Trusted
Global
Partner
Delivering to over 160
countries worldwide
Annual Report 2019
Contents
Overview
Operational and Financial Highlights
Investment Case
Chairman’s Report
Strategic Review
Chief Executive’s Report
Our Strategy
Business Model
Key Performance Indicators
Risk Management
Sustainability and Governance
2
6
8
14
18
22
24
28
34
Performance Review
Financial Review
Commercial & Clinical
Product Access
Supply Chain & Retail
42
46
48
50
Governance
55
Company Information
56
Board of Directors
Corporate Governance Report
58
Audit, Risk and Compliance Committee Report 67
70
Nomination Committee Report
74
Remuneration Committee Report
81
Directors’ Report
Financial Statements
92
Independent Auditors’ Report
Group Income Statement
100
Group Statement of Comprehensive Income 101
102
Group Balance Sheet
103
Company Balance Sheet
104
Group Cash Flow Statement
105
Company Cash Flow Statement
106
Group Statement of Changes in Equity
107
Company Statement of Changes in Equity
108
Accounting Policies
122
Notes to the Financial Statements
197
Alternative Performance Measures
Glossary of Terms
201
Our vision is to improve
patient access to
pharmaco-medical
products and treatments
by developing
connectivity between
manufacturers and
healthcare stakeholders.
Read more about
Our Strategy on
page 18
Commercial
& Clinical
page 46
Product
Access
page 48
Supply Chain
& Retail
page 50
Supporting 200 multinational
pharmaceutical and medical
technology manufacturers
Sourcing product and
technology from and
serving 160+ countries
287
Uniphar Symbol Group
pharmacies
2,2 +
Workforce
Contents
1
Operational and
Financial Highlights
Locations1
Further expansion planned in
the medium term in Northern
Europe and the USA.
Active in
2018
Expansion
achieved
in 2019
IPO
complete
Successful dual listing
on 17 July 2019 on the
Euronext Growth (Dublin)
and AIM (London) markets
Entry into
the Nordics
Important milestone achieved
in Q4 2019 through the
acquisition of the EPS Group
Geographical
expansion
Gross profit generated
from outside of Ireland
more than doubled in
the year
EBITDA4
Gross Profit
€18 .6m
56% increase year on
year, rising from
€115.7m to €180.6m
Organic Growth 7% Strong gross profit growth
across all divisions and
geographies, with 7%
organic gross profit growth
Group
transformed 52%
52% (2018: 40%) of gross
profit from growth divisions;
Commercial & Clinical, and
Product Access
Global
platform
Key strategic acquisition
of Durbin completed,
providing a global platform
for Product Access
to deliver to 160+ countries
€48. m
49% increase year on
year, from €32.2m to
€48.0m. Including the
impact of IFRS 16 “Leases”,
EBITDA was €58.6m
Return on capital
employed
In line with our medium
term outlook. Including the
impact of IFRS 16 “Leases”,
14.7%
ROCE was 15.2%
Go to page 6
for more on our
Investment Case
2
1. Locations relate to countries in which
Uniphar has a physical presence.
Summary Financial Results
Financial Year Ended 31 December 2019
Year ended 31 December2
Revenue
Gross profit
Gross margin
EBITDA
EBITDA excluding impact of IFRS 164
Operating profit
Profit before tax excluding exceptional items
Net bank cash/(debt)5
Basic EPS (cent)
Adjusted EPS (cent)
Growth
2019
€’000
2018
€’000
Reported
Constant
Currency3
17.4%
56.1%
81.6%
49.0%
78.2%
55.1%
17.3%
55.9%
81.4%
48.8%
77.7%
55.0%
1,665,283
1,417,895
180,602
115,717
10.8%
58,555
48,022
28,207
31,770
26,622
11.5
14.3
8.2%
32,237
32,237
15,826
20,479
(152,880)
7.3
15.0
2. Additional information in relation to Alternative Performance Measures (APMs) are set out on pages 197 to 200.
3. Constant currency growth is calculated by applying the prior period’s actual exchange rate to the current period’s result.
4. IFRS 16 “Leases” was adopted from 1 January 2019. For comparative purposes, EBITDA has also been presented excluding
the impact of the adoption of IFRS 16.
5. Net bank cash/(debt) represents the net total of current and non-current borrowings, cash and cash equivalents, and restricted cash as
presented in the Group Balance Sheet.
Overview
3
Uniphar plc Annual Report 2019
Operational and Financial
Highlights continued
Transformation
to a diversified
healthcare Group
Diversified healthcare services
business focused on growth markets
Divisional Gross Profit
Gross Profit €’m
€17.2m
10%
€86.6m
48%
2019
€76.8m
42%
Commercial & Clinical
Product Access
Supply Chain & Retail
200
180
160
140
120
100
80
60
40
20
0
2015 2016 2017 2018 2019
Commercial &
Clinical
Product
Access
MedTech Pharma
Exclusive On Demand
Uniphar at a Glance
Building a pan-European platform
Building a global capability
Providing sales, marketing and
distribution solutions to manufacturers
Sourcing and supply of unlicensed
medicines for pharmacy customers
Focused on speciality pharma and
medical technologies
Managing the release of speciality
medicines for pharma manufacturers
Supply Chain
& Retail
Supply Chain Retail
50 years in Supply Chain
#1 market position in wholesale in Ireland
Supported by a network of owned and
franchised pharmacies
A diversified international healthcare service provider.
Supporting over 200 multinational pharmaceutical and
medical technology manufacturers across three
divisions – Commercial & Clinical, Product Access
and Supply Chain & Retail
2,2
Workforce of more than 2,200
Geographic footprint
Active in Ireland, the UK, Benelux, USA
and the Nordics
Sourcing product from and serving 160+ countries.
€
€
7%
7% organic gross profit growth achieved in 2019 across
three divisions
€1.7b
In 2019, the Group generated revenue of €1.7b, gross
profit of €180.6m and EBITDA of €48.0m. Including the
impact of the adoption of IFRS 16 “Leases”, EBITDA
increases to €58.6m
4
Uniphar plc Annual Report 2019
Overview
5
Investment Case
Diversified healthcare
services business
operating in growth
markets
Experienced
Industry Team
• Executive management,
line management and
specialty/technical
personnel with many
years of relevant industry
experience driving
the business
€
Cash Generation
• Strong free cash flow
generation supporting
growth platform
• Capital allocation
prioritised to support
sustainable organic
growth, accretive M&A
and a progressive
dividend policy
Go to page 18
for more on
our Strategy
Go to page 42
for more on our
Financial Review
Compelling Market
Opportunity
•
Increasing requirements
for speciality products
• Continued growth
in outsourcing by
manufacturers
• Highly fragmented
European market
Experienced
Industry
Team
Compelling
Market
Opportunity
Cash
Generation
Uniphar
Investment
Case
Integrated
Model
Competitive
Edge
Platform for
Growth
Competitive Edge
• High tech distribution
infrastructure
• Longstanding manufacturer
relationships
• Digital capabilities
Platform for Growth
• Building a pan-European Commercial
& Clinical service offering for our
manufacturer clients
Integrated Model
• End to end solution
across the value chain and
throughout product lifecycle
• Exciting opportunity to integrate
• Leveraging existing
Durbin and scale our Product Access
offering on a global basis
• Migrating existing manufacturer
clients to multiple geographies
and services
facilities, technology
and relationships to take
advantage of substantial
market opportunity in
growth divisions
6
Uniphar plc Annual Report 2019
Overview
7
Chairman’s
Report
Dear Shareholders,
Overview
2019 was a transformative year for
Uniphar. On July 17th 2019, Uniphar plc
successfully completed our dual listing
on the Euronext Growth (Dublin) and
AIM (London) stock exchanges. It was
a historic day for the Group, being both
a recognition of how much the Group
has developed and grown in the last ten
years and a marker of the beginning of
a new era for Uniphar. The successful
IPO and dual listing represented the
culmination of a huge improvement
effort by the Board, management and
staff of Uniphar.
The Group saw the benefit of our new status
immediately and 2019 proved a successful year for
the business in many ways. We made a number of key
acquisitions and grew both organically and through
acquisition. The significant progress made in the year
is reflected in the financial performance, with Uniphar
achieving 56% growth in gross profit, with EBITDA
(pre-IFRS 16) growing by 49% year on year. Our loyal
shareholders have, as a result, seen strong basic
earnings per share of 11.5 cent and a return on capital
employed of 14.7%. Each of the three operational
divisions (Commercial & Clinical, Product Access and
Supply Chain & Retail) contributed to this performance,
with all delivering organic growth in line with medium-
term guidance.
As Chairman it is my responsibility to oversee the
corporate governance framework and to promote
high standards throughout the Group. During 2019,
the Directors took the decision to adopt the Quoted
Companies Alliance Corporate Governance Code
for small and mid-size quoted companies, which has
become a widely recognised benchmark for companies
of Uniphar’s size, particularly companies trading
on the AIM and Euronext Growth markets. It is my
responsibility to hold the Company and its executives
to account for progress towards meeting those
standards and I am happy to report that the Group has
made significant progress in that regard during 2019.
€139.4m
Successful IPO in
July 2019 raising
gross proceeds
of €139.4m
Independent corporate
governance review
performed as part of
IPO preparations
Strategy
During 2019, the Group invested in
a number of companies in support
of the strategy to build out our
capability internationally, allowing
us to offer global manufacturer
clients a multinational service.
As signalled during the IPO, we
completed the strategic acquisition
of Durbin, which provides Product
Access with the global platform to
operate and compete worldwide.
We also completed the acquisition
of the EPS Group delivering a
presence in the Nordics from Q4
2019. Commercial & Clinical was
further enhanced in November
2019 with the acquisition of M3
Medical, an Irish-based business
which operates in similar areas
of speciality.
There are a number of further
potential acquisitions in the
pipeline that will enhance our
geographic footprint in both
Commercial & Clinical and Product
Access. The next 12 to 18 months
will focus on, integrating recently
acquired businesses and potential
future acquisitions, and investing
in their capability to scale the
business to meet the needs of
global manufacturers. The Board
is cognisant of our responsibility
to ensure that, as these acquired
companies are integrated into the
Group, our emphasis on strong
corporate governance is carried
through into these entities.
Equally important to the Board
is to ensure that newly acquired
companies have strong ethical
values and behaviours aligned
to the culture of the Group as a
whole. As a diverse Group, we rely
on senior managers to reinforce
our culture and to communicate
our values consistently across
each division. Our senior
managers know our business,
our people and our stakeholders
and are the guardians of our
culture. As the Group continues
to grow, we are committed to
reviewing and further developing
and communicating our corporate
culture across the enlarged Group
and its stakeholders.
Capital structure
Following the IPO, the Group has
a strong capital structure. There
is a medium-term debt facility
in place which has three years
remaining, and this facility coupled
with the capital structure and
future cashflow projections, places
the Group in a strong position.
During the year the Group entered
into a receivables purchase
agreement with its banking
partners which unlocked €68m of
capital tied up in Supply Chain &
Retail. This additional capital is
now available to be redeployed
to execute the strategy of our
growth divisions.
Communication with
shareholders
As a quoted company,
communication with shareholders
now follows a well-defined pattern,
with key communications issued
through the Regulatory News
Service (RNS). Our shareholder
base has changed considerably
since the IPO, with a significant
percentage of shares now held
by new institutional investors.
We have invested in improving
our approach to communication
with shareholders and the market,
including building a new website,
to ensure that potential investors
understand the breadth of what
we do and the potential the
business has to offer.
Board and corporate
governance
Last year, following an
independent corporate
governance review, we identified
the need for a more diverse
Board of Directors that better
reflected the breadth of activity
that the Group now undertakes.
We saw considerable change
in the composition of the Board
of Directors in advance of the
IPO, with long standing Board
members stepping down and three
new appointments made. Our
new Board members have wide
ranging experience at Board and
senior management levels in the
healthcare sector and with listed
companies. The new appointees
are Heather Ann McSharry, an
experienced Non-Executive
Director who has sat on the board
of a number of listed companies,
Paul Hogan, a senior industry
figure with experience in both the
US and Europe and Sue Webb, an
industry veteran with experience
at the highest level in a global
pharmaceutical company. We are
already seeing the benefit of their
experience and contribution in
Board discussions.
Our 2019 acquisitions
support our growth
strategy and build
out of our capability
internationally.
8
Uniphar plc Annual Report 2019
9
Overview
Looking to 2020, the Board
will continue to focus
on the Group’s delivery
against our ambitious
strategic priorities.
Chairman’s Report
continued
On behalf of the Board,
shareholders, management
and staff, I would like to thank
outgoing Non-Executive Directors,
Matt Murphy, Michael Quinn and
Criofan Shannon, for their hard
work, integrity and diligence in
the execution of their duties as
Non-Executive Directors of Uniphar
over many years. They remained
steadfast through challenging
economic periods and were
instrumental in steering the Group
towards its current position of
strength. Their sterling contribution
is very much appreciated.
As well as new Non-Executive
Board members, the Group made
a number of appointments at a
corporate level to support the
growth of the business and ensure
adherence to high standards of
corporate governance. In May
2019, Uniphar appointed a new
General Counsel and Company
Secretary, Group Director of
Corporate Development and a
senior industry figure as Managing
Director of Commercial & Clinical
Pharma. Each of these resources
bring a wealth of experience in
their respective fields. On behalf of
the Board and our shareholders,
I would like to extend a warm
thanks to former Company
Secretary, Rob Hanratty who
has moved to a new role within
the Group.
Sustainability and
Governance
At Uniphar we are committed to
growing shareholder value through
a sustainable and responsible
business model and we remain
committed to managing our
environmental responsibilities
effectively. We understand that
our work has an impact on the
environment, the communities
in which we operate and all
stakeholders. We understand that
our activities can have a lasting
impact and we believe in protecting
the environment for the benefit of
future generations.
Further details on our approach to
sustainability and governance is
outlined on pages 34 to 39.
Dividend
The Board is committed to a
sustainable and progressive
dividend policy, and made a
commitment at the time of the
IPO to pay a dividend in 2020 in
respect of the period from IPO to
31 December 2019. I am happy to
confirm that following another set
of positive results for the Group,
the Board is in a position to
propose a shareholder dividend of
€2.0m, subject to approval at the
Annual General Meeting.
Covid-19
Uniphar plays a significant
role in the national healthcare
infrastructure, ensuring continuity in
the supply and distribution of much
needed medicines, medical devices
and related services. As we continue
to prepare for the full impact of
Covid-19, we remain focused on
finding solutions to problems we’ve
never encountered before.
We are taking all necessary
measures to safeguard the
wellbeing of our staff, while
ensuring all healthcare stakeholders
continue to receive both the
medicinal and medical device
products they urgently need.
I would like to thank all of our
highly committed staff who are
managing the evolving situation
with dedication and resilience. We
remain in close communication with
Government and health authorities
on contingency planning for the
New Independent
Non-Executive
Directors appointed
to the Board3
coming weeks in anticipation of
wider outbreaks of the virus.
The nature of the product and
services provided means that there
is a continued requirement for these
products. While there may be a
reduction in the demand for certain
products and services and in
elective procedures, we expect the
requirement for these services and
procedures will still exist once the
pandemic is brought under control.
Outlook
Looking to 2020, the Board will
continue to focus on the Group’s
delivery against our ambitious
strategic priorities. The strategic
acquisitions completed in both our
growth divisions, together with the
successful IPO in 2019 have given
the Group a strong platform for
international growth, and continue
to deliver consistent and sustained
value for all stakeholders.
While Uniphar has made
considerable progress in terms of
corporate governance in the last 18
months, the Board recognises that
there is always progress to be made
and we will continue to ensure
that shareholder value is protected
and enhanced by continuously
improving standards of corporate
governance across the Group.
Finally, I would like to thank the
staff, management and Board for
the huge effort they have put in to
preparing for our dual stock market
listing and, most of all, I would like
to thank shareholders, old and new,
for their trust and support during a
landmark year for Uniphar.
Maurice Pratt
Chairman
10
Overview
11
Uniphar plc Annual Report 2019 Delivering
to over 160
countries
worldwide
Chief Executive’s Report
Our Strategy
Business Model
Key Performance Indicators
Risk Management
Sustainability and Governance
14
18
22
24
28
34
R
e
v
e
w
i
S
t
r
a
t
e
g
c
i
12
Uniphar plc Annual Report 2019
13
Chief Executive’s
Report
Dear Shareholders,
2019 marks a significant milestone in
the history of Uniphar. Having listed
the Company in Dublin and London
in July this year, we are now well
positioned to deliver the strategy of
doubling 2018 pro-forma EBITDA within
five years from IPO.
The structures are in place for our two growth divisions
and we have made great progress against our strategic
objectives, with the acquisitions of Durbin and the entry
into the Nordic market. We are very pleased to have
finished 2019 having delivered on our commitments
to shareholders, firstly, to list Uniphar plc to secure
the funding to double 2018 pro-forma EBITDA, and
secondly, to provide liquidity in our shares for our
committed and supportive shareholder base.
We find ourselves in a stronger position than ever
before at the end of 2019. The Group’s expertise,
digital platforms, strong industry relationships and
increasingly international business puts us in an
excellent position to deliver on our strategy, through
partnering with multinational manufacturer clients
across multiple geographies. The depth of expertise
and breadth of service offered across key therapeutic
areas make Uniphar particularly attractive to specialist
pharma and medtech manufacturers, both big pharma
and emerging companies. Uniphar’s fully integrated
model allows us to support manufacturers right across
the product lifecycle.
Financial Performance
Uniphar delivered an excellent performance in 2019,
performing in line with expectations for the full year
2019, including our first five months as a listed
company, with each division contributing strongly in
the period. Top-line performance was strong with a
year on year increase of over 56% in Gross Profit.
Over the full year, EBITDA (pre-IFRS 16) increased
by 49%, through a combination of organic growth
and growth through acquisitions. The acquisitions
completed in Commercial & Clinical contributed
strongly to this growth. The Group saw organic gross
profit growth of 7%, with each division contributing to
the total.
Key Strategic Highlights
IPO complete providing the
financial platform to deliver
growth strategy
Durbin acquisition provides
global capabilities in
Product Access
Pan-European expansion
on track in Commercial
& Clinical
Operating Profit has jumped by
78% in the period, resulting in a
significantly improved bottom line
performance. Following strong
cash performance in 2019, our
successful IPO, and the execution
of the non-recourse financing
arrangement, the Group is now in
a positive net bank cash position
of €26.6m (2018: net bank debt
€152.9m). This growth has enabled
strong returns for shareholders,
with adjusted earnings per share of
14.3 cent per share.
Organic growth of
7% All three divisions performed
well and contributed to gross
profit growth
Strategic Review
Our strategy is underpinned by
a number of structural drivers in
the global pharma and medtech
market:
- By 2023, speciality pharma is
forecast to grow to 50% of total
global pharma sales.
- There is a continued trend
among pharmaco-medical
manufacturers to outsource
specialist and non-core activities.
- Fragmentation is a feature of the
European pharmaco-medical
market across EU member
states and EEA countries all
part of the single market, a large
addressable market of more than
500 million people
We are well
positioned to
deliver our strategy,
and double 2018
pro-forma EBITDA
in the five years
from IPO.
The Group’s strategic objective
is to double 2018 pro-forma
EBITDA through building out a
pan-European business in the
Commercial & Clinical division and
using the global platform provided
by the acquisition of Durbin
to grow a world class Product
Access business. The Group lean
on three strategic initiatives that
will make this ambitious goal
achievable: Continued Client
Growth – growing with existing
manufacturer clients into new
services and new geographies,
Focused Market Leadership –
achieving a leading position in
our chosen specialist therapeutic
areas and Scaling Through Digital
– using our proven strength in the
use and development of digital
technology to offer better service
and outcomes to our manufacturer
clients and patients. All of these
initiatives are enabled through
people. As we move forward, we
believe it is the talent, expertise and
drive of our teams that will deliver
success for the Group.
During the year, Uniphar completed
one strategic and two bolt-
on acquisitions, as part of the
strategy to build a global platform
for Product Access and expand
the pan-European footprint of
Commercial & Clinical.
Uniphar is now one of the
largest independent medtech
sales, marketing and distribution
companies in Europe with a
significant pan-European footprint
across Ireland, the UK, Benelux,
and the Nordics, supporting more
than 200 brands for over 70 key
pharmaco-medical manufacturer
clients. We will expand our
presence in new geographies
both organically and through
acquisition, as appropriate. Already
45% of Commercial & Clinical’s
gross profit was generated in the
UK and Europe and contribution
from newer geographies will
continue to increase in both our
growth businesses.
The strategic acquisition of
Durbin provides Product Access
with global reach and global
regulatory expertise. With offices
in key hubs in the UK and the
US, Durbin has the capability,
regulatory and specialist expertise
to ship medicinal products all over
the globe.
In Supply Chain & Retail, we have
outperformed our expectation of
low single digit growth due to the
excellent return delivered by the
retail pharmacies acquired in 2018
and 2019, together with strong
growth in our consumer product
offerings. Their contribution
demonstrates clearly the benefits
the Uniphar symbol group can
deliver to any pharmacy taken
under its management. In 2019,
we completed the acquisition of
17 retail pharmacies, increasing
the number of pharmacies owned
by the Group to 59 and the total
number of pharmacies operating in
the Uniphar symbol group to 287.
14
Uniphar plc Annual Report 2019
Strategic Review
15
Chief Executive’s Report
continued
The strategy for acquisitions
remains focused on higher margin
opportunities particularly in our
two growth divisions, Commercial
& Clinical and Product Access. We
will continue to target companies
that are speciality focused, with a
strong local presence, a talented
management team with the desire
to grow the business beyond what
they might achieve alone, and a
culture that is compatible with our
own. We aim to generate ROCE
of 12-15% in the medium term
on new bolt-on investments,
with latitude for a slower return
in the short term on more
strategic investments.
Divisional Performance
This year has been a
transformational year for the
Group with the integration of
our strategic acquisitions into
Commercial & Clinical and Product
Access providing the Group with
a strong platform for growth into
2020 and beyond, across all three
trading divisions.
Commercial & Clinical
The goal in Commercial &
Clinical is to continue to expand
the division’s pan-European
service offering, commercialising
speciality brands. Already we
are seeing the benefit of this
with existing clients, with whom
we have key agencies, having
expanded with us from Ireland and
the UK into the Benelux, and now
expecting to grow with us into the
Nordic market. Key to the ability to
succeed in new regions is:
- Having a sales-focused,
clinically trained team;
- Leveraging our digitally
enabled multi-channel account
management system allowing
us to communicate with
healthcare professionals in
their preferred medium. This
allows the division to capitalise
on richer interactions with
HCPs, leading to better
sales outcomes.
Our medtech business is focused
on building in-depth therapeutic
expertise across several high
growth markets including
Interventional Health Informatics,
Orthopaedics, Ophthalmology,
Minimally Invasive Surgery and
Diagnostic Imaging.
Product Access
Our goal is to become a global
leader in the provision of On
Demand and Exclusive Access
services. Following the acquisition
of Durbin, the division is well-
placed to achieve this through
combining Uniphar’s scale,
relationships and digital platform
with Durbin’s traditional value
proposition and global capabilities
servicing over 160 countries.
This also strengthens the Group’s
pan-European Commercial &
Clinical offerings, with both
emerging and established
pharmaco-medical clients. Our
ability to now offer both Product
Access and Commercial &
Clinical solutions to manage
speciality products across the
entire lifecycle of a product is an
attractive feature for speciality
product manufacturers.
We are in a strong
position to continue
to deliver the
Group’s strategy
The core focus of the Exclusive
Access business remains on key
specialities and orphan drugs.
There is a strong pipeline of new
Exclusive Access opportunities
to convert to revenue growth.
The integration of Durbin is going
well and we are pleased with
the performance for the first five
months post acquisition and
excited for what we can achieve
with this platform.
Supply Chain & Retail
In Supply Chain & Retail we have
maintained a market-leading
position in pharmaceutical
wholesaling in Ireland. This
business gives us high-tech
distribution facilities, scalable
digital infrastructure, longstanding
manufacturer relationships, and
deep market insights into a small,
complex market. Importantly,
this business also gives us a
strong ability to generate cash
for reinvestment.
Our market-leading position
is supported by a network of
over 287 owned and franchised
pharmacies. While this is
an Irish-only business, the
manufacturer relationships, and
the infrastructure are leveraged
for the benefit of the growth
divisions in other geographies.
Our digital solutions are a key
differentiator for us across all
three divisions and we have grown
revenue generated through our
eCommerce Platform year on
year by 36%.
People, Culture and
Environment
Everything that we do is enabled
through people. Our greatest asset
is our relationship with pharmaco-
medical manufacturer clients.
These relationships exist because
of the energy, expertise and
customer focus of our people and
our can-do culture.
As we expand the footprint of
the business, we are increasingly
aware of the importance of doing
so responsibly and sustainably.
We are moving to harmonise the
Group’s approach to sustainability,
including reducing our impact on
the environment and making our
business more sustainable. We
believe that it is the right thing
to do for the communities we
operate in and the right thing to
do for shareholders.
Covid-19
While we continue to monitor
ongoing Covid-19 developments,
performance is ahead of our
expectations for the first two
months of 2020 and there has been
limited disruption to our business.
As we prepare for the full impact of
the Covid-19 crisis, we expect to
continue to see increased volumes
across the Group, with likely
increases in costs as we invest in
additional resources to manage
significantly higher volumes. With
potential sick leave, self-isolation
or quarantine situations arising, we
expect that we will have to deal
with reduced availability of the
workforce. Due to reprioritisation
of resources within hospitals and
other healthcare facilities we are
preparing for a possible delay in
Commercial & Clinical revenue
if certain ‘non-urgent’ elective
surgeries have to be postponed.
Using currently available
information our best estimate, of
a three month disruption, could
result in a reduction of 2020
EBITDA in the region of €5m.
We would, however, expect that
this would be recovered in future
periods as and when healthcare
systems return to normal.
The Group has a strong capital
structure in place with significant
cash resources available. At the
year-end, we held a net cash
position of €26.6m, consisting
of €116.2m of cash and cash
equivalents and €89.6m of bank
borrowings. I am confident based
on the Group’s financial position
and strong liquidity that the Group
remains in a strong position to
deliver our strategy.
Outlook
Our strategic developments in 2019
have positioned us well to achieve
our strategic objective of doubling
EBITDA within 5 years of IPO.
Outside of Covid-19
preparedness, our priorities for
2020 are to continue to integrate
and scale our 2019 acquisitions
in the two growth divisions and
carry on leveraging our key
assets in Supply Chain & Retail
to maintain a market leadership
position. In the medium term, we
plan to further enlarge our pan-
European platform. Commercial
& Clinical is already delivering
well for shareholders and will
continue to do so, as we convert
existing clients into multi-territory
customers in Europe. Our other
growth division, Product Access,
with the recent acquisition of
Durbin, presents a significant
opportunity for the Group.
We are confident we have the
strategy, the market opportunity,
the platform, the competitive edge,
and the team in place to double
2018 pro-forma EBITDA within five
years from IPO as committed.
Gerard Rabbette
Chief Executive Officer
Go to page 40
for details of our
Performance Review
16
Strategic Review
17
Uniphar plc Annual Report 2019
Our Strategy
2019 was an important year in
the progression of the Group’s
strategy. The acquisition of Durbin
provides Product Access with a
global platform delivering to over
160 countries. EPS Group broadens
the pan-European offering of the
Commercial & Clinical business,
giving a strong local presence in the
wider Nordic market.
Padraic Dempsey
Chief Commercial Officer
Our Vision
To improve patient access to
pharmaco-medical products
and treatments by enhancing
connectivity between manufacturers
and healthcare stakeholders.
Our Strategy
Double 2018 pro-forma EBITDA
over the five years from IPO, by
expanding the pan-European
Commercial & Clinical offering
and developing the global Product
Access capabilities to meet the
increasing needs of speciality
product and innovative medical
technology manufacturers.
Our business has always been
built on strong relationships
with all healthcare stakeholders,
particularly with manufacturers,
healthcare professionals and
patients. Core to our strategy is
focusing on speciality medtech
and pharma products and
leveraging our relationships,
deep insights digital platforms
and highly skilled workforce. In
Commercial & Clinical, we are
building a pan-European platform
and in Product Access we aspire
to be a global leader.
In the first five months since the
IPO, we have taken important
steps to execute our strategy
on a new larger stage. We have
acquired and are in the process
of integrating Durbin, which has
given Product Access a global
platform and links us to over 160
countries around the world.
We have acquired the EPS Group,
broadening the pan-European
offering of Commercial & Clinical,
and giving us a strong local
presence in the wider Nordic
market. This is a significant step
in the pan-European strategy for
Commercial & Clinical, where we
now have a presence in Ireland,
the UK, Benelux, and the Nordics.
Our strategy is to continue to grow
and develop the business in existing
markets, with existing clients, as
well as targeting new markets and
clients that would benefit from the
services we offer. We see speciality
pharmaceuticals and medical
devices as key market segments
for us and we are working to build
deeper strategic partnerships with
manufacturers that will allow us
to support them across multiple
markets and geographies, with a
broader range of services through
the full lifecycle of the product.
Key structural drivers underpinning
this strategy are the trend towards
speciality-focused development,
a fragmented European sales
channel for manufacturers and the
growing trend for manufacturers
to outsource.
Strategy in Action
Our strategic focus is to grow
EBITDA in a sustainable and
focused way. In formulating
our strategy, the Board are
conscious of our responsibility
not only to provide strong returns
to shareholders but to create
good quality employment for
our workforce and to minimise
our impact on the planet, while
focusing on our core mission,
to connect the manufacturer
to healthcare stakeholders and
thereby improve patient access to
pharmaco-medical products.
Strategic Initiatives
Continued
Client
Growth
Focused
Market
Leadership
Enabled
Through
People
Scaling
Through
Digital
18
Uniphar plc Annual Report 2019
Strategic Review
19
Our Strategy continued
The table below explains our strategic initiatives and
charts our progress against them during 2019:
Strategic
Initiatives
Continued
Client Growth
Focused Market
Leadership
Scaling Through
Digital
Why it’s
important
Growing our client base is central
to achieving our organic growth and
geographical expansion targets.
Creating and sustaining leading
positions in each of the targeted
market sectors in which we operate.
- Achieved organic gross profit growth
- The combined Uniphar & Durbin
of 7% across the Group.
- Developed a global platform,
now offering patients access to
unlicensed and speciality medicine
in over 160 countries.
- Expanded our pan-European offering
with entry into the Nordics with the
acquisition of the EPS Group.
- Leveraged our relationships with
long term clients to continue to grow
across all of our geographic markets.
offering creates a global platform in
which to become a market leader in
Product Access.
- Uniphar is now one of the largest
independent sales, marketing &
distribution companies in Europe in
our targeted speciality medtech and
pharma sectors.
- Continued to grow market share in
Supply Chain & Retail in the Irish
wholesale market to retail/hospital
pharmacies.
What we
achieved in
2019
Key
Performance
Indicators
Optimising and leveraging our key
digital platforms differentiates us from
our peers and drives organic growth
across each division.
- Leveraged our digital platform &
infrastructure to provide global
product access programs on behalf of
pharmaceutical manufacturers across
the globe.
- Expanded our MCAM model and
Patient Management System to
enable preferred HCP and patient
communication channels.
- Enhanced our market leading Supply
Chain e-commerce platform, enabling
a tailored solution to be provided to
each symbol group member, driving
organic growth.
Organic gross profit growth
of 7% achieved.
Gross profit from outside of Ireland
more than doubled in the year.
Over 30,000 patients now enrolled on
Patient Management System.
How we create value
- We focus on excellent customer
service and build strong, lasting
customer relationships.
- We maintain high standards of
corporate governance.
- We use digital platforms as
a differentiator to provide
a superior experience for
healthcare stakeholders.
- We drive innovation through
applying deep insights gained
through closely working with all
healthcare stakeholders.
- We employ people who are
focused, driven and innovative.
- We acquire businesses
with strong management
teams and high growth
potential that support the
delivery of our strategy.
- We maintain tight financial
discipline and strong quality
control.
- We balance our portfolio of
businesses across service and
geography, not reliant on any
one business area or market.
- We build sustainable businesses
with strong fundamentals.
Value Created in 2019
Revenue
Gross Profit
EBITDA:
ROCE:
Basic EPS:
Adjusted EPS:
Dividend proposed:
€1,665.3m
(2018: €1,417.9m)
€18 .6m
(2018: €115.7m)
€48. m
(2018: €32.2m),
including impact
of IFRS 16 EBITDA
was €58.6m
14.7%
(2018: 15.3%),
including impact
of IFRS 16 ROCE
was 15.2%
11.5
cent per share
(2018: 7.3
cent per share)
14.3
cent per share
(2018: 15.0
cent per share)
€2. m
(2018: €nil)
20
Uniphar plc Annual Report 2019
Strategic Review
21
Business Model
A key strength of
Uniphar’s business
model is the ability to
offer pharmaco-medical
companies support
across the whole
lifecycle of a product.
Uniphar has designed its fully integrated
platform around the provision of outsourced
solutions to meet the growing needs of specialist
pharmaceutical and medical device manufacturers
across the lifecycle of their products.
The development of this business model has
resulted in strong manufacturer relationships,
deep insights, scalable digital platforms and a
highly skilled workforce.
We are in a strong position to meet the needs
of manufacturer clients seeking a strategic
partner across multiple geographies, who can
take a pharmaceutical product from early market
access, through commercialisation in target
markets and on towards brand fostering at the
end of the product lifecycle.
Go to page 46 of our
Performance Review section
for more understanding of
operations of each division
Market
Drivers
What Uniphar
Offer
Outputs for
Manufacturers
Increasing complexity in
the commercialisation of
speciality products
Continuing growth in
demand for outsourcing
Highly fragmented
European market
Barriers in establishing
European presence
(regulatory, language,
tax, diversity)
Increasing prevalence
of outcome-based
reimbursement
Sales and marketing
expertise in
therapeutic areas
Regulatory support
Global access
Global high-tech
distribution
infrastructure
Ability to partner across
multiple geographies
Digital platforms
including, multi-channel
capabilities and patient
management system
Access to the patient
through pharmacy or
direct platforms
Product that reaches
its full potential
throughout its lifespan
across all geographies
Patient centric service
Global product access
for patients
Connectivity between
manufacturers to
healthcare stakeholders
Digital tracking of patient
adherence and outcomes
Simplicity despite
fragmented and complex
market - One team
supporting the product
across multiple geographies
22
Uniphar plc Annual Report 2019
Strategic Review
23
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.
56% Gross
Profit
Growth
Financial
Key
Performance
Indicators
Gross Profit
(€m)
2019
180.6
2018
115.7
EBITDA
excluding
impact of
IFRS 16 (€m)
w
2019
2018
48.0
32.2
Free Cash Flow
Conversion (%)
2019
2018
82.6
(4.7)
Return on
Capital
Employed (%)
2019
14.7
2018
15.3
Adjusted
Earnings
per Share
(cent)
2019
14.3
2018
15.0
Why we measure it
Performance in 2019
Gross profit is viewed by the Board as the best
measure of top-line performance. It allows
management to assess the performance of
the business and is a key profit measure in the
assessment of divisional performance.
EBITDA provides management with an
assessment of the underlying trading
performance of the Group and excludes
transactions that are not reflective of the
ongoing operations of the business.
Free cash flow represents the funds generated
from the Group’s ongoing operations. These
funds are available for reinvestment, and for
future acquisitions as part of the Group’s
growth strategy. A high level of free cash
flow is key to maintaining a strong, liquid
balance sheet.
This measure allows management to monitor
business performance and review potential
investment opportunities.
Adjusted EPS is used to assess the after tax
underlying performance of the business in
combination with the impact of capital structure
actions on the share base.
The improvement in gross profit is driven by
increased revenues in our core businesses,
together with the impact of recent acquisitions.
This increase in revenues, coupled with significant
growth in gross margin percentage, contributed
to 56% growth in gross profit during the period
(7% on an organic basis).
EBITDA performance has been strong in 2019,
driven by the continued expansion into higher
margin businesses through the two growth
divisions. EBITDA excluding IFRS 16 increased
by 49% during the year to €48.0m. Including the
impact of IFRS 16, EBITDA increased to €58.6m.
Strong free cash flow conversion of 82.6%. The
Group’s medium-term free cash flow conversion
target is 60-70%. The high conversion rate in
2019 reflects one off timing impacts which will
unwind in early 2020.
The Group’s ROCE for 2019 was 14.7%, with this
increasing to 15.2% when the impact of IFRS 16
is included. This is in line with our medium-term
target, with the integration of recent acquisitions
progressing well.
Adjusted earnings per share is 14.3 cent in 2019.
Underlying earnings have increased by 48%
from €17.8m in 2018 to €26.3m in 2019, which
has been offset by the significant increase in
the weighted average number of shares in issue
during the year following the IPO in July.
Medium Term Outlook
In the medium term, acquisitions
are expected to make a meaningful
contribution to gross profit in
addition to organic growth
FCF Conversion
6 %-7 %
ROCE
12%-15%
Peak Net Bank Debt / EBITDA
2. X to 2 .5X
Dividend
Intention to pay progressive dividend
24
Uniphar plc Annual Report 2019
Strategic Review
25
Key Performance Indicators
continued
Non-Financial
Key
Performance
Indicators
Number of
Exclusive
Access
Programmes
2019
2018
46
6
HCP
Interactions
w
2019
2018
580k
340k
Symbol Group
Pharmacy
Numbers
2019
2018
287
235
Why we measure it
Performance
in 2019
Medium Term Outlook
Divisional Guidance
Medium term organic gross profit growth
A key strategic priority of Product Access is
the successful operation of exclusive access
programmes, enabling the connection of the
manufacturer to the patient. The number of
these programmes in operation during the year
is a key metric in measuring progress against
this priority, as well as the strength of our
manufacturer relationships.
In Commercial & Clinical, interactions with
healthcare professionals form an integral part
in connecting the manufacturer to the patient
and the success of the business.
The Uniphar Symbol Group consists of owned
and franchised pharmacies operating under our
Allcare and Life pharmacy brands. The number
of pharmacies operating under the Symbol
Group provides management with insight into
the strength of these brands in the marketplace.
Significant progress has been made
during 2019, both through the
acquisition of Durbin, and in the success
of the combined Uniphar/Durbin service
offering. This combined offering has
enabled the Group to win a number
of high profile global and European
programmes, as more manufacturers
recognise our unique combination of
technical and global market expertise.
The significant increase of c.70% reflects
the achievement of strong organic growth
together with the impact of our recently
completed acquisitions.
2019 has seen strong growth in our
Symbol Group pharmacy numbers,
through new pharmacies signing
up to the benefits of the Symbol
Group, and the integration of the 17
retail pharmacies acquired during
the year. The growth is underpinned
by our market leading supply chain
e-commerce platform which enables a
tailored solution to be provided to each
Symbol Group member.
Product Access
Double
Digit
Commercial & Clinical
Mid Single
Digit
Supply Chain & Retail
Low Single
Digit
26
Strategic Review
27
Uniphar plc Annual Report 2019 Risk
Management
The Group’s Risk Management Policy provides the
framework to identify, assess, monitor and manage
the risks associated with the Group’s business. It is
designed to enable the Group to meet its business
objectives by appropriately managing, rather than
eliminating, these risks.
Risk Management and
Internal Control
The Directors have overall
responsibility for the Group’s
system of internal control and
for reviewing its effectiveness.
Through the activities of the Audit,
Risk and Compliance Committee,
the effectiveness of these internal
controls are regularly reviewed.
As part of the IPO preparation the
Group engaged an independent
adviser, to assist it in a review of
its risk identification and reporting
structures and the population of a
risk appetite statement to ensure a
clear and comprehensive approach
to risk within the business. The
Board adopts practices designed
to identify areas of business risk
and to effectively manage those
risks in accordance with the
Group’s risk appetite.
In addition, during 2019 the Group
appointed a new dedicated Head
of Internal Audit who meets with
the Audit, Risk and Compliance
Committee to monitor the adequacy
of the Group’s internal control
systems. The Audit, Risk and
Compliance Committee also meets
with and receives reports from the
external auditors. The Chairman
of the Audit, Risk and Compliance
Committee reports to the Board on
all significant issues considered by
the Committee.
The Group operates a Group-wide
risk register which is reviewed and
updated on a regular basis and is
presented to the Audit, Risk and
Compliance Committee where they
consider the risk identified and the
appropriateness of the mitigating
action taken, focusing on those
deemed most critical.
Where necessary, the Board draws
on the expertise of appropriate
external consultants to assist in
dealing with or mitigating risk.
Risk Management
Framework
The Group’s risk management
framework provides the structure
by which the principal risks
are managed. The Group has
implemented a three lines of
defence approach to ensure that
risks are effectively managed
across the Group. Each of these
three “lines” play a distinct
role within the Group’s wider
governance framework.
Risk Register Process
The Group’s risk register process is
based on a Group-wide approach.
Risks are identified, assessed and
monitored with a clear focus on the
assignment of responsibility to each
risk owner.
Individual risks are assessed with a
rating assigned based on potential
EBITDA impact and likelihood of
occurrence. The risk register is
reviewed regularly, and new risks
are added as they are identified
and assessed.
Divisional management are
responsible for maintaining
divisional risk registers setting out
the risks and mitigation factors
pertaining to their area. These
are reviewed and approved by
executive management and the
Group risk register is updated to
reflect any significant changes at
divisional level.
The Audit, Risk and Compliance
Committee and the Board carry out
a robust review of the risk register
and communicate any required
changes in mitigating actions
back into executive and divisional
management levels.
Risk
Management
Framework
Senior
Management
Board / Audit, Risk
and Compliance
Committee
1st line
of defence
2nd line
of defence
3rd line
of defence
Management
Controls
Internal
Control
Measures
Risk Co-ordinator
Security
Risk Management
Quality
Inspection
Compliance
Regulator
Internal
Audit
External Audit
Principal Financial and
Reporting Risks and
Uncertainties
Set out in the following tables are
the principal risks and uncertainties
facing the business, which have
potential to have a direct impact
on the key strategic objectives
of the Group. The principal risks
are categorised as Strategic,
Operational and Financial.
Included is a key to the strategic
initiatives that the risk relates
to, the impact and mitigation
measures.
