Uniphar Regulatory News (UPR)

Uniphar plc

2023 Interim Results

Uniphar plc, an international diversified healthcare services business, announces its half year results for the six months ended 30 June 2023 together with new medium-term targets and a new divisional structure that reflects our strategic ambition.

FINANCIAL HIGHLIGHTS

· Gross profit growth of 28.6% (5.5% organic3) reflecting growth across all divisions with Supply Chain & Retail continuing to outperform medium-term guidance with 7.7% organic growth3.

· Continued progression in gross profit margin from 14.7% to 15.2%, reflecting focus and growth in higher margin activities.

· EBITDA growth of 13.8%, from €44.9m to €51.1m, demonstrating the resilience of the business and continued focus on growth.

· Adjusted EPS of 7.4 cents representing a decline of 1.0 cents primarily due to increased financing costs.

· Acquisition of the McCauley Pharmacy Group ("McCauley") completed in January 2023 enhances our retail pharmacy footprint and service offering. McCauleys are recognised as a market leader in the delivery of health, wellbeing and beauty products.

· Continuing strong normalised free cash flow conversion of 68% (30 June 2022: 70%) which is within our guided range.

· Net bank debt of €178.0m at 30 June 2023 (December 2022: €91.2m) and leverage at 1.95x.

· The Board have declared an interim dividend of €0.0064 per ordinary share for the period to 30 June 2023 representing growth of 5% in the period (30 June 2022: €0.0061 per ordinary share).

1. Additional information is set out in Alternative Performance Measures (APMs) section.

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

· The Group performed strongly during the period and has achieved its target of doubling 2018 pro forma EBITDA ahead of the timeframe committed to at the time of IPO.

· The Group is pleased to announce an ambitious new target of growing Group EBITDA to €200m over the medium-term. This will be achieved through a combination of strong organic growth complemented with acquisitions that meet our disciplined strategic and financial criteria.

· Technology investment is critical in enabling the Group to deliver on its strategic ambitions. The Group will invest c.€60m of strategic capital expenditure in an IT and ERP investment programme that will future proof our market leading Supply Chain and Retail division and enable us to scale our global Pharma platforms. The implementation will be delivered in a non-live environment which significantly reduces the risk on the programme.

· The Group intends to create a new divisional structure (to be reported from FY23 onwards) to capitalise on the attractive growth opportunities in our target markets and better align with our customers and stakeholders during this next phase of growth:

§ Uniphar Medtech: the Medtech business unit of Commercial & Clinical will become a standalone division reflecting its position as a leading specialist Medtech provider in Europe.

§ Uniphar Pharma: the Pharma business unit of Commercial & Clinical will be combined with Product Access to create 'Uniphar Pharma'. This platform will enable Uniphar to provide an enhanced service offering across the entire lifecycle of an asset, providing patients with access to innovative medicines in global and often complex markets.

§ Uniphar Supply Chain & Retail: the Supply Chain & Retail division will remain unchanged in the new divisional structure.

· Organic gross profit growth of 5.5% in H1 2023, driven by growth across each of our three divisions:

§ Supply Chain & Retail division: 34.1% gross profit growth of which 7.7% is organic growth. This outperformance highlights our strong market position, the resilience of the Irish market and supports our investment in the division to build future capacity to ensure continued growth.

§ Product Access delivered 73.1% gross profit growth of which 8.5% is organic growth. The growth in gross profit reflects strong underlying business performance combined with the acquisitions of BModesto Group and Orspec Pharma in 2022. These acquisitions demonstrate the Group's commitment to creating a market leading global platform and have provided increased scale across continental Europe and the APAC region.

§ Commercial & Clinical division delivered gross profit growth of 6.0% of which 1.0% is organic, driven by a strong performance in the MedTech business unit offset by the Pharma business unit that is refocusing and investing to address the market opportunities that can be capitalised on under the new divisional structure.

