at 100% of base salary and is based on the same balance of financial and non-financial performance measures as for FY2020.

Long Term Incentive Plan (‘LTIP’) The outstanding LTIPs were granted under rules approved by shareholders in 2010. Replacement share plan rules were put forward and approved by shareholders at the AGM in January 2019, and LTIP awards granted from FY2020 onwards will be granted under these new rules.

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Award for Which the Year to 30 September 2020 Was the Last Year of the Performance Period The following table sets out details in respect of the 2017 LTIP awards, for which the final year of performance was the year to 30 September 2020. Awards are subject to a two-year holding period and will be delivered to participants in December 2022.

Targets for performance period (1 October 2017 to 30 September 2020) Performance against targets TSR performance TSR measured against constituents of the FTSE 250 Index The relative TSR performance over the three-year period (50% of award) Vesting schedule: was externally measured as being at the 50th percentile Below median = 0% and accordingly 25.7% of this part of the award will vest. At median = 25% Upper quartile = 100%* As the upper quartile was not achieved, the final 25% of Pro-rating between points this element of the reward was not available and so the underpin was not required to be calculated. * Vesting of final 25% Vesting of the final 25% of the TSR award is subject to the following underpin: • adjusted diluted Earnings Per Share (‘EPS’) growth of not less than 5% per annum compounded over the performance period. Aggregate Company’s aggregate cash flow performance (PBIT to The PBIT conversion rate was 123% over the three-year cash flow cash conversion rate) period, and aggregate cash generation was $567 million. performance1 Percentage PBIT to cash conversion rate vesting schedule: Accordingly, 100% of this element of the award will vest. (50% of award) Below 80% = 0% At 80% = 25% Cash flow benefited from a $40 million Covid-19 impact in 100% or above = 100% 2020, which is expected to reverse in 2021. Excluding this Pro-rating between points benefit, three-year cash conversion was still ahead of the 100% target. In addition, the cash underpin target of $397 Vesting under the cash flow element is also contingent on an million was also met. aggregate minimum cash flow generation by the company of $397 million over the performance period. Total 62.85% of awards will vest and become exercisable in December 2022.

1 In line with the plan rules, for the purposes of assessing the level of LTIP awards that should vest, the impact of exceptional items and amortisation of acquired intangible assets has been excluded within both PBIT and cash flow for calculation purposes. For the purposes of assessing the achievement of the minimum cash flow generation target over the performance period, actual cash generation during this period has been adjusted by eliminating cash generated from acquisitions completed after the target level of $397 million had been set. Similarly, the target of $397 million has also been adjusted in respect of disposals completed after the target level had been set.

LTIP Awards Made During or Relating to the Year to 30 September 2020

Share price Threshold Maximum at date of grant Face value vesting vesting Number of options Date of award £ £ % % Brendan McAtamney 108,684 4 December 2019 8.11 881,427 25 100 36,228 25 November 2020 7.951 288,013 25 100 Nigel Clerkin 77,866 4 December 2019 8.11 631,493 25 100 12,978 25 November 2020 7.951 103,175 25 100

1 Following approval of new Remuneration Policy at the 2020 AGM, this reflects the additional grant that was noted in the 2019 Annual Report. Actual share price used to determine the number of shares under this award is the share price used on 4 December 2019 i.e, £8.11, to replicate conditions on original grant date of award.

UDG Healthcare plc 97 Annual Report and Financial Statements 2020 Directors’ Remuneration Report (continued)

LTIP Awards Made During or Relating to the Year to 30 September 2020 continued The awards in the table above are subject to performance over the three-year period to 30 September 2022. The award is then subject to a further two-year holding period and the vested portion will be delivered in December 2024. The award is in the form of nominal value share options over ordinary shares with an exercise price of €0.05 per share. The market value of the options granted to each of Brendan McAtamney and Nigel Clerkin (number of options multiplied by the share price at the date of grant) equated, in the aggregate, to 200% and 175% of base salary respectively.

The following table sets out details of performance measures in respect of the LTIP awards granted during the year.

Targets for performance period (1 October 2019 to 30 September 2022) TSR performance TSR measured against the FTSE 250 Index (50% of award) Vesting schedule: Below median = 0% At median = 25% Upper quartile = 100%* Pro-rating between points

* Vesting of final 25% Vesting of the final 25% of the TSR award is subject to the following underpin: • adjusted diluted Earnings per Share (‘EPS’) growth of not less than 5% per annum compounded over the performance period. Aggregate cash Company’s aggregate cash flow performance (PBIT to cash conversion rate) flow performance 1 Percentage PBIT to cash conversion rate vesting schedule: (50% of award) Below 80% = 0% At 80% = 25% 100% or above = 100% Pro-rating between points

Vesting under the cash flow element is also contingent on an aggregate minimum cash flow generation by the Company of $423.9 million over the performance period.

1 In line with the plan rules, for the purposes of assessing the level of LTIP awards that should vest, the impact of exceptional items and amortisation of acquired intangible assets will be excluded within both PBIT and cash flow for calculation purposes. For the purposes of assessing the achievement of the minimum cash flow generation target, cash flows from acquisitions shall be excluded and the target shall also be adjusted in respect of lost cash flows from disposals.

The proportion of awards that do not meet the performance criteria will lapse on the scheduled vesting date.

LTIP Awards During the Year to 30 September 2021 As noted on page 90, Brendan McAtamney and Nigel Clerkin will participate in the FY2021 LTIP at 200% and 175% of base salary respectively and in line with current policy. This award is typically granted in December. The Remuneration Committee believes such awards to be at the appropriate level of award given the Group’s ambitious growth plans over the next three to five years and taking into account the award sizes at the Company’s comparators in the FTSE 250. It is anticipated that performance targets for LTIP awards to be granted during the year to 30 September 2021 will continue to be based on the performance conditions as outlined below. However, as noted on page 90, in light of Covid-19, the Committee will consider this in due course and, if it determines that any changes are appropriate, it will issue an updated disclosure.

Targets for performance period (1 October 2020 to 30 September 2023) TSR performance TSR measured against the FTSE 250 Index (50% of award) Vesting schedule: Below median = 0% At median = 25% Upper quartile = 100%* Pro-rating between points

* Vesting of final 25%: Vesting of the final 25% of the TSR award is subject to the following underpin: • adjusted diluted Earnings per Share (‘EPS’) growth of not less than 5% per annum compounded over the performance period.

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Targets for performance period (1 October 2020 to 30 September 2023) Aggregate cash Company’s aggregate cash flow performance (PBIT to cash conversion rate) flow performance Percentage PBIT to cash conversion rate vesting schedule: (50% of award) Below 80% = 0% At 80% = 25% 100% or above = 100% Pro-rating between points

Vesting under the cash flow element is also contingent on an aggregate minimum cash flow generation by the Company of an amount to be set by the Committee in due course over the performance period.

The performance period will be the three years to 30 September 2023 and awards meeting their vesting criteria will be released to participants on the fifth anniversary of their grant, following a two-year holding period.

Pensions All pension benefits are determined solely in relation to base salary. Fees paid to non-executive directors are not pensionable. As noted on page 90, from 1 October 2020, pension contributions for Brendan McAtamney and Nigel Clerkin will be maintained at FY2020 levels. Brendan McAtamney and Nigel Clerkin receive taxable, non-pensionable cash allowances of 24.5% and 19.6% of base salary respectively. In each case, and as noted in previous years, this reflects a reduction against the pension benefits received by their predecessors as a percentage of base salary. As previously disclosed, pension contributions for new appointments will be set in line with the rates available to the wider workforce in the executive’s local market and pension benefits for incumbent executive directors will also be reduced from 1 October 2022.

Additional Information Fees from External Appointments The executive directors are permitted to retain for their own benefit fees they receive from any external non-executive directorships. Brendan McAtamney has served as a non-executive director of Scapa Group plc since 1 February 2018. During the period from 1 October 2019 to 30 September 2020, he received fees of £41,467.

Payments to Former Directors Except as previously disclosed, there were no payments to former directors during the year.

Payments for Loss of Office Except as previously disclosed, there were no payments for loss of office during the year.

Minimum Shareholding Requirements The Committee has adopted guidelines for executive directors to retain substantial long-term share ownership. Following approval of the new Remuneration Policy at the 2020 AGM, these guidelines now specify that executive directors should, over a period of five years from the date of appointment (or the date of any change of shareholding level within the guidelines, whichever is the later), build up and then retain a shareholding in the company with a valuation at least equal to 200% of their annual base salary. As noted above, the revised Remuneration Policy was approved at the 2020 AGM and the guidelines were increased to 200% of base salary. The executive directors therefore have until 27 January 2025 to build up and retain such a shareholding.

The table below sets out the percentage of base salary held in shares in the Company by each executive director as at 30 September 2020.

Value of Shareholdings as % of Base Salary Below is set out the value of executive directors’ shareholdings as a percentage of annual base salary.

30 September 30 September Value of 2020 salary (or last Number 2020 share price shareholding applicable salary % of base of shares £ £ where relevant)1 salary1,2 Brendan McAtamney 140,000 7.74 1,083,600 €690,000 179% Nigel Clerkin 60,000 7.74 464,400 €494,000 107%

1 Amounts have been converted to Euro at the average exchange rate for the year of 0.879. 2 Brendan McAtamney has achieved 89.5% of the current shareholding guideline as at the date of this report and has until 27 January 2025 to meet the shareholding guideline. Nigel Clerkin has achieved 53.5% of the current shareholding guideline as at the date of this report and has until 27 January 2025 to meet the current shareholding guideline.

UDG Healthcare plc 99 Annual Report and Financial Statements 2020 Directors’ Remuneration Report (continued)

Non-executive Directors’ Remuneration Non-executive directors’ fees are set at a level to attract individuals with broad international, commercial and other relevant experience and reward them for fulfilling the relevant role.

Non-executive directors receive fees for their role and membership of Committees. In addition, where physical attendance at one or more meetings requires intercontinental travel, non-executive directors’ are entitled to an additional fee of €1,000 for each such trip while, for travel outside of non-executive directors’ country of residence but within the same continent (and in the case of the U.S., interstate), non-executive directors’ are entitled to an additional fee of €500. The Senior Independent non-executive Director (‘SID’) is also entitled to an additional fee of €10,404 per annum, while the designated non-executive directors receive an additional fee of €5,000 per annum.

Following a review of the fees of the non-executive directors and the Chair in November 2020, a 2% increase was agreed in each case. This increase will be effective from 1 January 2021.

From 1 January From 1 January Non-executive directors’ fees: 2021 2020 € € Basic fee (including Committee membership) 70,358 68,979 Chair’s fee (including basic fee) 221,899 217,548 Committee Chair 1 15,918 15,606 SID fee 10,612 10,404 Designated NED fee 5,100 5,000

1 This is an additional fee payable to the Chairs of the Audit, Remuneration, and Risk, Investment & Financing Committees. Shane Cooke is Chair of the Nominations & Governance Committee and does not receive a separate fee in respect of this role.

Directors’ Shareholding and Share Interests (Audited) LTIP Details of outstanding share awards, with performance conditions, granted to directors under the LTIP are set out below.

Number of shares under award Granted Exercised Lapsed At 30 Market price Exercise Market price At 1 October during the during the during the September at date of price at date of Date of Performance 2019 year1 year year 2020 award € vesting award period Vesting date Expiry date Chris Corbin2 77,212 – 77,212 – – £3.73 0.05 £5.79 28.02.14 01.10.13 - 28.02.19 27.02.21 30.09.16 77,772 – 77,772 – – £3.78 0.05 £7.76 17.12.14 01.10.14 - 17.12.19 16.12.21 30.09.17 46,103 – – – 46,103 £5.52 0.05 n/a 03.12.15 01.10.15 - 03.12.20 03.06.21 30.09.18 201,087 – 154,984 – 46,103 Brendan McAtamney 93,911 – – – 93,911 £3.73 0.05 £5.79 28.02.14 01.10.13 - 28.02.19 27.02.21 30.09.16 92,041 – – – 92,041 £3.78 0.05 £7.76 17.12.14 01.10.14 - 17.12.19 16.12.21 30.09.17 48,681 – – – 48,681 £5.52 0.05 n/a 03.12.15 01.10.15 - 03.12.20 02.12.22 30.09.18 64,977 – – – 64,977 £5.12 0.05 n/a 05.02.16 01.10.15 - 05.02.21 04.02.23 30.09.18 122,1803 – – 39,159 83,021 £6.72 0.05 n/a 07.12.16 01.10.16 - 06.12.21 06.12.23 30.09.19 102,0384 – – – 102,038 £8.55 0.05 n/a 05.12.17 01.10.17 - 05.12.22 05.12.24 30.09.20

100 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Number of shares under award Granted Exercised Lapsed At 30 Market price Exercise Market price At 1 October during the during the during the September at date of price at date of Date of Performance 2019 year1 year year 2020 award € vesting award period Vesting date Expiry date 133,367 – – – 133,367 £6.79 0.05 n/a 04.12.18 01.10.18 - 04.12.23 04.12.25 30.09.21 – 108,684 – – 108,684 £8.11 0.05 n/a 04.12.19 01.10.19 - 04.12.24 04.12.26 30.09.22 657,195 108,6845 –39,159726,720 Nigel Clerkin 95,550 – – – 95,550 £6.79 0.05 n/a 04.12.18 01.10.18 - 04.12.23 04.12.25 30.09.21 – 77,866 – – 77,866 £8.11 0.05 n/a 04.12.19 01.10.19 - 04.12.24 04.12.26 30.09.22 95,550 77,8665 ––173,416

1 Details regarding the grant of awards to directors during the year to 30 September 2020 are set out on page 97. 2 As previously disclosed, as part of Chris Corbin’s transition arrangements, he received no further share awards since 2015. 3 Denotes the 2016 LTIP awards. Following a performance assessment, the Committee determined that 67.95% of the 2016 LTIP awards would vest, and accordingly 32.05% of the shares subject to these awards lapsed post 1 October 2019 (i.e. during FY2020). 4 Denotes the 2017 LTIP award. Following a performance assessment, the Committee determined that 62.85% of the 2017 LTIP award would vest, and accordingly 37.15% of the shares subject to this award (i.e. 37,907) will lapse in due course. 5 As disclosed on page 97, and following approval of the Remuneration Policy at the 2020 AGM, an additional grant was made in relation to the year to 30 September 2020 for Brendan McAtamney (36,228 options) and Nigel Clerkin (12,978 options) on 25 November 2020. Please see page 97 for further detail. s.305 CA 2014 For the purposes of Section 305 of the Companies Act 2014 (Ireland), the aggregate gains by directors on the exercise of share options during the year ended 30 September 2020 was €934,124 (2019: €0.00).

Directors’ and Company Secretary’s Interests in Share Capital (Audited) The beneficial interests of the directors and secretary (including family interests) during FY2020 in the ordinary share capital of the Company are detailed below.

1 October 2019 (or date of 30 September appointment 2020 if later) Ordinary shares Ordinary shares Chris Brinsmead 10,500 12,500 Nigel Clerkin 60,000 40,000 Peter Chambré 5,000 5,000 Chris Corbin 259,481 259,481 Shane Cooke 15,500 – Peter Gray 134,000 114,000 Myles Lee 10,000 10,000 Brendan McAtamney 140,000 115,000 Nancy Miller-Rich – – Liz Shanahan – – Erik van Snippenberg 7,500 7,500 Lisa Ricciardi 22,745 22,745 Linda Wilding 19,304 19,304 Damien Moynagh (Company Secretary) 7,000 –

There were no other changes in the above directors and Secretary’s interests between 30 September 2020 and 1 December 2020. The directors and Secretary have no beneficial interests in any Group subsidiary or joint venture undertakings.

UDG Healthcare plc 101 Annual Report and Financial Statements 2020 Directors’ Remuneration Report (continued)

Statement of Shareholder Voting The Company is committed to ongoing shareholder dialogue and takes shareholder views into consideration when formulating remuneration policy and practice. To the extent there are substantial numbers of votes against resolutions in relation to directors’ remuneration, the Company will seek to understand the reasons for any such vote and will provide details of any actions in response to such a vote.

The following tables set out the actual votes at the 2020 AGM in respect of the Directors’ Remuneration Report and the actual votes at the 2020 AGM in relation to the Directors’ Remuneration Policy.

Directors’ Remuneration Report For Against Withheld1 Number of votes (millions) 159.0 1.9 1.1 Percentage % 98.8 1.2 –

Directors’ Remuneration Policy For Against Withheld1 Number of votes (millions) 138.6 12.6 10.8 Percentage % 91.7 8.3 –

1 A vote withheld is not a vote in law and is not counted in the calculation of the percentage votes for and against a resolution.

External Advisors The Committee seeks and considers advice from independent remuneration advisors where appropriate. In 2012, the Committee appointed Deloitte LLP to provide advice on compensation and remuneration matters including advice on best practice market developments. During the year to 30 September 2020, fees payable to Deloitte in respect of services which materially assisted the Committee amounted to £17,800. This included advice in relation to the Remuneration Report and various matters relating to market practice, the impact of Covid-19 on the market as a whole, including market practice in relation to the pension arrangements of incumbent executive directors. These fees were charged on a time and expenses basis. Deloitte is one of the founding members of the Remuneration Consultants’ Code of Conduct and adheres to this Code in its dealings. The Committee is satisfied that the advice provided by Deloitte is objective and independent. The Committee is comfortable that the Deloitte engagement team that provide remuneration advice to the Committee do not have connections with UDG Healthcare that may impair their independence, and is satisfied that the provision of these services does not constitute a conflict of interest.

Performance Graph and Table The table below summarises the single figure of total remuneration for the Chief Executive for the past ten years as well as how the actual awards under the annual bonus and LTIP compare to their respective maximum opportunity.

Annual bonus LTIP Single figure of award against award against total remuneration maximum maximum Chief Executive €’000 opportunity opportunity 2020 Brendan McAtamney 1,782 53.0% 62.9% 2019 Brendan McAtamney 2,210 77.2% 67.9% 2018 Brendan McAtamney 1,891 18.0% 84.0% 2017 Brendan McAtamney 2,329 75.0% 100% 20161 Brendan McAtamney 1,265 74.0% 100% 2016 Liam FitzGerald 683 81.2% 100% 2015 Liam FitzGerald 2,509 70.2% 100% 2014 Liam FitzGerald 2,371 71.6% 89.2% 2013 Liam FitzGerald 1,709 20.0% 95.5% 2012 Liam FitzGerald 1,697 90.0% 62.5% 2011 Liam FitzGerald 1,223 89.8% 0%2

1 Liam FitzGerald was CEO until 1 February 2016. Brendan McAtamney was appointed as Group CEO from 2 February 2016. For 2016, Brendan McAtamney participated in the 2010 LTIP. Liam FitzGerald also participated in the 2010 LTIP in 2012, 2013, 2014 and 2015 financial years. Details on the vesting performance of awards under this plan are set out on pages 97 and 98. In relation to the single figure of total remuneration, both Liam FitzGerald and Brendan McAtamney’s amounts have been pro-rated for their period of service as CEO. 2 For the 2011 financial year, Liam FitzGerald participated in the former employee share option scheme. Awards under this scheme did not meet their performance targets in respect of this financial year.

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The company became a member of the FTSE 250 Index on 24 December 2012 and the Committee believes that this is the most appropriate index against which to compare the performance of the company (prior to this the company had its primary listing on the Irish Stock Exchange). The chart on page 87 (Remuneration at a Glance) compares the performance of the company relative to the FTSE 250 Index over the ten-year period to 30 September 2020.

Change in Remuneration of the Directors Compared to Average Employee The table below shows the percentage changes of the remuneration paid to the executive and non-executive directors relative to the average overall percentage change for employees across the Group (on a full-time equivalent basis) between 30 September 2019 and 30 September 2020:

Percentage change from FY2019 Executive Directors Nigel Clerkin -14% Brendan McAtamney -19% Non-Executive Directors Peter Chambre1 -4% Shane Cooke1 7% Peter Gray -17% Myles Lee 3% Liz Shanahan2 n/a Erik van Snippenberg3 3% Lisa Ricciardi3 4% Linda Wilding -4% Average employee4 6% Performance of the Group (TSR)5 25.7%

1 Peter Chambre and Shane Cooke joined the Board on 1 February 2019. Shane Cooke became Chair of the Risk, Investment and Financing Committee on 28 February 2020. Figures for 2019 have been grossed up to provide comparable year on year change. 2 Liz Shanahan joined the Board on 1 February 2020. 3 Erik van Snippenberg and Lisa Ricciardi were appointed Designated NEDs for the purpose of UDG Healthcare’s workforce engagement program from 1 October 2019. 4 The increase in average employee remuneration is a reflection of currency movements, a change in employee mix arising from acquisitions and disposals, and the broad geographic spread of employees across 29 countries. 5 TSR performance for the period 1 October 2017 to 30 September 2020.

Chief Executive Pay Ratio The Chief Executive’s total remuneration for the year ended 30 September 2020 is 25.7 times that of the average employee for the same period. In addition, taking account of the U.K. Companies (Miscellaneous Reporting) Regulations, we are voluntarily disclosing a ratio of 31.6 times, being the ratio of Chief Executive’s total pay to the average U.K. employee’s total pay based on U.K. gender pay ratio data. The data on U.K. gender gap pay relates to FY2019, as FY2020 data was not required to be filed due to the Covid-19 pandemic.

Relative Spend on Pay The following table sets out the percentage change in adjusted profit before tax, dividends and overall expenditure on pay (as a whole across the organisation). Both profit and expenditure on pay have been impacted by changes in foreign exchange translation rates, between 2019 and 2020.

2020 2019 $’000 $’000 Change Adjusted profit before tax1 152,003 146,710 3.6% Dividends 42,084 40,325 4.4% Overall expenditure on pay 673,853 639,951 5.3%

1 In 2019, the adjusted profit before tax figure (2019: $150,261,000) was presented in accordance with IAS 18. This table is now presented in accordance with IFRS 15, with the 2019 figure updated accordingly.

UDG Healthcare plc 103 Annual Report and Financial Statements 2020 Governance

Report of the Directors

The directors present their report and audited financial statements for the year ended 30 September 2020.

Non-Financial Reporting Statement In compliance with the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017, our Non-Financial Reporting Statement is set out on page 60.

Dividends An interim dividend of $4.46 cent (2019: $4.46 cent) per share was paid on 15 September 2020. Subject to shareholder approval at the company’s AGM, it is proposed to pay a final dividend of $12.54 cent (2019: $12.34 cent) per share on 5 February 2021, to ordinary shareholders on the Company’s register at 5.00 p.m. on 8 January 2021, thereby giving a total dividend for the year of $17.00 cent (2019: $16.8 cent) per share.

Board of Directors Liz Shanahan and Anne Whitaker were appointed as independent non-executive directors on 1 February 2020 and 1 October 2020 respectively. Details of the Board and Committee composition are set out on pages 62 and 63.

In accordance with the recommendation contained in the 2018 U.K. Corporate Governance Code, the Board has adopted the practice of annual re-election for all directors, unless a director is stepping down from the Board.

Company Listing and Share Price At 30 September 2020, the Company’s shares were listed solely on the London Stock Exchange. The price of the Company’s shares ranged between £4.64 and £8.33 with an average price of £7.23 during the year ended 30 September 2020. The share price at the end of the 2020 financial year was £7.73 and the market capitalisation of the Group was £1.94 billion.

Substantial Interests The Company has received notification of the following interests of 3% or more in its ordinary share capital:

At 20 November 20201 At 30 September 2020 % of issued share % of issued share Number of capital (excluding Number of capital (excluding ordinary shares treasury shares) ordinary shares treasury shares) Allianz Global Investors GmbH 21,789,531 8.68% 21,789,531 8.68% Kabouter Management 14,216,105 5.66% 14,150,797 5.64% Blackrock Inc 13,462,033 5.36% 12,650,400 5.04% Fidelity Management & Research 10,296,058 4.10% 9,303,162 3.71% The Vanguard Group, Inc 9,856,533 3.93% 10,085,249 4.02% BNP Paribas Group 9,754,782 3.89% 9,754,782 3.89%

1 20 November is the last practicable date to verify interests before printing this report.

These entities have indicated that the shareholdings are not ultimately beneficially owned by them.

Authority to Allot Shares and Disapplication of Pre-emption Rights At the AGM held on 28 January 2020, the directors received the authority from shareholders to allot shares up to an aggregate nominal value representing approximately one-third of the issued share capital of the company and the power to disapply the statutory pre-emption provisions relating to the issue of new equity for cash. The disapplication is limited to the allotment of shares in connection with the exercise of share options, any rights issue, any open offer or other offer to shareholders and the allotment of shares up to an aggregate nominal value representing approximately 5% of the issued share capital of the company. The directors also received authority to allot up to 10% of the issued share capital of the company if the issue was related to an acquisition.

These authorities are due to expire at the company’s 2021 AGM. Consequently, at the forthcoming AGM, shareholders will be asked to renew these authorities until the date of the company’s AGM to be held in 2022 or the date 15 months after this forthcoming AGM, whichever is the earlier.

Purchase of Own Shares At the AGM held on 28 January 2020, authority was granted to the company, or any of its subsidiaries, to purchase a maximum aggregate of 10% of the company’s shares.

Special resolutions will be proposed at the company’s 2021 AGM to renew the authority of the company, or any of its subsidiaries, to purchase up to 10% of the issued share capital of the company and in relation to the maximum and minimum prices at which treasury shares (effectively shares purchased and not cancelled) may be re-issued off-market by the company. If granted, the authorities will expire on the earlier of the date of the company’s AGM in 2022 or the date 15 months after this forthcoming AGM.

The directors will only exercise the power to purchase shares if they consider it to be in the best interests of the company and its shareholders as a whole.

104 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Takeover Directive The Group’s principal banking and loan note facilities include provisions that, in the event of a change of control of the company, the Group could be obliged to repay the facilities together with penalties. Certain client and supplier contracts and joint venture arrangements also contain change of control provisions. Additionally, the company’s Long-Term Incentive Plan and Employee Share Option Plan contain change of control provisions which potentially allow for the acceleration of the exercisability of awards in the event that a change of control occurs with respect to the Company.

Political Donations No political donations which require disclosure in accordance with the Electoral Acts 1997 to 2012 were made by the Group during the year.

Accounting Records The directors believe that they have complied with the requirements of Sections 281 to 285 of the Companies Act 2014 with regard to maintaining adequate accounting records by employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The accounting records of the company are maintained at the Company’s registered office, 20 Riverwalk, Citywest Business Campus, Citywest, Dublin 24, Ireland.

Auditor The appointment of Ernst & Young as the company’s External Auditor was approved by shareholders on 7 February 2017. The re-appointment of Ernst & Young for the year ending 30 September 2021 will be subject to shareholder approval at the AGM to be held on 26 January 2021.

Disclosure of Information to the Auditor Each of the directors individually confirms that: • in so far as they are aware, there is no relevant audit information of which the Company’s auditor is unaware; and • they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of such information.

Annual General Meeting The AGM of the Company will be held on 26 January 2021. Your attention is drawn to the letter to shareholders and the Notice of AGM available on the Company’s website, www.udghealthcare.com, which sets out details of the matters which will be considered at the meeting.

Memorandum and Articles of Association The Company’s Memorandum and Articles of Association set out the objects and powers of the Company and may be amended by a special resolution passed by the shareholders at a general meeting of the Company. At the upcoming EGM of the Company on 26 January 2021, a number of changes to the Company’s Articles of Association will be recommended to shareholders for approval. These changes are required to facilitate the migration from CREST, being the central securities depositary currently used by UDG Healthcare for the electronic settlement of trading in its equity securities, to EB. The Notice of EGM will explain in detail the proposed changes.

Extraordinary General Meeting As noted earlier, UDG Healthcare is also holding an EGM on 26 January 2021. The purpose of the EGM is to obtain shareholder approval for various migration resolutions required to migrate the electronic settlement of trading in UDG’s equity securities from CREST to EB. Further details are available on page 75.

Corporate Governance Report For the purpose of section 1373 of Companies Act 2014, the Corporate Governance Report on pages 66 to 86, which contains the information required by section 1373(2) and the risk management disclosures on pages 46 to 51, are deemed to be incorporated into the Report of the Directors and form part of the corporate governance statement required by section 1373 of the Companies Act 2014.