These are not listed in order of
priority nor do they represent an
exhaustive list of all risks currently
affecting the business. Some risks
may not be known to the Board at
this time or may not be of material
consequence at this time. The
mitigation factors that are in place
do not represent an absolute
level of protection and elimination
against the risk. They are designed
to give reasonable protection
against the impact of the risk.
28
Strategic Review
29
Uniphar plc Annual Report 2019
Risk Management continued
Key to strategic initiatives
Continued Client Growth
Focused Market Leadership
Scaling Through Digital
Go to page 18
for more on
Our Strategy
Risk
Impact
Mitigation
Key personnel &
succession planning
The success of the Group is directly
correlated to the effectiveness
and talent of its people, including
Directors, senior management, and
personnel across all divisions.
Succession planning and talent management
is implemented across the Group ensuring
that the appropriate skills, knowledge and
diversity are in place to ensure the future
success of the Group.
Strategic Risks
Risk
Brexit
Impact
Mitigation
The United Kingdom leaving the EU
poses several risks for the Group
due to uncertainty and complexities
as to the future fiscal and regulatory
landscape in the United Kingdom.
This may have a negative impact on
supply and trade.
Brexit also has the potential to
create market uncertainty and
currency fluctuations which could
impact the translation of our UK
operations into the Group
reporting currency.
The uncertainty caused by Brexit, which saw
the UK leave the EU in January 2020, and the
continued uncertainty into 2020 as negotiations
on a trade deal continue has been an important
consideration for the business.
A Brexit Plan is in place to manage the risks
across the Group. The Group has worked with
its manufacturer customers and suppliers to
prepare and minimise the potential impact of any
related disruption on the business, customers
and patients.
Brexit also presents opportunities in
Product Access which provides specialist
procurement services.
The Group is continuing to expand its
operations in Europe and the U.S. creating
geographical diversity.
Acquisitions
Economic &
geopolitical risk
Growth through acquisition
continues to remain a key strategy
for the Group. Failure to identify,
complete and integrate acquisitions
successfully may directly impact the
Group’s projected growth.
All potential acquisitions are assessed to
measure their strategic fit and financial return.
Specialist advisers are appointed to provide
robust and thorough due diligence.
Experienced management and project teams
ensure integration is managed effectively
to achieve identified benefits and minimise
potential risks.
The global macroeconomic,
regulatory, political and legal
environment may impact the
markets in which we operate and
in turn our client and supplier base.
This may adversely affect the
financial and operational results
of the Group.
The Group closely monitors global political and
economic conditions and responds quickly to
any changes in circumstances or events.
The Group has increased its geographical
footprint to now include Ireland, the UK, the
USA, Benelux, and the Nordics, thus decreasing
the reliance on one geographic market.
Market perception &
reputational risk
Operational Risks
Pandemic risk
Covid-19
If the Group fails to attract, retain
and develop the skills and expertise
of its individuals, this may adversely
impact the Group’s performance.
Uniphar plc is now a publicly listed
company and must communicate
to the market and stakeholders
regularly with updates on financial
performance and key metrics.
Failure to deliver in line with
expectations may result in
reputational damage impacting
the Group’s ability to achieve
strategic targets.
The spread of Covid-19 and its
implications are continuing to
evolve and change. The risks
outlined below are based on
current knowledge and projections
of the circumstances.
Risk to product availability due to
potential disruption to supply chains
or shipping routes.
Operational impact due to
unavailability of the workforce
caused by measures taken by either
the Group or Government to contain
an outbreak.
The Group recognises the wider risk
of a change in demand and lower
general economic activity in the
countries where it operates in the
event of a prolonged outbreak of
the virus.
The Group has financial reporting structures
and timelines in place to ensure accurate
and timely reporting. The Board reviews the
financial and operating performance, together
with the implementation of the strategic plan.
The Group has appointed a Group Director of
Corporate Development to ensure timely and
accurate communication.
Uniphar plays a significant role in the healthcare
infrastructure. The warehouse capacity
created across multiple locations, together
with exclusive distribution agreements, and
our strong manufacturer relationships, enables
the Group to ensure continuity of services to
the healthcare sector and to meet the needs
of customers in the event of any disruption to
normal supply chain routes.
The Group is following Government guidance
in each country it operates in, concerning
travel restrictions on colleagues and self-
isolation guidance for any colleagues returning
from impacted areas. Communications have
been sent to all colleagues advising them on
the necessary precautions and will be updated
as necessary.
Business continuity and contingency plans are
in place in anticipation of wider outbreaks of
the virus.
The nature of the product and services
provided means that there is a continued
requirement for pharmaco-medical products.
While there may be a reduction in the demand
for certain products and services and in
elective procedures, the requirement for these
services and procedures will still exist once the
pandemic is brought under control.
30
Strategic Review
31
Uniphar plc Annual Report 2019
Impact
Mitigation
Risk
Impact
Mitigation
Risk Management continued
Risk
IT systems
The Group is reliant on the
effectiveness of its IT systems
and network.
Any interruption or downtime
may have a negative impact on
the Group’s operations, financial
conditions and competitive position.
The Group actively monitors the performance
and robustness of IT systems in place.
Uniphar’s in-house IT team works in tandem with
external providers to ensure all business-critical
processes are safeguarded.
The Group has a Business Continuity Plan in
place to ensure processes are in place and
enable the restoration of key systems
if necessary.
Cybercrime
Failure to protect against the threat
of a cyber-attack could lead to
a breach in security, impacting
operations, financial transactions
and sensitive information.
The Group have lT security processes in place to
minimise the occurrence of cyber-attacks.
External audit/penetration testing is also carried
out to identify vulnerable areas and put in place
mitigating controls.
Business interruption The Group may be unable to
provide a service to customers
due to external factors affecting
its operations such as, natural
disasters, environmental hazard
or industrial disputes, resulting
in potential lost sales and loss of
customer loyalty.
A business continuity and disaster recovery
plan is in place and is updated and reviewed
continuously to mitigate the risks to
operational continuity.
Health & safety
Uniphar distributes pharmaceuticals
and medical devices to pharmacies,
hospitals and patients.
Dedicated quality functions are in operation
across the Group ensuring adherence and
compliance with good distribution practice,
pharmacovigilance and regulatory requirements.
Failure to implement and follow
proper health and safety procedures
in the distribution and administration
of these products and the provision
of proper handling information may
have adverse effects on employees
or patients.
A robust health and safety framework is in place
to ensure effective health and safety processes
are in operation.
Laws, regulations &
Compliance
Financial Risks
Foreign currency
Uniphar operates in a highly
regulated environment and as
such is subject both local and
international laws and regulations in
the jurisdictions it operates in.
Failure to operate under any of
these stringent laws and regulations
could result in financial penalties,
reputational damage and risk to
business operations.
A strong culture of corporate governance exists,
and the Group’s Code of Business Conduct sets
out the best practice in relation to regulatory and
compliance matters amongst others.
The Group General Counsel and Company
Secretary has responsibility for ensuring
compliance across the Group, together with a
dedicated GDPR officer and Quality officers.
Education and internal training is provided on
updates to laws and regulations as considered
appropriate.
The Group’s reporting currency is
the Euro. The Group operates in
jurisdictions outside the Eurozone
and, therefore is exposed to foreign
exchange risk.
The Groups’ activities are primarily conducted in
the local currency of the operation, which results
in low levels of transactional risk.
The Group reduces its exposure to currency
fluctuation by matching foreign currency
payments and receipts across business units.
Treasury
The Group is exposed to liquidity,
interest rate and credit risks
Inventory losses &
provisions
Uniphar holds a large amount of
inventory across our locations –
both pharmaceutical and medical
devices of varying values.
Inventory losses may occur due to
theft, loss, fire, spoilage of stock
and obsolescence.
The Group Treasury Policy sets out how
these risks are managed. The policy is
reviewed and approved by the Audit Risk
and Compliance Committee.
Cash forecasting and effective management
reports are in place to monitor and minimise the
financial risk.
The Group has systemised controls together with
robust policies and procedures in operation to
minimise inventory losses.
32
Strategic Review
33
Uniphar plc Annual Report 2019
Sustainability
and Governance
Working towards a
Group-wide approach
Uniphar places a strong emphasis
on working responsibly and
sustainably to ensure long term
viability. We understand that
our work has an impact on the
environment, the communities
in which we operate and all our
stakeholders, and we are committed
to working in a sustainable and
socially responsible manner.
As Uniphar has matured and
grown as an organisation, the
strategic importance of being
conscious not only of our markets
and our customers but of our
environment and communities
has come to the fore. The
principles of best practice in
operating a responsible and
sustainable business have always
been important to Uniphar.
We have always tried to meet
and, where possible, exceed
these expectations.
2019 saw a number of successful
initiatives across each of our
four pillars of Sustainability and
Governance and our aim for 2020 is
to work with each of the companies
within the Group to harmonise our
approach in this area, with a view
to rolling out successful initiatives
Group wide to enhance their
effectiveness and benefit.
What Sustainability
and Governance
means to us
Sustainability
and Governance
People and
Workplace
Community
Involvement
Environment and
Sustainability
•
Inclusivity & Diversity
• Health & Safety
• Employee wellbeing
• Serving the
community
• Supporting
good causes
• Minimising our
impact
• Meeting our
responsibilities
Governance,
Quality and
Compliance
• Continuous
improvement
• Quality culture
The principles of best
practice in operating a
responsible business
have always been
important to Uniphar.
Go to page 58 for
our Corporate
Governance Report
34
Uniphar plc Annual Report 2019
Strategic Review
35
Sustainability and Governance
continued
1. People and Workplace
2. Community Involvement
As a knowledge-based
organisation, we understand that
our people are our most important
asset and we are committed to
making Uniphar a fulfilling and
inclusive place to work. We are a
people-based business operating
in healthcare markets that are
highly regulated and demand high
quality and compliance standards.
Inclusivity & Diversity
At Uniphar the different
experiences and attitudes of our
people bring diverse perspectives
and ideas to the Group, which
together can create better
outcomes.
Uniphar’s employment policies,
procedures and practices promote
full equality of opportunity in
all areas and comply with the
provisions of the Employment
Equality Acts 1998 to 2011 and
the Equal Status Acts 2000 to
2012. 2019 saw the appointment
of two female Independent Non-
Executive Directors, increasing
the female representation on the
Board and bringing the total female
representation on the Board to
25%, four years ahead of the
Irish Governments, ‘Balance for
Better Business’ Initiative which
is targeting 25% female Board
membership for all Irish listed
companies by 2023. Diversity
remains a key focus in Board
succession planning for the future.
Uniphar has long been an employer
that works to provide suitable
and rewarding jobs for adults with
intellectual disabilities and we
have a number of long serving
and valued team members who
came to us via this route. We are
committed to creating a supportive,
respectful, inclusive, and equal
opportunity working environment
Health & Safety
in Practice
Action
In the spirit of continuous improvement and monitoring, in
2019, the number of risk assessments carried out across
our Irish supply chain locations increased by 14% on 2018
numbers. Improved processes and procedures, increased
training and more robust incident reporting has led to a
reduction in overall claims.
Outcome
Measures implemented across our supply chain business in the
previous two years have seen a decrease in employer liability
claims of 20% and a decrease in public liability claims of 33%
since 2018.
where every employee can reach
their full potential.
Health & Safety
Uniphar provide the highest
standards of health and safety
throughout the organisation,
ensuring that all relevant statutory
requirements are complied with,
and best practice is adhered to.
The health, safety and wellbeing
of all employees, both inside and
outside of work, is paramount
and Uniphar runs regular training
courses throughout the year,
including targeted health & safety
courses to benefit our employees
outside the workplace. For example,
in November the Citywest facility
ran a Christmas Health & Safety at
home training course to highlight
health & safety risk management
measures which employees can use
at home. Certain training courses
which run during the year have
mandatory attendance including
manual handling training.
Uniphar is constantly reviewing and
refining its approach to Health &
Safety and incident reporting and
the results of these efforts are seen
throughout the Group.
Wellbeing
The Group runs Wellness at Work
programmes. Each month has
a wellbeing theme ranging from
mental health to personal finance,
fitness to nutrition. We also
encourage employees to
take part in a range of staff-run
sports activities.
We engage external professionals
to lead our Employee Assistance
Programme allowing employees
and retired staff to seek
assistance, advice and information
for a range of personal and
professional issues in a safe and
confidential environment.
On the international stage,
Durbin’s Aid and Development
business has worked with United
Nation agencies such as WHO and
UNICEF for over 30 years, and is
one of the preferred suppliers of
medicines, medical equipment
and medical disposables for
their programmes internationally.
In 2019, Durbin’s Aid and
Development team supplied more
than 750,000 items to more than
100 charitable organisations in
over 100 countries around
the world.
Supporting employees to
actively participate in the local
communities where we are based
is a critical objective for the Group,
and is achieved through serving
the community and supporting
good causes.
Serving the Community is at
the core of what we do
As a global healthcare provider,
Uniphar’s business is intrinsically
linked to serving the community.
Across each of our three divisions
Uniphar provides vital medicines,
the highest quality medical devices
and access to life saving drugs
both nationally and across the
globe. Our involvement in managed
access programmes, facilitates the
supply of life saving treatments to
individual patients around the world
who would not otherwise have
access to such medicines.
Supporting good causes –
Uniphar’s Charity Partners
At a local level, Uniphar is
committed to supporting the
community through educational
outreach programmes, charitable
donations and staff volunteering,
with a focus on education, and
employability.
As part of our commitment to
the community, Uniphar actively
encourages employees to support
their local communities through
fundraising. Sometimes the activity
is led by the organisation, but on
many occasions it is our employees
who instigate projects and
initiatives around something that
they feel passionately about.
In recent years, Uniphar has
facilitated its employees to support
over 30 charities in Ireland and
the UK.
Uniphar actively
encourages employees
to support their local
communities through
fundraising.
C.R.O.S.S. is a charity which
supports early stage cancer
research. It was founded in
2014 as a joint venture between
St James’ Hospital and Trinity
College Dublin, who together carry
out the research.
For the last four years, Uniphar has
sponsored a round-Ireland cycle,
encouraging not just staff but
customers, suppliers and friends
to take part and raise funds for
the organisation. Staff train for the
cycle together and there is a strong
wellbeing and enjoyment aspect for
all the staff who take part.
Funds raised have been used to
improve both the infrastructure
and technical support required to
advance the operation of the cancer
research activities. Advancing
these operations will increase
collaborative activity with other
leading cancer institutes globally.
We are proud to support the
life-changing work that they carry
out through their ongoing research.
36
Strategic Review
37
Uniphar plc Annual Report 2019
Sustainability and Governance
continued
3. Environment and Sustainability
4. Governance, Quality and Compliance
We have a pro-active approach
to managing our environmental
obligations. As the business grows
and our geographical footprint
expands, we remain committed
to managing our environmental
responsibilities effectively. We
understand that our activities
can have a lasting impact and
we believe in protecting the
environment for the benefit of
future generations.
Minimising our Impact
- Energy and Carbon
Management
We continue to work hard to
manage and reduce our carbon
footprint. We are conscious of the
impact climate change has on
people and the environment, and
we continue to examine how we can
manage the risks and opportunities
that this presents for our business.
Throughout the Group we continue
to actively engage in projects that
will reduce our energy consumption
levels and environmental impact.
Uniphar is conscious that Co2
emissions from our distribution
network and logistic partners is
a large part of our environmental
impact. As Uniphar outsources most
of our logistics services, it is key
to us that we partner with the right
companies who share the same
values. From July 2019 Uniphar’s
largest outsourced provider of
logistic services switched their
courier van fleet to vans with lower
Co2 emissions, resulting in an
annual reduction of approximately
14 tonnes of Co2.
Meeting our Responsibilities
- Waste Management
Across all our sites we are
continuously exploring ways to
reduce, reuse and recycle. Uniphar
are compliant with the European
Union (Packaging) Regulations
2014 and 2015, which require
suppliers/producers of packaging
and packaged products to fund
the recovery and recycling of
their used packaging. As a Group
we have been proactive in this
measure and have been a member
of Repak since 1999. Across the
business we have also increased
our efforts to remove single use
plastics in the business and will
continue to further reduce the use
of these going forward.
Citywest – a Pilot Project
Inspired by the low carbon footprint of our newest warehouse in
Greenogue, a highly automated ‘dark warehouse’ which uses light
only when there are people in a given area, we identified that there
was potential to reduce energy consumption levels across our
warehouse network, starting with our largest facility in Citywest.
Action
-
Invested in two new high efficiency packaged air cooled chillers
for our Citywest warehouse.
- Upgraded our energy monitoring system in Citywest to allow
full visibility of our energy usage.
Outcome
- Achieved energy savings of 334 tonnes of Co2 in 2019, 16%
savings on 2018.
- The savings were delivered despite a significant increase in
warehouse activity of approximately 13% from 2018.
- Our plan is to implement these initiatives in other Uniphar
locations from 2020.
The Group’s approach to
Governance, Quality & Compliance
is to seek continuous improvement.
The governance of our business is
dealt with in extensive detail in our
corporate governance section of
this report on pages 58 to 66.
Continuous Improvement
- Quality and compliance
growing in importance
The healthcare industry is a
highly regulated industry and this
regulation is essential to protect
the health and safety of people
who use the products and services
we supply. The Group works hard
to ensure that the products we
supply reach the patient in perfect
condition, without any impact on
their safety and efficacy, and that
we provide all services in an ethical
and compliant manner.
Governments and regulatory
agencies are increasingly extending
the regulatory remit, for example
the new Falsified Medicine Directive
and Medical Device Directive and
programs to support and encourage
pharmaceutical innovation. There
has been a move towards greater
cross body co-operation for some
time, in the form of supra-national
bodies such as the International
Conference of Drug Regulatory
Authorities and the International
Council for Harmonisation. This
trend towards the harmonisation of
pharmaceutical regulation across
the globe should improve patient
outcomes and increase patient
access to new pharmaceutical and
medical technologies, which is key
to the Group’s vision.
All these initiatives and changes
means an ever-evolving regulatory
and compliance environment which
requires agility and readiness to
adapt from companies, like Uniphar,
operating within its scope.
Uniphar has in place a robust
quality management system which
allows us to comply with the many
regulatory regimes, including:
- Storage and distribution of
product in accordance with EU
GDP regulations.
-
Importation of products from 3rd
Countries in accordance with
GMP requirements.
- Dispensing through our
community pharmacy network
in line with local pharmaceutical
society codes of conduct and
medicinal product legislation.
- Promotion of and engagement
with pharmaceutical and medical
device manufacturers in an
ethical and complaint manner.
Every applicable legal or regulatory
framework is important and
demands the utmost integrity and
compliance and control.
The Quality Culture
at Uniphar
At Uniphar, quality is an integral
part of what we do.
People &
Culture
Quality Risk
Management
Innovation &
Continuous
Improvement
Performance
& Monitoring
2019 has seen the commencement
of a project to harmonise our
approach to quality across all our
locations with the roll-out of our
electronic quality management
system across all divisions and
business units. It is this investment
in technology that allows the
Group to put quality at the centre
of what we do. It means that both
we and our customers can be
assured that the Group have a best
in class comprehensive quality
and compliance system to meet
business needs, and to implement
in new acquisitions within a short
time frame.
Uniphar is committed to successful
collaboration with all our customers,
partners and stakeholders to ensure
their regulatory expectations and
needs are met at all times. This
is achieved through the training
we provide to all our employees
in their relevant fields. Through
extensive training the Group places
a focus on a quality culture and a
strong understanding of quality risk
management which allows us to
meet or exceed the requirements
and expectations of our customers
and partners.
The Group follows a path of
continuous improvement, which
is supported through internal
monitoring and audits. This allows
for the detection and prevention
of regulatory and compliance
concerns.
Go to page 58 for
our Corporate
Governance Report
38
Uniphar plc Annual Report 2019
Strategic Review
39
Divisional Gross Profit
Commercial & Clinical
Product Access
Supply Chain & Retail
€17.2m
10%
2019
€76.8m
42%
€86.6m
48%
Financial Review
Commercial & Clinical
Product Access
Supply Chain & Retail
42
46
48
50
40
Uniphar plc Annual Report 2019
R
e
v
e
w
i
P
e
r
f
o
r
m
a
n
c
e
41
Financial
Review
The Group delivered a strong
financial performance in 2019,
with growth across all divisions
and geographies, driven by 7%
organic gross profit growth. We
were particularly pleased with the
strengthening of our Balance Sheet,
providing us with the financial
platform to continue our growth
strategy and double our 2018
pro-forma EBITDA within five
years from IPO.
Tim Dolphin
Chief Financial Officer
2019 Financial Highlights
Gross Profit (up 56%)
€18 .6m
(2018: €115.7m)
Gross Profit Organic Growth
7%
EBITDA (up 49%)
€48. m
(2018: €32.2m)
Net bank cash (up €179.5m)
€26.6m
(2018: net bank debt €152.9m)
ROCE
14.7%
(2018: 15.3%)
Basic earnings per share (up 4.2c)
11.5cent
(2018: 7.3 cent)
Summary financial performance
Year ended 31 December
2019
€’000
2018
€’000
Reported
Constant
Currency
Growth
IFRS measures
Revenue
Gross profit
Operating profit
Basic EPS (cent)
Alternative performance measures
Gross margin
EBITDA
EBITDA excluding impact of IFRS 16
Adjusted EPS (cent)
Net bank cash/(debt)
Return on capital employed
Revenue
Revenue growth of 17% across
all three divisions, was achieved
through a combination of strong
organic growth, together with the
impact of the 2018 Commercial
& Clinical acquisitions, and the
acquisition of Durbin during 2019
in Product Access.
Divisional gross profit
Year ended 31 December
Commercial & Clinical
Product Access
Supply Chain & Retail
1,665,283
1,417,895
180,602
28,207
11.5
10.8%
58,555
48,022
14.3
26,622
14.7%
115,717
15,826
7.3
8.2%
32,237
32,237
15.0
(152,880)
15.3%
17.4%
56.1%
78.2%
17.3%
55.9%
77.7%
81.6%
49.0%
81.4%
48.8%
Gross profit
The increase in revenues, coupled
with significant growth in our gross
margin percentage from 8.2% to
10.8% due to improvements in
our revenue mix principally in the
two growth divisions, contributed
to 56% growth in gross profit
during the period (7% on an
organic basis). The improvement
is primarily driven by the strategy
of expanding into higher growth,
higher margin businesses, with
the acquisitions completed during
2018 and 2019, in our two growth
divisions, Commercial & Clinical
and Product Access. Gross
profit generated from outside
of Ireland more than doubled in
the year, with the expansion of
the pan-European footprint in
Commercial & Clinical, and also
reflecting the new geographies
which we are operating in
following the acquisition of Durbin
in Product Access.
2019
€’000
76,754
17,199
86,649
Growth
2018
€’000
35,378
10,338
70,001
Reported
Constant
Currency
117.0%
116.6%
66.4%
23.8%
65.5%
23.8%
Go to page 90
for our Financial
Statements
42
42
Uniphar plc Annual Report 2019
Performance Review
43
Financial Review continued
EBITDA
Year on year, EBITDA has
increased by €15.8m (49%) to
€48.0m, benefiting from the
increase in gross profit. The
impact of the adoption of IFRS 16
resulted in a further increase of
€10.6m to €58.6m.
Exceptional items
Exceptional costs incurred during
the year of €5.3m are primarily due
to acquisition related costs, and
costs associated with our IPO, and
are partially offset by the release of
deferred contingent consideration
following a review of the expected
performance against earn-out
targets. See note 5 in the financial
statements for further details.
Earnings per share
The basic earnings per share
amounted to 11.5 cent, increasing
from 7.3 cent in 2018, with the
increase driven by the improved
trading performance of the Group
and the reduction in exceptional
costs in 2019.
Adjusted earnings per share
reduced to 14.3 cent in 2019,
from 15.0 cent in 2018. The lower
adjusted earnings per share
in 2019 reflects the improved
underlying trading performance of
the Group, offset by the increase
in the weighted average number of
shares in issue during the year as
a result of the IPO.
The weighted average number of
shares in 2019 was 183,546,000
compared to 119,044,000 in 2018,
following our successful IPO in July.
The full year dilutionary impact of
the IPO on the weighted average
number of shares will come through
in 2020.
Impact of IFRS 16 ‘Leases’
IFRS 16 is effective for annual
reporting periods beginning on or
after 1 January 2019. The Group
has applied IFRS 16 from its
effective date using the cumulative
catch up approach. The adoption
of IFRS 16 has resulted in cost
of sales reducing by €1.1m, and
operating expenses reducing
by €9.4m for the year ended 31
December 2019, as before IFRS
16, accounting standards required
the recognition of operating
lease expenses in the Income
Statement.
Depreciation and finance costs
as currently reported in the Group
Income Statement have increased
by €9.5m and €2.6m respectively,
as under the new Standard the
right-of-use asset has been
capitalised and is now being
depreciated over the term of the
lease with an associated finance
cost applied annually to the
lease liability.
Strong financial indicators
ROCE14.7%
82.6%
Free cash flow
conversion
On adoption at 1 January 2019,
a right-of-use asset of €80.9m
has been recognised in the Group
Balance Sheet included within
property, plant and equipment,
with a corresponding lease liability
recognised for this amount in the
Group Balance Sheet.
Cash flow and net debt
2019 showed a strong cash
performance, driven by free cash
flow conversion of 82.6%, with the
Group’s net bank cash position
being €26.6m (2018: net bank
debt €152.9m).
The increase in our cash balances
of €179.5m reflects the successful
completion of the IPO in July 2019,
and strong cash generated by our
operating activities which includes
the successful execution of the
non-recourse financing arrangement
unlocking €68.0m of cash in Supply
Chain & Retail for reinvestment.
Net cash inflow/(outflow) from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Increase in cash and cash equivalents in the year
Movement in restricted in restricted cash
Cash flow from movement in borrowings
Movement in net bank cash/(debt)
2019
€’000
106,997
(45,644)
42,148
103,501
(210)
76,211
179,502
2018
€’000
(8,738)
(82,005)
100,094
9,351
210
(111,939)
(102,378)
The Group has remained focused on
strong working capital management,
and together with the successful
execution of the non–recourse
financing arrangement which
generated a cash inflow of €68.0m,
is reflected in cash generated from
our operating activities of €107.0m.
Free cash flow conversion in 2019
of 82.6% is calculated excluding
the impact of the non-recourse
financing arrangement. The high
conversion in 2019 reflects one off
timing impacts which will unwind in
early 2020. The Group’s medium-
term free cash flow conversion
target is 60-70%.
The net cash outflow from investing
activities consisted of acquisitions
completed during the year of
€38.3m, deferred consideration of
€1.3m, and capital investment of
€6.4m primarily in Commercial &
Clinical. The Group completed one
strategic (Durbin), and two bolt–on
acquisitions (EPS Group, and M3
Medical), as part of our strategy to
build a global platform for Product
Access and expand the European
footprint of Commercial & Clinical.
The Group also completed the
acquisition of 17 retail pharmacies
in Supply Chain & Retail.
Cash generated from financing
activities of €42.1m was principally
due to the net proceeds from our
successful IPO in July of €127.3m.
This was partially offset by the
repayment of banking facilities
(including invoice discounting
facilities), and the payment of the
principal element of lease liabilities.
Taxation
The effective tax rate has increased
from 13% in 2018 to 17% in 2019,
primarily due the increase in profits
generated from outside of Ireland
in higher tax rate jurisdictions. The
effective tax rate is calculated as the
income tax charge for the year as a
percentage of the profit before tax
and exceptional items.
Foreign exchange
The Group’s expansion into new
geographies, and the continued
growth in existing geographies
operating outside of the Euro,
results in the primary foreign
exchange exposure for the Group
being the translation of local
income statements and balance
sheets into Euro for Group
reporting purposes.
The re-translation of overseas
profits to Euro has resulted in a
marginal increase in our operating
results for 2019. On a constant
currency basis, revenue increased
by 17.3% (vs 17.4% reported
growth), gross profit increased
55.9% (vs reported growth 56.1%)
and operating profit increased
by 77.7% (vs 78.2% reported
growth). This is primarily due to
the strengthening of the GBP
sterling against the Euro in the
year versus 2018.
2019
2018
Average
Average
GBP
0.87756
0.88458
US Dollar
1.11949
1.17997
Swedish
Krona
10.58475
10.25418
Return on capital employed
(‘ROCE’)
The Group’s ROCE was 14.7% for
the year (2018: 15.3%). Including
the impact of IFRS 16, ROCE was
15.2%. This modest decrease
in ROCE versus the prior year
principally reflects the impact of
the substantial acquisition spend
during the current and prior year
as the Group invested in the
growth divisions and entered new
geographies. Details on how this
was calculated are included in
the APMs section on pages 197
to 200.
Dividends
The Board made a commitment at
the time of IPO to pay a dividend
in 2020 in respect of the period
from IPO to 31 December 2019.
Following another set of positive
results for the Group, the Directors
are proposing a final dividend of
€2.0m. Subject to approval at
the Annual General Meeting, it
is proposed to pay the dividend
to ordinary shareholders on the
Company’s register on 1 May 2020.
The Board intends to adopt a
progressive dividend policy to
reflect the expectation of future cash
flow generation and the long-term
earnings potential of the Group.
Non-recourse financing
arrangement
In December 2019 the Group
entered into a new receivables
purchase arrangement with
its existing banking partners,
which generated a cash inflow
of €68.0m. Under the terms of
this non-recourse agreement, the
Group has transferred substantially
all credit risk and control of certain
trade receivables mainly within
Supply Chain & Retail, unlocking
the cashflow value for further
reinvestment. For further detail see
note 32 in the financial statements
for further details.
IPO on AIM and Euronext
Growth
The Group successfully listed on the
AIM and Euronext Growth markets
of the London Stock Exchange and
Euronext Dublin on 17 July 2019.
As part of the placing, 117,391,304
new ordinary shares were issued by
the Company, at a listing price of
€1.15 per share, resulting in gross
share proceeds from the issuance of
these ordinary shares of €135.0m.
Market capitalisation on the day
of Admission was approximately
€310m.
Subsequently, on 16 August,
the over-allotment option was
exercised in respect of 3,818,004
ordinary shares in the Company,
resulting in an additional €4.4m of
gross proceeds being received by
the Company, bringing the total
gross proceeds from the placing
to €139.4m.
Tim Dolphin
Chief Financial Officer
44
Performance Review
45
Uniphar plc Annual Report 2019
Commercial
& Clinical
Supporting Manufacturers
to Commercialise
Speciality Brands in
Pharma & Medtech
Commercial & Clinical provides
outsourced sales, marketing
and distribution solutions to
pharmaceutical and medical
device manufacturers. The
division is focused on the
commercialisation of speciality
brands and on building a pan-
European presence.
With a workforce of over 900
across Europe, supporting more
than 200 brands for 70 key
pharmaco-medical manufacturer
clients, Commercial & Clinical
represents 42% of the Group’s
gross profit in 2019.
Uniphar’s Fully Integrated
Model Provides the
Competitive Edge
Uniphar has built the business
to meet the emerging needs of
speciality pharma and medtech
product manufacturers and offer
the most effective route to market
in our chosen geographies.
Commercial & Clinical
Year ended 31 December
Revenue
Gross Profit
Gross Profit Margin
Speciality products require more
targeted, expertise-led sales
solutions due to the complex
nature of treatments. Although
the pharmaceutical and medtech
industries use different commercial
models, they share the same
operational requirements which
Uniphar’s fully integrated model is
designed to meet.
Scaling Geographically,
Leveraging Our Expertise
In New Markets
In the last two years, Uniphar has
successfully scaled the division
and expanded in Europe, entering
the Benelux (2018) and Nordic
(2019) markets. By leveraging the
recruitment offering of Commercial
& Clinical, we ensure access to
the strongest local talent which
drives our capability in producing
high performing speciality sales
outcomes. The approach has
been to acquire complementary
bolt-on acquisitions with strong
local expertise and accelerate
their ability to scale and grow
organically by bringing new
efficiencies through technology
and leveraging the Group’s strong
manufacturer relationships.
Pharma
The pharma team are focused
on providing insight-driven,
multi-channel solutions for
pharmaceutical partners. This
allows the engagement with the
right healthcare professional,
in a way that is convenient and
comfortable for them and with
clear, targeted information that
helps them to understand better
what the particular specialist
product might do for their
patient cohort.
European Expansion
Fuelling Organic Growth
The pharma business has
demonstrated strong organic
growth across Ireland and the UK
with a combination of leading and
emerging pharmaceutical clients.
Over the last 12 months, Uniphar
has built and deployed several
multi-channel enabled teams
across the UK and succeeded
in moving a number of existing
manufacturer clients in Ireland and
the UK into the Benelux.
2019
€’000
204,031
76,754
37.6%
2018
€’000
102,558
35,378
34.5%
Growth
Reported
98.9%
117.0%
312bps
Constant
Currency
98.5%
116.6%
+
Workforce
2 +
Supporting more
than 200 brands for
70 key pharmaco-medical
manufacturer clients
Outlook
The expansion into Benelux and
the Nordic markets have been
successful and provides the
opportunity to grow long–standing
manufacturer partners into new
geographies as well as providing
a multi geography platform to new
clients. In the medium term, the
Group is focused on identifying
further bolt on acquisitions in
European markets to further grow
our pan–European platform.
Due to ongoing Covid-19
developments, hospitals and
other healthcare facilities may
reprioritise resources and as such
we are preparing for a possible
delay in medical device revenue
if certain ‘non-urgent’ elective
surgeries have to be postponed.
We would, however, expect that
this would be recovered in future
periods as and when healthcare
systems return to normal. In
Pharma, our mutli-channel
account management and digital
capabilities are proving valuable
and offer the Group alternatives
to in-person visits across our
contract sales teams.
Go to page 18
for more on
Our Strategy
These new wins and a strong
speciality focused business
development pipeline demonstrate
that Uniphar’s fully integrated
multi-channel enabled solution
underpinned by its suite of digital
capabilities, is a differentiated
and compelling alternative
for speciality manufacturers,
compared to managing sales
in-house or procuring a more
traditional CSO solution.
Medtech
The Commercial & Clinical
medtech business provides a fully
integrated solution to our clients
across sales, marketing and
distribution of medical devices.
The medtech business is focused
on building in-depth therapeutic
expertise across several high value
market opportunities.
Growing Pan-European Business
Organically and by Acquisition
Following the successful
acquisitions of Sisk Healthcare,
Macromed and Angiocare in 2018,
the business continues to grow
its pan-European business both
organically and by acquisition.
Now with a presence in Benelux
and following the acquisition of the
EPS Group in Sweden and Finland
in Q4 2019, the division has
expanded into the Nordics.
The 2018 acquisitions have been
successfully integrated into
Commercial & Clinical and are
performing well, with the Nordics
integration underway. In terms of
organic growth, significantly, we
have taken several key agencies
into new markets, with an
expectation that they will move into
the Nordics with us in due course.
The medtech business has
represented 90% of its top 20
clients for more than nine years,
with significant opportunity for
organic growth on a pan-European
basis.
The ability to attract hi-tech medical
device technologies will continue to
support the financial performance
of this division. New business wins
combined with the businesses
ability to retain highly experienced
sales and clinical teams gives the
Board confidence in achieving the
strategic objectives.
Commercial & Clinical is supported
by a centralised head office in
Dublin, which drives therapeutic
focus, operational excellence
and shared services for account
management, training and
business development. The UK
and European teams will continue
to leverage the central support
services of the Dublin headquarters
and will focus on commercial
activities in their regions.
46
Performance Review
47
Uniphar plc Annual Report 2019 Product
Access
New Global Platform for
Product Access
Product Access has continued to
show strong growth throughout
2019, delivering 16% organic
gross profit growth. The division
specialises in two primary
business areas: (i) On Demand
Access, i.e. sourcing and
supplying unlicensed medicines
for pharmacy customers, and
(ii) Exclusive Access, which
is managing the release of
medicines for pharmaceutical
manufacturers to specific,
approved patient populations.
The division has been
transformed into a global market
access business of significant
scale, key to this transformation
is the acquisition of Durbin,
completed in August 2019.
This acquisition expands
Uniphar’s Product Access
footprint to over 160 countries
and adds significant capability in
regulatory affairs and compliance
across multiple geographies. The
Product Access
Year ended 31 December
Revenue
Gross Profit
Gross Profit Margin
combination of Uniphar’s robust
I.T. infrastructure and innovative
use of digital technology, together
with Durbin’s market reach and
experience, puts Product Access
in a strong position to operate
as the trusted global partner of
leading and emerging speciality
product manufacturers.
The acquisition has enabled
the organisation to win a
number of high profile global
and European Managed
Access Programmes (MAPs).
New business opportunities
have developed as more
manufacturers recognise our
unique combination of technical
and global market expertise.
On Demand
Over the past eight years,
experienced Uniphar personnel
have developed the On Demand
service offering in response to an
increasing need by pharmacists
to access unlicensed medicines,
or other medicines that are
in short supply or difficult to
source. The team of pharmacy
technicians consult with
customers on their requirements,
providing a value-added service
to pharmacists and working
with them to source medicines
to solve particular challenges
for their patients. Uniphar’s
e-commerce platform enables
this demand to be met in a highly
efficient way with over 7,000
products presently listed.
Durbin has positioned itself
as a major global supplier
of unlicensed medicines to
specialist importers. The
integration of Durbin has given
Uniphar a far-reaching customer
network for unlicensed medicines
which enables the continued
growth of our geographic
footprint. The implementation
of the e-commerce platform in
Durbin is progressing well and
we believe, will facilitate growth
in the On Demand business.
2019
€’000
132,245
17,199
13.0%
2018
€’000
74,416
10,338
13.9%
Growth
Reported
77.7%
66.4%
(89)bps
Constant
Currency
76.5%
65.5%
Exclusive Access
Product Access delivers bespoke,
controlled and supervised
mechanisms for the release of
speciality medicines to approved
patient populations. They provide
an important mechanism for
the manufacturer and the payor
of ensuring that an expensive
resource is used appropriately.
The strategy is to target key
therapeutic areas to ensure
value to manufacturer partners
is maximised.
Uniphar’s MAP capabilities
have been developed through
working with several leading
multinational pharmaceutical
companies and the combined
skillsets around distribution,
regulatory and reimbursement
expertise, patient enrolment and
restricted release. A health data
and analytics capability has also
been developed, which provides a
controlled environment to capture
patient and prescriber information
and produce informed insights to
support better outcomes.
MAPs allow pharmaceutical
companies to provide medicines
to patients when a product
has not yet been licensed in a
jurisdiction, or has been licensed,
but has not yet been accepted
for reimbursement by the relevant
authority. Speciality medicines are
classified as high-cost, difficult to
administer, and are often used to
treat complex or rare conditions.
The Exclusive Access business
is currently operating over 40
exclusive access programmes,
which demonstrates strong organic
growth over the last 12 months.
Outlook
Uniphar’s ability to offer an
integrated solution to manage
speciality products across
their entire lifecycle is a key
differentiator and allows us to fill
the role of a trusted global partner
for manufacturers, particularly in
the case of specialist and orphan
drugs which tend to require
bespoke solutions and a high level
of expertise. The combination
of strong relationships, market
leading digital platforms and
strong financial management
capabilities, together with Durbin’s
excellence in global regulation and
distribution, provides a compelling
offering to manufacturers.
Covid-19 has not had a negative
impact on divisional performance
to date and we continue to
monitor developments closely.
17 +
expert employees
5m
Supplying more than
5 million units
16 +
Delivering to
over 160 countries
annually
4 +
Managing MAPs for
40+ global manufacturers,
from offices in Ireland,
the UK and the US
The Product
Access business
has continued to
show strong growth
throughout 2019,
delivering 16%
organic gross
profit growth.
Go to page 18
for more on
Our Strategy
48
Performance Review
49
Uniphar plc Annual Report 2019
Supply Chain
& Retail
Uniphar operates in a highly
concentrated Irish pre-wholesale
and wholesale market. We are
an established market leader
in Supply Chain in Ireland with
c.50% of the wholesale market
to hospital/retail pharmacies,
supported by a network of 287
owned and franchised pharmacies.
Price deflation on patent expired
products has been a feature of the
wholesale market, as has price
pressure. To counteract this, there
has been the growth of speciality
products, as well as a move by
the business to an activity-based
costing model. Supply Chain &
Retail has been active in finding
new avenues for the creation of
profitability, sustainability and
growth in the business.
Organic gross profit growth in
2019 was an exceptional 8%,
and we would expect rates of
between 3 and 4% next year.
In addition, we have invested in
ownership of retail pharmacies
and in the development of select
consumer brands, both of which
have been successful, with retail
sales growing by 142% and
consumer sales growing by 27%.
We have also moved more of our
back office and customer-facing
activities to digital platforms,
Supply Chain & Retail
Year ended 31 December
Revenue
Gross Profit
Gross Profit Margin
success in securing a number of
new principals during the period.
In 2019, the unresolved Brexit
situation continued to impact our
pre-wholesale business. The key
focus for the year was meeting
the requirements of our existing
customers for more warehouse
capacity, as manufacturers tried to
ensure that their companies had
sufficient stock in the country to
secure continuity of supply and
meet the needs of their customers
in the event of any Brexit-related
disruption to normal supply chain
and shipping routes. The additional
capacity created at our Greenogue
campus has proved invaluable
and allowed us to facilitate our
customers’ requirements and flex
to their needs.
Looking to 2020 the outlook
remains positive through a
combination of potential new
business wins and continued
organic growth within the strong
portfolio of manufacturers we
represent.
which has been highly effective
in lowering costs and improving
efficiency. In 2019, the growth
in sales made through digital
platforms was 36%.
Key Enabler for the
Growth Divisions
Supply Chain is where Uniphar
has its roots. Today, while many
of the disciplines learned in that
highly competitive business,
(such as prudent financial
management, tight cost control
and the importance of constant
technological innovation to
improving productivity and
returns), are embedded in the
culture and apply across the
organisation. The Supply Chain
business is an enabler of growth
for the Group. Supply Chain &
Retail is currently an Irish-only
business for Uniphar, with the
manufacturer relationships and
infrastructure of the division also
utilised for the benefit of the
growth divisions.
