Uniphar Regulatory News (UPR)

Uniphar plc

2022 Interim Results

Uniphar plc, an international diversified healthcare services business announces its half year results for the six months ended 30 June 2022, performing in line with expectations and delivering EBITDA growth of 9.2% and Adjusted EPS growth of 18.3%.

FINANCIAL HIGHLIGHTS

· Gross profit growth of 8.8% (4.9% organic3); growth across all divisions with Supply Chain & Retail once again outperforming medium term guidance, delivering 5.2% organic growth3.

· Continued growth in gross profit margin from 13.9% to 14.7%, reflecting ongoing focus on margin development in a challenging inflationary environment.

· EBITDA growth of 9.2%, from €41.1m to €44.9m, demonstrating the resilience of the business despite continued macroeconomic uncertainty and inflationary pressures.

· 18.3% adjusted EPS growth to 8.4 cent (June 2021: 7.1 cent).

· The Group continued to execute its growth strategy with the acquisition post period end of Orspec Pharma Pty Ltd. ("Orspec") which provides entry into the strategically important Asia Pacific (APAC) region.

· Robust liquidity with net bank debt of €73.8m at 30 June 2022 (December 2021: €48.3m), leverage remaining low and free cash flow conversion of 47.5% which reflects the unwind of December 2021 working capital positions. Excluding the impact of the working capital movements, free cash flow conversion is within our target range (60-70%).

· The Board have declared an interim dividend of €1.7m (€0.0061 per ordinary share) for the period up to 30 June 2022.

1. Additional information in relation to Alternative Performance Measures (APMs) are set out below.

2. Constant currency growth is calculated by applying the prior period's actual exchange rate to the current period's result.

3. Organic growth is calculated as the gross profit growth of the underlying business in the period adjusting for the contribution from prior period acquisitions and divestments to ensure a like-for-like comparison.

STRATEGIC AND OPERATIONAL HIGHLIGHTS

· Strong performance in the period leveraging the Group's scale and leading market positions to mitigate inflationary headwinds.

· Organic gross profit growth of 4.9% driven by growth across all divisions, with an outperformance in Supply Chain & Retail delivering 5.2%, Commercial & Clinical delivering 4.2% and Product Access delivering 5.7%.

· New five-year banking facility completed post period end which more than doubles the revolving credit facility (RCF) to €400m with an additional uncommitted accordion facility of €150m. Three international banks, Barclays Bank, ING Bank and Citizens Bank joined the existing syndicate increasing the syndicate to seven banks. This new facility provides the platform to accelerate our ambitious growth strategy and acquisition pipeline.

· Robust cash flow performance with reported free cash flow conversion of 47.5%. When adjusted for the impact of the planned unwind of temporary timing benefits, free cash flow conversion is within our target range of 60-70%.

· The Commercial & Clinical division delivered gross profit growth of 9.5% off a very strong comparative period in 2021 where growth of 27.5% was recorded. The diversity of the MedTech portfolio ensured continued growth in the period, while investment in our digital platforms and omni-channel offerings supported our customers in the industry-shift towards a hybrid model of both digital and in-person HCP (Healthcare Professional) engagement.

· Product Access has recently signed its first US Expanded Access Program (EAP) representing a significant milestone in the continued geographic growth of the division. The division continues to target double-digit organic growth in gross profit over the medium term.

· The Supply Chain & Retail division has commenced a strategic investment programme in an Irish-based distribution facility. This multi-year organic investment in a state-of-the-art facility will unlock further operational efficiencies and provide the infrastructure to meet growing market demands by doubling capacity levels and enhancing the division's market leading service offering.

· Post period end, the Group completed the acquisition of Orspec marking our entry into the strategically important APAC market. Orspec, an Australian-headquartered company with additional hubs in Singapore and New Zealand, specialises in the supply of unlicensed medicines and the delivery of Expanded Access Programs across APAC. This acquisition represents our first entrance into the APAC region and further advances our divisional strategy of being a global leader in Product Access services.

· Integration of 2021 acquisitions including CoRRect Medical, BESTMSLs Group, E4H and Devonshire Healthcare Services are progressing well and delivering expected benefits. The acquisition of the Navi Group is subject to approval by the Competition and Consumer Protection Commission (CCPC) and is expected to close later this year.

· Sustainability and governance remain key objectives for the Group and progress was made across all five sustainability pillars. The Group has completed the assessment of its Scope 3 carbon footprint globally and this is included in our 2022 CDP submission.

Ger Rabbette, Uniphar Group Chief Executive Officer said:

"The Group has performed strongly during the period delivering Adjusted Earnings per Share growth of 18%. Each division has delivered organic gross profit growth, underpinned by a strong team performance across the board, with an outperformance in Supply Chain & Retail. The Group has leveraged its scale and diverse service offering to help mitigate inflationary pressures which continue to be a challenge across the globe.

Additionally, we have completed the acquisition of Orspec Pharma, marking our entry into the strategically important Asia-Pacific region. Orspec, headquartered in Australia, will support our goal of becoming a global leader in Product Access services through the provision of Expanded Access Programs and the delivery of unlicensed medicines.

