"Revenue for the year is 5% ahead of 2011 at €1.83 billion. Each of our three divisions reported revenues ahead of last year. Acquisitions completed during the year contributed €16 million to revenue."

Finance Review


Group revenue for the year was 5% higher than in 2011 at €1.83 billion. Operating profit, before once-off acquisition costs and amortisation of intangible assets, was 10% ahead of 2011 at €84.4 million. Pre-tax profit, on the same basis, was 11% ahead of 2011 at €75.8 million.

Highlights   Amortisation    
    of intangible    
    assets and    
  IFRS acquisition   Increase
  based costs Adjusted on 2011
  €’mn €’mn €’mn %
Revenue 1,830.2 - 1,830.2 5
Operating profit 67.6 16.8 84.4 10
Profit before tax 59.0 16.8 75.8 11

Diluted earnings
per share (cent)

19.89 5.48 25.37 11
Dividend per share (cent) 9.04 - 9.04 4
      2012 2011
Net debt (€’mn)     217.7 1 21.5
Net debt/EBITDA* (times)     2.22 1.31

* EBITDA before once-off acquisition costs and exceptional item (2011) including annualised EBITDA of companies acquired during the year.


Costs of €3.3 million were incurred during the year on the acquisition activity undertaken over the last 12 months. These costs were primarily professional fees for due diligence, legal negotiations and contracts and banking services. Given the size of these costs in the year they are shown separately on the face of the income statement.

The Group completed the acquisition of five businesses during the year. The net cash outflow on these acquisitions was €102.3 million with deferred consideration payable of €38.1 million. The net assets acquired with these acquisitions were €56.3 million with goodwill of €84.1 million.

The Group announced a programme to buyback and cancel 5 million shares during 2011. This programme was completed during 2012. At 30 September 2011, 4.6 million of the shares had been bought back and cancelled.

The Group’s share of investment in the Medco joint venture had been classified as an asset held for sale at 30 September 2011. This asset was sold to our joint venture partners in October 2011 for Stg£8.2 million.


Revenue for the year is 5% ahead of 2011 at €1.83 billion. Each of our three divisions reported revenues ahead of last year. Acquisitions completed during the year contributed €16 million to revenue.

Adjusted Operating Profit

Operating profit for the year of €84.4 million was 10% higher than in 2011, with profits in each of our three divisions ahead of last year. Acquisitions completed during the year contributed €0.7 million to operating profit.

Adjusted Profit before Tax

Net interest costs for the year of €8.6 million are €0.3 million higher than in 2011. After interest costs profit before tax of €75.8 million is 11% higher than in 2011.

Adjusted Earnings per Share

Earnings per share for the year were 11% ahead of 2011 at 25.37 cent.

Cash flow

Net debt increased by €96.2 million during the year. Within this the net cash inflow from operating activities was €77.6 million and the net cash outflow on acquisitions completed during the year was €102.3 million with a further €63.4 million spent on the purchase of property, plant and equipment.

Balance sheet

Year end net debt was €217.7 million. The net debt to EBITDA ratio is 2.22 times and interest is covered 11.6 times by EBITDA. Our financial covenants are based on net debt to EBITDA not to exceed 3.5 times and EBITDA interest cover to be greater than three times.

Forward-looking information

Some statements in this announcement are forward-looking. They represent expectations for the Group’s business, and involve risks and uncertainties. The Group has based these forward-looking statements on current expectations and projections about future events. The Group believes that expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve known and unknown risks, uncertainties and other factors, which in some cases are beyond the Group’s control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

Financial risk management

The management of the financial risks facing the Group is governed by policies reviewed and approved by the Board. These policies primarily cover liquidity risk, credit risk, interest rate risk and currency risk. The primary objective of the Group’s policies is to minimise financial risk at reasonable cost. The Group does not trade in financial instruments.

The Group uses financial instruments throughout its businesses: borrowings and cash resources are used to finance the Group’s operations; trade receivables and payables arise directly from operations; and interest rate swaps are used to manage interest rate and currency risks and to achieve the desired currency profile of borrowings. Further details of financial instruments used by the Group are provided in note 28 to the financial statements.

Liquidity risk management

The Group ensures that it has sufficient financing facilities available through cash flow generated from operating activities, loan notes issued, committed banking facilities and access to equity markets to meet its projected short and medium term funding requirements.

Interest rate risk management

The Group finances its operations through a mixture of retained profits, bank borrowings and funding raised on the US private placement market. The Group’s policy is to borrow in the required currencies at both fixed and floating rates of interest and use interest rate swaps to manage the Group’s exposure to interest rate fluctuations.

Currency risk management

United Drug’s reporting currency and that in which its share capital is denominated is the euro. Given the nature of the Group’s businesses, exposure arises in the normal course of business to other currencies, principally sterling and the US dollar.

The majority of the Group’s activities are conducted in the local currency of the country of operation. The primary foreign exchange risk arises from the fluctuating value of the Group’s net investment in different currencies. Borrowings, to finance acquisitions or major capital expenditure programmes, are made in the currency of the country of operation.

Where sales or purchases are invoiced in other than the local currency and there is not a natural hedge with other activities within the Group, the policy is to eliminate at least 50% of the currency exposures through forward currency contracts. A proportion of the Group’s operating profits are denominated in currencies other than our reporting currency, and, where appropriate, foreign currency hedges are put in place to minimise the exchange rate volatility on the retranslation of these profits to euro for reporting purposes.

Barry McGrane
Finance Director