Strong Pre-Wholesale
Performance
Our pre-wholesale business had
a very strong year, seeing growth
in revenues of 6%, as a result of
increased business with existing
manufacturer clients and our
2019
€’000
2018
€’000
1,329,007
1,240,921
86,649
6.5%
70,001
5.6%
Growth
Reported
7.1%
23.8%
88bps
Constant
Currency
7.1%
23.8%
Established Market
Leader in Ireland
Supply Chain & Retail has
established a market leadership
position with approximately 50%
of the Irish wholesale market to
hospital/retail pharmacies. Uniphar
has a significant market share
in high street retail pharmacy,
operating a vertically integrated
model. Our two retail pharmacy
brands, Allcare Pharmacy and
Life Pharmacy put us in pole
position in terms of market share
in retail pharmacy.
Uniphar provides twice daily
deliveries, Monday to Friday, to
more than 950 pharmacies and
holds 50,000 SKUs in stock. In
addition to the division’s high-tech
warehouse facilities at Citywest
and Greenogue, it also operates
three regional depots to provide
nationwide coverage. There is
limited direct to pharmacy activity,
which is confined to high-tech
products in the Irish market. Of
the 287 Uniphar Symbol Group
supported pharmacies, 59 are
owned by the Group.
The retail pharmacy market is highly
fragmented with approximately
65% of pharmacies classified as
independently owned. Supply
Chain & Retail competes by
offering a service focused on
enabling community pharmacists
to compete with the larger and
multi-national owned chains.
Supporting them with services
such as a B2B e-commerce hub,
and a range of consumer and own
brand products. Experienced teams
also provide advice and support
on retail category development
through a strong focus on training
and category management and a
range of other back office support
services including regulatory audit
support, claims and marketing.
Newly Acquired Pharmacies
Show Strong Gross
Profit Growth
In 2018, the Group acquired the
Bradley’s Pharmacy Group chain
of 19 retail pharmacies. These
pharmacies have been integrated
into the Group’s existing pharmacy
network and all but two have
already been rebranded under
the Allcare brand. These newly
acquired pharmacies have achieved
strong gross profit growth year on
year, demonstrating the expertise,
support and purchasing power
which the Uniphar symbol group
offering brings to pharmacies
under its management. In August
2019, the Group completed the
acquisition of 15 Inischem retail
pharmacies, which have been
operating under the Allcare brand
throughout the Republic of Ireland,
with the acquisition of an additional
two retail pharmacies completed
in Q4 2019.
50
Performance Review
5 %
Approximately 50% of the wholesale
market to retail/hospital pharmacies
287
Network of 287 Uniphar Symbol
Group pharmacies
Outlook
While 2019 outperformed, we
expect to return to low single
digit growth in 2020 in line with
our medium–term guidance. The
Group’s key assets – high tech
distribution facilities, longstanding
manufacturer relationships and
scalable digital infrastructure were
developed within Supply Chain
& Retail or from insights based
on the division’s operations and
experienced personnel.
The strategy for Supply Chain &
Retail is to continue to leverage
these key assets to maintain
market leadership in Ireland, while
supporting increasing service
levels and managing continued
operational and financial efficiency
within this division.
Covid-19 has not had a negative
impact on divisional performance
to date and we continue to monitor
developments closely. However,
the outbreak has demonstrated
the significance of the role Uniphar
plays in the national healthcare
infrastructure in Ireland and
also highlighted some of the
constraints when demand increases
exponentially for a prolonged
period. To continue to capitalise
on our growth and ensure we can
offer a robust service as part of the
healthcare infrastructure we will
invest in a regional facility in 2020.
Go to page 18
for more on
Our Strategy
51
Uniphar plc Annual Report 2019 The Company adopted
the QCA Code of
Corporate Governance
in June 2019 in
advance of the IPO.
55
Company Information
56
Board of Directors
Corporate Governance Report
58
Audit, Risk and Compliance Committee Report 67
70
Nomination Committee Report
74
Remuneration Committee Report
81
Directors’ Report
52
G
o
v
e
r
n
a
n
c
e
53
Uniphar plc Annual Report 2019 In Uniphar, we have a
strong commitment to
ensuring that the highest
standards of corporate
governance are
maintained throughout
the organisation.
Company Information
Company Secretary and
Registered Office
A. McCarthy
Uniphar plc
4045 Kingswood Road
Citywest Business Park
Co. Dublin
D24 V06K
Registrar
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Principal Bankers
Bank of Ireland
Allied Irish Banks
Ulster Bank Ireland
Joint Brokers
Davy
Davy House
49 Dawson Street
Dublin 2
D02 PY05
RBC Capital Markets
Thames Court
One Queenhithe
London
EC4V 3DQ
Board of Directors
M. Pratt (Chairman)
G. Rabbette (Chief Executive Officer)
T. Dolphin (Chief Financial Officer)
P. Dempsey (Chief Commercial Officer)
H. McSharry
P. Hogan
J. Holly
M. McConn
M. Moran
G. Penny
P. Staunton
S. Webb
Registered Number:
224324
Auditors
PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
One Spencer Dock
North Wall Quay
Dublin 1
D01 X9R7
Legal Adviser
William Fry
2 Grand Canal Square
Dublin 2
D02 A342
Nomad and Euronext Growth Advisor
Davy
Davy House
49 Dawson Street
Dublin 2
D02 PY05
Website
Further information on Uniphar plc
is available on the Group’s website:
www.uniphar.ie
54
Uniphar plc Annual Report 2019
Governance
55
Board of Directors
Maurice Pratt
Non-Executive Chairman
Nationality:
Appointed:
Independent:
Irish
July 2003
No
Committee Memberships:
Nomination, Remuneration
Skills and Experience:
Former Chief Executive Officer of Tesco
Ireland Limited and C&C plc. Maurice is
also a former president of IBEC the leading
Irish business lobby group, and his previous
board roles include Eircom, Irish Heart
Foundation, Tourism Ireland and Bank of
Scotland Ireland. He also has significant skills
and experience obtained from his current
external directorships. Maurice was appointed
Chairman of the Uniphar Board in 2009.
Current External Directorships of note:
Maurice is currently Chairman of Barretstown,
European Movement Ireland, B&B Ireland,
Nursing Homes Ireland, and Serious Fun
Children’s Network.
Padraic Dempsey
Chief Commercial Officer
Nationality:
Appointed: March 2017
Independent:
Irish
No
Skills and Experience:
Padraic has significant senior management
experience in the healthcare sector. A business
and legal graduate, Padraic joined Uniphar
from UDG Healthcare plc in 2014.
Ger Rabbette
Chief Executive Officer
Nationality:
Appointed:
Independent:
Irish
March 2010
No
Tim Dolphin
Chief Financial Officer
Nationality:
Appointed:
Independent:
Irish
July 2010
No
Skills and Experience:
An industry veteran, Ger joined Uniphar from
Celesio, where he was Managing Director
of Movianto Ireland and Head of Celesio
Manufacturing Solutions Ireland. Ger is a
Chartered Accountant by training and has
held a range of senior positions in supply
chain with Cahill May Roberts and the wider
Celesio Group.
Skills and Experience:
Formerly a member of the senior
management team at Topaz Energy Limited,
Tim has held various senior financial
positions with Shell in Ireland, and is an EY
trained Chartered Accountant.
Current External Directorships of note:
Tim is currently a member of the board of the
Irish Medicines Verification Organisation and
the Pharmaceutical Distributors Federation
Ireland CLG.
John Holly
Non-Executive Director
Marie McConn
Non-Executive Director
Nationality:
Appointed: September 2009
Independent:
Irish
No
Nationality:
Appointed:
Independent:
Irish
September 2009
No
Committee Memberships:
Audit, Risk and Compliance
Committee Memberships:
Nomination
Skills and Experience:
John is a retired community pharmacist based
in Wicklow. Prior to his appointment to the
Board, John had previously sat on the boards
of a number of Uniphar’s main trading entities.
Skills and Experience:
Marie is a community pharmacist based in
Limerick and a former President of the Irish
Pharmacy Union.
Mark Moran
Non-Executive Director
Nationality:
Appointed:
Independent:
Irish
August 2018
No
Committee Memberships:
Nomination
Skills and Experience:
Mark was Chairman of Sisk Healthcare Group,
is a former CEO of Mater Private Hospital,
and a former Chairman of Galway University
Foundation. Mark has also served as
Chairman of EBS Building Society and director
of the Irish Blood Transfusion Service.
Current External Directorships of note:
Mark is currently a director of the Fitzwilliam
Hotel Group.
Heather Ann McSharry
Senior Independent Director
Nationality:
Appointed:
Independent:
Irish
June 2019
Yes
Committee Memberships:
Nomination
Skills and Experience:
Heather Ann has significant healthcare
industry experience from her roles as
Managing Director (Ireland) of Reckitt
Benckiser and Managing Director (Ireland) of
Boots Healthcare. Heather Ann was previously
on the Board of Bank of Ireland.
Current External Directorships of note:
Heather Ann is currently on the Board of the
following three publicly listed companies:
CRH plc, Greencore Plc, and Jazz
Pharmaceuticals Plc.
Paul Hogan
Non-Executive Director
Nationality:
Appointed:
Independent:
American/Irish
June 2019
Yes
Committee Memberships:
Audit, Risk and Compliance
Skills and Experience:
Until early 2020, Paul was the Chief Financial
Officer at Nelipak Healthcare, a specialist
healthcare packaging business in Rhode
Island, US. Paul was previously the Director
of Development and Chief Financial Officer of
the Clondalkin Group. He trained in audit and
business advisory in PwC, and is a Chartered
Accountant by training.
Padraic Staunton
Non-Executive Director
Nationality:
Appointed:
Independent:
Irish
September 2009
No
Committee Memberships:
Remuneration
Skills and Experience:
A retired community pharmacist based
in Meath, Padraic has also held a
number of senior positions on pharmacy
industry committees.
Sue Webb
Non-Executive Director
Nationality:
Appointed:
Independent:
English
June 2019
Yes
Committee Memberships:
Remuneration
Skills and Experience:
Sue has held a variety of sales and marketing
roles for Novartis Pharmaceuticals UK Ltd,
most recently as Country President, UK
& Region Head of Country Management,
Europe. Previously, Sue worked for Ortho
McNeil in the US and Janssen-Cilag in the UK,
with significant experience in pricing, strategy,
country reorganisation and launches for
pharmaceutical products.
Ger Penny
Non-Executive Director
Nationality:
Appointed:
Independent:
Irish
August 2018
No
Committee Memberships:
Audit, Risk and Compliance
Skills and Experience:
Ger is the Chief Financial Officer of the Sisk
Group, where he leads the finance and IT
functions. He also serves as Chairman to the
Group’s non-construction businesses, and has
recently been appointed as a director of the
Irish Cancer Society. A qualified accountant
and chartered director, Ger also spent 12 years
with Diageo plc., where he held a number of
senior finance, strategy and operational roles
in Dublin, Belfast & London.
Current External Directorships of note:
Ger is currently a director of a number of
Sisk Construction companies, and the Irish
Cancer Society.
56
Governance
57
Uniphar plc Annual Report 2019 Corporate
Governance
Report
New Independent
Non-Executive
Directors appointed
to the Board 3
In Uniphar, we have a strong commitment to
ensuring that high standards of corporate
governance are maintained throughout the
organisation. As the Group grows, the Board
ensures that we are taking a reasonable strategic
approach and managing risk and resources in a
balanced and ethical manner.
Preparations for the Company’s
IPO, in July 2019, involved
considerable work to ensure that
the Company could meet the more
stringent standards of corporate
governance expected of a listed
company. The Company adopted
the QCA Code of Corporate
Governance in June 2019 in
advance of the IPO. The QCA Code
has become a widely recognised
benchmark for corporate
governance of small and mid-sized
companies, particularly companies
admitted to trading on AIM and
Euronext Growth.
The QCA Code provides the
Company with the framework to
help ensure that a strong level
of governance is maintained,
enabling the Company to embed
the governance culture that exists
within the Group as part of building
a successful and sustainable
business for all of its stakeholders.
It is the Board’s intention to
continue to enhance its corporate
governance framework and to
transition to compliance with the UK
Code within three years from IPO.
This report outlines the clear roles
and structures we have in place for
managing corporate governance
and seeking to ensure that the
Group is positioned to meet high
standards of corporate governance
at all times.
Corporate Governance
Statement
The Directors acknowledge the
importance of good corporate
governance and believe that good
corporate governance creates
shareholder value by improving
performance, whilst reducing
or mitigating the risks that a
company faces as it seeks to create
sustainable growth over the medium
to long-term.
The QCA Code requires the
Company to apply ten principles
of good corporate governance
and publish certain disclosures
in its annual report and also on
its website. The Company has
committed to applying these
principles within its business and
the full details of the application of
these principles are contained on
our website, www.uniphar.ie.
Board of Directors
The Board comprises of twelve
Directors, three of whom are
Executive Directors and nine of
whom, including the Chairman, are
Non-Executive Directors, reflecting
a blend of different experience
and backgrounds. Of the Non-
Executive Directors, three of these
have been deemed by the Board
to be independent. Biographies of
all of the Directors are set out on
pages 56 and 57.
The Board believes that there is
an appropriate balance between
Executive and Non-Executive
Directors for governing the
business effectively and promoting
shareholder interests. The Board
believes this combination of
Executive and Non-Executive
Directors allows it to exercise
objectivity in decision making
and proper control of the Group’s
business and that this composition
is appropriate in view of the current
size of the Board and requirements
of the Group’s business.
Uniphar plc Board of Directors
Audit, Risk and
Compliance
Committee
Nomination
Committee
Remuneration
Committee
Chief Executive
Officer
Chair
Paul Hogan
Chair
Heather Ann
McSharry
Chair
Maurice Pratt
Ger Rabbette
See pages
67 to 69 for
Committee Report
See pages
70 to 73 for
Committee Report
See pages
74 to 80 for
Committee Report
See pages
14 to 17 for
CEO Report
58
Governance
59
Uniphar plc Annual Report 2019
Corporate Governance Report continued
Board Diversity
Board Composition
3
1
3
Male
Female
9
5
3
Chairman
Executive
Non-Executive
Independent
Non-Executive
Division of Responsibilities
The Board retains ultimate
accountability for good governance
and is responsible for monitoring
the activities of the executive
team. The Board has a collective
responsibility and legal obligation
to promote the interests of
the Group and are collectively
responsible for defining corporate
governance arrangements. Ultimate
responsibility for the quality of, and
approach to, corporate governance
lies with the Chairman.
The roles of Chairman and
Chief Executive Officer are
not combined and there is a
clear division of responsibilities
between them. The Chairman’s
responsibility is to lead the Board
and this ensures that the Board is
effective and efficient. The Chief
Executive Officer is accountable
to the Board for all authority
delegated to the executive team.
Chairman
The Chairman has overall
responsibility for corporate
governance and for promoting
high standards throughout the
Group. He leads and chairs the
Board, ensuring that Committees
are properly structured and
operate with the appropriate
terms of reference. He ensures
that all Directors contribute
effectively in the development and
implementation of the Group’s
strategy whilst ensuring that the
nature and extent of the significant
risks the Group is willing to embrace
in the implementation of its strategy
are determined and challenged.
The Chairman is involved in the
development of strategy and setting
objectives together with the Chief
Executive Officer and oversees
communication between the
Company and its shareholders.
Chief Executive Officer
The Chief Executive Officer
provides coherent leadership and
management of the Group, leads
the development of objectives,
strategies and performance
standards as agreed by the
Board. He monitors, reviews and
manages key risks and strategies
with the Board, and ensures
that the assets of the Group are
maintained and safeguarded.
He also takes a leading role on
investor relations activities to
ensure communications and
the Company’s standing with
shareholders and financial
institutions is maintained. The
Board has delegated responsibility
for the management of the Group,
through the Chief Executive Officer,
to the executive team.
Non-Executive Directors
The Non-Executive Directors
contribute independent thinking and
judgement through the application
of their external experience
and knowledge, scrutinise the
performance of management,
provide constructive challenge to
the Executive Directors and ensure
that the Group is operating within
the governance and risk framework
approved by the Board.
Company Secretary
The Company Secretary is
responsible for providing clear
and timely information flow to the
Board and its Committees and
supports the Board on matters
of corporate governance and
risk. All Directors have access
to the advice and services of
the Company Secretary, who
is responsible to the Board for
ensuring that Board procedures
are complied with. The
appointment and removal of the
Company Secretary is a matter for
the Board.
Senior Independent Director
In June 2019 Heather Ann McSharry
was appointed to the role of
Senior Independent Director. This
role provides a sounding board
for the Chairman and serves as
an intermediary for the other
Directors when necessary. The
Senior Independent Director is also
available to shareholders if they
have concerns.
Committees
The Board is supported in its
function by the Audit, Risk and
Compliance Committee, the
Nomination Committee and
the Remuneration Committee
and reports from each of these
Committees are contained on pages
67 to 80.
Schedule of Matters
Reserved for the Board
The Board meets at least six times
a year to review, formulate and
approve the Group’s strategy,
budgets and corporate actions
and oversee the Group’s progress
towards its goals.
A formal Schedule of Matters
Reserved for the Board is in place
and is reviewed annually. Specific
responsibilities reserved for the
Board include:
-
responsibility for the overall
leadership of the Group and
setting the Group’s values and
standards;
- approval of the Group’s purpose,
strategic aims and objectives;
- promoting the long-term
sustainable success of the
Group, generating value for
shareholders and contributing to
wider society;
- embodying and promoting
a corporate culture that is
based on sound ethical values
and behaviours and using it
as an asset and a source of
competitive advantage;
- undertaking an assessment of
the prospects of the Group, over
a defined period and determining
why it considers that period to
be appropriate;
- ensuring maintenance of an
effective system of internal
control and risk management;
- approving changes to the
structure, size and composition
of the Board, following
recommendations by the
Nomination Committee;
- undertaking a formal and
rigorous review of its own
performance, that of its
Committees and individual
Directors, and the division of
responsibilities;
- considering the balance of
interests between shareholders,
employees, customers and
the community.
Appointment of Directors
The Board put in place a formal
Board appointments policy in June
2019 which sets out the procedure
and criteria to be applied when
considering the appointment of new
individuals to the Board.
Re-election of Directors
The Articles provide that at least
one third of the Company’s
Directors must retire annually by
rotation and are then eligible for
re-election in accordance with
the Articles.
Directors appointed to the
Board during a year must submit
themselves to shareholders
for election at the Annual
General Meeting following their
appointment. The Board has
determined that when a Non-
Executive Director has served
on the Board for more than nine
years, that Director will be subject
to annual re-election.
Induction, development
and training
The Directors believe that the Board
has significant industry, financial,
public markets and governance
experience, possessing the
necessary mix of experience, skills,
personal qualities and capabilities to
deliver the strategy of the Group for
the benefit of shareholders over the
medium to long-term.
In early 2019, the Board engaged
external advisers to carry out an
independent review of the Board
structure and composition. This
detailed review focused on the
skills and experience of each
Board member and identified areas
where additional experience and
diversity would be appropriate
following our IPO to enhance the
collective Board composition.
Following this review, the Chairman
engaged leading organisational
consultants to assist with the
search for additional Independent
Non-Executive Directors for the
Board who would possess the
skills and diversity profile sought
for the Board. The outcome of this
process saw the appointment of
Paul Hogan, Heather Ann McSharry
and Sue Webb as new Independent
Non-Executive Directors increasing
the independent representation on
the Board.
In addition, the Board engaged
external experts including legal
advisers, accountants, Nominated
Adviser and Euronext Growth
Adviser and brokers in accordance
with fundraising and normal
legal and financial processes
associated with being a company
admitted to trading on AIM and
Euronext Growth.
60
Governance
61
Uniphar plc Annual Report 2019 Corporate Governance Report continued
Go to page 81 for our
Directors’ Report
The Board is kept abreast of
key developments regarding
corporate governance and AIM
and Euronext Growth regulation
by its Nominated Adviser and
Euronext Growth Adviser, and its
legal advisers. The Company’s
legal advisers provide updates
on relevant legal and governance
issues with the Nominated Adviser
and Euronext Growth Adviser
providing the Board with training
on the AIM Rules and Euronext
Growth Rules (as applicable) and
refresher training as and when
required. The Company Secretary
also helps keep the Board up to
date on corporate governance
developments and liaises with the
Nominated Adviser and Euronext
Growth Adviser on areas of AIM
and Euronext Growth Rules
requirements.
The Directors have access to the
Nominated Adviser and Euronext
Growth Adviser, Company
Secretary, lawyers and auditors as
and when required and are able to
obtain advice from other external
bodies when necessary.
A new Board induction procedure
was put in place in June 2019
and as a result, when new
Directors join the Board they are
provided with extensive briefing
materials on the Group and its
operations, as well as training
where appropriate.
Board Evaluation
The Board believes that, in
addition to dealing with any
matters as they arise, it is
appropriate to carry out a formal
evaluation of the performance
of the Board each year. This is
intended to ensure that the Board
remains effective, well-informed
and able to make high quality and
timely decisions for the benefit of
all stakeholders of the Group.
-
The Board has recently put
a formal annual performance
evaluation procedure in place.
As part of the annual evaluation
process, the performance of
the Board as a whole, Board
processes, its Committees, the
Chairman, and individual Directors
on an individual basis shall be
assessed. The Board will conduct
a self-evaluation of its performance
on an annual basis and a separate
external evaluation of the Board
will be facilitated at least every
three years. The Chairman is
responsible for overseeing the
annual evaluation process.
The annual performance
evaluation procedure includes
an evaluation of:
-
-
the composition and structure of
the Board, to include balance of
skills, experience and knowledge
on the Board;
the Boards’ diversity, to include
gender, social and ethnic
backgrounds, and cognitive and
personal strengths;
-
independence of the Board and
individual Directors;
- how the Board works together as
a unit to achieve objectives and
fulfil responsibilities;
- how the Board discharges its
roles and responsibilities;
- Board processes, to include
effectiveness of meetings,
agendas, forward planning and
reporting;
-
the Chairman’s leadership style
and approach;
- performance of Committees;
and
individual Directors’ performance
and ability to contribute
effectively and ongoing
commitment to their role
as Director and, if relevant,
Committee members.
Board succession planning
The Board plans for its own
succession with the assistance
of the Nomination Committee
and has prepared a succession
plan to ensure that the Board has
continuity of relevant skills and
independence in the future. In so
doing, the Board considers the
skill, knowledge and experience
necessary to enable it to meet the
strategic vision for the Group.
Independence
In 2019, the Board engaged
the services of independent
consultants to undertake a search
for suitable candidates to serve
as Independent Non-Executive
Directors.
The Board has determined
that Paul Hogan, Heather Ann
McSharry and Sue Webb are
independent in character and
judgement and that there are no
relationships or circumstances
which could materially affect or
interfere with the exercise of their
independent judgement. The
Board has also determined that
each of the other Non-Executive
Directors are not independent
based on either their tenure on
the Board or their nominee status
arising from the acquisition of
Sisk Healthcare.
Time Commitment
Each Board member commits
sufficient time to fulfil their duties
and obligations to the Board and
the Group and expectations in
Attendance at Board and Board Committee meetings in 2019
Board
Audit, Risk and
Compliance
Committee
Nomination
Committee
Remuneration
Committee
A
15
15
15
15
5
5
15
15
15
15
15
5
10
10
10
B
15
14
15
13
5
4
13
13
12
13
13
5
9
8
9
A
-
-
-
-
-
2
10
-
-
2
-
-
8
8
-
B
-
-
-
-
-
2
10
-
-
2
-
-
8
8
-
A
3
-
-
-
0
-
-
3
3
-
-
-
-
-
3
B
3
-
-
-
0
-
-
3
3
-
-
-
-
-
3
A
1
-
-
-
-
-
-
-
-
-
1
0
-
1
-
B
1
-
-
-
-
-
-
-
-
-
1
0
-
1
-
Director
M. Pratt
G. Rabbette
T. Dolphin
P. Dempsey
H. McSharry
P. Hogan
J. Holly
M. McConn
M. Moran
G. Penny
P. Staunton
S. Webb
M. Murphy
M. Quinn
C. Shannon
Column A indicates the number of meetings held during the period in which the Director was a member of
the Board and/or Committee.
Column B indicates the number of meetings attended during the period in which the Director was a
member of the Board and/or Committee.
terms of time commitment are
clearly set out in the terms of
appointment of all Non-Executive
Directors.
There were 15 formal meetings
of the Board during 2019. Details
of Directors’ attendance at
those meetings are set out in the
table above. The Chairman sets
the agenda for each meeting,
in consultation with the Chief
Executive Officer and the Company
Secretary. Board papers are
circulated to Directors in advance
of meetings. The Non-Executive
Directors met frequently during
2019 without Executive Directors
present and discussed a wide
range of issues including those
brought to it by the various
standing Board Committees.
In June 2019, Matt Murphy, Michael
Quinn and Criofan Shannon retired
from the Board. Subsequently, the
Board approved the appointment of
Paul Hogan, Heather Ann McSharry
and Sue Webb as new Independent
Non-Executive Directors enhancing
the independent representation
on the Board. Heather Ann
McSharry was appointed as Senior
Independent Director.
Board Committees
The Board has three permanent
Committees to assist in the
execution of its responsibilities.
These are the Audit, Risk and
Compliance Committee, the
Nomination Committee and the
Remuneration Committee. Ad hoc
committees are formed from time to
time to deal with specific matters.
For example, the Board constituted
an IPO sub-committee in 2018 to
consider matters relating to the IPO.
Each of the permanent Committees
has terms of reference under which
authority is delegated to them
by the Board. The Chair of each
Committee reports to the Board
on its deliberations, attends the
Annual General Meeting and is
available to answer questions
from shareholders.
The current membership of each
Committee, details of attendance,
each member’s tenure, and the
roles and responsibilities of each
Committee are set out in the
individual Committee reports on
pages 67 to 80.
62
Governance
63
Uniphar plc Annual Report 2019
Shareholders are kept up to date
on matters of a material substance
and/or a regulatory nature via
announcements made through the
regulatory news service and updates
are provided to the market via this
regulatory news service.
The Company’s AGM is an
opportunity for shareholders
to meet with the Chairman and
other members of the Board. The
meeting is open to all shareholders,
giving them the opportunity to ask
questions and raise issues during
the meeting or more informally
following the meeting. The results
of the Company’s AGM will be
announced via the regulatory
news service.
In 2019, the Company also
implemented a “Significant Votes
Against a Resolution Procedure”
which will ensure that where 20%
or more of votes have been cast
against the Board’s recommendation
for a resolution at a general meeting
of shareholders, the Board will
engage with shareholders and seek
to understand their views in relation
to the significant vote against.
The Board views the Annual Report
as well as its interim results as key
communication channels through
which progress in meeting the
Group’s objectives and updating
its strategic targets can be given
to all shareholders. In addition,
the Board uses the AGM as a
primary mechanism to engage
with shareholders, both to give
information and receive feedback
about the Group and its progress.
Corporate Governance Report continued
in March 2020. The Board has
determined that Sue Webb is
independent.
The Committee receives advice
from leading independent firms
of compensation and benefits
consultants when necessary and
the Chief Executive Officer is fully
consulted about remuneration
proposals.
Communications with
Shareholders
The Company has established
a framework for stakeholder
engagement which identifies the
key stakeholders of the Group
(including shareholders), sets out
mechanisms for engaging and
communicating with them and
details key responsibilities.
The Company’s main method
of communication with its
shareholders has traditionally
been through its Annual Report
and AGM process. The Board
recognises that understanding and
meeting shareholder needs and
expectations is a key business
objective in and of itself. The
Group appointed a Group Director
of Corporate Development
in May 2019, who manages
investor relations and shareholder
communications on behalf of the
Group. In 2019, the Group also
put in place an investor relations
policy to:
- outline the Company’s
methods of communication
to shareholders;
- ensure that the Company
communicates effectively with all
shareholders; and
- ensure that the Company
discloses information correctly,
in a balanced, transparent and
timely way and simultaneously to
shareholders.
Audit, Risk and
Compliance Committee
The Audit, Risk and Compliance
Committee consists of three Non-
Executive Directors: Paul Hogan,
John Holly and Ger Penny. Paul
Hogan is Chair of this Committee
and is considered by the Board to
be independent. Paul Hogan and
Ger Penny also have extensive
financial experience and expertise.
It will be seen from the Directors’
biographical details appearing on
pages 56 and 57 that the members
of the Committee bring to it a wide
range of experience and expertise.
The Committee met 10 times
during 2019. The Chief Financial
Officer, and senior members of
the Group Finance team, normally
attend meetings of the Committee
while the Chief Executive Officer
attends when necessary. The
external auditors attend as required
and have direct access to the
Committee Chair at all times.
During the year, the Committee met
with the external auditors without
management being present.
Nomination Committee
The Nomination Committee
consists of four Non-Executive
Directors: Heather Ann McSharry,
Maurice Pratt, Marie McConn
and Mark Moran. Heather
Ann McSharry is Chair of this
Committee and is considered by
the Board to be Independent.
The Committee assists the Board
in ensuring that the composition
of the Board and its Committees
is appropriate to the needs of
the Group.
In discharging its responsibilities,
the Committee uses the services
of independent consultants as
required.
Remuneration Committee
The Remuneration Committee
consists of three Non-Executive
Directors: Maurice Pratt, Padraic
Staunton and Sue Webb. During
2019, Maurice Pratt was the
Chair of this Committee and was
succeeded as Chair by Sue Webb
With the Company’s successful dual listing on the Euronext Growth (Dublin) and AIM (London) markets in
July 2019, there was c.200 meetings and conferences calls with existing and prospective shareholders during
2019, including:
Date
April 2019
June 2019
June 2019
July 2019
Activity
Investors presentations in Dublin and London
Annual General Meeting, Dublin
IPO pilot fishing
IPO roadshows in Dublin, London, Edinburgh, Frankfurt, Paris and New York
September 2019
Interim results for six months ended 30 June 2019
September 2019
Roadshows in Dublin, London, Frankfurt and Paris
October 2019
USA roadshow and investor calls
November 2019
Investor meetings and calls
December 2019
Investor meetings and calls
Internal control and risk
management
The Directors have overall
responsibility for the Group’s
system of internal control and
for reviewing its effectiveness.
This system is designed to help
the Group meet its business
objectives by appropriately
managing, rather than eliminating,
the risks to those objectives.
Through the activities of the Audit,
Risk and Compliance Committee,
the effectiveness of these internal
controls is regularly reviewed.
The Group’s Risk Management
Policy is designed to provide the
framework to identify, assess,
monitor and manage the risks
associated with the Group’s
business. Further details in relation
to the Group’s risk management
framework are set out on pages
28 to 33.
Culture
The Directors are committed to
upholding ethical values and
behaviours both at Board level and
throughout the Group.
The Schedule of Matters Reserved
for the Board includes an
obligation on the Board to:
- embody and promote a
corporate culture that is based
on sound ethical values and
behaviours and use it as an asset
and a source of competitive
advantage; and
- establish a framework for setting,
promoting, monitoring and
assessing culture.
The Group is mindful that its
corporate culture transcends all
three business divisions. The
Group is committed to reviewing
and further developing and
communicating its corporate
culture across the enlarged Group
and to its stakeholders.
Go to page 6
for more on our
Investment Case
64
Governance
65
Uniphar plc Annual Report 2019
Corporate Governance Report continued
Audit, Risk and
Compliance
Committee Report
Case
Study
Corporate
Governance
Strengthening
the Board and
improving gender
balance
Issue
We have a strong commitment to ensuring that high standards of
corporate governance are maintained throughout the organisation.
As the Group grows, the Board of Directors ensures that we
are taking a reasonable strategic approach and managing risk
and resources in a balanced and ethical manner. Therefore,
it is essential that the Board has the skills, experience and
independence to fulfil this important role.
As part of the constant drive to enhance standards of corporate
governance, we identified an opportunity to improve the diversity
and broaden the skillset of our Board during 2019.
Action
- Working with an independent resourcing consultancy firm, we
began an international search for suitably qualified candidates
who could bring significant added value to the Board.
- We were conscious of identifying candidates with international
experience in healthcare as well as experience of listed
plc boards.
-
Improving the gender balance and independence of the
Board were key focuses of the search.
Outcome
- Following the extensive search process, we made three new
appointments to the Board, adding diversity, independence
and listed plc experience to the Board.
- The new appointments saw an increase in independence to
25% and an increase in female representation, bringing the total
female representation on the Board to 25%.
- The addition of board members with extensive international
senior management experience from the US and the UK.
I succeeded Michael Quinn as Chair of the Audit, Risk
and Compliance Committee on my appointment to
the Board in June 2019. On behalf of the Committee,
I am pleased to present the report of the Committee
for the year ended 31 December 2019, which
provides a summary of the Committee’s role and
responsibilities, and how the Committee discharged
these during 2019.
Membership
The members of the Committee
are set out in the table below,
along with the date of appointment
of each member, and details of
their attendance at Committee
meetings during the year. During
2019, Matt Murphy and Michael
Quinn retired from the Board
and the Committee and Ger
Penny and I were appointed to
the Committee. The Committee
member’s biographies are set out
on pages 56 and 57.
The Committee is appointed by the
Board and the terms of reference
of the Committee state that the
composition should comprise of
a minimum of three Independent
Non-Executive Directors, to the
extent possible. The Committee
does not currently meet this
independence criteria. However,
2019 saw the appointment of
an Independent Chair to the
Committee and the Board is
committed to ensuring that the
Committee transitions to meeting
this independence requirement in
the future, once the composition of
the Board permits this.
The members of the Committee
bring to it a wide range of
experience and expertise including
significant financial experience,
and knowledge of financial
reporting principles.
Committee Member
Position
Appointed
Resignation
Attendance
Paul Hogan
Committee Chair
John Holly
Ger Penny
Non-Executive Director
Non-Executive Director
Matt Murphy
Non-Executive Director
Michael Quinn
Non-Executive Director
June 2019
Sept. 2010
June 2019
Sept. 2010
Sept. 2002
N/A
N/A
N/A
June 2019
June 2019
2 / 2
10 / 10
2 / 2
8 / 8
8 / 8
66
Governance
67
Uniphar plc Annual Report 2019
Audit, Risk and Compliance
Committee Report continued
Role of the Audit, Risk and
Compliance Committee
The Committee is responsible
for ensuring that the financial
performance of the Group
is accurately reported. The
Committee’s role includes;
- monitoring the integrity of
the financial statements of
the Group;
-
-
reviewing significant financial
reporting issues;
reviewing the effectiveness of
the internal controls;
- monitoring and reviewing the
effectiveness of the internal
audit function; and
- making recommendations to
the Board on the appointment
or removal of the external
auditors as well as approving
their remuneration and terms
of engagement and evaluating
their performance.
A copy of the terms of reference of
the Committee is available on the
Group’s website, www.uniphar.ie.
Meetings of the Committee
The Committee met 10 times
during 2019. The Chief Financial
Officer and senior members of
the Group Finance team normally
attend meetings of the Committee
while the Chief Executive Officer
attends when necessary. The
external auditors attend as
required and have direct access
to the Committee Chair at all
times. During the year, the
Committee met with the external
auditors without management
being present.
The main activities of the
Committee during the year included:
-
review of the Working Capital
Report, Financial Position
and Prospects Procedures
Report together with risk and
compliance related policies and
procedures as part of the IPO
preparations;
-
review of the annual and interim
reports and related statements
and recommendation of these
to the Board for approval;
- approval of the external audit
plan and identification of
significant risks;
- approval of the internal audit
plan and internal audit charter;
- approval of fees paid to the
external auditors for audit and
non-audit services;
-
-
-
-
review of the independence,
objectivity, performance and
effectiveness of the external
auditors;
review of the integrity and
consistency of the key
accounting judgements;
review of principal risks and
uncertainties; and
review of the Group’s
accounting for significant
acquisitions.
Financial Reporting and
Key Areas of Focus
The Committee has an important
oversight role in providing the
Board with assurance as to
the propriety of the financial
reporting process. As part of this
role, the Committee considers
significant accounting policies,
any changes to them and any
significant judgements and
estimates. During the year the
Committee reviewed the clarity
and integrity of disclosures in the
financial statements and reviewed
in detail the goodwill impairment
assessment. The Committee also
had detailed discussions on these
matters with senior management
and the external auditor.
The Committee reviewed the
Annual Report and were able to
confirm to the Board that, in its
view, it was fair, balanced and
understandable and provided
the information necessary for
shareholders to assess the
Group’s position, performance,
business model and strategy.
Goodwill Impairment
Assessment
For the purposes of its annual
impairment testing process, the
Group assesses the recoverable
amount of each of the Group’s
cash generating units (“CGUs”)
based on the calculation of the
value-in-use or fair value less
costs to sell. The annual goodwill
impairment testing was conducted
by management, and papers
outlining the methodology and
assumptions used in, and the
results of, that assessment were
presented to the Committee.
Through discussion with both
management and the external
auditors, the Committee
reviewed management’s goodwill
impairment testing methodology
and processes. In this regard the
Committee specifically assessed
the key assumptions used to
estimate the recoverable amount
of each CGU, including future
Go to page 92
for the Independent
Auditors’ Report
cash flows and discount rates
applied in the calculation of
the value in use, along with the
sensitivity analysis performed.
The Committee found the
methodology to be robust and
the results of the assessment,
together with the disclosures
in note 12 of the financial
statements, to be appropriate.
Risk Management
The Group’s internal control and
risk management framework
is embedded within the
organisational structure. The
Committee is responsible for
reviewing the adequacy and
effectiveness of the internal control
system and risk management on
behalf of the Board.
During the year, the Committee
reviewed in depth the process
followed by the Group to identify
and manage risk and to determine
the principal risks faced by the
Group. The Committee is satisfied
that the risk management process
is robust.
Further details on the Group’s
risk management is contained on
pages 28 to 33.
Internal Audit
The Group has an internal audit
function appropriate to the Group’s
current size and complexity. During
2019 the Group appointed a new
dedicated Head of Internal Audit
who meets with the Committee
to monitor the adequacy of the
Group’s internal control systems.
External Auditor
The Committee has an important
role in supporting the Board in
discharging its duties by providing
independent oversight over the
external audit.
Independence and Objectivity
The Committee is responsible for
ensuring that the external auditor
is objective and independent. PwC
as external auditor is precluded
from engaging in certain non-audit
services which would compromise
its independence, violate any
laws and regulations and affect its
appointment as external auditor.
During 2019, as presented in the
financial statements, the level of
non-audit fees received by PwC
was €2.0m. The non-audit services
performed by PwC during the
year largely related to advisory
work in connection with the IPO,
due diligence and tax advice on
acquisitions completed during
the year.
The Committee performed a review
of the audit and non-audit services
provided by the external auditor and
the fees charged for those services
in respect of the year ended 31
December 2019. Following this
review and the confirmation in
writing received from the Group’s
external auditor re-affirming its
independence and objectivity, the
Committee is satisfied as to PwC’s
independence and objectivity.
Effectiveness
The external audit plan for the
year ended 31 December 2019
was presented by PwC to the
Committee at its meeting in
November 2019. The Committee
reviewed and appropriately
challenged the external auditor
before agreeing the proposed audit
scope and approach.
PwC subsequently presented a
detailed report of their audit findings
to the Committee at its meeting in
March 2020.
In determining the appropriateness
of the external auditor, the
Committee had full regard to the
auditor’s competence, the quality
and efficiency of the audit, and
whether the audit fee is appropriate
in relation to the size, complexity,
and risk and control profile of the
Group. After taking into account all
of the above factors, the Committee
continues to be satisfied with the
performance of PwC and has
informed the Board accordingly.
Areas of Focus for 2020
Looking ahead to 2020, the
Committee will continue to focus on
external audit planning, rigorous risk
management and internal controls.
On behalf of the Committee
Paul Hogan
Chair of the Audit, Risk and
Compliance Committee
68
Governance
69
Uniphar plc Annual Report 2019
Nomination
Committee
Report
I succeeded Maurice Pratt as Chair of the Nomination
Committee on my appointment to the Board in June
2019. On behalf of the Committee I am pleased to
present the report for the year ended 31 December
2019, which provides a summary of the Committee’s
role and responsibilities, and how the Committee
discharged these during 2019.
Membership
The members of the Committee
are set out in the table below,
along with the date of appointment
of each member and details of
their attendance at Committee
meetings during the year.
During 2019, Criofan Shannon
retired from the Board and the
Committee, Mark Moran and I
were appointed as members of the
Committee. Biographies of each
Committee member are set out on
pages 56 and 57.
The Committee is appointed by the
Board and the terms of reference
of the Committee state that the
composition should comprise
of a minimum of three Directors,
the majority of whom must be
Independent Non-Executive
Directors. The Committee does not
currently meet this independence
criteria. However, 2019 saw the
appointment of an independent
Chair of the Committee. In line
with the Board’s commitment to
transition to compliance with the
UK Code within three years from
IPO, the Committee composition
will be refreshed to meet the
independence requirements set
out in the Committee’s terms of
reference, whilst balancing the need
for continuity in the short term.
Each appointment to the
Committee is for a term of up
to three years, which may be
extended by up to two further
three-year terms, provided the
Director in question continues to
Committee Member
Position
Appointed
Resignation
Attendance
Heather Ann McSharry Committee Chair
Maurice Pratt
Non-Executive Chairman
Marie McConn
Non-Executive Director
Mark Moran
Non-Executive Director
June 2019
Oct. 2009
Oct. 2009
May 2019
N/A
N/A
N/A
N/A
Criofan Shannon
Non-Executive Director
Oct. 2009
June 2019
0 / 0*
3 / 3
3 / 3
3 / 3
3 / 3
* No formal meetings of the Committee were held after June 2019.
70
meet the criteria for membership
of the Committee. Both Maurice
Pratt and Marie McConn have
served on the Committee for
over 10 years. In reviewing the
composition of the Committee
during 2019, and in light of the
appointment of both Mark Moran
and myself as new members of
the Committee, the Board and
the Committee were cognisant
of the need to ensure continuity
and have extended the tenure
of both Maurice Pratt and Marie
McConn beyond that set out in
the Committee terms of reference.
Under the terms of reference,
the Chair of the Committee may
be either the Chair of the Board
or another Independent Non-
Executive Director. Following
my appointment to the Board
in June 2019, I was delighted
to be appointed as Chair of the
Committee.
Role of the Nomination
Committee
The Committee is responsible
for overseeing succession
planning for the Board and senior
management and assessing the
leadership needs for the Group in
terms of the ability of the Group to
compete effectively. In that regard
the Committee’s roles include:
-
reviewing the structure, size
and composition of the Board
including the skills, knowledge
and experience of the Directors;
- making recommendations to
the Board with regard to any
changes to its composition or
that of the Committees;
-
identifying and nominating
candidates to fill Board
vacancies;
- overseeing the performance
evaluation of the Board; and
- succession planning for senior
management.
