Final Results

United Drug plc

Preliminary Announcement of Results

Year ended 30 September 2012

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

United Drug believes that the adjusted operating profit, adjusted profit before tax and adjusted diluted earnings per share are more appropriate measures of the underlying group performance than those measurements set out in the primary financial statements, as this information is in a format communicated to and reviewed by the investment community.

·; Revenues increase by 5% with all divisions ahead of 2011.

·; Operating profit growth of 10% for the year with margin improvement in all divisions.

·; Pre-tax profits and earnings per share both up by 11%.

·; Good working capital management delivers another strong cash flow performance. Operating cash flow for the period of €77.6 million, resulting in an operating profit to cash conversion ratio of 92%.

·; Proposed 5% increase in final dividend, to 6.56 cent per share, giving a total dividend for the year of 9.04 cent per share (2011: 8.66 cent per share), 4% up on 2011.

·; Further internationalisation of the Group with our US businesses accounting for 27% of operating profit and in total over 70% of profit generated outside of Ireland.

·; Significant expansion of service offering and geographic footprint with the completion of five acquisitions in the second half of the year.

·; Good underlying trading in the Sales, Marketing & Medical division with the expansion of our service offering during the year through bolt-on acquisitions. The acquisition of Pharmexx establishes United Drug as one of the leading global contract sales outsourcing providers.

·; Increased market leadership positions in wholesale and pre-wholesale and a big improvement in the medical and scientific business.

·; Very strong performance in our US packaging business, including the addition of a clinical trials packaging offering through the acquisition of Bilcare Global Clinical Services, now Sharp Clinical Services.

Commenting on the 2012 performance, United Drug Chief Executive Officer, Liam FitzGerald said:

"United Drug is now a truly international provider of services to global life sciences companies. We offer efficient outsourcing solutions for healthcare producers, providers and patients across 22 countries. During 2012 we have significantly expanded our service offering and geographic footprint, delivered double-digit earnings growth and very strong operating cash flow. Over 70% of operating profits were generated outside Ireland with 27% now coming from the US market. The five international acquisitions completed in the second half of the year position the business well for future growth.

Group revenues for the year of €1.83 billion were 5% higher than in 2011. Margins again increased during the year, as we grew our international services business, and operating profit for the year of €84 million was 10% ahead of the previous year."

Analyst presentation:

A presentation for investors and analysts will be held at 9.00 BST, today Wednesday 14 November. The dial in details are as follows: - Standard International Access +44 (0) 20 3003 2666 - UK Toll Free 0808 109 0700 -Password: United Drug

For reference:

About United Drug plc

Listed on the London Stock Exchange, United Drug is a leading international provider of services to healthcare manufacturers and pharmaceutical retailers, with operations in over 20 countries including the UK, Ireland, Germany, the Netherlands, Belgium, and the US. 

The Company operates across three divisions, Sales, Marketing & Medical, Healthcare Supply Chain and Packaging & Specialty.

In the Sales, Marketing & Medical division United Drug is a global leader in the provision of contract sales outsourcing services to pharmaceutical manufacturers with operations in major markets including Continental Europe, the UK, North America and a presence in South America. United Drug also provides related marketing services to pharmaceutical manufacturers in many of these markets.

In Healthcare Supply Chain, United Drug is the largest pharmaceutical wholesaler in the island of Ireland. It is also the market leader in contract distribution outsourcing (pre-wholesaling) in Ireland and has achieved the No. 1 position in the UK through its joint venture business UniDrug Distribution Group (UDG). The Company provides specials medicines manufacturing and distribution services in the UK. Through its medical and scientific operations, United Drug provides sales & marketing and technical service solutions, including contract distribution services to a wide range of medical & scientific equipment & consumable manufacturers, with a market leading position in Ireland and an emerging presence in the UK.

In the Packaging & Specialty division United Drug is a leading international provider of pharmaceutical contract packaging and clinical trials materials services with facilities in the US, UK, Dutch and Belgian markets. The Company also provides speciality distribution and homecare services in the UK and Ireland.

For more information go to www.united-drug.com.

 Review of Operations

Sales, Marketing & Medical (SMM)

The SMM division provides outsourced sales, marketing and medical services to the global healthcare industry. In 2012, divisional revenue grew by 7% to €214 million and operating profits of €21 million were 2% ahead of 2011.