A summary of the Group’s business model and strategy is set out on pages 14 to 19 and the Group’s sustainability policies and activities are summarised on pages 52 to 59. As UDG Healthcare plc is an Irish registered company, it is therefore not subject to the disclosure requirements contained in the U.K. Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013.

Directors Compliance Statement (Made in accordance with section 225 of the Companies Act, 2014).

The directors acknowledge that they are responsible for securing compliance by UDG Healthcare plc (the ‘Company’) with its relevant obligations as are defined in the Companies Act, 2014 (the ‘Relevant Obligations’).

The directors confirm that they have drawn up and adopted a compliance policy statement setting out the Company’s policies that, in the directors’ opinion, are appropriate to the company with respect to compliance by the Company with its relevant obligations.

UDG Healthcare plc 105 Annual Report and Financial Statements 2020 Governance (continued)

Directors Compliance Statement continued The directors further confirm the company has put in place appropriate arrangements or structures that are, in the directors’ opinion, designed to secure material compliance with its relevant obligations including reliance on the advice of persons employed by the Company and external legal and tax advisers as considered appropriate from time to time and that they have reviewed the effectiveness of these arrangements or structures during the financial year to which this report relates.

Statement of Directors’ Responsibilities The directors are responsible for preparing the Annual Report and the Group and company financial statements, in accordance with applicable laws and regulations.

Company law requires the directors to prepare Group and company financial statements each year. Under that law, the directors are required to prepare the Group financial statements in accordance with IFRS as adopted by the European Union and have elected to prepare the company financial statements in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2014.

Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and company and of their profit and loss for that period. In preparing each of the Group and company financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state that the financial statements comply with IFRS as adopted by the European Union as applied in accordance with the Companies Act 2014; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland to include a management report containing a fair review of the business and a description of the principal risks and uncertainties facing the Group.

The directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy, at any time, the assets, liabilities, financial position and profit and loss of the company, and which enable them to ensure that the financial statements of the Group comply with the provisions of the Companies Act 2014. The directors are also responsible for taking all reasonable steps to ensure such records are kept by subsidiaries which enable them to ensure that the financial statements of the Group comply with the provisions of the Companies Act, 2014. They are also responsible for safeguarding the assets of the company and the Group, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s and company’s website (www.udghealthcare.com). Legislation in Ireland concerning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement as Required by the Transparency Directive and U.K. Corporate Governance Code Each of the directors, whose names and functions are listed on pages 62 and 63 of this Annual Report, confirm that, to the best of each person’s knowledge and belief: • as required by the Transparency Regulations: — The Group financial statements, prepared in accordance with IFRS as adopted by the European Union and, in the case of the Company, as applied in accordance with the Companies Act 2014, give a true and fair view of the assets, liabilities, financial position of the Group and company as at 30 September 2020 and of the profit of the Group for the year then ended; — The Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Group and company, together with a description of the principal risks and uncertainties that they face; and • as required by the U.K. Corporate Governance Code: — The Annual Report and financial statements, taken as a whole, provide the information necessary to assess the Group’s performance, business model and strategy and is fair, balanced and understandable.

106 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Other Information Other information relevant to the Director’s Report may be found in the following sections of the Annual Report:

Information Location in the Annual Report Principal activities, business review and future developments Chair’s Statement; Chief Executive’s Review; Operations Reviews and Finance Review – pages 6 to 33. Results Financial Statements – pages 115 to 185. Corporate Governance Corporate Governance Report – pages 66 to 86. Directors’ remuneration, including the interests of the Directors’ Remuneration Report – pages 87 to 103. directors and secretary in the share capital of the company Principal Risks and Uncertainties Principal Risks and Uncertainties – pages 48 to 51. Key Performance Indicators Key Performance Indicators – pages 20 to 23. Financial risk management objectives and Financial Statements – Note 31. policies of the Group and the Company Company’s capital structure including a summary Group Statement of Changes in Equity – page 117; and of the rights and obligations attaching to shares Financial Statements – Notes 18, 20 and 21. Purchase of own shares Financial Statements – Note 18. Long Term Incentive Plan, share options Directors’ Remuneration Report – pages 87 to 103. and equity settled incentive schemes Non-Financial Reporting Statement Non-Financial Reporting Statement – page 60. Events after the balance sheet date Financial Statements – Note 35. Significant subsidiary undertakings Financial Statements – Note 43.

The Directors’ Report for the year ended 30 September 2020 comprises these pages and the sections of the Annual Report referred to under ‘Other information’ above, which are incorporated into the Directors’ Report by reference.

On behalf of the Board

S. Cooke B. McAtamney Director Director

1 December 2020

UDG Healthcare plc 107 Annual Report and Financial Statements 2020 Financial Statements

Financial Statements Independent Auditor’s Report 109 Group Income Statement 115 Group Statement of Comprehensive Income 116 Group Statement of Changes in Equity 117 Group Balance Sheet 118 Group Cash Flow Statement 119 Notes Forming Part of The Group Financial Statements 120 Company Statement of Comprehensive Income 175 Company Statement of Changes in Equity 176 Company Balance Sheet 177 Company Cash Flow Statement 178 Notes Forming Part of The Company Financial Statements 179 Financial Calendar 184 Additional Information 185 Glossary 189 Contacts for Shareholders 190

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Independent Auditor’s Report to the Members of UDG Healthcare plc

Opinion We have audited the financial statements of UDG Healthcare plc (‘the Company’) and its subsidiaries (‘the Group’) for the year ended 30 September 2020, which comprise the Group Income Statement, Group Statement of Comprehensive Income, Group Statement of Changes in Equity, Group Balance Sheet, Group Cash Flow Statement, the Company Statement of Comprehensive Income, the Company Statement of Changes in Equity, the Company Balance Sheet, the Company Cash Flow Statement and the Notes forming part of the Group and Company Financial Statements, including the Significant Accounting Policies set out in Note 1. The financial reporting framework that has been applied in their preparation is Irish Law and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2014.

In our opinion: • the Group financial statements give a true and fair view of the assets, liabilities and financial position of the Group as at 30 September 2020 and of its profit for the year then ended; • the Company Balance Sheet gives a true and fair view of the assets, liabilities and financial position of the Company as at 30 September 2020; • the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; • the Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2014; and • the Group financial statements and Company financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (‘ISAs (Ireland’)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group and Company in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including the Ethical Standard as applied to public interest entities issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Overview of Our Audit Approach

Key audit matters • Assessment of the carrying value of goodwill. • Revenue recognition. Audit scope • We performed an audit of the complete financial information of 11 (2019: 13) components and audit procedures on specific balances for a further 42 (2019: 41) components. • The components where we performed full or specific audit procedures accounted for 96% (2019: 99%) of Group Profit before tax, 96% (2019: 94%) of Revenue and 98% (2019: 96%) of Total assets. Materiality • Overall Group materiality of $5 million represents 5% of Group Profit before tax before non-recurring exceptional items. In our prior year audit, we adopted a materiality of $4.85 million based on 5% of Profit before tax before non-recurring exceptional items.

Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. There were no changes in key audit matters from our prior year auditor’s report.

UDG Healthcare plc 109 Annual Report and Financial Statements 2020 Independent Auditor’s Report (continued) to the Members of UDG Healthcare plc

Key observations communicated Risk Our response to the risk to the Audit Committee Assessment of the carrying value of goodwill We evaluated the determination of the Group’s seven Our observations included (2020: $583.1 million, 2019: $547.5 million) cash-generating units (CGUs), and flexed our audit the headroom level by CGU approach relative to our risk assessment and the level and movements in headroom Refer to the Audit Committee Report (page 81); of excess of value-in-use over the carrying amount over the prior year, the results Accounting policies (page 120); and Note 13 of the in each CGU. For all CGUs selected for detailed of our sensitivity analysis, Group Financial Statements (page 143). testing, in order to exhibit professional scepticism, and an analysis of the five-year we corroborated key assumptions in the models, in forecast EBIT growth rate The impairment review of goodwill, with a carrying particular growth rates, which we compared against when viewed against the value of $583.1 million, is considered to be a risk area historic rates achieved and external analyst forecasts. prior year impairment due to the size of the balance as well as the fact that model and the current year it involves significant judgement by management. Our team included valuations specialists who actual growth. Judgemental aspects include assumptions of future performed an independent assessment against external profitability, revenue growth, margins, and the market data of key inputs used by management in selection of appropriate discount rates, all of calculating appropriate discount rates. which may be subject to management override. We performed a sensitivity analysis on the discount rate and the long term growth rate, to assess the level of excess of value-in-use over the carrying value in place for each CGU based on reasonably possible movements in such assumptions.

We considered the adequacy of management’s disclosures in respect of impairment testing and whether the disclosures appropriately communicate the underlying sensitivities. Revenue recognition (2020: $1,279.2 million, We performed procedures on revenue at all relevant Our observations included an 2019: $1,298.5 million) in-scope locations, as outlined in further detail in outline of the range of audit the ‘Tailoring the scope’ section below. Detailed procedures performed, the Refer to the Audit Committee Report (page 81); transactional testing of revenue recognised throughout key judgements involved and Accounting policies (page 120); and Note 3 of the the year was performed, commensurate with the the results of our testing. Group Financial Statements (page 132). higher audit risk assigned to revenue. We also provided our The Group generates revenue from a variety of Dependent on the nature of the revenue recognised at assessment of the level geographies and across a large number of separate each location, we examined supporting documentation of subjectivity involved in legal entities spread across the Group’s segments. including customer contracts, statements of works or revenue related estimates. Revenue may be recognised in an incorrect financial purchase orders, sales invoices, and cash receipts. In period as a result of management accelerating revenue addition, we performed cut-off procedures, revenue recognition to achieve revenue targets or forecasts. journal testing and customer balance confirmations. In some locations data analytics procedures were Certain of the Group’s revenue streams involve the also performed. exercise of judgement, in particular the determination of stage of completion of individual contracts where Particular focus was applied at those locations where their duration spans accounting periods. revenue is recognised over time under a stage of completion methodology or where agent versus In addition, the Group must assess whether it acts principal considerations apply. In these circumstances as agent or principal in transactions and accordingly we applied professional scepticism when assessing the whether revenue should be recorded on a gross or judgements made by management. net basis. These judgements are important, given the significance of revenue as both a growth measure and a key determinant of profit in each period.

110 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Our Application of Materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group to be $5 million, which is approximately 5% of Profit before tax before non-recurring exceptional items. In our prior year audit, we adopted a materiality of $4.85 million based on 5% of Profit before tax before non-recurring exceptional items. Profit before tax before exceptional items is a key performance indicator for the Group and is also a key metric used by the Group in the assessment of the performance of management. We therefore considered Profit before tax before exceptional items, adjusted for recurring items, to be the most appropriate performance metric on which to base our materiality calculation as we consider it to be the most relevant performance measure to the stakeholders of the Group.

During the course of our audit, we reassessed initial materiality and amended it to reflect the actual reported performance of the Group in the year.

Performance Materiality The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 50% of our planning materiality, namely $2.5 million. We have set performance materiality at this percentage based on our assessment of the risk of misstatements, both corrected and uncorrected.

Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of performance materiality allocated to components was $0.5 million to $1.375 million.

Reporting Threshold An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $250,000, which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

An Overview of the Scope of Our Audit Report Tailoring the Scope Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each entity within the Group. Taken together, this enables us to form an opinion on the Group financial statements.

In determining those components in the Group at which we perform audit procedures, we utilised size and risk criteria in accordance with International Standards on Auditing (Ireland).

In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant accounts in the financial statements, of the 161 (2019: 161) reporting components of the Group, we selected 53 (2019: 54) components covering entities within Austria, Belgium, Canada, Germany, Ireland, Japan, the Netherlands, Portugal, Spain, Sweden, Turkey, the U.K. and the U.S., which represent the principal business units within the Group.

Of the 53 (2019: 54) components selected, we performed an audit of the complete financial information of 11 (2019: 13) components (‘full scope components’) which were selected based on their size or risk characteristics. For the remaining 42 (2019: 41) components (‘specific scope components’), we performed audit procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their risk profile.

The reporting components where we performed either full or specific scope audit procedures accounted for 96% (2019: 99%) of the Group’s Profit before tax, 96% (2019: 94%) of the Group’s Revenue and 98% (2019: 96%) of the Group’s Total assets.

UDG Healthcare plc 111 Annual Report and Financial Statements 2020 Independent Auditor’s Report (continued) to the Members of UDG Healthcare plc

An Overview of the Scope of Our Audit Report continued Tailoring the Scope continued For the current year, the full scope components contributed 92% (2019: 97%) of the Group’s Profit before tax, 67% (2019: 68%) of the Group’s Revenue and 77% (2019: 80%) of the Group’s Total assets. The specific scope component contributed 4% (2019: 2%) of the Group’s Profit before tax, 29% (2019: 26%) of the Group’s Revenue and 21% (2019: 16%) of the Group’s Total assets. The audit scope of these components may not have included testing of all significant accounts of the component but will have contributed to the coverage of significant accounts tested for the Group.

Of the remaining 108 (2019: 107) components that together represent 4% (2019: 1%) of the Group’s Profit before tax, none are individually greater than 1.5% (2019: 2%) of the Group’s Profit before tax. From these 108 (2019: 107) components, we selected 5 (2019: 8) components where we performed procedures at the component level that were specified by the Group audit team in response to specific risk factors and an additional 3 (2019: 3) components where we performed review procedures. For the other remaining components, we performed other procedures, including analytical review, testing of consolidation journals and intercompany eliminations, and foreign currency translation recalculations to respond to any potential risks of material misstatement to the financial statements.

The charts below illustrate the coverage obtained from the work performed by our audit teams.

Proft before tax Revenue Total assets

4%4% 4% 2% 21% 29%

67% 92% 77%

Full Full Full Specific Specific Specific Other Other Other

Involvement with Component Teams In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating under our instruction. Of the 11 (2019: 13) full scope components, audit procedures were performed on 1 (2019: 1) of these directly by the primary audit team and on 10 (2019: 12) by component audit teams. For the 41 (2019: 40) full scope and specific scope components, where the work was performed by component auditors, we determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.

The Group audit team typically complete a programme of planned visits which has been designed to ensure that senior members of the Group audit team, including the Audit Engagement Partner, visit a number of overseas locations each year. During the current year’s audit cycle, due to travel restrictions as a result of the Covid-19 pandemic, no physical visits were possible by the Group audit team. Instead the Group audit team performed virtual visits to key component teams in the U.S. and the U.K. These visits involved discussing the audit approach with the component team and any issues arising from their work, discussions with local management and attending closing meetings. The Group audit team interacted regularly with the component teams where appropriate during various stages of the audit, reviewed key working papers as deemed necessary and were responsible for the scope and direction of the audit process. This, together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.

Conclusions Relating to Principal Risks, Going Concern and Viability Statement We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (Ireland) require us to report to you whether we have anything material to add or draw attention to: • the disclosures in the annual report set out on pages 48 to 51 that describe the principal risks and explain how they are being managed or mitigated; • the directors’ confirmation set out on pages 46 and 47 in the annual report that they have carried out a robust assessment of the principal risks facing the Group and the parent company, including those that would threaten its business model, future performance, solvency or liquidity; • the directors’ statement set out on page 47 in the annual report about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and the directors’ identification of any material uncertainties to the Group’s and parent company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

112 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Conclusions Relating to Principal Risks, Going Concern and Viability Statement continued • whether the directors’ statement in relation to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or • the directors’ explanation set out on pages 46 and 47 in the annual report as to how they have assessed the prospects of the Group and the parent company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group and the parent company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Other Information The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions: • Fair, balanced and understandable (set out on page 106) – the statement given by the directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and parent company’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or • Audit committee reporting (set out on page 81) – the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee or is materially inconsistent with our knowledge obtained in the audit; or • Directors’ statement of compliance with the U.K. Corporate Governance Code (set out on page 66) – the parts of the directors’ statement required under the Listing Rules relating to the Company’s compliance with the U.K. Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 6.8.6 do not properly disclose a departure from a relevant provision of the U.K. Corporate Governance Code.

Opinions on Other Matters Prescribed by the Companies Act 2014 Based solely on the work undertaken in the course of the audit, we report that: • in our opinion, the information given in the Directors’ Report, other than those parts dealing with the non-financial statement pursuant to the requirements of S.I. No. 360/2017 on which we are not required to report in the current year, is consistent with the financial statements; and • in our opinion, the Directors’ Report, other than those parts dealing with the non-financial statement pursuant to the requirements of S.I. No. 360/2017 on which we are not required to report in the current year, has been prepared in accordance with the Companies Act 2014.

We have obtained all the information and explanations which we consider necessary for the purposes of our audit.

In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the Company statement of financial position is in agreement with the accounting records.

Matters on Which We Are Required to Report by Exception Based on the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report.

The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required by sections 305 to 312 of the Act are not made. We have nothing to report in this regard.

We have nothing to report in respect of section 13 of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (as amended), which require us to report to you if, in our opinion, the Company has not provided in the non-financial statement the information required by Section 5(2) to (7) of those Regulations, in respect of year ended 30 September 2019.

Respective Responsibilities Responsibilities of Directors for the Financial Statements As explained more fully in the directors’ responsibilities statement set on page 106, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

UDG Healthcare plc 113 Annual Report and Financial Statements 2020 Independent Auditor’s Report (continued) to the Members of UDG Healthcare plc

Respective Responsibilities continued Responsibilities of Directors for the Financial Statements continued In preparing the financial statements, the directors are responsible for assessing the Group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

Our approach was as follows: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group across the various jurisdictions globally in which the Group operates. We determined that the most significant are those that relate to the form and content of external financial and corporate governance reporting including company law, tax legislation, employment law and regulatory compliance with agencies such as the U.S. Food and Drug Administration. • We understood how UDG Healthcare plc is complying with those frameworks by making enquiries of management, internal audit, those responsible for legal and compliance procedures and the company secretary. We corroborated our enquiries through our review of the Group’s Compliance Policy, board minutes, papers provided to the Audit Committee and correspondence received from regulatory bodies. • We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by meeting with management, including within various parts of the business, to understand where they considered there was susceptibility to fraud. We also considered performance targets and the potential for management to influence earnings or the perceptions of analysts. Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing manual journals and were designed to provide reasonable assurance that the financial statements were free from fraud or error. • Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures included a review of board minutes to identify any noncompliance with laws and regulations, a review of the reporting to the audit committee on compliance with regulations, enquiries of internal general counsel and management.

A further description of our responsibilities for the audit of the financial statements is located on the IAASA’s website at: http://www.iaasa.ie/ getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsiblities_for_audit.pdf. This description forms part of our auditor’s report.

Other Matters Which We Are Required to Address We were appointed by the Audit Committee following the AGM held on 7 February 2017 to audit the financial statements for the year ended 30 September 2017 and subsequent financial periods. This is our fourth year of engagement.

The non-audit services prohibited by IAASA’s Ethical Standard were not provided to the Group or Company and we remain independent of the Group and Company in conducting our audit.

Our audit opinion is consistent with the additional report to the Audit Committee.

The Purpose of Our Audit Work and to Whom We Owe Our Responsibilities Our report is made solely to the Company’s members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Breffni Maguire for and on behalf of Ernst & Young Chartered Accountants and Statutory Audit Firm Dublin 1 December 2020

114 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Group Income Statement for the year ended 30 September 2020

2020 2019 Pre-exceptional Exceptional items Pre-exceptional Exceptional items items (Note 9) Total items (Note 9) Total Note $’000 $’000 $’000 $’000 $’000 $’000 Revenue 3 1,279,194 – 1,279,194 1,298,523 – 1,298,523 Cost of sales (881,023) (3,342) (884,365) (920,010) (7,372) (927,382) Gross profit 398,171 (3,342) 394,829 378,513 (7,372) 371,141 Selling and distribution expenses (201,596) – (201,596) (193,856) – (193,856) Administrative expenses (24,250) (864) (25,114) (21,840) (1,050) (22,890) Other operating expenses (41,716) (6,952) (48,668) (40,414) (33,631) (74,045) Other operating income 7 –5,2575,257 ––– Transaction costs 29 (2,064) – (2,064) (2,136) – (2,136) Share of equity accounted investments’ profit after tax 15 2,372 – 2,372 50 – 50 Operating profit 5 130,917 (5,901) 125,016 120,317 (42,053) 78,264 Finance income 6 19,021 – 19,021 16,171 4,143 20,314 Finance expense 6 (32,330) (3,539) (35,869) (24,301) – (24,301) Profit before tax 117,608 (9,440) 108,168 112,187 (37,910) 74,277 Income tax expense 8 (22,050) 6,723 (15,327) (20,951) 4,165 (16,786) Profit for the financial year 95,558 (2,717) 92,841 91,236 (33,745) 57,491

Profit attributable to: Owners of the parent 95,543 (2,717) 92,826 91,196 (33,745) 57,451 Non-controlling interests 23 15 – 15 40 – 40 95,558 (2,717) 92,841 91,236 (33,745) 57,491

Earnings per share Basic earnings per share – cent 11 37.00c 23.06c Diluted earnings per share – cent 11 36.85c 22.92c

UDG Healthcare plc 115 Annual Report and Financial Statements 2020 Group Statement of Comprehensive Income for the year ended 30 September 2020

2020 2020 2019 2019 Note $’000 $’000 $’000 $’000 Profit for the financial year 92,841 57,491 Other comprehensive income/(expense): Items that will not be reclassified to profit or loss: Remeasurement gain/(loss) on Group defined benefit schemes 30 2,307 (3,905) Deferred tax on Group defined benefit schemes: 28 (511) 846 1,796 (3,059) Items that may be reclassified subsequently to profit or loss: Foreign currency translation adjustment 9,578 (16,675) Group cash flow hedges: – Effective portion of cash flow hedges – movement into reserve (8,869) 21,637 – Effective portion of cash flow hedges – movement out of reserve 15,980 (12,414) Effective portion of cash flow hedges: 21 7,111 9,223 – Movement in deferred tax – movement into reserve 1,109 (2,704) – Movement in deferred tax – movement out of reserve (1,998) 1,551 Net movement in deferred tax 28 (889) (1,153) 15,800 (8,605)

Total other comprehensive income/(expense) 17,596 (11,664)

Total comprehensive income for the financial year 110,437 45,827

Total comprehensive income attributable to: Owners of the parent 110,405 45,791 Non-controlling interests 32 36 110,437 45,827

116 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Group Statement of Changes in Equity for the year ended 30 September 2020

Other Attributable Non- Equity share Share reserves Retained to owners of controlling Total capital premium (Note 21) earnings the parent interest equity $’000 $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 2019 14,678 198,978 (142,759) 829,459 900,356 207 900,563 Change in accounting policy (Note 34) – – – 1,924 1,924 – 1,924 Restated total equity at the beginning of the financial year 14,678 198,978 (142,759) 831,383 902,280 207 902,487 Profit for the financial year – – – 92,826 92,826 15 92,841 Other comprehensive income/(expense): Effective portion of cash flow hedges – – 7,111 – 7,111 – 7,111 Deferred tax on cash flow hedges – – (889) – (889) – (889) Translation adjustment – – 9,561 – 9,561 17 9,578 Remeasurement gain on defined benefit schemes – – – 2,307 2,307 – 2,307 Deferred tax on defined benefit schemes – – – (511) (511) – (511) Total comprehensive income for the year – – 15,783 94,622 110,405 32 110,437 Transactions with shareholders: New shares issued 57 756 – – 813 – 813 Issued in settlement of deferred consideration1 406,160– –6,200–6,200 Share-based payment expense – – 5,688 – 5,688 – 5,688 Dividends paid to equity holders – – – (42,084) (42,084) – (42,084) Release from share-based payment reserve ––(5,157)5,157––– At 30 September 2020 14,775 205,894 (126,445) 889,078 983,302 239 983,541

1 The Company issued 723,775 ordinary shares during the year as a part settlement of the deferred consideration for the acquisition of STEM Marketing which the Group acquired in the year ended 30 September 2017.

Other Attributable Non- Equity share Share reserves Retained to owners of controlling Total capital premium (Note 21) earnings the parent interest equity $’000 $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 2018 14,643 197,837 (135,955) 812,469 888,994 171 889,165 Profit for the financial year – – – 57,451 57,451 40 57,491 Other comprehensive income/(expense): Effective portion of cash flow hedges – – 9,223 – 9,223 – 9,223 Deferred tax on cash flow hedges – – (1,153) – (1,153) – (1,153) Translation adjustment – – (16,671) – (16,671) (4) (16,675) Remeasurement loss on defined benefit schemes – – – (3,905) (3,905) – (3,905) Deferred tax on defined benefit schemes – – – 846 846 – 846 Total comprehensive (expense)/income for the year – – (8,601) 54,392 45,791 36 45,827 Transactions with shareholders: New shares issued 351,141– –1,176–1,176 Share-based payment expense – – 4,720 – 4,720 – 4,720 Dividends paid to equity holders – – – (40,325) (40,325) – (40,325) Release from share-based payment reserve – – (2,923) 2,923 – – – At 30 September 2019 14,678 198,978 (142,759) 829,459 900,356 207 900,563

UDG Healthcare plc 117 Annual Report and Financial Statements 2020 Group Balance Sheet as at 30 September 2020

2020 2019 Note $’000 $’000 ASSETS Non-current Property, plant and equipment 12 194,040 176,305 Goodwill 13 583,101 547,520 Intangible assets 14 220,387 241,615 Equity accounted investments 15 50,316 10,216 Right of use assets 25 88,334 – Contract fulfilment assets 3 4,834 5,327 Derivative financial instruments 31 13,138 15,395 Deferred income tax assets 28 4,081 5,178 Employee benefits 30 8,592 7,636 Total non-current assets 1,166,823 1,009,192 Current Inventories 16 28,730 25,253 Trade and other receivables 17 312,117 370,350 Contract fulfilment assets 3 4,656 5,315 Cash and cash equivalents 246,045 135,228 Current income tax assets 4,013 4,385 Derivative financial instruments 31 1,604 8,878 Total current assets 597,165 549,409 Total assets 1,763,988 1,558,601

EQUITY Equity share capital 18 14,775 14,678 Share premium 20 205,894 198,978 Other reserves 21 (126,445) (142,759) Retained earnings 22 889,078 829,459 Equity attributable to owners of the parent 983,302 900,356 Non-controlling interests 23 239 207 Total equity 983,541 900,563

LIABILITIES Non-current Interest-bearing loans and borrowings 24 276,920 174,734 Lease liabilities 25 86,962 – Other payables 26 15,374 23,853 Provisions 27 56,978 74,193 Deferred income tax liabilities 28 33,002 39,263 Total non-current liabilities 469,236 312,043 Current Interest-bearing loans and borrowings 24 64 65,297 Lease liabilities 25 16,777 – Trade and other payables 26 236,403 246,685 Current income tax liabilities 13,586 14,380 Provisions 27 44,381 19,633 Total current liabilities 311,211 345,995 Total liabilities 780,447 658,038 Total equity and liabilities 1,763,988 1,558,601

On behalf of the Board

S. Cooke B. McAtamney Director Director 118 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Group Cash Flow Statement for the year ended 30 September 2020

2020 2019 Note $’000 $’000 Cash flows from operating activities Profit before tax 108,168 74,277 Finance income 6 (19,021) (16,171) Finance expense 6 32,330 24,301 Exceptional items 9 9,440 37,910 Operating profit 130,917 120,317 Share of equity accounted investments’ profit after tax (2,372) (50) Transaction costs 2,064 2,136 Depreciation of property, plant and equipment 12 22,841 23,130 Depreciation of right of use assets 25 17,162 – Loss/(profit) on disposal of property, plant and equipment 157 (571) Amortisation of intangible assets 14 41,716 40,414 Share-based payment expense 30 5,599 4,400 Decrease/(increase) in contract fulfilment assets 1,479 (3,786) Increase in inventories (2,691) (6,989) Decrease/(increase) in trade and other receivables 68,716 (5,814) (Decrease)/increase in trade payables, provisions and other payables (4,520) 23,105 Exceptional items paid (14,063) (29,267) Transaction costs paid (2,030) (2,534) Cash generated from operations 264,975 164,491 Interest paid (12,324) (9,910) Income taxes paid (21,995) (25,329) Net cash inflow from operating activities 230,656 129,252 Cash flows from investing activities Interest received 941 2,209 Purchase of property, plant and equipment (30,176) (27,016) Proceeds from disposal of property, plant and equipment 88 852 Investment in intangible assets – computer software (7,724) (12,475) Acquisitions of subsidiaries (net of cash and cash equivalents acquired) 29 (26,866) (69,078) Investment in equity accounted investees (37,500) – Deferred consideration paid (10,347) (24,333) Deferred contingent consideration paid 27 (3,585) (812) Disposal of subsidiary undertakings (net of cash and cash equivalents disposed) 7 9,924 – Net cash outflow from investing activities (105,245) (130,653) Cash flows from financing activities Proceeds from issue of shares (including share premium thereon) 813 1,176 Repayments of interest-bearing loans and borrowings 31 (63,406) (1,859) Proceeds from interest-bearing loans and borrowings 31 100,744 1,928 Principal elements of lease payments (2019: repayment of finance leases) 31 (17,098) (5) Dividends paid to equity holders of the Company (42,084) (40,325) Net cash outflow from financing activities (21,031) (39,085) Net increase/(decrease) in cash and cash equivalents 104,380 (40,486) Translation adjustment 6,437 (4,385) Cash and cash equivalents at beginning of year 135,228 180,099 Cash and cash equivalents at end of year 246,045 135,228 Cash and cash equivalents is comprised of: Cash at bank and short-term deposits 246,045 135,228

UDG Healthcare plc 119 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements

1. Significant Accounting Policies General Information UDG Healthcare plc (the ‘Company’) and its subsidiaries (together the ‘Group’) delivers advisory, communications, commercial, clinical and packaging services to the healthcare industry. The Company is a public limited company whose shares are publicly traded. It is incorporated and domiciled in Ireland. The Company’s registered number is 12244. The address of its registered office is 20 Riverwalk, Citywest Business Campus, Citywest, Dublin 24, Ireland.