We remain confident and are on track to achieve our strategic objective of doubling 2018 pro-forma EBITDA within five years of IPO"

Analyst presentation

A conference call for investors and analysts will be held at 9am (BST), today, 30 August 2022. To register for the call please visit www.uniphar.ie.

A copy of the presentation and announcement will be available on our website at the time of the call.

Contact details

Cautionary statement

This announcement contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses, and prospects of the Uniphar Group. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these projections and forward-looking statements. Any of the assumptions underlying these projections and forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the projections and forward-looking statements may not actually be achieved. Recipients are cautioned not to place undue reliance on any projections and forward-looking statements contained herein. Except as required by law or by any appropriate regulatory authority, the Uniphar Group undertakes no obligation to update or revise (publicly or otherwise) any projection or forward-looking statement, whether as a result of new information, future events or other circumstances

About Uniphar plc

Headquartered in Dublin, Ireland, the Uniphar Group is an international diversified healthcare services business servicing the requirements of more than 200 multinational pharmaceutical and medical technology manufacturers across three divisions - Commercial & Clinical, Product Access and Supply Chain & Retail. The Group is active in Ireland, the UK, Europe, the US and Australia.

The Company's vision is to improve patient access to pharmaco-medical products and treatments by enhancing connectivity between manufacturers and healthcare stakeholders. Uniphar represents a strong combination of scale, growth, and profitability.

Commercial & Clinical

In Commercial & Clinical, the Group provides outsourced sales, marketing & distribution solutions to multinational pharmaceutical and medical device manufacturers. Active in Ireland, the UK, Benelux, the Nordics, Germany and the US, the Group is growing with its clients to provide pan-European solutions, with a targeted service offering in the US. Uniphar has built fully integrated digitally enabled customer centric solutions that are supported by our highly experienced and clinically trained teams, leveraging our digital technology and insights which allows us to deliver consistently exceptional outcomes for our clients.

Product Access

In Product Access, the Group is growing two distinct service offerings: 1) "On Demand", which are pharmacy led solutions for sourcing and supplying unlicensed medicines to meet the needs of both retail and hospital pharmacists; and 2) "Exclusive Access", which are manufacturer led solutions for controlling the release of speciality medicines for specifically approved patient populations in agreed markets. The Group currently delivers product access solutions on a global basis.

Supply Chain & Retail

Uniphar is an established market leader in Ireland with c. 53% market share in the wholesale/hospital market, supported by a network of 381 owned, franchised and symbol group pharmacies. The business supports the diverse customer base through the provision of strong service levels coupled with innovative commercial initiatives. Supply Chain & Retail is an Irish only business for the Group, although the manufacturer relationships and infrastructure are also utilised for the benefit of the Commercial & Clinical and Product Access divisions.

Overview

Uniphar delivered a strong performance during the first six months of 2022 leveraging its scalable platforms to help mitigate the impact of inflationary pressures and global economic uncertainty. Gross profit growth of 8.8% was driven by organic growth of 4.9% with a particularly strong performance in the Supply Chain & Retail division combined with the benefit of acquisitions completed in 2021. We continue to deliver on our growth strategy, which remains unchanged, of building out our pan-European and global platforms for Commercial & Clinical and Product Access respectively, through acquisition and organic growth, while at the same time investing in both infrastructure and earnings accretive acquisition opportunities in our market leading Supply Chain & Retail division.

Adjusted EPS increased from 7.1 cent to 8.4 cent delivering 18.3% growth. EBITDA has increased by 9.2% (€3.8m) to €44.9m (June 2021: €41.1m) benefitting from the impact of 2021 acquisitions and strong organic gross profit growth across all divisions. EBITDA margin at 4.5% has remained consistent with 2021 levels (June 2021: 4.3%) with growth in gross margin being offset by inflationary challenges and continued investment in our teams and infrastructure.

Return on capital employed (ROCE) for the rolling 12-month period closed at 16.6% (December 2021: 17.6%) performing ahead of the Group's medium term target (12-15%) and reflecting both the increase in operating profit in the period and strong performance from our 2021 acquisitions. The investments made during 2021, both from a capital and acquisitions perspective, will deliver further benefits and growth in the coming years.

The Group continues to maintain its solid financial position, with a robust Balance Sheet, and strong liquidity which is driven by continued focus on working capital management. Net bank debt was €73.8m (December 2021: €48.3m) with low leverage providing a solid platform to support future growth and investment.

A new five-year banking facility (with two one-year extension options) was signed in August 2022. The new facility more than doubles the Group's available facilities with a revolving credit facility of €400m and a €150m uncommitted accordion facility. The banking syndicate has increased to seven banks with the addition of three new international banking partners, Barclays Bank, ING Bank and Citizens Bank joining the existing banking syndicate. The new facility and enlarged banking syndicate provides the platform to accelerate our ambitious growth strategy and acquisition pipeline.

The Group remains focused on delivering on its strategy in the Commercial & Clinical division where we are focused on building a pan-European offering, with a targeted service offering in the US, while in the Product Access division we are targeting a global offering in providing a market leading service in the delivery of Expanded Access Programs. Both enhance our ability to develop new client relationships and achieve growth. In Supply Chain & Retail, our management team have a track record of outperforming the market. We will continue to leverage this valuable experience combined with our digital technologies, hi-tech infrastructure and long-standing manufacturer relationships to grow this division.

