Final Results

UDG Healthcare plc

Preliminary Announcement of Results

Year ended 30 September 2016

24 November 2016: UDG Healthcare plc ("UDG Healthcare" or "Group"), a leading international healthcare services provider, announces its preliminary results for the year ended 30 September 2016, after another year of continued growth and strategic progress for the Group.

· Diluted earnings per share1 (EPS) from continuing operations increased by 8% (9% on a constant currency basis).

· Revenue growth of 3% to €943.1m. Underlying revenue2 up 7%.

· Operating profit1 growth of 8% (9% on a constant currency basis) to €104.2 million.

· Operating margin1 increased from 10.5% to 11.1%. Net operating margin3 increased from 12.2% to 12.6%.

· Profit before tax1 up 10% (11% on a constant currency basis).

· Proposed 5% increase in final dividend to 8.50c per share, yielding a full year dividend of 11.55c per share.

· The Group has net cash of €128.3m at 30 September 2016.

· Return on capital employed (ROCE) for 2016 was 13.7%, up from 13.5% in 2015.

· Disposal of the United Drug Supply Chain businesses and MASTA completed on 1 April 2016 resulting in a net profit on disposal of €132.1m.

· Completed the acquisition of Pegasus in April 2016, and STEM post year end. Both acquisitions are an excellent strategic fit for Ashfield, with good growth prospects and a higher margin profile.

· Ashfield's operating profit increased by 7% (underlying growth2 of 9%), driven by positive underlying growth2 in both Ashfield Commercial & Clinical and Ashfield Communications.

· Sharp's operating profit increased by 16% (underlying growth2 of 12%) driven by continued growth in the US commercial packaging business.

· Sharp completed the build and fit out of its new packaging facility in Allentown, Pennsylvania increasing US commercial packaging capacity by approximately 30%. 

· Aquilant's performance negatively impacted by adverse currency movements with underlying2 operating profit €0.2 million down.

Commenting on the 2016 performance, UDG Healthcare plc Chief Executive Officer, Brendan McAtamney said:

"2016 saw the continuing business deliver another year of good growth as the Group positioned itself for the next phase of development, following the disposal of the United Drug Supply Chain businesses. The Group has made significant progress in delivering on its strategy to capitalise on an increasing trend among healthcare companies to outsource non-core and specialist activities on an international basis.

The Group began to deploy the disposal proceeds with the acquisitions of Pegasus, a UK-based healthcare communications business, and following the year end, STEM, a leading global provider of commercial and medical audits to pharmaceutical companies. Both acquisitions are aligned with the Group's global growth strategy.

The Group's earnings per share increased by 8% (9% on a constant currency basis) during the year. Sharp's operating profit increased by 16% while Ashfield increased operating profit by 7%, with operating margins in both divisions increasing during the year. Overall Group operating margins continue to improve, increasing from 10.5% to 11.1%.

The Group remains focused on delivering organic growth and executing strategic acquisition opportunities, complementary to our existing high growth businesses."

1 Before the amortisation of acquired intangible assets and transaction costs.

2 Underlying growth is reported growth adjusted for the impact of currency translation movements and any acquisition or disposal activity.

3 Operating margin as a percentage of net revenue. Net revenue represents gross revenue adjusted for revenue associated with pass-through costs for which the Group does not earn a margin.

Non-GAAP information

The Group reports certain financial measures that are not required under International Financial Reporting Standards (IFRS) which represent the generally accepted accounting principles (GAAP) under which the Group reports. The Group believes that the presentation of these non-GAAP measures provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors with a more meaningful understanding of the underlying financial and operating performance of the Group and its divisions. These measures are also used internally to evaluate the historical and planned future performance of the Group's operations and to measure executive management's performance based remuneration. Reference to these performance measurements throughout this report are to the adjusted measurements unless otherwise stated and these adjusted measures are explained in detail on pages 33 - 38.

1 Adjusted operating profit, profit before tax and diluted EPS from continuing operations are stated before the amortisation of acquired intangible assets (€14.4m, pre-tax) and transaction costs (€2.0m, pre-tax).

Adjusted profit after tax and diluted EPS from discontinued operations is stated after deducting the profit on disposal of the discontinued operations (€132.1m, net of tax), and adding back impairment of the investment in Magir Limited, an asset held for sale (€17.0m, net of tax).

