Notes forming part of the Group Financial Statements

1. Revenue
2. Segmental information
3. Statutory and other information
4. Finance income and expense
5. Exceptional item

1. Revenue

2012 2011
€’000 €’000
Goods for resale 1,548,384 1,479,727
Services 276,470 260,560
Commission income 5,352 6,165
Total revenue 1,830,206 1,746,452
Commission income relates to the sale of products where the Group acts as an agent in the transaction rather than as a principal.

 

 

2. Segmental information

Segmental information is presented in respect of the Group’s operating segments and geographical regions. The operating segments are based on the Group’s management and internal reporting structure. Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Due to the nature of certain liabilities, which are not segment specific, they have not been allocated to a segment but rather have been disclosed in aggregate immediately after the relevant segment note. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period and is comprised of property, plant and equipment, goodwill and intangible assets.

 

Operating segments

United Drug is a leading healthcare services provider in Ireland, the United Kingdom, North America and Continental Europe. IFRS 8 Operating Segments requires the reporting of information for operating segments to reflect the Group’s management structure and the way financial information is regularly reviewed by the Group’s Chief Operating Decision Maker, which the Group has defined as the Board of Directors. The segmental information of the business as presented corresponds with these requirements. Operating profit before acquisition costs, amortisation of intangible assets and exceptional items in 2011 represents the key measure utilised in assessing the performance of operating segments.

 

The Group’s businesses are divided into the following operating segments:

 

  • Healthcare Supply Chain
    The Healthcare Supply Chain segment combines all of the Group’s healthcare logistics based businesses.

  • Sales, Marketing & Medical (SMM)
    The SMM segment provides contract sales outsourcing and related marketing services to healthcare manufacturers.

  • Packaging & Specialty
    The Packaging & Specialty segment provides outsourced packaging solutions to pharmaceutical manufacturers.

 

Geographical analysis

The Group operates in four principal geographical regions being the Republic of Ireland, the United Kingdom, North America and Continental Europe. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the Group’s subsidiaries. Segment assets are based on the geographical location of the assets.

 

Inter-segment revenue is not material and thus not subject to disclosure.

 

 

The segment results for the year ended 30 September 2012 are as follows:
           

Healthcare Supply Chain Sales, Marketing & Medical Packaging & Specialty Group Total
  2012 2012 2012 2012
Income statement items €’000 €’000 €’000 €’000
Segment revenue 1,455,782 213,867 160,557 1,830,206

Adjusted operating profit*

48,322 20,575 15,522 84,419

Amortisation of intangible assets

(5,940) (4,227) (3,345) (13,512)

Acquisition costs

- (2,288) (1,019) (3,307)

Operating profit

42,382 14,060 11,158 67,600

Finance income

8,012

Finance expense

(16,626)
Profit before tax 58,986

Income tax expense

(11,373)
Profit for the financial year 47,613

* excluding amortisation of intangible assets and acquisition costs.

           

Healthcare Supply Chain Sales, Marketing & Medical Packaging & Specialty Group Total
  2011 2011 2011 2011

€’000 €’000 €’000 €’000

Segment revenue

1,409,496 198,989 137,967 1,746,452

Adjusted operating profit*

44,378 20,130 12,278 76,786

Amortisation of intangible assets

(6,644) (4,199) (3,691) (14,534)

Exceptional item

(6,061) (1,886) (1,805) (9,752)

Operating profit

31,673 14,045 6,782 52,500

Finance income

8,322

Finance expense

(16,657)

Profit before tax

44,165

Income tax expense

(7,708)

Profit for the financial year

36,457

* excluding amortisation of intangible assets and exceptional items.

           

Healthcare Supply Chain
Sales, Marketing & Medical

Packaging & Specialty

Group Total
  2012 2012 2012 2012
Balance sheet items €’000 €’000 €’000 €’000

Segment assets

593,978 308,174 259,131 1,161,283

Unallocated assets

3,376

1,164,659

Segment liabilities

302,847 102,024 33,573 438,444

Unallocated liabilities

297,785

736,229

           

Healthcare Supply Chain Sales, Marketing & Medical Packaging & Specialty Group Total
  2011 2011 2011 2011

€’000 €’000 €’000 €’000

Segment assets

581,886 203,475 155,638 940,999

Unallocated assets

2,798

943,797

Segment liabilities

256,534 49,904 26,263 332,701

Unallocated liabilities

231,078

563,779

Unallocated assets and liabilities comprises amounts relating to interest-bearing loans and borrowings, derivative financial instruments, current income tax and deferred income tax.