· Reported free cash flow conversion of 25.9%. When adjusted for the unwinding of the temporary favorable timing positions in December 2022, the adjusted free cash flow is 67.8% which is within our target range of 60-70%.

· The Group completed the acquisition of the McCauley Pharmacy Group in January 2023 which further enhances the Group's offering in the Irish retail pharmacy market with the addition of 34 retail pharmacies. In August 2023, the Group completed the acquisition of certain assets from Pivot Digital, an omni-channel and digital strategy consultancy business. These capabilities will be integrated into the consultancy arm of Uniphar's Pharma division broadening the Group's overall digital offering.

· Integration of 2022 acquisitions including BModesto Group, Inspired Health and Orspec Pharma are progressing well and delivering expected benefits.

· The Group made continued progress on Sustainability across all five of our sustainability pillars. The Group's MSCI rating has recently been upgraded to "AAA". Furthermore, the Group formally submitted Science Based Targets to SBTi for validation during the period.

Ger Rabbette, Uniphar Group Chief Executive Officer said:

"Just over four years post-IPO, I am pleased to announce that we have already achieved our IPO target of doubling EBITDA within five years. We are now focused on creating a strong foundation for our next phase of growth, reorganising our divisions to reflect our strategic ambitions and accelerating our progress in our target markets. As well as maintaining an active acquisition pipeline, we are also making a significant investment in our IT systems to further enhance the technological backbone of our business and reach our ambitious new target of €200m EBITDA over the medium-term."

Analyst presentation

A conference call for investors and analysts will be held at 9am (BST), today, 14 September 2023. Analysts and investors who wish to participate should visit www.uniphar.ie to register.

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 has an established presence in Ireland, the UK, Europe, the US and Asia Pacific.

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 423 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 robust performance during the first six months of 2023, achieving significant growth in gross profit and EBITDA. Gross profit growth of 28.6% was driven by organic growth of 5.5% in addition to the impact of the acquisitions completed in the past year. The diversity and geographic breadth of our service offering enables the business to deliver consistent growth.

The Supply Chain & Retail division delivered an excellent performance in a market characterised by medicine shortages and inflationary pressure on costs. Commercial and Clinical delivered a robust performance with the MedTech business unit performing strongly, offset by a Pharma business unit that is refocusing and investing to address the market opportunities that the new divisional structure will enable it to better capitalise on. The Group continues to develop its European medical affairs offering with expertise now available in 11 European countries. The Product Access division leveraged its global scale to support the heightened demand for medicines in short supply in addition to being awarded 8 new expanded access programs (EAPs) in the period. Gross profit margin increased to 15.2% (June 2022: 14.7%), reflecting the Group's ability to deliver growth at a time when input costs are increasing.

The integration of BModesto Group, acquired in late 2022, is progressing in line with plan with previously identified revenue synergies being realised. The acquisition provides the Group with increased scale and a gateway into key European markets. This investment, combined with the previous investments in the division, will enable pharma and biotech customers to bring innovative medicines to global markets across their product lifecycles.

EBITDA has increased by 13.8% (€6.2m) to €51.1m (June 2022: €44.9m) reflecting organic growth achieved across all divisions and the positive contribution of the 2022 acquisitions. Adjusted EPS of 7.4 cents declined by 1.0 cent reflecting the impact of higher interest rates on the Group.

Return on capital employed (ROCE) for the rolling 12-month period closed at 14.7% (December 2022: 17.3%) and is at the upper end of the Group's medium-term target of 12-15%. The change in ROCE is reflective of recent acquisitions and investment in strategic capital expenditure that will deliver improved growth and returns in future years.

Technology has been a key enabler of the Group's growth since IPO and continued investment in technology is critical to enabling the Group to deliver on our medium-term objectives. The Group will invest c.€60m in an IT and ERP investment programme. This investment will future proof our market leading Supply Chain and Retail division whilst enabling us to scale our Pharma platform. The implementation will be delivered in a non-live environment which significantly reduces the risk on the programme.