A copy of the terms of reference of
the Committee is available on the
Group’s website, www.uniphar.ie
Meetings of the Committee
The Committee met three times
during 2019. The principal matters
dealt with by the Committee
included the following:
- consideration of the
independent adviser’s report on
Board composition;
- evaluation of potential
independent non-executive
candidates;
- Board succession and
retirement by rotation;
-
-
resignations of the outgoing
Directors;
recommendation of the new
Independent Non-Executive
Directors for appointment to
the Board and Committees and
the appointment of the new
Company Secretary;
-
review and recommendation
for approval of new policies to
enhance Board governance.
Board and Committee
Composition
Elections and re-elections at AGM
The Articles provide (1) that at
least one third of the Directors
must retire annually by rotation
and (2) the terms on which they
are eligible for re-election.
Re-appointment is not automatic.
Directors seeking re-election
are subject to a performance
appraisal which is overseen
by the Committee. Directors
appointed to the Board during a
year must submit themselves to
shareholders for election at the
Annual General Meeting following
their appointment. The Board has
determined that when a Non-
Executive Director has served
on the Board for more than nine
years, that Director will be subject
to annual re-election.
Tim Dolphin, Padraic Dempsey,
John Holly, Marie McConn,
Padraic Staunton, Matt Murphy,
Michael Quinn and Criofan
Shannon were re-elected by the
shareholders as Directors at the
Company’s AGM on 12 June 2019.
On 27 June 2019, Michael Quinn,
Matt Murphy and Criofan Shannon
retired from the Board and three
new Independent Non-Executive
Directors were appointed – Paul
Hogan, Sue Webb and myself.
Michael Quinn, Matt Murphy and
Criofan Shannon all contributed
hugely to the Board during their
respective terms and on behalf
of the Committee and the Board,
I would like to extend a warm
thanks to each of them for their
commitment and contributions to
the Group over the past decade.
Appointment of Company
Secretary
In 2019, the Committee
recommended the appointment
of Aisling McCarthy as Group
Company Secretary and the Board
approved her appointment on
1 May 2019.
Appointment of Non-Executive
Directors
As part of the Company’s IPO
preparations, the Board appointed
external advisers to carry out an
independent review of the Board
structure and composition. This
detailed review focused on the
skills and experience of each Board
member and identified areas where
additional experience and diversity
would be appropriate post-IPO
to enhance the collective Board
composition. Following this review,
the Chairman engaged a leading
firm of organisational consultants to
assist with the search for additional
Independent Non-Executive
Directors for the Board who
possess the skills/diversity profile
sought of the Board. The outcome
of this process saw the appointment
of Paul Hogan, Sue Webb and
myself as new Independent Non-
Executive Directors increasing the
71
Uniphar plc Annual Report 2019Governance Nomination Committee Report continued
The Board is keen to ensure the Group
benefits from the expertise and insights
of a high-quality Board comprising
of individuals with an appropriate
balance of skills and experience.
Each appointment to a Board
Committee is for a term of up
to three years, which may be
extended by up to two further
three-year terms, provided the
Director in question continues to
meet the criteria for membership
of the relevant committee. A
number of the Board Committees
currently have members serving
in excess of this term and it is
the Board’s intention that these
members will transition off these
Committees as the Board moves
to increase independence across
all Committees.
Boardroom Diversity
The Board is keen to ensure the
Group benefits from the expertise
and insights of a high-quality
Board comprising of individuals
with an appropriate balance
of skills and experience. Each
year the Committee reviews
the businesses evolving needs
and the core competencies and
construct of our Board. Diversity
and equality in all aspects remain
key values in relation to Board
appointments.
independent representation on the
Board. I was also appointed as
Senior Independent Director on my
appointment to the Board.
Appointment of Board
Committees
During 2019 the Committee
and Board completed a review
of the composition of the main
Board Committees (Audit, Risk
and Compliance Committee,
Nomination Committee and
Remuneration Committee) having
regard to skills, experience,
diversity and the time required
of each of the Non-Executive
Directors in discharging their
responsibilities.
The composition of the
Committees does not currently
meet the independence criteria
contained in the terms of reference
for those Committees. However,
following the appointment
of Sue Webb as Chair of the
Remuneration Committee in March
2020, each Board Committee
now has an independent Chair
and in line with its commitment
to further enhance its corporate
governance standards the Board
intends to increase independent
representation on the Board and
its Committees in the near term.
On the appointment of Sue
Webb and myself to the Board in
June 2019, in addition to Marie
McConn’s continued position
on the Board, the Committee
is pleased that the Board now
comprises of 25% female
members, four years ahead of the
Irish Governments, ‘Balance for
Better Business’ Initiative which
is targeting 25% female Board
membership for all Irish listed
companies by 2023.
Succession Planning
Board succession was a key focus
of the Committee in 2019 as a
number of long-serving members
of the Board resigned and three
new Independent Non-Executive
Directors were appointed. As the
Board stated at the time of the
IPO, it is the Board’s objective to
continue to enhance its corporate
governance structures and to
transition to full compliance
with the UK Code within three
years from IPO. The Committee
is cognisant that in order to
achieve this objective a series of
further Board changes will need
to occur within this timeframe.
The Committee has therefore put
in place a detailed succession
plan which balances the need for
stability and continuity with the
need to move towards a smaller,
more independent Board.
72
Length of Tenure
The length of tenure on the Board and on the three main Board Committees as at 31 December 2019
is set out below:
Board of
Directors
Years
Audit, Risk and
Compliance
Committee
Years
Remuneration
Committee
Nomination
Committee
Years
Years
Executive Directors
Ger Rabbette
Tim Dolphin
Padraic Dempsey
Non-Executive Directors
Maurice Pratt
Heather Ann McSharry
Paul Hogan
John Holly
Marie McConn
Mark Moran
Ger Penny
Padraic Staunton
Sue Webb
Average tenure
9.8
9.4
2.8
16.5
0.5
0.5
10.3
10.3
1.4
1.4
10.3
0.5
6.1
-
-
-
-
-
0.5
10.2
-
-
0.5
-
-
3.7
-
-
-
10.2
-
-
-
-
-
-
10.2
0.5
7.0
On behalf of the Committee
Heather Ann McSharry
Chair of the Nomination
Committee
A number of the Non-Executive
Directors, including our Chairman,
have served on the Board
for longer than nine years.
The succession plan that the
Committee and the Board have
approved will see a number of
changes to the composition of
the Board over the next three
years as the Board moves to
comply with the corporate
governance standards set out in
the UK Code. In the interests of
maintaining stability and to have
an orderly transition at a time of
significant change, the Board and
the Committee believe that our
current Chairman is best placed
to continue to Chair the Board
through this transitional phase.
Areas of Focus for 2020
A key area of focus for the
Committee in 2020 will be the
implementation of the Board
succession plan. As our business
continues to grow, the Committee
will also focus on senior
management succession planning
to ensure the Group continues
to have the depth of resources
required to compete effectively in
all markets in which it operates.
In 2020, the Board also intends
to review the terms of reference
of the Committee to ensure
it will keep up to date on
evolving corporate governance
requirements and make
recommendations to the Board
on any updates required to reflect
developing best practice.
-
-
-
10.2
0.5
-
-
10.2
0.7
-
-
-
5.4
73
Uniphar plc Annual Report 2019Governance Remuneration
Committee
Report
As outgoing Chair of the Remuneration Committee,
I am pleased to present the report for the
Committee for the year ended 31 December 2019.
The objective of this Report is
to provide the shareholders with
information to enable them to
understand the remuneration
structures in place and how
they relate to the Group’s
financial performance. The
report also provides a summary
of the Committee’s roles and
responsibilities and how these
were discharged during 2019.
The Committee has ensured
that the disclosures in relation
to the remuneration structures
reflect best corporate governance
practice, having regard to the
Group’s size and the markets on
which its shares are listed.
Membership
The members of the Remuneration
Committee are set out in the table
below, together with the date of
appointment of each member, and
attendance details.
During 2019, Michael Quinn retired
from both the Board and the
Committee. Sue Webb joined the
Board and the Committee during
2019 and took over from me as
Chair of the Committee in March
2020. I would like to wish her well
in her new role and I look forward
to serving on the Committee
alongside her.
The Committee member’s
biographies are set out on pages
56 and 57.
Committee Member Position
Appointed Resignation/
Attendance
Maurice Pratt
Committee Chair
Oct. 2009
Sue Webb
Independent Non-Executive Director
June 2019
Padraic Staunton
Non-Executive Director
Oct. 2009
N/A
N/A
N/A
Michael Quinn
Non-Executive Director
Sept. 2002
June 2019
1 / 1
0 / 0*
1 / 1
1 / 1
*No formal meetings of the Committee were held after June 2019
Members are appointed to the
Committee for a term of up
to three years, which may be
extended by up to two further
three-year terms, provided
(where relevant) the Director in
question remains independent.
The terms of reference of the
Committee also require that there
is a minimum of three Directors
on the Committee with, at least
two being Independent Non-
Executive Directors. Currently the
tenures of both Padraic Staunton
and myself are in excess of the
maximum nine-year term and the
Committee does not currently
meet the independence criteria
set out in the terms of reference.
However, the Board is committed
to ensuring that the Committee
transitions to a composition that
meets the requirements set out
in the terms of reference and the
Board has a succession plan in
place which aims to achieve this
within the next three years.
Role of the Remuneration
Committee
The Committee’s main duties
are to:
- determine the Group’s policy on
executive remuneration;
-
review the suitability of
performance measurement
criteria for the Executive
Directors, the Chairman and
senior key management;
-
review the notice periods for
Executive Director employment
contracts;
- determine compensation
arrangements for early
termination of employment
contracts;
- administer LTIP schemes for
Executive Directors and key
senior management; and
-
review the performance of
Executive Directors against key
performance indicators for the
purposes of determining annual
bonus entitlements and make
recommendations to the Board
about pay out level.
play a key role in aligning
individual objectives with the
Group’s strategy and values;
- Externally aligned – the Group
aims to align remuneration to
market leaders, competitors and
benchmarking data.
Meetings of the Committee
The Committee met once in 2019
and each member serving on the
Committee at that time attended
this meeting.
Remuneration Policy
The Board, on the
recommendation of the
Remuneration Committee,
approved the Group’s
Remuneration Policy on 14 June
2019. The Group’s Remuneration
Policy sets out the framework
for all remuneration related
policies, procedures and practices
within the Uniphar Group. The
Remuneration Policy has been
prepared in line with the business
strategy, objectives, values and
interests of the Group and its
aim is to promote long-term
sustainable success.
The Group is committed
to promoting a transparent
remuneration structure
incorporating the following
principles:
- Fairness – the Group aims
to continually remunerate
employees in a fair way, aligning
to or exceeding market rates
in order to attract, retain and
motivate the highest calibre of
individuals. Remuneration in the
Group is set independently of
gender, age, religion, disability,
sexual orientation, political
affiliation or ethnic background.
- Performance based –
performance-based incentives
The Group’s policy on Executive
Director remuneration is to ensure
that the remuneration promotes
the achievement of the long-term
strategic goals of the Group and
appropriately reflects the role
and responsibility of the Director.
The Group recognises the need
to attract and retain highly skilled
and experienced individuals and
reflects this in its remuneration
package with a mix of fixed and
performance-linked elements.
The Group also refers to external
benchmarks when setting
remuneration levels.
Advisors to the
Remuneration Committee
During 2019, the Group
engaged the services of external
remuneration consultants Willis
Towers Watson. Their advice
related to bonus scheme
structuring for executives and key
senior management. The total
fees paid to Willis Towers Watson
during the year were €17,000,
these were charged on a time and
materials basis.
No other external advisers
were engaged in respect of
remuneration consulting services
during the year.
Executive Directors
Executive remuneration within the
Group can be broken down into
the following five components
which we believe provide a
fair balance between fixed and
performance related remuneration.
74
75
Uniphar plc Annual Report 2019Governance
Remuneration Committee Report continued
Operation
Maximum
Performance
Metric
Not Applicable
Base salaries
and increases
are aligned and
bench marked to
market leaders,
competitors
and industry
standards
Based on the bonus grid
approved by the Board
in March 2020, 80% of
executive bonus is linked
to company performance
and specifically in achieving
challenging EBITDA and
Free Cash Flow targets.
The remaining 20%
opportunity is linked to
personal performance
targets established by the
Committee.
In early 2020, the
Board, on the
recommendation
of the Committee
approved a bonus
grid which is
designed to align
management’s
interests
with those of
shareholders.
Further details on
the grid structure
are set out below
in “Remuneration
Policy in 2020”.
20% of annual
base salary.
Not Applicable
An appropriate base
salary is set and
reviewed by the
Committee annually.
Factors taken into
consideration include:
- skills & experience;
- specific role
and level of
responsibility;
- external
benchmarks,
including economic
indicators and
geographical scope.
The Committee
reviews the
performance of the
Executive Directors
for the purposes of
determining annual
bonus entitlements
and makes
recommendations to
the Board as to the
pay-out level.
Executive Directors
are enrolled into
a defined contribution
pension plan or are
offered the alternative
of cash allowances.
Provide a level of
benefits or specified
monetary allowances
including, healthcare
and car.
The level of
benefits is set at
an appropriate
market rate.
Not Applicable
Key
Salary
Purpose &
Link to Group
Strategy
Provide an
appropriate
level of fixed
remuneration to
recruit and retain
the necessary
skill and talent
to develop
and deliver on
the business
strategy.
Bonus
To drive and
reward for
the delivery
of business
objectives over
the financial
year.
To provide
competitive,
flexible
retirement
benefit that does
not impose any
unacceptable
level of financial
risk to the
Group.
To provide
other market
competitive
monetary and
non-monetary
benefits.
Pension
Benefits
76
Key
LTIP
Purpose &
Link to Group
Strategy
To reward
participants
for the
delivery of the
Group’s goals
and driving
shareholder
value.
Operation
Maximum
Performance
Metric
The LTIP was
established in 2018
and represents
4.9% of issued
share capital, with
executives and
key employees
participating in the
arrangement.
The Group’s
current LTIP is
fully allotted and
the details of
each Executive
Director’s interest
is set out below.
Vesting of the LTIP shares
is subject to (i) reaching the
share price targets set out
below:
€1.75 – 25%
€2.25 – 25%
€2.75 – 25%
€3.30 – 25%
and (ii) remaining in
employment with the Group
on the vesting date.
In 2020, the Board, on the
recommendation of the
Committee, approved the
extension of the vesting date
of the LTIP to 31 December
2024 to bring this in line
with the Group’s strategy to
double EBITDA within five
years from IPO.
LTIP
The below table sets out the
LTIP share awards granted to
Executive Directors in 2018.
There were no further awards
granted to Executive Directors in
2019 and the existing LTIP is now
fully allotted.
Director
G. Rabbette
T. Dolphin
P. Dempsey
Number of LTIP
awards granted
2018
3,685,427
2,284,965
2,284,965
Non-Executive Directors
The Board aims to recruit
high-calibre Non-Executive
Directors, with broad commercial,
international or other relevant
experience. Non-Executive
Directors cannot individually vote
on their own remuneration. Non-
Executive Director remuneration is
reviewed by the Chairman and the
Executive Directors and discussed
and agreed by the Board. Non-
Executive Directors may attend
the Board discussion but may not
participate in it.
In accordance with the resolution
passed at the 2019 AGM, the
aggregate fees payable to the
Non-Executive Directors shall not
exceed €750,000.
The total aggregate remuneration
of all Non-Executive Directors is
subject to approval at each AGM.
As Chairman I am paid a fee of
€150,000 per annum and each of
the other Non-Executive Directors
are paid such fees as the Board
determine to be appropriate,
taking account of increased time
commitments for the Senior
Independent Director and each
Chair of a Board Committee.
In addition, all reasonable and
documented expenses incurred
in the performance of the Non-
Executive Directors’ duties are
reimbursed.
77
Uniphar plc Annual Report 2019Governance
Remuneration Committee Report continued
Annual Report on Remuneration 2019
The following table sets out the total remuneration for Directors for the year ending 31 December 2019:
Director
Salary/fees
Bonus4
€’000
€’000
Pension/
Allowance5
€’000
Other
Benefits6
€’000
LTIP
Total 2019
€’000
€’000
Executive Directors:
G. Rabbette
T. Dolphin
P. Dempsey
Non-Executive Directors
M. Pratt
H. McSharry1
P. Hogan1
J. Holly
M. McConn
M. Moran3
G. Penny3
P. Staunton
S. Webb1
M. Murphy2
M. Quinn2
C. Shannon2
Total
440
300
300
123
45
38
51
47
60
60
47
30
18
24
17
440
300
300
161
106
56
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77
91
60
-
-
-
-
-
-
-
-
-
-
-
-
1,600
1,040
323
228
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,118
797
716
123
45
38
51
47
60
60
47
30
18
24
17
3,191
1. P. Hogan, H. McSharry, and S. Webb were appointed as Directors on 27 June 2019.
2. M. Murphy, M. Quinn and C. Shannon resigned as Directors on 27 June 2019.
3. M. Moran and G. Penny includes salary paid in respect of 2019 and for the period of appointment in 2018.
4. In 2019, the Committee determined that based on performance during 2018, each Executive Director’s bonus pay-out would be 100% of
base salary.
5. Pension allowance payments for G. Rabbette and T. Dolphin in 2019 include payments in respect of prior year entitlements.
6. Other benefits principally include health and car allowances together with benefit in kind charges. The benefits paid to Executive
Directors in 2019 also include certain amounts due in respect of prior year entitlements.
Service Contracts/Letters of Appointment
Details of the service contracts for the Executive Directors are outlined below.
Name
Title
Date of Contract
Notice Period
Ger Rabbette
Chief Executive Officer
27 June 2019
Tim Dolphin
Chief Financial Officer
27 June 2019
Padraic Dempsey
Chief Commercial Officer
27 June 2019
12 months
12 months
12 months
The Company can terminate
Executive Director employment
by making a lump sum payment
in lieu of notice consisting of
the basic salary for the notice
period. Standard ‘cause’
provisions are included which
allow the Company to terminate
without notice or the obligation
to make a payment in lieu of
notice. There are also standard
‘garden leave’ provisions for all
Executive Directors together
with post-termination restrictions
on competing activity and non-
solicitation of customers or key
employees which are effective
for a period of 12 months after
termination.
The Service Contracts of each
of the Executive Directors were
amended in March 2020 to bring
the bonus provisions in line with
the bonus grid approved by
the Board.
Each of the Non-Executive
Directors has been appointed
under the terms of a letter of
appointment. Appointment is
terminable by either party giving
one month’s written notice or
otherwise in accordance with
the Articles. Continuation of
appointment is contingent on
satisfactory performance, re-
election (where applicable) in
accordance with the Articles and
any relevant statutory provisions for
the removal of Directors. Standard
‘cause’ provisions are included that
entitle the Company to terminate
a Non-Executive Director’s
appointment without notice or
payment of compensation.
The appointment letter includes
membership of any Board
Committees, the fees to be
paid and the time commitment
expected. The letter also covers
matters such as confidentiality,
data protection and the
Company’s share dealing policy.
Dates of appointment for the
Non-Executive Directors are set
out below:
Name
M. Pratt
J. Holly
M. McConn
M. Moran
G. Penny
P. Staunton
P. Hogan
H. McSharry
S. Webb
Date of Appointment
1 July 2003
25 September 2009
25 September 2009
20 August 2018
20 August 2018
25 September 2009
27 June 2019
27 June 2019
27 June 2019
78
Governance
79
Uniphar plc Annual Report 2019 Remuneration Committee Report continued
Payments to former Directors
As set out on the remuneration
table, Matt Murphy, Michael Quinn
and Criofan Shannon were paid
fees for their service as Directors
up to the date of their resignation.
There were no other payments to
former Directors during the year.
Payments for loss of office
There were no payments for loss
of office during the year.
Remuneration Policy in 2020
Executive bonus arrangements
In early 2020, the Committee
recommended to the Board that,
based on advice received from
Willis Towers Watson, the Company
should amend the bonus structure
for Executive Directors to move to
a grid-based mechanism to reflect
a scale of performance which has
been externally benchmarked.
In March 2020, on the
recommendation of the Committee,
the Board approved the new bonus
grid which provides that each
Executive Director can achieve
100% of base salary for on-target
achievement of Group and personal
performance targets. In setting the
on-target return the Committee and
the Board were cognisant of the
ambitious strategic targets set for
the Group and sought to align the
Executive Directors interests with
those of shareholders in achieving
the Group’s stated strategy. On this
basis the Committee and the Board
believe that 100% opportunity
for achieving performance targets
is appropriate.
The grid also provides a threshold
for achieving bonus of 95%
of target, at which point the
Executive Directors achieve 50%
of base salary. Where target
performance is exceeded, the
Executive Directors can achieve
up to a maximum of 130% of
base salary.
Long-Term Incentive Plan
In March 2020, the Board, on
the recommendation of the
Committee, also resolved to
extend the vesting period under
the current LTIP arrangement to
bring it in line with the Group’s
strategy of doubling EBITDA within
five years from IPO. As a result,
the period within which the vesting
criteria must be achieved was
extended from 31 December 2022
to 31 December 2024.
Ongoing review in 2020
The Committee is continuing to
work with Willis Towers Watson to
further enhance the remuneration
policy of the Group in line with
evolving market practice and
in particular to consider salary
benchmarking, bonus deferral and
pension alignment.
On behalf of the Committee
Maurice Pratt
Chair of the Remuneration
Committee
Under the 2020 bonus grid, 80%
of Executive Directors’ bonus
is linked to Group performance
and specifically in achieving
challenging EBITDA (80% of
allocation) and free cash flow
(20% of allocation) targets. The
remaining 20% opportunity is
linked to personal performance
targets approved by the Board.
Pay-out amounts in respect
of 2019
In March 2020, the Board approved,
on the recommendation of the
Committee, an annual bonus
payment of 100% of base salary for
each Executive Director in respect
of 2019 to reflect an exceptional
year for the Group and achievement
of ambitious EBITDA and free cash
flow targets, as well as personal
targets of delivery of IPO and key
strategic acquisitions.
Directors’
Report
The Directors present their annual report
and audited Group financial statements
for the year ended 31 December 2019.
Principal activities and
review of the development
of the business
The Group is a leading
service provider within the
pharmaceutical and healthcare
sector headquartered in Ireland,
with offices in the UK, mainland
Europe, the Nordics, and the
United States.
By operating a strong service-
based culture and working with
our partners, we provide an
innovative range of services,
including product distribution and
the provision of specialist services
for the pharmaceutical and
healthcare sector. The business
is divided into three trading
divisions: Commercial & Clinical,
Product Access and Supply Chain
& Retail.
- Commercial & Clinical
provide outsourced services,
specifically sales, marketing
and multichannel account
management to pharmaco-
medical manufacturers, and
distribution and support
services to medical device
manufacturers. Uniphar
offer a fully integrated multi-
channel account management
solution that is supported
through market data, insights
and digital programmes. We
integrate these programmes
with our supply chain and
distribution capability to provide
a full end to end service to
manufacturers.
- Product Access consists
of two service offerings,
being: On Demand Access
and Exclusive Access. On
Demand Access provides
access to pharmaco-medical
products and treatments,
by developing valuable
relationships and interactions
between manufacturers and
other healthcare stakeholders.
This business operates in
both the retail and hospital
markets in both the Irish and
UK markets. Exclusive Access
provides bespoke distribution
partnerships to pharmaceutical
partners around key brands,
with new programmes focused
on speciality pharmaceutical
products. Delivering a unique
patient support programme that
allows healthcare professionals
to connect with patients, on a
global basis.
- Supply Chain & Retail provides
both pre-wholesale distribution
and wholesale distribution of
pharmaceutical, healthcare
and animal health products
to pharmacies, hospitals
and veterinary surgeons in
Ireland. The business supports
the diverse customer base
through the provision of
strong service levels coupled
with innovative commercial
initiatives. Uniphar operate
a network of pharmacies
under the Life and Allcare
brands. Additionally, through
the extended Uniphar symbol
group, the business provides
services and supports that
help independent community
pharmacies to compete more
effectively in an increasingly
difficult environment.
The three trading divisions
work in synergy to allow us to
support healthcare professionals
and manufacturer customers
to provide their patients and
communities with the medicines
and care that they need.
Business review
2019 was a transformative year
for Uniphar and a significant
milestone in our history, with the
Group successfully listing on
the AIM and Euronext Growth
markets of the London Stock
Exchange and Euronext Dublin on
17 July 2019, raising gross share
proceeds of €139.4m.
Revenues increased from
€1,417.9m to €1,665.3m, a rise
of 17%. During 2019, the Group
continued the expansion into
higher margin, and higher growth
businesses with the integration of
acquisitions completed in 2018, and
the strategic acquisition of Durbin,
along with two bolt on acquisitions
80
81
Uniphar plc Annual Report 2019Governance
Directors’ Report continued
in the Commercial & Clinical
division. In the Supply Chain &
Retail division, 17 retail pharmacies
were acquired. The bolt on
acquisition of EPS Group continues
the pan-European growth strategy
of the Commercial & Clinical division
and marks entry into the Nordic
market. When combined with
organic growth of 7% in existing
businesses, significant growth of
56% was achieved in gross profit
during the year, increasing to
€180.6m from €115.7m.
Strong cash generation across
the Group, along with the
proceeds raised from our
successful IPO, and the execution
of the non-recourse financing
arrangement, have led to a
significant improvement in cash
resources with the Group having
a positive net bank cash position
at 31 December 2019 of €26.6m
compared to a net bank debt of
€152.9m in 2018.
This provides a strong platform for
the Group to continue its growth
strategy and deliver long term
value for shareholders.
The uncertainty caused by
Brexit, which saw the United
Kingdom leave the European
Union in January 2020, and the
continued uncertainty into 2020
as the United Kingdom continue
negotiations on a trade deal with
the European Union has been an
important consideration for the
business. The Group has worked
with its manufacturer customers
and suppliers to prepare and to
minimise the potential impact
of any related disruption on the
business, on customers and
on patients.
The Group have a number of key
performance indicators (KPIs)
which are used to monitor the
Group’s performance. These KPIs
are outlined further in our key
performance indictors section on
pages 24 to 27.
Covid-19
The Group continues to monitor
ongoing Covid-19 developments,
and the potential impact to
the business. Uniphar plays a
significant role in the national
healthcare infrastructure, ensuring
the continuity in the supply and
distribution of much needed
medicines, medical devices and
related services. As we prepare
for the full impact of the Covid-19
crisis, we expect to continue to
see increased volumes in Supply
Chain & Retail, with likely increases
in costs due to investment in
additional resources to manage
significantly higher volumes.
Business continuity and
contingency plans are in place in
anticipation of wider outbreaks
of the virus. With potential
sick leave, self-isolation or
quarantine situations arising, the
Group expects to have to deal
with reduced availability of the
workforce. Due to reprioritisation
of resources within hospitals and
other healthcare facilities the Group
is preparing for a possible delay
in Commercial & Clinical revenue
if certain ‘non-urgent’ elective
surgeries have to be postponed.
Using currently available information
our best estimate, of a three
month disruption, could result in
a reduction of 2020 EBITDA in the
region of €5m. The Group would,
however, expect that this would be
recovered in future periods as and
when healthcare systems return
to normal.
There are over three years
remaining on the Group’s existing
banking facility, which provides
a range of financing facilities,
ensuring the Group has the
appropriate mix of liquidity,
enabling access to capital on
an ongoing basis. Following
our successful IPO in July
2019, together with strong cash
generation, and the execution
of the non-recourse financing
arrangement, the Group has a
robust capital structure, with
unrestricted cash of €114.0m, and
a positive net bank cash position of
€26.6m at 31 December 2019.
Acquisitions and disposals
The Group completed one strategic
acquisition during 2019 with the
acquisition of Durbin, a specialist
provider of pharmaceuticals with
offices in the UK and the US
supplying over 160 countries.
Durbin is currently being integrated
within Product Access, providing
the Group with the opportunity
to become a leading player in
the provision of On Demand
and Exclusive Access services
on a global basis. Durbin has
approximately 45 years’ experience
in shipping unlicensed and hard-
to-find medicines and has built
up significant global capability in
managing access programmes for
pharmaceutical manufacturers.
Two bolt on acquisitions were
also completed during the year in
Commercial & Clinical, with the
acquisitions of EPS Group and M3
Medical. Both EPS Group and M3
Medical deliver sales, marketing
and distribution services to medical
device manufacturers in the
therapeutic areas of interventional
cardiology and vascular medicine.
The acquisition of the EPS Group
marks our entry into the Nordic
market, delivering these services
across Sweden, Denmark, Norway,
Finland, Iceland and the Baltics,
while M3 Medical’s services extend
exclusively to the Irish market.
These acquisitions represent
another important development
in the roll-out of Uniphar’s pan-
European growth strategy for
Commercial & Clinical, which is
focused on acquiring local expertise
and broadening its capacity to
provide sales, marketing and
distribution services for medical
device manufacturers on a pan-
European basis.
In August 2019 the Group
acquired 15 Inischem retail
pharmacies, with two independent
community pharmacies acquired
in Q4 of 2019, bringing our total
pharmacy ownership to 59 by the
end of 2019.
Exceptional costs in 2019 of €5.3m
were driven largely by acquisition
activity, and costs attributable to our
IPO. See note 5 for further details
of exceptional costs incurred during
the year.
Results for the year
The Group Income Statement for
the year ended 31 December 2019
and the Group Balance Sheet at
that date are set out on pages 100
and 102 respectively. The Group’s
gross profit was €180,602,000
(2018: €115,717,000) and earnings
before interest, tax, depreciation,
amortisation and exceptional items
(“EBITDA”) was €48,022,000 (2018:
€32,237,000). EBITDA is presented
before the impact of the adoption of
IFRS 16 “Leases” for comparative
purposes, and including the impact
of the new standard, EBITDA
increases to €58,555,000.
The Group’s profit on ordinary
activities before tax was
€26,458,000 in 2019 (2018:
€11,304,000). After including a
tax expense of €5,537,000 (2018:
€2,599,000) and losses attributable
to non-controlling interests
of €105,000 (2018: profits of
€63,000), the profit for the financial
year attributable to owners was
€21,026,000 (2018: €8,642,000).
There was a strong cash
performance in 2019, with the
Group now in a net bank cash
position of €26,622,000 (2018:
net bank debt €152,880,000). The
increase in the Group’s net cash
balances of €179,502,000 reflects
strong cash generated by our
operating activities, the successful
IPO and the introduction of a non-
recourse facility.
Total equity of the Group at 31
December 2019 was €180,920,000
(2018: deficit of €619,000).
Future developments
The Group has delivered a strong
performance this year, showing
growth across all three trading
divisions, and in each geography in
which we operate.
Having delivered an excellent year
in 2019, we are in a strong position
to continue to deliver our growth
strategy. Our priorities for 2020
are to continue the integration and
scaling of our 2019 acquisitions
in our two growth divisions, carry
on leveraging our key assets in
the Supply Chain & Retail division
to maintain our market leadership
position, and expand further in our
two growth divisions.
The acquisition of the EPS Group
marked our entry into the Nordic
market as part of Commercial &
Clinical’s pan-European growth
strategy, and in the medium term,
we plan to further enlarge the pan-
European platform with entry into
new geographies. Commercial &
Clinical, which is the more mature of
the two growth divisions, is already
delivering well for shareholders
and will continue to do so, as we
convert more existing clients into
multi-territory customers in Europe.
The other growth division, Product
Access, presents a significant
opportunity for the Group with the
integration of Durbin.
While wholesaling to community
pharmacy remains a challenging
sector, with very low margins and
constant price pressure, we have
been successful in mitigating this by
developing new revenue streams,
including the development of
consumer brands and expansion
of retail pharmacy ownership, with
the Group now owning 59 retail
pharmacies. The strategy for Supply
Chain & Retail is to continue to
leverage our high tech distribution
facilities, longstanding manufacturer
relationships and scalable digital
infrastructure, to maintain market
leadership in Ireland, while
supporting increasing service
levels and managing continued
operational and financial efficiency
within this division.
Statement of Directors’
responsibilities
The Directors are responsible for
preparing the Directors’ Report
and the financial statements
of the Group and Company in
accordance with Irish law.
Irish law requires the Directors to
prepare financial statements for
each financial year. Under that
law the Directors have elected to
prepare Group financial statements
in accordance with International
Financial Reporting Standards
(‘IFRSs’) and IFRSs as adopted
by the European Union and Article
4 of the IAS Regulation and have
also chosen to prepare the parent
company financial statements
under IFRSs and IFRSs as adopted
by the European Union.
Under Irish law, the Directors
shall not approve the financial
statements unless they are
satisfied that they give a true
and fair view of the Group’s and
Company’s assets, liabilities and
financial position as at the end of
the financial year and the profit or
loss of the Group and Company
for the financial year.
In preparing these 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 whether the financial
statements have been prepared
in accordance with IFRS
and ensure that the financial
statements contain the additional
information required by the
Companies Act 2014; and
- prepare the financial statements
on the going concern basis
unless it is inappropriate to
presume that the Group and
Company will continue in
business.
82
83
Uniphar plc Annual Report 2019Governance
Directors’ Report continued
The Directors are responsible for
keeping adequate accounting
records that are sufficient to:
- correctly record and explain the
transactions of the Group and
Company;
- enable, at any time, the assets,
liabilities, financial position and
profit or loss of the Group and
Company to be determined with
reasonable accuracy; and
- enable the Directors to ensure
that the financial statements
comply with the Companies Act
2014 and enable those financial
statements to be audited.
The Directors are also responsible
for safeguarding the assets of the
Group and Company and hence
for taking reasonable steps for the
prevention and detection of fraud
and other irregularities.
Each of the Directors confirms
that they consider that the Annual
Report and Consolidated Financial
Statements, taken as a whole, is
fair, balanced and understandable
and provides the information
necessary for shareholders to
assess the Company’s position,
performance, business model
and strategy.
The Directors are responsible for
the maintenance and integrity
of the corporate and financial
information included on the
company’s website. Legislation in
Ireland governing the preparation
and dissemination of financial
statements may differ from
legislation in other jurisdictions.
Disclosure of information
to auditors
The Directors in office at the
date of this report have each
confirmed that:
- As far as he/she is aware, there
is no relevant audit information of
which the Company’s statutory
auditors are unaware; and
- He/she has taken all the steps
that he/she ought to have taken
as a Director in order to make
himself/herself aware of any
relevant audit information and
to establish that the Company’s
statutory auditors are aware of
that information.
Directors’ compliance
statement
The Directors acknowledge that
they are responsible for securing
the Company’s compliance with
its relevant obligations.
The Directors confirm that:
(1) A compliance policy
statement setting out the
Company’s policies respecting
compliance by the Company
with its relevant obligations
has been drawn up.
(2) Appropriate arrangements or
structures that are designed
to secure material compliance
with the Company’s relevant
obligations have been put
in place.
(3) A review of the arrangements
and structures, referred to at
2 above has been conducted
during the year ended 31
December 2019.
Audit, Risk and
Compliance Committee
In accordance with Section 167
of the Companies Act 2014, the
Group has established an Audit,
Risk and Compliance Committee.
Full particulars are provided in
the Audit, Risk and Compliance
Committee Report.
Corporate governance
Statements by the Directors
in relation to the Group’s and
Company’s application of
corporate governance principles
and the Group’s system of
internal controls are set out in the
Corporate Governance Report.
Going concern
The Directors have made
appropriate enquiries and carried
out a thorough review of the
Group’s forecasts, projections and
available banking facilities, taking
account of possible changes
in trading performance and
considering business risk.
In light of the ongoing Covid-19
developments, the Group has
performed an impact assessment
taking into account expected
impacts of the pandemic. Uniphar
plays a significant role in the
healthcare sector and is classified
as part of the critical infrastructure
by the national Government,
ensuring continuity in the supply
and distribution of much needed
medicines, medical devices and
related services. We expect to
continue to see increased volumes
in Supply Chain & Retail, with
likely increases in costs due to
investment in additional resources
to manage significantly higher
volumes. Due to reprioritisation
of resources within hospitals and
other healthcare facilities the Group
are preparing for a possible delay
in Commercial & Clinical revenue
if certain ‘non-urgent’ elective
surgeries have to be postponed.
In preparing the impact
assessment a number of scenarios
were considered including the
impact of the pandemic over
an extended period of up to 12
months. The key assumptions
within each of these scenarios
include increased volumes and
costs for a limited period within
Supply Chain & Retail, a reduction
in Commercial & Clinical revenues
with no corresponding reduction
in costs, and no negative impact
within Product Access. In all of
these scenarios the assessment
indicates that there is no impact on
the underlying ability to meet debt
repayments, comply with banking
covenants and retain sufficient
liquidity to meet our financial
obligations as they fall due.
There are over three years
remaining on our existing banking
facility, ensuring the Group has
access to capital on an ongoing
basis. Following our successful
IPO in July 2019, together with
strong cash generation, and the
execution of the non-recourse
financing arrangement, the Group
has a robust capital structure, with
unrestricted cash of €114.0m, and
a positive net bank cash position
of €26.6m at 31 December 2019.
Having regard to the factors
noted above, the Directors have
a reasonable expectation that the
Group has adequate resources to
continue in operational existence
for the foreseeable future, being
a period of 12 months from
the date of approval of these
financial statements. As a result,
the Directors believe that it is
appropriate to continue to adopt
the going concern basis in
preparing the financial statements.
Accounting records
The measures taken by the
Directors to secure compliance
with the Group’s obligation to keep
adequate accounting records are
the use of appropriate systems
and procedures and employment
of competent persons. The
accounting records are kept at
4045 Kingswood Road, Citywest
Business Park, Co. Dublin.
Principal risks and
uncertainties
The principal risks and
uncertainties facing the Group and
its subsidiaries are outlined on
pages 28 to 33.
Financial risk management
The Group’s operations expose
it to various financial 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 and it is the policy to
manage these risks in a non-
speculative manner.
The Group’s financial risk
management is carried out by
a central finance department
under policies approved by the
Board. Group finance identifies,
evaluates and manages financial
risks in close co-operation with the
Group’s operating units. The Board
approves written principles for
overall risk management, as well
as policies covering specific areas,
such as foreign exchange risk,
interest rate risk, credit risk, use
of derivative financial instruments
and non-derivative financial
instruments, and the investment of
excess liquidity. The Group uses
financial instruments throughout
its business. Borrowings, cash
and liquid resources are used to
finance the Group’s operations.
Trade receivables and payables
arise directly from operations.
Forward foreign exchange
contracts are used to manage
currency risks arising from the
Group’s operations.
Finance interest and
currency risk
The Group’s procedure is to
finance operating subsidiaries
by a combination of retained
profits and, to a lesser extent,
invoice discounting, non-
recourse financing arrangements
and overdrafts, and to finance
investments with a combination of
Group funds and borrowings. The
majority of the Group’s activities
are conducted in Euro. Foreign
exchange exposure arises from
transactional currency exposures
arising from the sale and purchase
of goods in currencies other than
the Group’s functional currency
(i.e. Euro). The Group takes
appropriate measures to manage
its exposure to fluctuating foreign
exchange rates associated with
both transaction activity and
the translation into Euro of its
net investment in its non-Euro
subsidiaries. With UK subsidiaries
being key to our growth strategy,
the Board have been monitoring
the effect of the UK’s exit from
the European Union and the
ongoing trade negotiations with
the European Union. So far, there
has been no negative impact on
trade, and the strengthening of
Sterling during the second half
of 2019 resulted in a marginal
increase in the value of UK profits
and net assets when translated into
Euro. Forward foreign exchange
contracts and the holding of foreign
currency cash balances are used to
hedge these currency exposures,
where material.
84
85
Uniphar plc Annual Report 2019Governance Directors’ Report continued
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, the table below outlines Uniphar’s approach to these non-
financial matters:
Substantial Holdings
The table below shows all notified shareholdings in excess of 3% of the issued ordinary share capital of the
Company as at 31 December 2019 and 18 March 2020, being the closest possible date to the date of signing
of this report:
Reporting
requirements
Our policies
Commentary
Environmental matters
- Corporate Social Responsibility
- Environmental
Social and employee
matters
- Corporate Social Responsibility
- Health and Safety
- Whistleblowing
Human rights
- Code of Business Conduct
- Equality & Dignity at work
Anti-bribery and
corruption
- Anti-Bribery
- Code of Business Conduct
- Whistleblowing
- Conflicts of Interest
For further information on the Group’s
approach to Environmental matters see the
Environment and Sustainability section of
our Sustainability and Governance report
on pages 34 to 39.
For further information on the Group’s
approach to Social and Employee matters
see the People and Workplace section of
our Sustainability and Governance report
on pages 34 to 39.
The Group is committed to conducting
all our activities in accordance with high
standards of business conduct, respecting
the fundamental freedoms and rights of
our people. The Group is also committed
to ensuring that our supply chain is free
from human rights abuses, including forced
labour, slavery and trafficking.
The Group does not tolerate any form of
bribery, prohibits facilitation payments and
does not make political contributions.
Description of the
business model
Details are set out in the principal activities and review of the development of the
business section of this report.
Non-financial key
performance indicators
The Group’s planning and financial reporting procedures include financial
and non-financial Key Performance Indicators (‘KPIs’) which benchmark
progress towards our strategic priorities. KPIs are reviewed and monitored on
a regular basis by the Board, the Audit, Risk and Compliance Committee or the
applicable business manager and are amended to better reflect the Group’s key
performance measures when required. Our KPIs in connection with the above
matters relate to the level of reported breaches of applicable legislation or
incidents reported, of which there were none in the current year.
In addition to the KPIs which are reviewed and monitored at a business level,
the Group have a number of key performance indicators (KPIs) which are used
to monitor the Group’s performance. These KPIs are outlined further in our key
performance indictors section on pages 24 to 27.
Principal risks
Details are set out in the Risk Management section of this report on pages 28 to
33 and discuss each of the above areas where relevant.