The accounting policies applied in the preparation of the financial statements for the year ended 30 September 2020 are set out below.

Statement of Compliance The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Union (E.U.). The consolidated financial statements are also prepared in compliance with the Companies Act 2014 and Article 4 of the E.U. IAS Regulation. References to IFRS hereafter refer to IFRS adopted by the E.U. The individual financial statements of the company (company financial statements) have been prepared in accordance with IFRS as adopted by the E.U. and as applied in accordance with the Companies Act 2014. In accordance with Section 304 of the Companies Act 2014, the Company has availed of the exemption from presenting its individual profit and loss account to the AGM and from filing it with the Registrar of Companies (Note 19).

Basis of Preparation The Consolidated financial statements are presented in U.S. dollars ($), rounded to the nearest thousand ($’000), and are prepared on a going concern basis. The Company financial statements are presented in euro (€), rounded to the nearest thousand (€’000), and are prepared on a going concern basis. The consolidated financial statements have been prepared under the historical cost convention, except for the following which are measured at fair value: share-based payments, defined benefit pension plan assets and certain financial assets and liabilities including derivative financial instruments.

The preparation of financial statements in accordance with IFRS requires management to make certain judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The areas involving a higher degree of judgement and areas where assumptions and estimates are significant in relation to the consolidated financial statements are discussed in the significant accounting judgements and estimates note (Note 2).

The Group has assessed the principal risks and uncertainties facing the Group, including the Covid-19 pandemic and the impact it is having on economic activity. The Group is actively monitoring the impact of Covid-19 and has adopted cost control measures during the year to mitigate against the potential future impact of weaker demand in some of our businesses. These measures have included: the reduction of appropriate variable costs; tight control of discretionary expenditure; a recruitment freeze; and a temporary reduction in labour including reduced working hours and furloughing employees in the Group’s businesses that are primarily impacted. The Group implemented a restructuring programme during the year in the businesses most impacted by the Covid-19 pandemic (Note 9).

The financial impact of Covid-19 is not quantifiable due to the uncertainty over the length of time that the health crisis and related restrictions will continue to exist. The Group has continued to trade profitably during the year ended 30 September 2020. In assessing the potential impact on the Group, a number of scenarios have been modelled including where the restrictions imposed as a result of the pandemic and the downturn in economic activity continues for the period to the end of September 2021. Further possible downside risk has been incorporated into forecasts through sensitivity analysis.

The Group continues to have significant liquidity headroom on its existing financing facilities (Note 31). At 30 September, the Group has • unrestricted cash and cash equivalents of $246 million; • unused committed debt facilities of up to $245.9 million from a multi-currency revolving senior bank credit facility expiring in May 2025; and • bank overdraft facilities of $5.9 million renewable on an annual basis.

The Group has a low gearing with a net debt of $16.2 million and net debt to annualised EBITDA ratio of 0.1, excluding IFRS 16 lease liabilities. There are no material debt maturities until September 2023. In the financial year ending 30 September 2020, the Group generated a net cash inflow from operating activities of $230.7 million.

Having considered the Group’s forecasts, sensitivity analysis and the Group’s significant financial headroom, the directors have a reasonable expectation that the Company, and the Group as a whole, have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group and Company financial statements.

The parent company’s financial statements included on pages 168 to 176 are prepared using accounting policies which are consistent with the accounting policies applied to the consolidated financial statements by the Group. The accounting policies are set out below and they have also been applied consistently by all of the Group’s subsidiaries, joint ventures and associates to all years presented in these financial statements.

120 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

1. Significant Accounting Policies continued Basis of Consolidation The Group’s financial statements include the financial statements of the company and all of its subsidiaries and the Group’s interests in joint ventures and associates using the equity method of accounting.

New and Amended Standards and Interpretations Effective in the Year The Group adopted IFRS 16, ‘Leases’ with effect from 1 October 2019. The impact of adopting this standard is described further in Note 34. Other amendments to IFRS that became effective in the year did not have a material effect on the Group accounting policies and the Group or Company financial statements.

Standards and Interpretations Issued and Amended but Not Yet Effective or Early Adopted There have been some changes to IFRS issued that are not yet effective for the Group. However, they are either not expected to have a material effect on the Consolidated financial statements or they are not currently relevant for the Group.

Accounting for Subsidiaries, Joint Ventures and Associates Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed or has rights to variable returns from its involvement with the investee and has the ability to effect these returns through its power over the investee. In assessing control, potential voting rights that currently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the Group financial statements from the date that control commences until the date that control ceases.

Intragroup balances and any unrealised income and expenses arising from intragroup transactions are eliminated in preparing the Group financial statements. Unrealised gains arising from transactions with equity accounted joint ventures are eliminated against the investment to the extent of the Group’s interest. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent there is no evidence of impairment.

Joint ventures are those entities where the rights are to share in the net assets and over whose activities the Group has joint control, established by contractual arrangement and requiring unanimous consent for strategic, financial and operational decisions. An associate is an enterprise over which the Group has significant influence, but not control, through participation in the financial and operating policy decisions of the investee. Joint ventures and associates are included in the financial statements using the equity method of accounting, from the date that joint control and significant influence commence, until the date that joint control and significant influence cease. The Income Statement reflects in operating profit, the Group’s share of profit after tax of its equity accounted investments. The Group’s interest in the net assets of equity accounted investments is included in the Balance Sheet at an amount representing the Group’s share of the fair value of the identifiable net assets at acquisition plus the Group’s share of post-acquisition retained profits or losses and other comprehensive income less dividends received from the joint ventures and associates, goodwill arising on the investment and intercompany transactions that are eliminated.

Business Combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

The Group measures goodwill at the acquisition date as: • the fair value of the consideration transferred; plus • the recognised amount of any non-controlling interests in the acquiree; plus • if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less • the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities that the Group incurs in connection with completed business combinations are expensed as incurred.

Any deferred contingent consideration payable is measured at fair value at the acquisition date. If the deferred contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the deferred contingent consideration are recognised in profit or loss.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service.

UDG Healthcare plc 121 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

1. Significant Accounting Policies continued Investment in Subsidiary Undertakings Investment in subsidiaries in the Company financial statements are stated at cost less any accumulated impairment and are reviewed for impairment if there are any indicators that the carrying value may not be recoverable.

Intangible Assets – Acquired Intangible assets that are acquired by the Group in a business combination are stated at cost less accumulated amortisation and impairment losses, when separable or arising from contractual or other legal rights and when they can be measured reliably.

Amortisation is charged to the Income Statement on a straight-line basis over the estimated useful lives of the intangible assets. Intangible assets are amortised over the following range of periods: Customer relationships 6–15 years Trade names 2–15 years Technology 3–10 years Contract-based 6 months–1 year (contractual terms)

Intangible Assets – Computer Software Computer software, including computer software which is not an integrated part of an item of computer hardware, is stated at cost less any accumulated amortisation and any accumulated impairment losses. Cost comprises purchase price and any other directly attributable costs.

Computer software is recognised if it meets the following criteria: • An asset can be separately identified; • It is probable that the asset created will generate future economic benefits; • The development cost of the asset can be measured reliably; • It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and • The cost of the asset can be measured reliably.

Costs relating to the development of computer software for internal use are capitalised once the recognition criteria outlined above are met. Computer software is amortised over its expected useful life, which ranges from three to ten years, by charging equal instalments to the Income Statement from the date the assets are ready for use.

Property, Plant and Equipment Property, plant and equipment is reported at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Depreciation is calculated, on a straight-line basis on cost less estimated residual value, to write property, plant and equipment off over their anticipated useful lives using the following annual rates:

Land and buildings: – Freehold land not depreciated – Freehold buildings 2–7% Plant and equipment 10–20% Computer equipment 20–33% Motor vehicles 20% Assets under construction not depreciated

The residual value of assets, if not insignificant, and the useful life of assets are reassessed annually. Gains and losses on disposals are determined by comparing the consideration received with the carrying amount at the date of disposal and are included in operating profit.

Assets Held for Sale and Discontinued Operations Non-current assets and disposal groups that are expected to be recovered primarily through sale rather than continuing use are classified as held for sale. These assets are shown in the Balance Sheet at the lower of their carrying amount and fair value less any disposal costs. Impairment losses on initial classification as assets held for sale and subsequent gains or losses on remeasurement are recognised in the Income Statement.

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: • represents a separate major line of business or geographic area of operations; • is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or • is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re- presented as if the operation had been discontinued from the start of the comparative year.

122 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

1. Significant Accounting Policies continued Goodwill Goodwill arises on the acquisition of subsidiaries, and it represents the excess of the consideration transferred for the acquisition, the amount of any non-controlling interests in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets and liabilities acquired. When the fair value of the identifiable assets and liabilities acquired exceeds the cost of the acquisition, the values are reassessed and any remaining gain is recognised immediately in the Income Statement. Goodwill is subsequently carried at cost less accumulated impairment losses. Goodwill is allocated to the cash generating units (CGUs) that are expected to benefit from the combination’s synergies. This is the lowest level at which goodwill is monitored for internal management purposes.

Goodwill is subject to impairment testing on an annual basis, or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and fair value less costs of disposal. Any impairment is recognised immediately as an expense in the Income Statement and is not subsequently reversed.

Where goodwill forms part of a CGU and part of the operation within that CGU is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal. The goodwill disposed of on a partial disposal of a CGU is measured on the basis of the relative values of the operation disposed of and the portion of the CGU retained.

Impairment of Non-Financial Assets The carrying amounts of the Group’s non-financial assets, other than inventories (which are carried at the lower of cost and net realisable value) and deferred tax assets (which are recognised based on recoverability), are reviewed on an annual basis to determine whether there is any indication of impairment. If such an indication exists, then the asset is tested for impairment.

The recoverable amount of a non-financial asset or CGU is the greater of its fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets (the CGU). An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.

An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

All impairment losses are recognised in the Income Statement.

Impairment of Financial Assets The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Leases All leases are accounted for by recognising a right of use asset and a lease liability except for: • Leases of low value assets; and • Leases with a duration of 12 months or less.

Such leases are expensed to the Income Statement over the term of the lease.

UDG Healthcare plc 123 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

1. Significant Accounting Policies continued Leases continued Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, discounted using the rate inherent in the lease unless this is not readily determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. Incremental borrowing rates are calculated using a portfolio approach and are determined using observable inputs (corporate bond yields) based on the risk profile of the entity holding the lease, and the term and currency of the lease. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: • Lease payments made at or before the commencement of the lease; • Initial direct costs incurred; and • The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

Subsequent to initial measurement, lease liabilities increase as a result of interest charged on the balance outstanding and are reduced for lease payments made. Right of use assets are amortised on a straight line basis over the remaining term of the lease or over the remaining economic life of the asset if this is determined to be shorter than the lease term.

When the estimate of the term of any lease is revised, for example due to reassessing the probability of exercising an extension or termination option, the carrying amount of the lease liability is adjusted to reflect the payments to be made over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is also revised when the variable element of future lease payments dependent on a rate or index is revised, except in this case the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right of use asset, with the revised carrying amount being amortised over the remaining revised lease term.

When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification. If the renegotiation results in one or more additional assets being leased for an amount equal to the standalone price for the additional right of use assets obtained, the modification is accounted for as a separate lease in accordance with the above policy. In all other cases where the renegotiation increases the scope of the lease, the lease liability is remeasured using the discount rate applicable on the modification date, with the right of use asset being adjusted by the same amount. If the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right of use asset are reduced by the same proportion to reflect the partial or full termination of the lease with any difference recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right of use asset is adjusted by the same amount.

For contracts that include both a right to the Group to use an identified asset and require services to be provided to the Group by the lessor, the Group has elected to separate the non-lease components and exclude these from the lease liability calculations.

Accounting Policy Applied Before 1 October 2019 Leases of property, plant and equipment, where the Group assumes substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in interest-bearing loans and borrowings. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.

Leases where substantially all of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the term of the lease.

Inventories Inventories are measured at the lower of cost and net realisable value. Cost is based on the first in, first out principle and includes all expenditure which has been incurred in the normal course of business in bringing the products to their present location and condition. Net realisable value is the estimated selling price of inventory on hand in the ordinary course of business less all costs expected to be incurred in marketing, selling and distribution.

124 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

1. Significant Accounting Policies continued Foreign Currency Transactions in foreign currencies are translated into the functional currency of the related entity at the foreign exchange rate ruling at the date of the transaction. Non-monetary assets and liabilities that are measured based on historical cost are not subsequently re-translated. Non- monetary assets carried at fair value are subsequently remeasured at the exchange rate at the date fair value was determined. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into functional currencies at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Income Statement, except for qualifying cash flow hedges and a financial liability designated as a hedge of the net investment in a foreign operation, which are recognised directly in Other Comprehensive Income.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to U.S. dollars at the foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to U.S. dollars at the average exchange rate for the financial period. Foreign exchange differences arising on translation of foreign operations, including those arising on long-term intra-Group loans deemed to be quasi-equity in nature, are recognised in Other Comprehensive Income and accumulated in the foreign exchange reserve within Equity.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

Hedge of Net Investment in Foreign Operation Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in Other Comprehensive Income to the extent that the hedge is effective and are presented within Equity in the foreign exchange translation reserve. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged part of a net investment is disposed of, the associated cumulative amount in equity is transferred to profit or loss as an adjustment to the profit or loss on disposal.

Financial Guarantee Contracts Where the Group enters into financial guarantee contracts to guarantee the indebtedness of other parties, the Group considers these to be insurance arrangements and accounts for them as such. The Group treats the guarantee contract as a contingent liability until such time as it becomes probable that the Group will be required to make a payment under the guarantee.

Government Grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received, and the group will comply with all attached conditions. Grants that compensate the Group for expenses incurred are recognised in the Group Income Statement on a systematic basis in the same periods in which the related expenses are incurred and offset with the related expense. Grants that compensate the Group for the cost of an asset are recognised in the Group Income Statement as other income on a systematic basis over the useful life of the asset.

Revenue Recognition Revenue is recognised for identified contracts with customers. The Group’s revenue is derived from providing expert outsourcing services to healthcare companies through contract packaging services in the Sharp division, commercial and clinical outsourced services in Ashfield, and advisory and communications services in Ashfield. Revenue comprises the fair value of the consideration receivable for goods and services sold to third party customers in the ordinary course of business. It excludes sales-based taxes and is net of allowances for volume-based rebates and early settlement discounts.

It is the Group’s policy and customary business practice to receive a valid order from the customer in which each parties’ rights and payment terms are established. The Group assesses revenue contracts to determine the transaction price and performance obligations to be delivered to customers under contract. The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the stand-alone selling price. The Group’s contracts with customers generally include a single performance obligation and do not contain multiple performance obligations or bundled pricing arrangements.

UDG Healthcare plc 125 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

1. Significant Accounting Policies continued Revenue Recognition continued If the consideration in a revenue contract includes a variable amount (including volume rebates), the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. Accumulated experience is used to estimate and provide for discounts and rebates, using the most likely amount estimation method for contracts with a single-volume threshold and the expected value method for contracts with more than one volume threshold. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. In some of the Group’s revenue contracts, the Group receives short-term advances from its customers. Using the practical expedient in IFRS 15, the Group does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.

The Group recognises revenue as the amount of the transaction price expected to be received for goods and services supplied at a point in time or over time as the contractual performance obligations are satisfied and control passes to the customer. Revenue is recognised when a customer obtains control of a good or service and therefore has the ability to direct the use and obtain the benefits from the good or service. Revenue is recognised over time where (i) there is a continuous transfer of control to the customer; or (ii) there is no alternative use for any asset created and there is an enforceable right to payment for performance completed to date. Other revenue contracts are recognised at a point in time when control of the good or service transfers to the customer.

Where the contractual performance obligations are satisfied over time and revenue is recognised over time, the Group recognises revenue by reference to the estimated stage of completion of the performance obligations. The primary method of estimating stage of completion of over time revenue contracts is the input method of cost incurred to date over the estimated total cost to complete the revenue contract. Estimates of revenues, costs and stage of completion during the performance of a contract are revised where circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known. Where performance obligations are satisfied at a point in time, revenue is recognised when the risks and rewards of ownership have transferred to the customer. This is at the point where the product is delivered to the customer and there are no unfulfilled obligations that could affect the customer’s acceptance of the product.

In certain of the Group’s contracts where another party is involved in providing goods or services to its customer, the Group determines whether it is a principal or an agent in these transactions by evaluating the nature of its promise to the customer. The Group is a principal and records revenue on a gross basis if it controls the promised goods or services before transferring them to the customer. In circumstances where the Group’s role is only to arrange for another entity to provide the goods or services, then the Group is an agent and revenue is recognised at the net amount that it retains for its agency services. The Group has generally concluded that it is the principal in its revenue arrangements, except for the agency services disclosed in Note 3.

The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in Note 2.

Contract Fulfilment Assets For certain contracts, the Group incurs costs necessary to fulfil obligations under a contract after it is obtained but before transferring goods or services to the customer. Costs to fulfil a contract are recognised on the Group Balance Sheet where the costs relate directly to a contract, generate or enhance Group resources that will be used in satisfying future performance obligations, and the costs are expected to be recovered. Contract fulfilment assets are amortised to cost of sales on a systematic basis, consistent with the pattern of transfer of the goods or services to which the asset relates.

Exceptional Items The Group has applied an income statement format which seeks to highlight significant items within Group results for the year. Such items may include significant restructuring and onerous lease provisions, fair value movements in contingent consideration, profit or loss on disposal or termination of operations, litigation costs and settlements, termination benefits including settlement of share-based payments, profit or loss on disposal of investments and impairment of assets. The Group exercises judgement in assessing the particular items which, by virtue of their scale and nature, should be disclosed in the Income Statement and related notes as exceptional items. The Group believes that such a presentation provides a more helpful analysis as it highlights material items of a non-recurring nature.

Finance Income and Expense Finance income comprises interest income on funds invested, changes in the fair value of financial assets measured at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance expense comprises interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest rate method.

126 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

1. Significant Accounting Policies continued Employee Benefits Pension Obligations A defined contribution pension plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the Income Statement as incurred.

A defined benefit plan is a post-employment plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior years, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in Other Comprehensive Income. The Group determines the net interest expense/(income) on the net benefit liability/(asset) for the year by applying the discount rate used to measure the defined benefit obligation at the beginning of the year to the then net benefit liability/(asset), taking into account any changes in the net defined benefit liability/ (asset) during the year as a result of contributions and benefit payments. The discount rate applied is the yield at the balance sheet date on high- quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations.

Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in the profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Performance-Related Incentive Plans The Group recognises the present value of a liability for short-term employee benefits, including costs associated with performance-related incentive plans, in the Income Statement when an employee has rendered service in exchange for these benefits and a constructive obligation to pay those benefits arises.

Share-based Payment Transactions The Group operates a Long-Term Incentive Plan and share option scheme which allow executive directors and employees acquire shares in the Company. All schemes are equity settled arrangements under IFRS 2 Share-based Payments. The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share- based payment awards with market-based vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Income Tax Expense Income tax expense for the year comprises current and deferred tax. Taxation is recognised in the Income Statement except to the extent that it relates to items recognised directly in Equity or Other Comprehensive Income, in which case the related tax is recognised directly in Equity or Other Comprehensive Income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

If the deferred tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction does not affect accounting nor taxable profit or loss, it is not recognised. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same tax entity or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis.

UDG Healthcare plc 127 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

1. Significant Accounting Policies continued Segmental Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) who is responsible for allocating resources and assessing performance of the operating segments.

Cash and Cash Equivalents Cash and cash equivalents comprise cash balances and deposits, including bank deposits of less than six months’ maturity from the commencement date. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the Group and Company Cash Flow Statements.

Trade and Other Receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment.

The Group recognises a provision for impairment for trade receivables by applying the simplified approach permitted by IFRS 9 to apply a lifetime expected credit loss provision for trade receivables. Impairment losses on trade and other receivables are recognised in profit or loss. The approach to measuring the provision for impairment of trade receivables is outlined in Note 17.

Financial Instruments Trade receivables and debt instruments issued are initially recognised when they are originated. All other financial instruments are recognised when the Group becomes a party to the contractual provisions. Financial assets and financial liabilities are initially recognised at fair value. For financial instruments that are not measured at fair value through profit or loss, transaction costs are included in the initial measurement of the financial asset or financial liability.

Financial assets are classified as measured at: • Amortised cost; • Fair value through profit or loss (P&L); or • Fair value through other comprehensive income (OCI).

Financial assets are classified based on the business model for managing the financial assets and the contractual terms of the cash flows. Financial assets are only reclassified between categories where there has been a change in the business model for managing those assets. Financial assets are derecognised when the Group’s contractual rights to cash flows from the financial assets are extinguished, expire or transfer to a third party.

Financial liabilities are classified as measured at: • Amortised cost; or • Fair value through P&L.

Financial liabilities are derecognised when the Group’s obligations in the contracts are discharged, expire or are terminated. Where a financial liability is modified such that the cash flows of the modified liability are substantially different, the existing financial liability is derecognised and a new financial liability based on the modified terms is recognised at fair value. On recognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid is recognised in profit or loss.

Derivative Financial Instruments The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the Income Statement, except where derivatives qualify for hedge accounting, in which case recognition of any resultant gain or loss depends on the nature of the item being hedged, as set out below.

The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

128 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

1. Significant Accounting Policies continued Financial Instruments continued Cash Flow Hedges Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecasted transaction, the effective part of changes in the fair value of the derivative financial instrument is recognised directly in Other Comprehensive Income in the cash flow hedge reserve. When the forecasted transaction results in the recognition of a non-financial asset or non-financial liability, the associated cumulative gain or loss is removed from Equity and included in the initial cost or other carrying amount of the non-financial asset or liability. In other cases, the associated cumulative gain or loss is removed from equity and recognised in the Income Statement in the same period or periods during which the hedged item affects profit or loss. The ineffective part of any gain or loss is recognised immediately in the Income Statement.

When a hedging instrument expires, is sold, terminated, exercised or the entity revokes the designation of the hedge relationship but the forecasted hedged transaction is still expected to occur, then hedge accounting is ceased prospectively and the cumulative gain or loss at that point remains in Equity. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in Equity is reclassified immediately to the Income Statement.

Fair Value Hedges Where a derivative financial instrument is designated as a hedge of a change in the fair value of an asset or liability, gains or losses arising from the remeasurement of the hedging instrument to fair value are reported in the Income Statement. In addition, any changes in the fair value of the hedged item which is attributable to the hedged risk is adjusted against the carrying amount of the hedged item and reflected in the Income Statement. Where the adjustment is to the carrying amount of a hedged interest-bearing financial instrument, the adjustment is amortised to the Income Statement with the objective of achieving full amortisation by maturity.

Non-derivative Financial Instruments Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative financial instruments are initially recognised at fair value and subsequently measured at amortised cost.

A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control of substantially all risks and rewards of the asset. Purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are de-recognised if the Group’s obligations specified in the contract expire, are discharged or cancelled.

Interest-bearing Loans and Borrowings Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings, other than those accounted for under the fair value hedging model outlined above, are stated at amortised cost with any difference between cost and redemption value being recognised in the Income Statement over the period of the borrowings on an effective interest basis. Effective interest rate is calculated by taking into account any issue costs and any expected discount or premium on settlement.

Provisions A provision is recognised in the Balance Sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation which can be measured reliably. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Share Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Where share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.

UDG Healthcare plc 129 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

2. Significant Accounting Estimates and Judgements Revenue Recognition (Note 3) Revenue is recognised over time where (i) there is a continuous transfer of control to the customer; or (ii) there is no alternative use for any asset created and there is an enforceable right to payment for performance completed to date. Determining the stage of completion of contracts to recognise revenue involves estimation techniques, particularly where the contract duration spans accounting periods. The Group estimates stage of completion for fixed price contracts using stage of completion input methods of cost incurred to date as a proportion of the expected overall cost and effort to complete the performance obligations. The amount of in-progress and unbilled revenue as at 30 September is represented by the contract assets (accrued income) disclosed in Note 3. The weighted average estimated stage of completion of revenue contracts represented by contract assets and a sensitivity analysis of changes in weighted average stage of completion are outlined in Note 3.

Employee Benefits (Note 30) Retirement Benefit Obligations The estimation of and accounting for retirement benefit obligations involves judgements made in conjunction with independent actuaries. The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis. These involve estimates about uncertain future events based on the environment in different countries, including life expectancy of scheme members, future salary and pension increases and inflation as well as discount rates. The assumptions used in determining the net cost (income) for pensions include the discount rate. The assumptions used by the Group and a sensitivity analysis of a change in these assumptions are described in Note 30.

Share-based Payments The fair value of the Executive Share Option Scheme has been measured using the Black Scholes formula or the binomial formula. The fair value of the LTIP has been measured using the Black Scholes formula or the Monte Carlo Simulation. The inputs used in the measurement of the fair values at grant date are disclosed in Note 30.

Goodwill and Intangible Assets (Note 13 and Note 14) The Group annually tests whether there is any impairment in goodwill, in accordance with the accounting policy outlined in Note 1. Determining whether goodwill is impaired requires comparison of the value in use for the relevant CGUs to the net assets attributable to these CGUs. The value in use calculation is based on an estimate of future cash flows expected to arise from the CGUs and these are discounted to net present value using an appropriate discount rate. In calculating value in use, management judgement is required in forecasting cash flows of cash generating units, in determining terminal growth values and in calculating an appropriate discount rate. The goodwill impairment test is sensitive to these estimates. The Group has performed sensitivity analysis over the value in use calculation with respect to the key estimates. Sensitivities to changes in assumptions are detailed in Note 13.

Determining the useful life of intangible assets requires judgement. Management regularly reviews these useful lives and changes them if necessary to reflect current conditions. Changes in useful lives can have a significant impact on the amortisation charge for the year. The amortisation expense in the year by class of intangible asset and the weighted average remaining useful lives for each category of intangible assets are disclosed in Note 14.