The Group's Balance Sheet remains robust. Net bank debt at 30 June 2023 amounted to €178.0m (31 December 2022: €91.2m) with the increase attributable to completing the McCauley acquisition and strategic capital investment. The Group's banking facility, renewed in August 2022, consists of a €400m revolving credit facility and €150m of an uncommitted accordion facility and provides a stable platform to support the Group's growth and investment strategy. The Group's leverage of 1.95x as at 30 June 2023 remains within its medium-term target range.

The Group remains focused on delivering its vision of improving patient access to innovative therapies and treatments by enhancing connectivity between manufacturers and stakeholders. Having achieved the commitments made at the time of IPO, the Group announces ambitious new medium-term targets and our intention to create a new divisional structure that reflects our strategic ambition. We are confident we have the right strategy, the best people and the market opportunity to continue to deliver for our stakeholders.

Sustainability

Uniphar is committed to continuing to make a positive impact across our five sustainability pillars and embedding this strategy within the culture of the Group.

The Group has recently had its MSCI ESG rating upgraded to "AAA" which reflects the Group's commitment to being a leader in sustainability initiatives. Furthermore, the Group formally submitted Science Based Targets to SBTi for validation during the period. This follows the completion of our first Scope 3 assessment during 2022 and is in line with our commitment to setting a science-based carbon reduction target. Pending validation of our SBTi targets, we have set an internal target to reduce our absolute Scope 1 & 2 emissions by 5% per annum between 2019 and 2030, in line with the SBTi 1.5˚C aligned pathway for targets. This would see the Group achieve our climate ambition of at least 50% reduction in our absolute Scope 1 & 2 emissions by 2030.

Current trading

In the first half of 2023, Uniphar performed in line with expectations delivering strong underlying growth offset by higher interest costs. Since the period end, the Group has continued to perform in line with the board's expectations.

Outlook and new targets

Uniphar remains well positioned to achieve continued gross profit growth in each division and is confident of delivering on expectations for the full year.

The Group is pleased to announce a new ambitious target of growing Group EBITDA to €200m over the medium-term. This will be achieved through a combination of strong organic growth across each division complemented by earnings accretive M&A. The Group expects the growth in EBITDA to be delivered through:

· Continued strong organic growth in all three divisions driven by robust underlying market growth and continued market share gains underpinned by an investment programme in infrastructure, digital platforms, strategic capex and talent.

· M&A remaining a key component of the Group's compounding growth story with a pipeline of acquisition opportunities continuing to be reviewed to add further scale and breadth to the existing platform with a focus on building out the Pharma platform.

Our medium-term guidance for gross profit growth for the new divisions is:

· Uniphar Pharma: Double digit

· Uniphar Medtech: High-single digit

· Uniphar Supply Chain & Retail: Low-single digit

Disciplined capital allocation remains a focus for the Group and M&A is expected to continue to play an important role in Uniphar's growth strategy. The Group has an active pipeline of acquisition opportunities to add further capability to our existing platform.

In addition to the headline EBITDA growth target, the Group's broader medium-term guidance is as follows:

· Target ROCE of 12% - 15%

· Focus on cash generation and target an adjusted free cash flow conversion of 60% - 70%

· Progressive dividend policy that seeks to return capital to shareholders each year

· Net bank debt / EBITDA not to exceed 2.5x

Acquisitions and integration update

Uniphar completed the acquisition of the McCauley Pharmacy Group in the period which added 34 pharmacies to the Group. The integration of the acquisitions completed during 2022 are progressing well and in line with expectation. The Group maintains a disciplined approach to capital allocation with an active pipeline of acquisition opportunities across all divisions and internationally to further expand our capability and geographic reach.

Commercial & Clinical

Acquisition update

In August 2023 the Group acquired certain assets and contracts from Pivot Digital. Pivot provide omni-channel consultancy, digital strategy and execution services to global pharma and biotech clients. Pivot's capabilities will be integrated into the consultancy arm of Uniphar's Pharma division broadening the group's digital offering.