Sisk Family
AIB plc
IG Wealth Management
Danske Capital Management
Gerard Rabbette1
Polar Capital
31 December 2019
18 March 2020
Number of
shares
19,652,336
17,391,304
13,383,810
9,163,348
8,758,310
N/A
% Holding
7.2%
6.4%
4.9%
3.4%
3.2%
N/A
Number of
shares
19,652,336
17,391,304
16,764,087
9,817,706
8,758,310
14,806,225
% Holding
7.2%
6.4%
6.1%
3.6%
3.2%
5.4%
1. Including Ordinary Shares issued under the 2018 LTIP
Directors, secretary and their interests in shares
The names of the persons who, at any time during the year, were Directors are set out below.
M. Pratt
G. Rabbette
T. Dolphin
P. Dempsey
H. McSharry
P. Hogan
J. Holly
M. McConn
M. Moran
G. Penny
P. Staunton
S. Webb
M. Murphy
M. Quinn
C. Shannon
Appointed to the Board on 27 June 2019
Appointed to the Board on 27 June 2019
Appointed to the Board on 27 June 2019
Retired from the Board on 27 June 2019
Retired from the Board on 27 June 2019
Retired from the Board on 27 June 2019
86
Governance
87
Uniphar plc Annual Report 2019
Directors’ Report continued
The beneficial interests, including family interests, of the Directors and Company Secretary of Uniphar plc in
office at 31 December 2019 in the share capital of Uniphar plc and subsidiary undertakings were:
G. Rabbette
T. Dolphin
P. Dempsey
M. Murphy
C. Shannon
31 December 2019
ordinary shares
31 December 2018
ordinary shares
8,758,310
5,586,322
3,285,183
N/A
N/A
8,758,310
5,586,322
3,285,183
1,941,288
1,628,103
related services. As we prepare
for the full impact of the Covid-19
crisis, we expect to continue to
see increased volumes in Supply
Chain & Retail, with likely increases
in costs due to investment in
additional resources to manage
significantly higher volumes.
Business continuity and
contingency plans are in place in
anticipation of wider outbreaks
of the virus. With potential sick
leave, self-isolation or quarantine
situations arising, the Group expect
to have to deal with reduced
availability of the workforce. Due to
reprioritisation of resources within
hospitals and other healthcare
facilities the Group is preparing for
a possible delay in Commercial &
Clinical revenue if certain ‘non-
urgent’ elective surgeries have to
be postponed.
There have been no other material
events subsequent to 31 December
2019 that would require adjustment
to or disclosure in this report.
The Directors and secretary
who hold less than 1% of the
Company’s issued share capital
are not disclosed as the Company
is exempt under Section 260,
Companies Act 2014.
Political donations
The Electoral Act, 1997, (As
amended by the Electoral Political
Funding Act 2012) requires
companies to disclose all political
donations to any individual party
over €200 in value made during
the financial year. The Directors, on
enquiry, have satisfied themselves
that no such donations in excess of
this amount have been made by the
Group or any of its subsidiaries.
Events after the Balance
Sheet Date
Wind up of Whelehan Group
Pension Scheme
Contributions to the Whelehan
Group Pension Scheme were
terminated in October 2019, and
the scheme was formally wound
up effective in January 2020.
The assets and liabilities of this
scheme were reflected in the
Group’s defined benefit pension
obligation at 31 December 2019.
The assets of the scheme were
distributed in January 2020 in line
with members chosen options and
no assets or liabilities remain. Any
former members of this scheme
still employed by the Group were
offered membership of the Uniphar
Group Retirement Benefits
Scheme for future service benefits.
A settlement loss of €0.5m will be
recognised in the 2020 financial
statements.
Acquisition of Innerstrength
Limited
In March 2020, Uniphar completed
the acquisition of Innerstrength
Limited. Innerstrength Limited
currently operates in Ireland, in
the technology market, enabling
healthcare professionals to
deliver personalised education to
patients who are currently living
with chronic conditions. The total
consideration including deferred
contingent consideration, is up to
a maximum of €8m.
Due to the short time frame
between the completion date of
the acquisition of Innerstrength
Limited, and the date of issuance
of this report, it was not possible
to reliably estimate the fair value
of assets and liabilities or the
goodwill amount associated with
the completed acquisition. This
acquisition will be accounted
for as an acquisition in the 2020
financial statements.
Impact of Covid-19
The Group continue to monitor
ongoing Covid-19 developments,
and the potential impact to
the business. Uniphar plays a
significant role in the national
healthcare infrastructure, ensuring
the continuity in the supply and
distribution of much needed
medicines, medical devices and
Dividends
The Board made a commitment
at the time of the IPO to pay a
dividend in 2020 in respect of the
period from IPO to 31 December
2019. Following another set of
positive results for the Group,
the Directors are proposing a
final dividend of €2.0m. Subject
to approval at the Annual
General Meeting, the proposed
dividend will be paid to ordinary
shareholders on the Company’s
register on 1 May 2020.
The Board intends to adopt a
progressive dividend policy to
reflect the expectation of future
cash flow generation and the
long-term earnings potential of
the Group.
Auditors
The independent auditors,
PricewaterhouseCoopers, have
indicated their willingness to
continue in office.
On behalf of the Board
M. Pratt
G. Rabbette
The Board intends to
adopt a progressive
dividend policy to
reflect the expectation
of future cash flow
generation and
long-term earnings
potential of the Group.
88
Governance
89
Uniphar plc Annual Report 2019
Go to page 42 for
our Finance Review
92
Independent Auditors’ Report
Group Income Statement
100
Group Statement of Comprehensive Income 101
102
Group Balance Sheet
103
Company Balance Sheet
104
Group Cash Flow Statement
105
Company Cash Flow Statement
106
Group Statement of Changes In Equity
107
Company Statement of Changes in Equity
108
Accounting Policies
122
Notes to the Financial Statements
197
Alternative Performance Measures
201
Glossary of Terms
F
i
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
90
91
Uniphar plc Annual Report 2019
Independent auditors’ report
to the members of Uniphar plc
Independent auditors’ report
to the members of Uniphar plc (continued)
Report on the audit of the financial statements Opinion
In our opinion, Uniphar plc’s Group financial statements and Company financial statements (the
“financial statements”):
Our audit approach
Overview
Materiality
» give a true and fair view of the Group’s and the Company’s assets, liabilities and financial position as at
31 December 2019 and of the Group’s profit and the Group’s and the Company’s cash flows for the year
then ended;
» have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”)
as adopted by the European Union and, as regards the Company’s financial statements, as applied in
accordance with the provisions of the Companies Act 2014; and
» have been properly prepared in accordance with the requirements of the Companies Act 2014.
We have audited the financial statements, included within the Annual Report, which comprise:
» the Group Balance Sheet as at 31 December 2019;
» the Company Balance Sheet as at 31 December 2019;
» the Group Income Statement for the year then ended;
» the Group Statement of Comprehensive Income for the year then ended;
» the Group Cash Flow Statement for the year then ended;
» the Company Cash Flow Statement for the year then ended;
» the Group Statement of Changes in Equity for the year then ended;
» the Company Statement of Changes in Equity for the year then ended;
» the Accounting Policies; and
» the notes to the financial statements.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and
applicable law. Our responsibilities under ISAs (Ireland) are further described in the Auditors’ responsibilities for
the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit
of the financial statements in Ireland, which includes IAASA’s Ethical Standard as applicable to listed entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements.
Materiality
€1.595m - Group financial statements
» Based on C. 5% of profit before tax before exceptional items
Audit
scope
Key audit
matters
€2.267m - Company financial statements.
» Based on C. 1% of net assets. Financial statement line items that do not
eliminate on consolidation have been audited based on overall materiality for
the Group financial statements.
Audit scope
» Our audit work addressed each of the Group’s three operating segments:
Commercial & Clinical, Product Access and Supply Chain & Retail. Each of
these consists of a number of reporting components.
» We performed full scope audits of the complete financial information of five
financially significant reporting components.
» Audits of or specified audit procedures on selected account balances,
classes of transactions or disclosures were performed at other reporting
components within the Group.
» Audit coverage for revenue and profit before tax before exceptional
items within the Group Income Statement is in excess of 85% and
90% respectively.
» Audit coverage for total assets and total liabilities within the Group Balance
Sheet is in excess of 85% and 75% respectively.
Key audit matters
» Goodwill impairment assessment.
» Accounting for material acquisitions.
» Covid-19
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example
in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
92
93
Uniphar plc Annual Report 2019Financial Statements Independent auditors’ report
to the members of Uniphar plc (continued)
Independent auditors’ report
to the members of Uniphar plc (continued)
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
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) identified by the auditors, 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, and any comments we make on the results of our procedures thereon, 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. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Impairment assessment of goodwill
Refer to “Intangible assets” and “Impairment
of assets” on pages 110 and 111 (Accounting
policies), “Impairment assessment of goodwill
and other non-current assets” in note 1
(“Significant estimates and judgements”) and
note 12 (“Intangible Assets”).
The carrying value of goodwill at 31 December
2019 is C. €270.7m, representing approximately
36% of the Group’s total assets.
The carrying amount of goodwill attributed to
each Cash Generating Unit (“CGU”) is tested for
impairment annually, or more frequently if events
or changes in circumstances indicate that it
might be impaired.
We regard this as a key audit matter due to the
level of judgement required by management in
determining the recoverable amount of goodwill,
and the assumptions used in the calculation of its
value-in-use.
Key assumptions used to develop the estimation
of value-in-use at 31 December 2019 include the
growth rates for Revenue, inflation rates for costs
and the discount rate.
We considered management’s impairment model
for each CGU and evaluated the methodology used.
We also tested the mathematical accuracy of the
impairment models.
We agreed the cash flow forecasts for 2020 to 2024 to
Board approved plans.
We assessed the reasonableness of estimates of future
revenue from product sales and inflation rate for costs
included in the cash flow forecasts by comparing relevant
assumptions to historical performance and economic
forecasts, as appropriate. We challenged management’s
long-term growth rates and long-term inflation rates with
reference to OECD published economic forecasts data.
We evaluated the discount rate used by management,
with the assistance of PwC valuation experts, through
comparison to industry peers.
We also performed a sensitivity analysis using alternative
reasonably possible assumptions for determining future
CGU performance.
We found the assumptions used in the assessment of
goodwill fell within a reasonable range.
We also considered the disclosures in the financial
statements regarding the impairment assessment
of goodwill.
Key audit matter
How our audit addressed the key audit matter
Accounting for material acquisitions
Refer to “Business combinations” on pages
114 and 115 (Accounting policies), “Business
combinations” under note 1 (“Significant
estimates and judgements”) and note 35
(“Acquisitions of subsidiary undertakings and
business assets”).
During 2019 the Group completed six
acquisitions. Management determined
that all acquisitions met the definition of a
business combination under IFRS 3 ‘Business
Combinations’. The acquisition of the Durbin
Group was the most substantial acquisition in
the year.
We read the legal agreements for each acquisition to
obtain an understanding of the structure and key terms of
each transaction.
We challenged the reasonableness of the key
assumptions used in the valuation of deferred and
contingent consideration pertaining to the acquisitions.
This included considering management’s assessment of
the likelihood of the specified future profitability targets
being achieved, including considering the growth rates
used against OECD published economic forecasts for the
region in which each acquired entity operates and other
relevant factors. We also assessed, with the assistance of
PwC valuations expert, the discount rate applied.
We regard the accounting for acquisitions as a
key audit matter due to:
We found the assumptions used fell within a
reasonable range.
their significance to the financial statements; and
the complexity and degree of judgement involved
in determining the total consideration payable,
particularly the deferred and contingent element
that are based on achievement of specified future
profitability targets.
We also considered the disclosures in the financial
statements regarding the acquisitions made during 2019.
94
95
Uniphar plc Annual Report 2019Financial Statements Independent auditors’ report
to the members of Uniphar plc (continued)
Independent auditors’ report
to the members of Uniphar plc (continued)
Key audit matter
How our audit addressed the key audit matter
Covid-19
Since the year end the impact of Covid-19
has given rise to an unprecedented level of
economic uncertainty.
We obtained the impact assessment prepared by the
Group in relation to Covid-19 and understood each of the
scenarios modelled and the key assumptions therein.
We considered the accuracy of the disclosures made
in the accounting policies on page 108 of the financial
statements by reference to our knowledge of the Group
and the understanding we had obtained of the impact
assessment performed.
We were satisfied that the disclosures made were
appropriate in the circumstances.
As set out in the accounting policies on page
108 the group undertook an impact assessment
of Covid-19 on its operations and the Directors
concluded that there is a reasonable expectation
that the Group has adequate resources to
continue in operational existence for the
foreseeable future.
The Going concern note on page 108 includes
disclosures of the scenarios considered in the
impact assessment, the key assumptions made
and the financing facilities available to the Group
over the going concern period of assessment, i.e.
at least 12 months from the date of approval of
these financial statements.
We considered this to be a key audit matter
due to the importance to users of the
financial statements in understanding the key
assumptions and judgements made by the
directors in considering the possible impacts
of Covid-19 when arriving at their conclusions
in relation to the adoption of the going concern
basis of accounting.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group, the accounting processes and
controls, and the industry in which the Group operates.
The Group is structured along three operating segments being Commercial & Clinical, Product Access and
Supply Chain & Retail. Each operating segment comprises a number of reporting components. The Group
financial statements are a consolidation of thirty seven reporting components across the three operating
segments. In establishing the overall approach to the Group audit, we identified five reporting components,
which in our view required an audit of their complete financial information due to their size and financial
significance to the Group.
This together with the work we performed at Group gave us the comfort we required in respect of our audit of the
financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as
a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Group financial statements
Company financial statements
Overall materiality
€1.595m
€2.267m
How we determined it
C. 5% of profit before tax, before
exceptional items
C. 1% of net assets
Rationale for
benchmark applied
The Group is profit-oriented and profit
before tax before exceptional items is one
of the key metrics used by shareholders in
reviewing performance of the Group. We
consider this to be the most appropriate
relevant performance metric for the
stakeholders of the Group.
We consider net assets to be
the appropriate benchmark
given it is a holding company
with its main activity being the
management of investments
in subsidiaries.
We agreed with the Audit, Risk and Compliance Committee that we would report to them misstatements
identified during our audit above €0.08m (Group audit) and €0.08m (Company audit) as well as misstatements
below that amount that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report
to you where:
» the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
» the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s or the Company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are authorised
for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s or the Company’s ability to continue as a going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
96
97
Uniphar plc Annual Report 2019Financial Statements Independent auditors’ report
to the members of Uniphar plc (continued)
Independent auditors’ report
to the members of Uniphar plc (continued)
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 an apparent
material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of 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 based on these responsibilities.
With respect to the Directors’ Report, we also considered whether the disclosures required by the Companies
Act 2014 (excluding the information included in the “Non Financial Statement” as defined by that Act on which
we are not required to report) have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland)
and the Companies Act 2014 require us to also report certain opinions and matters as described below:
» In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors’
Report (excluding the information included in the “Non Financial Statement” on which we are not required
to report) for the year ended 31 December 2019 is consistent with the financial statements and has been
prepared in accordance with the applicable legal requirements.
» Based on our knowledge and understanding of the Group and Company and their environment obtained in the
course of the audit, we have not identified any material misstatements in the Directors’ Report (excluding the
information included in the “Non Financial Statement” on which we are not required to report).
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors’ responsibilities set out on pages 83 and 84, the directors
are responsible for the preparation of the financial statements in accordance with the applicable framework and
for being satisfied that they give a true and fair view.
The directors are also responsible 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.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the 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 the directors either intend to liquidate the Group or the Company or to
cease operations, or have no realistic alternative but to do so.
Auditors’ 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 auditors’ 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.
A further description of our responsibilities for the audit of the financial statements is located on the IAASA
website at:
https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_
responsibilities_for_audit.pdf
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2014 opinions on other matters
» 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 Company financial
statements to be readily and properly audited.
» The Company Balance sheet is in agreement with the accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’
remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no
exceptions to report arising from this responsibility.
Prior financial year Non Financial Statement
We are required to report if the Company has not provided the information required by Regulation 5(2) to 5(7)
of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings
and groups) Regulations 2017 in respect of the prior financial year. We have nothing to report arising from
this responsibility.
John Dunne
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
31 March 2020
98
99
Uniphar plc Annual Report 2019Financial Statements Group Income Statement
Year Ended 31 December 2019
Group Statement of Comprehensive Income
Year Ended 31 December 2019
Notes
2019
Pre-
exceptional
€’000
2019
Exceptional
(note 5)
€’000
2019
Total
€’000
2018
Pre-
exceptional
€’000
2018
Exceptional
(note 5)
€’000
2018
Total
€’000
Profit for the financial year
20,921
8,705
Notes
2019
€’000
2018
€’000
Revenue
Cost of sales
Gross profit
Selling and distribution costs
Administrative expenses
Other operating income
Operating profit
Finance cost
Profit before tax
Income tax expense
3
4
6
7
9
1,665,283
(1,484,681)
180,602
(52,214)
(88,410)
272
-
-
-
1,665,283
(1,484,681)
1,417,895
(1,302,178)
180,602
115,717
-
-
-
-
(12,043)
-
(52,214)
(100,453)
272
(34,870)
(56,659)
813
-
(10,168)
993
1,417,895
(1,302,178)
115,717
(34,870)
(66,827)
1,806
40,250
(12,043)
28,207
25,001
(9,175)
15,826
(8,480)
6,731
(1,749)
(4,522)
-
(4,522)
31,770
(5,537)
(5,312)
26,458
20,479
(9,175)
11,304
-
(5,537)
(2,599)
-
(2,599)
Profit for the financial year
26,233
(5,312)
20,921
17,880
(9,175)
8,705
Attributable to owners
Attributable to non-
controlling interests
39
Profit attributable to:
Continuing operations
Earnings per ordinary share
(in cent):
Basic and diluted -
continuing operations
Basic and diluted earnings
per share (in cent)
36
21,026
(105)
20,921
20,921
20,921
11.5
11.5
8,642
63
8,705
8,705
8,705
7.3
7.3
Other comprehensive income/(expense)
Items that may be reclassified to the Income Statement:
Unrealised foreign currency translation adjustments
Items that will not be reclassified to the Income Statement:
Actuarial loss in respect of pension scheme
Deferred tax on Group defined benefit pension schemes
Total comprehensive income relating to the year
Total comprehensive income relating to the year:
Attributable to owners
Attributable to non-controlling interests
27
17
39
Total comprehensive income attributable to:
Continuing operations
3,815
(315)
(1,207)
151
(434)
(54)
23,680
7,902
23,785
(105)
23,680
23,680
23,680
7,839
63
7,902
7,902
7,902
100
101
Uniphar plc Annual Report 2019Financial Statements Group Balance Sheet
As at 31 December 2019
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Other receivables
Employee benefit surplus
Financial assets – Investments in equity instruments
Financial assets – Long term receivables
Current assets
Assets held for sale
Inventory
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total assets
EQUITY
Capital and reserves
Called up share capital presented as equity
Share premium
Other reserves
Retained earnings
Attributable to owners
Attributable to non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Other non-current payables
Provisions
Derivative financial instruments
Facility termination fee
Employee benefit obligation
Lease obligations
Current liabilities
Borrowings
Trade and other payables
Facility termination fee
Lease obligations
Total liabilities
Total equity and liabilities
On behalf of the Board
M. Pratt
G. Rabbette
102
Notes
12
13
17
16
27
14
14
13
15
16
18
18
23
24
25
26
39
20
19
22
32
32
27
21
20
19
32
21
2019
€’000
275,959
119,483
4,972
1,132
-
25
-
401,571
7,985
98,105
136,780
114,040
2,142
359,052
760,623
21,841
176,501
3,464
(20,601)
181,205
(285)
180,920
66,977
545
81,069
-
-
45
82,901
2018
€’000
206,978
23,141
7,103
2,106
439
25
5,500
245,292
4,000
76,070
170,659
10,539
2,352
263,620
508,912
9,413
22,489
(351)
(31,990)
(439)
(180)
(619)
84,018
-
52,142
27,586
5,122
-
-
231,537
168,868
22,583
310,500
5,000
10,083
348,166
579,703
760,623
81,753
256,410
2,500
-
340,663
509,531
508,912
Company Balance Sheet
As at 31 December 2019
ASSETS
Non-current assets
Property, plant and equipment
Deferred tax asset
Other receivables
Financial assets – Investments in subsidiaries
Financial assets – Investments in equity instruments
Financial assets – Long term receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total assets
EQUITY
Capital and reserves
Called up share capital presented as equity
Share premium
Other reserves
Retained earnings
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Provisions
Derivative financial instruments
Facility termination fee
Lease obligations
Current liabilities
Borrowings
Trade and other payables
Facility termination fee
Lease obligations
Total liabilities
Total equity and liabilities
Notes
13
17
16
14
14
14
16
18
18
23
24
25
26
20
22
32
32
20
19
32
2019
€’000
47,335
2,724
138
288,412
25
-
338,634
435,863
67,328
2,142
505,333
843,967
21,841
176,501
60
28,331
226,733
65,796
56,385
-
-
44,633
2018
€’000
-
2,386
308
246,568
25
5,500
254,787
317,078
7,333
2,142
326,553
581,340
9,413
22,489
60
(6,021)
25,941
82,622
34,817
27,586
5,122
-
166,814
150,147
16,827
425,282
5,000
3,311
450,420
617,234
843,967
6,218
396,534
2,500
-
405,252
555,399
581,340
The profit recorded in the financial statements of the Company for the year ended 31 December 2019 was
€42,933,000 (2018: loss €7,267,000). As permitted by Section 304 of the Companies Act 2014, the Income
Statement of the Company has not been separately presented in the financial statements.
On behalf of the Board
M. Pratt
G. Rabbette
103
Uniphar plc Annual Report 2019Financial Statements
Group Cash Flow Statement
Year Ended 31 December 2019
Company Cash Flow Statement
Year Ended 31 December 2019
Operating activities
Cash inflow/(outflow) from operating activities
Proceeds from non-recourse financing
Interest paid
Interest paid on lease liabilities
Corporation tax payments
Net cash inflow/(outflow) from operating activities
Investing activities
Payments to acquire property, plant and equipment
Receipts from disposal of property, plant and equipment
Receipts from disposal of assets held for sale
Payments to acquire intangible assets
Loans advanced to retail holding and management companies
Receipts from disposals/repayments of financial assets
Proceeds from disposal of subsidiary undertakings
Cash transferred on disposal of subsidiary undertakings
Payments to acquire subsidiary undertakings
Cash acquired on acquisition of subsidiary undertakings
Payment of deferred and deferred contingent consideration
Receipt of deferred consideration receivable
Net cash outflow from investing activities
Financing activities
Issue of partly paid share capital
Proceeds from calling of unpaid element of partly paid share capital
Proceeds from IPO equity issue
IPO cash exceptional costs
IPO cash exceptional costs – recognised directly in equity
Proceeds from borrowings
Repayments of borrowings
Net (decrease)/increase in invoice discounting facilities
Net movement in restricted cash
Payment of deferred consideration
Payment of facility termination fee
Principal element of lease payments
Net cash inflow from financing activities
Increase in cash and cash equivalents in the year
Opening balance cash and cash equivalents
Closing balance cash and cash equivalents
Notes
29
13
12
14
14
35
23
23
23
30
30
30
31
32
31
18
18
2019
€’000
49,566
68,000
(3,831)
(2,637)
(4,101)
106,997
(5,585)
9
415
(861)
-
5,359
-
-
(50,533)
6,860
(1,403)
95
2018
€’000
(4,897)
-
(2,651)
-
(1,190)
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4,207
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763
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27,014
(3,490)
217
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17
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210
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(7,896)
246
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33,468
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42,148
100,094
103,501
10,539
9,351
1,188
114,040
10,539
Operating activities
Cash (outflow)/inflow from operating activities
Interest paid
Interest paid on lease liabilities
Notes
29
2019
€’000
(31,901)
(2,466)
(1,467)
2018
€’000
24,585
(1,247)
-
Net cash (outflow)/inflow from operating activities
(35,834)
23,338
Investing activities
Receipts from disposals of tangible assets
Loans advanced to retail holding and management companies
Receipts from disposals/repayments of financial assets
Proceeds from disposal of subsidiary undertakings
Payments to acquire subsidiary undertakings
Receipt of deferred consideration receivable
Net cash outflow from investing activities
Financing activities
Issue of partly paid share capital
Proceeds from calling of unpaid element of partly paid share capital
Proceeds from IPO equity issue
IPO exceptional costs
IPO exceptional costs – recognised directly in equity
Proceeds from borrowings
Repayments of borrowings
Deferred consideration payments
Payment of facility termination fee
Principal element of lease payments
Net cash inflow from financing activities
Increase in cash and cash equivalents in the year
Opening balance cash and cash equivalents
Closing balance cash and cash equivalents
14
14
23
23
23
30
30
32
31
18
18
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5,359
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(26,802)
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(5,500)
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(2,651)
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(11,910)
(286)
(2,500)
-
117,177
75,050
59,995
7,333
67,328
5,965
1,368
7,333
104
105
Uniphar plc Annual Report 2019Financial Statements y
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107
Uniphar plc Annual Report 2019Financial Statements
Accounting Policies
Basis of preparation
Basis of consolidation
The consolidated financial statements of Uniphar plc and its subsidiaries (the ‘Group’) have been prepared
in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS
Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS, as adopted by the EU. The
financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB), as
adopted by the EU and as applied in accordance with the Companies Acts 2014.
Uniphar plc is incorporated in the Republic of Ireland under registration number 224324 with a registered office at
4045 Kingswood Road, Citywest Business Park, Co. Dublin.
The parent Company’s financial statements 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 and joint ventures to
all years presented in these financial statements.
Going concern
The Directors have made appropriate enquiries and carried out a thorough review of the Group’s forecasts,
projections and available banking facilities, taking account of possible changes in trading performance and
considering business risk.
In light of the ongoing Covid-19 developments, the Group has performed an impact assessment taking into
account expected impacts of the pandemic. Uniphar plays a significant role in the healthcare sector and is
classified as part of the critical infrastructure by the national Government, ensuring continuity in the supply
and distribution of much needed medicines, medical devices and related services. We expect to continue to
see increased volumes in Supply Chain & Retail, with likely increases in costs due to investment in additional
resources to manage significantly higher volumes. Due to reprioritisation of resources within hospitals and other
healthcare facilities the Group are preparing for a possible delay in Commercial & Clinical revenue if certain ‘non-
urgent’ elective surgeries have to be postponed.
In preparing the impact assessment a number of scenarios were considered including the impact of the
pandemic over an extended period of up to 12 months. The key assumptions within each of these scenarios
include increased volumes and costs for a limited period within Supply Chain & Retail, a reduction in Commercial
& Clinical revenues with no corresponding reduction in costs, and no negative impact within Product Access.
In all of these scenarios the assessment indicates that there is no impact on the underlying ability to meet debt
repayments, comply with banking covenants and retain sufficient liquidity to meet our financial obligations as
they fall due.
There are over three years remaining on our existing banking facility, ensuring the Group has access to capital
on an ongoing basis. Following our successful IPO in July 2019, together with strong cash generation, and the
execution of the non-recourse financing arrangement, the Group has a robust capital structure, with unrestricted
cash of €114.0m, and a positive net bank cash position of €26.6m at 31 December 2019.
Having regard to the factors noted above, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future, being a period of 12 months
from the date of approval of these financial statements. As a result, the Directors believe that it is appropriate to
continue to adopt the going concern basis in preparing the financial statements.
The Group’s financial statements are prepared for the year ended 31 December 2019. The annual financial
statements incorporate the Company and all of its subsidiary undertakings. A subsidiary undertaking is
consolidated by reference to whether the Group has control over the subsidiary undertaking. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the activities of the entity.
The results of all Group undertakings are prepared to the Group’s financial year end. The principal subsidiaries
of the Group are listed in note 38. The attributable results of acquisitions are included in the financial statements
from the date of acquisition. The results of the subsidiary undertakings disposed of are included in the
consolidated Income Statement and Cash Flow Statement up to the date control ceases. Intergroup transactions
are eliminated on consolidation in the preparation of the Group’s financial statements.
New Standards, Amendments and Interpretations
The Group has applied the following standards and amendments for the first time for their annual reporting
period commencing 1 January 2019:
» IFRS 16 Leases
» Prepayment Features with Negative Compensation – Amendments to IFRS 9
» Long-term Interests in Associates and Joint Ventures – Amendments to IAS 28
» Annual Improvements to IFRS Standards 2015 – 2017 Cycle
» Plan Amendment, Curtailment or Settlement – Amendments to IAS 19
» Interpretation 23 Uncertainty over Income Tax Treatments.
The Group had to change its accounting policies as a result of adopting IFRS 16. This is the first set of the
Group’s financial statements where IFRS 16 has been applied. Changes to significant accounting policies are
described in note 2. The other amendments listed above did not have any impact on the amounts recognised in
prior periods and are not expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for
31 December 2019 reporting periods and have not been early adopted by the Group. These standards
are not expected to have a material impact in the current or future reporting periods and on foreseeable
future transactions.
Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
» investments in equity, financial assets and liabilities (including derivative instruments), certain classes of
property, plant and equipment – measured at fair value;
» defined benefit pension plans – plan assets measured at fair value.
The preparation of financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. The areas involving a high degree of judgement
or complexity, or areas where assumptions and estimates are significant in relation to the consolidated financial
statements are set out in note 1.
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Accounting Policies (continued)Uniphar plc Annual Report 2019Financial Statements Foreign currency translation
(i) Functional currency and presentational currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The functional currency of
the parent company is Euro. The consolidated financial statements and parent company financial statements are
presented in Euro.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange
rates are generally recognised in the Income Statement. They are deferred in equity if they relate to qualifying
cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a
foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the Income Statement, within
finance cost. All other foreign exchange gains and losses are presented in the Income Statement on a net basis
within administrative expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary
assets and liabilities such as equities held at fair value through the Income Statement are recognised in the
Income Statement as part of the fair value gain or loss and translation differences on non-monetary assets such
as equities classified as investments in equity instruments are recognised in Other Comprehensive Income.
(iii) Foreign currency translation
On consolidation, exchange differences arising from the translation of any net investment in foreign entities,
and of borrowings and other financial instruments designated as hedges of such investments, are recognised
in Other Comprehensive Income. When a foreign operation is sold or any borrowings forming part of the net
investment are repaid, the associated exchange differences are reclassified to the Income Statement, as part of
the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate.
Intangible assets
(i) Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is
tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating
units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups
of cash-generating units that are expected to benefit from the business combination in which the goodwill
arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal
management purposes.
Intangible assets (continued)
(ii) 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 of 5 years, by
charging equal instalments to the Income Statement from the date the assets are ready for use.
(iii) Trademarks
Trademarks are shown at historical cost. Trademarks have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the straight line method to allocate the cost of
trademarks over their estimated useful lives of 5 years.
Impairment of assets
Goodwill has an indefinite useful life, is not subject to amortisation and is tested annually for impairment, or
more frequently if events or changes in circumstances indicate that it might be impaired. Other assets are tested
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment
are reviewed for possible reversal of the impairment at the end of each reporting period.
Property, plant and equipment
Property, plant and equipment are stated at cost or deemed cost as appropriate less accumulated depreciation.
On transition to IFRS as adopted by the EU in 2015, freehold property in Ireland was revalued to fair value
and is measured on the basis of deemed cost being the revalued amount at the date of that revaluation less
accumulated depreciation.
Depreciation is calculated in order to write off the cost of property, plant and equipment, other than land and
assets under construction, over their estimated useful lives by equal annual instalments.
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Accounting Policies (continued)Accounting Policies (continued)Uniphar plc Annual Report 2019Financial Statements Property, plant and equipment (continued)
Investments and other financial assets (continued)
The estimated useful lives of property, plant and equipment by reference to which depreciation has been
calculated are as follows:
Freehold buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computer equipment
Motor vehicles
Instruments
Land is not being depreciated.
50 years
10 years
3 - 10 years
10 years
3 - 5 years
5 years
3 years
Property, plant and equipment recognised as a right-of-use asset in accordance with IFRS 16 is depreciated over
the right-of-use asset’s useful life on a straight-line basis.
Assets Held for Sale
Non-current assets that are expected to be recovered principally through sale rather than continuing use and
meet the IFRS 5 criteria 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 costs to sell. Impairment losses on initial classification
as non-current assets held for sale and subsequent gains or losses on re-measurement are recognised in the
Income Statement.
Financial assets – Investments in subsidiaries
Investments in subsidiaries are stated at cost less any accumulated impairment and are reviewed for impairment
if there are indications that the carrying amount may not be recoverable. They are assessed for impairment
annually as part of the Group’s overall impairment assessment.
Investments and other financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
» those to be measured subsequently at fair value (either through OCI or through profit or loss), and
» those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
(ii) Recognition and derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through the Income Statement, transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at fair value through the Income Statement are
expensed in the Income Statement.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset
and the cash flow characteristics of the asset. There are three measurement categories into which the Group
classifies its debt instruments:
» Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in the Income Statement and presented in other gains/(losses) together
with foreign exchange gains and losses. Impairment losses are presented as separate line item in the
Income Statement.
» Fair value through Other Comprehensive Income (FVOCI): Assets that are held for collection of contractual cash
flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal
and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are
recognised in the Group Income Statement. When the financial asset is derecognised, the cumulative gain or
loss previously recognised in OCI is reclassified from equity to the Group Income Statement.
» Fair value through profit or loss (FVPL): Assets that do not meet the criteria for amortised cost or FVOCI are
measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised
in the Group Income Statement in the period in which it arises.
Loans and receivables
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The
liability is initially measured at fair value and subsequently at the higher of:
» the amount determined in accordance with the expected credit loss model under IFRS 9 Financial
Instruments and
» the amount initially recognised less, where appropriate, the cumulative amount of income recognised in
accordance with the principles of IFRS 15 Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present value of the difference in cash flows
between the contractual payments required under the debt instrument and the payments that would be required
without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.
Where guarantees in relation to loans or other payables of associates are provided for no compensation, the fair
values are accounted for as contributions and recognised as part of the cost of the investment.
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Accounting Policies (continued)Accounting Policies (continued)Uniphar plc Annual Report 2019Financial Statements
Investments and other financial assets (continued)
Business combinations (continued)
Derivatives and facility termination fees
Derivatives and facility termination fees are initially recognised at fair value on the date a contract is entered
into and are subsequently remeasured to their fair value at the end of each reporting period through the
Income Statement.
Equity instruments
Investments in equity instruments are subsequently carried at fair value through other comprehensive income.
Gains or losses arising from changes, due to both translation differences and other changes, in the fair value are
recognised in Other Comprehensive Income.
Details on how the fair value of financial instruments is determined are disclosed in note 32.
(iv) Impairment
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been
a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables.
(v) Income recognition
Interest income
Interest income is recognised in the Income Statement as it accrues using the effective interest method.
Dividends
Dividends are recognised as revenue when the right to receive payment is established. This applies even if
they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as
a consequence.
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. Under the acquisition method, the assets, liabilities and
contingent liabilities of an acquired business are initially recognised at their fair value at the date of acquisition.
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 the Income Statement.
The cost of a business combination is measured as the aggregate of the fair values of any assets transferred,
liabilities incurred or assumed, and equity instruments issued in exchange for control. The consideration
transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are
generally recognised in the Income Statement.
Where a business combination agreement provides for an adjustment to the cost of the combination which
is contingent on future events, the 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 the Income Statement.
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.
When the initial accounting for a business combination is determined provisionally, any adjustments to the
provisional values allocated to the identifiable assets and liabilities are made within twelve months of the
acquisition date.
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.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the Income Statement over the period of the borrowings using the effective interest
method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until
the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the
facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in the Income Statement as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
Cash and cash equivalents
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities in the Balance Sheet.
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Accounting Policies (continued)Accounting Policies (continued)Uniphar plc Annual Report 2019Financial Statements Share capital
Ordinary shares are classified as equity. Proceeds from the issue of ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are recognised directly in retained
earnings within equity, net of any tax effects.
Leases (2019 Accounting policy under IFRS 16)
The Group leases various properties, equipment and motor vehicles. Rental contracts are typically made for fixed
periods of 1 to 30 years but may have extension options as described below. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose
any covenants, but leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to the Income Statement over the lease period to produce a constant periodic rate of
interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the
right-of-use assets useful life on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
» fixed payments (including in-substance fixed payments), less any lease incentives receivable
» variable lease payment that are based on an index or a rate
» amounts expected to be payable by the lessee under residual value guarantees
» the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
» payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or
the Group’s incremental borrowing rate which is calculated using a portfolio approach, based on the nature of the
lease. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019
was 3.1%.
The Group applied the following practical expedients when applying IFRS 16 to leases previously classified
as operating leases under IAS 17.
» Excluded initial direct costs from measuring the right-of-use asset at the date of initial application
» Used hindsight when determining the lease term if the contract contains options to extend or terminate
the lease.
Right-of-use assets are measured at cost comprising the following:
» the amount of the initial measurement of lease liability
» any lease payments made at or before the commencement date less any lease incentives received
» any initial direct costs, and
» restoration costs.
Extension and termination options are included in a number of property and equipment leases across the
Group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of
extension and termination options held are exercisable only by the Group and not by the respective lessor.
Payments associated with leases of low-value assets are recognised on a straight-line basis as an expense in the
Income Statement.
Low-value assets comprise of computer equipment, small items of office furniture, and in-store equipment in our
retail pharmacies.
Leases (2018 Accounting policy under IAS 17)
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards
of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the
fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding
rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease
payment is allocated between the liability and finance cost. 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 is depreciated over the asset’s
useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that
the Group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as
lessee are classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to the Income Statement on a straight-line basis over the period of the leases.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. Provision is made using the expected credit loss model
which uses a lifetime expected loss allowance for all trade receivables.
Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is based on the moving average cost
method (and first in first out principle where appropriate). Moving average is a costing method used under a
perpetual inventory system whereby, after each purchase, average unit cost is recomputed by adding the cost
of purchased units to the cost of units in inventory and dividing by the new total number of units. The first in,
first out principle 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 comprises selling price net of trade but
before settlement discounts, less all costs to be incurred in marketing, selling and distribution.
Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company, and the Company’s subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
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Accounting Policies (continued)Accounting Policies (continued)Uniphar plc Annual Report 2019Financial Statements Income tax (continued)
Employee benefits (continued)
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if
it arises from initial recognition of an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using
tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and
tax bases of investments in foreign operations where the Company and its subsidiaries are able to control
the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the Income Statement, except to the extent that it relates to items
recognised in Other Comprehensive Income or directly in equity. In this case, the tax is also recognised in Other
Comprehensive Income or directly in equity, respectively.
Employee benefits
Share-based payments
Employees (including Executive Directors) of the Group receive remuneration in the form of share-based payment
transactions, whereby employees render service in exchange for shares or rights over shares in the ultimate
parent undertaking, Uniphar plc. The fair value of share entitlements granted is recognised as an employee
expense in the Income Statement with a corresponding increase in equity. The expense or credit recognised in
the Income Statement represents the product of the total number of shares anticipated to vest and the fair value
of those shares.
Certain Directors and employees may acquire shares in the Company under long-term incentive plans. The
Company accounts for the proceeds of these share issues as and when payment of the nominal value of the
share is called.
Post-employment obligations
The liability or asset recognised in the Balance Sheet in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The
defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using market yields of high-quality corporate bonds that are denominated in the currency in which the
benefits will be paid, and that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included in finance costs in the Income Statement.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions
are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in
retained earnings in the Statement of Changes in Equity and in the Balance Sheet. Changes in the present value
of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in
the Income Statement as past service costs.
The defined contribution pension charge to operating profit comprises of the contribution payable to the scheme
for the year.
Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents the amount
receivable for goods supplied or services rendered, net of returns, discounts and rebates allowed by the Group
and value-added tax.
The Group bases its estimate of returns, discounts and rebates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics of each arrangement.
Where the consideration receivable in cash or cash equivalents is deferred, and the arrangement constitutes a
financing transaction, the fair value of the consideration is measured as the present value of all future receipts
using the imputed rate of interest.
The Group recognises revenue in the amount of the price expected to be received for goods and services
supplied at a point in time or over time, as contractual performance obligations are fulfilled, and control of goods
and services passes to the customer.
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 concluded that it is the
principal in its revenue arrangements, except for certain agreements in Product Access where the Group’s role is
only to arrange for another entity to provide the goods or services.
An analysis of the revenue recognition principles applied in each of the Group’s operating segments is
provided below:
Commercial & Clinical
Revenue is derived from the provision of goods and services falling within the Group’s ordinary activities after
deduction of trade discounts and value-added tax.
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Accounting Policies (continued)Accounting Policies (continued)Uniphar plc Annual Report 2019Financial Statements Cost of Sales
Commercial & Clinical
The cost of sales attributable to the supply of goods includes all costs of purchase of inventory and other costs
incurred net of value-added tax in bringing inventories for resale to their present location and condition. When
inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which
the related revenue is recognised.
The cost of sales attributable to the supply of services includes all direct costs attributable to the provision of
resourcing and outsourcing services net of value-added tax. The cost of service is recognised as an expense in
the period in which the related revenue is recognised.
Product Access
The cost of sales includes all direct costs attributable to the provision of services and cost of purchase of
inventory for resale net of value-added tax. When a service is provided or inventory is sold, the cost of service
or carrying amount of inventory is recognised as an expense in the period in which the related revenue
is recognised.
Supply Chain & Retail
The cost of sales includes all costs of purchase of inventory and other costs incurred net of value-added tax in
bringing inventories for resale to their present location and condition. When inventories are sold, the carrying
amount of those inventories is recognised as an expense in the period in which the related revenue is recognised.
Exceptional items
With respect to 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 restructuring costs, professional
fees including directly attributable acquisition costs and acquisition integration costs, impairment of non-
current assets, profit and loss on disposal of tangible assets and investments. 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.
Revenue (continued)
Sales of goods are recognised on despatch to the customer, and there is no unfulfilled performance obligation
that could affect the customer’s acceptance of the product. Despatch occurs when the goods have been
shipped to the location specified by the customer, the risks of obsolescence or loss have been transferred to
the customer, the customer has accepted the products in accordance with the sales contract, the acceptance
provisions have lapsed or the company has objective evidence that all criteria for acceptance have been
satisfied. Where sales are on a consignment basis, turnover is not recognised until a sale has been made to
a third party. In some circumstances goods are sold with volume rebates. Sales are measured at the prices
specified in the sale contract, net of estimated volume rebates. Volume rebates are assessed based on
anticipated annual purchases and historical experience.