Sustainability

Sustainability continues to be a key focus for the Group with progress across all five sustainability pillars in the first half of 2022. Equity, Diversity and Inclusion has been a key focus during 2022 with the launch of our Unity@Uniphar initiative and two employee resource groups - our Women's Alliance and Rainbow Alliance.

On the environmental front, in line with our commitment to setting a science-based carbon reduction target, we completed our first Scope 3 footprint in respect of our global business with the emissions data collected included in our 2022 CDP submission. Having completed a global footprinting data exercise across Scopes 1, 2 and 3, the Group's focus is now on finalising our science-based targets and establishing a decarbonisation strategy to meet our target of 50% reduction in carbon emissions by 2030 from a baseline of 2019.

Following the outbreak of the war in Ukraine, the Group launched the Unity for Ukraine Initiative to provide much needed healthcare supplies and funds to Ukraine. We are incredibly proud that with the dedication of Uniphar's teams, customers and suppliers we saw much needed medical product donated to support humanitarian efforts in Ukraine.

From a corporate governance perspective, in line with commitments made at the time of the Group's IPO, in early 2022 the Board adopted the UK Corporate Governance Code as the corporate governance code of the Group.

Current trading

In the first half of the year, Uniphar performed in line with expectations at a group level, leveraging the scale of our platforms and the diversity of our service offering to help mitigate unprecedented inflation in all markets. Since the period end, the Group has continued to perform in line with expectation notwithstanding continued cost inflationary challenges which the management team are focused on mitigating.

The Group is in a strong position to continue to invest in growth opportunities. Net bank debt was €73.8m (December 2021: €48.3m) at period end and low leverage together with the new banking facility and enlarged banking syndicate provide a solid platform to support future growth and investment as opportunities arise.

The Group continues to deliver on the strategy and growth committed to at IPO and is confident that it will continue to deliver long-term value for our shareholders. Acquisitions, combined with strategic capital expenditure, continue to play an important part in Uniphar's growth strategy, and the Group's Balance Sheet is well placed to support our objectives.

Outlook

Uniphar is well positioned to drive gross profit growth across all divisions and is confident of delivering on current trading expectations for the full year. Cost inflation continues to be a concern and will remain a key focus for management through the remainder of 2022 and into 2023. The business has substantially mitigated the cost pressures experienced to date but given the unprecedented levels of inflation being experienced in certain markets, the Group remains focused on maintaining margins through the current inflationary cycle.

While the Group expects Product Access to deliver mid-single digit organic growth in 2022, the medium term guidance remains unchanged:

· Commercial & Clinical: Mid-single digit

· Product Access: Double-digit

· Supply Chain & Retail: Low-single digit

M&A will continue to play an important role in Uniphar's growth strategy, and we will continue to have a disciplined approach to capital allocation. The Group has an active pipeline of acquisition opportunities to add further scale and breadth to the existing platform.

We are pleased with the progress we have made since IPO towards delivering our target of doubling 2018 pro-forma EBITDA within five years. We are confident we have built the team and platform which, combined with a compelling market opportunity, will enable us to deliver this objective.

Acquisitions and integration update

Post period end, the Group completed the acquisition of Orspec marking our entry into the strategically important APAC markets. Integration of the four acquisitions completed in 2021 is progressing in line with expectations. The acquisition of Navi Group is, as previously disclosed, subject to approval by the CCPC and the Group expects the acquisition to close later this year.

Commercial & Clinical

Integration update

The integration of the 2021 acquisitions of CoRRect Medical, BESTMSLs Group and E4H are progressing well into the Commercial & Clinical division, and all have enhanced the division's ability to build connectivity between its clients and key healthcare stakeholders with its best-in-class digital capabilities. CoRRect Medical has enabled the provision of a fully integrated offering across the important German and Swiss MedTech markets. BESTMSLs Group expands the Group's US presence by providing outsourced medical affairs services including the provision of contract MSL (Medical Science Liaison) teams, recruiting, training, education, and a range of innovative digital solutions for its pharma partners. E4H enhances Uniphar's value proposition by creating a truly differentiated omni-channel offering for pharmaceutical clients looking to commercialise their brands across Europe.

Product Access

Acquisition update

Orspec is an Australian-headquartered company which specialises in the sourcing and procurement of pharmaceutical products for supply on a named patient basis across the Asia Pacific Region. This acquisition represents our first entrance into the APAC region and helps advance our divisional strategy of being a global leader in Product Access services.

Integration update

The integration of the 2021 acquisition of Devonshire Healthcare Services into our Product Access division is progressing well. Devonshire enables Uniphar to expand its global access into key hospitals in the Middle East and North Africa (MENA) region, for the benefit of both its On Demand and Exclusive Access businesses. Devonshire is benefitting from Uniphar's existing operational infrastructure and driving cross-selling opportunities.

Supply Chain & Retail

Acquisition update

In December 2021, the Group announced the acquisition of the Navi Group. The acquisition remains subject to CCPC approval. On completion of this acquisition, the unique technology and value proposition of the Navi Group combined with Uniphar's scalable hi-tech distribution facilities and digital platforms, should deliver an even stronger offering to our independent community pharmacy customer base.