Integration update

The Group acquired Inspired Health in September 2022 which increases Uniphar's capability to offer market research and commercialisation insights to pharmaceutical and MedTech manufacturers and further deepens our presence in the strategically important US market. The integration of the business into the wider Group is progressing well and in line with expectations.

Product Access

Integration update

The integration of the acquisitions of the BModesto Group in November 2022 and Orspec Pharma in August 2022 are progressing well delivering previously identified revenue synergies and creating cross-selling opportunities. The BModesto Group provides a wide range of services including the distribution of medicines on both an exclusive and on-demand basis, clinical trial services, market authorisation holder and medical device distribution. The acquisition broadens our European scale with a well-located facility in the Netherlands to supply mainland Europe.

Orspec Pharma provides the Group with physical infrastructure in the Asia Pacific region. Orspec Pharma specialises in the supply of unlicensed medicines and the delivery of EAP's across the Asia region from its locations in Australia, New Zealand and Singapore.

Supply Chain & Retail

Acquisition update

In January 2023, the Group completed the acquisition of the McCauley Pharmacy Group. This acquisition added 34 pharmacies net of three divestments which were completed as a requirement of the CCPC approval. The McCauley Pharmacy Group is widely recognised as a leading brand across health, wellbeing and beauty, and their expertise and advanced digital offering will complement our fast-growing consumer business in the Supply Chain & Retail division.

Strategic capital expenditure

Uniphar's track record of investment in technology has been a critical enabler of the Group's transformational growth journey to date. To continue to support sustainable growth into the future, Uniphar has committed to a multi-year ERP and IT investment programme. Through the previously announced investment in a new state of the art distribution facility, Uniphar have the unique ability to implement this investment programme in a non-live environment, significantly de-risking the programme. This investment will provide the foundation in which to future proof our market leading Supply Chain & Retail division and will enable us to scale our global Pharma platforms. Uniphar estimate this project will require c.€60m of strategic capex. This investment is a key component in achieving our new medium-term target of €200m EBITDA.

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 2022 Annual Report on pages 30 to 34. A copy of the Annual Report can be downloaded from our website www.uniphar.ie.

2023 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 2023, 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 and 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

· Economic and 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 challenges posed by higher inflation and interest rates on the Group and its stakeholders.

· 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.

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

· 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. Furthermore, failure to comply with mandatory reporting obligations may impact the Group's financial and operational results.

· Transformation project execution - The Group is embarking on several transformational projects that will provide the platform and capacity to grow over the coming years. Failure of the Group to effectively deliver such projects may result in cost overruns or reputational damage impacting the Group's ability to deliver strategic targets.

Operational Risks

· 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.

· 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.

· 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 is exposed to increases in interest rates and credit risks from changes to economic conditions.

Business Reviews

Commercial & Clinical

Overview

Commercial & Clinical provides outsourced sales, marketing, distribution and consultancy solutions to pharmaceutical and medical device manufacturers on a pan-European basis, serving 15 European countries in H1 2023 compared to four at the time of IPO, with a targeted service offering in the US. The division is focused on the commercialisation of speciality products to ensure that patients and their physicians are offered the best treatments for their conditions. The division has two business units, MedTech and Pharma, both of which are driven by the mission of ensuring patients have access to the treatments they need when they need them.

H1 2023 Performance

Commercial & Clinical delivered organic gross profit growth of 1% in H1 2023. The MedTech business unit delivered strongly against their strategy and that growth was offset by the Pharma business unit which is refocussing and investing to address the market opportunities that the new divisional structure will enable it to capitalise on.

Key highlights from the six-month period ended 30 June 2023 include:

· Gross profit growth of 6% against a strong comparative period driven by growth in the gross profit margin to 40.1%.

· Gross profit generated from outside Ireland represents 52% of the divisional gross profit.