In contract sales outsourcing we have continued to strengthen our position as market leader in the UK and Ireland and have grown our business in the US. The total number of sales representatives in these markets is declining, but the proportion being outsourced is increasing as the pharmaceutical industry seeks a more flexible and cost effective means of promoting their products. We have achieved strong growth in our nursing services business in the UK and Ireland and generally with smaller and more specialised pharmaceutical companies in the US who prefer our more flexible and focused approach. Both of these areas provide further growth opportunities going into 2013.

In September 2012, we assumed control of all parts of the Pharmexx group of companies not subject to on-going competition clearance. On 9 November 2012, the outstanding competition clearance was received and the acquisition will complete on 20 November 2012. Pharmexx is a multi-country contract sales business with operations throughout Europe and in Canada and Latin America. This acquisition significantly strengthens our contract sales business, positioning us as a major international service provider and provides a platform around which we can cross-sell our marketing and medical services to a wide range of clients in multiple jurisdictions We are currently implementing a detailed integration plan and putting our processes and procedures in place in the acquired business to improve efficiency, expand business development capability and increase margins.

To add further to our global contract sales offering we have just entered into a commercial arrangement with a major Japanese contract sales and research organisation to provide contract sales services in Japan, (the second largest pharmaceutical market in the world). A number of projects have already been secured through our existing pharma relationships and an active business development programme is in place in a market where we see great potential.

Our medical affairs business has also had another very good year. Growth in our US business has been added to by a profitable first year's trading in the UK. Business wins have been achieved in the areas of medical affairs, patient adherence and medical telesales.

The acquisitions, late in the year, of Drug Safety Alliance (DSA) and Synopia add significantly to our medical affairs offering both in the US and as a basis for a wider international offering. DSA along with our existing business will allow us provide an integrated call centre and case processing product safety service. Synopia adds market access services to our offering to clients in the US market.

Our events management business is now the number one global event management company serving the healthcare sector. The business has delivered good revenue growth over the last year and been very successful winning new business, with 42 new clients added over the period. In the last year the business has managed more than 1,700 meetings and events in 47 countries, looking after over 145,000 delegates.

Our healthcare communications and consultancy business had another good year with revenues and profits ahead of last year. This offering was enhanced with the acquisition of

Watermeadow, a healthcare communications business with offices in Oxford, Manchester and New York. The acquisition increases the scope and scale of our medical writing business to over 200 people and widens our pharmaceutical client base. We are now one of the leading global healthcare communications and consultancy businesses and are well positioned for growth in the coming years.

Healthcare Supply Chain

The Healthcare Supply Chain division combines all of the Group's healthcare logistics based businesses. In 2012, divisional revenue of €1.46 billion was 3% higher than last year, and operating profits of €48 million were 9% ahead of 2011.

Revenue in Irish wholesale was ahead of 2011, despite continuing healthcare austerity measures, due to further growth in our market share and ongoing volume growth in the market. However, margins were down slightly. In pre-wholesale (contract logistics for pharmaceutical companies) in Ireland we also strengthened our market leading position through a number of new contract wins in both the pharmaceutical and consumer parts of our business.

Last year, we implemented major changes within our Irish business, including the outsourcing of all deliveries to third party operators, a reduction in working hours in certain locations and staff redundancies. These changes have yielded significant cost savings in 2012. We are currently investing in further automation in our Dublin warehouse, which when combined with the ongoing impact of the last years changes will enable the business to offset much of the impact of government austerity measures and manage future volume growth in a highly cost effective and efficient manner.

In Northern Ireland, our wholesale business continues to outperform the market and has grown profits significantly in the year. Although still subject to government intervention, prices in this market have been more stable in recent years, and underlying volume growth has seen this business contribute significantly to group profits. We have recently completed a major automation and expansion project in our Belfast operation that will facilitate the expected growth in this business in the coming years and drive further efficiency in our Northern Ireland operation.

Our UK pre-wholesale joint venture with Alliance Boots, has continued to perform very well and is now the strong market leader in the outsourced UK pre-wholesale market. Multiple new contract wins have driven a very significant profit increase in 2012.

A number of strategically important new business wins within our medical and scientific business in Ireland, the UK and the Netherlands have enabled the business to grow profits substantially in 2012. The momentum from these new business wins and ongoing cost restraint leave this business well positioned for future growth.