Income Tax Expense (Note 8) The Group is subject to income tax in a number of jurisdictions, and significant judgement and degree of estimation is required in determining the worldwide provision for taxes. There are many transactions and calculations during the ordinary course of business, for which the ultimate tax determination is uncertain and the complexity of the tax treatment may be such that the final tax charge may not be determined until formal resolution has been concluded with the relevant tax authority which may take extended time periods to conclude. Also, the Group can be subject to uncertainties, including tax audits in any of the jurisdictions in which it operates, which are frequently complex taking many years to conclude. Amounts accrued for anticipated tax authority reviews are based on estimates of whether any additional amounts of tax may be due. Such estimates are determined based on a number of factors including management judgement, interpretation of relevant tax laws, correspondence with the tax authorities, advice from external tax professionals and a probability weighted expected value.

The ultimate tax charge may, therefore, be different from that which initially is reflected in the Group’s consolidated tax charge and provision and any such differences could have a material impact on the Group’s income tax charge and consequently financial performance. Where the final tax charge is different from the amounts that were initially recorded, such differences are recognised in the income tax provision in the period in which such determination is made.

130 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

2. Significant Accounting Estimates and Judgements continued Provisions and Deferred Contingent Consideration (Note 27) The amounts recognised as a provision are management’s best estimate of the expenditure required to settle present obligations at the balance sheet date. The outcome depends on future events which are by their nature uncertain. In assessing the likely outcome, management bases its assessment on historical experience and other factors that are believed to be reasonable in the circumstances. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Further details on provisions by category including the movement in provisions and expected maturity of provisions are outlined in Note 27.

Deferred contingent consideration are recognised in the Group Balance Sheet as provisions. The expected payment is determined separately in respect of each individual contingent consideration agreement taking into consideration the expected level of profitability of each acquisition. Deferred contingent consideration is recognised at fair value at the acquisition date and included in the costs of the acquisition. Deferred contingent consideration arrangements are based on earn-out agreements providing for future payment if certain profit and revenue (if applicable) targets of the acquiree are achieved. The fair value of deferred contingent consideration is estimated using an income-based approach of estimating the expected payment from forecasts of performance of acquired businesses and discounting the expected payment on the contingent consideration to present value using an appropriate discount rate. The movement in deferred contingent consideration in the year is outlined in Note 27. Further details on measurement of contingent consideration and sensitivities are disclosed in Note 31.

Leases (Note 25) Judgement is used in determining whether an extension or termination option will be exercised. Extension options and periods after termination options are only included in the lease term if the lease is reasonably certain to be extended or not terminated. All facts and circumstances that create an incentive to exercise an extension option or to not exercise a termination option are considered, including: • If there are significant penalties to terminate a lease, the Group is typically reasonably certain to not terminate the lease. • If the rental terms are favourable to current market terms, the Group is typically reasonably certain to extend the lease, or to not exercise a termination option. • If leasehold improvement assets are considered to have a significant remaining value, the Group is typically reasonably certain to extend the lease, or to not terminate the lease.

Other factors considered in determining whether a lease extension option or lease termination option will be exercised include historical lease durations, the availability of alternative similar properties in the market, and the costs and business disruption to replace the leased asset. The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the Group.

UDG Healthcare plc 131 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

3. Revenue Revenue recognised over time is recognised as services are rendered. Other revenue contracts are recognised at a point in time when control of the good or service transfers to the customer, primarily upon delivery to the customer. A disaggregation of revenue recognised from contracts with customers by service offering, timing of transfer of goods and services and geographical region is outlined below.

Timing of Revenue Recognition

2020 2019 Over time Point in time Total Over time Point in time Total $’000 $’000 $’000 $’000 $’000 $’000 Ashfield Communications & Advisory 411,989 – 411,989 383,253 – 383,253 Commercial & Clinical 477,430 2,033 479,463 564,614 2,382 566,996 Ashfield 889,419 2,033 891,452 947,867 2,382 950,249 Sharp 383,296 4,446 387,742 339,110 9,164 348,274 Group 1,272,715 6,479 1,279,194 1,286,977 11,546 1,298,523

Geographical Analysis of Revenue 2020 2019 $’000 $’000 Republic of Ireland 4,850 6,364 United Kingdom 212,304 251,962 North America 873,936 826,420 Rest of World 188,104 213,777 1,279,194 1,298,523

Revenue recognised under contracts where the Group was determined to be acting as an agent in the transactions during the year amounted to:

2020 2019 $’000 $’000 Revenue from agent transactions 859 1,644

Contract Assets

2020 2019 $’000 $’000 At 1 October 84,456 81,074 At 30 September 66,668 84,456 (Decrease)/increase (17,788) 3,382

A contract asset (accrued income) is the right to consideration in exchange for goods or services transferred to the customer. Where the Group transfers services to a customer over time before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration to date under the contract. Contract assets are presented within trade and other receivables (Note 17) on the Group Balance Sheet and are expected to be realised in less than one year. Contract assets have decreased during the year due to a combination of timing of billings and the impact of Covid-19 in Ashfield.

132 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

3. Revenue continued Contract Assets continued The weighted average stage of completion of contract assets for contracts where revenue is recognised over time and a sensitivity of contract assets for the estimation of stage of completion is outlined below.

2020 2019 Weighted average stage of completion of contract assets 69% 72%

2020 2019 $’000 $’000 1% increase in average stage of completion 2,791 2,927 1% decrease in average stage of completion (3,642) (3,853)

Contract Liabilities

2020 2019 $’000 $’000 At 1 October 80,444 62,517 At 30 September 73,376 80,444 (Decrease)/increase (7,068) 17,927

Non-current 15,374 16,223 Current 58,002 64,221 Total at 30 September 73,376 80,444

A contract liability (deferred income) is the obligation to transfer goods or services to a customer for which the Group has received consideration from the customer. Where the customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract. Contract liabilities are presented within trade and other payables (Note 26) on the Group Balance Sheet.

Of the contract liability balance as at 1 October 2019, $64,789,000 has been recognised as revenue in the current year (2019: $55,904,000). The Group expects that long term contract liabilities will be recognised as revenue over an average period of five years (2019: four years).

Assets Recognised from Costs to Fulfil a Contract Contract fulfilment assets arise primarily from contracts in Sharp for customer specific production facility installation or modification on Sharp’s premises, and typically include costs for engineering, commissioning, qualification and validation. Contract fulfilment assets are amortised on a straight-line basis over the term of the specific contracts they relate to, consistent with the pattern of recognising the associated revenue. The amortisation cost is recorded within cost of sales. The movement in contract fulfilment assets in the year was:

2020 2019 $’000 $’000 At 1 October 10,642 7,005 Assets recognised from costs incurred to fulfil contracts 10,985 11,483 Amortisation as costs of provided services during the year (12,465) (7,623) Translation adjustment 328 (223) At 30 September 9,490 10,642

Non-current 4,834 5,327 Current 4,656 5,315 Total at 30 September 9,490 10,642

UDG Healthcare plc 133 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

4. Segmental Information Segmental information is presented in respect of the Group’s operating segments and geographical regions. The operating segments are based on the Group’s management and internal reporting structure. Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Due to the nature of certain liabilities and assets, which are not segment specific, they have not been allocated to a segment but rather have been disclosed in aggregate immediately after the relevant segment note. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one year and is comprised of property, plant and equipment, goodwill and intangible assets.

UDG Healthcare plc is a leading global healthcare services provider. IFRS 8 Operating Segments requires the reporting information for operating segments to reflect the Group’s management structure and the way financial information is regularly reviewed by the Group’s CODM, which the Group has defined as Brendan McAtamney (Chief Executive Officer). The segmental information of the business as presented corresponds with these requirements. Operating profit before transaction costs, amortisation of acquired intangible assets and exceptional items (adjusted operating profit) represents the key measure utilised in assessing the performance of operating segments.

The Group’s operations are divided into the following operating segments:

Ashfield – Ashfield is a global leader in commercialisation services for the pharmaceutical and healthcare industry, operating across three broad areas of activity: advisory, communications and commercial & clinical services. It focuses on supporting healthcare professionals and patients at all stages of the product life cycle. The division provides field and contact centre sales teams, healthcare communications, patient support, audit, advisory, medical information and event management services to over 300 healthcare companies.

Sharp – Sharp is a global leader in contract packaging and clinical trial packaging services for the pharmaceutical and biotechnology industries, operating from state-of-the-art facilities in the U.S. and Europe.

No operating segments have been aggregated for disclosure purposes.

Geographical Analysis The Group operates in four principal geographical regions being the Republic of Ireland, the United Kingdom, North America and the Rest of World. In presenting information on the basis of geographical segment, segment revenue is based on the geographical location of the Group’s subsidiaries. Segment assets are based on the geographical location of the assets.

Inter-segment revenue is not material and thus not subject to disclosure.

Revenue and Results – 2020

Ashfield Sharp Group total 2020 2020 2020 $’000 $’000 $’000 Segment revenue 891,452 387,742 1,279,194 Adjusted operating profit* 105,154 60,158 165,312 Amortisation of acquired intangibles (30,782) (1,549) (32,331) Transaction costs (380) (1,684) (2,064) Exceptional items (7,732) 1,831 (5,901) Operating profit 66,260 58,756 125,016 Finance income 19,021 Finance expense (35,869) Profit before tax 108,168 Income tax expense (15,327) Profit for the financial year 92,841

* Excluding amortisation of acquired intangibles, transaction costs and exceptional items.

134 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

4. Segmental Information continued Geographical Analysis continued Revenue and Results – 2019

Ashfield Sharp Group total 2019 2019 2019 $’000 $’000 $’000 Segment revenue 950,249 348,274 1,298,523 Adjusted operating profit* 110,010 44,830 154,840 Amortisation of acquired intangibles (30,837) (1,550) (32,387) Transaction costs (2,119) (17) (2,136) Exceptional items (26,377) (15,676) (42,053) Operating profit 50,677 27,587 78,264 Finance income 20,314 Finance expense (24,301) Profit before tax 74,277 Income tax expense (16,786) Profit for the financial year 57,491

* Excluding amortisation of acquired intangibles, transaction costs and exceptional items.

Segmental Assets and Liabilities – 2020

Ashfield Sharp Group total 2020 2020 2020 $’000 $’000 $’000 Segment assets 1,137,281 481,245 1,618,526 Unallocated assets 145,462 1,763,988 Segment liabilities (376,463) (114,063) (490,526) Unallocated liabilities (289,921) (780,447)

Segmental Assets and Liabilities – 2019

Ashfield Sharp Group total 2019 2019 2019 $’000 $’000 $’000 Segment assets 1,083,654 408,954 1,492,608 Unallocated assets 65,993 1,558,601 Segment liabilities (309,747) (90,036) (399,783) Unallocated liabilities (258,255) (658,038)

Unallocated assets and liabilities comprises amounts relating to interest-bearing loans and borrowings, derivative financial instruments, current income tax, deferred income tax, employee benefits and cash held at Group.

UDG Healthcare plc 135 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

4. Segmental Information continued

Ashfield Sharp Group total 2020 2020 2020 Other segmental information $’000 $’000 $’000 Depreciation of property, plant and equipment 7,584 15,257 22,841 Depreciation of right of use assets 14,732 2,430 17,162 Capital expenditure1 43,906 34,607 78,513 Amortisation of acquired intangibles 30,782 1,549 32,331 Amortisation of computer software 7,529 1,856 9,385 Share-based payment expense 3,930 1,669 5,599

Ashfield Sharp Group total 2019 2019 2019 Other segmental information $’000 $’000 $’000 Depreciation 7,619 15,511 23,130 Capital expenditure1 106,663 22,814 129,477 Amortisation of acquired intangibles 30,837 1,550 32,387 Amortisation of computer software 6,431 1,596 8,027 Share-based payment expense 3,308 1,092 4,400

1 Capital expenditure comprises acquisition of computer software, property, plant and equipment, goodwill and intangible assets.

The results and assets of equity accounted investments are included within the individual business segment in which they are included for internal reporting.

The following represents a geographical analysis of the segment information in accordance with IFRS 8, which requires disclosure of information about the country of domicile (Republic of Ireland) and countries with material revenue and non-current assets.

Republic of Ireland United Kingdom North America Rest of World Group total 2020 2020 2020 2020 2020 Geographical analysis $’000 $’000 $’000 $’000 $’000 Revenue 4,850 212,304 873,936 188,104 1,279,194 Total assets 130,493 415,881 1,015,054 202,560 1,763,988 Capital expenditure1 1,688 9,245 63,245 4,335 78,513

Republic of Ireland United Kingdom North America Rest of World Group total 2019 2019 2019 2019 2019 Geographical analysis $’000 $’000 $’000 $’000 $’000 Revenue 6,364 251,962 826,420 213,777 1,298,523 Total assets 37,466 449,991 882,931 188,213 1,558,601 Capital expenditure1 954 30,341 91,509 6,673 129,477

1 Capital expenditure comprises acquisition of computer software, property, plant and equipment, goodwill and intangible assets.

136 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

5. Statutory and Other Information 2020 2019 $’000 $’000 Operating profit is stated after charging/(crediting): Depreciation of property, plant and equipment 22,841 23,130 Depreciation of right of use assets 17,162 – Loss/(profit) on disposal of property, plant and equipment 157 (571) Amortisation of intangible assets: – Amortisation of acquired intangibles 32,331 32,387 – Amortisation of computer software 9,385 8,027 Employee benefits 673,853 639,951 Operating lease rentals: – Land and buildings – 15,205 – Other assets – 9,307 Foreign exchange loss/(gain) 3,228 (58)

Details of directors’ remuneration, pension entitlements and interests in share options are set out in the Directors’ Remuneration Report.

Auditor’s Remuneration

2020 2019 $’000 $’000 Fees payable to the Group auditors and to member firms of the Group auditors are as follows: Description of services Audit services: – Group 1,649 1,412 – Company 9 9 Other assurance services: – Group – – – Company – – Tax advisory services: – Group – – – Company – – Other non-audit services: – Group 41 34 – Company – – 1,699 1,455

Group audit consists of fees payable for the consolidated and statutory audits of the Group and its subsidiaries.

Included in the above fees are the following amounts payable to the Group auditors outside of Ireland:

2020 2019 $’000 $’000 Audit services 760 472 Other assurance services – – Tax advisory services – – Other non-audit services – – 760 472

UDG Healthcare plc 137 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

6. Finance Income and Expense

2020 2019 $’000 $’000 Finance income Income arising from cash deposits 927 2,280 Fair value adjustments to guaranteed senior unsecured loan notes 2,000 1,097 Foreign currency gain on retranslation of guaranteed senior unsecured loan notes 15,980 12,414 Net finance income on defined benefit pensions 114 380 19,021 16,171

Finance expense Interest on overdrafts (87) (60) Interest on bank loans and other loans: – Wholly repayable within 5 years (8,588) (7,196) – Wholly repayable after 5 years (576) (1,893) Interest on lease liabilities (2019: Interest on finance leases) (3,174) (2) Unwinding of discount on deferred consideration – (124) Unwinding of discount on provisions (1,925) (1,515) Fair value adjustments to fair value hedges (2,000) (1,097) Fair value of cash flow hedges transferred to equity (15,980) (12,414) (32,330) (24,301) Net finance expense, pre-exceptional items (13,309) (8,130) Finance (expense)/income relating to exceptional items (Note 9) (3,539) 4,143 Net finance expense (16,848) (3,987)

7. Disposal of Subsidiaries On 10 January 2020 the Group completed the disposal of Ashfield Pharmacovigilance, which was part of the Ashfield operating segment, based in the U.S. The following tables summarise the consideration received, profit on disposal and the net cash flow arising on the disposal:

2020 $’000 Consideration Cash consideration received 10,924 Total consideration received 10,924

Assets and liabilities disposed of Property, plant and equipment 1,004 Intangible assets 198 Goodwill 1,450 Deferred tax assets 213 Trade and other receivables 2,165 Trade and other payables (529) Cash and cash equivalents 1,000 Net assets disposed of 5,501

Gain on disposal Total consideration received 10,924 Net assets disposed of (5,501) Disposal costs (166) Net profit on disposal of subsidiaries 5,257 Net cash flow from disposal of subsidiaries Cash and cash equivalents received 10,924 Cash and cash equivalents disposed of (1,000) Net cash inflow from disposal of subsidiaries 9,924

138 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

7. Disposal of Subsidiaries continued The cash inflow from disposal of subsidiaries is presented within cash flows from investing activities in the Group Cash Flow Statement. The net gain on disposal is presented as an exceptional item (Note 9) and presented as other operating income in the Income Statement.

8. Income Tax Expense

2020 2019 Recognised in the income statement $’000 $’000 Current income tax Ireland Adjustment in respect of prior years 5,843 1,206 Current year income tax on profit for the year (2,729) (2,981) 3,114 (1,775) Overseas Adjustment in respect of prior years 1,427 1,007 Current year income tax on profit for the year (25,492) (22,387) (24,065) (21,380) Total current income tax expense (20,951) (23,155) Deferred income tax Origination and reversal of temporary differences: Property, plant and equipment (1,253) (401) Leases 444 – Intangible assets 9,522 7,084 Tax deductible goodwill (5,966) (5,202) Employee benefits 335 301 Short-term temporary differences 2,542 4,587 Total deferred income tax credit 5,624 6,369 Income tax expense (15,327) (16,786)

Factors Affecting the Tax Charge in Future Years The total tax charge for future periods will be affected by changes to applicable tax rates in force in jurisdictions in which the Group operates and other changes in tax legislation applicable to the Group’s businesses.

2020 2020 2019 2019 Reconciliation of effective tax rate % $’000 % $’000 Profit before tax 108,168 74,277 Taxation based on Irish corporation tax rate 12.5 (13,521) 12.5 (9,285) Expenses not deductible for tax purposes (1,135) (2,497) Loss on disposal of subsidiary not deductible 657 – Tax on income from joint ventures 212 6 Losses recognised/(not utilised) 2,715 (1,069) Differences in foreign tax rates (10,536) (5,481) Exceptional tax credit (Note 9) 4,420 – Adjustments in respect of prior years 1,861 1,540 (15,327) (16,786)

The Group’s share of joint ventures’ profit after tax includes a tax charge of $905,000 (2019: $27,000).

2020 2019 Recognised in other comprehensive income $’000 $’000 Deferred tax Defined benefit schemes (511) 846 Cash flow hedges (889) (1,153) (1,400) (307)

UDG Healthcare plc 139 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

9. Exceptional Items Exceptional items are those which, in management’s judgement, should be disclosed separately by virtue of their nature or amount. These exceptional items are separately presented in the Income Statement caption to which they relate. An analysis of exceptional items is disclosed below.

2020 2019 Note $’000 $’000 Restructuring costs and other (a) 10,219 12,481 Sharp Europe rationalisation (b) (2,477) 10,445 Impairment of intangible assets (c) – 3,744 Impairment of property, plant and equipment (c) 861 389 Impairment of right of use assets (c) 2,555 – Gain on disposal of subsidiary (d) (5,257) – Legal costs and settlements (e) – 14,994 Net operating exceptional items 5,901 42,053 Deferred contingent consideration (f) 3,539 (4,143) Net exceptional items before taxation 9,440 37,910 Exceptional items tax credit (g) (4,420) – Tax effect of exceptional items (2,303) (4,165) Net exceptional items after taxation 2,717 33,745

(a) Restructuring Costs and Other During the year, the Group implemented a restructuring of its Ashfield operations due to market conditions arising from the Covid-19 pandemic, primarily within the Meetings and Events business and the STEM business. Restructuring costs and other includes redundancy costs of $7,583,000, consulting and legal costs of $945,000, onerous contracts and termination costs of $1,857,000 and an accelerated share-based payment expense of $89,000. There was a $255,000 release of restructuring costs relating to the previous year. In the prior year, the Group incurred restructuring costs primarily relating to Ashfield Commercial & Clinical in Europe. A tax credit of $2,082,000 arose in respect of exceptional restructuring costs.

(b) Sharp Europe Rationalisation The Group completed the rationalisation of Sharp’s European operations during the year with the closure of the plant at Oudehaske, Netherlands. Following a successful closure programme, the cost of the rationalisation was lower than previously estimated resulting in an exceptional credit in the year. The tax impact of the exceptional rationalisation credit amounted to $619,000.

(c) Impairment of Assets The Group incurred a one-off expense of $861,000 arising from the impairment of property, plant and equipment and $2,555,000 arising from the impairment of right of use assets. The impairment arose following a review of leased offices in Ashfield in the U.S. which resulted in a consolidation of leased space during the year. In the prior year, an impairment of intangible assets arose relating to software in Ashfield. A tax credit of $881,000 arose in respect of the impairment of assets.

(d) Gain on Disposal of Subsidiary In January 2020, Ashfield disposed of Ashfield Pharmacovigilance, a U.S. based subsidiary that provides safety and risk management services supporting healthcare organisations. The business was not considered core to Ashfield’s operations. As further outlined in Note 7, the disposal resulted in a gain of $5,257,000. The related tax charge was $41,000.

(e) Legal Costs and Settlements In the prior year, the Group recognised $14,994,000 million of an exceptional charge after tax primarily relating to the settlement of a claim relating to the Group’s disposal of United Drug in 2016 and other legal costs relating to protecting an Ashfield trademark.

(f) Deferred Contingent Consideration Following review of expected performance of acquired business against earn-out targets, there was an increase in deferred contingent consideration of $3,539,000 primarily in respect of Putnam Associates in Ashfield. In the prior year, there was a release of contingent consideration of $4,143,000 following a review of earn-out targets.

(g) Exceptional Tax Credit In the measurement of the Group’s current tax liabilities, there are transactions and calculations, for which the ultimate tax determination can be both complex and uncertain. During the year, the Group recognised a credit of $4,420,000 on the remeasurement of current tax liabilities as a consequence of the resolution of a historic uncertain tax position.

140 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

10. Dividends – Equity Shares

2020 2019 $’000 $’000 Dividends paid Final dividend for 2019 of 12.34 $ cent (2018: 11.75 $ cent) per share 30,887 29,224 Interim dividend for 2020 of 4.46 $ cent (2019: 4.46 $ cent) per share 11,197 11,101 Total dividends 42,084 40,325

The directors have proposed a final dividend for 2020 of 12.54 $ cent per share (2019: 12.34 $ cent per share) amounting to $31,486,000 (2019: $30,887,000), subject to shareholder approval at the upcoming AGM. The total dividend for the year, subject to shareholder approval, is 17.00 $ cent (2019: 16.80 $ cent) per share.

The final dividend for 2020 has not been provided for in the Balance Sheet at 30 September 2020, as there was no present obligation to pay the dividend at year end.

11. Earnings Per Ordinary Share

Total Total 2020 2019 $’000 $’000 Profit attributable to owners of the parent 92,826 57,451 Adjustment for amortisation of acquired intangible assets (net of tax) 22,808 25,302 Adjustment for transaction costs (net of tax) 1,841 2,098 Adjustment for exceptional items (net of tax) 2,717 33,745 Adjusted profit attributable to owners of the parent1 120,192 118,596

2020 2019 Number of shares Number of shares Weighted average number of shares 250,881,495 249,110,546 Number of dilutive shares under options 1,027,597 1,551,905 Weighted average number of shares, including share options 251,909,092 250,662,451

2020 2019 Basic earnings per share – $ cent 37.00 23.06 Diluted earnings per share – $ cent 36.85 22.92 Adjusted basic earnings per share – $ cent 47.91 47.61 Adjusted diluted earnings per share – $ cent 47.71 47.31

1 Adjusted profit attributable to equity holders of the parent from continuing operations is stated before the amortisation of acquired intangible assets ($22.8 million, net of tax), transaction costs ($1.8 million, net of tax) and exceptional items ($2.7 million, net of tax).

Non-GAAP information The Group reports certain financial measurements that are not required under International Financial Reporting Standards (IFRS) which represent the generally accepted accounting principles (GAAP) under which the Group reports. The Group believes that the presentation of these non-GAAP measurements provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors 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 and to measure executive management’s performance-based remuneration.

Treasury shares have been excluded from the weighted average number of shares in issue used in the calculation of earnings per share. 1,202,686 (2019: 1,371,292) anti-dilutive share options have been excluded from the calculation of diluted earnings per share.

The average market value of the Company’s shares for the purposes of calculating the dilutive effect of share options was based on quoted market prices for the year.

UDG Healthcare plc 141 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

12. Property, Plant and Equipment

Land and Plant and Motor Computer Assets under buildings equipment vehicles equipment construction Total $’000 $’000 $’000 $’000 $’000 $’000 Year ended 30 September 2020 Opening net book amount 84,088 82,160 38 5,530 4,489 176,305 Additions in year 913 27,815 22 3,450 2,525 34,725 Arising on acquisition – 4,917 – 79 – 4,996 Depreciation charge (4,085) (15,175) (5) (3,576) – (22,841) Impairment –(861)–––(861) Disposals in year (7) (209) – (29) – (245) Disposal of subsidiaries – (757) – (247) – (1,004) Transfer from intangible assets – – – 114 – 114 Reclassifications (4,600) 6,261 (36) 1,140 (2,765) – Translation adjustment 1,431 1,113 – 99 208 2,851 At 30 September 2020 77,740 105,264 19 6,560 4,457 194,040

At 30 September 2020 Cost or deemed cost 120,632 204,309 68 29,711 4,457 359,177 Accumulated depreciation (42,892) (99,045) (49) (23,151) – (165,137) Net book amount 77,740 105,264 19 6,560 4,457 194,040

Land and Plant and Motor Computer Assets under buildings equipment vehicles equipment construction Total $’000 $’000 $’000 $’000 $’000 $’000 Year ended 30 September 2019 Opening net book amount 71,531 81,674 152 6,039 20,197 179,593 Additions in year 1,172 19,125 – 3,620 3,234 27,151 Arising on acquisition – 1,423 – 70 – 1,493 Depreciation charge (4,622) (14,595) (1) (3,912) – (23,130) Impairment (1,254) (2,326) – (385) – (3,965) Disposals in year (13) (221) – (47) – (281) Transfer to intangibles – (1,070) – (115) 112 (1,073) Reclassifications 19,078 (355) (109) 440 (19,054) – Translation adjustment (1,804) (1,495) (4) (180) – (3,483) At 30 September 2019 84,088 82,160 38 5,530 4,489 176,305

At 30 September 2019 Cost or deemed cost 122,568 166,807 127 25,824 4,489 319,815 Accumulated depreciation (38,480) (84,647) (89) (20,294) – (143,510) Net book amount 84,088 82,160 38 5,530 4,489 176,305

142 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

13. Goodwill

2020 2019 $’000 $’000 At 1 October 547,520 515,954 Arising on acquisition (Note 29) 23,810 49,622 Measurement period adjustment (Note 29) 267 (1,451) Disposals of subsidiaries (Note 7) (1,450) – Translation adjustment 12,954 (16,605) At 30 September 583,101 547,520

Goodwill arises on acquisitions. The goodwill acquired during the year relates to the acquisition of Canale Communications and the Macungie packaging facility (Note 29).

Goodwill acquired through business combinations has been allocated to CGUs for the purpose of impairment testing. The CGUs represent the lowest level within the Group at which associated goodwill is monitored for management purposes and are not bigger than the segments determined in accordance with IFRS 8 Operating Segments. Significant under-performance in any of the Group’s major CGUs may give rise to a material write-down of goodwill which would have a substantial impact on the Group’s income and equity. Following a reorganisation of reporting and management structures in Ashfield Commercial & Clinical, there are a total of seven (2019: eight) CGUs identified.

The carrying value of goodwill and the number of CGUs are analysed between the operating segments in the Group below.

2020 Number 2019 Number $’000 of CGUs $’000 of CGUs Ashfield 492,886 5 459,818 6 Sharp 90,215 2 87,702 2 583,101 7 547,520 8

In accordance with IAS 36 Impairment of Assets, the CGUs to which significant amounts of goodwill (greater than 10% of the total value) have been allocated are as follows:

2020 2019 $’000 $’000 Ashfield Healthcare Communications Group1 228,804 202,876 Ashfield Advisory Group 118,131 115,628 Ashfield Commercial & Clinical Europe Group2 73,232 –

1 Includes goodwill relating to Canale Communications which was acquired during the year (Note 29). 2 Ashfield Commercial & Clinical Europe Group is a new CGU arising during the year following a reorganisation of reporting and management structures in Ashfield.

All other units account for individually less than 10% of the total carrying value of goodwill and are not considered individually significant.