· Growth in gross profit margin from 36.1% (June 2022) to 40.1%

· Rebrand of the MedTech entities under the brand 'Uniphar MedTech' further integrating the pan-European offering.

· Increase in number of manufacturers represented in more than one geography to 83 (June 2022: 75).

· Integration of the acquisition of Inspired Health is progressing well.

MedTech

The MedTech business unit provides a fully integrated solution for our clients in sales, marketing and distribution of medical devices across specialisms such as interventional cardiology and radiology, orthopaedics, ophthalmology, minimally invasive surgery, diagnostic imaging and critical care.

The business delivered strong growth in the period capitalising on our ability to deliver excellent service to our customers. Our business continued to partner with suppliers on supply chain constraints and improvement is being seen against the challenges experienced in 2022. A focus for the business in 2023 has been the continued integration of our pan-European service offering. The consolidation of our business unit under a single brand name of 'Uniphar MedTech' is the next step in that journey.

The strength of MedTech has been the geographic and clinical diversity of its portfolio combined with deep trusted relationships with manufacturers and customers. The opening of a US-based facility in mid-2023 gives the business the capability to support European MedTech manufacturers seeking to access the US market in addition to offering pharma solutions to US manufacturers.

Pharma

The Pharma business unit supports pharmaceutical partners in driving the commercialisation of their products leveraging data, insights and marketing solutions to deliver targeted omni-channel solutions. The pharmaceutical industry is constantly evolving as manufacturers develop innovative therapies and seek new methods of commercialising them.

Pharma delivered a solid performance in 2023 with the result reflective of a period of refocusing and investing to address the market opportunities that the new divisional structure will enable it to capitalise on. The business has capitalised on the emergence of the hybrid model of engagement with Healthcare Practitioners (HCP's) combining both in-person and virtual engagement. HCP's now seek information that is customised to their interests, delivered in a convenient medium at a time of their choice rather than mass marketing. Uniphar Pharma's suite of services across the product lifecycle enable us to support our customers reach their target markets and drive growth.

Our recently launched medical affairs capability across Europe is a valuable addition to the suite of services we can offer our customers. The division is developing local medical affairs expertise in 11 countries across Europe and the market response has been positive to date. This experienced team has launch experience in Rare Disease, Immunology, Oncology, Haematology, Neurology, Vaccines and Paediatrics and will support clients launching therapies in European markets that address unmet needs and deliver the best quality of care for patients.

Product Access

Overview

The Product Access division is focussed on ensuring equitable access to medicines for patients. We partner with manufacturers to provide global reach and world class execution to get their medicines to the patients who need them with many of these being early stage, high tech or otherwise difficult to source medicines. The division operates through two business units being On Demand and Exclusive Access.

H1 2023 Performance

Product Access achieved transformational growth in the period driven by the acquisitions of BModesto Group and Orspec Pharma in the second half of 2022. Gross profit increased by 73.1% to €37.8m with organic gross profit growth of 8.5% achieved in the period.

Key highlights from the period include:

· Gross profit growth of 73.1% of which 8.5% is organic growth.

· Gross profit margin declined to 14.9% due to the recent acquisition of the BModesto Group.

· 8 new Expanded Access Programs (EAPs) awarded in the period with 83 in total compared to 42 at the time of IPO.

· 73% of the division's gross profit is generated outside of Ireland.

· The integration of BModesto Group and Orspec Pharma, both of which were acquired in the second half of 2022, is progressing according to plan and opening up opportunities in mainland Europe and in the Asia Pacific region.

On Demand

The On Demand business unit is a leading supplier of unlicenced and difficult to source medicines to healthcare providers globally. The business delivered a very strong performance in the period driven by global medicine shortages combined with the acquisitions of the BModesto Group and Orspec Pharma in 2022. The global shortages of medicines has created opportunities for specialist suppliers such as Uniphar to source and deliver them to where they are needed across the world.