Our pharmaceutical 'specials' business in the UK has been negatively impacted by the November 2011 NHS introduction of a "drug tariff" which sets a fixed reimbursement price on the most popular products in the market. However, we have developed new services to import named patient medicines from overseas and to manage the distribution of these medicines on behalf of pharmaceutical manufacturers. When combined with strong growth in our own brand "Arjun" range of affordably priced specials, these new services will make a growing contribution to group profits.

Packaging & Specialty

The Group's packaging businesses provide outsourced packaging, storage, logistics, and project management services to the pharmaceutical and biotech industry in the US, UK and continental Europe. The Group's specialty businesses provide specialty pharmacy, cold chain logistics, homecare and compliance services in Ireland. In 2012, divisional revenue grew by 16% to €161 million and operating profits of €15 million were 26% ahead of 2011.

Our US commercial packaging business has had another excellent year. There has been an increase in outsourcing of packaging services throughout the year and we have increased our market share in this growing market which has helped drive a substantial revenue increase. In addition, we have strengthened our long term relationship with a number of customers by signing multi-year contracts. We are confident that this business will continue to grow in 2013 and beyond.

Our commercial packaging business in Europe has considerable capacity available to it but we have not yet filled sufficient capacity to drive strong returns in this business. Consolidation and integration of this business continued during the year. We have now aligned our US and EU commercial business development teams. This has resulted in a number of significant contract wins in 2012, which will begin to generate revenue toward the end of 2013. We continue to see significant opportunity in this alignment and in the European commercial packaging market generally and we believe we are well placed to capture those opportunities in 2013 and beyond.

In September 2012, the Group acquired the US and UK clinical services business from Bilcare Limited. The acquired business is complementary to our existing business and provides clinical trial packaging, logistics and supply chain management services to the pharmaceutical and biotechnology industry. In October, we rebranded the acquired business Sharp Clinical Services. We will continue to integrate the business into the division in 2013.

Our Irish specialty business continued to win new customers and market share in 2012. We now treat approximately 20,000 patients in their homes each year. We have also developed innovative track and trace solutions, which are complementary to the services offered by our packaging and supply chain businesses.

Group development and outlook

The Group took a significant step forward in terms of its internationalisation and diversification in 2012. We completed five acquisitions during the period. Our US businesses now account for 27% of operating profit and in total over 70% of profits are now generated outside of Ireland. The Group had another good cash flow performance with operating cash flow of €77.6 million.

The Sales, Marketing & Medical division had another successful year with revenues and profits ahead of last year. The acquisitions during the year of Watermeadow, Drug Safety Alliance and Synopia enhance our capability to provide outsourced sales, marketing and medical services to global pharmaceutical companies. The acquisition of Pharmexx means that we are now one of the leading global contract sales outsourcing providers. The combination of market entry, sales, regulatory and marketing services is a potent offering to clients launching products internationally.

In the Healthcare Supply Chain division revenues and profits are ahead of last year, despite the healthcare markets in which we operate experiencing significant austerity measures. We continued to add to our market leading positions in our wholesale and pre-wholesale businesses in Ireland and the UK and had a big improvement in our medical and scientific business in these markets. We have secured meaningful new client wins in our medical and scientific and pre-wholesale business units.

In the Packaging & Specialty division, our US packaging business has had another excellent year and we have been successful in winning a number of contracts across the US and EU. Our Irish specialty business has also grown its market leading position, winning contracts with pharmaceutical clients, the private health insurance industry and the HSE. The acquisition late in the year of Bilcare GCS, now renamed Sharp Clinical Services, adds a clinical trials packaging offering and provides an opportunity along with our commercial packaging business to become one of the leading global contract packaging outsourced providers.

United Drug continues to develop and grow its international offering to the life sciences industry and remains positive about the growth opportunities in all of its businesses. The Group has considerable financing facilities available and good internally generated cash flow to support its growth objectives. With the recent acquisitions adding to our strong market positions the Group is well positioned for further growth in 2013 and beyond.

Overview

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.

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

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.

* before once-off acquisition costs and amortisation of intangible assets

Balance Sheet

Year end net debt was €218 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.

Dividends

The directors are proposing a final dividend of 6.56 cent per share. This gives a total dividend for the year of 9.04 cent per share, an increase of over 4% on the 2011 total dividend.