Impairment Testing of CGUs Containing Goodwill The Group tests goodwill for impairment on an annual basis or more frequently if there is an indication that the goodwill may be impaired. This testing involves determining the CGU’s value in use and comparing this to the carrying amount of the CGU. Where the value in use exceeds the carrying value of the CGU, the asset is not impaired, but where the carrying amount exceeds the value in use, an impairment loss is recognised to reduce the carrying amount of the CGU to its value in use. Estimates of value in use are key judgemental estimates in the financial statements. A number of key assumptions have been made as a basis for the impairment tests. In each case, these key assumptions have been made by management reflecting past experience and are consistent with relevant external sources of information.

Value in Use Calculations Where a value in use approach is used to assess the recoverable amount of the CGU, calculations use pre-tax cash flow projections based on financial budgets and projections covering a five-year period. The cash flow forecasts used for the value in use computations exclude incremental profits and other cash flows derived from planned acquisition activities. For individual CGUs, the cash flow forecasts employed in the computations are based on a four-year plan, which has been approved by senior management. The remaining year’s forecasts have been extrapolated using the estimated long-term growth rates.

UDG Healthcare plc 143 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

13. Goodwill continued Value in Use Calculations continued A long-term growth rate reflecting the long-term economic growth rates for the countries of operation of the CGUs have been applied to the year five cash flows. The long-term growth rates applied to value in use calculations range from 1.9% to 2.2% (2019: 2.0% to 2.2%). The value in use of each CGU is calculated using a discount rate representing the Group’s estimated weighted average cost of capital, adjusted to reflect risks associated with each CGU including country specific risks. The pre-tax discount rates range from 9.1% to 9.7% (2019: 9.4% to 10.3%). The pre- tax discount rates and long-term growth rates used for significant CGUs are detailed in the table below.

Discount rate (pre-tax) Long-term growth rate 2020 2019 2020 2019 Ashfield Healthcare Communications Group 9.1% 9.6% 2.1% 2.1% Ashfield Advisory Group 9.6% 9.7% 2.1% 2.1% Ashfield Commercial & Clinical Europe Group 9.7% – 1.9% –

Following the introduction of IFRS 16 Leases in the year commencing 1 October 2019, the lease right-of-use assets are included in the carrying amount of the CGUs for impairment testing. The cost of leasing is included in the determination of the discount rates based on a weighted average cost of capital specific to each CGU. As the cost of leasing is lower than the cost of equity, this results in lower discount rates compared to the prior year. The implementation of IFRS 16 Leases does not impact on the result of the goodwill impairment test.

The key assumptions used for the value in use computations are that the markets will grow in accordance with publicly available data, the Group will maintain its current market share, gross margins will be maintained at current levels and overheads will increase in line with expected levels of inflation. The cash flow forecasts assume appropriate levels of capital expenditure and investment in working capital to support the growth in individual CGUs.

Impairment There was no impairment charge arising from the Group’s annual goodwill impairment test.

Additional Sensitivity Analysis The Group has conducted a sensitivity analysis on each of the CGUs by applying the following scenarios: • Decreasing revenue growth forecasts by 3%; • Decreasing operating profit margins by 1.5%; • Increasing discount rates by 1%; and • Reducing long-term growth rates by 1%.

The Group has also performed a sensitivity analysis on the Group’s CGUs assuming the Covid-19 pandemic and the restrictions imposed as a result continues until 30 September 2021 with normal growth assumed thereafter. A reasonably possible change in any of the key assumptions would not cause the carrying amount to exceed the recoverable amount in any of the significant CGUs.

14. Intangible Assets

Computer Customer software relationships Trade names Contract-based Technology Total $’000 $’000 $’000 $’000 $’000 $’000 Year ended 30 September 2020 Opening net book amount 52,525 131,997 50,316 1,653 5,124 241,615 Additions in year 8,653––––8,653 Arising on acquisition 209 2,550 3,440 130 – 6,329 Disposal of subsidiaries (198)––––(198) Amortisation of acquired intangible assets –(21,740)(8,192)(1,238)(1,161)(32,331) Amortisation of computer software (9,385)––––(9,385) Transfer to property, plant and equipment (114)––––(114) Translation adjustment 2,660 2,463 511 18 166 5,818 At 30 September 2020 54,350 115,270 46,075 563 4,129 220,387

At 30 September 2020 Cost or deemed cost 87,404 250,959 93,074 18,227 18,351 468,015 Accumulated amortisation (33,054) (135,689) (46,999) (17,664) (14,222) (247,628) Net book amount 54,350 115,270 46,075 563 4,129 220,387

144 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

14. Intangible Assets continued

Computer Customer software relationships Trade names Contract-based Technology Total $’000 $’000 $’000 $’000 $’000 $’000 Year ended 30 September 2019 Opening net book amount 53,798 127,283 50,381 1,442 8,634 241,538 Additions in year 12,475––––12,475 Arising on acquisition 10 28,070 7,565 3,091 – 38,736 Amortisation of acquired intangible assets – (19,544) (6,827) (2,860) (3,156) (32,387) Amortisation of computer software(8,027)––––(8,027) Transfer from property, plant and equipment1,073––––1,073 Impairment charge (3,744)––––(3,744) Translation adjustment (3,060) (3,812) (803) (20) (354) (8,049) At 30 September 2019 52,525 131,997 50,316 1,653 5,124 241,615

At 30 September 2019 Cost or deemed cost 75,278 251,549 88,451 18,246 17,721 451,245 Accumulated amortisation (22,753) (119,552) (38,135) (16,593) (12,597) (209,630) Net book amount 52,525 131,997 50,316 1,653 5,124 241,615

The amortisation charge for the year has been charged to other operating expenses in the Income Statement. Intangible assets are amortised over their useful lives, ranging from six months to 15 years, depending on the nature of the asset.

Computer Customer Weighted average remaining amortisation period (years) software relationships Trade names Contract-based Technology At 30 September 2020 5.8 5.3 5.6 0.5 3.6 At 30 September 2019 6.5 6.2 6.5 0.4 1.6

15. Equity accounted investments The Group’s interest in its joint ventures and associates, all of which are unlisted, is set out below.

Joint ventures Associates Total $’000 $’000 $’000 At 30 September 2018 9,729 – 9,729 Share of profit after tax 50 – 50 Translation adjustment 437 – 437 At 30 September 2019 10,216 – 10,216 Investment in associate –37,50037,500 Share of profit after tax 1,709 663 2,372 Translation adjustment 228 – 228 At 30 September 2020 12,153 38,163 50,316

Joint Ventures

Name Nature of business Segment Group share Investment CMIC Ashfield Co., Ltd Contract sales outsourcing Ashfield 49.99% Ordinary shares

CMIC Ashfield Co., Ltd has its registered office at 7–10–4 Nishi-Gotanda, Shinagawa-ku, Tokyo, Japan.

UDG Healthcare plc accounts for CMIC Ashfield Co. Limited as a joint venture on the basis of contractual arrangements which establish joint control between the Group and the remaining shareholders. These contractual arrangements outline the requirement for all significant strategic, financial and operational decisions to be jointly approved by both parties to the respective agreements.

UDG Healthcare plc 145 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

15. Equity accounted investments continued 2020 2019 $’000 $’000 Joint venture balance sheet (100%) Non-current assets 4,527 3,317 Cash and cash equivalents 9,337 2,562 Other current assets 16,977 18,074 Non-current liabilities (3,320) (2,490) Current liabilities (14,660) (12,235) Net assets 12,861 9,228

Carrying value of Group’s interest in joint ventures: Group’s equity interest 49.99% 49.99% Group’s share of net assets 6,429 4,613 Goodwill 5,724 5,603 Carrying value of Group’s interest in joint ventures 12,153 10,216

2020 2019 $’000 $’000 Revenue 80,322 71,705 Expenses, net of tax (76,903) (71,605) Profit after tax 3,419 100 Group’s equity interest 49.99% 49.99% Group’s share of profit after tax 1,709 50

At 30 September 2020, the Group’s share of authorised but not contracted for capital expenditure of joint ventures was $nil (2019: $nil).

Associates

Name Nature of business Segment Group share Investment Berkshire Sterile Manufacturing, LLC

Berkshire Sterile Manufacturing, LLC has its registered office Contract sterile Sharp 25% Cumulative convertible at 480 Pleasant Street, Lee, MA, 01238, packaging preference shares1 United States of America. and manufacturing Magir Limited (trading as Medicare)

Magir Limited has its registered office at 44 Montgomery Road, Healthcare and retail n/a 25% Ordinary shares Belfast, BT6 9ML, United Kingdom. organisation

1 Preferences shares provide for 25% voting rights and representation on the Board of Directors of BSM. They are convertible into ordinary shares.

On 24 July 2020, the Group acquired a 25% interest in Berkshire Sterile Manufacturing (‘BSM’), a Massachusetts based sterile packaging and manufacturing services business, for $37,500,000. This investment expands Sharp’s capabilities into sterile fill/finish manufacturing and is highly complementary to its existing clinical trial, packaging and related services.

BSM and Magir Limited are accounted for as associates due to the extent of the Group’s investment, representation on the Board of Directors and contractual arrangements that provide the Group with significant influence over the financial and operating policy decisions of the associates.

The investment in Magir Limited was reclassified as an investment in associate in 2020, having been presented as held for sale in 2019. The investment was reclassified from held for sale as it is not highly probable that a sale will be concluded within a year. The investment in Magir is not material to present summary financial information as the investment is carried at $nil.

146 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

15. Equity accounted investments continued Associates continued Set out below is the summarised financial information for the Group’s investment in associate, BSM.

2020 $’000 Associate balance sheet (100%) Non-current assets 49,675 Cash and cash equivalents 12,351 Other current assets 7,410 Non-current liabilities (17,804) Current liabilities (10,424) Net assets 41,208

Carrying value of Group’s interest in associates: Group’s share of net assets1 10,786 Goodwill 27,377 Carrying value of Group’s interest in associates 38,163

2020 $’000 Revenue 10,511 Amortisation of intangible assets arising on investment (3,361) Expenses, net of tax (6,432) Profit after tax 718 Group’s share of profit after tax1 663

1 The Group’s effective share of net assets of the associate was 26% at 30 September 2020 owing to the cumulative preference dividend arising on the Group’s investment in cumulative convertible preference shares in BSM. The preference shares and dividend rank above ordinary shares. The Group’s share of profit of associate includes share of profit arising from cumulative preference dividend.

16. Inventories

2020 2019 $’000 $’000 Raw materials 26,106 22,908 Work in progress 2,564 2,307 Finished goods 60 38 28,730 25,253

In 2020, raw materials, work in progress and finished goods recognised as cost of sales amounted to $79,921,000 (2019: $81,341,000).

Estimates of net realisable value are based on the most reliable evidence, taking into consideration product obsolescence or perishability (which are generally low given the nature of the Group’s inventory) and the purpose for which the inventory is held. Current replacement cost does not differ materially from historical cost.

17. Trade and Other Receivables

2020 2019 $’000 $’000 Current Trade receivables 203,224 231,239 Other receivables 22,769 29,223 Contract assets (Note 3) 66,668 84,456 Prepayments 19,456 25,432 312,117 370,350

UDG Healthcare plc 147 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

17. Trade and Other Receivables continued The maximum exposure to credit risk for trade receivables at the reporting date by geographical region was:

2020 2019 $’000 $’000 Geographical analysis of risk Republic of Ireland 1,166 2,156 United Kingdom 15,939 20,687 North America 139,365 144,801 Rest of World 46,754 63,595 203,224 231,239

The Group trades with a large number of clients on varied credit terms. There is no material concentration of credit risk with regard to individual clients included in Group trade receivables. Details of how the Group manages credit risk are set out in Note 31.

The Group applies a lifetime expected credit loss provision for trade receivables, as permitted by IFRS 9. Trade receivables have been grouped based on shared credit risk characteristics and the days past due for the purposes of measuring the expected credit losses. The expected credit loss rates are based on the historical settlement profiles of sales and the credit losses experienced. Credit loss rates are adjusted to reflect current and forward-looking information where there is evidence that these factors affect the ability of customers to settle the amounts due. The Group has considered the general economic climate including the impact of the Covid-19 pandemic in its determination of the expected credit loss provision. Impairments are recorded in the Group Income Statement on identification.

The ageing of trade receivables, under the IFRS 9 expected credit loss model, at 30 September 2020 and 2019 was:

2020 2019 Weighted Weighted Gross value Impairment Net average loss Gross value Impairment Net average loss $’000 $’000 $’000 rate $’000 $’000 $’000 rate Not past due 178,143 (841) 177,302 0.5% 188,237 (412) 187,825 0.2%

Past due 0–30 days 16,513 (206) 16,307 1.2% 29,264 (462) 28,802 1.6% 31–90 days 6,326 (235) 6,091 3.7% 10,108 (488) 9,620 4.8% 91–180 days 3,737 (499) 3,238 13.4% 3,714 (531) 3,183 14.3% +181 days 1,758 (1,472) 286 83.7% 3,260 (1,451) 1,809 44.5% Past due 28,334 (2,412) 25,922 8.5% 46,346 (2,932) 43,414 6.3% Total trade receivables 206,477 (3,253) 203,224 1.6% 234,583 (3,344) 231,239 1.4%

The movement in the impairment provision in respect of trade receivables during the year was as follows:

2020 2019 $’000 $’000 At beginning of the year 3,344 2,656 Acquisitions in year 45 43 Bad debts written off during the year (325) (103) Impairment loss recognised during the year 73 875 Translation adjustment 116 (127) At end of year 3,253 3,344

148 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

18. Equity Share Capital

Number of Number of shares 2020 shares 2019 Equity share capital 2020 $’000 2019 $’000 Authorised Ordinary shares of €0.05 each 367,471,934 21,605 367,471,934 21,605 Redeemable ordinary shares of €0.05 each 7,528,066 492 7,528,066 492 375,000,000 22,097 375,000,000 22,097 Allotted, called up and fully paid Ordinary shares of €0.05 each 251,085,412 14,283 249,347,507 14,186 Redeemable ordinary shares of €0.05 each 7,528,066 492 7,528,066 492 In issue at 30 September 258,613,478 14,775 256,875,573 14,678

The redeemable ordinary shares do not rank for dividends and do not carry voting rights. The redeemable ordinary shares can be redeemed by the Company with the agreement of holders of such shares. All redeemable ordinary shares are held by the Group and are treated as treasury shares in accordance with the requirements of company law.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to attend, speak, ask questions and have one vote per share at general meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

Number of ordinary shares Number of redeemable ordinary shares 2020 2019 2020 2019 In issue at beginning of year 249,347,507 248,712,639 7,528,066 7,528,066 Exercise of share options 1,014,130 634,868 – – Issued in settlement of deferred consideration 723,775 – – – In issue at end of year 251,085,412 249,347,507 7,528,066 7,528,066

19. Profit Attributable to UDG Healthcare plc The profit recorded in the financial statements of the holding Company for the year ended 30 September 2020 was €179,397,000 (2019: €78,986,000). As permitted by Section 304 (2) of the Companies Act 2014, the Income Statement of the Company has not been separately presented.

20. Share Premium

2020 2019 $’000 $’000 At 1 October 198,978 197,837 Premium arising on shares issued 756 1,141 Issued in settlement of deferred consideration 6,160 – At 30 September 205,894 198,978

21. Other Reserves

Capital Cash flow Share-based Foreign Treasury redemption hedge payment exchange shares reserve Total $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 2019 (7,816) 16,605 (144,219) (7,676) 347 (142,759) Effective portion of cash flow hedges 7,111––––7,111 Deferred tax on cash flow hedges (889)––––(889) Share-based payment expense –5,688–––5,688 Release from share-based payment reserve –(5,157)–––(5,157) Translation adjustment ––9,561––9,561 At 30 September 2020 (1,594) 17,136 (134,658) (7,676) 347 (126,445)

Included in the cash flow hedging reserve is an amount of $726,000 (2019: $360,000) relating to the cost of hedging for currency basis spreads on the Group’s cross currency interest rate swaps, which the Group has elected to recognise in the cost of hedging reserve.

UDG Healthcare plc 149 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

21. Other Reserves continued

Capital Cash flow Share-based Foreign Treasury redemption hedge payment exchange shares reserve Total $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 2018 (15,886) 14,808 (127,548) (7,676) 347 (135,955) Effective portion of cash flow hedges 9,223––––9,223 Deferred tax on cash flow hedges(1,153)––––(1,153) Share-based payment expense – 4,720 – – – 4,720 Release from share-based payment reserve – (2,923) – – – (2,923) Translation adjustment – – (16,671) – – (16,671) At 30 September 2019 (7,816) 16,605 (144,219) (7,676) 347 (142,759)

Cash Flow Hedge Reserve The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.

Share-based Payment Reserve This reserve comprises amounts expensed in the Income Statement in connection with share-based payments, net of transfers to retained earnings on the exercise, lapsing or forfeiting of share awards.

Foreign Exchange Reserve The currency translation reserve comprises all foreign exchange differences arising from the translation of the net assets of the Group’s non-U.S. dollar-denominated operations, including the translation of the profits of such operations from the average exchange rate for the year to the exchange rate at the balance sheet date.

The reserve also includes all foreign exchange differences arising from the translation of liabilities that hedge the Group’s net investment in foreign operations.

Capital Redemption Reserve The capital redemption reserve is a legal reserve which has arisen from the company buying back and cancelling its ordinary shares.

Treasury Shares Dublin Drug Company Limited During the year ended 30 September 1998, the Group acquired Dublin Drug Company Limited for consideration of $13,118,000 which at the date of its acquisition held 2,225,438 ordinary shares in UDG Healthcare plc which had a nominal value of $790,000 and at the date of their acquisition represented 9.84% of the Company’s issued ordinary share capital. Subsequent to the acquisition, these ordinary shares were converted into redeemable ordinary shares.

On 29 January 2002, 1,150,000 of these redeemable ordinary shares were redeemed at their market value both out of the proceeds of a placing in the market of 1,150,000 new ordinary shares and the distributable reserves of the Company, in accordance with Article 3A of the Articles of Association of the Company and Section 207 of the Companies Act 1990, and immediately thereafter were cancelled.

During the year ended 30 September 2003, the Company’s shareholders approved a seven for one split of the ordinary share capital and redeemable ordinary share capital of the Company. At 30 September 2018, Dublin Drug Company Limited continued to hold 7,528,066 redeemable ordinary shares and they have been treated as treasury shares in the Balance Sheet in accordance with the requirements of company law.

Summary At 30 September 2020, 7,528,066 (2019: 7,528,066) treasury shares were held by the Group, representing 2.91% (2019: 2.93%) of the issued ordinary and redeemable ordinary share capital of the Company.

150 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

22. Retained Earnings

2020 2019 $’000 $’000 At 1 October 829,459 808,647 Change in accounting policy (Note 34) 1,924 3,822 Restated total equity at the beginning of the financial year 831,383 812,469 Net income recognised directly in the Income Statement 92,826 57,451 Net income recognised directly in Other Comprehensive Income: – Remeasurement gain/(loss) on Group defined benefit schemes 2,307 (3,905) – Deferred tax on Group defined benefit schemes (511) 846 Dividends paid to equity holders (42,084) (40,325) Release from share-based payment reserve 5,157 2,923 At 30 September 889,078 829,459

23. Non-controlling Interests

2020 2019 $’000 $’000 At 1 October 207 171 Share of profit for the financial year 15 40 Translation adjustment 17 (4) At 30 September 239 207

The non-controlling interests relate to Sellxpert AG, a company registered in Switzerland. The Group acquired a 50% shareholding in Sellxpert AG on 10 July 2017.

24. Interest-bearing Loans and Borrowings

2020 2019 $’000 $’000 Non-current Guaranteed senior unsecured notes 276,920 174,704 Finance leases – 30 276,920 174,734 Current Guaranteed senior unsecured notes – 64,862 Bank borrowings 64 416 Finance leases – 19 64 65,297

Interest-bearing loans and borrowings are repayable as follows:

2020 2019 $’000 $’000 Bank borrowings, overdrafts and guaranteed senior unsecured notes Within one year 64 65,278 After one but within two years (740) (362) After two but within five years 166,103 117,215 After five years 111,557 57,851 Finance leases Within one year – 19 After one but within two years – 30 276,984 240,031 Non-current 276,920 174,734 Current 64 65,297 276,984 240,031

UDG Healthcare plc 151 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

24. Interest-bearing Loans and Borrowings continued In September 2010, the Group completed a $130 million debt financing in the U.S. Private Placement Market. The notes were repaid in full in September 2020.

2020 2019 $’000 $’000 5.25% Series ‘B’ guaranteed senior unsecured notes, 2020 – 65,000 – 65,000

In September 2013, the Group completed a $140 million and €23 million debt financing in the U.S. Private Placement Market. The following notes remain outstanding:

2020 2019 $’000 $’000 4.48% Series ‘A’ guaranteed senior unsecured notes, 2023 105,000 105,000 4.59% Series ‘B’ guaranteed senior unsecured notes, 2025 35,000 35,000 140,000 140,000

2020 2019 €’000 €’000 3.45% Series ‘C’ guaranteed senior unsecured notes, 2023 12,000 12,000 3.50% Series ‘D’ guaranteed senior unsecured notes, 2025 11,000 11,000 23,000 23,000

In September 2014, the Group completed a €10 million debt financing in the U.S. Private Placement Market. The following notes remains outstanding:

2020 2019 €’000 €’000 2.64% Series ‘A’ guaranteed senior unsecured notes, 2026 10,000 10,000 10,000 10,000

In respect of the senior unsecured notes issued in 2010, 2013 and 2014, U.S. dollar loan note issuance proceeds were swapped into euro and the U.S. dollar fixed interest rates applicable to the debt were swapped into predominantly fixed euro rate debt to generate the desired interest profile.

In August 2020, the Group completed a $99.9 million debt financing in the U.S. Private Placement Market. The following notes remains outstanding:

2020 2019 $’000 $’000 3.07% Series ‘B’ guaranteed senior unsecured notes, 2030 99,900 – 99,900 –

All the loan notes were issued by UDG Healthcare Finance Limited, a wholly owned subsidiary, and have been guaranteed by UDG Healthcare plc and other Group undertakings. These loans are repayable in full on maturity.

Borrowing Facilities In March 2020, the Group renewed its senior bank debt facility extending the term to May 2025.

At year end the Group has $245,868,000 (2019: $228,669,000) of committed, undrawn multi-currency senior debt loan facilities with a maturity date of 31 May 2025. The Group also has $5,854,000 (2019: $5,445,000) of undrawn overdraft facilities.

Covenants The unsecured loan notes and senior bank facilities are subject to compliance with certain covenants including a leverage covenant (net debt to EBITDA) not to exceed 3.5:1 and an interest cover covenant (EBITDA to net interest expense) to be at least 3.0:1. Net debt excludes IFRS 16 lease liabilities.

152 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

25. Leases The Group leases various offices, vehicles, machinery and other equipment used in its operations. Rental contracts for offices generally have lease terms between 3 and 20 years, while motor vehicles and other equipment generally have lease terms between 1 and 6 years. The Group also has certain leases of motor vehicles with lease terms of 12 months or less and leases of equipment with low value. The Group applies the recognition exemptions for these leases available in accordance with IFRS 16.

Right of Use Assets

Motor vehicles, Land and plant and other buildings equipment Total $’000 $’000 $’000 Year ended 30 September 2020 At 1 October (Note 34) 75,241 5,920 81,161 Additions 15,552 5,215 20,767 Arising on acquisition 7,938 – 7,938 Depreciation (12,936) (4,226) (17,162) Impairment (2,555) – (2,555) Termination of lease contracts (141) (217) (358) Modification of lease contracts (2,614) 191 (2,423) Translation adjustment 963 3 966 At 30 September 2020 81,448 6,886 88,334

Lease Liabilities

2020 $’000 At 1 October (Note 34) 94,087 Additions 20,790 Arising on acquisition 7,790 Cash payments (20,272) Accretion of interest 3,174 Termination of lease contracts (378) Modification of lease contracts (2,423) Translation adjustment 971 At 30 September 103,739 Non-current 86,962 Current 16,777 Total at 30 September 103,739

Total cash outflow for leases 24,527

Total cash outflow for leases includes interest expense and principal repayments of lease liabilities, short-term leases and low value leases.

The maturity analysis of lease liabilities is disclosed in Note 31. The future cash outflows relating to leases that have not yet commenced are disclosed in Note 32. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

As at 30 September 2020, future cash outflows of $22,467,000 (undiscounted) related to extension options on the leases have been included in the determination of the lease liabilities as it is considered reasonably certain that the leases will be extended. Potential future cash outflows of $6,879,000 (undiscounted) related to periods for which there are termination options, have not been included in the determination of the lease liabilities as it concluded it is reasonably certain that the leases will be terminated. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was a decrease in recognised lease liabilities and right of use assets of $2,423,000.

UDG Healthcare plc 153 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

25. Leases continued Lease Liabilities continued Other amounts relating to leases recognised in profit or loss are as follows: 2020 $’000 Expenses relating to short-term leases 3,442 Expenses relating to leases of low-value assets 813 Income from sub-leasing right of use assets (1,225)

Expenses relating to short-term leases are mainly for motor vehicle and office leases that had less than one year remaining on transition to IFRS 16. Expenses relating to low-value leased assets consist mainly of office and IT equipment that are individually low value items.

26. Trade and Other Payables

2020 2019 $’000 $’000 Current Trade payables 35,170 35,658 Accruals 110,202 97,993 Contract liabilities (Note 3) 58,002 64,221 Other payables 11,080 35,423 PAYE, VAT and social welfare 21,949 13,390 236,403 246,685 Non-current Contract liabilities (Note 3) 15,374 16,223 Other payables – 7,630 15,374 23,853

27. Provisions

Deferred contingent Restructuring consideration Onerous leases and other costs Total Total 2020 2020 2020 2020 2019 $’000 $’000 $’000 $’000 $’000 At the beginning of the year 78,184 1,537 14,105 93,826 108,445 Charge to income statement 3,539 106 7,547 11,192 29,137 Arising on acquisitions (Note 29) 10,461 – 1,665 12,126 26,669 Utilised during the year (3,585) (99) (13,964) (17,648) (29,335) Unwinding of discount 1,925 – – 1,925 1,515 Reclassification – (1,310) 342 (968) (41,566) Translation adjustment 346 23 537 906 (1,039) At 30 September 2020 90,870 257 10,232 101,359 93,826 Non-current 55,313 – 1,665 56,978 74,193 Current 35,557 257 8,567 44,381 19,633 Total 90,870 257 10,232 101,359 93,826

Deferred Contingent Consideration The deferred contingent consideration liability represents the fair value of amounts which may become payable over the period from October 2020 to October 2025 in connection with the acquisition of subsidiaries. Payment is dependent on achieving predetermined targets based on future performance and profitability. During the year, payments were made of $3,585,000 (2019: $812,000) with respect to prior year acquisitions. Following review of expected performance of acquired businesses against earn-out targets, there was an increase in deferred contingent consideration of $3,539,000 primarily in respect of Putnam Associates in Ashfield. In the prior year, there was a release of contingent consideration of $4,143,000 following a review of earn-out targets (Note 9). Further details on the measurement of contingent consideration and sensitivities are disclosed in Note 31.

154 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

27. Provisions continued Onerous Leases The onerous lease relates to a property that the Group remains committed to following the integration of the businesses acquired in prior years. The property is being proactively managed. In calculating the provisions, the Group made certain estimates and assumptions in assessing the amount provided. The provision was calculated by taking into consideration the committed rental charges associated with the premises and the period of time to the earliest date at which the Group can exit from the lease. The cash outflows will be incurred during the period from October 2020 to April 2021. The Group availed of the practical expedient on adoption of IFRS 16 Leases to rely on the assessment of whether leases are onerous applying IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Consequently, right of use assets were adjusted on transition by the amount of the provisions for onerous leases recognised at 30 September 2019 (Note 34). The remaining onerous lease balance relates to a lease with a lease term of less than one year.