Revenue arises from the provision of resourcing and outsourcing services and the provision of patient solution
services. Revenue from service contracts is recognised in the financial year in which the services are rendered
and when the outcome of contract can be estimated reliably.
Product Access
Revenue is measured at the fair value of the consideration received or receivable and represents the amount
receivable for goods supplied or services rendered, net of VAT and trade discounts. Revenue arises from the sale
of goods to retailers and hospitals.
The Group bases its estimate of returns, discounts and rebates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each arrangement. The Group recognises
revenue in the amount of the price expected to be received for goods supplied at a point in time as contractual
performance obligations are fulfilled, and control of goods passes to the customer.
Supply Chain & Retail - wholesaling
Revenue is derived from the provision of goods and services falling within the Group’s ordinary activities after
deduction of trade discounts and value-added tax. Revenue arises from the sale of goods to wholesalers,
retailers and hospitals and the operation of retail pharmacy.
Sale of pharmaceutical and healthcare related products are recognised on delivery to the purchaser, hospital
or retail pharmacy, when the purchaser has full discretion over the channel and price to sell the product and
there is no unfulfilled obligation that could affect the purchaser’s acceptance of the product. Delivery occurs
when the products have been shipped to the location specified by the purchaser, the risks of obsolescence or
loss have been transferred to the purchaser, the purchaser has accepted the products in accordance with the
sales contract, the acceptance provisions have lapsed or the Group has objective evidence that all criteria for
acceptance have been satisfied.
Products sold to customers are often sold with volume rebates and also with the provision for the customer
to return faulty goods. Sales are measured at the prices specified in the sale contract, net of estimated
volume rebates and returns. Volume rebates are assessed based on anticipated annual purchases and
historical experience.
Sales are normally made with credit terms of between 30-90 days. This element of financing is deemed
immaterial and is disregarded in the measurement of revenue.
Supply Chain & Retail – retail pharmacies
The Group operates retail shops for the sale of pharmacy and certain related products. Sales of products are
recognised on sale to the customer, which is considered the point of delivery. Retail sales are usually by cash,
credit or debit card.
120
121
Accounting Policies (continued)Accounting Policies (continued)Uniphar plc Annual Report 2019Financial Statements Notes to the Financial Statements
1 Significant estimates and judgements
1 Significant estimates and judgements (continued)
The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s
accounting policies.
Management judgements
Information about critical judgements in applying accounting policies that have the most significant effect on the
amounts recognised in the financial statements are included in the following notes:
Impairment assessment of goodwill and other non-current assets
The Group tests annually whether goodwill has suffered any impairment. 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 CGUs, 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.
Management have performed detailed sensitivity analysis on each of the CGUs by applying sensitivities to
each of the key assumptions. This analysis resulted in an excess in the recoverable amount over their carrying
amount under each approach for all CGUs. Management believe that any reasonable change in any of the
key assumptions would not cause the carrying value of goodwill to exceed the recoverable amount. Further
information is detailed in the intangible assets note 12.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period. Impairment tests in respect of property, plant and equipment and
software related intangible assets are also performed on a CGU basis.
Adoption of IFRS 16 “Leases”
The adoption of IFRS 16 “Leases” required management judgement in the selection of the appropriate discount
rates to be used in the discounting of the expected future payments to present value. The discount rate applied
is the interest rate implicit in the lease, if that rate can be determined, or the Group’s incremental borrowing rate
which is calculated using a portfolio approach, based on the nature of the lease. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 3.1%. See note 2 for further
details on our adoption of IFRS 16 “Leases”.
Impairment of inventory
The Group sells pharmaceutical, health and beauty products and medical devices. Pharmaceutical includes
ethical medicines, OTC, hospital and veterinary products. As a result, it is necessary to consider the
recoverability of the carrying amount of inventory at the end of each financial year. When calculating any
inventory impairment, management applies judgement in considering the nature and condition of the inventories,
current estimated selling prices, as well as applying assumptions around anticipated saleability of goods held for
resale. See note 15 for the carrying amount of the inventories and the provision recognised.
Impairment of receivables
The Directors make an assessment at the end of each financial year of whether there is objective evidence that
a trade receivable or other receivable is impaired. When assessing impairment of trade and other receivables,
the Directors consider factors including the current credit rating of the trade receivables, the age profile of
outstanding invoices, recent correspondence, trading activity and historical experience of cash collections
from the trade receivable. See note 32 for the net carrying amount of the receivables and the impairment loss
recognised in the financial year.
Revenue recognition
Management judgement is required in the assessment of whether the Group acts as an agent or a principal
in transactions and accordingly whether revenue should be recorded on a gross or net basis. As part of this
assessment, the Group has considered its responsibilities for fulfilling contracts, inventory risk, and establishing
selling prices and therefore it has determined that it acts as a principal. In relation to acquisitions completed
during 2019, the Group has identified certain agreements which following consideration of the requirements of
IFRS 15, it was concluded that the Group acts as an agent, where the Group’s role is only to arrange for another
entity to provide the goods or services.
Income taxes
Provisions for taxes require judgement and estimation in interpreting tax legislation, current case law and the
uncertain outcomes of tax audits and appeals. Where the final outcome of these matters differs from the amounts
recognised, differences will impact the tax provisions once the outcome is known. In addition, the Group
recognised deferred tax assets, mainly relating to unused tax losses, when it is probable that the assets will be
recovered through future profitability and tax planning. The assessment of recoverability involves judgement.
Further information is contained in note 9, income tax expense.
Business combinations
In accounting for business combinations, the identifiable assets, liabilities and contingent liabilities acquired
have to be measured at their fair values. Judgement is required in; estimating the fair value of inventory with
reference to current selling prices and an assessment of obsolescence and demand for inventory; the fair value
of trade debtors with reference to the ageing and recoverability of these. Additionally, management judgement is
also required in the identification and valuation of any potential intangible assets arising on acquisitions. Details
concerning acquisitions and business combinations are outlined in note 35.
Management estimates
Information about critical estimates in applying accounting policies that have the most significant effect on the
amounts recognised in the financial statements are included in the following notes:
Provisions
The amount recognised for a provision is management’s best estimate of the expenditure to be incurred.
Provisions are measured at each Balance Sheet date based on the best estimate of the expected settlement
amount. Changes to the best estimate of the settlement amount may result from changes in the amount of timing
of the outflows or changes in discount rates.
Deferred contingent consideration are recognised in the Group Balance Sheet as provisions. The expected
payment is determined in respect of each individual agreement taking into account the expected level of
profitability of each acquisition. Deferred contingent consideration is recognised at fair value at the acquisition
date and included in the cost of the business combination. Deferred contingent consideration arrangements are
based on earn-out agreements providing for future payment if certain pre-defined profit targets are achieved. The
fair value of deferred contingent consideration is estimated using an income-based approach, by estimating the
expected payment based on the forecasted performance of the acquired business and discounting the expected
future payment to present value using an appropriate discount rate. The movement in deferred contingent
consideration in the period is outlined in Note 22. Further details on measurement, sensitivities applied, and
maturity profile are outlined in Note 32.
122
123
Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 1 Significant estimates and judgements (continued)
2
Changes in significant accounting policies
Measurement of defined benefit obligations
The cost of defined benefit pension plans and the present value of pension obligations are determined using
actuarial valuations. These valuations involve making various estimates that may differ significantly from actual
developments in the future. The estimates include determination of appropriate discount rates, future salary
increases, inflation, mortality rates and future pension increases. Due to the complex nature of the valuations
the Group employs an international network of professional actuaries to perform these valuations. The critical
assumptions and estimates applied along with a sensitivity analysis are provided in the employee benefit
obligations note 27.
Useful economic lives of property, plant and equipment
Determining the useful life of property, plant and equipment requires judgement. Management regularly reviews
the useful economic lives and residual values. They are amended when necessary to reflect current estimates,
based on technological advancement, economic utilisation and the physical condition of the assets. See note
13 for the carrying amount of the property, plant and equipment, and the depreciation charge for each class of
asset, and the accounting policies for the useful economic lives for each class of asset.
Fair value of derivatives financial instruments
The derivative financial instruments represented share warrants that were issued to the previous shareholders of
Sisk Healthcare Group on the completion of the acquisition of Sisk Healthcare Group. This share warrant granted
the right to subscribe for 18,782,808 ordinary shares in Uniphar plc with a nominal value of €0.08 each. The share
warrant was exercised in July 2019 in advance of the initial public offering. The share warrant was previously
exercisable within a five-year period from the date of completion of the acquisition, or alternatively through a
cash termination payment. Management estimates were required in the valuation of the share warrant. At the
acquisition date, the fair value attributable to the share warrant was calculated based on management’s best
estimate of the weighted probability of each of the possible outcomes. In July 2019, a gain of €1,765,000 was
recognised on the settlement of the share warrant, being the amount attributable to the cash settlement option
under the weighted probability method.
124
IFRS 16, published in January 2016 and effective on 1 January 2019, replaces the existing guidance in IAS 17
‘Leases’. IFRS 16 eliminates the classification of leases as either operating leases or finance leases. It introduces
a single lessee accounting model, which requires a lessee to recognise assets and liabilities for all leases with
a term of more than 12 months and depreciation of lease assets separately from interest on lease liabilities in
the Income Statement. The Group has applied the cumulative catch up approach and as a result there was no
retrospective adjustment required.
The Group has assessed the impact on its consolidated financial statements resulting from the application
of IFRS 16. The adoption of this new standard at 1 January 2019 had a material impact on the Group Income
Statement and Balance Sheet as follows:
Income Statement
The adoption of IFRS 16 has resulted in cost of sales reducing by €1.1m, and operating expenses reducing by
€9.4m for the year ended 31 December 2019, as the Group previously recognised operating lease expenses in
either cost of sales or operating expenses (depending on the nature of the lease).
Depreciation and finance costs as currently reported in the Group Income Statement have increased by €9.5m
and €2.6m respectively, as under the new Standard the right-of-use asset has been capitalised and is now being
depreciated over the term of the lease with an associated finance cost applied annually to the lease liability.
Balance Sheet
At the transition date the Group has assessed all lease commitments outstanding at that date and applied the
appropriate discount rate to calculate the present value of the lease commitment. The Group adopted IFRS 16 by
applying the cumulative catch up approach as permitted by the Standard.
The Group has entered into leases for a range of assets, including property, plant and equipment and motor
vehicles. The Group has elected to apply the recognition exemption for both short-term and low-value leases.
On adoption of IFRS 16 at 1 January 2019, a right-of-use asset of €80.9m has been recognised in the Group
Balance Sheet included within property, plant and equipment, with a corresponding lease liability recognised for
this amount in the Group Balance Sheet.
Operating lease commitments disclosed as at 31 December 2018
Discounted using the group’s incremental borrowing rate of 3.1%
Add: adjustments as a result of a different treatment of extension and termination options
Lease liability recognised as at 1 January 2019
Lease liabilities recognised at 1 January 2019:
Current
Non-current
€’000
64,773
(10,197)
26,287
80,863
6,245
74,618
80,863
125
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 2
Changes in significant accounting policies (continued)
2
Changes in significant accounting policies (continued)
2019 Accounting policy under IFRS 16
The accounting policy for leases under IFRS 16 “Leases” is outlined in the accounting policies section.
The following table summarises the impact of the adoption of IFRS 16 on the Group Balance Sheet as at
1 January 2019:
Impact on the Group Balance Sheet as at 1 January 2019
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Other receivables
Employee benefit surplus
Financial assets – Investments in equity instruments
Financial assets – Long term receivables
Current assets
Properties held for sale
Inventory
Trade and other receivables
Cash and cash equivalents
Restricted cash
As reported
31 December
2018
IFRS 16
impact
€’000
€’000
206,978
23,141
7,103
2,106
439
25
5,500
-
80,863
-
-
-
-
-
Adjusted
Opening
Balance
Sheet
€’000
206,978
104,004
7,103
2,106
439
25
5,500
245,292
80,863
326,155
4,000
76,070
170,659
10,539
2,352
263,620
-
-
-
-
-
-
4,000
76,070
170,659
10,539
2,352
263,620
Total assets
508,912
80,863
589,775
Impact on the Group Balance Sheet as at 1 January 2019 (continued)
EQUITY
Capital and reserves
Called up share capital presented as equity
Share premium
Other reserves
Retained earnings
Attributable to owners
Attributable to non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Provisions
Derivative financial instruments
Lease obligations
Facility termination fee
Current liabilities
Borrowings
Trade and other payables
Lease obligations
Facility termination fee
Total liabilities
Total equity and liabilities
As reported
31 December
2018
IFRS 16
impact
€’000
€’000
Adjusted
Opening
Balance
Sheet
€’000
9,413
22,489
(351)
(31,990)
(439)
(180)
(619)
-
-
-
-
-
-
-
9,413
22,489
(351)
(31,990)
(439)
(180)
(619)
84,018
52,142
27,586
-
5,122
-
-
-
74,618
-
84,018
52,142
27,586
74,618
5,122
168,868
74,618
243,486
81,753
256,410
-
2,500
-
-
6,245
-
81,753
256,410
6,245
2,500
340,663
6,245
346,908
509,531
80,863
590,394
508,912
80,863
589,775
126
127
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 2
Changes in significant accounting policies (continued)
2
Changes in significant accounting policies (continued)
The following tables summarise the impact of the adoption of IFRS 16 on the Group Income Statement for the
year ended 31 December 2019, the Group Balance Sheet as at 31 December 2019, and the Group Cash Flow
Statement for the year ended 31 December 2019:
Impact on the Group Income Statement for the year ended 31 December 2019
Impact on the Group Balance Sheet as at 31 December 2019
Revenue
Cost of sales
Gross profit
Selling and distribution costs
Administrative expenses
Other operating income
Operating profit
Finance income/(cost)
Profit before tax
Income tax expense
Profit for the financial year
Attributable to owners
Attributable to non-controlling interests
Profit attributable to:
Continuing operations
Earnings per ordinary share (in cent):
Basic and diluted - continuing operations
Basic and diluted earnings per share (in cent)
Without
adoption of
IFRS 16
€’000
IFRS 16
impact
As
reported
€’000
€’000
1,665,283
(1,485,804)
-
1,123
1,665,283
(1,484,681)
179,479
1,123
180,602
(52,214)
(100,385)
272
-
(68)
-
(52,214)
(100,453)
272
27,152
1,055
28,207
888
(2,637)
(1,749)
28,040
(5,537)
(1,582)
26,458
-
(5,537)
22,503
(1,582)
20,921
22,608
(105)
(1,582)
-
21,026
(105)
22,503
(1,582)
20,921
22,503
(1,582)
20,921
12.3
12.3
(0.8)
(0.8)
11.5
11.5
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Other receivables
Financial assets – Investments in equity instruments
Current assets
Properties held for sale
Inventory
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total assets
Without
adoption of
IFRS 16
€’000
IFRS 16
impact
As
reported
€’000
€’000
275,959
27,505
4,972
1,132
25
-
91,978
-
-
-
275,959
119,483
4,972
1,132
25
309,593
91,978
401,571
7,985
98,105
137,356
114,040
2,142
-
-
(576)
-
-
7,985
98,105
136,780
114,040
2,142
359,628
(576)
359,052
669,221
91,402
760,623
128
129
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 2
Changes in significant accounting policies (continued)
2
Changes in significant accounting policies (continued)
Impact on the Group Balance Sheet as at 31 December 2019 (continued)
Without
adoption of
IFRS 16
€’000
IFRS 16
impact
As
reported
€’000
€’000
EQUITY
Capital and reserves
Called up share capital presented as equity
Share premium
Other reserves
Retained earnings
Attributable to owners
Attributable to non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Provisions
Other non-current payables
Lease obligations
Employee benefit deficit
Current liabilities
Borrowings
Trade and other payables
Facility termination fee
Lease obligations
Total liabilities
Total equity and liabilities
21,841
176,501
3,464
(19,019)
-
-
-
(1,582)
21,841
176,501
3,464
(20,601)
182,787
(285)
(1,582)
-
181,205
(285)
182,502
(1,582)
180,920
66,977
81,069
545
-
45
-
-
-
82,901
-
66,977
81,069
545
82,901
45
148,636
82,901
231,537
22,583
310,500
5,000
-
-
-
-
10,083
22,583
310,500
5,000
10,083
338,083
10,083
348,166
486,719
92,984
579,703
669,221
91,402
760,623
Impact on the Group Cash Flow Statement for the year ended 31 December 2019
Operating activities
Cash inflow from operating activities
Proceeds from non-recourse financing
Interest paid
Interest paid on lease liabilities
Corporation tax payments
Without
adoption of
IFRS 16
€’000
IFRS 16
impact
As
reported
€’000
€’000
39,033
68,000
(3,831)
-
(4,101)
10,533
-
-
(2,637)
-
49,566
68,000
(3,831)
(2,637)
(4,101)
Net cash inflow from operating activities
99,101
7,896
106,997
Investing activities
Payments to acquire property, plant and equipment
Receipts from disposal of property, plant and equipment
Receipts from disposal of assets held for sale
Payments to acquire intangible assets
Receipts from disposals/repayments of financial assets
Payments to acquire subsidiary undertakings
Cash acquired on acquisition of subsidiary undertakings
Payment of deferred and deferred contingent consideration
Receipt of deferred consideration receivable
Net cash outflow from investing activities
Financing activities
Issue of partly paid share capital
Proceeds from calling of unpaid element of partly paid share capital
Proceeds from IPO equity issue
IPO cash exceptional costs
IPO cash exceptional costs – recognised directly in equity
Repayments of borrowings
Net decrease in invoice discounting facilities
Net movement in restricted cash
Principal element of lease payments
Payment of facility termination fee
(5,585)
9
415
(861)
5,359
(50,533)
6,860
(1,403)
95
(45,644)
17
1,211
139,391
(3,493)
(8,581)
(6,869)
(69,342)
210
-
(2,500)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7,896)
-
(5,585)
9
415
(861)
5,359
(50,533)
6,860
(1,403)
95
(45,644)
17
1,211
139,391
(3,493)
(8,581)
(6,869)
(69,342)
210
(7,896)
(2,500)
Net cash inflow from financing activities
50,044
(7,896)
42,148
Increase in cash and cash equivalents in the period
Opening balance cash and cash equivalents
Closing balance cash and cash equivalents
103,501
10,539
114,040
-
-
-
103,501
10,539
114,040
130
131
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 3
Revenue
3
Revenue (continued)
2019
€’000
2018
€’000
Ireland
€’000
UK
€’000
ROW
€’000
Total
€’000
Revenue
1,665,283
1,417,895
Segmental information
Segmental information is presented in respect of the Group’s geographical regions and operating segments.
The operating segments are based on the Group’s management and internal reporting structures.
Geographical analysis
The Group operates in two principal geographical regions being the Republic of Ireland and the United
Kingdom. The Group also operates in other European countries and the United States which are not material for
separate identification.
The following is a geographical analysis presented in accordance with IFRS 8 “Operating Segments” which
requires disclosure of information about country of domicile (Ireland) and countries with material revenue.
Ireland
UK
Rest of the World
2019
€’000
2018
€’000
1,476,247
152,623
36,413
1,325,130
86,411
6,354
1,665,283
1,417,895
At 31 December 2019
Intangible assets (excluding goodwill)
Property, plant and equipment
Deferred tax asset
Other receivables
Financial assets – Investment in equity instruments
Ireland
€’000
UK
€’000
ROW
€’000
Total
€’000
5,146
108,134
4,730
1,132
25
86
9,685
242
-
-
-
1,664
-
-
-
5,232
119,483
4,972
1,132
25
Non-current assets (excluding goodwill)
119,167
10,013
1,664
130,844
Goodwill
Non-current assets
270,727
401,571
At 31 December 2018
Intangible assets (excluding goodwill)
Property, plant and equipment
Deferred tax asset
Other receivables
Employee benefit surplus
Financial assets – Investment in equity instruments
Financial assets – Long term receivables
6,699
22,054
6,960
2,106
439
25
5,500
62
800
143
-
-
-
-
Non-current assets (excluding goodwill)
43,783
1,005
Goodwill
Non-current assets
-
287
-
-
-
-
-
287
6,761
23,141
7,103
2,106
439
25
5,500
45,075
200,217
245,292
Operating segments
IFRS 8 “Operating Segments” requires the reporting information for operating segments to reflect the Group’s
management structure and the way the financial information is regularly reviewed by the Group’s Chief Operating
Decision Maker (“CODM”), which the Group has defined as the Board of Directors.
The Group operates with three divisions, being, Commercial & Clinical, Product Access, and Supply Chain &
Retail. These divisions provide the operational and financial management structures that will allow the Group to
continue to grow and develop successfully over the coming years.
» Commercial & Clinical provide outsourced services, specifically sales, marketing and multichannel account
management to pharmaco-medical manufacturers, and distribution and support services to medical device
manufacturers. Uniphar offer a fully integrated multi-channel account management solution that is supported
through market data, insights and digital programmes. We integrate these programmes with our supply chain
and distribution capability to provide a full end to end service to manufacturers.
» Product Access consists of two service offerings, being: On Demand Access and Exclusive Access. On
Demand Access provides access to pharmaco-medical products and treatments, by developing valuable
relationships and interactions between manufacturers and other healthcare stakeholders. This business
operates in both the retail and hospital markets in both the Irish and UK markets. Exclusive Access provides
bespoke distribution partnerships to pharmaceutical partners around key brands, with new programmes
focused on speciality pharmaceutical products. Delivering a unique patient support programme that allows
healthcare professionals to connect with patients, on a global basis.
» Supply Chain & Retail provides both pre-wholesale distribution and wholesale distribution of pharmaceutical,
healthcare and animal health products to pharmacies, hospitals and veterinary surgeons in Ireland. The
business supports the diverse customer base through the provision of strong service levels coupled with
innovative commercial initiatives. Uniphar operate a network of pharmacies under the Life and Allcare brands.
Additionally, through the extended Uniphar symbol group, the business provides services and supports that
help independent community pharmacies to compete more effectively in an increasingly difficult environment.
132
133
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 3
Revenue (continued)
5
Exceptional charge
Operating segments results
The Group evaluates performance of the operational segments on the basis of gross profit from operations.
Revenue
Gross profit
Revenue
Gross profit
2019
Commercial
& Clinical
€’000
2019
Product
Access
€’000
2019
Supply Chain
& Retail
€’000
2019
Total
€’000
204,031
132,245
1,329,007
1,665,283
76,754
17,199
86,649
180,602
2018
Commercial
& Clinical
€’000
2018
Product
Access
€’000
2018
Supply Chain
& Retail
€’000
2018
Total
€’000
102,558
35,378
74,416
10,338
1,240,921
1,417,895
70,001
115,717
The Commercial & Clinical revenue of €204,031,000 (2018: €102,558,000) consists of revenue derived from
medtech of €157,691,000 (2018: €62,007,000) and pharma of €46,340,000 (2018: €40,551,000).
Assets and liabilities are reported to the Board at a Group level and are not reported on a segmental basis.
4
Other operating income
Other income and commission
Dividends receivable from investments
Profit on disposal of property, plant and equipment
Profit on disposal of subsidiary undertakings
2019
€’000
211
61
-
-
272
2018
€’000
349
464
138
855
1,806
134
Professional fees including acquisition costs
Redundancy costs
Initial public offering costs
Foreign exchange revaluation of deferred contingent consideration
Restructuring costs
Exceptional charge from investment in IPOS network
Warehouse closure costs
Other exceptional charges
Trademark impairments (note 12)
Profit on disposal of property, plant and equipment
Profit on disposal of subsidiary undertakings (note 8)
Exceptional charge recognised in operating profit
Deferred and deferred contingent consideration
Gain on settlement of derivative financial instrument (note 32)
Refinancing costs
Exceptional credit recognised in finance costs
2019
€’000
(5,896)
(1,494)
(2,432)
(1,426)
(795)
-
-
-
-
-
-
(12,043)
5,251
1,765
(285)
6,731
2018
€’000
(6,094)
(204)
-
-
(1,534)
(647)
(386)
(842)
(461)
138
855
(9,175)
-
-
-
-
Total Exceptional charge
(5,312)
(9,175)
Deferred and deferred contingent consideration:
Deferred and deferred contingent consideration relates to €5,290,000 in respect of Clinical Pyramid Limited, and
€546,000 in respect of Murrays Medical Limited. Additionally, a provision of €585,000 has been recognised in
respect of deferred consideration receivable on the disposal of a retail pharmacy. These amounts were released
in the year following a review of expected performance against earn-out targets.
6
Operating profit
Operating profit is stated after charging/(crediting):
Directors’ remuneration
» Emoluments
» Defined contribution pension*
» Fees
Depreciation (note 13)
Amortisation of computer software (note 12)
Amortisation of trademarks (note 12)
Profit on disposal of property, plant and equipment (note 5)
2019
€’000
2,528
103
558
15,911
2,363
31
-
*Defined contribution pension costs included in Directors’ remuneration which were charged to the Group
Income Statement relate to pension contributions relating to two Directors (2018: two).
2018
€’000
2,160
142
325
4,610
2,597
29
(138)
135
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 6
Operating profit (continued)
7 Finance (income)/cost
Auditors’ remuneration (including expenses) for the statutory audit of the Group’s financial statements, subsidiary
financial statements and other services carried out for the Group by the Company’s auditors and subsidiary
auditors. Included in fees payable for the audit of Group accounts are total fees of €19,000 (2018: €19,000)
which are due to the Group’s auditor in respect of the Parent Company. The non-audit services performed by
PwC during the year largely related to advisory work in connection with the IPO, due diligence and tax advice on
acquisitions completed during the year.
Group Auditors – PwC
» Audit of group accounts
» Tax compliance services
» Tax advisory services
» Other non-audit services
Subsidiary company auditors – Non PwC
» Audit of subsidiary accounts
» Tax compliance services
» Other non-audit services
Operating lease rentals:
» Plant and equipment
» Other assets
» Buildings
Staff costs (including Directors):
» Wages and salaries
» Social welfare costs
» Pension costs (note 27)
2019
€’000
604
59
825
1,183
206
43
-
-
-
-
90,373
9,125
2,922
102,420
2018
€’000
535
183
130
959
152
36
-
490
1,506
4,761
56,955
5,945
1,558
64,458
The increase in staff costs is largely due to the acquisitions completed in the current year, and the full year impact
of the acquisitions which were completed in 2018.
Employees
The average number of persons employed by the Group
(including Directors) during the year was as follows:
Administration
Selling, distribution and warehouse
2019
Number
2018
Number
664
1,175
1,839
465
857
1,322
136
Interest payable on borrowings repayable within five years
Fair value adjustment to deferred and deferred contingent consideration on
investments
Fair value adjustment on facility termination fee
Amortisation of re-financing transaction fees
Net interest (income)/expense from pension scheme liabilities (note 27)
Interest receivable
Other fair value adjustments
Interest on lease obligations
Finance cost before exceptional credit
Decrease in fair value deferred contingent consideration (note 5)
Exercise of derivative financial instrument (note 5)
Re-financing costs (note 5)
Exceptional credit recognised in finance cost
Finance cost
2019
€’000
3,871
1,725
(122)
282
(15)
(24)
126
2,637
8,480
(5,251)
(1,765)
285
(6,731)
1,749
2018
€’000
2,794
1,238
371
127
23
(31)
-
-
4,522
-
-
-
-
4,522
8
Profit on disposal of subsidiary undertakings
There were no disposals of subsidiary undertakings during 2019. During 2018, the Group fully disposed of its
shareholdings in the following companies:
» IPOS Holding 63 Limited (66.0% shareholding);
» IPOS Holding 162 Limited (72.4% shareholding).
The disposals in 2018 by way of share redemption were in line with the relevant IPOS shareholding agreements.
The profit on disposal resulting from these transactions was €855,000 on total proceeds of €937,000 (inclusive
of deferred consideration amounting to €282,000). This amount included goodwill ascribed to these pharmacies
of €1,586,000 (cost: €4,245,000 less impairment of €2,659,000) (note 12) and net liabilities on disposal were
€1,504,000.
Profit on disposal of subsidiary undertakings
Consideration receivable
Net liabilities disposed of
Disposal of goodwill (note 12)
Profit on disposal of subsidiary undertakings
2019
€’000
2018
€’000
-
-
-
-
937
1,504
(1,586)
855
137
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 9
Income tax expense
9
Income tax expense (continued)
Recognised in the Income Statement:
Current income tax
Republic of Ireland
Overseas
Total current income tax expense
Deferred income tax
Origination and reversal of temporary differences:
Property, plant and equipment
Employee benefits
Tax losses and other differences
Total deferred income tax expense
Total income tax expense
The total income tax expense for the financial year is analysed as follows:
Continuing operations
2019
€’000
2018
€’000
2,914
1,748
4,662
235
82
558
875
894
746
1,640
(72)
227
804
959
5,537
2,599
5,537
5,537
2,599
2,599
Factors affecting the tax expense in future years
In addition to the Republic of Ireland, the Group has operations in the overseas tax jurisdictions of the UK, the
Netherlands, the Nordics and the USA. 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.
The UK statutory corporation tax rate of 19% will be progressively reduced to 17% by 1 April 2020.
The Netherlands standard corporate income tax rate of 25% will be reduced to 21.7% from 1 January 2021.
The Swedish corporate income tax rate of 21.4% will be reduced to 20.6% from 1 January 2021.
Reconciliation of effective tax rate
Profit on ordinary activities before tax
2019
€'000
2018
€'000
26,458
11,304
Profit on ordinary activities multiplied by standard rate of corporation tax in the
Republic of Ireland of 12.5%
3,307
1,413
Effects of
Disallowable expenses
Impairment provision
Higher overseas income tax rates
Income not taxable
Utilisation of tax losses not previously recognised
Tax base asset adjustments in respect of prior years
Under-provision of corporation tax in prior year
Total income tax expense for the year
1,030
15
653
(2)
(256)
478
312
5,537
1,355
70
245
(317)
(286)
115
4
2,599
10 Result for the financial year
The profit recorded in the financial statements of the Company for the year ended 31 December 2019 was
€42,933,000 (2018: loss €7,267,000). As permitted by Section 304 of the Companies Act 2014, the Income
Statement of the Company has not been separately presented in the financial statements.
11
Dividends
There were no dividends paid in the current year ended 31 December 2019, or the prior year ended
31 December 2018.
The Directors have proposed a final dividend of 0.73 cent per ordinary share, subject to approval at the Annual
General Meeting. This results in a total shareholder dividend of €2.0m in respect of the period from IPO to 31
December 2019. The proposed dividend will be paid to ordinary shareholders on the Company’s register on 1
May 2020. This dividend has not been provided for in the Balance Sheet at 31 December 2019, as there was no
present obligation to pay the dividend at year end.
138
139
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 12 Intangible assets
12 Intangible assets (continued)
Cost
At 1 January 2018
Foreign exchange movements
Acquisitions
Additions
Disposals/retirements (note 8)
Computer
software
€’000
Trademark
Goodwill
Total
€’000
€’000
€’000
29,822
(1)
474
2,015
-
732
(4)
-
-
(575)
88,780
(492)
134,883
-
(4,245)
119,334
(497)
135,357
2,015
(4,820)
At 31 December 2018
32,310
153
218,926
251,389
At 1 January 2019
Foreign exchange movements
Acquisitions (note 35)
Additions
Disposals/retirements
At 31 December 2019
Accumulated amortisation
At 1 January 2018
Amortisation
Provision for impairment
Disposals/retirements
At 31 December 2018
At 1 January 2019
Amortisation
Disposals/retirements
At 31 December 2019
Net book amounts
At 31 December 2018
At 31 December 2019
32,310
4
-
861
(66)
33,109
23,045
2,597
-
-
25,642
25,642
2,363
(66)
27,939
6,668
5,170
153
-
-
-
-
153
145
29
-
(114)
218,926
3,440
67,070
-
-
251,389
3,444
67,070
861
(66)
289,436
322,698
21,054
-
314
(2,659)
44,244
2,626
314
(2,773)
60
18,709
44,411
60
31
-
91
93
62
18,709
-
-
44,411
2,394
(66)
18,709
46,739
200,217
206,978
270,727
275,959
Acquisitions of €67,070,000 comprise the following transactions:
» Goodwill of €34,350,000 arising on the acquisition of 100% controlling interest in Durbin plc, and Durbin inc
(“Durbin”) (note 35).
» Goodwill of €12,808,000 arising on the acquisition of 100% controlling interest in M3 Medical Limited
(note 35).
» Goodwill of €11,173,000 arising on the acquisition of 100% controlling interest in EPS Vascular AB, EP
Endovascular AB and EPS Vascular OY, together “EPS Group” (note 35).
» Goodwill of €5,446,000 arising on the acquisition of 100% controlling interest in 15 Inischem retail pharmacies
(note 35).
» Goodwill of €1,887,000 arising on the acquisition of 100% controlling interest in Gort Road Pharmacy Limited
(note 35).
» Goodwill of €1,406,000 arising on the acquisition of 100% controlling interest in Regional Pharmacy Limited
(note 35).
The Group continues to have a registered trademark known as Life Pharmacy. This trademark is used by
customers of Uniphar who operate under the common symbol of Life Pharmacy and this trademark symbol is a
central part of developing the Life brand. Amortisation of this trademark commenced in 2017.
Cash-generating units
Goodwill acquired in business combinations is allocated, at acquisition, to the cash-generating units (‘CGUs’)
that are expected to benefit from that business combination, based on the Group’s existing CGUs or where more
appropriate the recognition of a new CGU. The CGUs represent the lowest level at which the associated goodwill
is assessed for internal management purposes and are not larger than the operating segments determined in
accordance with IFRS 8 Operating Segments.
As disclosed in Note 35 the initial accounting for the business combinations completed during the year has been
determined provisionally. As a result, the allocation of the goodwill recognised in 2019 to CGUs has not been
finalised. For 31 December 2019 the goodwill arising on business combinations completed during 2019 has been
tested for impairment by reference to the CGUs determined in accordance with the businesses acquired. For the
acquisitions completed in Q4 of 2019, which have not yet been allocated to CGUs, a market-based approach
has been used given the recent transaction date.
At 31 December 2018, the goodwill arising on the acquisitions of Angiocare B.V. and Bradleys Pharmacy Group
had not been finalised and remained unallocated. In 2019, the goodwill arising on the acquisition of Angiocare
B.V. was allocated to the Commercial & Clinical MedTech CGU, and the goodwill arising on the acquisition of
Bradleys Pharmacy Group was allocated to the Retail Pharmacies CGU, based on the CGUs that are expected
to benefit from that business combination. Following the creation of the Commercial & Clinical MedTech CGU in
2019, the goodwill attributable to the 2018 acquisition of Macromed (UK) Limited was re-allocated to Commercial
& Clinical MedTech, being the CGU that is expected to benefit from that business combination.
During 2019, the goodwill arising on the acquisition of Durbin was allocated to the Product Access CGU, and the
goodwill arising on the acquisition of the 15 Inischem retail pharmacies was allocated to the Retail Pharmacies
CGU, based on the CGUs that are expected to benefit from that business combination. In 2020, it is expected
that the goodwill arising on the acquisitions of EPS Group and M3 Medical Limited will be allocated to the
Commercial & Clinical MedTech CGU, and it is expected that the goodwill arising on the acquisitions of Gort
Road Pharmacy Limited and Regional Pharmacy Limited will be allocated to the Retail Pharmacies CGU, based
on the CGUs that are expected to benefit from that business combination.
140
141
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 12 Intangible assets (continued)
12 Intangible assets (continued)
Commercial & Clinical MedTech (previously called Sisk Healthcare Group)
Supply Chain Services
Commercial & Clinical Pharma (previously called Commercial & Clinical)
Retail Pharmacies
Product Access
IPOS Pharmacies
Acquisitions not yet allocated to CGUs
2019
€’000
127,158
37,372
19,009
22,248
37,666
-
27,274
2018
€’000
113,308
37,372
24,322
8,351
1,245
558
15,061
Net book value of goodwill at 31 December 2019
270,727
200,217
Impairment testing of goodwill
Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. An
impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or groups of assets (CGUs).
The recoverable amount of each CGU is determined based on value-in-use calculations. The carrying value of
each CGU is initially compared to its estimated value-in-use. There were no impairments during the year (2018:
€314,000).
As part of this assessment the Group continued to review the carrying value of goodwill associated with
subsidiary companies previously acquired as at 31 December 2019.
Value-in-use Calculations
The value-in-use is calculated on the basis of estimated future cash flows discounted to present value. Estimated
future cash flows were determined by reference to the budget for the period 2020 to 2021 and management
forecasts for each of the following years from 2022 to 2024 inclusive. The terminal value was calculated using
a long-term growth rate in respect of the years after 2024. The estimates of future cash flows were based on
consideration of past experience together with an assessment of the future prospects for each of the businesses
within the CGUs. The assumptions used are also referenced against external industry data.
The key assumptions used in the value-in-use calculations are the discount rate, the long term growth rate, and
the cash flow forecasts. The pre-tax discount rates used were based on the Group’s estimated weighted average
cost of capital, adjusted to reflect risks associated with each CGU. The discount rate applied for each CGU was
determined to be between 10.6% and 11.0%. The rate applied for the purpose of the Group impairment testing
was 11.0%. In determining the terminal value of the value-in-use, it was assumed that cash flows after the first
five years will increase at a long term growth rate ranging from 2.1% to 2.5%. The rate assumed was based on
an assessment of the likely long term growth prospects of the individual CGUs based on the weighted average
growth rate by geographies in which the CGU operates.
The value-in-use calculations assume that the markets in which each CGU operates will grow in accordance
with publicly available data, the Group will maintain its current market share, gross margin percentage 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.
Fair value less cost of disposal calculations
The fair value less cost of disposal calculations are only prepared when the value-in-use calculations indicate a
potential impairment. At the Balance Sheet date this comparison did not indicate any potential impairment.
The fair value less costs of disposal is calculated as the maintainable EBITDA of each CGU multiplied by the
appropriate EBITDA valuation multiple attributable to that CGU. The fair value measurement is considered a
Level 3 fair value based on certain unobservable pricing inputs.
Sensitivity Analysis
The Group has conducted a sensitivity analysis on each of the CGUs by applying the following sensitivities;
decreasing free cash flows by 10%, increasing discount rates by 1%, and reducing long-term growth rates by 1%.
This analysis resulted in an excess in the recoverable amount over their carrying amount under each approach
for all CGUs. Management believe that any reasonable change in any of the key assumptions would not cause
the carrying value of goodwill to exceed the recoverable amount.
142
143
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 0
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145
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements
13 Property, plant and equipment, and assets held for sale
13 Property, plant and equipment, and assets held for sale
(continued)
COMPANY
Cost
At 1 January 2018
Disposals
At 31 December 2018
Adoption of IFRS 16
At 1 January 2019
Additions
Disposals
Freehold
land and
buildings
€’000
Plant and
equipment
Total
€’000
€’000
4,408
(4,408)
-
50,442
50,442
-
-
-
-
-
153
153
-
-
4,408
(4,408)
-
50,595
50,595
-
-
(continued)
13(b) Assets held for sale
GROUP
At 1 January 2018
Acquisitions
At 31 December 2018
At 1 January 2019
Acquisitions (note 35)
Disposals
At 31 December 2019
Properties
€’000
-
4,000
4,000
4,000
-
(415)
3,585
Other
assets
€’000
-
-
-
-
4,400
-
4,400
Total
€’000
-
4,000
4,000
4,000
4,400
(415)
7,985
At 31 December 2019
50,442
153
50,595
Accumulated depreciation
At 1 January 2018
Charge for the year
Disposals
At 31 December 2018
At 1 January 2019
Charge for the year
Disposals
At 31 December 2019
Net book amounts
At 31 December 2018
At 31 December 2019
Reconciliation to Balance Sheet
Property, plant & equipment
Right-of-use assets
Net book value at 31 December 2019
422
53
(475)
-
-
3,162
-
3,162
-
47,280
-
47,280
47,280
-
-
-
-
-
98
-
98
-
55
-
55
55
422
53
(475)
-
-
3,260
-
3,260
-
47,335
-
47,335
47,335
In 2018, a number of properties were acquired on completion of the acquisition of Bradley’s Pharmacy Group.
These properties are presented in the Balance Sheet at the lower of their carrying amount and fair value less
any costs to sell. Uniphar plc acquired Bradley’s Pharmacy Group from examinership in November 2018, and in
accordance with the application of the examinership scheme arrangement acquired non-recourse borrowings of
€4,000,000 which are secured by these properties.
During 2019, the Group disposed of €415,000 of properties which were previously held for sale. The remaining
properties held for sale are available for immediate sale in their present condition subject to terms that are usual
and customary for properties of this nature. The individual properties are being actively marketed and the Group
is committed to its plan to sell these properties in an orderly manner.
The other assets acquired during 2019 relates to certain business assets acquired as part of the acquisition of
M3 Medical Limited. These assets have been disposed of post year end in February 2020 for an amount equal to
their carrying value, and the deferred contingent consideration attributable to the sale of these assets has now
been paid.
146
147
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 14 Financial assets
14 Financial assets (continued)
Investments in
equity instruments
Shares in
unlisted
companies
Total
€’000
€’000
Long term receivables
Loans to
IPOS
entities
and other
loans
€’000
Total
Loans to
retail
holding
companies
€’000
€’000
353
-
-
353
353
-
353
328
-
328
328
328
25
25
353
-
-
353
353
-
353
328
-
328
328
328
25
25
17
-
-
17
17
-
17
17
-
17
17
17
-
-
10,012
5,500
(763)
10,029
5,500
(763)
14,749
14,766
14,749
(5,500)
14,766
(5,500)
9,249
9,266
10,012
(763)
10,029
(763)
9,249
9,266
9,249
9,266
9,249
9,266
5,500
5,500
-
-
GROUP
Cost
At 1 January 2018
Additions
Cash payments received
At 31 December 2018
At 1 January 2019
Disposal
At 31 December 2019
Provision for impairment
At 1 January 2018
Reversal of previous impairment
At 31 December 2018
At 1 January 2019
At 31 December 2019
Net book amounts
At 31 December 2018
At 31 December 2019
Investments in equity
instruments
Long term receivables
Shares in
subsidiary
companies
Shares in
unlisted
companies
Total
€’000
€’000
€’000
Loans to
IPOS
entities
and other
loans
€’000
92,770
156,504
(816)
-
248,458
248,458
41,844
-
290,302
1,941
(156)
105
-
1,890
1,890
1,890
246,568
288,412
224
-
-
-
224
224
-
-
224
199
-
-
-
199
199
199
25
25
224
-
-
-
224
224
-
-
224
199
-
-
-
199
199
199
25
25
17
-
-
-
17
17
-
-
17
17
-
-
-
17
17
17
-
-
Total
Loans to
retail
holding
companies
€’000
€’000
10,012
5,500
-
(763)
10,029
5,500
-
(763)
14,749
14,766
14,749
-
(5,500)
14,766
-
(5,500)
9,249
9,266
10,012
-
-
(763)
10,029
-
-
(763)
9,249
9,266
9,249
9,266
9,249
9,266
5,500
5,500
-
-
COMPANY
Cost
At 1 January 2018
Additions
Disposals
Cash payments received
At 31 December 2018
At 1 January 2019
Additions
Disposal
At 31 December 2019
Provision for impairment
At 1 January 2018
Disposals
Provision for diminution in value
Reversal of previous impairment
At 31 December 2018
At 1 January 2019
At 31 December 2019
Net book amounts
At 31 December 2018
At 31 December 2019
148
149
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 14 Financial assets (continued)
The main movements in financial assets in 2019 are set out below:
GROUP AND COMPANY
Shares in unlisted companies
The fair value of €25,000 (2018: €25,000) is represented solely by the Group’s investment in Independent Life
Pharmacy plc (Life) comprising of 69 A ordinary shares of €0.01 each and 25,000 C shares of €1.00 each. The C
shares are non – voting and do not confer any dividend entitlement. Independent Life Pharmacy plc represents
the Life symbol group owned jointly by pharmacy owners through B shares and Uniphar plc through A shares.
The pharmacy owners nominate their own directors to the Life Board in addition to Uniphar nominees with the
pharmacy owner directors having the casting vote on all Board decisions through the office of Chairman.
Loans to IPOS entities and other loans
As part of the IPOS restructuring programme the retail holding companies, Riverchem DAC (Riverchem),
and Inischem DAC (Inischem), were formed to amalgamate and restructure the portfolio of pharmacies and
were aligned to their funding banks. The closing net book value is €nil (2018: €nil) and comprised of assigned
debt receivables.
Loans to retail holding and management companies
During 2018, Uniphar plc, acquired the Bank of Ireland loan associated security debt in Inischem for a cash
consideration of €5,500,000. Following the acquisition of the Bank of Ireland debt in Inischem, €763,000 was
recovered relating to amounts due from Inischem which had previously been provided for. The recovery of this
debt was recorded as an exceptional gain in administrative expenses.
The historic value of the loans advanced to Riverchem and Inischem at year-end is €13,225,000 being
€13,988,000 directly advanced, less cash proceeds received in 2018 of €763,000. During 2019, the loan
receivable of €5,500,000 from Inischem was disposed of and cash payments of €5,359,000 received in final
settlement of the balance, and the remaining unpaid balance of €141,000 was written off.
As at 31 December 2019, the Group has recognised a cumulative historic impairment provision of €13,225,000
(2018: €13,225,000).
At year-end, the carrying value of amounts due from the retail holding companies amounted to €nil (2018:
€5,500,000).
COMPANY
Shares in subsidiary companies
Financial assets of the parent company, Uniphar plc, include shares in subsidiary companies with a net book
value of €288,412,000 (2018: €246,568,000). The main movement in 2019 consists of:
Additions:
» In July 2019, the Company acquired 100% of the ordinary share capital of Durbin plc, and Durbin inc
(“Durbin”), companies incorporated in the United Kingdom and the United States respectively.
15 Inventory
GROUP
Goods for resale
2019
€’000
2018
€’000
98,105
76,070
The replacement cost of inventories did not differ materially from the Balance Sheet amounts at 31 December
2019 and 31 December 2018.
Inventory stated above is net of impairment provision of €1,140,000 (2018: €748,000). Write-downs of inventories
recognised as an expense during 2019 amounted to €392,000 (2018: €76,000).
In 2019, goods for resale recognised as cost of sales amounted to €1,412,000,000 (2018: €1,242,000,000).
16 Trade and other receivables
Current trade and other receivables
GROUP
Trade receivables
Prepayments
Accrued income
Other receivables
Deferred consideration receivable
COMPANY
Trade receivables
Amounts due from subsidiaries
Prepayments
Accrued income
Other receivables
Value added tax
Corporation tax
Deferred consideration receivable
2019
€’000
2018
€’000
118,629
5,423
3,865
8,569
294
157,369
4,934
2,593
5,549
214
136,780
170,659
79
429,540
454
3
5,244
256
113
174
252
314,382
617
54
1,503
63
113
94
435,863
317,078
Amounts due from subsidiaries are unsecured, interest free and are repayable on demand.
Tax is repayable at various dates over the coming months in accordance with the applicable statutory provisions.
Details of the provision for impairment of trade and other receivables is outlined in note 32.
150
151
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 16 Trade and other receivables (continued)
17
Deferred tax asset
Non-current trade and other receivables
GROUP
Other receivables
Deferred consideration receivable
COMPANY
Deferred consideration receivable
Deferred consideration receivable
GROUP
Within one year
Between one and two years
COMPANY
Within one year
Between one and two years
2019
€’000
531
601
1,132
2018
€’000
681
1,425
2,106
138
308
2019
€’000
294
601
895
174
138
312
2018
€’000
214
1,425
1,639
94
308
402
The deferred consideration receivable of €895,000 relates to contractual amounts due from the disposal of
Uniphar International Holdings Limited, IPOS Holding 158 Limited, IPOS Holding 162 Limited and pharmacies
disposed by Lindchem DAC.
The 2018 deferred consideration receivable of €1,639,000 relates to contractual amounts due from the disposal
of Uniphar International Holdings Limited, IPOS Holding 158 Limited, IPOS Holding 63 Limited, IPOS Holding
162 Limited and pharmacies disposed by Lindchem DAC.
The following is an analysis of the movement in the major categories of deferred tax assets recognised by the
Group for the years ended 31 December 2019 and 2018:
Employee
benefits
€’000
Property
plant and
equipment
€’000
Tax losses
and other
differences
€’000
Other
Total
€’000
€’000
GROUP
At 1 January 2018
Reclassification
Acquisitions
Recognised in Income Statement
Recognised in Other Comprehensive Income
Translation adjustment
At 31 December 2018
At 1 January 2019
Reclassification
Acquisitions
Recognised in Income Statement
Recognised in Other Comprehensive Income
Translation adjustment
At 31 December 2019
236
6
-
(227)
(54)
-
(39)
(39)
(4)
-
(82)
151
-
26
462
4
405
72
-
2
945
945
(13)
(74)
(235)
-
(4)
619
6,985
(10)
30
(804)
-
(4)
6,197
6,197
17
111
(558)
-
12
-
-
-
-
-
-
-
7,683
-
435
(959)
(54)
(2)
7,103
-
-
(1,452)
-
-
-
7,103
-
(1,415)
(875)
151
8
5,779
(1,452)
4,972
The deferred tax asset in relation to losses reflects the Group’s expected utilisation of carried forward trading
losses in respect of its pharmaceutical wholesale and agency businesses.
Other deferred tax liabilities relate to the tax liability expected to be incurred on the disposal of certain business
assets recognised on the acquisition of M3 Medical Limited. See note 13 for further details of these assets.
The Group has an unrecognised deferred tax asset of €6,701,000 (2018: €6,856,000) arising from losses carried
forward. The Directors believe sufficient taxable profits to utilise this potential asset may arise in the future, but
that there is currently insufficient evidence to support the recognition of a deferred tax asset. These balances
may be carried forward indefinitely under current tax law and are available for offset against future profits and
gains generated by the companies which hold the losses.
152
153
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 17
Deferred tax asset (continued)
COMPANY
At 1 January 2018
Recognised in Income Statement
At 31 December 2018
At 1 January 2019
Recognised in Income Statement
At 31 December 2019
Deferred
tax asset
€’000
2,370
16
2,386
2,386
338
2,724
The Company’s deferred tax asset relates primarily to the recognition of tax losses on its management services
trade and facility termination fee, and the Directors believe that sufficient taxable profits will arise in the future to
utilise these deferred tax assets.
18 Cash and cash equivalents and restricted cash
Cash and cash equivalents consists of the following:
GROUP
Cash at bank and in hand
Restricted cash deposits at call
COMPANY
Cash at bank and in hand
Restricted cash deposits at call
2019
€’000
2018
€’000
114,040
2,142
116,182
67,328
2,142
69,470
10,539
2,352
12,891
7,333
2,142
9,475
The restricted cash balance at 31 December 2019 relates to a rent deposit on the Citywest property.
154
18 Cash and cash equivalents and restricted cash (continued)
Reconciliation to Cash Flow Statement
The cash and cash equivalents shown in the Cash Flow Statement at the end of the financial year is reconciled
as follows:
GROUP
Cash and cash equivalents
COMPANY
Cash and cash equivalents
19 Trade and other payables
GROUP
Trade payables
Accruals
Other payables
Finance lease obligations
Corporation tax
PAYE/PRSI
Value added tax
Deferred acquisition consideration
2019
€’000
2018
€’000
114,040
10,539
67,328
7,333
2019
€’000
178,746
109,235
7,155
-
852
3,453
4,210
6,849
2018
€’000
141,206
97,259
6,061
216
292
2,484
3,326
5,566
310,500
256,410
Trade and other payables are payable at various dates in the next three months in accordance with the suppliers’
usual and customary credit terms.
Tax and social welfare costs are payable at various dates over the coming months in accordance with the
applicable statutory provisions.
COMPANY
Amounts owed to subsidiaries
Trade payables
Accruals
Other payables
PAYE/PRSI
Deferred acquisition consideration
2019
€’000
413,836
2,062
3,129
546
497
5,212
2018
€’000
383,090
2,236
3,490
2,090
228
5,400
425,282
396,534
155
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 19 Trade and other payables (continued)
Amounts owed to subsidiaries are unsecured, interest free and are repayable on demand.
Trade and other payables are payable at various dates in the next three months in accordance with the suppliers’
usual and customary credit terms.
Tax and social welfare costs are payable at various dates over the coming months in accordance with the
applicable statutory provisions.
Other non-current payables
GROUP
Deferred acquisition consideration
2019
€’000
2018
€’000
545
-
Deferred acquisition consideration
Total deferred acquisition consideration is payable in the following periods after 31 December in the Group
and Company:
GROUP
Within one year
Between one and two years
COMPANY
Within one year
2019
€’000
6,849
545
7,394
2018
€’000
5,566
-
5,566
5,212
5,400
Deferred acquisition consideration reflects the amounts payable relating to the acquisition of Cahill May Roberts
Limited in 2013, and Outico Limited. During 2019 payments were made in relation to deferred consideration on
the acquisition of the ostomy business and related assets of Murray’s Medical Limited.
As at 31 December 2019, deferred contingent consideration relating to the acquisition of Outico Limited is
no longer contingent on the pre-defined performance thresholds being satisfied and consequently has been
reclassified from deferred contingent consideration to deferred acquisition consideration.
20 Borrowings
The Group’s bank loans are repayable in the following periods after 31 December:
Amounts falling due within one year
Amounts falling due between one and five years
The Company’s bank loans are repayable in the following periods after
31 December:
Amounts falling due within one year
Amounts falling due between one and five years
2019
€’000
2018
€’000
22,583
66,977
81,753
84,018
89,560
165,771
16,827
65,796
82,623
6,218
82,622
88,840
The Group’s total bank loans at 31 December 2019 were €89,560,000 (2018: €165,771,000). Borrowing under
invoice discounting facilities as at the Balance Sheet date was €1,505,000 (2018: €70,847,000). Bank loans
falling due within one year include €3,585,000 (2018: €4,000,000) of loans arising on the acquisition of Bradley’s
Pharmacy Group which are secured by properties acquired on the acquisition which are classified as held for
sale. Following the disposal of these properties these loans are required to be repaid (note 13).
At 31 December, Group term loans and invoice discount funding are subject to an interest rate of Euribor +2%
(2018: Euribor +3%). The majority of Group term loans will be repaid over the period 2019 to 2023. A breakdown
of the maturity profile of the Group’s borrowings is provided in note 32.
The Company’s total bank loans at 31 December 2019 were €82,623,000 (2018: €88,840,000). At 31 December,
the loan is subject to an interest rate of Euribor +2% (2018: Euribor +3%). Principal repayments commenced on
Company loans in 2017 with final payment being made in 2023.
Bank security
Bank overdrafts (including invoice discounting) and bank loans of €89,560,000 (2018: €165,771,000) are secured
by cross guarantees and fixed and floating charges from the Company and certain subsidiary undertakings.
Of the total facilities, invoice discounting with recourse to the Company, are secured by way of assignment
of book debts to the bank. At the Balance Sheet date €1,505,000 (2018: €70,847,000) of invoice discounting
facilities were utilised by the Group.
156
157
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 21 Leases
(i) Amounts recognised in the Balance Sheet:
As at 31 December, the Balance Sheet shows the following amounts relating to leases;
Right-of-use assets:
Buildings
Plant and equipment
Motor vehicles
Lease liabilities:
Current
Non-current
2019
€’000
87,334
1,054
3,590
91,978
10,083
82,901
92,984
2018
€’000
-
-
-
-
-
-
-
Right-of-use assets are included in the line ‘Property, plant and equipment’ on the Balance Sheet, and are
presented in note 13.
Additions to the right-of-use assets during the year ended 31 December 2019 were €3,464,000.
Lease liabilities are presented separately on the face of the Balance Sheet. For adjustments recognised on
adoption of IFRS 16 on 1 January 2019, please refer to note 2.
The contractual maturity of the lease liabilities is presented in note 32.
(ii) Amounts recognised in the Income Statement:
The Income Statement shows the following amounts relating to leases;
Depreciation charge of right-of-use assets:
Buildings
Plant and equipment
Motor vehicles
Interest on lease obligations (note 7)
2019
€’000
6,291
516
2,671
9,478
2,637
2018
€’000
-
-
-
-
-
22 Provisions
GROUP
At 1 January
Unwinding of discount
Arising on acquisition
Reclassified
Utilised during the year
Released during the year
Foreign currency movement
At 31 December
Deferred
contingent
consideration
2019
€’000
Lease
dilapidation
Warranty
provision
Total
Total
2019
€’000
2019
€’000
2019
€’000
2018
€’000
51,811
1,939
33,966
(1,752)
(1,237)
(5,836)
1,920
80,811
269
-
-
-
(56)
-
-
213
62
-
-
-
(21)
-
4
52,142
1,939
33,966
(1,752)
(1,314)
(5,836)
1,924
10,550
1,111
42,935
-
(2,177)
-
(277)
45
81,069
52,142
Deferred contingent consideration
Deferred contingent consideration represents the present value of deferred contingent acquisition consideration
which would become payable based on pre-defined profit thresholds being met. During the year payments
of €1,237,000 were made in respect of prior year acquisitions. Deferred contingent consideration relating to
the acquisition of Outico Limited is no longer contingent on the pre-defined performance thresholds being
satisfied and consequently has been reclassified to deferred consideration. Deferred contingent consideration
of €5,836,000 in respect of prior year acquisitions was released in the year following a review of expected
performance against earn-out targets (Note 5). Further details on the measurement of deferred contingent
consideration is provided in note 32. The balance at 31 December 2019 relates to the following acquisitions:
» Dialachemist Limited (2015)
» Macromed (UK) Limited (2018)
» Sisk Healthcare Group (2018)
» Angiocare B.V. (2018)
» Durbin plc and Durbin inc (“Durbin”) (2019)
» EPS Vascular AB, EP Endovascular AB and EPS Vascular OY (“EPS Group”) (2019)
» M3 Medical Limited (2019)
The deferred contingent consideration at 31 December 2018 related to the acquisition of the following:
» Dialachemist Limited (2015)
» Murray’s Medical Equipment Limited (2016)
» Outico Limited (2017)
» Clinical Pyramid Limited (2017)
» Macromed (UK) Limited (2018)
» Sisk Healthcare Group (2018)
» Angiocare B.V. (2018)
The maturity profile of the deferred contingent consideration at 31 December 2019 is outlined in note 32.
158
159
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 22 Provisions (continued)
23 Called up share capital
Lease dilapidation
The lease dilapidation provision covers the cost of reinstating certain Group properties at the end of the lease
term. This is based on the terms of the individual leases which set out the conditions relating to the return of
property. The timing of the outflows will match the ending of the relevant leases with various dates up to 2042.
Warranty provision
The warranty provision relates to a product warranty provided to customers on certain medical devices.
The estimated cost of the warranty is provided for upon recognition of the sale of the product. The costs are
estimated based on actual historical experience of expenses incurred and on estimated future expenses related
to current sales and are updated periodically. Actual warranty costs are charged against the warranty provision.
COMPANY
At 1 January
Arising on acquisition
Charge to Income Statement
Foreign currency movement
At 31 December
Deferred
contingent
consideration
2019
€’000
Total
Total
2019
€’000
2018
€’000
34,817
18,847
1,296
1,425
34,817
18,847
1,296
1,425
-
34,446
371
-
56,385
56,385
34,817
Deferred contingent consideration represents the present value of deferred contingent acquisition consideration
which would become payable based on pre-defined profit thresholds being met. The balance at 31 December
2019 relates to the following acquisitions:
» Sisk Healthcare Group (2018)
» Durbin plc and Durbin inc (“Durbin”) (2019)
The deferred contingent consideration at 31 December 2018 related to the acquisition of the following:
» Sisk Healthcare Group (2018)
GROUP AND COMPANY
Authorised:
300 million (2018: 240 million) ordinary shares of 8c each
16 million (2018: 16 million) “A” ordinary shares of 8c each
Movement in the year in issued share capital
Allotted, called up and fully paid presented as equity
At 1 January – 112,838,580 (2018: 111,437,842) ordinary shares of 8c each
Issued during the year – 139,992,116 (2018: 1,400,738) ordinary shares of 8c each
Fully called during the year – 20,184,558 (2018: nil) ordinary shares of 8c each
At 31 December – 273,015,254 (2018: 112,838,580) ordinary shares of 8c each
Allotted, called up and partly paid presented as equity
At 1 January – 19,315,951 (2018: 7,022,318) ordinary shares of 8c each
Issued during the year – 868,607 (2018: 12,293,633) ordinary shares of 8c each
Fully called during the year – 20,184,558 (2018: nil) ordinary shares of 8c each
At 31 December – nil (2018: 19,315,951) ordinary shares of 8c each
2019
€’000
24,000
1,280
25,280
9,027
11,199
1,615
21,841
386
17
(403)
-
2018
€’000
19,200
1,280
20,480
8,915
112
-
9,027
140
246
-
386
Total allotted share capital:
At 31 December – 273,015,254 (2018: 132,154,531) ordinary shares
21,841
9,413
There are no “A” ordinary shares in Uniphar plc issued at 31 December 2019, or 31 December 2018.
Allotted, called up and partly paid shares are represented by issues to the Senior Management Team under the
Uniphar Executive Share Incentive Scheme (note 28).
In June 2019, following the passing of a resolution at the Annual General Meeting, the authorised share capital
of the Company was increased from €20,480,000 divided into 240,000,000 ordinary shares of 8c each and
16,000,000 “A” ordinary shares of 8c each, to €25,280,000 divided into 300,000,000 ordinary shares of 8c each
and 16,000,000 “A” ordinary shares of 8c each.
160
161
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 23 Called up share capital (continued)
During 2019, the following transactions took place:
» The conditions for vesting associated with 7,022,318 shares were met and the Company called €0.06 being
the amount unpaid on each share. These shares are now fully paid and the Company received €422,000 in
share proceeds (fully paid shares amounting to €562,000 less amount previously partly paid of €140,000).
» In May 2019, 750,000 ordinary shares were issued as partly paid at €0.02 per share under the Uniphar
24 Share premium
GROUP AND COMPANY
Premium arising on shares issued
2019
€’000
2018
€’000
176,501
22,489
Executive Share Incentive Scheme.
» In June 2019, a further 118,607 ordinary shares were issued as partly paid at €0.02 per share under the
Uniphar Executive Share Incentive Scheme. Collectively, the Company received €17,000 in proceeds
associated with both share issues.
» In June 2019, the Company made a call in respect of unpaid share capital, being an amount of €0.06 per
share, on 300,000 issued but not fully paid ordinary shares. These shares while remaining subject to vesting
conditions are now fully paid. The Company received €18,000 as a result of the call, which when aggregated
with the €0.02 originally paid up on each of those shares, gives a total paid up amount in respect of those
shares of €24,000.
» In July 2019, the Company made a call in respect of unpaid share capital, being an amount of €0.06 per share,
on 12,862,240 issued but not fully paid ordinary shares. These shares while remaining subject to vesting
conditions are now fully paid. The Company received €772,000 as a result of the call, which when aggregated
with the €0.02 originally paid up on each of those shares, gives a total paid up amount in respect of those
shares of €1,029,000.
» In July 2019 as part of its admission to trading on the AIM and Euronext Growth markets, the Company
issued 117,391,304 ordinary shares of €0.08 each as fully paid at €1.15 per share including share premium.
In addition, following the receipt of a notice of exercise, the Company issued 18,782,808 ordinary shares
of €0.08 each at €1.37 per share including share premium in full exercise and conversion of its 2018 issued
share warrant.
» In August 2019 as part of the exercising of the over-allotment option attributable to the initial public offering,
the Company issued 3,818,004 ordinary shares of €0.08 each as fully paid at €1.15 per share including
share premium.
During 2018, the following transactions took place:
» In April 2018, 11,568,633 ordinary shares were issued as partly paid at €0.02 per share under the Uniphar
Executive Share Incentive Scheme.
» In August 2018, 1,400,738 deemed fully paid ordinary shares were issued for non-cash consideration on
completion of the acquisition of Sisk Healthcare Group.
» In October 2018, a further 725,000 ordinary shares were issued as partly paid at €0.02 per share under the
Uniphar Executive Share Incentive Scheme.
The increase in share premium during 2019 relates to the issuance of shares as part of its admission to trading on
the AIM and Euronext Growth markets, the exercising of the over-allotment option attributable to the initial public
offering, and the exercise of the share warrant. See note 23 for further details.
25 Other reserves
GROUP
Property revaluation reserve
Foreign currency translation reserve
Capital redemption reserve
COMPANY
Capital redemption reserve
2019
€’000
700
2,704
60
3,464
60
60
2018
€’000
700
(1,111)
60
(351)
60
60
Property revaluation reserve
The property revaluation reserve arose on the revaluation of freehold land and buildings. When revalued land
and buildings are sold, the portion of the property revaluation reserve that relates to that asset will be transferred
directly to retained earnings. During 2018 the Company disposed of property and the revaluation reserve that
relates to that asset was realised and transferred directly to retained earnings.
Foreign currency translation reserve
The foreign currency translation reserve comprises of all foreign exchange differences arising from the translation
of the net assets of the Group’s non-Euro 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.
Capital redemption reserve
The capital redemption reserve is a legal reserve which has arisen from the Company buying back and cancelling
its ordinary shares in 2013.
162
163
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 26 Retained earnings
GROUP
At 1 January 2018
Profit for the financial year
Other comprehensive expense relating to the financial year
Transfer of revaluation reserve
At 31 December 2018
At 1 January 2019
Profit for the financial year
Other comprehensive expense relating to the financial year
Costs associated with the issue of ordinary share capital
At 31 December 2019
COMPANY
At 1 January 2018
Loss for the financial year (note 10)
Transfer of revaluation reserve
Reclassification of foreign currency translation reserve
At 31 December 2018
At 1 January 2019
Profit for the financial year (note 10)
Costs associated with the issue of ordinary share capital
At 31 December 2019
27 Employee benefit obligation
€’000
(40,844)
8,642
(488)
700
(31,990)
(31,990)
21,026
(1,056)
(8,581)
(20,601)
1,367
(7,267)
700
(821)
(6,021)
(6,021)
42,933
(8,581)
28,331
The pension entitlements of employees, including Executive Directors, arise under two defined benefit schemes
and three defined contribution schemes and are secured by contributions by the Group to separate trustee
administered pension funds in the Republic of Ireland. The trustees are responsible for the management and
governance of the plans including compliance with all relevant laws and regulations. The benefits provided by the
defined benefit plans are no longer linked to future salary inflation due to the accrual of pension benefit ceasing
on these schemes in prior years. The Uniphar Superannuation Scheme wound up with an effective date of 1
October 2018. The assets of the scheme were distributed in line with members chosen options and no assets or
liabilities remain. Any former members of these schemes still employed by the Group were offered membership
of the Uniphar Group Retirement Benefits Scheme for future service benefits.
The defined benefit schemes are:
» The Cahill May Roberts Limited Contributory Pension Plan
» The Whelehan Group Pension Scheme
» The Uniphar Superannuation Scheme (wound up on 1 October 2018)
27 Employee benefit obligation (continued)
The pension charge for the year is €2,922,000 (2018: €1,558,000) comprising current service cost of €44,000
(2018: €185,000) and defined contribution scheme costs of €2,878,000 (2018: €1,373,000). The net finance
income resulting from the scheme deficit/surplus is €15,000 (2018: net finance cost of €23,000).
The funding requirements in relation to the Group’s defined benefit schemes are assessed in accordance with the
advice of independent qualified actuaries and valuations are prepared at triennial intervals. Annual contributions
are based on the advice of professionally qualified actuaries using the projected unit method. The actuarial
valuation reports are available for inspection by members of the schemes at the registered office of the Company
but are not available for public inspection.
An updated actuarial valuation for the purposes of International Accounting Standards 19 “Employee Benefits”
(IAS 19) was carried out as at 31 December 2019 by a qualified independent actuary in respect of the Group
pension schemes.
Financial instruments held by the defined benefit schemes
At 31 December 2019 the scheme assets were invested in a diversified portfolio that consisted primarily of
equity and debt securities. Scheme assets do not include any of Uniphar plc’s own financial instruments, nor any
property occupied by Uniphar plc. The fair value of the schemes’ assets at the Balance Sheet date are shown
as follows:
Equities – Investments in quoted active markets
Bonds – Investments in quoted active markets
Cash
Other
Principal actuarial assumptions at the Balance Sheet date
The main financial assumptions used were:
Rate of increase in pensionable salaries
Rate of increase in pensions in payment
Discount rate
Inflation rate
Fair value
2019
€’000
4,954
15,127
301
2,128
22,510
2018
€’000
6,702
12,101
125
2,223
21,151
2019
2018
0.0% - 2.5%
0.0%
0.9%
1.4%
0.0% - 2.5%
0.0%
1.95%
1.5%
Investigations have been carried out within the past three years into the mortality experience of the Group’s major
schemes. These investigations concluded that the current mortality assumptions include sufficient allowance for
future improvements in mortality rates. The assumed life expectations on retirement at age 65 are 21.7 (2018:
21.5) years for males and 24.1 (2018: 24.0) years for females.
164
165
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements
27 Employee benefit obligation (continued)
27 Employee benefit obligation (continued)
The following amounts at the Balance Sheet dates were measured in accordance with the requirements of
IAS 19:
Present value of scheme liabilities
Fair value of scheme assets
2019
€’000
2018
€’000
(22,555)
22,510
(20,712)
21,151
Pension (liability)/asset resulting from employee benefit obligation
(45)
439
The amounts recognised in the Income Statement for the year ended 31 December are as follows:
Movement in scheme assets and liabilities
At 1 January 2018
Current service cost
Settlement gain
Employer contributions paid
Contributions paid by plan participants
Interest on scheme liabilities
Interest on scheme assets
Actuarial (loss)/gain in current year
Benefits (paid)/settled
Pension
assets
Pension
liabilities
€’000
€’000
Pension
surplus
/(deficit)
€’000
31,223
-
-
2,415
23
-
574
(716)
(12,368)
(33,044)
(185)
487
-
(23)
(597)
-
282
12,368
(1,821)
(185)
487
2,415
-
(597)
574
(434)
-
Charged to operating profit
Current service cost
Credited/(charged) to finance cost
Interest on pension scheme assets
Interest on pension scheme liabilities
Net finance income/(cost)
2019
€’000
2018
€’000
(44)
(185)
395
(380)
15
574
(597)
(23)
The actual return on scheme assets is gain of €3,185,000 (2018: loss of €142,000).
The amounts recognised in the Statement of Comprehensive Income for the year ended 31 December 2019 are
as follows:
Analysis of amount recognised in Statement of Comprehensive Income
Actual return less amounts included in interest and expense
Experience (losses) / gains arising on the scheme liabilities
Changes in financial assumptions underlying the present value of the scheme
assets and liabilities
Actuarial loss in the year
Expected contributions for the year ended 31 December 2020 are €245,000.
2019
€’000
2,790
(228)
(3,769)
(1,207)
2018
€’000
(716)
1
281
(434)
166
At 31 December 2018
21,151
(20,712)
439
At 1 January 2019
Current service cost
Employer contributions paid
Interest on scheme liabilities
Interest on scheme assets
Actuarial gain/(loss) in current year
Benefits (paid)/settled
21,151
-
752
-
395
2,790
(2,578)
(20,712)
(44)
-
(380)
-
(3,997)
2,578
439
(44)
752
(380)
395
(1,207)
-
At 31 December 2019
22,510
(22,555)
(45)
All of the scheme liabilities arise from schemes that are wholly or partly funded.
The weighted average duration of the defined benefit obligation at 31 December 2019 is approximately 17 years
(2018: approximately 17 years).
Amounts for the current and previous years:
Present value of scheme liabilities
Fair value of scheme assets
2019
€’000
2018
€’000
(22,555)
22,510
(20,712)
21,151
Pension (obligation)/surplus from employee benefit obligations
(45)
439
Experience (losses)/gains on scheme liabilities
Amount (€’000)
Percentage of the present value of the scheme liabilities
Difference between the actual and expected return on scheme assets:
Amount (€’000)
Percentage of scheme assets
(228)
1.01%
1
0.00%
2,790
12.39%
(716)
3.39%
167
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 27 Employee benefit obligation (continued)
Defined contribution scheme
Included in accruals and other payables is an amount of €294,000 (2018: €224,000) due in relation to the defined
contribution schemes.
Sensitivity of results to actuarial assumptions
Actuarial assumptions to be used to calculate liabilities are ultimately the responsibility of the Directors of the
Group. This section illustrates the sensitivity of the Group defined benefit pension surplus at 31 December 2019.
The funded status of the pension plans and the amount recognised as a Group asset/(liability) at 31 December
2019 is compared to the corresponding amount with the assumptions varying as shown in the following table:
Current Discount
-0.25%
Discount
+0.25%
Inflation
-0.25%
Inflation
+0.25%
Life
expectancy
+1 year
Discount rate
Inflation
0.90% 0.65% 1.15% 0.90% 0.90%
1.40% 1.40% 1.40% 1.15% 1.65%
0.90%
1.40%
(Obligation)/Surplus
(45)
(1,127)
962
353
(459)
(946)
28 Employee share awards
Long term incentive plan
As set out in note 23, the Company operates a long term incentive plan for certain Executive Directors and
managerial employees under which conditional shares have been granted, subject to the achievement of
demanding Group performance measures and operational targets. The Company can redeem these shares if
certain criteria are not met.
As at 31 December 2019, the Company has allotted 13,162,240 ordinary shares of €0.08 each (2018: 21,101,146
shares) to members of the Uniphar executive management team under the long term incentive plan. During
2019, the decrease relates to 8,807,513 shares for which the vesting conditions attributable to the shares were
satisfied. An additional 868,607 ordinary shares were issued during the year under the Uniphar Executive Share
Incentive Scheme.
The long term incentive plan shares were allotted for an issue price of €0.08 per ordinary share. As at 31
December 2019, 13,162,240 shares (2018: 1,785,195 shares) were called up and fully paid.
As at 31 December 2019, the Company has no partly paid ordinary shares of €0.08 each in issue (2018:
19,315,951 shares). During 2019, the Company made a call in respect of unpaid share capital, being an amount
of €0.06 per share, on 13,162,240 issued but not fully paid ordinary shares. These shares while remaining subject
to vesting conditions are now fully paid. No charge to the Income Statement arises in either 2019 or 2018 in
respect of this arrangement.
29 Reconciliation of operating profit to cash flow
from operating activities
GROUP
Operating profit before operating exceptional items
Cash related exceptional items
Depreciation
Amortisation of intangible assets
Increase in inventory
Increase in receivables
Increase/(decrease) in payables
Foreign currency translation adjustments
2019
€’000
40,250
(7,075)
33,175
15,911
2,394
(14,889)
(17,656)
30,424
207
2018
€’000
25,001
(8,290)
16,711
4,610
2,626
(1,109)
(19,730)
(7,944)
(61)
Cash inflow/(outflow) from operating activities
49,566
(4,897)
COMPANY
Operating profit before operating exceptional items
Cash related exceptional items
Depreciation
Increase in receivables
Increase in payables
Foreign currency translation adjustments
54,363
(3,868)
50,495
3,260
(114,906)
28,652
598
1,652
(6,348)
(4,696)
53
(70,565)
99,930
(137)
Cash (outflow)/inflow from operating activities
(31,901)
24,585
168
169
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 30 Reconciliation of net cash flow to movement
in net bank cash/(debt)
GROUP
Increase in cash and overdrafts in the year (note 31)
Movement in restricted cash (note 31)
Cash flow from movement in borrowings (note 31)
Increase/(decrease) in net debt resulting from cash flows
Debt acquired during the year (note 31)
Debt disposed of during the year (note 31)
Movement in net bank cash/debt in the year
Net bank debt at beginning of year
Net bank cash/(debt) at end of year
COMPANY
Increase in cash and overdrafts in the year (note 31)
Cash flow from movement in borrowings (note 31)
Increase/(decrease) in net debt resulting from cash flows
Movement in net debt in the year
Net bank debt at beginning of year
Net bank debt at end of year
2019
€’000
2018
€’000
103,501
(210)
76,211
179,502
-
-
9,351
210
(102,634)
(93,073)
(11,500)
2,195
179,502
(152,880)
(102,378)
(50,502)
26,622
(152,880)
59,995
6,217
66,212
66,212
(79,365)
5,965
(77,590)
(71,625)
(71,625)
(7,740)
(13,153)
(79,365)
Acquisitions Disposals 31 December
2019
€’000
€’000
€’000
31 Analysis of changes in net debt
GROUP
Cash and cash equivalents
Restricted cash
1 January
2019
€’000
Cash
flow
€’000
10,539
2,352
96,641
(210)
12,891
96,431
Bank loans repayable within one year
Bank loans repayable after one year
(81,753)
(84,018)
59,170
17,041
Bank loans
(165,771)
76,211
6,860
-
6,860
-
-
-
Net bank cash/(debt)
(152,880) 172,642
6,860
Current lease obligations
Non-current lease obligations
(6,245)
(74,618)
(1,977)
6,734
(1,861)
(15,017)
Lease obligations
(80,863)
4,757
(16,878)
Net debt
(233,743) 177,399
(10,018)
-
-
-
-
-
-
-
-
-
-
-
114,040
2,142
116,182
(22,583)
(66,977)
(89,560)
26,622
(10,083)
(82,901)
(92,984)
(66,362)
1 January
2018
€’000
Cash
flow
€’000
Acquisitions
Disposals
€’000
€’000
31 December
2018
€’000
GROUP
Cash and cash equivalents
Restricted cash
1,188
2,142
(17,433)
210
3,330
(17,223)
27,014
-
27,014
Bank loans repayable within one year
Bank loans repayable after one year
(42,324)
(11,508)
(28,256)
(74,378)
(11,500)
-
Bank loans
Net bank debt
(53,832)
(102,634)
(11,500)
(50,502)
(119,857)
15,514
(230)
-
(230)
327
1,868
2,195
1,965
10,539
2,352
12,891
(81,753)
(84,018)
(165,771)
(152,880)
170
171
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 31 Analysis of changes in net debt (continued)
32 Financial instruments
COMPANY
Cash and cash equivalents
Restricted cash
Bank loans repayable within one year
Bank loans repayable after one year
Bank loans
Net bank debt
Current lease obligations
Non-current lease obligations
Lease obligations
Net debt
Cash and cash equivalents
Restricted cash
Bank loans repayable within one year
Bank loans repayable after one year
Bank loans
Net bank debt
1 January
2019
€’000
Cash
flow
€’000
31 December
2019
€’000
7,333
2,142
59,995
-
9,475
59,995
67,328
2,142
69,470
(6,218)
(82,622)
(10,609)
16,826
(16,827)
(65,796)
(88,840)
6,217
(82,623)
(79,365)
66,212
(13,153)
(3,820)
(46,425)
(50,245)
509
1,792
2,301
(3,311)
(44,633)
(47,944)
(129,610)
68,513
(61,097)
1 January
2018
€’000
Cash
flow
€’000
31 December
2018
€’000
1,368
2,142
3,510
5,965
-
5,965
7,333
2,142
9,475
(3,750)
(7,500)
(2,468)
(75,122)
(6,218)
(82,622)
(11,250)
(77,590)
(88,840)
(7,740)
(71,625)
(79,365)
Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
Notes
Financial
assets at
FVOCI*
€’000
Financial
assets at
amortised
cost
€’000
Total
€’000
14
16
16
18
18
Notes
14
14
16
16
18
18
25
-
-
-
-
25
-
127,729
895
114,040
2,142
25
127,729
895
114,040
2,142
244,806
244,831
Financial
assets at
FVOCI*
€’000
Financial
assets at
amortised
cost
€’000
Total
€’000
25
-
-
-
-
-
25
-
5,500
163,599
1,639
10,539
2,352
25
5,500
163,599
1,639
10,539
2,352
183,629
183,654
Financial assets
2019
Investments in equity instruments
Trade and other receivables **
Deferred consideration receivable
Cash and cash equivalents
Restricted cash
Financial assets
2018
Investments in equity instruments
Long term receivables
Trade and other receivables **
Deferred consideration receivable
Cash and cash equivalents
Restricted cash
*
**
Fair value through Other Comprehensive Income.
Excluding prepayments and accrued income.
172
173
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 32 Financial instruments (continued)
32 Financial instruments (continued)
Notes
Financial
liabilities at
FVTPL*
Financial
liabilities at
amortised
cost
€’000
Total
€’000
89,560
7,394
185,901
-
-
92,984
89,560
7,394
185,901
5,000
80,811
92,984
€’000
-
-
-
5,000
80,811
-
85,811
375,839
461,650
-
-
-
7,622
51,811
27,586
165,771
5,566
147,483
-
-
-
165,771
5,566
147,483
7,622
51,811
27,586
87,019
318,820
405,839
Financial liabilities
2019
Borrowings
Deferred acquisition consideration
Trade and other payables **
Facility termination fee (before tax asset)
Deferred contingent consideration
Lease liabilities
2018
Borrowings
Deferred acquisition consideration
Trade and other payables **
Facility termination fee (before tax asset)
Deferred contingent consideration
Derivative financial instruments
*
**
Fair value through profit and loss.
Excluding non-financial liabilities.
20
19
19
22
21
20
19
19
22
Fair value
The following table sets out the fair value of the Group’s principal financial assets and liabilities.
Financial assets
Investments in equity instruments
Long term receivables
Trade and other receivables
Deferred consideration receivable
Cash and cash equivalents
Restricted cash
Financial liabilities
Borrowings
Deferred acquisition consideration
Trade and other payables
Facility termination fee
Deferred contingent consideration
Lease liabilities
Derivative financial instruments
Notes
2019
Carrying
value
€’000
2019
Fair value
€’000
2018
Carrying
value
€’000
2018
Fair value
€’000
14
14
16
16
18
18
20
19
19
22
21
25
-
127,792
1,093
114,040
2,142
25
-
127,729
895
114,040
2,142
25
5,500
163,673
1,969
10,539
2,352
25
5,500
163,599
1,639
10,539
2,352
245,092
244,831
184,058
183,654
96,308
7,452
185,901
5,000
80,811
92,984
-
89,560
7,394
185,901
5,000
80,811
92,984
-
175,479
5,566
147,486
7,622
51,811
-
27,586
165,771
5,566
147,483
7,622
51,811
-
27,586
468,456
461,650
415,550
405,839
Measurement of fair values
In the preparation of the financial statements, the Group finance department, which reports directly to the Chief
Financial Officer (“CFO”), reviews and determines the major methods and assumptions used in estimating the fair
values of the financial assets and liabilities which are set out below:
Investments in equity instruments
Investments in equity instruments are measured at fair value through other comprehensive income (FVOCI).
Long term receivables
The fair value of long term receivables is determined by discounting future cash flows at market rates of interest
at the period end.
Trade and other receivables/trade and other payables
For receivables and payables with a remaining life of less than 12 months or demand balances, the carrying value
less impairment provision where appropriate, is deemed to reflect fair value.
Cash and cash equivalents, including short-term bank deposits
For short term bank deposits and cash and cash equivalents, all of which have a remaining maturity of less than
three months, the carrying amount is deemed to reflect fair value.
174
175
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 32 Financial instruments (continued)
32 Financial instruments (continued)
Interest-bearing loans and borrowings
For floating rate interest-bearing loans and borrowings with a contractual repricing date of less than 6 months,
the nominal amount is deemed to reflect fair value. For loans with repricing dates of greater than 6 months,
the fair value is calculated based on the present value of the expected future principal and interest cash flows
discounted at appropriate market interest rates (level 2) effective at the Balance Sheet date and adjusted for
movements in credit spreads.
Deferred acquisition consideration
Discounted cash flow method was used to capture the present value of the expected future economic benefits
that will flow out of the Group arising from the deferred acquisition consideration.
Deferred contingent consideration
The fair value of the deferred contingent consideration is calculated by discounting the expected future payment
to the present value. The expected future payment represents the deferred contingent acquisition consideration
which would become payable based on pre-defined profit thresholds being met and is calculated based on
management’s best estimates of the expected future cash outflows using current budget forecasts. The provision
for deferred contingent consideration is principally in respect of acquisitions completed from 2015 to 2019. A
maturity analysis of the deferred contingent consideration on an undiscounted basis is presented on page 182.