Subject to shareholder approval at the Company's 2013 Annual General Meeting, the proposed final dividend of 6.56 cent per share will be paid on 25 February 2013 to ordinary shareholders on the Company's register at 5.00 p.m. on 23 November 2012. 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.

2012 Annual Report and Annual General Meeting

The 2012 Annual Report and Accounts will be published in January 2013 and the Annual General Meeting of the Company will be held on 12 February 2013.

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.

This announcement and further information is available on our web-site:

www.united-drug.com.

Group income statement

Group statement of comprehensive income

Group statement of changes in equity

Group balance sheet

Group cash flow statement

Notes to the preliminary announcement 

1. Reporting entity

United Drug plc (the "Company") is a company domiciled in Ireland. The preliminary consolidated financial statements of the Company for the year ended 30 September 2012, are comprised of the Company and its subsidiaries and joint ventures (together referred to as the "Group").

The financial information presented herein does not amount to statutory financial statements that are required by Section 7 of the Companies (Amendment) Act, 1986 to be annexed to the annual return of the Company. The financial information does not include all the information and disclosures required in the annual financial statements. The statutory financial statements for the year ended 30 September 2011, on which the auditors gave an unqualified opinion, have been attached to the annual return of the Company and filed with the Registrar of Companies. The statutory financial statements for the year ended 30 September 2012 will be annexed to the next annual return of the Company and filed with the Registrar of Companies._____________________________________________________________________________________________

2. Basis of preparationThis announcement has been prepared on the basis of the results and financial position that the directors expect will be reflected in the audited statutory accounts when these are completed. The financial information presented in this report has been prepared in accordance with the Group's accounting policies under International Financial Reporting Standards (IFRS), as adopted by the EU and as set out more fully in the Group's last Annual Report. The Group has adopted the following standards and amendments to existing standards during the financial year:

- IAS 24 (revised) - Related party disclosures

This revised standard removes the requirement for government related entities to disclose details of all transactions with the government and other government related entities and it clarifies and simplifies the definition of a related party. This standard did not have a significant impact on the Group's financial statements.

- Amendments to IFRS 1* - First time adoption, on fixed dates and hyperinflation

This amendment replaces reference to a fixed date of 1 January 2004 with "the date of transition to IFRSs", thus eliminating the need for entities adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs. The amendment also provides guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. This amendment will have no effect on the Group's financial statements.

- Amendments to IFRS 7 - Financial Instruments: Disclosures' on transfers of assets

The amendments promote transparency in the reporting of transfer transactions and improve users' understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entities financial position, particularly those involved in securitisation of financial assets. This standard did not have a significant impact on the Group's financial statements.

- Amendment to IFRIC 14 - Prepayments of a minimum funding requirement

This amendment applies to entities that are required to make minimum funding contributions to defined benefit pension plans. It removes an unintended consequence of IFRIC 14, IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction, relating to voluntary pension pre-payments when there is a minimum funding requirement. This amendment will have no effect on the Group's financial statements.

- Improvements to IFRSs 2010

The improvements include changes in presentation, recognition and measurement plus terminology and editorial changes. These improvements have not had a significant impact on the Group's financial statements.

Prospective accounting changes

The following standards, amendments to existing standards, and interpretations published by the IASB are not yet effective for the year ended 30 September 2012 and have not been early adopted in preparing the financial statements.

• Amendment to IAS 1 - Financial statement presentation regarding other comprehensive income

• Amendment to IAS 12* - Income taxes

• Amendment to IAS 19 - Employee benefits

• IAS 27 (revised 2011)* - Separate financial statements

• IAS 28 (revised 2011)* - Associates and joint ventures

Notes to the preliminary announcement (continued)

• Amendment to IAS 32* - Financial instruments: Presentation, on offsetting financial assets and financial liabilities

• Amendments to IFRS 1* - First time adoption, on government loans

• Amendments to IFRS 7* - Financial instruments: Disclosure, on offsetting financial assets and financial liabilities

• IFRS 9* - Financial Instruments: classification and measurement

• IFRS 10* - Consolidated financial statements

• IFRS 11* - Joint arrangements

• IFRS 12* - Disclosure of interest in other entities

• IFRS 13* - Fair value measurement

• Annual improvements 2011*

A number of the standards (*) set out above have not yet been EU endorsed and management are assessing whether these amendments will have a material impact on the Group.