Restructuring and Other Costs This provision primarily relates to redundancy and other restructuring costs associated with the implementation of the restructuring of operations within Ashfield following the impact of the Covid-19 pandemic, primarily within the Meetings and Events and the STEM businesses. The Group restructuring provision recognised in the year includes redundancy costs of $7,583,000, consulting and legal costs of $945,000 and onerous contracts and termination costs of $1,751,000. A credit of $2,477,000 has been recognised relating to the prior year provision for the rationalisation of Sharp’s European operations where the cost of the rationalisation was lower than previously estimated. There was a $255,000 release relating to other prior year restructuring costs. The provision arising on acquisition relates to a dilapidation provision for the future cost of dismantling the leased packaging facility acquired in Macungie (Note 29).

28. Deferred Income Tax Assets and Liabilities The following is an analysis of the movement in the major categories of deferred tax assets/(liabilities) recognised by the Group for the year ended 30 September 2020: Short-term Retirement temporary Property, plant Intangible Tax deductible benefit differences and and equipment Leases assets goodwill obligation other differences Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 2019 (11,040) – (9,713) (28,770) (1,764) 17,202 (34,085) Recognised in Income Statement (1,253) 444 9,522 (5,966) 335 2,542 5,624 Recognised in Other Comprehensive Income – – – – (511) (889) (1,400) Arising on acquisition (668) – – 233 – 102 (333) Arising on disposal 173 – (3,267) 2,737 – 144 (213) Arising on transition to IFRS 16 (Note 34) – 3,315 – – – (1,391) 1,924 Measurement period adjustments (Note 29) (267)–––––(267) Exchange differences and other (136) 27 (540) 38 (35) 475 (171) At 30 September 2020 (13,191) 3,786 (3,998) (31,728) (1,975) 18,185 (28,921)

Analysed as: Deferred tax asset 19 – (812) (353) – 5,227 4,081 Deferred tax liability (13,210) 3,786 (3,186) (31,375) (1,975) 12,958 (33,002) (13,191) 3,786 (3,998) (31,728) (1,975) 18,185 (28,921)

The following is an analysis of the movement in the major categories of deferred tax assets/(liabilities) recognised by the Group for the year ended 30 September 2019: Short-term Retirement temporary Property, plant Intangible Tax deductible benefit differences and and equipment assets goodwill obligation other differences Total $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 2018 (10,687) (16,229) (23,429) (2,931) 13,323 (39,953) Recognised in Income Statement (401) 7,084 (5,202) 301 4,587 6,369 Recognised in Other Comprehensive Income – – – 846 (1,153) (307) Arising on acquisition (2) (1,505) – – – (1,507) Measurement period adjustments ––––1,4511,451 Exchange differences and other 50 937 (139) 20 (1,006) (138) At 30 September 2019 (11,040) (9,713) (28,770) (1,764) 17,202 (34,085)

Analysed as: Deferred tax asset 28 (1,021) (225) (233) 6,629 5,178 Deferred tax liability (11,068) (8,692) (28,545) (1,531) 10,573 (39,263) (11,040) (9,713) (28,770) (1,764) 17,202 (34,085)

UDG Healthcare plc 155 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

28. Deferred Income Tax Assets and Liabilities continued No deferred income tax is recognised on the unremitted earnings of overseas subsidiaries and joint ventures as the Group does not anticipate additional tax on any ultimate remittance.

As at 30 September 2020, the Group has unused tax losses and other timing differences of $11,275,000 (2019: $33,450,000) in respect of which no deferred tax asset has been recognised as it is not considered probable that there will be future taxable profits available. Included in the tax losses not recognised for deferred tax purposes are losses of $5,907,000 (2019: $28,430,000) which will expire within the next nine years. The remaining tax losses carry forward indefinitely.

29. Business Combinations The Group completed the acquisition of 100% of Canale Communications, Inc. (‘CanaleComm’) on 12 November 2019. CanaleComm is a U.S.-based healthcare strategic communications agency, with specialist capabilities in corporate communications, public relations and investor relations. CanaleComm is presented as part of the Ashfield operating segment, and significantly strengthens the Group’s public relations offering in the U.S.

On 15 May 2020, the Group completed the acquisition of the trade and assets of a U.S.- based pharmaceutical packaging facility at Macungie, Pennsylvania. The facility provides further primary, secondary and tertiary packaging space, warehouse facilities and additional capacity to expand. The acquisition provides an opportunity to expand Sharp’s capacity in the Allentown area, and is reported as part of the Sharp operating segment.

The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of the above acquisitions. Any amendments to these acquisition fair values within the 12-month timeframe from the date of acquisition will be disclosed in the relevant Annual Report as stipulated by IFRS 3 Business Combinations.

Arising on acquisition $’000 Property, plant and equipment 4,996 Right of use assets 7,938 Intangible assets – computer software 209 Intangible assets – arising on acquisition 6,120 Inventory 494 Trade and other receivables 4,411 Trade and other payables (863) Lease liabilities (7,790) Deferred tax liabilities (333) Provisions (1,665) Cash acquired 60 Net assets acquired 13,577 Goodwill 23,810 Consideration 37,387 Satisfied by: Cash consideration 26,926 Deferred contingent consideration 10,461 Total consideration 37,387 Net cash outflow – arising on acquisitions Cash consideration 26,926 Less: Cash and cash equivalents (60) Net cash outflow 26,866

The total transaction related costs for completed and aborted acquisitions amounts to $2,064,000. These are presented separately in the Group Income Statement.

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 workforce and management teams within the business acquired, the enhancement of the competitive position of the Group in the marketplace and the strategic premium paid by UDG Healthcare plc to create the combined Group. The goodwill arising from acquisitions that is expected to be tax deductible is $23,810,000.

156 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

29. Business Combinations continued The intangible assets arising on the acquisitions primarily relate to the trade names, customer relationships, and customer contracts. The gross contractual value of trade and other receivables on acquisition amounted to $4,456,000. The fair value of trade and other receivables recognised on acquisition was $4,411,000. No contingent liabilities were recognised on the acquisitions completed during the financial year.

Contingent consideration is payable to the sellers of CanaleComm after three years, based on the achievement of certain profit targets. The fair value of contingent consideration recognised at the date of acquisition is calculated by discounting the expected future payments to present value at the acquisition date. For contingent consideration to become payable, the pre-defined profit thresholds must be achieved by the acquired business. On an undiscounted basis, the future payments for which the Group may be liable in respect of the current year acquisitions range from $nil to $11,000,000.

The Group’s results for the year ended 30 September 2020 included the following amounts in respect of the businesses acquired during the year:

2020 Total $’000 Revenue 12,298 Profit for the year 1,497

The proforma revenue and profit of the Group for the year ended 30 September 2020 would have been $1,286,117,000 and $91,707,000 respectively had the acquisitions taken place at the start of the reporting year. The proforma results for the year include the estimate of tax expense and amortisation of intangible assets arising on acquisition.

During the year, the Group finalised the acquisition accounting for Putnam Associates, LLC, which was acquired on 20 May 2019. This led to an increase in deferred tax liabilities of $267,000 and a corresponding increase in goodwill. The adjusted reported balances for this acquisition are as follows:

As previously Measurement Final balance reported period adjustment sheet $’000 $’000 $’000 Goodwill 40,476 267 40,743 Deferred tax liabilities –(267)(267)

30. Employee Benefits The aggregate employee costs recognised in the Income Statement are as follows:

2020 2019 $’000 $’000 Wages and salaries 589,184 550,074 Social security contributions 55,062 57,348 Pension costs – defined contribution schemes 13,082 11,226 Pension costs – defined benefit schemes 3,254 2,981 Share-based payment expense 5,688 4,720 Termination benefits 7,583 13,602 673,853 639,951

During the year the Group capitalised employee costs amounting to $468,000 (2019: $1,030,000) relating to intangible assets – computer software. The Group also capitalised employee costs amounting to $518,000 (2019: $849,000) relating to property, plant and equipment.

The average number of employees, including executive directors, during the year was as follows:

2020 2019 Number Number Marketing, distribution and selling 6,110 6,193 Operational 1,640 1,524 Administration 84 73 7,834 7,790

A further 1,428 (2019: 1,232) personnel are employed in the Group’s joint ventures and associates.

UDG Healthcare plc 157 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

30. Employee Benefits continued (i) Defined Contribution Schemes The Group makes contributions to a number of defined contribution schemes, the assets of which are vested in independent trustees for the benefit of members and their dependants.

(ii) Defined Benefit Schemes The following amounts were recognised on the Balance Sheet of the Group in respect of employee benefit schemes as at 30 September:

2020 2019 $’000 $’000 Employee benefit asset 8,592 7,636

The Group operates a number of defined benefit schemes as at 30 September as follows:

2020 2019 $’000 $’000 United States defined benefit scheme (U.S. scheme) 5,727 6,795 Republic of Ireland defined benefit schemes (ROI schemes) 2,865 841 Net surplus 8,592 7,636

On 1 April 2016, the Group completed the disposal of United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA. Under the terms of the disposal, the Group retained responsibility for the funding requirements in respect of the ROI schemes. Pension accruals under the ROI schemes ceased on 31 December 2015.

Each of the defined benefit schemes operated by the Group are funded by the payment of contributions to separately administered trust funds. The contributions to the schemes are determined with the advice of independent qualified actuaries obtained at regular intervals using the projected unit method of funding. Each defined benefit scheme is independently funded and the assets are vested in the independent trustees for the benefit of members and their dependants. The valuations are not available for public inspection but the results are advised to members of the schemes. The most recent full actuarial valuations for the principal schemes were conducted as at 31 December 2017 for the ROI schemes and 1 January 2020 for the U.S. scheme. Assumed medical costs are not a component of the pension obligations of any of the Group’s pension obligations.

The principal long-term financial assumptions used by the Group’s actuaries in the computation of the defined benefit liabilities arising on pension schemes as at 30 September are as follows:

ROI schemes U.S. scheme 2020 2019 2020 2019 Increase in salaries n/a n/a 4.00% 2.75%–4.00% Increase in pensions 0-1.25% 0–1.25% 0.00% 0.00% Inflation rate 1.25% 1.25% 2.75% 2.75% Discount rate 0.85% 0.85% 2.40% 3.00%

The ROI schemes have a remeasurement gain in the current year resulting from experience gains on liabilities. The U.S. scheme has a remeasurement gain in the current year resulting from changes in the assumptions used to measure liabilities of the plan. In the ROI schemes, there is no longer a salary increase assumption due to the accrual of pension benefit ceasing from 1 December 2015.

All schemes used certain mortality rate assumptions when calculating scheme obligations. These are based on advice from published statistics and experience in each geographic region. These assumptions will continue to be monitored in light of general trends in mortality experience. The average life expectancy of a pensioner at age 65, in years, is as follows:

ROI schemes U.S. scheme 2020 2019 2020 2019 Current pensioners Male 21.8 21.7 21.7 21.0 Female 24.2 24.1 24.0 24.6

Future pensioners Male 24.1 24.0 22.0 21.3 Female 26.2 26.1 24.5 25.1

158 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

30. Employee Benefits continued The market value of the assets in the pension schemes at 30 September 2020 were:

ROI U.S 2020 2020 % $’000 % $’000 Equities: – Developed markets 10 3,862 35 12,466 – Emerging markets ––62,316 Bonds: – Government 61 22,706 34 12,276 – Non-government 3 1,029 24 8,464 Cash 26 9,509 1 151 Fair value of scheme assets 100 37,106 100 35,673 Present value of scheme obligations (34,241) (29,946) Employee benefits asset 2,865 5,727 Deferred income tax liability (668) (1,307) Net asset 2,197 4,420

The market value of the assets in the pension schemes at 30 September 2019 were:

ROI U.S. 2019 2019 % $’000 % $’000 Equities: – Developed markets 10 3,446 35 11,634 – Emerging markets ––51,832 Bonds: – Government 63 21,359 38 12,790 – Non-government ––227,361 Cash 27 9,384 – 133 Fair value of scheme assets 100 34,189 100 33,750 Present value of scheme obligations (33,348) (26,955) Employee benefits asset 841 6,795 Deferred income tax liability (233) (1,531) Net asset 608 5,264

Movements in Fair Value of Plan Assets

ROI U.S. Total ROI U.S. Total 2020 2020 2020 2019 2019 2019 $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 34,189 33,750 67,939 32,409 33,931 66,340 Interest income on plan assets 300 875 1,175 628 1,224 1,852 Employer contributions 1,642 – 1,642 1,286 – 1,286 Benefit payments (1,344) (1,252) (2,596) (1,371) (1,449) (2,820) Return on plan assets excluding interest income (266) 2,300 2,034 3,419 44 3,463 Translation adjustment 2,585 – 2,585 (2,182) – (2,182) At 30 September 37,106 35,673 72,779 34,189 33,750 67,939

UDG Healthcare plc 159 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

30. Employee Benefits continued Movements in Present Value of Defined Benefit Obligations

ROI U.S. Total ROI U.S. Total 2020 2020 2020 2019 2019 2019 $’000 $’000 $’000 $’000 $’000 $’000 At 1 October 33,348 26,955 60,303 30,747 22,658 53,405 Current service costs –3,2543,254 – 2,981 2,981 Interest on scheme obligations 286 775 1,061 583 889 1,472 Benefit payments (1,344) (1,252) (2,596) (1,371) (1,449) (2,820) Remeasurement loss/(gain) (487) 1,234 747 (184) 148 (36) Effect of changes in actuarial assumptions –(1,020)(1,020)5,676 1,728 7,404 Translation adjustment 2,438 – 2,438 (2,103) – (2,103) At 30 September 34,241 29,946 64,187 33,348 26,955 60,303

The remeasurement gain/(loss) on the plan assets and present value of the defined benefit obligation are as follows:

2020 2019 $’000 $’000 Return on plan assets excluding interest income 2,034 3,463 Remeasurement (loss)/gain on experience variations (747) 36 Effect of changes in actuarial assumptions: – Changes in demographic assumptions 17 15 – Changes in financial assumptions 1,003 (7,419) Total included in Group Statement of Comprehensive Income 2,307 (3,905)

Defined Benefit Pension Credit/(Expense) Recognised in the Income Statement The employee benefit credit/(expense) is analysed as:

ROI U.S. Total 2020 2020 2020 $’000 $’000 $’000 Current service costs –(3,254)(3,254) Interest cost on scheme obligations (286) (775) (1,061) Interest income on scheme assets 300 875 1,175 14 (3,154) (3,140)

ROI U.S. Total 2019 2019 2019 $’000 $’000 $’000 Current service costs – (2,981) (2,981) Interest cost on scheme obligations (583) (889) (1,472) Interest income on scheme assets 628 1,224 1,852 45 (2,646) (2,601)

Accrual of pension benefits within the ROI schemes ceased with effect from 31 December 2015.

The tax effect relating to these items is disclosed in Note 28.

The expected employer’s contribution for the year ended 30 September 2021 is $1,642,000.

160 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

30. Employee Benefits continued Expected Maturity Analysis of Undiscounted Pension Benefits

Less than Between Between Over 1 year 1–2 years 2–5 years 5 years Total $’000 $’000 $’000 $’000 $’000 ROI schemes 857 874 2,884 5,336 9,951 U.S. scheme 2,654 2,215 7,799 95,256 107,924 At 30 September 2020 3,511 3,089 10,683 100,592 117,875

ROI schemes 879 899 2,942 5,388 10,108 U.S. scheme 2,242 1,705 7,068 88,590 99,605 At 30 September 2019 3,121 2,604 10,010 93,978 109,713

Sensitivity Analysis for Principal Assumptions Used to Measure Scheme Liabilities There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial valuation of the Group’s defined benefit pension schemes. The following table analyses, for the Group’s pension schemes, the estimated impact on plan obligations resulting from changes to key actuarial assumptions, whilst holding all other assumptions constant. The impact on the defined benefit obligation at 30 September 2020 is calculated on the basis that only one assumption is changed with all other assumptions remaining unchanged. The assessment of the sensitivity analysis below could therefore be limited as a change in one assumption may not occur in isolation as assumptions may be correlated.

Assumption Change in assumption Impact on ROI plan liabilities Impact on U.S. plan liabilities Discount rate Increase/Decrease by 0.25% ↓↑ by 4.6% ↓↑ by 2.1% Price inflation Increase/Decrease by 0.25% ↑↓ by 2.0% ↑↓ by 0.0% Mortality Increase by one year ↑ by 4.3% ↑ by 0.3%

Share-based Payment

2020 2019 $’000 $’000 Executive Share Option Plan expense – 10 LTIP expense 5,599 4,390 Pre-exceptional Share-based payment expense 5,599 4,400 LTIP accelerated Share-based payment expense (Note 9) 89 320 Total share-based payment expense 5,688 4,720

$1,080,000 (2019: $666,000) of the total share-based payment expense recognised in the Group Income Statement relates to the directors.

The company’s Executive Share Option Plan (ESOP) was established during 2010. Under the ESOP share options may be granted to management which may entitle them to purchase shares in the company so as to provide an incentive to perform strongly over an extended period and to encourage alignment of their interests with those of shareholders. Share options granted under the ESOP are exercisable for a period of four years from the third anniversary of the grant date, if adjusted diluted EPS growth is not less than the movement in the Irish Consumer Price Index, plus 3% compounded, over the performance period. There were no share options granted under the ESOP in the current year (2019: nil). In accordance with the terms of the ESOP, share options granted are exercisable at the market price of the underlying share on the last dealing day preceding the date of grant.

The number and weighted average exercise price of outstanding share options under the ESOP are as follows:

Weighted average Number of Weighted average Number of exercise price share options exercise price share options 2020 2020 2019 2019 $ ’000 $ ’000 Outstanding at beginning of year 7.08 285 6.95 511 Forfeited during the year ––6.24 (13) Exercised during the year 7.17 (139) 6.84 (213) Outstanding at end of year 6.99 146 7.08 285 Exercisable at end of year 6.99 146 7.08 285

UDG Healthcare plc 161 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

30. Employee Benefits continued Share-based Payment continued The weighted average share price at the date of exercise of share options during the year was $8.81 (2019: $8.73). The weighted average remaining contractual life for the share options outstanding at 30 September 2020 was 2.6 years (2019: 3.9 years).

At 30 September 2020, the range of exercise prices of outstanding share options was from $6.24 to $7.78 (2019: $6.24 to $7.78).

Analysis of ESOP Share Options Outstanding at Year End Share option by exercise price:

Number of Number of Exercise options options price 2020 2019 £ ’000 ’000 5.13 71 155 3.73 75 130 Total options outstanding – sterling denominated 146 285

LTIP The Company’s LTIP was established during 2010. The terms of share options granted under the LTIP during the year are set out in the Directors’ Remuneration Report on pages 88 to 103. During the year 912,182 (2019: 1,031,826) share options were granted under the LTIP. In accordance with the terms of the LTIP, share options awarded are exercisable at the nominal value of the underlying share as at the date of grant.

A summary of the details in respect of share options granted under the LTIP in 2020 and 2019 is set out below.

2020 2020 2020 2020 2020 2020 2020 2020 Market-based Non-market Market-based Non-market Non-market Non-market Market-based Non-market awards based awards awards based awards based awards based awards awards based awards Grant date 04/12/2019 04/12/2019 04/12/2019 04/12/2019 04/12/2019 04/12/2019 04/12/2019 04/12/2019 Fair value at grant date $6.50 $10.42 $6.50 $10.42 $10.42 $9.61 $5.98 $9.61 Share price at grant date $10.46 $10.46 $10.46 $10.46 $10.46 $10.46 $10.46 $10.46 Exercise price $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 Expected volatility 26.98% 26.98% 26.98% 26.98% n/a n/a 26.98% 26.98% Expected life 6 years 6 years 5 years 5 years 5 years 5 years 5 years 5 years Risk-free interest rate 0.52% 0.52% 0.56% 0.56% 0.56% 0.56% 0.56% 0.56% Valuation model Monte Monte Monte Monte Black- Black- Monte Monte Carlo Carlo Carlo Carlo Scholes Scholes Carlo Carlo Option Option Option Option Option Option Option Option Pricing Pricing Pricing Pricing Pricing Pricing Pricing Pricing Model Model Model Model Model Model Model Model Performance period 3 years 3 years 3 years 3 years n/a n/a 3 years 3 years Vesting period 5 years 5 years 3 years 3 years 3 years 3 years 3 years 3 years

2020 2020 2020 Non-market Non-market Non-market based awards based awards based awards Grant date 21/09/2020 21/09/2020 21/09/2020 Fair value at grant date $9.29 $9.29 $9.29 Share price at grant date $9.35 $9.35 $9.35 Exercise price $0.06 $0.06 $0.06 Expected volatility 16.5% 16.5% 16.5% Expected life 4 years 4 years 5 years Risk-free interest rate 0% 0% 0% Valuation model Black- Black- Black- Scholes Scholes Scholes option option option pricing pricing pricing model model model Performance period n/a n/a n/a Vesting period 0.4 years 1 year 2 years

162 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

30. Employee Benefits continued LTIP continued

2019 2019 2019 2019 2019 2019 2019 2019 2019 Market-based Market-based Non-market Market-based Non-market Market-based Non-market Market-based Market-based awards awards based awards awards based awards awards based awards awards awards Grant date 22/05/2019 04/12/2018 04/12/2018 04/12/2018 04/12/2018 04/12/2018 04/12/2018 04/12/2018 04/12/2018 Fair value at grant date $8.20 $5.52 $8.57 $5.52 $8.57 $5.52 $8.57 $8.11 $7.94 Share price at grant date $8.74 $8.63 $8.63 $8.63 $8.63 $8.63 $8.63 $8.63 $8.63 Exercise price $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 Expected volatility 27.53% 25.69% 25.69% 25.69% 25.69% 25.69% 25.69% 25.69% 25.69% Expected life 3.5 years 6 years 6 years 3.5 years 3.5 years 5 years 5 years 3.5 years 5 years Risk-free interest rate 0.71% 0.93% 0.93% 0.76% 0.76% 0.87% 0.87% 0.76% 0.87% Valuation model Black- Black- Monte Black- Monte Black- Monte Black- Black- Scholes Scholes Carlo Scholes Carlo Scholes Carlo Scholes Scholes option option option option option option option option option pricing pricing pricing pricing pricing pricing pricing pricing pricing model model model model model model model model model Performance period 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years Vesting period 3 years 5 years 5 years 3 years 3 years 3 years 3 years 3 years 3 years

The number and weighted average exercise price of outstanding share options under the LTIP are as follows:

Number Number Weighted average of share Weighted average of share exercise price options exercise price options 2020 2020 2019 2019 $ ’000 $ ’000 Outstanding at beginning of year 0.06 3,336 0.06 3,238 Forfeited during the year 0.06 (275) 0.06 (512) Exercised during the year 0.06 (874) 0.06 (422) Granted during the year 0.06 912 0.06 1,032 Outstanding at end of year 0.06 3,099 0.06 3,336 Exercisable at end of year 0.06 418 0.06 373

The weighted average share price at the date of exercise of share options during the year was $8.85 (2019: $9.34). The weighted average remaining contractual life for the share options outstanding at 30 September 2020 was 4.4 years (2019: 4.1 years).

31. Financial Instruments and Financial Risk Fair Values Versus Carrying Amounts The fair value of financial assets and liabilities together with the carrying amounts shown in the Balance Sheet are as follows:

Fair value Fair value Total through profit through Amortised carrying Fair or loss OCI cost value value 30 September 2020 $’000 $’000 $’000 $’000 $’000 Trade and other receivables (Note 17) – – 292,661 292,661 292,661 Derivative financial assets – 14,742 – 14,742 14,742 Cash and cash equivalents – – 246,045 246,045 246,045 –14,742538,706553,448553,448 Trade and other payables (Note 26) – – 178,401 178,401 178,401 Interest-bearing loans and borrowings (Note 24) – – 276,984 276,984 279,474 Lease liabilities (Note 25) – – 103,739 103,739 103,739 Deferred contingent consideration (Note 27) 90,870 – – 90,870 90,870 90,870 – 559,124 649,994 652,484

UDG Healthcare plc 163 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

31. Financial Instruments and Financial Risk continued Fair Values Versus Carrying Amounts continued

Fair value Fair value Total through profit through Amortised carrying Fair or loss OCI cost value value 30 September 2019 $’000 $’000 $’000 $’000 $’000 Trade and other receivables (Note 17) – – 344,918 344,918 344,918 Derivative financial assets 1,944 22,329 – 24,273 24,273 Cash and cash equivalents – – 135,228 135,228 135,228 1,944 22,329 480,146 504,419 504,419 Trade and other payables (Note 26) – – 182,466 182,466 182,466 Interest-bearing loans and borrowings (Note 24) – – 239,982 239,982 242,815 Finance lease liabilities (Note 24) – – 49 49 49 Deferred contingent consideration (Note 27) 78,184 – – 78,184 78,184 78,184 – 422,497 500,681 503,514

The fair values of the financial assets and liabilities not measured at fair value disclosed in the above tables have been determined using the methods and assumptions set out below.

Trade and Other Receivables/Payables For receivables and payables, the carrying value less impairment provision is deemed to reflect fair value, where appropriate.

Cash and Cash Equivalents For cash and cash equivalents, the nominal amount is deemed to reflect fair value.

Interest-bearing Loans and Borrowings (Excluding Finance Lease Liabilities) The fair value of interest-bearing loans and borrowings is based on the fair value of the expected future principal and interest cash flows discounted at interest rates effective at the balance sheet date and adjusted for movements in credit spreads.

Finance Lease Liabilities For finance lease liabilities, fair value is the present value of future cash flows discounted at current market rates.

Valuation Techniques and Significant Unobservable Inputs Fair Value Hierarchy of Assets and Liabilities Measured at Fair Value The Group has adopted the following fair value hierarchy in relation to its financial instruments that are carried in the balance sheet at the fair values at the year end: • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 – inputs, other than quoted prices included within Level 1, that are observable for the asset or liability either directly (as prices) or indirectly (derived from prices); and • Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table sets out the fair value of all financial assets and liabilities that are measured at fair value:

Fair Value Measurement as at 30 September 2020

Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000 Assets measured at fair value Designated as hedging instruments Cross-currency interest rate swaps –14,742–14,742 –14,742–14,742

Liabilities measured at fair value At fair value through profit or loss Deferred contingent consideration – – 90,870 90,870 – – 90,870 90,870

164 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

31. Financial Instruments and Financial Risk continued Valuation Techniques and Significant Unobservable Inputs continued Fair Value Measurement as at 30 September 2019

Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000 Assets measured at fair value Designated as hedging instruments Cross-currency interest rate swaps – 24,273 – 24,273 – 24,273 – 24,273

Liabilities measured at fair value At fair value through profit or loss Deferred contingent consideration – – 78,184 78,184 – – 78,184 78,184

Derivative Financial Instruments

2020 2019 $’000 $’000 Derivative financial assets Current 1,604 8,878 Non-current 13,138 15,395 14,742 24,273

Derivative financial liabilities – – Net derivative financial asset 14,742 24,273

All derivatives entered into by the Group are included in Level 2 of the fair value hierarchy and consist of cross-currency interest rate swaps. The fair value of cross-currency interest rate swaps is calculated at the present value of the estimated future cash flows based on the terms and maturity of each contract using forward currency rates and market interest rates as applicable for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include, where appropriate, adjustments to take account of the credit risk of the Group entity and counterparty.

The fair value of cross-currency interest rate swaps of $14,742,000 (2019: $24,273,000) is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates.

The swaps consist of fixed to fixed rate swaps. In prior year, the swaps were a mixture of fixed to fixed and fixed to floating rate swaps. The Group classifies the fixed to floating swap as a fair value hedge and has stated it at its fair value with a corresponding opposite adjustment to the underlying debt for the risk being hedged. Both of these adjustments are recorded within the Income Statement and to the extent they do not offset, this represents the ineffective portion of the fair value hedge. The fair value of this swap at 30 September 2020 was $nil (2019: asset of $1,944,000).

The fixed to fixed rate cross-currency interest rate swaps are classified as cash flow hedges and are stated at their fair value. The fair value of these swaps at 30 September 2020 was an asset of $14,742,000 (2019: asset of $22,329,000), and the effective portion of this adjustment was accounted for in the cash flow hedge reserve through Other Comprehensive Income. The interest element of the cash flow hedges will be recognised in the Income Statement in the years to 30 September 2025, as the associated interest on the hedged debt is recognised.