2 The discontinued operations include United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA. These operations were included in the Group's disposal which was announced on 18 September 2015 and completed on 1 April 2016. The discontinued operations also include Magir Limited, which is classified as an asset held for sale at 30 September 2016.

Group development and outlook

During 2016, the Group completed the disposal of the United Drug Supply Chain and MASTA businesses to McKesson and began to reinvest the disposal proceeds received. The Group's continuing operations delivered good EPS growth of 8% (9% on a constant currency basis). The proposed full year dividend will increase by 5% continuing the Group's 27-year history of consistent dividend growth.

Corporate development activity

In April, the Group acquired Pegasus Public Relations Limited ("Pegasus"), for a total potential consideration of up to Stg£16.8 million. Pegasus is a UK-based healthcare communications business, complementing the existing services provided by Ashfield Communications.

Post the year end, the Group acquired STEM Marketing Limited ("STEM"), on 21 October 2016 for an initial consideration of Stg£55 million with an additional consideration of up to Stg£29 million payable over the next three years, based on the achievement of agreed profit targets. STEM provides services in 35 countries and is a leading provider of commercial and medical audits to pharmaceutical companies. The acquisition of STEM, a business with an established global footprint and strong growth opportunities, will enable the Group to provide new advisory services to our clients, which are highly complementary to those already delivered by Ashfield.

The Group is in a net cash position and will continue to focus on delivering organic growth and executing strategic acquisition opportunities, complementary to our existing high growth businesses.

Future Fit

The Group has delivered continued growth while simultaneously investing in scalable infrastructure across HR, Finance and IT. These investments will support the Group's delivery of sustainable future growth, by ensuring there is a robust platform in place to manage the existing businesses and to integrate future acquisitions. The first phase of this project, the implementation of a Group wide Human Resource Information System, is expected to go live during the second half of 2017 with a total capital investment of €12 million. The implementation of the Ashfield finance system and investments in the Group's IT infrastructure will be phased over the next two years with a total combined cost of €25 million.

Sharp and Ashfield expansion

In April 2016, Sharp US completed the build and fit out of its new packaging facility in Allentown, Pennsylvania increasing its US commercial packaging capacity by approximately 30%. The initial phase of packaging suites are now operational with the remainder expected to become operational during 2017. Additionally, the business continues to invest in serialisation capabilities in advance of the regulatory requirement for prescription products to be serialised from November 2017 in the US and from February 2019 in Europe. The business is well positioned to take advantage of demand for serialisation services.

To support the delivery of sustainable growth in Ashfield, a number of businesses are scheduled to relocate to larger office facilities during 2017. This includes Ashfield's US Commercial & Clinical operations which will move to a new office in Pennsylvania which is 60% larger than the current facility. The expansion of these office facilities, will put in place a long term growth platform to support the continued expansion of Ashfield.

Reporting currency

The Group announced in August 2016 that from the beginning of the new financial year 1 October 2016, it will present its financial results in US Dollars. These 2016 results will therefore be the last set of results which the Group will present in Euro. The geographic profile of the Group's businesses has changed considerably with the Group's US based businesses generating 52% of continuing Group profits in 2016 and also providing the greatest organic and inorganic growth opportunities. The Group expects that this change will provide a clearer understanding of the Group's financial performance and reduce the impact of currency movements on the Group's reported results in the long term.

The average 2016 financial year exchange rates were €1 = £0.7826 and $1.1109. (2015 €1 = £0.7428 and $1.1482). Based on the current prevailing exchange rates, the Group is likely to face a foreign exchange headwind on the translation of non-US profits in FY17.

Outlook

The Group's activities and strategy continue to be supported by the strong growth outlook for the outsourced healthcare services market. Following the disposal of the United Drug Supply Chain businesses and MASTA the Group is in a net cash position and is well positioned to deliver sustained future growth.

Analyst presentation:

A presentation for investors and analysts will be held at the London Stock Exchange at 9.00 GMT today, Thursday, 24 November 2016. If you wish to attend, please contact Powerscourt on the details below. Alternatively, to dial into the conference call or webcast, the details are as follows:

Audio webcast

http://edge.media-server.com/m/p/g8vc7tax

Conference call

UK number: +44(0)20-3427-1902

Ireland number: + 353-1-246-5601

US number: + 1-646-254-3361

Participant code: 6446012 

If you wish to ask questions, please do so via the conference call.