Strategic capital expenditure

The Supply Chain & Retail division has commenced a multi-year strategic investment programme in an Irish-based distribution facility. The Group recognises the strategic need to invest to meet the growing demands of the market and to continue to grow market share. Once completed the facility will incorporate the latest technologies to enable the business to drive operational efficiencies and provide the infrastructure to double current capacity levels. This will further strengthen our already strong position in the Irish market and provide the platform for further growth. The project will take four years to complete, after which it will start to deliver the expected transformational benefits.

Principal Risks & Uncertainties

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. The principal risks & uncertainties faced by the Group can be found in the 2021 Annual Report on pages 27 to 31. A copy of the Annual Report can be downloaded from our website www.uniphar.ie.

2022 Highlights

The Group continues to ensure that the risk management framework is integrated in the day-to-day activities across the business. During the period ended 30 June 2022, the Group carried out the following:

· Reviewed the Group Risk Register, updating for all the key risks facing the Group at this time; and

· Performed a review of emerging and new risks, in particular economic & geopolitical risk with regards to the ongoing war in Ukraine and global economic instability.

The key principal risks and uncertainties faced by the Group are summarised as follows:

Strategic Risks

· Brexit - The post-Brexit environment poses several risks for the Group due to uncertainty and complexities as to the future fiscal and regulatory landscape in the UK. The Group has traded through the initial Brexit uncertainty with Brexit plans in operation and this risk has decreased year-on-year. The Group recognises the potential risk surrounding the agreement of the Northern Ireland Protocol. Overall, this may have a negative impact on EU-UK 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.

· Acquisitions - Growth through acquisitions 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.

· Economic & geopolitical risk - 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 continues to monitor the ongoing war in Ukraine, and the knock-on effects of this on inflation and the cost base.

· Key personnel & succession planning - Failure to attract, retain and develop the skills and expertise of its people may adversely impact the Group's performance.

· Market perception & reputational risk - Failure to deliver in line with market expectations may result in reputational damage, impacting the Group's ability to achieve its strategic targets.

· Loss of competitive position - Failure of the Group to respond to any changes in the environment in which it operates may result in loss of market share, which may put pressure on profitability and margins.

· Environment & sustainability - The increasing global focus on environmental and sustainability governance is recognised by the Group, and by its stakeholders. Failure to appropriately assess, monitor and manage the Group's impact on the environment and the communities in which it operates may result in reputational damage, impacting the Group's ability to deliver results.

Operational Risks

· Pandemic Risk - Covid-19 and its implications continue to evolve and change. Business disruption arising from further waves and variants of the Covid-19 virus, or other future pandemics may result in but is not limited to the following: supply chain disruption, postponement of certain elective surgeries, curtailment of travel and impact on staff.

· IT systems - Digital capabilities are a specific strategic offering of Uniphar, interruption or downtime may have a negative impact on the Group's operations, financial, and competitive positions.

· Cybercrime - Failure to protect against the ongoing threat of a cyber-attack could lead to a breach in security, impacting operations, financial transactions, and sensitive information. The knock-on impact from an attack on one of our business partners is also an area of risk for the Group.

· Business interruption - External factors such as natural disasters, environmental hazard or industrial disputes may result in potential lost sales and loss of customer loyalty.

· Health & safety - Failure to implement and follow proper health and safety procedures may have adverse effects on employees or patients.

· Laws, regulations & compliance - Failure to operate under any of the stringent laws and regulations the Group is subject to could result in financial penalties, reputational damage, and a risk to business operations.

Financial Risks

· Foreign currency - The Group's reporting currency is Euro. Exposure to foreign currency is present in the normal course of business, together with the Group operating in jurisdictions outside of the Eurozone.

· Treasury - The Group is exposed to liquidity, interest rate and credit risks. The Group may be exposed to increased interest rate and credit risks from any changes to economic conditions.

Operational overview

Commercial & Clinical

Overview

Commercial & Clinical provides outsourced sales, marketing and distribution solutions to pharmaceutical and medical device manufacturers on a pan-European basis with a targeted service offering in the US. The division is focused on the commercialisation of speciality products for our manufacturer clients. With an ability to serve 15 countries, we are able to deliver flexible commercial solutions across multiple markets for our key customers. The recent acquisitions of Diligent Health Solutions and BESTMSLs Group in the US, together with E4H in the UK, have further enhanced our service offering by broadening our range of services, with the acquisition of CoRRect Medical enhancing our pan-European MedTech offering and strengthening our interventional portfolio.

H1 2022 Performance

Commercial & Clinical delivered another very strong performance in H1 2022, with organic gross profit growth of 4.2% off a very strong comparative period in 2021, reinforcing our role as a trusted partner to our clients and customers across Europe and the US. The expertise and agility of our teams, our speciality focus, the diversity of our product portfolio and our multi-channel enabled sales teams ensured the business achieved a robust performance in a challenging environment. Commercial & Clinical represents 40% of the Group's gross profit in the first half of 2022.

Key highlights from the six-month period include:

· Revenue growth of 2.9% achieved across the division, against a strong comparative period.

· Gross profit generated from outside Ireland represents 60% of the divisional gross profit.

· Increase in number of manufacturers represented in more than one geography to 75 (June 2021: 59).