UDG Healthcare plc 165 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

31. Financial Instruments and Financial Risk continued Deferred Contingent Consideration Deferred contingent consideration is included in Level 3 of the fair value hierarchy. Details of the movement in the year are included in Note 27. The fair value is determined considering the expected payment, discounted to present value using a risk adjusted discount rate. The expected payment is determined separately in respect of each individual earn-out agreement taking into consideration the expected level of profitability of each acquisition. The provision for deferred contingent consideration is principally in respect of acquisitions completed during 2017 to 2020.

The significant unobservable inputs are: • forecast weighted average EBIT growth rate 13% (2019: 19%); and • risk adjusted discount rate 0.7%–2.8% (2018: 0.7%–2.8%).

Inter-relationship Between Significant Unobservable Inputs and Fair Value Measurement The estimated fair value would increase/(decrease) if: • the EBIT growth rate was higher/(lower); and • the risk adjusted discount rate was lower/(higher).

For the fair value of deferred contingent consideration, a reasonably possible change to one of the significant unobservable inputs at 30 September 2020, holding the other inputs constant, would have the following effects:

Increase Decrease $’000 $’000 Effect of change in assumption on income statement: Annual EBIT growth rate (1% movement) 985 (1,100) Risk-adjusted discount rate (1% movement) (1,427) 1,456

Capital Management The Board considers capital to consist of equity (share capital, share premium, other reserves and retained earnings) and net debt. The Board’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence and to sustain the ongoing development of the Group. The directors periodically review the capital structure of the Group, considering the cost of capital and the risks associated with each class of capital. The Board monitors the return on equity generated by the Group and the level of dividends paid to shareholders. There were no changes to the Board’s approach to capital management during the year.

2020 2019 $’000 $’000 Capital and reserves attributable to the equity holders of the Company 983,302 900,356 Net debt 16,197 80,530 Capital and net debt 999,499 980,886

Financial Ratios Financial covenants in our principal debt facilities are based on net debt to EBITDA being less than 3.5 times and EBITDA interest cover being greater than three times.

2020 2019 times times Net debt to EBITDA 0.1 0.4 EBITDA interest cover 23.3 28.1

Financial Risk Management The Group’s multinational operations expose it to different financial risks that include foreign exchange rate risks, credit risks, liquidity risks and interest rate 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. The Board has determined the policies for managing these risks as set out below.

Credit Risk The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables based on experience, clients’ track record and historic default rates. Individual credit limits are generally set by client and credit is only extended above such limits in defined circumstances.

The Group establishes an impairment provisions matrix based on an expected credit loss model in respect of trade and other receivables (Note 17). Where the Group considers that no recovery of the amount owing is possible, the amount is considered irrecoverable and is written off directly against the receivable.

166 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

31. Financial Instruments and Financial Risk continued Credit Risk continued Risk of counterparty default arising on cash and cash equivalents and derivative financial instruments is controlled within a framework of dealing with high quality institutions and by a policy limiting the amount of credit exposure to any one bank or institution. Of the Group’s total cash and cash equivalents at 30 September 2020 of $246,045,000 (2019: $135,228,000), 66% (2019: 56%) was with financial institutions with a Standard & Poor’s A1 short-term credit rating, 26% (2019: 31%) with financial institutions with A2 short-term credit ratings and the balance, which are individually small, are held with regulated financial institutions in the jurisdictions in which the Group operates.

At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset.

Interest Rate Risk The majority of the Group’s ongoing operations are financed from a mixture of cash generated from operations and borrowings. The U.S. dollar private placement borrowings are secured at fixed interest rates. In prior years borrowings were initially secured at floating interest rates. Interest rate risk is monitored on an ongoing basis.

A reduction of one hundred basis points in interest rates at the reporting date would have increased profit before tax by the amounts shown below assuming all other variables including foreign currency rates remain constant. An increase of 100 basis points on the same basis would reduce profit before tax by $nil (2019: $138,000).

Effect of reduction of one hundred basis points:

2020 2019 $’000 $’000 Profit before tax – 138

The Group adopts a policy of ensuring that at least 50% of its interest rate risk exposure is at fixed rates. This is achieved through cross currency interest rate swaps and by borrowing at fixed interest rates. The Group applies a hedge ratio of 1:1.

Summary of Derivatives at 30 September 2020

Notional payable Notional amount of receivable amount contracts of contracts Fair value outstanding outstanding asset Termination date Nature of hedging instrument €’000 $’000 $’000 Fixed USD interest rate to fixed Euro Cross-currency Interest Rate Swap 2023 interest rate 80,707 105,000 11,102 Fixed USD interest rate to fixed Euro Cross-currency Interest Rate Swap 2025 interest rate 26,902 35,000 3,640 Total fair value of derivatives 14,742

Summary of Derivatives at 30 September 2019

Notional payable Notional receivable amount of amount of contracts contracts Fair value outstanding outstanding asset Termination date Nature of hedging instrument €’000 $’000 $’000 Fixed USD interest rate to floating Euro Cross-currency Interest Rate Swap 2020 interest rate 12,195 15,000 1,944 Fixed USD interest rate to fixed Euro Cross-currency Interest Rate Swap 2020 interest rate 40,650 50,000 5,071 Fixed USD interest rate to fixed Euro Cross-currency Interest Rate Swap 2023 interest rate 80,707 105,000 13,433 Fixed USD interest rate to fixed Euro Cross-currency Interest Rate Swap 2025 interest rate 26,902 35,000 3,825 Total fair value of derivatives 24,273

UDG Healthcare plc 167 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

31. Financial Instruments and Financial Risk continued Currency Risk Structural Currency Risk A significant proportion of the Group’s operations are carried out in the U.K. and Europe and as a result the Group is exposed to structural currency fluctuations in respect of sterling and euro. Where practical, the Group finances investments through borrowings denominated in the same currency in which the related cash flows will be generated. To the extent that the non-U.S. dollar-denominated assets and liabilities of the Group do not offset, the Group is exposed to structural currency risk. Such movements are reported through the Group Statement of Comprehensive Income.

Euro and sterling-denominated profits are translated into U.S. dollars at the average rate of exchange for the financial year. The average rate at which euro profits were translated during the year was $1:€0.8924 (2019: $1:€0.8865) and sterling profits were translated at $1:£0.7844 (2019: $1:£0.7839).

The Group is also subject to translational currency risk on the translation of profits earned outside of the U.S.

Transactional Currency Risk The euro is the principal currency of the Group’s Irish and Continental European businesses, sterling is the principal currency for the Group’s U.K. businesses and the U.S. dollar is the principal currency for the Group’s U.S. businesses. The Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot and forward rates where necessary. Details of the Group’s transactional foreign currency risk at 30 September 2020 and 2019 arising from foreign currency transactions are set out in the table below.

Euro Sterling U.S. dollar Total 2020 2020 2020 2020 $’000 $’000 $’000 $’000 Cash and cash equivalents 400 2,427 3,961 6,788 Trade receivables 3,687 – 6,329 10,016 Trade and other payables (81) (513) (323) (917) 4,006 1,914 9,967 15,887

Euro Sterling U.S. dollar Total 2019 2019 2019 2019 $’000 $’000 $’000 $’000 Cash and cash equivalents 3,134 3,381 1,052 7,567 Trade receivables 11,016 81 10,094 21,191 Trade and other payables (1,260) (21) (114) (1,395) 12,890 3,441 11,032 27,363

Sensitivity Analysis on Transactional Currency Risk For the purposes of performing sensitivity analysis on transactional currency risk, financial assets and liabilities outstanding at the balance sheet date denominated in a currency other than the functional currency of individual entities, have been aggregated by currency and the impact of a 5% weakening of the U.S. dollar against the relevant currency calculated. This analysis assumes that all other variables, in particular interest rates, remain constant.

Euro Based on the value of euro-denominated financial assets and liabilities held by individual entities with a functional currency other than euro, a 5% weakening of the U.S. dollar against the euro at 30 September 2020 and 30 September 2019 would have increased equity and profit after tax by the amounts shown below:

2020 2019 $’000 $’000 Profit after tax 173 558

168 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

31. Financial Instruments and Financial Risk continued Currency Risk continued Sterling Based on the value of sterling-denominated financial assets and liabilities held by individual entities with a functional currency other than sterling, a 5% weakening of the U.S. dollar against sterling at 30 September 2020 and 30 September 2019 would have increased equity and profit after tax by the amounts shown below:

2020 2019 $’000 $’000 Profit after tax 82 149

Funding and Liquidity Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group uses a combination of long and short-term debt and cash and cash equivalents to meet its liabilities as they fall due. This is in addition to the Group’s strong cash flow generation. The Group believes it has sufficient cash resources and bank debt facilities at its disposal, which provides flexibility in financing existing operations, acquisitions and other developments.

The following are the undiscounted contractual maturities of financial instruments, including interest payments and excluding the impact of netting arrangements:

Carrying Contractual 6 months 6–12 Between Between More than amount cash flow or less months 1–2 years 2–5 years 5 years 30 September 2020 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Non-derivative financial instruments Bank borrowings 646464–––– Lease liabilities 103,739 113,656 9,982 9,809 17,480 42,549 33,836 Fixed rate unsecured guaranteed senior notes 276,920 333,371 4,722 4,722 9,444 187,487 126,996 Trade and other payables 178,401178,401178,401–––– Deferred contingent consideration 90,870 97,671 9,135 26,390 24,720 37,426 – Derivative financial instruments Cash flow hedges (14,742) (16,730) (270) (270) (541) (15,649) – 635,252 706,433 202,034 40,651 51,103 251,813 160,832

Carrying Contractual 6 months 6–12 Between Between More than amount cash flow or less months 1–2 years 2–5 years 5 years 30 September 2019 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Non-derivative financial instruments Bank borrowings (707) (678) 320 (125) (250) (623) – Finance leases 49 50 12 12 26 – – Floating rate unsecured guaranteed senior notes 15,223 13,437 84 13,353 – – – Fixed rate unsecured guaranteed senior notes 225,466 237,129 3,940 51,050 5,716 120,123 56,300 Trade and other payables 182,466 182,466 178,216 4,250 – – – Deferred contingent consideration 78,184 93,505 3,813 750 37,989 50,953 – Derivative financial instruments Cash flow hedges (22,329) (26,008) (432) (5,599) (627) (13,175) (6,175) Fair value hedges (1,944) (1,967) (12) (1,955) – – – 476,408 497,934 185,941 61,736 42,854 157,278 50,125

UDG Healthcare plc 169 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

31. Financial Instruments and Financial Risk continued Maturity Profile of Net Debt In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they mature.

Less than Between Between More than Effective Total 1 year 1–2 years 2–5 years 5 years 30 September 2020 interest rate $’000 $’000 $’000 $’000 $’000 Cash at bank and short-term deposits 0.19%246,045246,045––– Other loans and borrowings 15.75% (64) (64) – – – Fixed rate unsecured guaranteed senior notes 3.37% (276,920) – 740 (166,103) (111,557) Total before derivatives (30,939) 245,981 740 (166,103) (111,557) Derivatives 14,742 1,603 1,600 11,539 – Net (debt)/cash (16,197) 247,584 2,340 (154,564) (111,557) Lease liabilities 3.17% (103,739) (16,777) (15,206) (39,347) (32,409) Net (debt)/cash including lease liabilities (119,936) 230,807 (12,866) (193,911) (143,966)

Less than Between Between More than Effective Total 1 year 1–2 years 2–5 years 5 years 30 September 2019 interest rate $’000 $’000 $’000 $’000 $’000 Cash at bank and short-term deposits 1.54% 135,228 135,228 – – – Other loans and borrowings 14.00% 707 (166) 250 623 – Finance leases 1.51% (49) (19) (30) – – Floating rate unsecured guaranteed senior notes 1.27% (15,223) (15,223) – – – Fixed rate unsecured guaranteed senior notes 3.73% (225,466) (49,888) 111 (117,838) (57,851) Total loan notes (240,689) (65,111) 111 (117,838) (57,851) Total before derivatives (104,803) 69,932 331 (117,215) (57,851) Derivatives 24,273 8,878 1,726 11,861 1,808 Net (debt)/cash (80,530) 78,810 2,057 (105,354) (56,043)

The effect of the derivatives included for the year ended 30 September 2020 above has been to swap U.S. dollar-denominated debt to euro- denominated debt and to partially swap fixed rate interest into floating rate interest.

Movements of Liabilities Within Cash Flows from Financing Activities Interest Interest Lease bearing loans bearing loans liabilities and liabilities Total and liabilities Total 2020 2020 2020 2019 2019 $’000 $’000 $’000 $’000 $’000 At the beginning of the year 49 239,982 240,031 243,371 243,371 Changes from financing cash flows: – Repayments of interest-bearing loans and borrowings – (63,406) (63,406) (1,859) (1,859) – Proceeds from interest-bearing loans and borrowings –100,744100,744 1,928 1,928 – Loan set up costs incurred –(322)(322)(1,123) (1,123) – Capital repayments of lease liabilities (2019: Capital repayments of finance leases) (17,098) – (17,098) (5) (5) Changes from non-cash flow items: – Implementation of IFRS 16 (Note 34) 94,038 – 94,038 –– – Lease additions 20,790 – 20,790 –– – Arising on acquisition 7,790 – 7,790 –– – Lease terminations and modifications (2,801) – (2,801) –– Currency translation adjustment 971 (14) 957 (2,281) (2,281) At end of year 103,739 276,984 380,723 240,031 240,031 Presented as Current 16,777 64 16,841 65,297 65,297 Non-current 86,962 276,920 363,882 174,734 174,734 103,739 276,984 380,723 240,031 240,031

170 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

31. Financial Instruments and Financial Risk continued Offsetting Financial Assets and Financial Liabilities The following financial assets are subject to offsetting, enforceable master netting arrangements and similar arrangements:

Related amounts Gross amounts of Net amounts of of financial Gross amounts financial liabilities financial assets liabilities not of recognised set off in the presented in the set off in the financial assets Balance Sheet Balance Sheet Balance Sheet Net amount As at 30 September 2020 $’000 $’000 $’000 $’000 $’000 Derivative financial instruments 14,742 – 14,742 – 14,742 Cash and cash equivalents 282,353 (36,308) 246,045 – 246,045

Related amounts Gross amounts of Net amounts of of financial Gross amounts financial liabilities financial assets liabilities not of recognised set off in the presented in the set off in the financial assets Balance Sheet Balance Sheet Balance Sheet Net amount As at 30 September 2019 $’000 $’000 $’000 $’000 $’000 Derivative financial instruments 24,273 – 24,273 – 24,273 Cash and cash equivalents 167,510 (32,282) 135,228 – 135,228

For financial assets and liabilities that are subject to enforceable master netting arrangements, each agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. Financial assets and financial liabilities are offset when the Group has a current legally enforceable right to set off of the recognised amounts; and intends to settle on a net basis, or to realise the asset and settle the liability simultaneously.

32. Capital Commitments Capital expenditure authorised but not contracted for amounted to $23,764,000 (2019: $13,170,000) at the balance sheet date.

The Group has committed to an office lease contract in the U.S. that has not yet commenced as at 30 September 2020. The future lease payments for this non-cancellable lease contract are $293,000 within one year, $3,519,000 within five years and $1,321,000 thereafter.

33. Related Parties The Group trades in the normal course of business with its equity accounted investments. The aggregate value of these transactions is not material in the context of the Group’s financial results.

The Group has provided a loan to Magir Limited, an associate of the Group, gross of interest, of Stg£12,164,000 (2019: Stg£11,759,000).

IAS 24 Related Party Disclosures requires the disclosure of compensation paid to the Group’s key management personnel. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. UDG Healthcare plc classifies directors, the Company Secretary and members of its SET as key management personnel. The SET is the body of senior executives that formulates business strategy along with the directors, follows through on implementation of that strategy and directs and controls the activities of the Group on a day-to-day basis. In addition to the executive directors, the following individuals were members of the SET during the year ended 30 September 2020:

Name Title Amar Urhekar President, Ashfield Healthcare Communications Colin Stanley President, Advisory Services and Global Business Development Damien Moynagh General Counsel and Company Secretary Eimear Kenny Group Head of Human Resources Greg Flynn Global President, Ashfield Commercial and Clinical Kevin Orfan President, Sharp Liam Logue Executive Vice President, Corporate Development Ryan Quigley Chief Operating Officer

UDG Healthcare plc 171 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

33. Related Parties continued Remuneration of Key Management Personnel

2020 2019 $’000 $’000 Salaries and other short-term benefits 7,308 7,382 Post-employment benefits 567 714 Share-based payment (calculated in accordance with the principles disclosed in Note 30) 2,580 2,255 Termination benefits – 919 10,455 11,270

Details of the remuneration of the Group’s individual directors, together with the number of UDG Healthcare plc shares owned by them and their outstanding share options, are set out in the Directors’ Remuneration Report.

34. Change in Accounting Policies New and Amended Standards and Interpretations Effective During 2020 The Group’s significant accounting policies outlined in Note 1 reflect the requirements of new IFRS accounting standards and interpretations effective for the Group during 2020. This note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial statements and the new accounting policies that have been applied from 1 October 2019, where they are different to those applied and disclosed in the 2019 Annual Report.

IFRS 16 Leases IFRS 16 replaced IAS 17 Leases and related interpretations. The standard addresses the definition of a lease, recognition and measurement of leases, and establishes principles for reporting useful information to users of financial statements about leasing activities. A key change arising from IFRS 16 is that most of the leases previously accounted for as operating leases under IAS 17 are now accounted for on the Balance Sheet, similar to the accounting for finance leases previously.

Accounting Policy The following accounting policies are applied on transition to IFRS 16: • The Group applied the modified retrospective approach to transition at 1 October 2019. With this approach, lease liabilities and right of use assets were recognised for the remaining lease payments on identified lease contracts at date of application, discounted at the appropriate incremental borrowing rate; • Right of use assets were measured at the amount equal to the lease liabilities, adjusted by the amount of any related prepaid or accrued lease payments recognised on the balance sheet at 30 September 2019 before initial adoption of IFRS 16; • The Group applied the practical expedient on transition to IFRS 16 to not recognise lease liabilities for lease contracts with a remaining lease term of less than 12 months; • The Group applied the practical expedient wherein it relied on its assessment of whether leases are onerous immediately before the date of initial application; • The Group applies the recognition exemption for both short-term leases with a duration of 1 year or less, and leases of low value assets. Such leases continue to be accounted for on a straight-line expense basis; • The Group separates non-lease components for property, plant and motor vehicle leases; • For all lease contracts in existence at 1 October 2019, the Group retained the assessment made under IAS 17 and IFRIC 4 as to whether such contracts contain a lease.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, discounted using the rate inherent in the lease unless this is not readily determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate. Lease contracts that are low value or have a lease term of less than 12 months continue to be accounted for on a straight line expense basis.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: • Lease payments made at or before the commencement of the lease; • Initial direct costs incurred; and • The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

Subsequent to initial measurement, lease liabilities increase as a result of interest charged on the balance outstanding and are reduced for lease payments made. Right of use assets are amortised on a straight line basis over the remaining term of the lease or over the remaining economic life of the asset if this is determined to be shorter than the lease term.

172 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

34. Change in Accounting Policies continued IFRS 16 Leases continued When the estimate of the term of any lease is revised, for example due to reassessing the probability of exercising an extension or termination option, the carrying amount of the lease liability is adjusted to reflect the payments to be made over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is also revised when the variable element of future lease payments dependent on a rate or index is revised, except in this case the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right of use asset, with the revised carrying amount being amortised over the remaining revised lease term.

When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification. If the renegotiation results in one or more additional assets being leased for an amount equal to the standalone price for the additional right of use assets obtained, the modification is accounted for as a separate lease in accordance with the above policy. In all other cases where the renegotiation increases the scope of the lease, the lease liability is remeasured using the discount rate applicable on the modification date, with the right of use asset being adjusted by the same amount. If the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right of use asset are reduced by the same proportion to reflect the partial or full termination of the lease with any difference recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right of use asset is adjusted by the same amount.

Implementation of IFRS 16 The impact of adopting the new standard on the Group Balance Sheet as at 1 October 2019 is outlined as follows:

30 September 2019 IFRS 16 1 October Previously reported Adjustments 2019 Adjusted $’000 $’000 $’000 Non-current assets Right of use assets – 81,161 81,161 Deferred income tax assets 5,178 1,936 7,114 Current assets Trade and other receivables 370,350 (868) 369,482 Equity Retained earnings 829,459 1,924 831,383 Non-current liabilities Interest-bearing loans and borrowings 174,734 (30) 174,704 Lease liabilities – 79,467 79,467 Other payables 23,853 (7,630) 16,223 Provisions 74,193 (181) 74,012 Deferred income tax liabilities 39,263 12 39,275 Current liabilities Interest-bearing loans and borrowings 65,297 (19) 65,278 Lease liabilities – 14,620 14,620 Trade and other payables 246,685 (5,045) 241,640 Provisions 19,633 (889) 18,744

Total lease liabilities of $94,087,000 and corresponding right of use assets of $94,087,000 were recognised on adoption of IFRS 16. Existing lease related balances of $12,926,000 at 1 October 2019 were offset with the right of use assets, resulting in the recognition of a net right of use asset of $81,161,000. The weighted average discount rate applied in calculating the lease liabilities on transition was 3.23%. A net deferred tax asset of $1,924,000 was recognised on adoption of the standard as a result of temporary tax differences on recognition of the lease liabilities and right of use assets (Note 28). The impact of adopting IFRS 16 on opening retained earnings was $1,924,000.

UDG Healthcare plc 173 Annual Report and Financial Statements 2020 Notes Forming Part of The Group Financial Statements (continued)

34. Change in Accounting Policies continued IFRS 16 Leases continued Reconciliation of operating lease commitments to lease liabilities

Land and Motor Plant, equipment, buildings vehicles and other Total Reconciliation of operating lease commitments to IFRS 16 lease liability on transition $’000 $’000 $’000 $’000 Operating lease commitments under IAS 17 at 30 September 2019 112,070 10,800 2,327 125,197 Adjusted for impact of: Finance lease liabilities recognised under IAS 17 as at 30 September 2019 (Note 24) – – 49 49 Short-term leases not recognised as a liability1 (904) (4,320) – (5,224) Low-value leases not recognised as a liability2 ––(1,523)(1,523) Different treatment of extension and termination options3 4,034 103 – 4,137 Separation of non-lease components from the lease contracts4 (6,022) (1,110) (110) (7,242) Lease contracts not yet commenced5 (9,185) – – (9,185) Effect of discounting the lease liability6 (11,875) (221) (26) (12,122) Provisional IFRS 16 Lease liability on adoption at 1 October 2019 88,118 5,252 717 94,087

1 Relates to leases which are ending within 1 year or less of the date of transition, and are therefore excluded from the IFRS 16 lease liability as a result of applying the recognition exemption for short-term leases. 2 Relates to leases of assets that qualify as low-value assets and are therefore excluded from the IFRS 16 lease liability as a result of applying the recognition exemption for leases of low-value assets. These leases primarily relate to leases of IT, office and telephony equipment which are not individually material. 3 Differences between the non-cancellable periods of the in-scope leases which are used to calculate the operating lease commitments, and the lease terms used to calculate the lease liability under IFRS 16 which include periods covered by an option to extend the lease if the lessee is reasonably certain to exercise such options, and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise such options. As part of the transition to IFRS 16, management judgement has been applied to assess whether options included in the in-scope lease contracts will be executed. 4 Adjustments to remove non-lease components included in operating lease commitments from the IFRS 16 lease liability, in accordance with the Group accounting policy being applied on transition. 5 Refers to lease contracts that have been signed as at the transition date but that have not yet commenced as the asset is not available for use. 6 Impact of discounting the remaining lease payments on identified lease contracts as at the transition date, using the appropriate incremental borrowing rate.

IFRIC 23 Uncertainty over Income Tax Treatments IFRIC 23 clarified how to recognise and measure uncertainties over income tax treatments. The Group already provides for tax uncertainties in the recognition and measurement of the income tax expense and current tax liabilities. The impact of implementing IFRIC 23 did not have a material impact on the financial statements.

A number of other changes to IFRS became effective in the period beginning on 1 October 2019, however they did not have a material effect on the Group accounting policies and financial statements.

35. Events After the Balance Sheet Date There have been no significant events after the balance sheet date which require disclosure.

174 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Company Statement of Comprehensive Income for the year ended 30 September 2020

2020 2019 €’000 €’000 Profit for the financial year 179,397 78,986 Other comprehensive income for the financial year – – Total comprehensive income for the financial year 179,397 78,986

UDG Healthcare plc 175 Annual Report and Financial Statements 2020 Company Statement of Changes in Equity for the year ended 30 September 2020

Equity share Share Other Retained Total capital premium reserves earnings equity €’000 €’000 €’000 €’000 €’000 At 1 October 2019 12,842 166,664 63,242 414,861 657,609

Profit for the financial year –––179,397179,397 Other comprehensive income: ––––– Total comprehensive income for the year – – – 179,397 179,397

Transactions with shareholders: New shares issued 50 675 – – 725 Issued in settlement of deferred consideration1 36 5,575 – – 5,611 Share-based payment expense – – 5,076 – 5,076 Dividends paid to equity holders – – – (37,363) (37,363) Release from share-based payment reserve – – (4,603) 4,603 – At 30 September 2020 12,928 172,914 63,715 561,498 811,055

1 The Company issued 723,775 ordinary shares during the year as a part settlement of the deferred consideration for the acquisition of STEM Marketing which the Group acquired in the year ended 30 September 2017. for the year ended 30 September 2019

Equity share Share Other Retained Total capital premium reserves earnings equity €’000 €’000 €’000 €’000 €’000 At 1 October 2018 12,811 165,652 61,653 368,580 608,696

Profit for the financial year – – – 78,986 78,986 Other comprehensive income/(expense): ––––– Total comprehensive income for the year – – – 78,986 78,986

Transactions with shareholders: New shares issued 31 1,012 – – 1,043 Share-based payment expense – – 4,180 – 4,180 Dividends paid to equity holders – – – (35,296) (35,296) Release from share-based payment reserve – – (2,591) 2,591 – At 30 September 2019 12,842 166,664 63,242 414,861 657,609

176 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Company Balance Sheet as at 30 September 2020

2020 2019 Note €’000 €’000 ASSETS Non-current Investment in subsidiary undertakings 36 444,638 363,986 Total non-current assets 444,638 363,986 Current Trade and other receivables 37 367,405 383,741 Cash and cash equivalents 3,821 21,871 Current income Taxes 209 84 Total current assets 371,435 405,696 Total assets 816,073 769,682

EQUITY Equity share capital 12,928 12,842 Share premium 172,914 166,664 Other reserves 38 63,715 63,242 Retained earnings 38 561,498 414,861 Capital and reserves attributable to equity holders of the parent 811,055 657,609

LIABILITIES Current Trade and other payables 40 5,018 112,073 Total current liabilities 5,018 112,073 Total liabilities 5,018 112,073 Total equity and liabilities 816,073 769,682

As permitted by section 304 of the Companies Act 2014, the company is availing of the exemption from presenting its separate Income Statement in the financial statements and from filing it with the Registrar of Companies. The company’s profit for the financial year is €179,397,000 (2019: €78,986,000).

On behalf of the Board

S. Cooke B. McAtamney Director Director

UDG Healthcare plc 177 Annual Report and Financial Statements 2020 Company Cash Flow Statement for the year ended 30 September 2020

2020 2019 €’000 €’000 Cash flows from operating activities Profit before tax 179,174 78,201 Finance income (4) (11) Finance expense 3 8 Operating profit 179,173 78,198 Decrease in trade and other receivables 21,946 9,604 Decrease in trade payables, provisions and other payables (138,675) (29,226) Interest paid (3) (8) Income taxes received 100 53 Net cash inflow from operating activities 62,541 58,621

Cash flows from investing activities Interest received 4 11 Investment in subsidiary undertakings (43,957) (37,075) Net cash outflow from investing activities (43,953) (37,064)

Cash flows from financing activities Proceeds from issue of shares (including share premium thereon) 725 1,043 Dividends paid to equity holders of the company (37,363) (35,296) Net cash outflow from financing activities (36,638) (34,253)

Net decrease in cash and cash equivalents (18,050) (12,696) Cash and cash equivalents at beginning of year 21,871 34,567 Cash and cash equivalents at end of year 3,821 21,871

Cash and cash equivalents is comprised of: Cash at bank and short-term deposits 3,821 21,871 3,821 21,871

178 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Notes Forming Part of The Company Financial Statements

36. Investment in Subsidiary Undertakings

2020 2019 €’000 €’000 Cost At beginning of year 363,986 291,486 Additions in year 76,793 68,320 Share options granted to employees of subsidiary undertakings 3,859 4,180 At end of year 444,638 363,986

The additions to investment in subsidiary undertakings during the year of €76,793,000 were comprised of cash consideration of €43,957,000 and non-cash consideration of €32,836,000.