3. Segmental analysis

The Group's operations are divided into the following segments:

- Healthcare Supply Chain

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

- Packaging & Specialty

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

- Sales, Marketing & MedicalThe Sales, Marketing & Medical segment provides contract sales outsourcing and related marketing services to healthcare manufacturers.

The segmental analysis of the business corresponds with the Group's organisational structure, and the Group's internal reporting for the purpose of managing the business and assessing performance.

The amount of revenue and operating profit under the Group's operating segments is as follows:

Notes to the preliminary announcement (continued)

4. Share of joint ventures' profit after tax

The reduction in revenue and expenses on 2011 is attributable to our significant joint venture, UniDrug Distribution Group Limited, accounting for their contractual relationships on an agent basis in 2012.

5. Finance income and expense

Notes to the preliminary announcement (continued)

6. Earnings per ordinary share

* excluding amortisation of intangible assets, acquisition costs and exceptional item (2011) (net of tax)

Treasury shares have been excluded from the weighted average number of shares in issue used in the calculation of earnings per share.

7. Property, plant and equipment

Notes to the preliminary announcement (continued)

8. Movement in goodwill, intangible assets, investment in joint ventures & associates and assets classified as held for resale

On 17 October 2011, the Group disposed of its 50% shareholding in Medco Health Solutions [Ireland] Limited to Medco Health Solutions, Inc. for a consideration of £8.2 million. This gave rise to a gain of €300,000 being the difference between the fair value of the previously held asset at the date of sale and the consideration received. The gain has been included within the administration expenses in the Group Income Statement.

9. Other reserves

Notes to the preliminary announcement (continued)

10. Net debt

11. Provisions

12. Acquisition of subsidiary undertakings

During the year, the Group completed five acquisitions:

- On 26 June 2012, the Group acquired the entire issued share capital of Watermeadow Medical Limited and Watermeadow Consulting Inc., a leading healthcare communications and consultancy company providing services that include medical writing and preparation of promotional and educational materials typically for products pre-launch.

- On 26 July 2012, the Group agreed, subject to merger control, to acquire the entire issued share capital of Pharmexx GmbH ("Pharmexx"), a leading international trading company and provider of logistics and services in the pharmaceutical sector. With effect from 12 September 2012, United Drug assumed control over, and financial risk in, all of the Pharmexx group of companies not subject to ongoing competition clearances. The Irish and UK businesses continued to operate independently from the Group until clearance was received from the Irish Competition Authority. On 9 November 2012, clearance was received and the acquisition will complete on 20 November 2012.

- On 28 August 2012, the Group acquired the entire issued share capital of Drug Safety Alliance Inc. ("DSA") and Synopia RXLLC ("Synopia"). DSA provides safety and risk management services supporting pharmaceuticals, biotech, medical device, animal and consumer health organisations. The services include all the activities related to the detection, assessment, analysis and reporting of adverse drug reactions. Synopia provides market access services, which seek to accelerate the access and positioning of medicine in the payer market and include market research, payer strategy development and account management.

- On 31 August 2012, the Group acquired the UK and US clinical services business (combined "Bilcare Global Clinical Supplies"). Bilcare Global Clinical Supplies is a leading clinical trials materials business providing services to global pharmaceuticals and biotech manufacturers and clinical research organisations from facilities in the US and UK. The services include the formulation, development, packaging, labeling and supply chain management of drugs used in the clinical trials process.

Notes to the preliminary announcement (continued)

12. Acquisition of subsidiary undertakings (continued)

The acquisitions of Pharmexx and Bilcare have been deemed to be material transactions and separate disclosure of the fair values of the identifiable assets and liabilities has therefore been made. None of the remaining business combinations completed during the year were considered sufficiently material to warrant separate disclosure of the fair values attributable to those combinations.

Goodwill is attributable to the future economic benefits arising from assets which are not capable of being individually identified and separately recognised. The significant factors giving rise to the goodwill include the value of the workforce and management teams within the businesses acquired and the enhancement of the competitive position of the Group in the marketplace and the strategic premium paid by United Drug plc to create the combined Group.

The intangible assets arising on the acquisitions are primarily related to the trade names, customer relationships and technology.

The fair value of the assets and liabilities acquired (excluding net cash acquired) were as follows: