Directors' Report

The directors present their report and audited financial statements for the year ended 30 September 2012.

Dividends

An interim dividend of 2.48 cent (2011: 2.41 cent) per share was paid on 13 July 2012. Subject to shareholder approval at the Company’s 2013 Annual General Meeting, it is proposed to pay a final dividend of 6.56 cent (2011: 6.25 cent) per share on 25 February 2013, to ordinary shareholders on the Company’s register at 5.00 p.m. on 23 November 2012, thereby giving a total dividend for the year of 9.04 cent (2011: 8.66 cent) per share. A Dividend Reinvestment Plan (DRIP), which enables shareholders who elect to participate to use their cash dividend to acquire additional shares in the Company, is available in respect of the final dividend. The final date for receipt or cancellation of elections under the DRIP will be 1 February 2013.

Board of directors

Mr. Kells retired as Chairman and from the Board at the conclusion of the Company’s Annual General Meeting held on 7 February 2012.

 

Ms. Flynn will retire from the Board at the conclusion of the Company’s Annual General Meeting to be held on 12 February 2013.

 

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

 

Substantial interests

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

 

At 17 December 2012 At 30 September 2012

   

Ordinary shares
number
% of issued share capital (excluding treasury shares) Ordinary shares number % of issued share capital (excluding treasury shares)

       

Prudential plc group of companies

35,291,243 14.73 35,291,243 14.73

FMR LLC (Fidelity)

14,479,052 6.04 14,479,052 6.04

FIL Limited(i) (Fidelity)

7,337,052 3.06 - -

Aviva plc and its subsidiaries(ii)

- - 7,360,294 3.07

(i) Interest in the Company’s ordinary share capital was below 3% at 30 September 2012.

(ii) Interest in the Company’s ordinary share capital was below 3% at 17 December 2012.

 

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

 

Company listing and share price

At 30 September 2012, the Company’s shares were listed on the London Stock Exchange and Irish Stock Exchange. Following a review of the Company’s listing arrangements, the Board determined that inclusion in the FTSE UK Index would be in the best interests of the Company and its shareholders as a whole, accordingly the Company’s shares were delisted from the Irish Stock Exchange on 4 October 2012.

 

The price of the Company’s shares ranged between €1.85 and €2.95, with an average price of €2.21 during the year ended 30 September 2012. The share price at the end of the 2012 financial year was €2.95 and the market capitalisation of the Group was €706 million.

 

Authority to allot shares and disapplication of pre-emption rights

At the Annual General Meeting held on 7 February 2012, the directors received the authority from shareholders to allot shares up to an aggregate nominal value representing approximately one third of the issued share capital of the Company and the power to disapply the statutory pre-emption provisions relating to the issue of new equity for cash. The disapplication is limited to the allotment of shares in connection with the exercise of share options, any rights issue, any open offer or other offer to shareholders and the allotment of shares up to an aggregate nominal value representing approximately 5% of the issued share capital of the Company.


These authorities are due to expire at the Company’s 2013 Annual General Meeting, consequently at the forthcoming Annual General Meeting, shareholders will be asked to renew these authorities until the date of the Company’s Annual General Meeting to be held in 2014 or the date 15 months after this forthcoming Annual General Meeting, whichever is the earlier.

Purchase of own shares

At the Annual General Meeting held on 7 February 2012, authority was granted to the Company, or any of its subsidiaries, to purchase a maximum aggregate of 10% of the Company’s shares.

 

Special resolutions will be proposed at the Company’s 2013 Annual General Meeting to renew the authority of the Company, or any of its subsidiaries, to purchase up to 10% of the issued share capital of the Company and in relation to the maximum and minimum prices at which treasury shares (effectively shares purchased and not cancelled) may be re-issued off-market by the Company. If granted, the authorities will expire on the earlier of the date of the Company’s Annual General Meeting in 2014 and the date 15 months after this forthcoming Annual General Meeting, whichever is the earlier.

 

 

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

Share buyback

On 24 May 2011, the Company commenced a share buyback programme to acquire up to 5 million of the Company’s shares. At 30 September 2011, the Company had repurchased 4,560,611 shares at a total cost of €10.5 million. During the financial year ended 30 September 2012, the remaining 439,389 shares were repurchased at a cost of €1.0 million. All shares acquired under the share buyback programme were cancelled.

 

The share buyback programme was conducted in accordance with the terms of the general authority to make market purchases of its own shares granted to the Company by shareholders and with other applicable legislation and regulatory requirements.