A replay of the audio webcast can be accessed via the same webcast link above.

Media:

Business / Financial media:

Lisa Kavanagh / Jack Hickey

Powerscourt

Tel: +44-207-250-1446

Review of Operations

Ashfield1

1 Excludes MASTA discontinued operations in both 2016 and 2015. This disposal was completed on 1 April 2016.

2 Net revenue represents gross revenue adjusted for revenue associated with pass-through costs for which the Group does not earn a margin. There are no pass-through costs in Sharp or Aquilant.

3 Underlying growth adjusts for the impact of currency translation movements and any acquisition or disposal activity.

The Group has changed the way it reports within the Ashfield division, moving from a geographic basis to a business unit segment basis. This revised format is to align our reporting to how the Group operates the business and to ensure a more meaningful representation of the key drivers of the division. A geographical breakdown is available in the 2016 Investor presentation booklet (see www.udghealthcare.com).

Ashfield continued to perform well during 2016, with net revenue up 5% to €469.5 million and operating profit up 7% to €63.6 million. Adjusting for the negative impact of currency movements, the contribution of Pegasus profits for six months and the 2015 disposal of the non-core Speaker Bureau business, Ashfield generated 7% net underlying revenue growth and underlying operating profit growth of 9%. The business delivered good organic growth across both the Commercial & Clinical and the Communications segments of the business. Operating margin increased to 10.9%, whilst net operating margin (allowing for pass-through costs) was 13.5%.

Ashfield Commercial & Clinical delivered good growth during the year with net revenue increasing by 7% (underlying growth of 8%) and operating profit increasing by 8% (underlying growth of 9%). This was principally due to strong growth in Europe supplemented by good growth in North America, partly offset by a weaker performance from the UK commercial business which operates in a more mature market. Ashfield's Japanese joint venture, CMIC Ashfield, continued to show strong growth during the year. Ashfield's US Commercial & Clinical operations will move to a new office in Pennsylvania during 2017. This will ensure the business is well placed to continue to deliver sustainable growth having secured a number of new contract wins during 2016.

Ashfield Communications also delivered good underlying growth during the year. Adjusting for the negative impact of currency movements, the contribution of Pegasus profits for six months and the 2015 disposal of the non-core Speaker Bureau business, net underlying revenues grew by 4% and underlying operating profit grew by 10% during the year. The increasing number of new molecules being developed and new products being approved, including a growing proportion of specialty products requiring greater scientific expertise, supports the growth prospects of the communications business.

Sharp

1 Underlying growth adjusts for the impact of currency movements. There was no acquisition or disposal activity in 2015 or 2016.

Sharp delivered another year of strong growth with revenue increasing by 9% to €266.4 million and operating profit by 16% to €34.4 million. The division generated underlying constant currency operating profit growth of 12% and operating margin increased to 12.9% during the year.

Sharp US delivered strong growth with revenue increasing by 15% compared to the prior year and operating profit increased by 19% to €35.6 million with positive growth evident across all packaging formats. Operating margin in the US increased to 16.1%.

During 2016, Sharp completed the build and fit out of its new commercial packaging facility in Allentown, Pennsylvania increasing US commercial packaging capacity by 30%. The initial phase of packaging suites are now operational with the remainder expected to become operational during 2017.

Sharp Europe generated an operating loss of €1.2 million during 2016. During the year, the packaging facility in Belgium successfully passed its FDA certification audit, however in doing so, the business incurred additional one-off costs. Despite the volume of activity across our European facilities remaining below requirements, the improved business development pipeline in the second half of the year leaves the business better positioned.

Serialisation of prescription products will be mandatory from November 2017 in the US and from February 2019 in Europe. Sharp is well positioned to take advantage of demand for serialisation services, with the majority of required equipment already serialised and good ongoing client engagement. While the Group continues to expect that serialisation will be a growth driver, any benefit in 2017 is expected to be weighted towards the second half of the year.