The integration of the 2022 acquisitions of the BModesto Group and Orspec Pharma is progressing well and both businesses are performing strongly in the period post-acquisition. They have provided the Group with the platform to geographically extend the On Demand offering by providing a physical presence for the Group in mainland Europe and in key Asia Pacific markets.

A focus for the business is further developing our unlicenced medicines business utilising the infrastructure that the recent acquisitions provide combined with the deep logistics knowledge from our Supply Chain & Retail division.

Exclusive Access

The Exclusive Access business unit focusses on delivering Expanded Access Programmes (EAPs) for pharmaceutical manufacturers. EAPs allow patients gain access to innovative therapies that may not be available to them through other routes whilst enabling the manufacturer gain greater knowledge and understanding of the patient, the medicine and the market while refining their commercialisation strategy.

The Exclusive Access business unit delivered a solid performance and was awarded eight new Expanded Access Programs (EAPs) in the period. The drug development pipeline of our target customers remains strong and the strength of that pipeline will ultimately result in additional opportunities in future periods.

A particular focus for the business is in cell and gene therapy. These treatments are frequently complex to deliver from a clinical and manufacturing perspective and often have stringent distribution criteria. Our proprietary technology platform, Uniphi, continues to be developed to support patient enrolment and personalised patient education. This platform, combined with our experience in delivering such treatments, makes Uniphar a compelling partner for manufacturers considering an EAP as part of their launch strategy.

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 423 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 2023 performance

· 34.1% growth in gross profit of which 7.7% is organic growth.

· Continued growth in gross profit margin to 10.6% (2022: 8.7%).

· Strong gross profit growth is driven by volume growth in the market.

· McCauley Pharmacy Group acquisition completed in January 2023 with the integration progressing in line with expectations.

· New consumer products standalone distribution facility opened in 2023.

Wholesale

The Wholesale business delivered strong business volume growth in the period supported by demand from customers combined with overall growth in the market. Medicine shortages continue to challenge the business from an operational perspective in getting product distributed to customers in a timely and equitable manner. The business infrastructure has proven capable of responding to a strained supply chain with the continued growth highlighting the necessity of investing for the future. Progress is being made on our multi-year strategic investment programme in a new distribution facility. Once operational, this facility will encompass the latest technology enabling the doubling of existing capacity levels and ensuring that we continue to provide a market leading service offering to our customers.

Pre-wholesale

The pre-wholesale business performed well in the period and continues to be the partner of choice for manufacturers seeking pre-wholesale solutions in the Irish market. Cold chain pharmaceutical products continue to show volume growth and require more sophisticated capabilities that the business is experienced in delivering.

Retail

Our vertically integrated network of owned or franchised stores now amounts to 423 pharmacies that are supported 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.

Retail pharmacies performed strongly in the period driven by volume growth combined with the addition of the McCauley Group stores. Front-of-shop consumer products continue to be a growth opportunity and fits well with our existing distribution infrastructure. Our ambition is to continue to grow the consumer products category to become the go-to partner for brands seeking a presence on Irish pharmacy selves.

Acquisitions

The division completed the acquisition of the McCauley Pharmacy Group in January 2023 following approval from the CCPC. The McCauley Group brings an additional 34 pharmacies into the Group net of the three which were disposed to satisfy the CCPC agreed remedies. McCauley has built a strong consumer products offering that complements our existing estate and our ambition of becoming the go-to partner for brands seeking growth.

Financial Review

Summary financial performance

Revenue

Revenue increased by 25.0%, which was achieved through a combination of organic growth, driven by a strong performance in the Supply Chain & Retail division together with the impact of the acquisitions completed since June 2022.

Gross profit

Gross profit has increased by 28.6% in the period primarily due to the factors impacting revenue outlined above. The Gross profit margin has increased from 14.7% to 15.2% reflecting the continued expansion of the Group into higher margin businesses and categories.