· Integration of the acquisitions of BESTMSLs Group, CoRRect Medical and E4H is progressing well.

MedTech

Our Commercial & Clinical MedTech offering provides a fully integrated solution for our clients in sales, marketing and distribution of medical devices across interventional cardiology/radiology, orthopaedics, ophthalmology, minimally invasive surgery, diagnostic imaging and critical care.

The diversity of our MedTech portfolio enabled continued strong organic growth during the Covid-19 pandemic. With the effects of the pandemic now subsiding, our interventional and orthopaedic specialities in particular have helped fuel incremental growth in H1 2022 against a strong comparative period. We have leveraged our speciality expertise to enhance our technology offering by expanding into the surgical robotics space and we see significant growth opportunities in this area in future years. In addition, we have successfully continued to leverage our existing manufacturer relationships to fuel our geographical growth, with the number of manufacturers represented in more than one geography increasing to 75 across Commercial & Clinical.

Our continued focus in expanding our geographic and client base means we are now active in 15 markets. The acquisition of CoRRect Medical in July 2021, with a significant presence in Germany and Switzerland, enhances our pan-European offering and the integration of this business into the wider MedTech business is progressing well.

Pharma

Our Pharma business unit focusses on providing insight-driven, digitally enabled customer centric solutions for pharmaceutical manufacturers. This allows Uniphar to engage with healthcare professionals (HCPs) with targeted information by utilising the channel that is most convenient for them, resulting in better outcomes for both HCPs and pharmaceutical companies. Following the acquisition of BESTMSLs Group, their digital platform, The Doctors Channel, further enhances our engagement capabilities, delivering expert medical information condensed into short streaming videos.

The Covid-19 pandemic forced a rapid rethink in the sales and marketing strategies of pharma companies with a shift away from traditional in-person engagement to a significantly increased demand for digital engagement offerings. Uniphar was able to drive growth through this transition by supporting our customers with our digital propositions and omni-channel offering. As the industry re-emerges from the pandemic it is clear that, while there is a return of in-person engagement, there has been a marked shift and that the future is a hybrid model of digital and in-person engagement which Uniphar's omni-channel offering is well positioned to deliver. Our recent acquisition of E4H builds on our capabilities to further support our customer proposition and create a truly differentiated omni-channel offering in the industry.

The acquisitions of Diligent Health Solutions (H2 2020), and BESTMSLs Group (H2 2021) have extended our presence into the strategically important US market, and significantly enhances the capabilities of the Pharma business unit. While Diligent and BESTMSLs are US-based, our focus is to continue to enable these service offerings across our Commercial & Clinical and Product Access targeted geographies.

Product Access

Overview

Uniphar's Product Access division works to provide equitable access to medicines for patients on a worldwide basis. Partnering with manufacturers, we provide the global reach and world class execution required to help them to ensure patients can get access to their early stage, hi-tech or otherwise difficult to source medicines. Our digital and regulatory capabilities complimented by our expert multilingual teams enable us to offer a high standard of service quality and implementation.  Product Access represents 15% of the Group's gross profit in the first half of 2022.

H1 2022 Performance

Following an exceptionally strong 2021, Product Access reported positive gross profit growth of 8.8% to €21.8m in the first six months of 2022. The reduction in revenue during the period is reflective of a significant EAP contract moving to the commercialisation stage of its development lifecycle. 

Key highlights from the period include:

· Gross margin % improvement to 29.3% with focus on higher margin opportunities.

· 56% of the division's gross profit is generated outside of Ireland.

· Strong gross profit growth of 8.8% off the back of an exceptionally strong 2021 performance.

· The integration of Devonshire Healthcare Services, which was acquired in Q4 2021, is proceeding in accordance with plan and opening up opportunities in the MENA region.

Exclusive Access

Expanded Access Programmes (EAPs) allow pharmaceutical companies to provide medicines to patients when a product has not yet been licensed in a jurisdiction, or has been licensed, but is not yet eligible for reimbursement by the relevant authority. During the period, the business has secured four additional global programmes across several new clients.

Patient centricity is at the heart of everything we do and our bespoke digital platform developed by our team at Innerstrength, enhanced with the regulatory knowledge and skillset of the team at RRD, enables exceptional execution across all geographies.

The division recently signed its first EAP in the US which has been a key strategic objective of the business. This represents a significant milestone in becoming a global leader in this space.

On Demand

Uniphar is well positioned as a major supplier of unlicensed medicines to specialist importers around the globe. While Pharmasource, our Irish based On Demand business, continues to deliver record performance achieving double digit growth in a mature market and our focus on expanding our market share across the UK continues, we are also targeting non-EU markets, particularly through our Q4 2021 acquisition of Devonshire Health Services. 

During the period, the Devonshire business migrated to our Durbin UK Heathrow facility to realise the commercial and operational scale identified at the time of acquisition. The integration of Devonshire is progressing well with a continued focus on identifying additional opportunities across the MENA region to provide solutions to customers' sourcing challenges. 

Acquisition

Post period end, the Group completed the acquisition of Orspec, marking our entry into the strategically important APAC market. Orspec, an Australian-headquartered company with hubs in Singapore and New Zealand, specialises in the supply of unlicensed medicines and the delivery of Expanded Access Programs across APAC. Orspec brings a strong management team to the Group with region-specific expertise. This acquisition represents our first entrance into the APAC region and further advances our divisional strategy of being a global leader in Product Access services.