In the prior year, the additions to investment in subsidiary undertakings during the year of €68,320,000 were comprised of cash consideration €37,075,000 and non-cash consideration of €31,245,000.

37. Trade and Other Receivables

2020 2019 €’000 €’000 Current Amounts due from subsidiary undertakings 367,096 383,219 Other receivables 309 522 367,405 383,741 Amounts due from subsidiary undertakings are interest free and repayable on demand.

38. Capital and Reserves

Other Retained reserves earnings €’000 €’000 At 30 September 2018 61,653 368,580 Profit for the financial year –78,986 Release from share-based payment reserve (2,591) 2,591 Dividends paid to equity holders – (35,296) Share-based payment expense 4,180 – At 30 September 2019 63,242 414,861 Profit for the financial year –179,397 Release from share-based payment reserve (4,603) 4,603 Dividends paid to equity holders –(37,363) Share-based payment expense 5,076 – At 30 September 2020 63,715 561,498

Other reserves represents a share-based payment reserve of €13,632,000 (2019: €13,159,000), a treasury shares reserve of (€5,742,000) (2019: (€5,742,000)), a goodwill reserve of (€93,000) (2019: (€93,000)), a non-distributable reserve of €55,668,000 (2019: €55,668,000) and a capital redemption reserve of €250,000 (2019: €250,000).

The Company’s non-distributable reserve consists of €16,762,000 (2019: €16,762,000) transferred from the share premium account against which goodwill, arising from acquisitions in financial periods prior to 1 October 1999, is offset on consolidation and a transfer from the income statement of €38,906,000 (2019: €38,906,000), arising on the restructuring of Group activities.

Details of equity share capital are set out in Note 18.

UDG Healthcare plc 179 Annual Report and Financial Statements 2020 Notes Forming Part of The Company Financial Statements (continued)

39. Interest-bearing Loans and Borrowings Details of how the Company manages risk exposures and accounts for financial instruments are set out in Note 31.

Foreign Currency Risk Management The majority of trade conducted by the Company is in euro. Therefore, the level of transactional foreign exchange exposure is not material to the Company.

Funding and Liquidity The following are the undiscounted contractual maturities of financial instruments, including interest payments and excluding the impact of netting arrangements:

Carrying Contractual 6 months 6–12 Between Between amount cash flow or less months 1–2 years 2–5 years 30 September 2020 €’000 €’000 €’000 €’000 €’000 €’000 Trade and other payables 5,018 5,018 5,018 – – – 5,018 5,018 5,018 – – –

Carrying Contractual 6 months 6–12 Between Between amount cash flow or less months 1–2 years 2–5 years 30 September 2019 €’000 €’000 €’000 €’000 €’000 €’000 Trade and other payables 112,073 112,073 112,073 – – – 112,073 112,073 112,073 – – –

40. Trade and Other Payables

2020 2019 €’000 €’000 Current Amounts due to subsidiary undertakings 4,894 111,907 Accruals 124 166 5,018 112,073

Amounts due to subsidiary undertakings are interest free and repayable on demand.

41. Employee Benefits The aggregate employee costs recognised in the income statement are as follows:

2020 2019 €’000 €’000 Wages and salaries 455 516 Social security contributions 25 56 Pension costs – defined contribution schemes 7 – 487 572

The average number of employees, including executive directors, during the year was as follows:

2020 2019 number number Administration 3 3 3 3

180 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

42. Related Party Transactions The Company has related party relationships with its subsidiaries and with the directors of the Company. Details of the remuneration of the Company’s individual directors, together with the number of shares in the Company owned by them and their outstanding share options, are set out in the Directors’ Remuneration Report.

Transactions with Subsidiary Undertakings Details of balances outstanding with subsidiary undertakings are provided in Notes 37 and 40.

IAS 24 Related Party Disclosures requires the disclosure of compensation paid to the Company’s key management personnel. The details on key management personnel are outlined in Note 33.

In 2015 the Company transferred a significant element of its business activities to a subsidiary, UDG Healthcare Ireland Limited. The key management personnel engaged in the business throughout the year were employed by UDG Healthcare Ireland Limited.

43. Principal Subsidiaries As at 30 September 2020 Incorporated in the ROI

Name Nature of business Group share Ashfield Healthcare (Ireland) Limited Contract sales outsourcing 100% UDG Healthcare Ayrtons (Dublin) Limited* Investment holding company 100% UDG Healthcare Finance Limited* Financial services 100% UDG Healthcare (US) Holdings Limited* Investment holding company 100% UDG Healthcare Distributors Limited* Investment holding company 100% UDG Healthcare Ireland Limited Management services company 100% United Care Limited Investment holding company 100%

* Subsidiary undertakings owned directly by UDG Healthcare plc.

All of the above companies have their registered office at 20 Riverwalk, Citywest Business Campus, Dublin 24, NR23 D24.

All shares held are ordinary shares.

Incorporated in the U.K.

Name Nature of business Group share Ashfield Healthcare Limited 1 Contract sales outsourcing 100% Ashfield Insight & Performance Limited1 Sales force effectiveness training services provider 100% Ashfield Meetings & Events Limited1 Event management services provider 100% Galliard Healthcare Communications Limited1 Specialist healthcare and scientific public relations provider 100% Ashfield Healthcare Communications Group Limited1 Healthcare communications and consultancy services provider 100% Pegasus Public Relations Limited1 Healthcare communications provider 100% Sharp Clinical Services (UK) Limited1 Clinical trials services provider 100% UDG Healthcare (UK) Holdings Limited1 Investment holding company 100% STEM Healthcare Limited2 Commercial, marketing and medical audit services provider 100% Incisive Health Limited1 Healthcare policy and communications consultancy 100%

1 This company has its registered office at Ashfield House, Resolution Road, Ashby de la Zouch, Leicestershire, LE65 1HW. 2 This company has its registered office at 1 Parkshot, Richmond, Surrey, England, TW9 2RD.

UDG Healthcare plc 181 Annual Report and Financial Statements 2020 Notes Forming Part of The Company Financial Statements (continued)

43. Principal Subsidiaries continued Incorporated in Continental Europe

Name Nature of business Group share Ashfield Healthcare GmbH4 Contract sales outsourcing 100% Ashfield Healthcare GmbH5 Contract sales outsourcing 100% Ashfield Iberia SLU6 Contract sales outsourcing 100% Ashfield Nordic AB7 Pharmaceutical sales and marketing company 100% Ashfield S.A8 Contract sales outsourcing 100% Ashfield Saglik Hizmetleei Ticaret Limited Sirketi9 Pharmaceutical sales and marketing company 100% Enestia Belgium N.V.10 Packaging solutions provider 100% European Packaging Centre B.V.3 Contract packaging company 100% Ashfield Iberia Lda11 Contract sales outsourcing 100% UDG Healthcare Holdings B.V.3 Investment holding company 100% Sellxpert GmbH & Co KG12 Contract sales outsourcing 100% Selldirekt GmbH12 Contract sales outsourcing 100% Physicians World GmbH13 Medical Communications business 100% Pharma Logistics Investments B.V.3 Sales leads and sales intelligence data 100%

3 This company has its registered office at Neptunus 12, 8448 CN Heerenveen, Netherlands. 4 This company has its registered office at Euro Plaza, Gebaude F, Technologiestrabe 5, 4. OG, 1120 Vienna, Austria. 5 This company has its registered office at Goldbeckstrasse 5, 69493 Hirschberg, Germany. 6 This company has its registered office at Calle Quintanavides 13, Parque Empresarial Vía Norte, Edificio 1-2a planta, 28050 Madrid, Spain. 7 This company has its registered office at Luntmakargatan 66, 5van, 11351 Stockholm, Sweden. 8 This company has its registered office at Foundation Plaza, Building 501, Belgicastraat 1, 1930 Zaventum, Belgium. 9 This company has its registered office at Sahrayıcedit Mah. Halk Sk. No:40 Pakpen Plaza K:1 34734 Kozyatağı/Kadıköy/Istanbul. 10 This company has its registered office at Klocknerslyaat 1, 3930 Hamont-Achel, Belgium. 11 This company has its registered office at Avenida Dom João Ii, Nº 44c – 2.3 Edificio Atlantis, Parque Das Naçoes, 1990–095 Lisboa, Portugal. 12 This company has its registered office at Goldbeckstraße 5, 69493 Hirschberg, Germany. 13 This company has its registered office at Haupststrasse, 161, 68259 Mannheim, Germany.

Incorporated in North America

Name Nature of business Group share Ashfield Healthcare LLC14 Pharmaceutical sales and marketing company 100% Ashfield Healthcare Canada Inc15 Marketing, communications and sample and promotional material 100% management services provider Ashfield Healthcare Communications LLC16 Healthcare communications and consultancy services provider 100% Ashfield Meetings & Events Inc.25 Event management services provider 100% Sharp Clinical Services, Inc.17 Clinical trials services provider 100% Sharp Corporation, Inc18 Contract packaging company 100% Vynamic LLC21 Management consulting 100% Cambridge BioMarketing Group, LLC22 Healthcare communications business 100% MicroMass Communications, Inc.19 Healthcare communications business 100% UDG Healthcare U.S. Holdings, Inc.20 Investment holding company 100% Smart Analyst, Inc23 Commercialisations, consulting and analytics business 100% Create Group NYC LLC24 Communications agency 100% Putnam Associates LLC26 Consulting services to pharmaceutical 100% Canale Communications27 Strategic communications agency 100%

14 This company has its registered office at 1100 Virginia Drive, Suite 200, Fort. Washington, PA 19034. 15 This company has its registered office at 263 Labrosse Avenue, Pointe-Claire, Quebec H9R 1A3. 16 This company has its registered office at 125 Chubb Avenue, Lyndhurst, New Jersey 07071. 17 This company has its registered office at 2400 Baglyos Circle Bethlehem PA 18020. 18 This company has its registered office at 7451 Keebler Way, Allentown 18106. 19 This company has its registered office at 100 Regency Forest Drive, Suite 400, Cary, NC, 27518. 20 This company has its registered office at 2400 Baglyos Circle Bethlehem PA 18020. 21 This company has its registered office at 1600 Arch St, Philadelphia, PA 19103. 22 This company has its registered office at 53 State Street, 24th Floor, Boston, MA 02109. 23 This company has its registered office at 9 East 38th Street, 8th Floor, New York, NY 10016. 24 This company has its registered office at 180 Varick Street, Suite 212, New York, NY 10014. 25 This company has its registered office at 1100 Virginia Drive, Suite 200, Fort Washington, PA 19034. 26 This company has its registered office at 501 Boylston Street, Boston, MA 02116. 27 This company has its registered office at 4010 Goldfinch Street, San Diego, 92103.

182 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

44. Auditor Remuneration The auditor’s remuneration for the audit of the Company is detailed in Note 5.

45. Section 357 Guarantees and Contingent Liabilities Guarantees have been given by the Company in respect of the borrowing facilities of certain subsidiary undertakings and clients.

Pursuant to the provisions of Section 357, Companies Act 2014, the Company has guaranteed commitments entered into and liabilities of the following subsidiaries for the financial year ended 30 September 2020:, Ashfield Alliance Limited, Ashfield Healthcare (Ireland) Limited, Aquilant Limited, Dublin Drug (Investments) Limited, Dublin Drug Company Limited, Dublin Drug Limited, Marker (U.D.) Ireland Limited, Pharmexx Ireland (Sales Solutions) Limited, UDG Healthcare Ireland Limited, United Care Limited, UDG Healthcare (US) Holdings Limited, UDG Healthcare Ayrtons (Dublin) Limited, UDG Healthcare Distributors Limited, UDG Healthcare Finance Limited, UDG Healthcare Nordic Limited, UDG Healthcare Packaging Group Limited and UDG Healthcare Property Holdings Limited.

46. Approval of Financial Statements The Group and Company financial statements were approved by the directors on 1 December 2020.

UDG Healthcare plc 183 Annual Report and Financial Statements 2020 Financial Calendar

UDG Healthcare plc is an Irish registered company. The Company’s ordinary shares are quoted on the London Stock Exchange.

Ex-dividend date for 2020 final dividend 7 January 2021 Record date for 2020 final dividend 8 January 2021 AGM 26 January 2021 Payment date for 2020 final dividend 5 February 2021 Interim Announcement of Results for 2021 18 May 2021 Financial year end 30 September 2021 Preliminary Announcement of Results for 2021 23 November 2021

184 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Additional Information

Key Performance Indicators and Non-IFRS Performance Measures The Group reports certain financial measurements that are not required under International Financial Reporting Standards (IFRS) which represent the generally accepted accounting principles (GAAP) under which the Group reports. The Group believes that the presentation of these non-IFRS measurements 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 and to measure executive management’s performance based remuneration.

None of the non-IFRS measurements should be considered as an alternative to financial measures derived in accordance with IFRS. The non- IFRS measurements 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. The principal non-IFRS measurements used by the Group, together with reconciliations where the non-IFRS measures are not readily identifiable from the Financial Statements, are set out below.

Net Revenue Definition This comprises of revenue as reported in the Group Income Statement, adjusted for revenue associated with pass-through costs for which the Group does not earn a margin.

2020 2019 Calculation $’000 $’000 Revenue Income Statement 1,279,194 1,298,523 Pass-through revenue (125,669) (195,648) Net revenue 1,153,525 1,102,875

Adjusted Operating Profit Definition This comprises of operating profit as reported in the Group Income Statement before amortisation of acquired intangible assets, transaction costs and exceptional items (if any).

2020 2019 Calculation $’000 $’000 Operating profit Income Statement 125,016 78,264 Transaction costs Income Statement 2,064 2,136 Amortisation of acquired intangible assets Note 14 32,331 32,387 Exceptional items Note 9 5,901 42,053 Adjusted operating profit 165,312 154,840

Adjusted Profit Before Tax Definition This comprises of profit before tax as reported in the Group Income Statement before amortisation of acquired intangible assets, transaction costs and exceptional items (if any).

2020 2019 Calculation $’000 $’000 Profit before tax Income Statement 108,168 74,277 Transaction costs Income Statement 2,064 2,136 Amortisation of acquired intangible assets Note 14 32,331 32,387 Exceptional items Note 9 9,440 37,910 Adjusted profit before tax 152,003 146,710

Adjusted Operating Margin Definition Measures the adjusted operating profit as a percentage of revenue.

2020 2019 Calculation $’000 $’000 Adjusted operating profit Per above 165,312 154,840 Revenue Income Statement 1,279,194 1,298,523 Adjusted operating margin 12.9% 11.9%

UDG Healthcare plc 185 Annual Report and Financial Statements 2020 Additional Information (continued)

Key Performance Indicators and Non-IFRS Performance Measures continued Adjusted Net Operating Margin Definition Measures the adjusted operating profit as a percentage of net revenue.

2020 2019 Calculation $’000 $’000 Adjusted operating profit Per above 165,312 154,840 Net revenue Per above 1,153,525 1,102,875 Adjusted net operating margin 14.3% 14.0%

Adjusted Effective Tax Rate Definition The Group adjusted effective tax rate expresses the income tax expense adjusted for the tax impact of exceptional items, transaction costs and the amortisation of acquired intangible assets as a percentage of adjusted profit before tax.

2020 2019 Calculation $’000 $’000 Tax charge Income Statement 15,327 16,786 Tax relief with respect to transaction costs 223 38 Deferred tax credit with respect to acquired intangible amortisation 9,523 7,084 Tax relief with respect to exceptional items Note 9 2,303 4,165 Remeasurement of current tax liabilities Note 9 4,420 – Income tax expense before exceptional, transaction costs and deferred tax attaching to amortisation of acquired intangible assets 31,796 28,073 Adjusted profit before tax Per above 152,003 146,710 Adjusted effective tax rate 20.9% 19.1%

Return on Capital Employed (ROCE) Definition ROCE is the adjusted operating profit expressed as a percentage of the Group’s net assets employed. Net assets employed is the average of the opening and closing net assets in the year excluding net debt adjusted for the historical amortisation of acquired intangible assets and restructuring charges.

2020 2019 Calculation $’000 $’000 Net assets Balance Sheet 983,541 900,563 Net debt Note 31 16,197 80,530 Assets before net debt 999,738 981,093 Cumulative intangible amortisation 214,573 208,980 Cumulative restructuring costs 27,394 20,439 Total capital employed 1,241,705 1,210,512

Average total capital employed 1,226,108 1,186,319 Adjusted operating profit Per above 165,312 154,840 Return on capital employed 13.5% 13.1%

Adjusted and Annualised EBITDA Definition Adjusted EBITDA is used internally for performance management and is also a useful supplemental measure for external stakeholders. Adjusted EBITDA is adjusted operating profit (operating profit before amortisation of acquired intangible assets, transaction costs and exceptional items) before depreciation, share-based payment expense, amortisation of computer software, the share of equity accounted investments’ profits/(loss) and profit/(loss) on disposal of property, plant and equipment.

The annualised EBITDA used for debt covenant compliance purposes, amends adjusted EBITDA to include the annualisation of the EBITDA for acquisitions and exclude share-based payment expense, transaction costs, the impact of IFRS 16 Leases on EBITDA and the EBITDA of completed disposals.

186 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Key Performance Indicators and Non-IFRS Performance Measures continued Adjusted and Annualised EBITDA continued Adjusted and annualised EBITDA are adjusted for depreciation of right of use assets as the expense is considered by management to be similar in nature to depreciation of property, plant and equipment and amortisation of intangible assets. Annualised EBITDA excluding IFRS 16 is also presented (excluding depreciation of right of use assets and IFRS 16 operating profit impact) to illustrate an annualised EBITDA that is consistent with the Group’s financial debt covenants.

2020 2019 Calculation $’000 $’000 Adjusted operating profit Per above 165,312 154,840 Share-based payment expense Cash Flow Statement 5,599 4,400 Depreciation Cash Flow Statement 22,841 23,130 Depreciation of right of use assets Cash Flow Statement 17,162 – Amortisation of computer software Note 14 9,385 8,027 Share of equity accounted investments’ profit after tax Income Statement (2,372) (50) Loss/(profit) on disposal of property, plant and equipment Cash Flow Statement 157 (571) Adjusted EBITDA 218,084 189,776 Share-based payment expense Cash Flow Statement (5,599) (4,400) Transaction costs Income Statement (2,064) (2,136) EBITDA of completed disposals (259) – Annualised EBITDA of acquisitions1 3,212 10,004 Annualised EBITDA 213,374 193,244 IFRS 16 Operating profit impact (1,688) – Depreciation of right of use assets (17,162) – IFRS 16 impact on EBITDA of completed disposals 77 – IFRS 16 impact on Annualised EBITDA of acquisitions (475) – Annualised EBITDA excluding IFRS 16 194,126 193,244

1 Includes EBITDA for acquisitions which were not part of the Group for the full financial year.

Free Cash Flow Conversion Definition Free cash flow conversion is the adjusted EBITDA, less working capital movement and less capital expenditure on property, plant and equipment and computer software, expressed as a percentage of adjusted EBITDA.

2020 2019 Calculation $’000 $’000 Adjusted EBITDA Per above 218,084 189,776 Working capital Cash Flow Statement 62,984 6,516 Investment in property, plant and equipment Cash Flow Statement (30,176) (27,016) Investment in intangible assets – computer software Cash Flow Statement (7,724) (12,475) Cash generated from operations including capital expenditure 243,168 156,801 Free cash flow conversion 111.5% 82.6%

UDG Healthcare plc 187 Annual Report and Financial Statements 2020 Additional Information (continued)

Key Performance Indicators and Non-IFRS Performance Measures continued Financial Ratios Definition The net debt to EBITDA and EBITDA interest cover ratios disclosed are calculated using annualised EBITDA and adjusted net finance expense (net finance expense excluding interest on pension scheme obligations, the unwinding of discount on provisions and deferred consideration, see Note 6). Net debt represents the net total of current and non-current borrowings, current and non-current derivative financial instruments and cash and cash equivalents as presented in the Group Balance Sheet and is calculated in Note 31.

Constant Currency Definition The translation of foreign denominated earnings can be impacted by movements in foreign exchange rates versus U.S. dollars, the Group’s presentation currency. In order to present a better reflection of underlying performance in the year, the Group retranslates foreign denominated prior year earnings at current year exchange rates.

2020 2019 Revenue – constant currency $’000 $’000 Revenue Income Statement 1,279,194 1,298,523 Currency impact – (2,590) Revenue – constant currency 1,279,194 1,295,933 Revenue – constant currency decrease on 2019 (16,739) Revenue – constant currency decrease on 2019 % (1%)

2020 2019 Net revenue – constant currency $’000 $’000 Net revenue Per above 1,153,525 1,102,875 Currency impact – (2,240) Revenue – constant currency 1,153,525 1,100,635 Revenue – constant currency increase on 2019 52,890 Revenue – constant currency increase on 2019 % 5%

Adjusted operating profit – constant currency $’000 $’000 Adjusted operating profit Per above 165,312 154,840 Currency impact – 76 Adjusted operating profit – constant currency 165,312 154,916 Adjusted operating profit – constant currency increase on 2019 10,396 Adjusted operating profit – constant currency increase on 2019 % 7%

Adjusted profit before tax – constant currency $’000 $’000 Adjusted profit before tax Per above 152,003 146,710 Currency impact – 130 Adjusted profit before tax – constant currency 152,003 146,840 Adjusted profit before tax – constant currency increase on 2019 5,163 Adjusted profit before tax – constant currency increase on 2019 % 4%

Adjusted diluted earnings per share (‘EPS’) – constant currency $’000 $’000 Adjusted profit attributable to owners of the parent Note 11 120,192 118,596 Currency impact – 131 Adjusted profit attributable to owners of the parent – constant currency 120,192 118,727 Weighted average number of shares used in diluted EPS calculation Note 11 251,909,092 250,662,451 Adjusted diluted EPS – constant currency (cent) 47.71 47.37 Adjusted diluted EPS – constant currency increase on 2019 (cent) 0.34 Adjusted diluted EPS – constant currency increase on 2019 % 1%

188 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Glossary

AGM Annual General Meeting IASB International Accounting Standards Board ABPI Association of the British Pharmaceutical Industry IFRIC International Financial Reporting Interpretations APM Alternative Performance Measures Committee ARA Annual Report Announcement IFRS International Financial Reporting Standards CAGR Compound Annual Growth Rate IMP Investigational Medicinal Product CDP Carbon Disclosure Project Inc. Incorporated CEO Chief Executive Officer IRT Interactive Response Technology CFO Chief Financial Officer IT Information Technology CGU Cash Generating Unit ISAs International Standards on Auditing CMIC Current Medical Information Centre KPI Key Performance Indicator CMO Contract Manufacturing Organisation KWP Kilowatt Peak Carbon Dioxide LTA Lost Time Accidents CO2 CODM Chief Operating Decision Maker LTD Limited Company COE Centre of Excellence LTIP Long Term Incentive Plan COO Chief Operating Officer MAH Marketing Authorisation Holder CRM Customer Relationship Management M&A Mergers and Acquisitions CREST The relevant settlement system operated by Euroclear U.K. NED Non-Executive Director & Ireland NETS Network of Employers for Traffic Safety CSO Contract Sales Organisation N/A Not Applicable The Code U.K. Corporate Governance Code 2018 issued by the U.K. NI Northern Ireland Financial Reporting Council NomCo Nominations and Governance Committee CSR Corporate Social Responsibility N/M Not Meaningful DEI Diversity, Equity and Inclusion PA Pennsylvania EBIT Earnings Before Interest and Tax PAYE Pay As You Earn EBITDA Earnings Before Interest, Tax, Depreciation and PBCIT Profit Before Central Interest and Tax Amortisation PBIT Profit Before Interest and Tax EGM Extraordinary General Meeting PBT Profit Before Tax EHS Environmental Health and Safety PLC Public Limited Company EMEA Europe, the Middle East and Africa PR Public Relations EPS Earnings per Share PSP Patient Support Programme ERP Enterprise Resource Planning PwC PricewaterhouseCoopers ESG Environmental, Social and Governance Q4 Quarter 4 ESOP Executive Share Option Plan R&D Research and Development ESOS Executive Share Option Scheme Rem Co Remuneration Committee E.U. European Union RIF Risk, Investment and Financing Committee EB Euroclear Bank Belgium ROCE Return on Capital Employed EY Ernst & Young Chartered Accountants and Statutory Audit Return on Investment Firm ROI QP Qualified Person FDA Food and Drug Administration SCOPE 1 Covers direct emissions from owned or controlled sources. FMD Falsified Medicine’s Directive Examples – Fuel combustion, Company vehicles, Fugitive FTSE 100 Capitalisation – weighted index consisting of the 100 largest emissions.* Index companies listed on the London Stock Exchange with the Covers indirect emissions from the generation of highest market capitalisation SCOPE 2 purchased electricity, steam, heating and cooling FTSE 250 Capitalisation – weighted index consisting of the 101st consumed by the reporting company. Examples – Index to the 350th largest companies on the London Stock Purchased electricity, heat and steam.* Exchange SCOPE 3 Includes all other indirect emissions that occur in a FY2019 Financial Year 2019 company’s value chain. Examples – Purchased goods FY2020 Financial Year 2020 and services, Business travel and Waste disposal.* FY2021 Financial Year 2021 SET Senior Executive Team FRC Financial Reporting Council SID Senior Independent non-executive Director GAAP Generally Accepted Accounting Principles TSR Total Shareholder Return GDPR General Data Protection Regulation U.K. United Kingdom GM General Manager UN United Nations HCP Healthcare Professionals U.S. United States HIPAA Health Insurance Portability and Accountability Act VAT Value Added Tax HR Human Resources V.P Vice President H&S Health & Safety WDA Wholesale Distribution Authorisation IAASA Irish Auditing and Accounting Supervisory Authority WHO World Health Organisation IAS International Accounting Standard * Source: Carbon Trust. UDG Healthcare plc 189 Annual Report and Financial Statements 2020 Contacts for Shareholders

Company Secretary and Principal Bankers Registered Office Ulster Bank Damien Moynagh Ulster Bank Ireland DAC, UDG Healthcare plc, George’s Quay, 20 Riverwalk, Dublin 2, Ireland Citywest Business Campus, Citywest, Dublin 24, D24 NR23 Solicitors Ireland A&L Goodbody International Financial Services Centre, Tel: +353 1 468 9000 North Wall Quay, Website: www.udghealthcare.com Dublin 1, Ireland

Registered Number Auditor 12244 Ernst & Young Harcourt Centre, Registrar Harcourt Street, Enquiries concerning shareholdings Dublin 2, Ireland should be addressed to: Website Computershare Investor Further information on UDG Healthcare Services (Ireland) Limited is available on the Group’s website: 3100 Lake Drive, www.udghealthcare.com Citywest Business Campus, Dublin 24, D24 AK82 Ireland

Tel: +353 1 447 5100 Email: [email protected]

Stockbrokers Davy Davy House, 49 Dawson Street, Dublin 2, Ireland

Liberum, Ropemaker Place, 25 Ropemaker Street, London, EC2Y 9LY

Peel Hunt, Moor House, 120 London Wall, London, EC2Y 5ET

190 UDG Healthcare plc Annual Report and Financial Statements 2020 Strategic Report Governance Financial Statements

Notes

UDG Healthcare plc 191 Annual Report and Financial Statements 2020 Notes

192 UDG Healthcare plc Annual Report and Financial Statements 2020

UDG Healthcare plc

UDG Healthcare plc 20 Riverwalk Citywest Business Campus Citywest Dublin 24 Ireland D24 NR23

T: +353 1 468 9000 www.udghealthcare.com