 

Takeover directive

The Group’s principal banking and loan note facilities include provisions that, in the event of a change of control of the Company, could oblige the Group to repay the facilities together with penalties. Certain customer and supplier contracts and joint venture arrangements also contain change of control provisions. Additionally, the Company’s Long Term Incentive Plan and share option schemes contain change of control provisions which potentially allow for the acceleration of the exercisability of awards in the event that a change of control occurs with respect to the Company.

 

Mr. FitzGerald may in certain circumstances be entitled to terminate his employment with the Company in the event that a change of control occurs with respect to the Company. If Mr. FitzGerald’s contract is terminated he may be entitled to receive payment equal to his basic salary, annual bonus and the pension contribution made on his behalf in the year immediately preceding the termination in full and final discharge and satisfaction of all and any claims arising in these circumstances.

 

Political donations

No political donations, which require disclosure in accordance with the Electoral Acts 1997 to 2002 were made by the Group during the year.

 

Accounting records

The directors believe that they have complied with the requirements of Section 202 of the Companies Act, 1990 with regard to books of account by employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The books of account of the Company are maintained at the Company’s registered office, United Drug House, Magna Drive, Magna Business Park, Citywest Road, Dublin 24, Ireland.

 

Auditor

In accordance with Section 160(2) of the Companies Act, 1963, the auditor, KPMG, Chartered Accountants, will continue in office and a resolution authorising the directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.

 

Annual General Meeting

The Annual General Meeting of the Company will be held on 12 February 2013. Your attention is drawn to the letter to shareholders and the Notice of Annual General Meeting available on the Company’s website, www.united-drug.com which sets out details of the matters which will be considered.

 

Statement of Directors’ Responsibilities

The directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance with applicable law and regulations.

 

Company law in the Republic of Ireland requires the directors to prepare group and company financial statements for each financial year. Under that law the directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and have elected to prepare the Company financial statements in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Acts, 1963 to 2012.

 

The Group and Company financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position and performance of the Group and the Company. The Companies Acts 1963 to 2012 provide in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

 

In preparing each of the Group and Company financial statements, the directors are required to:

  • select suitable accounting policies and then apply them consistently;
  • make judgements and estimates that are reasonable and prudent;
  • state that the financial statements comply with IFRSs as adopted by the EU and, in the case of the Company, as applied in accordance with the Companies Acts 1963 to 2012; and
  • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

 

Under applicable law and the requirements of the Listing Rules issued by the Financial Services Authority, the directors are also responsible for preparing a Directors’ Report and reports relating to directors’ remuneration and corporate governance that comply with that law and those rules. In particular, in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 (‘the Transparency Regulations’), the directors are required to include in their report a fair review of the business and a description of the principal risks and uncertainties facing the Group and the Company and a responsibility statement.

 

The directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that its financial statements comply with the Companies Acts, 1963 to 2012 and as regards the Group financial statements Article 4 of the IAS Regulations. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

 

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Responsibility statement in accordance with the Transparency Regulations

Each of the directors, whose name and function are listed on this page confirm that, to the best of his or her knowledge and belief:

  • the Group financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities and financial position of the Group at 30 September 2012 and its profit for the year then ended;
  • the Company financial statements, prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the Companies Acts 1963 to 2012, give a true and fair view of the assets, liabilities and financial position of the Company at 30 September 2012; and
  • the Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that they face.

 

Other information

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

 

Information

Location in the Annual Report

Principal activities, business review and future developments

Chairman’s Statement, Chief Executive’s Review,
Operations Review and Finance Review

Results

Financial Statements

Corporate governance

Details concerning the appointment and the re-election
of directors

Details concerning the amendment of the Company’s
Articles of Association

Directors’ Statement on Corporate Governance

Directors’ remuneration, including the interests of the directors and secretary in the share capital of the Company

Report on Directors’ Remuneration

Principal risks and uncertainties

Principal risks and uncertainties

Principal key performance indicators

Finance Review

Financial risk management objectives and policies of the Group and the Company

Financial Statements

Company’s capital structure including a summary of the rights and obligations attaching to shares

Group Statement of Changes in Equity and
Financial Statementsnotes 15, 17, 18 and 28

Long Term Incentive Plan, share option and equity settled incentive schemes and employee share schemes details

Report on Directors’ Remuneration and

Financial Statementsnote 27

Events after the balance sheet date

Financial Statementsnote 31

Significant subsidiary undertakings

Financial Statementsnote 45

 

The Directors’ Report for the year ended 30 September 2012 comprises these pages and the sections of the Annual Report referred to under ‘Other information’ above, which are incorporated into the Directors’ Report by reference.

On behalf of the Board

P. GrayL. FitzGerald
DirectorDirector
17 December 2012