Supply Chain & Retail

Overview

The Supply Chain & Retail division comprises of our pre-wholesale and wholesale pharmaceutical distribution business, with approximately 1,900 community pharmacy customers and a vertically integrated model with 381 owned, franchised or supported pharmacies. Uniphar holds c.53% of the current market share and is an essential part of the national health infrastructure in Ireland.

H1 2022 performance

· 8.2% growth in gross profit of which 5.2% is organic growth.

· Six independent community pharmacies acquired in H1 2022.

· Continued growth of our consumer product offering supported by the addition of the Dr Hauschka brand of natural skincare products in the period.

· Digital innovation and transformation supporting our retail pharmacy partners.

Wholesale

The wholesale business performed strongly in the period with robust underlying volumes across all key categories. Growth was achieved through a combination of market recovery compared to 2021 coming out of the Covid-19 pandemic aided by a surge in Covid-19 related sales in the early part of 2022. Prescription and OTC (Over The Counter) products continue to be at the core of what we provide to our community pharmacy customers.

Pre-wholesale

The pre-wholesale business continued to experience growth in the period despite macroeconomic headwinds. The continued investment in our infrastructure to ensure operational excellence for our customers has ensured several successful contract renewals in the period.

The new four-year IPHA (Irish Pharmaceutical Healthcare Association) agreement came into effect in 2022, bringing with it market changes across our client manufacturer portfolios due to the growing penetration of biosimilar products. The new agreement gives pricing stability for the next four years, positioning the pre-wholesale business strongly moving forward.

Retail

The business supports a network of 381 pharmacies either owned or franchised through the Uniphar symbol group. Symbol group members are offered a range of both front and back-office support, in addition to a dedicated team on the ground to enable community pharmacies to better compete with the larger and multi-national owned chains. The business acquired six independent community pharmacies in the period which are being integrated into the division as planned.

Retail pharmacies have performed well in the period recovering from the Covid-19 pandemic which was a factor in the comparative period in 2021. Mitigating the inflationary headwinds was a focus for the period and will continue to be managed closely for the remainder of the year.

Online/Digital

We have brought our pharmacy customers on a journey with us in recent years in digitising and automating processes for our pharmacy teams. During the period, we launched the Hickey's B2C ecommerce platform and made further strides in digital innovation in our supported pharmacies. Our symbol groups now offer online doctor services, customer phone apps and online shopping.

Acquisitions

The acquisition of Navi Group is, as previously disclosed, subject to approval by the CCPC and the Group expects the acquisition to close later this year. This strategic acquisition brings market share in the form of additional pharmacy customers, an innovative and experienced trading team and importantly a number of innovative proprietary digital solutions for retail pharmacies. This will accelerate our ability to support our customers to achieve a fully connected pharmacy.

Strategic capital expenditure

The Supply Chain & Retail division has commenced a strategic investment programme in an Irish-based distribution facility. This multi-year organic investment in a state-of-the-art facility will unlock further operational efficiencies and provide the infrastructure to meet growing market demands by doubling capacity levels and enhancing the division's market leading service offering.

Financial Review

Summary financial performance

Revenue

Revenue increased by 2.8%, which was achieved through a combination of organic growth, driven by a strong performance in the Supply Chain & Retail and Commercial & Clinical divisions together with the impact of the 2021 acquisitions.

Gross profit

Gross profit has increased by 8.8% due to a particularly strong performance in the Supply Chain & Retail division combined with the impact of the 2021 acquisitions for the first six months. The Gross profit margin has increased from 13.9% to 14.7% reflecting the continued expansion of the Group into higher margin businesses and sectors.

Divisional gross profit

EBITDA

EBITDA has increased by €3.8m (9.2%) to €44.9m. The main drivers for this are the growth in revenue, particularly of higher margin businesses, coupled with the impact of the 2021 acquisitions. Overheads have increased to reflect the business investment for future growth, combined with some inflationary pressures on cost.

Exceptional items

Exceptional costs amounted to €5.5m for the period and primarily relate to restructuring costs (€2.7m), professional fees associated with acquisitions (€2.0m) and acquisition integration costs (€1.1m) offset by an associated exceptional tax credit. Further details are provided in note 3.

Earnings per share

Basic earnings per share increased from 5.7 cent to 5.9 cent. The increase in earnings has been partially offset by an increase in the weighted average number of shares from 267,137,000 to 272,297,000. The weighted average number of ordinary shares includes the effect of shares granted under the LTIP arrangement that have met the share price performance conditions but will not vest until 31 December 2024.

Adjusted earnings per share has increased from 7.1 cent to 8.4 cent reflecting the strong performance in the business. Growth in adjusted earnings per share is partially offset by an increase in the weighted average number of shares in issue during the period.

On a like for like basis, adjusted earnings per share increased from 7.0 cent to 8.4 cent by applying the weighted average number of shares as at June 2022 to both periods, to provide a more meaningful comparison.