The significant unobservable inputs are:
» Pre-defined profit thresholds which have not been disclosed due to their commercial sensitivities
» Risk adjusted discount rate of 3% (2018: 3%)
For the fair value of deferred contingent consideration, a 1% increase in the risk adjusted discount rate at
31 December 2019, holding the other inputs constant would reduce the fair value of the deferred contingent
consideration by €1.3m. A 1% decrease in the risk adjusted discount rate would result in an increase of €1.3m in
the fair value of the deferred contingent consideration.
Derivative financial instruments
The derivative financial instruments represent share warrants that were issued to the previous shareholders of
Sisk Healthcare Group on the completion of the acquisition of Sisk Healthcare Group. This share warrant granted
the right to subscribe for 18,782,808 ordinary shares in Uniphar plc with a nominal value of €0.08 each. The share
warrant was exercised in July 2019 in advance of the initial public offering. The share warrant was previously
exercisable within a five-year period from the date of completion of the acquisition, or alternatively the share
warrant would be settled through a cash termination payment. At the acquisition date, the fair value attributable
to the share warrant was calculated based on management’s best estimate of the weighted probability of each of
the possible outcomes. In July 2019, a gain of €1,765,000 was recognised on the settlement of the share warrant,
being the amount attributable to the cash settlement option under the weighted probability method.
Facility termination fee
The facility termination fee has a carrying value and respective fair value of €5,000,000 (2018: €7,622,000).
As part of the funding of the acquisition of Cahill May Roberts in 2013, a share warrant was issued to
participating banks, granting the right to subscribe for 10% of the entire fully diluted issued share capital of the
Company at the time of subscription, at any time up until 30 June 2017. During 2017, the share warrant holders
surrendered all of their equity rights in return for an agreed facility termination fee payable by the company
of €10,000,000.
Fair value hierarchy
The following table sets out the fair value hierarchy for financial instruments which are measured at fair value.
Level 1
€’000
Level 2
€’000
Level 3
€’000
Total
€’000
Recurring fair value measurements
At 31 December 2019
Investments in equity instruments
Facility termination fee
Deferred contingent consideration
At 31 December 2018
Investments in equity instruments
Facility termination fee
Deferred contingent consideration
Derivative financial instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25
(5,000)
(80,811)
25
(5,000)
(80,811)
(85,786)
(85,786)
25
(7,622)
(51,811)
(27,586)
25
(7,622)
(51,811)
(27,586)
(86,994)
(86,994)
There were no transfers between the fair value levels for recurring fair value measurements during the year. The
Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the
reporting period.
Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the
end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observable market data and rely as little as possible on entity-
specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
176
177
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 32 Financial instruments (continued)
32 Financial instruments (continued)
Total
€’000
(19,951)
4,610
(1,482)
(70,447)
276
Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the years ended 31 December 2019 and
31 December 2018:
Shares in
unlisted
companies
€’000
Facility
termination
fee
€’000
Deferred
contingent
consideration
€’000
Derivative
financial
instruments
€’000
At 1 January 2018
Payments
Unwinding of discount
Arising on acquisition
Foreign currency
At 31 December 2018
Payments
Exercise of share warrant
Unwinding of discount*
Arising on acquisition
Reclassification
Release*
Foreign currency
25
-
-
-
-
25
-
-
-
-
-
-
-
(9,751)
2,500
(371)
-
-
(10,225)
2,110
(1,111)
(42,861)
276
-
-
-
(27,586)
-
(7,622)
(51,811)
(27,586)
(86,994)
2,500
-
122
-
-
-
-
1,237
-
(1,939)
(33,966)
1,752
5,836
(1,920)
-
25,821
-
-
-
1,765
-
3,737
25,821
(1,817)
(33,966)
1,752
7,601
(1,920)
At 31 December 2019
25
(5,000)
(80,811)
-
(85,786)
* These amounts have been credited/(charged) to the Income Statement in finance income/costs.
Financial risk management
The Group’s operations expose it to various financial 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 and it is the
Group’s policy to manage these risks in a non-speculative manner.
The Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk,
currency risk, interest rate risk and price risk. This note presents information about the Group’s exposure to each
of the above risks and the Group’s objectives, policies and processes for measuring and managing the risk.
Further quantitative disclosures are included throughout this note.
The Group’s risk management is carried out by a central finance department under policies approved by the
Board of Directors. Group finance identifies, evaluates and manages financial risks in close co-operation with the
Group’s operating units. The Board approves written principles for overall risk management, as well as policies
covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments and the investment of excess liquidity.
Credit risk
Credit risk arises from credit to customers, loans to customers, loans to IPOS entities, loans to retail holding
companies, deferred consideration receivable, as well as cash and cash equivalents including deposits with
banks and financial institutions.
The Group manages credit risk through the use of credit limits for customers, regular review of the ageing of
trade and other receivables, and the review and monitoring of customer and bank credit ratings.
Trade receivables
Credit risk arising in the context of the Group’s operations is not significant with the provision for impairment at
the Balance Sheet date amounting to 3.3% of gross trade receivables (2018: 2.2%). The Group accounts for its
credit risk by appropriately providing for expected credit losses on a timely basis. In calculating the expected
credit loss rates, the company considers historical loss rates for each category of customers, and adjusts for
forward looking macroeconomic data.
Customer credit risk is managed at appropriate Group locations according to established policies, procedures
and controls. Customer credit quality is assessed in line with strict credit rating criteria and credit limits are
established where appropriate. Outstanding customer balances are regularly monitored and a review for
indicators of impairment (evidence of financial difficulty of the customer, payment default, breach of contract etc.)
is carried out at each reporting date. Individual receivables which are known to be uncollectible are written off
by reducing the carrying amount directly. The other receivables are assessed collectively to determine whether
there is objective evidence that an impairment has been incurred but not yet identified. For these receivables the
estimated impairment losses are recognised in a separate provision for impairment.
The Group considers that there is evidence of impairment if any of the following indicators are present:
» significant financial difficulties of the receivable;
» probability that the receivable will enter bankruptcy or financial reorganisation; and
» default or delinquency in payments (more than 30 days overdue).
Receivables for which an impairment provision was recognised are written off against the provision when there is
no expectation of recovering additional cash.
Impairment losses are recognised in the Income Statement within selling and distribution costs. Subsequent
recoveries of amounts previously written off are credited against selling and distribution costs where the initial
impairment was recorded.
178
179
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 32 Financial instruments (continued)
32 Financial instruments (continued)
Movements in the provision for impairment of trade receivables that are assessed for impairment collectively are
as follows:
At 1 January
Provision for impairment recognised during the year
Arising on acquisition
Receivables written off during the year as uncollectible
Recovery of balances previously provided for
Reclassification
Foreign currency translation
At 31 December
2019
€’000
3,548
233
270
(11)
(60)
12
19
4,011
2018
€’000
3,318
119
449
(191)
(140)
(7)
-
3,548
The trade receivables balances disclosed in note 16 comprise a large number of customers spread across the
Group’s activities and geographies with balances classified as “not past due” representing 87.4% of the total
trade receivables balance at the Balance Sheet date (2018: 91.4%). Invoice discounting arrangements are
employed in certain of the Group’s operations where deemed to be of benefit by management.
In December 2019, the Group entered into a receivables purchase arrangement with two of its banking partners.
Under the terms of this non-recourse agreement, the Group has transferred substantially all credit risk and
control of certain trade receivables, amounting to €80,000,000 (2018: €nil). The Group has recognised an asset
within trade and other receivables of €12,000,000 (2018: €nil), being the fair value of the amount receivable from
the financial institutions, representing 15% of the trade receivables transferred to the financial institutions in
accordance with the terms of the receivables purchase arrangement. The execution of this agreement resulted in
an operating cash inflow of €68,000,000 for the Group during the year ended 31 December 2019. Total interest
expense associated with this receivables purchase agreement during the year ended 31 December 2019 was
€31,000 (2018: €nil).
The ageing of trade receivables at 31 December 2019 and 2018 was:
Not past due
Past due
0 - 30 days
30 - 60 days
60 days
Total past due
Total trade receivables
Provision for impairment in long term receivables is outlined in note 14.
2019
€’000
2018
€’000
103,715
143,835
10,593
1,895
2,426
14,914
9,079
2,428
2,027
13,534
118,629
157,369
Cash and cash equivalents
Cash and cash equivalents give rise to credit risk on amounts due from counterparty financial institutions
(stemming from their insolvency or a downgrade in their credit ratings). Credit risk is managed by the regular
review of the credit ratings of these financial institutions and limiting the aggregate amount and duration of
exposure to any one counterparty primarily depending on its credit rating. All the Group’s cash and cash
equivalents are currently held with financial institutions which have investment grade credit ratings ranging from
A-1 to A-2 (2018: A-1 to A-3).
Other financial assets
The Group has investments in companies with a strategic interest to the Group which are of a non-speculative
nature. The investments and any impairment provisions are outlined in note 14.
The carrying amount of financial assets, net of impairment provisions represents the Group’s maximum credit
exposure. The maximum exposure to credit risk at year end was as follows:
Long term receivables
Trade and other receivables*
Deferred consideration receivable
Cash and cash equivalents
Restricted cash
Total
* Excluding prepayments and accrued income
2019
€’000
-
127,792
1,093
114,040
2,142
2018
€’000
5,500
163,673
1,969
10,539
2,352
245,067
184,033
Liquidity risk
The Group manages liquidity risk through, maintaining sufficient cash and cash equivalents to meet obligations
when due, credit facilities and overdraft facilities, monitoring and managing the maturity of borrowings,
regular review of the ageing of trade and other receivables, and review and monitoring of customer and bank
credit ratings.
Management monitors forecasts of the maturity of the Group’s borrowings and other obligations. Management
forecasts cash flows expected to settle the Group’s obligations and actively monitors the level of cash and
facilities available to settle the Group’s obligations as they fall due. Forecasts of cash flows to settle trade
and other payables are generally carried out at a subsidiary level in the operating companies of the Group in
accordance with practice and limits set up by the Group.
180
181
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 32 Financial instruments (continued)
32 Financial instruments (continued)
The following table outlines the undiscounted contractual maturities of the Group’s financial liabilities at the
Balance Sheet date. The undiscounted cash flows differ from the amount included in the Balance Sheet because
the Balance Sheet amount is based on the discounted cash flows.
Less
than 6
months
€’000
6 to 12
months
€’000
Between
1 and 2
years
€’000
Between
2 and 5
years
€’000
Over 5
years
€’000
Total
contractual
cash flows
€’000
Contractual maturity of financial
liabilities
At 31 December 2019
Borrowings
Deferred acquisition consideration
Deferred contingent consideration
Facility termination fee
Lease liabilities
Trade and other payables
At 31 December 2018
Borrowings
Deferred acquisition consideration
Deferred contingent consideration
Facility termination fee
Derivative financial instrument
Trade and other payables
8,466
6,865
4,803
5,000
5,627
185,900
14,500
-
28,854
-
5,353
-
14,539
587
21,776
-
9,842
-
57,842
-
29,453
-
23,516
-
584
-
-
-
67,738
-
95,931
7,452
84,886
5,000
112,076
185,900
216,661
48,707
46,744
110,811
68,322
491,245
71,579
166
683
2,500
-
147,486
10,947
5,400
2,558
-
27,586
-
17,966
-
28,734
2,500
-
-
74,279
-
23,234
2,750
-
-
222,414
46,491
49,200
100,263
708
-
-
-
-
-
708
175,479
5,566
55,209
7,750
27,586
147,486
419,076
Borrowings maturing within less than 6 months include an invoice discounting facility of €1,505,000 at the end of
the year (2018: €70,847,000).
Lender covenants
Group banking facilities are subject to three covenants: leverage ratio, interest cover and maximum capital
expenditure covenant. Banking covenants are subject to quarterly review, and during 2019 all covenants have
been fully complied with.
Currency risk
The Group primarily operates in the Republic of Ireland and the majority of the Group’s activities are conducted
in Euro. An element of the Group’s operations are carried out in the UK, Europe and the United States and, as
a result, the Group is exposed to structural currency fluctuations in respect of Sterling, Swedish Krona and the
US Dollar. To the extent that the non-Euro 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.
The Euro is the principal currency of the Group’s Irish businesses, Sterling is the principal currency of the Group’s
UK businesses, the Swedish Krona is the principal currency of our Nordic businesses, and the US Dollar is the
principal currency of our United States businesses. The Group actively monitors the level of foreign exchange
exposure and ensures that its net exposure is kept at an acceptable level. Currency risks are regularly monitored
and managed by utilising spot and forward foreign currency contracts as appropriate for settling liabilities arising
from the purchase of goods for resale in non-functional currencies. The majority of transactions entered into by
Group entities are denominated in functional currencies and no significant level of hedging is required.
Interest rate risk
The Group has no fixed rate borrowings and its receivables are carried at amortised cost. At 31 December, Group
term loans and invoice discount funding are subject to an interest rate of Euribor +2% (2018: Euribor +3%). The
exposure of the Group’s borrowings to interest rate changes is as follows:
2019
€’000
2018
€’000
Variable rate borrowings (note 20)
89,560
165,771
A decrease of fifty basis points in the Euribor interest rate would have reduced interest payable on borrowings in
finance costs by €448,000 and consequently increased our profit before tax and equity. An increase of fifty basis
points would have increased interest payable on borrowings in finance costs and consequently reduced our
profit before tax and equity by an equal and opposite amount.
Price risk
The Group’s exposure to equity price risk arises from investments held by the Group and classified in the
Balance Sheet as investments in equity instruments. The investments in equity instruments are measured at fair
value through other comprehensive income. The Group is exposed to the risk of an illiquid market for unlisted
companies as these investments are not traded on an active market.
Capital management
The Group’s objectives when managing capital are to:
» safeguard their ability to continue as a going concern and to continue to provide a return for shareholders; and
» maintain an optimal capital structure and reduce the overall cost of capital.
In managing its capital structure, the Group’s capital consists of total equity and net bank debt. The Board
monitor the return on capital employed and dividend policy in order to optimise shareholder value while allowing
the Group to take advantage of opportunities that might arise to grow the business and to sustain the ongoing
development of the Group. At the year end, the Group was in a positive net bank cash position of €26,622,000
(2018: net bank debt of €152,880,000). Total equity of the Group at 31 December 2019 was €180,920,000 (2018:
deficit of €619,000). The Directors periodically review the capital structure of the Group, considering the cost of
capital and the associated risks. During 2019, the Group’s capital structure was significantly improved following
the successful IPO, raising gross share proceeds of €139.4m, and the successful execution of the non-recourse
financing arrangement raising €68.0m in cash.
182
183
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 33 Future capital expenditure not provided for
At 31 December 2019 the Group had capital commitments of €1,478,000
(2018: €99,000)
Contracted for
Computer software
Plant and equipment
2019
€’000
2018
€’000
957
521
55
44
34 Contingent liabilities
Subsidiaries
Pursuant to the provisions of Section 357, Companies Act 2014, the Company have put in force in respect of the
whole of the financial year ended 31 December 2019 an irrevocable guarantee of all commitments entered into by
a subsidiary including amounts shown as liabilities in the statutory financial statements of the relevant subsidiary.
The list of relevant subsidiaries is as follows: Uniphar Wholesale Limited, Allphar Services Limited, Unisource
Pharma Services Ireland Limited, Allcare Management Services Limited, Point of Care Health Services Limited,
Lindchem Designated Activity Company, Trennamally Limited, Cahill May Roberts Limited, Life Pharmacy Limited
and Uniphar Europe Limited.
Guarantees
The Company and certain subsidiaries have issued guarantees capped at a total of €701,000 (2018: €647,000)
in respect of bank borrowings undertaken by IPOS scheme entities and past customers of Cahill May Roberts
Limited. The outstanding bank borrowing at the Balance Sheet date, for which these guarantees have been
provided, give rise to a contingent liability €372,000 (2018: €647,000) for the Group.
From a Company perspective, the contingent liability at year end is €nil (2018: €100,000).
The change in the level of contingent liabilities is due to movement in underlying loan balances and guarantee
releases due to investment disposals.
Legal
From time to time, in the normal course of business, the Group can be subject to claims from various parties.
Having considered the status of such matters as at 31 December 2019, the Directors are satisfied that there are
no such matters which require either a provision or contingent liability disclosure in the financial statements.
35 Acquisitions of subsidiary undertakings
and business assets
A key strategy of the Group is to expand into higher growth, higher margin businesses and to reduce exposure to
the pharmaceutical wholesaling market. In line with this strategy, the Group completed the following acquisitions
during the financial year:
» Durbin plc and Durbin inc (“Durbin”)
The Group acquired 100% of the issued share capital of Durbin plc and Durbin inc in July 2019 for
consideration of €41,843,000, of which €18,847,000 is deferred and contingent on agreed targets being met.
Durbin is a specialist provider of pharmaceuticals based in the United Kingdom and the United States.
» 15 Inischem retail pharmacies
The Group acquired 100% of the issued share capital of 15 Inischem retail pharmacies in August 2019, with
each company incorporated in Ireland for consideration of €5,490,000. The 15 Inischem retail pharmacies
operate throughout the Republic of Ireland.
» EPS Vascular AB, EP Endovascular AB and EPS Vascular OY (“EPS Group”)
The Group acquired 100% of the issued share capital of EPS Vascular AB, EP Endovascular AB and EPS
Vascular OY, together “EPS Group” in October 2019 for consideration of €13,887,000, of which €3,649,000 is
deferred and contingent on agreed targets being met. EPS Vascular AB, and EP Endovascular AB are Swedish
incorporated companies, and EPS Vascular OY is a Finnish incorporated company. EPS Group operates in the
medical devices sector in the Nordics.
» Regional Pharmacy Limited
The Group acquired 100% of the issued share capital of Regional Pharmacy Limited, in October 2019 for
consideration of €1,646,000. Regional Pharmacy Limited currently operates an independent retail pharmacy in
the Republic of Ireland.
» M3 Medical Limited
The Group acquired 100% of the issued share capital of M3 Medical Limited in November 2019 for
consideration of €18,961,000, of which €11,623,000 is deferred and contingent on agreed targets being
met. M3 Medical Limited is an Irish managed company, operating in the medical devices sector in the
Republic of Ireland.
» Gort Road Pharmacy Limited
The Group acquired 100% of the issued share capital of Gort Road Pharmacy Limited, in November 2019 for
consideration of €2,080,000. Gort Road Pharmacy Limited currently operates an independent retail pharmacy
in the Republic of Ireland.
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 businesses acquired, the enhancement of the
competitive position of the Group in the marketplace and the strategic premium paid by Uniphar Group to create
the combined Group.
The fair value of the deferred and contingent consideration recognised at the date of acquisition is calculated
by discounting the expected future payment to present value at the acquisition date. In general, for deferred
contingent consideration to become payable, pre-defined profit thresholds must be exceeded. On an
undiscounted basis, the future payments for which the Group may be liable in respect of acquisitions completed
in the current year range from nil to €63.4m at 31 December 2019.
184
185
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 35 Acquisitions of subsidiary undertakings and
business assets (continued)
The initial assignment of fair values to net assets acquired has been performed on a provisional basis in respect
of the acquisitions completed during 2019, due to their recent acquisition dates. There were no separately
identifiable intangible assets identified as part of our initial assessment of the fair value of the net assets
acquired. The Group has 12 months from the date of acquisition to finalise the fair value of the assets/liabilities
acquired, and any amendments to these fair values within the twelve-month period from the date of acquisition
will be disclosable in the 2020 Annual Report as stipulated by IFRS 3, Business Combinations. The fair values
of the assets and liabilities of the acquisitions completed in 2018 have now been finalised with no further
adjustments required to the provisional fair values of the assets and liabilities which were disclosed in the 2018
Annual Report.
The acquisition of Durbin has been determined to be a substantial transaction and separate disclosure of the
fair values of the identifiable assets and liabilities has therefore been made. None of the remaining business
combinations completed during the period were considered sufficiently material to warrant separate disclosure
of the fair values attributable to those combinations.
35 Acquisitions of subsidiary undertakings and
business assets (continued)
The provisional fair value of the assets and liabilities acquired as part of the acquisitions completed during the
financial year are set out below:
ASSETS
Non-current assets
Property, plant and equipment
Deferred tax asset
Current assets
Assets held for sale
Inventory
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Current liabilities
Lease liabilities
Trade and other payables
Total liabilities
Durbin
€’000
Others
€’000
Total
€’000
7,022
34
14,872
-
21,894
34
7,056
14,872
21,928
-
2,916
7,278
2,485
4,400
4,230
5,666
4,375
4,400
7,146
12,944
6,860
12,679
18,671
31,350
19,735
33,543
53,278
571
9
580
1,289
1,452
2,741
1,860
1,461
3,321
2,894
8,768
12,123
9,335
15,017
18,103
11,662
21,458
33,120
12,242
24,199
36,441
Identifiable net assets acquired
7,493
9,344
16,837
Goodwill arising on acquisition
34,350
32,720
67,070
Consideration
41,843
42,064
83,907
186
187
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 35 Acquisitions of subsidiary undertakings and
business assets (continued)
The gross contractual value of the trade and other receivables as at the respective dates of acquisition amounted
to €13.2m. The fair value of these receivables is estimated at €12.9m (all of which is expected to be recoverable).
The acquisitions completed in 2019 have contributed €40.6m to revenue and €11.6m of gross margin for the
period since the date of acquisition. The proforma revenue and operating profit for the Group for the period
ended 31 December 2019 would have been €1,739.0m and €28.5m respectively had the acquisitions been
completed at the start of the current reporting period.
In 2019, the Group incurred acquisition costs of €5.0m (2018: €4.9m). These have been included in administrative
expenses in the Group Income Statement.
36 Earnings per share
Earnings per share and fully diluted earnings per share have been calculated by
reference to the following:
Profit for the financial year attributable to owners
21,026
8,642
Weighted average number of shares (‘000)
183,546
119,044
2019
€’000
2018
€’000
Earnings per ordinary share (in cent):
Basic
Diluted
2019
2018
11.5
11.5
7.3
7.3
188
36 Earnings per share (continued)
Adjusted earnings per share has been calculated by reference to the following:
Profit for the financial year attributable to owners
Exceptional charge recognised in operating profit (note 5)
Exceptional credit recognised in finance costs (note 5)
2019
€’000
21,026
12,043
(6,731)
2018
€’000
8,642
9,175
-
Profit after tax excluding exceptional items
26,338
17,817
Weighted average number of shares in issue in the year (000’s)
183,546
119,044
Adjusted basic and diluted earnings per ordinary share (in cent)
14.3
15.0
37 Related party transactions
In the ordinary course of business as pharmacists, certain Non-Executive Directors of Uniphar plc and Executive
Directors of subsidiary companies have traded on standard commercial terms with the Group. The individual
value of these transactions is not material in the context of the Group’s financial results and have therefore been
disclosed in aggregate.
The Group sold goods and other assets to companies controlled by these Directors totalling €2,123,000 during
the year (2018: €4,317,000). As a result of payments in advance, amounts of €196,000 were owing to the
pharmacies in respect of these transactions at 31 December 2019 (2018: €258,000).
lAS 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. The Group classifies members of its executive team as key
management personnel. The executive team is the body of senior executives that formulates business strategy
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.
The executive team consists of three Executive Directors (2018: three), nine Non-Executive Directors (2018: nine),
and an additional four (2018: two) individual members at 31 December 2019.
Remuneration of key management personnel
Short term employee benefits (including redundancy)
Post-employment benefits
2019
€’000
5,344
605
5,949
2018
€’000
3,354
226
3,580
189
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 38 Group companies
Holding company
Uniphar plc
Principal activity
Investment holding company
The following are the significant subsidiary undertakings of Uniphar plc at 31 December 2019:
Incorporated
and trading in
Subsidiary name
Ownership
%**
Principle Activity
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Allcare Management Services Limited *
Allphar Services Limited *
Cahill May Roberts Limited *
Citywest Healthcare Limited
Gort Road Pharmacy Limited
IPOS Holding 97 Limited
Life Pharmacy Limited *
Lindchem Designated Activity Company*
M3 Medical Limited
Pagni Pharmacies Limited
Point of Care Health Services Limited *
Pyramach Limited
Regional Pharmacy Limited
Sisk Healthcare Unlimited Company
Trennamally Limited *
Uniphar Durbin Ireland Limited
Uniphar Europe Limited *
Uniphar Wholesale Limited *
100
100
100
75
100
73.4
100
100
100
100
100
100
100
100
100
100
100
100
Pharmacy support services
Pharmaceutical supply chain
and services
Non-trading
Non-trading
Pharmacy
Pharmacy
Non-trading
Pharmacy
Medical device distribution
Pharmacy
Specialist nursing and
infusion services
Pharmacy
Pharmacy
Medical device distribution
Pharmacy
Specialist provider of
pharmaceuticals
Medical device distribution
Pharmaceutical wholesale
distributor
38 Group companies (continued)
The following are the significant subsidiary undertakings of Uniphar plc at 31 December 2019:
Incorporated
and trading in
Subsidiary name
United Kingdom Bloom Fertility Limited
United Kingdom Clinical Cube Limited
United Kingdom Clinical Pyramid Limited
United Kingdom Dialachemist Limited
United Kingdom Durbin plc
Ownership
%**
Principle Activity
100
70
70
80
100
Non-trading
Data solutions for pharma
industry
Investment holding company
Online pharmacy and product
fostering
Specialist provider of
pharmaceuticals
United Kingdom Infusion Health UK Limited
100
Non-trading
United Kingdom Macromed (UK) Limited
94.95
Medical device distribution
United Kingdom Outcome Medical Solutions Limited
United Kingdom Outico Limited
United Kingdom Sisk Healthcare (UK) Limited
United Kingdom Springmed Solutions Limited
United Kingdom Star Medical Contracts Limited
United Kingdom Star Medical Limited
United Kingdom Uniphar Patient Support Solutions Limited
United Kingdom Unisource Limited
Finland
Sweden
Sweden
EPS Vascular OY
EP Endovascular AB
EPS Vascular AB
The Netherlands Angiocare B.V.
The Netherlands Star Medical B.V.
United States
Durbin inc.
100
89.3
100
100
100
100
100
100
100
100
100
100
100
100
100
Investment holding company
Data intelligence and
consultancy
Medical device distribution
Non-trading
Outsourcing and resourcing
Outsourcing and resourcing
Non-trading
Investment holding company
Medical device distribution
Medical device distribution
Medical device distribution
Medical device distribution
Outsourcing and resourcing
Non-trading
Specialist provider of
pharmaceuticals
Ireland
Unisource Pharma Services Ireland Limited*
100
Outsourcing and resourcing
United States
Pharmaceutical Trade Services inc.
190
191
* As disclosed in note 34, each of the above Irish registered wholly-owned subsidiaries of the Company may
avail of the exemption from filing its statutory financial statements for the year ended 31 December 2019 as
permitted by Section 357 of the Companies Act 2014 and there is in force an irrevocable guarantee from the
Company in respect of all commitments entered into by such wholly-owned subsidiary, including amounts
shown as liabilities (within the meaning of Section 357 (1) (b) of the Companies Act 2014) in such wholly-owned
subsidiary’s statutory financial statements for the year ended 31 December 2019.
** With the exception of the USA subsidiaries, where the holding is in the form of common stock, all holdings are
in the form of ordinary shares.
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 38 Group companies (continued)
38 Group companies (continued)
Pursuant to Sections 314-316 of the Companies Act, 2014, a full list of subsidiaries, joint ventures and
associated undertakings will be annexed to the Company’s Annual Return to be filed in the Companies
Registration Office in Ireland.
Details of registered offices are listed below:
Incorporated in ROI
M3 Medical Limited
All other Irish incorporated companies
Incorporated in UK
Star Medical Limited
Star Medical Contracts Limited
Outico Limited
Sisk Healthcare (UK) Limited
All other UK incorporated companies
Registered office
Unit F4 Calmount Park
Calmount Avenue
Ballymount
Dublin 12
D12 K2W6
4045 Kingswood Road
Citywest Business Park
Co. Dublin
Ireland
D24 V06K
Registered offices
4 – 5 Kelso Place
Upper Bristol Road
Bath
Somerset BA1 3AU
United Kingdom
6 Wildflower Way
Boucher Road
Belfast
BT12 6TA
Northern Ireland
6th Floor
One London Wall
London EC2Y 5EB
United Kingdom
Incorporated in The Netherlands
Registered offices
Angiocare B.V.
Star Medical B.V.
Eemweg 00031 21
3755LC
Eemnes
The Netherlands
De Tweeling 00020
5215MC
S-Hertogenbosch
The Netherlands
Incorporated in The United States
Registered offices
Durbin inc.
Pharmaceutical Trade Services inc.
Incorporated in Sweden
All Swedish incorporated companies
Incorporated in Finland
All Finnish incorporated companies
William. C. Penick IV
190 East Capitol, Suite 10
Jackson
Mississippi 39201
United States
Anne Franco Lewis
5820 Gulf Tech Drive
Ocean Springs
Mississippi 39564
United States
Registered offices
Hamnplanen 24
263 61 Viken
Skåne län
Sweden
Registered offices
Hauralantie 43
37800 LEMPÄÄLÄ
Finland
192
193
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 38 Group companies (continued)
The following were changes to the Group’s structure during 2019:
» As set out in note 35, in July 2019, the Group acquired 100% of the ordinary share capital of Durbin plc, and
Durbin inc (“Durbin”), companies incorporated in the United Kingdom and the United States respectively.
» As set out in note 35, in August 2019, the Group acquired 100% of the ordinary share capital of 15 Inischem
retail pharmacies, with each company incorporated in Ireland.
» As set out in note 35, in October 2019, the Group acquired 100% of the ordinary share capital of three
companies, together “EPS Group”, consisting of:
» EPS Vascular AB, a company incorporated in Sweden;
» EP Endovascular AB, a company incorporated in Sweden;
» EPS Vascular OY, a company incorporated in Finland
» As set out in note 35, in October 2019, the Group acquired 100% of the ordinary share capital of Regional
Pharmacy Limited a company incorporated in Ireland.
» As set out in note 35, in November 2019, the Group acquired 100% of the ordinary share capital of M3 Medical
Limited a company incorporated in Ireland.
» As set out in note 35, in November 2019, the Group acquired 100% of the ordinary share capital of Gort Road
Pharmacy Limited a company incorporated in Ireland.
During 2019, the Group incorporated the following company in Ireland:
» Uniphar Durbin Ireland Limited.
Joint Venture
» Independent Life Pharmacy plc (50% shareholding)
The Company’s interest is by way of a €25,000 investment in non – voting C €1.00 ordinary shares and 69 A
€0.01 ordinary voting shares. As the Company does not control the voting rights or the board of Independent Life
Pharmacy plc, this investment is accounted for as a joint venture. The Group has not included the joint venture
results Group financial statements as they are not material.
39 Non-controlling interests
At 1 January
Share of post-acquisition (losses)/profits
Acquisitions
Foreign exchange movement
At 31 December
2019
€’000
(180)
(105)
-
-
(285)
2018
€’000
(271)
63
29
(1)
(180)
Non-controlling interests own the following stakes in the issued ordinary share capital of the entities set
out below:
» 25.0% Citywest Healthcare Limited
» 20.0% Dialachemist Limited
» 26.6% IPOS Holding 97 Limited
» 10.7% Outico Limited
» 30.0% Clinical Pyramid Limited
» 5.05% Macromed (UK) Limited
The share of prior year non-controlling interests arising on acquisition relates to Macromed (UK) Limited which
was acquired during the prior year.
194
195
Notes to the Financial Statements (continued)Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements 40 Post balance sheet events
Non adjusting events
Wind up of Whelehan Group Pension Scheme
Contributions to the Whelehan Group Pension Scheme were terminated in October 2019, and the scheme was
formally wound up effective in January 2020. The assets and liabilities of this scheme were reflected in the
Group’s defined benefit pension obligation at 31 December 2019. The assets of the scheme were distributed
in January 2020 in line with members chosen options and no assets or liabilities remain. Any former members
of this scheme still employed by the Group were offered membership of the Uniphar Group Retirement
Benefits Scheme for future service benefits. A settlement loss of €0.5m will be recognised in the 2020 financial
statements.
Acquisition of Innerstrength Limited
In March 2020, Uniphar completed the acquisition of Innerstrength Limited. Innerstrength Limited currently
operates in Ireland, in the technology market, enabling healthcare professionals to deliver personalised education
to patients who are currently living with chronic conditions. The total consideration including deferred contingent
consideration, is up to a maximum of €8m.
Due to the short time frame between the completion date of the acquisition of Innerstrength Limited, and the
date of issuance of this report, it was not possible to reliably estimate the fair value of assets and liabilities or
the goodwill amount associated with the completed acquisition. This acquisition will be accounted for as an
acquisition in the 2020 financial statements.
Impact of Covid-19
The Group continue to monitor ongoing Covid-19 developments, and the potential impact to the business.
Uniphar plays a significant role in the national healthcare infrastructure, ensuring the continuity in the supply and
distribution of much needed medicines, medical devices and related services. As we prepare for the full impact
of the Covid-19 crisis, we expect to continue to see increased volumes in Supply Chain & Retail, with likely
increases in costs due to investment in additional resources to manage significantly higher volumes.
Business continuity and contingency plans are in place in anticipation of wider outbreaks of the virus. With
potential sick leave, self-isolation or quarantine situations arising, the Group expect to have to deal with reduced
availability of the workforce. Due to reprioritisation of resources within hospitals and other healthcare facilities the
Group is preparing for a possible delay in Commercial & Clinical revenue if certain ‘non-urgent’ elective surgeries
have to be postponed.
41 Approval of financial statements
The Directors approved the financial statements on 31 March 2020.
Alternative Performance Measures
The Group reports certain financial measurements that are not required under IFRS. These key alternative
performance measures (APMs) represent additional measures in assessing performance and for reporting both
internally, and to shareholders and other external users. The Group believes that the presentation of these APMs
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.
None of these APMs should be considered as an alternative to financial measurements derived in accordance
with IFRS. The APMs 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 APMs used by the Group, together with reconciliations where the APMs are not readily identifiable
from the financial statements, are as follows:
EBITDA
Earnings before exceptional items, net finance expense, income tax expense, depreciation and intangible
assets amortisation.
For comparative purposes, EBITDA excluding the impact of IFRS 16 is presented, which is calculated in 2019 by
adding back the operating lease charges which are removed from the Income Statement under IFRS 16.
Operating profit
Exceptional charge recognised in operating profit
Depreciation
Amortisation of computer software
Amortisation of trademark
Income Statement
Note 5
Note 13
Note 12
Note 12
EBITDA
Operating lease charges
EBITDA excluding impact of IFRS 16
2019
€’000
28,207
12,043
15,911
2,363
31
58,555
2018
€’000
15,826
9,175
4,610
2,597
29
32,237
(10,533)
-
48,022
32,237
196
197
Notes to the Financial Statements (continued)Uniphar plc Annual Report 2019Financial Statements Alternative Performance Measures (continued)
Alternative Performance Measures (continued)
Net bank cash/(debt)
Net bank cash/(debt) represents the net total of current and non-current borrowings, cash and cash equivalents,
and restricted cash as presented in the Group Balance Sheet.
Adjusted earnings per share
This comprises of profit for the financial year attributable to owners of the parent as reported in the Group Income
Statement before exceptional items (if any), divided by the weighted average number of shares in issue in the year.
Cash and cash equivalents
Restricted cash
Bank loans repayable within one year
Bank loans payable after one year
Balance Sheet
Balance Sheet
Balance Sheet
Balance Sheet
Net bank cash/(debt)
2019
€’000
2018
€’000
114,040
2,142
(22,583)
(66,977)
10,539
2,352
(81,753)
(84,018)
26,622
(152,880)
Net debt
Net debt represents the total of net bank debt, plus current and non-current lease obligations as presented in the
Group Balance Sheet.
2019
€’000
2018
€’000
Net bank cash/(debt)
Current lease obligations
Non-current lease obligations
Alternative Performance Measures
Balance Sheet
Balance Sheet
26,622
(10,083)
(82,901)
(152,880)
-
-
Net debt
(66,362)
(152,880)
Leverage
Net bank debt divided by EBITDA for the period.
Net bank cash/(debt)
EBITDA*
Leverage (times)
Alternative Performance Measures
Alternative Performance Measures
2019
€’000
26,622
48,022
0.6
2018
€’000
(152,880)
46,294
(3.3)
*Note – In 2018, the EBITDA relates to the annualised EBITDA, including the acquisition of Sisk Healthcare
as if the acquisition was completed on 1 January 2018, as defined in our Admission document. 2019 EBITDA
represents actual 2019 EBITDA excluding impact of IFRS 16 for the year ended 31 December 2019.
Adjusted earnings per share has been calculated by reference to the following:
Profit for the financial year attributable to owners
Exceptional charge recognised in operating profit (note 5)
Exceptional credit recognised in finance costs (note 5)
2019
€’000
21,026
12,043
(6,731)
2018
€’000
8,642
9,175
-
Profit after tax excluding exceptional items
26,338
17,817
Weighted average number of shares in issue in the year (000’s)
183,546
119,044
Adjusted basic and diluted earnings per ordinary share (in cent)
14.3
15.0
Free cash flow conversion
Free cash flow conversion calculated as EBITDA, less investment in working capital, less capital expenditure,
divided by EBITDA.
2019
Inc.
IFRS 16
€’000
2019
Exc.
IFRS 16
€’000
EBITDA
Increase in inventory
Increase in receivables
Increase/(decrease) in payables
Foreign currency translation adjustments
Payments to acquire property, plant and equipment Cash Flow Statement
Cash Flow Statement
Payments to acquire intangible assets
Note 29
Note 29
Note 29
Note 29
58,555
(14,889)
(17,656)
30,424
207
(5,585)
(861)
48,022
(14,889)
(17,656)
30,424
207
(5,585)
(861)
2018
€’000
32,237
(1,109)
(19,730)
(7,944)
(61)
(2,880)
(2,015)
Free cash flow
EBITDA
Free cash flow conversion
50,195
39,662
(1,502)
58,555
48,022
32,237
85.7% 82.6%
(4.7%)
198
199
Uniphar plc Annual Report 2019Financial Statements Alternative Performance Measures (continued)
Glossary of Terms
Return on capital employed
In 2019, ROCE is calculated as the adjusted 12 months rolling operating profit excluding the impact of the
adoption of IFRS 16, expressed as a percentage of the adjusted average capital employed for the same period.
The average capital employed is adjusted to ensure the capital employed of acquisitions completed during the
period are appropriately time apportioned in the calculation of the average capital employed. For comparative
purposed we have presented the comparative ROCE including the impact of the adoption of IFRS 16 “Leases”.
Excluding IFRS 16 Impact
2018
€’000
2019
€’000
Including IFRS 16 Impact
2018
€’000
2019
€’000
Rolling 12 months operating profit
Adjustment for exceptional costs
Adjusted 12 months rolling operating profit
Total equity
Non-recourse financing arrangement
Net bank debt
Derivative financial instruments
Facility termination fee
Deferred contingent consideration
Deferred consideration payable
27,152
12,043
39,195
182,502
68,000
(26,622)
-
5,000
80,811
7,394
28,207
12,043
40,250
180,920
68,000
(26,622)
-
5,000
80,811
7,394
(619)
-
152,880
27,586
7,622
51,811
5,566
(619)
-
152,880
27,586
7,622
51,811
5,566
Total capital employed
317,085
244,846
315,503
244,846
Average capital employed
Adjustment for acquisitions (note A below)
Adjusted average capital employed
Return on capital employed
280,966
(14,842)
266,124
14.7%
280,175
(14,842)
265,333
15.2%
Note A: Adjustment for acquisitions
Durbin
Other acquisitions completed during 2019
Adjustment for acquisitions
Consideration
€’000
Completion
Date
Adjustment
€’000
41,843
42,064
July 2019
Various
(3,487)
(11,355)
(14,842)
AGM
APM
Articles
Board
CCPC
CEO
CFO
CGU
Company
CSO
Durbin
EBITDA
EPS
EPS Group
ERP
EU
FMD
GAAP
GDP
GDPR
GMP
Group
HCP
HPRA
HR
HSE
IAS
IFRS
inc.
IPHA
IPO
IT
KPI
LTIP
MAPs
MCAM
N/A
NHS
PAYE
PLC
PwC
Q1
Q2
Q3
Q4
QCA Code
RNS
ROCE
ROI
ROW
UK
UK Code
Uniphar
USA
VAT
VPN
Workforce
2018 pro-forma EBITDA 2018 pro-forma EBITDA of €46.3m as disclosed in our Admission document
Annual General Meeting
Alternative Performance Measures
Articles of Association of Uniphar plc
The Board of Directors of Uniphar plc
The Irish Competition and Consumer Protection Commission
Chief Executive Officer
Chief Financial Officer
Cash-generating unit
Uniphar plc
Contract Sales Outsourcing
Durbin plc and Durbin Inc
Earnings before exceptionals, interest, tax, depreciation and amortisation
Earnings per share
EPS Vascular AB, EP Endovascular AB and EPS Vascular OY
Enterprise Resource Planning
European Union
Falsified Medicine Directive
Generally Accepted Accounting Principles
Good Distribution Practice Regulations
General Data Protection Regulation
Good Manufacturing Practice Regulations
Uniphar plc and Subsidiary undertakings of Uniphar plc
Healthcare professional
The Irish Health Products Regulatory Authority
Human Resources
Health Service Executive in Ireland
International Accounting Standard
International Financial Reporting Standards
Incorporated
Irish Pharmaceutical Healthcare Association
Initial Public Offering
Information Technology
Key Performance Indicator
Long Term Incentive Plan
Managed Access Programmes
Multi-channel account managers
Not Applicable
National Healthcare Service in the United Kingdom
Pay As You Earn
Public Limited Company
Pricewaterhouse Coopers
Quarter 1 (1 January to 31 March)
Quarter 2 (1 April to 30 June)
Quarter 3 (1 July to 30 September)
Quarter 4 (1 October to 31 December)
Quoted Companies Alliance Corporate Governance Code
Regulatory News Service
Return on capital employed
Republic of Ireland
Rest of the World
United Kingdom
UK Code of Corporate Governance
Uniphar plc and Subsidiary undertakings of Uniphar plc
United States of America
Value Added Tax
Virtual Private Network
Total number of employees and contractors
200
201
Uniphar plc Annual Report 2019Financial Statements Notes
Notes
202
203
Uniphar plc Annual Report 2019Financial Statements Uniphar Head Office
4045 Kingswood Road
Citywest Business Park
Co. Dublin
T (01) 428 7777
F (01) 428 7776
www.uniphar.ie