           

Healthcare Supply Chain Sales, Marketing & Medical Packaging & Specialty Group Total
  2012 2012 2012 2012
Other segmental information €’000 €’000 €’000 €’000

Depreciation

6,360 7,286 2,178 15,824

Capital expenditure*

53,535 90,001 44,679 188,215

Amortisation of intangible assets

5,940 4,227 3,345 13,512

Share-based payment expense

240 310 216 766

           

Healthcare Supply Chain Sales, Marketing & Medical Packaging & Specialty Group Total
  2011 2011 2011 2011

€’000 €’000 €’000 €’000

Depreciation

6,721 1,907 6,256 14,884

Capital expenditure*

15,260 26,402 5,254 46,916

Amortisation of intangible assets

6,644 4,199 3,691 14,534

Share-based payment expense

577 474 103 1,154

The results and assets of joint ventures and associates are included within the individual business segment in which they are included for internal reporting, which is primarily Healthcare Supply Chain.

           

Republic of Ireland United Kingdom Continental Europe North America Group Total
  2012 2012 2012 2012 2012
Geographical analysis €’000 €’000 €’000 €’000 €’000

Revenue

1,116,281 507,175 47,761 158,989 1,830,206

Segment assets

626,626 327,323 66,096 144,614 1,164,659

Capital expenditure*

46,825 41,186 33,365 66,839 188,215

           

Republic of Ireland United Kingdom Continental Europe North America Group Total
  2011 2011 2011 2011 2011

€’000 €’000 €’000 €’000 €’000

Revenue

1,097,992 483,623 40,620 124,217 1,746,452

Segment assets

570,581 269,055 31,198 72,965 943,799

Capital expenditure*

12,461 29,947 541 3,967 46,916

* capital expenditure comprises acquisition of property, plant and equipment, goodwill and intangible assets.

 

3. Statutory and other information

2012 2011
€’000 €’000
Operating profit is stated after charging/(crediting):
Depreciation of property, plant and equipment 15,824 14,884
Profit on disposal of property, plant and equipment (106) (87)
Amortisation of intangible assets 13,512 14,534
Operating lease rentals:
- Land and buildings 3,825 6,108
- Other assets 8,689 8,315
Foreign exchange loss 52 207
2012 2011
€’000 €’000
 
Auditor’s remuneration
Description of services
Audit services
- Group* 410 415
- Company 10 10
Other assurance services
- Group** 77 75
Tax advisory services
- Group*** 33 38
Other non-audit services
- Group 35 82
565 620
* includes €32,000 (2011: €59,000) in relation to joint ventures.
** includes €4,000 (2011: €7,000) in relation to joint ventures.
*** includes €7,500 (2011: nil) in relation to joint ventures.

 

Fees payable to other KPMG firms outside of Ireland are as follows:

2012 2011
€’000 €’000
Audit services* 246 147
Other assurance services** 99 11
Tax advisory services*** 15 -
Other non-audit services**** 2 -
362 158
* includes €28,000 (2011: €31,000) in relation to joint ventures.
** includes €3,000 (2011: €4,000) in relation to joint ventures.
*** includes €8,000 (2011: nil) in relation to joint ventures.
**** includes €2,000 (2011: nil) in relation to joint ventures.

 

Details of directors’ remuneration, pension entitlements and interests in share options are set out in the Report on Directors’ Remuneration.

4. Finance income and expense

2012 2011
€’000 €’000
Finance income
Income arising from cash deposits 787 1,835
Fair value adjustment to fair value hedges 2,900 -
Fair value adjustment to guaranteed senior unsecured loan notes - 2,539
Fair value of cash flow hedges transferred from equity 4,325 3,207
Fair value movement on interest swaps not designated as hedges - 741
8,012 8,322
Finance expense
Interest on bank loans and other loans
- wholly repayable within five years (6,237) (5,194)
- wholly repayable after five years (2,153) (4,626)
Interest on finance leases (31) (38)
Unwinding of discount on provisions (519) (642)
Foreign currency loss on retranslation of guaranteed senior unsecured loan notes (4,325) (3,207)
Interest on overdrafts (451) -
Fair value adjustment to guaranteed senior unsecured loan notes (2,900) -
Fair value adjustment to fair value hedges - (2,539)
Ineffective portion of cash flow hedges (10) (411)
(16,626) (16,657)
Net finance expense (8,614) (8,335)

 

 

5. Exceptional item

2012 2011
€’000 €’000
Redundancy costs - 8,264
Onerous leases - 816
Impairment of property, plant & equipment - 672
- 9,752
Exceptional taxation credit - (1,991)
Net exceptional items after taxation - 7,761

 

During the prior year, redundancy costs were incurred in relation to the rationalisation of the Group’s businesses.
This rationalisation also gave rise to onerous leases and an impairment of property, plant & equipment.