Cash flow and net bank debt

The free cash flow conversion in the six months to 30 June 2022 was 47.5% (2021: 69.6%) reflecting the unwind of working capital positions from 2021 with the Group's net bank debt position being €73.8m. This reflects an increase in net bank debt of €25.5m primarily driven by investment in acquisitions and strategic capital projects.

The Group remains focused on strong working capital management, and this is reflected in the cash generated from operating activities of €10.7m. Stock balances have increased reflecting trading volumes and some increased stocking as a result of supply chain challenges.

The net cash outflow from investing activities of €25.5m primarily consists of payments for acquisitions of €14.2m and capital investments of €11.3m. Of the capital investments, €7.1m is strategic in nature including €5m for the commencement of investment in a new distribution facility.

The net cash inflow from financing activities of €5.5m was due to a further drawdown of borrowings to support business growth offset by principal lease payments and the payment of dividends.

Net banking facility

The Group has entered into a new five-year banking facility which more than doubles the revolving credit facility (RCF) to €400m with an additional uncommitted accordion facility of €150m. Three international banks, Barclays Bank, ING Bank and Citizens Bank joined the existing syndicate increasing the syndicate to seven banks. This new facility provides the platform to accelerate our ambitious growth strategy and acquisition pipeline.

Taxation

The tax charge in the period is €4.5m and equates to an effective tax rate of 17.3%. This compares to a charge of €5.4m in the same period last year and an effective tax rate of 16.8% for the 2021 financial year. The increase in the effective tax rate of 0.5% is attributable to the increased contribution of profits from higher tax rate jurisdictions. The effective tax rate is calculated as the income tax charge for the period 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 Eurozone, 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.

On a constant currency basis, revenue increased by 2.4% (vs 2.8% reported growth), gross profit increased 7.6% (vs reported growth 8.8%) and operating profit increased by 5.2% (vs 6.2% reported growth).

Return on capital employed

Return on capital employed for the rolling 12-month period closed at 16.6% (December 2021: 17.6%) performing in line with the Group's medium term target and reflecting both the increase in operating profit in the period and strong performance from our recent acquisitions. The investments made during 2021, both from a capital and acquisitions perspective, will deliver further benefits and growth in the coming years. The reduction since December 2021 reflects the impact of the Group's recent acquisitions where the Group has expanded into new geographies and higher margin opportunities.

Dividends

A final dividend of €3m relating to 2021 was paid in May 2022. The Board has committed to a progressive dividend policy and, reflective of this, a 2022 interim dividend of €1.7m (€0.0061 per ordinary share) has been declared. It is proposed to pay the dividend on 6 October 2022 to ordinary shareholders on the Company's register on 9 September 2022.

In accordance with company law and IFRS, these dividends have not been provided for in the Balance Sheet at 30 June 2022.

Statement of Directors' responsibilities

The Directors confirm to the best of their knowledge that the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the EU, and to the best of their knowledge and belief:

a) the condensed consolidated interim financial statements comprising the Condensed Consolidated Group Income Statement, the Condensed Consolidated Group Statement of Comprehensive Income, the Condensed Consolidated Group Balance Sheet, the Condensed Consolidated Group Cash Flow Statement, the Condensed Consolidated Group Statement of Changes in Equity and related notes have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU, and are prepared in order to comply with the Euronext Growth Market Rule Book and AIM Rules for Companies;

b) the interim results include a fair review of the important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated interim financial statements for the half year ended 30 June 2022.

Signed on behalf of the Board

M. Pratt G. Rabbette

29 August 2022

Independent review report to Uniphar Plc

Report on the condensed consolidated interim financial statements

We have reviewed Uniphar Plc's condensed consolidated interim financial statements (the "interim financial statements") in the 2022 Interim results of Uniphar Plc for the six month period ended 30 June 2022 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial

Reporting', as adopted by the European Union.

The interim financial statements, comprise:

· the Condensed Consolidated Group Balance Sheet as at 30 June 2022;

· the Condensed Consolidated Group Income Statement for the period then ended;

· the Condensed Consolidated Group Statement of Comprehensive Income for the period then ended;

· the Condensed Consolidated Group Cash Flow Statement for the period then ended;

· the Condensed Consolidated Group Statement of Changes in Equity for the period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the 2022 Interim results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

We conducted our review in accordance with International Standard on Review Engagements (Ireland) 2410, 'Review of

Interim Financial Information Performed by the Independent Auditor of the Entity' ("ISRE (Ireland) 2410") issued for use

in Ireland. A review of interim financial information consists of making enquiries, primarily of persons responsible for

financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing

(Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the 2022 Interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for

conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately

adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (Ireland) 2410. However future events or conditions may cause the group to cease to continue as a going concern.

Our responsibilities and those of the directors

The 2022 Interim results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the 2022 Interim results in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. In preparing the 2022 Interim results, the directors are responsible for assessing the group'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 to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the 2022 Interim results based on our

review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for management purposes and for no other purpose. We do not, in giving this conclusion, 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.