Aquilant1

1 Excludes United Drug Supply Chain Services, United Drug Sangers and TCP Group in 2016 and 2015 as they are included in discontinued operations with their disposal completed on 1 April 2016. Also excludes the Group's share of profits from the joint venture, Magir Limited, which has been classified as a discontinued operation.

2 Underlying growth adjusts for the impact of currency movements and any acquisition, closure or disposal activity.

Revenue was 8% behind the prior year, however, adjusting for the closure of Aquilant's UK laboratory distribution business in February 2015 and negative currency movements, underlying revenue was in line with the prior year.

Reported operating profit was 14% behind the prior year, primarily due to adverse currency movements and the timing of capital sales activity. Underlying operating profit was 2% (c. €0.2 million) behind the prior year.

Discontinued operations

1 Profit after tax from discontinued operations is stated before amortisation of acquired intangible assets, transaction costs, exceptional items, profit on disposal of discontinued operations and before the impairment of the Group's investment in Magir Limited, an asset held for sale at 30 September 2016. In accordance with IFRS 5, depreciation of property, plant and equipment and amortisation of intangibles has not been charged on the assets disposed of during the year. If the assets had continued to be depreciated and amortised, the respective pre-tax charges for the year would have been €3,526,000 and €720,000.

On 1 April 2016 the Group completed the disposal of United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA. These businesses are treated as discontinued operations and have performed in line with expectations for the six-month period. 2015 includes results for the twelve month period. The disposal resulted in a profit on disposal of €132.1 million, net of tax.

The Group has classified its investment in Magir Limited as an asset held for sale at 30 September 2016 and has accounted for the Group's share of the profit after tax for the year ended 30 September 2016 as a discontinued operation. The value of this investment has been impaired by €17.0 million.

Forward-looking information

Some statements in this announcement are or may be forward looking statements. They represent expectations for the Group's business, including statements that relate to the Group's future prospects, developments and strategies, and involve risks and uncertainties both general and specific. The Group has based these forward-looking statements on assumptions regarding present and future strategies of the Group and the environment in which it will operate in the future. However, because they involve known and unknown risks, uncertainties and other factors including but not limited to general economic, political, financial and business factors, which in some cases are beyond the Group's control, actual results, performance, operations or achievements expressed or implied by such forward looking statements may differ materially from those expressed or implied by such forward-looking statements and accordingly you should not rely on these forward looking statements in making investment decisions. Except as required by applicable law or regulation, neither the Group nor any other party intends to update or revise these forward looking statements after the date these statements are published, whether as a result of new information, future events or otherwise.

About UDG Healthcare plc:

UDG Healthcare plc (LON: UDG) is a leading international partner of choice delivering commercial, clinical, communications and packaging services to the healthcare industry, employing almost 8,000 people with operations in 23 countries and delivering services in over 50 countries.

UDG Healthcare plc operates across three divisions: Ashfield, Sharp and Aquilant.

Ashfield is a global leader in commercialisation services for the pharmaceutical and healthcare industry, operating across two broad areas of activity: commercial & clinical services, and communications services. It focuses on supporting healthcare professionals and patients at all stages of the product life cycle. The division provides field and contact centre sales teams, healthcare communications, patient support, audit, advisory, medical information and event management services to over 300 healthcare companies.

Sharp is a global leader in contract commercial packaging and clinical trial packaging services for the pharmaceutical and biotechnology industries, operating from state of the art facilities across the US and Europe. Sharp is also a world leader in 'Track and Trace' serialisation services, which will require all prescription drugs to have a unique serial code for authentication and traceability.

Aquilant is a leading provider of outsourced sales, marketing, distribution and engineering services to the medical and scientific sectors in the UK, Ireland and the Netherlands.

The company is listed on the London Stock Exchange and is a constituent of the FTSE 250.

For more information please go to: www.udghealthcare.com

Finance Review

Revenue

Revenue from continuing operations of €943.1 million for the year was 3% ahead of 2015. Ashfield reported revenue 2% ahead of the prior year (up 5% excluding pass through revenue) and Sharp reported revenue 9% ahead of the prior year. Aquilant revenue was 8% down on 2015 due to the closure of Aquilant's UK laboratory distribution business in February 2015 and the significant adverse movement in Sterling exchange rates.