Divisional gross profit

EBITDA

EBITDA has increased by €6.2m (13.8%) to €51.1m. This is driven by the organic growth in revenue and gross profit together with the impact of the acquisitions completed in the past year. Overheads have increased as a result of increased investment in the cost base to facilitate future growth combined with some inflationary pressures on cost.

Exceptional items

Exceptional costs amounted to €3.8m for the period and primarily relate to acquisition integration costs (€1.7m), loss on disposal of businesses and assets (€1.4m), redundancy and restructuring costs (€1.0m), strategic business transformation costs (€0.9m), professional fees associated with acquisitions (€0.8m) and other costs (€0.2m). These costs are offset by a decrease in deferred contingent consideration (€1.7m) and an exceptional income tax expense credit (€0.6m). Further details are provided in note 3.

Earnings per share

Basic earnings per share decreased from 5.9 cent to 5.5 cent. The decrease in earnings is primarily attributable to a reduction in the profit attributable to owners of €1.0m due to increased financing costs in the period. The weighted average number of shares in the period is 272,815,000 (2022: 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 decreased from 8.4 cent to 7.4 cent reflecting the increased financing costs in the period partially offset by increased operating profits arising from organic growth and acquisitions.

On a like for like basis, adjusted earnings per share decreased from 8.4 cent to 7.4 cent by applying the weighted average number of shares as at June 2023 to both periods, to provide a more meaningful comparison.

Cash flow and net bank debt

Reported free cash flow conversion in the six months to 30 June 2023 was 25.9% (2022: 47.5%) reflecting as expected the unwind of temporary favourable working capital positions from 2022 with the Group's net bank debt position being €178.0m. This reflects an increase in net bank debt of €86.8m primarily driven by investment in acquisitions and strategic capital projects.

The cash outflow from operating activities of €12.9m is reflective of the unwind of temporary favourable working capital positions from 2022 combined with higher levels of interest payments and corporation tax payments compared to 2022. When adjusted for the unwind of the temporary timing positions in December 2022, the adjusted free cash flow is 67.8% which is within our target range of 60-70%.

The net cash outflow from investing activities of €62.8m primarily consists of payments for acquisitions of €23.4m (net of cash acquired), capital investments of €14.0m, deferred and contingent consideration payments of €4.1m and repayment of debt acquired on acquisition of €22.7m. Of the capital investments, €10.4m is strategic in nature primarily relating to the commencement of investment in a new distribution facility.

The net cash inflow from financing activities of €27.6m was due to a drawdown of borrowings to support business growth offset by principal lease payments and the payment of dividends.

Taxation

The tax charge excluding exceptional items in the period is €4.0m and equates to an effective tax rate of 17.5%. This compares to a charge of €4.5m in the same period last year with an effective tax rate of 17.3%. The increase in the effective tax rate of 0.2% is attributable to the increased contribution of profits from higher tax rate jurisdictions coupled with the increase in the UK corporation tax rate from April 2023. 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 25.3% (vs 25.0% reported growth), gross profit increased 29.4% (vs reported growth 28.6%) and operating profit increased by 12.2% (vs 11.7% reported growth).

Return on capital employed

Return on capital employed for the rolling 12-month period closed at 14.7% (December 2022: 17.3%) performing in line with the Group's medium-term target. The reduction of 2.6% since 2022 reflects the increased investment by the Group in strategic capital expenditure that will deliver growth to the Group in the medium term. The investments made during 2023, both from a capital and acquisitions perspective, will deliver further benefits and growth in the coming years.

Dividends

A final dividend of €3.1m relating to 2022 was paid in May 2023. The Board has committed to a progressive dividend policy and, reflective of this, a 2023 interim dividend of €0.0064 per ordinary share has been declared. It is proposed to pay the dividend on 20 October 2023 to ordinary shareholders on the Company's register on 29 September 2023.

In accordance with company law and IFRS, these dividends have not been provided for in the Balance Sheet at 30 June 2023.

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 2023.