PricewaterhouseCoopers

Chartered Accountants

29 August 2022

Dublin

Notes:

(a) The maintenance and integrity of the Uniphar plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Condensed Consolidated Group Income Statement

for the six months ended 30 June 2022

Condensed Consolidated Group Statement of Comprehensive Income

for the six months ended 30 June 2022

Condensed Consolidated Group Balance Sheet

as at 30 June 2022

Condensed Consolidated Group Cash Flow Statement

for the six months ended 30 June 2022

Condensed Consolidated Group Statement of Changes in Equity

for the six months ended 30 June 2022

Notes to the Consolidated Financial Statements

1. General information

Basis of preparation

The condensed consolidated interim financial statements of Uniphar plc and its subsidiaries (the 'Group') have been prepared in accordance with IAS 34, Interim Financial Reporting, as endorsed by the European Union. 

The financial information in the condensed interim consolidated financial statements has been prepared on a basis consistent with that adopted for the year ended 31 December 2021. The accounting policies applied in the interim financial statements are the same as those applied in the 2021 Annual Report.

The Group's auditors have reviewed, not audited the condensed consolidated interim financial statements contained in this report. These interim financial statements are prepared in order to comply with the Euronext Growth Market Rule Book and AIM Rules for Companies and are not statutory financial statements as they do not include all of the information required for full annual financial statements and should be read in conjunction with the Uniphar Group Annual Report (statutory financial statements) for the year ended 31 December 2021. The audit report on those statutory financial statements was unqualified and did not contain any matters to which attention was drawn by way of emphasis.

The preparation of interim financial statements in compliance with IAS 34 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 interim 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 to the financial statements are disclosed in the Group's Annual Report for the year ended 31 December 2021 in note 1 on pages 125 to 126.

The Group's interim financial statements are prepared for the six-month period ended 30 June 2022. The interim 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.

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, D24 V06K.

Going Concern

The Group Condensed Consolidated Interim Financial Statements have been prepared on the going concern basis of accounting. 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 geopolitical risk.

Uniphar plays a significant role in the healthcare sector, ensuring continuity in the supply and distribution of much needed medicines, medical devices, and related services.

The Group has a robust capital structure with strong liquidity at the end of June 2022, supported by the recent renewal of our banking facility together with the addition of three new international banking partners. This provides a solid platform for the Group to deal with challenges that may arise caused by geopolitical or macroeconomic risks.

Having regard to the factors outlined above and noting the financial impact of the recently announced acquisition, 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 interim financial statements. As a result, the Directors consider that it is appropriate to continue to adopt the going concern basis in preparing the interim financial statements.

New Standards, Amendments, and Interpretations

There have been no accounting standards, amendments and interpretations that are effective for the first time in respect of the Group condensed interim financial statements for the six months ended 30 June 2022.

New Standards and Interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2022 reporting periods and have not been 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.

2. Revenue and segments

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 UK. The Group also operates in other European countries and the US 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 the country of domicile (Ireland) and countries with material revenue.

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 align to the Group's operational and financial management structures:

· 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 offers a fully integrated digitally enabled customer centric 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 and Exclusive Access. On Demand 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 the Irish, UK and MENA markets. Exclusive Access provides bespoke distribution partnerships to pharmaceutical partners around key brands, with new programs focused on speciality pharmaceutical products. The division delivers a unique patient support program that allows healthcare professionals to connect with patients on a global basis; and

· 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. Uniphar operate a network of pharmacies under the Life, Allcare and Hickey's brands. Additionally, through the extended Uniphar symbol group, the business provides services and supports that help independent community pharmacies to compete more effectively.

Operating segments results

The Group evaluates performance of the operational segments on the basis of gross profit from operations.

Assets and liabilities are reported to the Board at a Group level and are not reported on a segmental basis.

3. Exceptional charge

Professional fees including acquisition costs

Professional fees including acquisition costs incurred during 2022 are primarily relating to costs relating to acquisitions disclosed in note 17 together with costs incurred on transactions currently under consideration.

Acquisition integration costs 

Acquisition integration costs primarily relate to payments made to staff agreed as part of the RRD International acquisition which do not qualify for classification as consideration due to the continuing employment requirement for the individuals.

Redundancy and restructuring costs

These costs include restructuring and reorganisation costs relating to group entities and recent acquisitions.

Exceptional credit recognised in tax charge

The tax credit recognised in the tax charge is the tax impact of the components of the Exceptional charge listed above.

4. Finance cost

5. Earnings per share

Basic earnings per share and diluted earnings per share for the six months ended 30 June have been calculated by reference to the following:

Adjusted earnings per share has been calculated by reference to the following:

The weighted average number of ordinary shares includes the effect of shares granted under the LTIP arrangement that have met the share price performance conditions during the period but will not vest until 31 December 2024.

6. Dividends

A final dividend of €3.0m (€0.011 per ordinary share) relating to 2021 was declared and paid in May 2022 (June 2021: €4.2m). Continuing with the Board's commitment to a progressive dividend policy, the Board declared a 2022 interim dividend of €1.7m (€0.0061 per ordinary share). It is proposed to pay the dividend on 6 October 2022 to ordinary shareholders on the Company's register on 9 September 2022.

In accordance with company law and IFRS, these dividends have not been provided for in the Balance Sheet at 30 June 2022.

7. Intangible assets, and right-of-use assets

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).

There is no material change to the circumstances that existed at 31 December 2021 and consequently no impairment indicators were identified. The Group's annual impairment assessment will be performed at 31 December 2022.

8. Property, plant and equipment, and right-of-use assets