Signed on behalf of the Board

M. Pratt G. Rabbette

13 September 2023

We have reviewed Uniphar Plc's condensed consolidated interim financial statements (the "interim financial statements") in the 2023 Interim results of Uniphar Plc for the six month period ended 30 June 2023 (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 2023;

● 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 2023 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 2023 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 2023 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 2023 Interim results in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. In preparing the 2023 Interim results including the interim financial statements, 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 2023 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

13 September 2023

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 2023

Condensed Consolidated Group Statement of Comprehensive Income

for the six months ended 30 June 2023

Condensed Consolidated Group Balance Sheet

as at 30 June 2023

Condensed Consolidated Group Cash Flow Statement

for the six months ended 30 June 2023

Condensed Consolidated Group Statement of Changes in Equity

for the six months ended 30 June 2023

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 2022. The accounting policies applied in the interim financial statements are the same as those applied in the 2022 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 2022. 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 2022 in note 1 on pages 142 to 143.

The Group's interim financial statements are prepared for the six-month period ended 30 June 2023. 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 business risk.

The Group has strong liquidity supported into the future by a banking facility with a remaining term extending to August 2027 (with two options to extend by a further one year). The Group renewed and expanded its banking facility during 2022 to provide it with the platform to fund continued growth.

Having regard to the factors outlined 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 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

The following standards and interpretations are effective for the Group from 1 January 2023 but do not have a material effect on the results or financial position of the Group:

- Amendments to IAS 1, 'Presentation of Financial Statements'

- Amendments to IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors'

- Amendments to IAS 12, 'Income Taxes'

New Standards and Interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2023 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 Europe (including UK). The Group also operates in the US and Asia Pacific region 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, Netherlands and MENA markets. Exclusive Access provides bespoke distribution partnerships to pharmaceutical partners around key brands, with new programs focused on speciality pharmaceutical products. It 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 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, Hickey's and McCauley 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 2023 are primarily relating to costs relating to the acquisition disclosed in note 17 together with costs incurred on transactions currently under consideration.

Acquisition integration costs 

Acquisition integration costs primarily relate to costs incurred on the integration of recent acquisitions into the expanded Group. They also include professional fees relating to specialist industry and market insights to optimise the integration of recent acquisitions.

Redundancy and restructuring costs

Redundancy and restructuring costs are primarily redundancy and ex-gratia termination costs arising on reorganisations and recent acquisitions.

Strategic business transformation

Strategic business transformation are costs incurred associated with reorganising and establishing a strategic presence in the US market. The costs include initial setup costs, relocation costs and a long term incentive plan associated with building a strategically significant business in the US market.

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.

Loss on disposal of businesses and assets

Loss on disposal of businesses

On 31 May 2023 the Group disposed of 100% of the share capital of McHugh's Pharmacy Limited and Sam McCauley Chemists (Bunclody) Limited both of which traded as retail pharmacies. These disposals were completed as a binding commitment from Uniphar to the CCPC associated with the acquisition of the McCauley Pharmacy Group. The combined consideration from these disposals amounted to €878,000 resulting in a loss on disposal of these businesses of €789,000.

Loss on disposal of assets

During the period, the Group disposed of the assets of a retail pharmacy in Navan further to a binding commitment to the CCPC associated with the acquisition of the McCauley Pharmacy Group. In addition, the Group disposed of a legacy distribution facility in Limerick that is included in property, plant and equipment. The combined consideration from these disposals amounted to €1.5m resulting in a net loss on disposal of €631,000.

4. Finance cost / (income)

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 €3.1m (€0.0113 per ordinary share) relating to 2022 was declared and paid in May 2023 (June 2022: €3.0m). Continuing with the Board's commitment to a progressive dividend policy, the Board declared a 2023 interim dividend of €0.0064 per ordinary share. It is proposed to pay the dividend on 20 October 2023 to ordinary shareholders on the Company's register on 29 September 2023.

In accordance with company law and IFRS, these dividends have not been provided for in the Balance Sheet at 30 June 2023.

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