Adjusted operating profit

Adjusted operating profit from continuing operations of €104.2 million is 8% ahead (9% on a constant currency basis) of 2015.

Adjusted operating margin

The adjusted operating margin for the continuing businesses for the year of 11.1% increased from 10.5% in 2015. This continues the upward trend in operating margin in recent years as the Group focuses on operating efficiencies and achieving faster growth from businesses with higher operating margins.

Adjusted profit before tax

Net interest costs for the year of €12.6 million are 3% lower than 2015. This delivered a profit before tax from continuing operations of €91.6 million which is 10% ahead of 2015 (11% on a constant currency basis).

Taxation

The effective taxation rate on continuing operations has increased from 21.9% in 2015 to 22.7% in 2016. This is because a larger proportion of profit has been generated in countries with higher taxation rates.

Adjusted diluted earnings per share

Earnings per share from continuing operations is 8% ahead (9% on a constant currency basis) of 2015 at 28.61 cent. On a combined continuing and discontinued basis, adjusted diluted earnings per share increased by 1% to 35.41 cent.

Foreign exchange

The Group operates in 23 countries, with its primary foreign exchange exposure being the translation of local income statements and balance sheets into Euro for Group reporting purposes. The primary non-Euro currencies are Sterling and US Dollar and their exchange rates for 2015 and 2016 are outlined in note 19. The re-translation of overseas profits to Euro has reduced constant currency EPS growth of 9% to a reported EPS growth rate of 8%.

On 4 August 2016 the Group announced that due to the growth in its US business and the disposal of its Irish supply chain businesses, that the Group will change its presentation currency to US Dollar for the 2017 Financial Year.

Discontinued operations

On 1 April 2016 the Group disposed of the United Drug Supply Chain businesses and MASTA. These businesses are reported as discontinued operations in 2016. At 30 September 2016 the Group has classified its joint venture arrangement with Magir Limited as a discontinued operation and an asset held for sale. The discontinued businesses contributed an operating profit of €17.6 million to the Group made up of six months contribution from the disposed businesses and twelve months profit from Magir Limited. The operating profit of the Group's continuing and discontinued businesses of €121.8 million increased by 1% in comparison to the 2015 operating profit of €120.3 million. The discontinued businesses have also contributed €132.1 million of a profit on disposal, offset by a €17.0 million reduction in the investment in Magir Limited.

Cash flow

Net cash increased by €324.1 million in the year to €128.3 million (30 September 2015: net debt €195.8 million). The net cash inflow from operating activities was €66.9 million with €85.2 million being generated by continuing operations and an outflow of €18.3 million from discontinued operations.

The net cash received resulting from the disposal of the United Drug Supply Chain businesses and MASTA was €373.9 million (pre transaction costs and taxation). €38.4 million was invested in our continuing operations in property, plant and equipment and computer software. This includes IT investment to enable our businesses to grow in an efficient manner and investment in the new facility in Sharp US. €12.7 million was paid in consideration for the acquisition of Pegasus, while the Group also paid €15.6 million in deferred contingent consideration associated with prior year acquisitions. Dividend payments of €27.4 million relating to the final 2015 dividend and the 2016 interim dividend were made during the year. Foreign exchange translation reduced cash balances by €15.3 million.

Balance sheet

Net cash at the end of the year was €128.3 million (€384.1 million cash and €255.8 million debt). The net cash/(debt) to annualised EBITDA ratio is 1.04 times cash (2015: 1.42 times debt) and net interest is covered 10.6 times (2015: 11.4 times) by annualised EBITDA. Financial covenants in our principal debt facilities are based on net debt to EBITDA being less than 3.5 times and EBITDA interest cover being greater than three times.

The Group has maintained its long term private placement debt as it expects to make acquisitions and other capital investments in the coming years. At 30 September 2016 the Group also had €220 million of undrawn overdraft and loan facilities.

Return on capital employed (ROCE)

The ROCE for continuing operations was 13.7%, up from 13.5% at the end of 2015.

The Group targets ROCE of 15% within three years for all investments. The Group has invested significantly in acquisitions and capital expenditure in recent years and we are targeting that organic growth in future years will increase Group ROCE to 15%.

Dividends

The directors are proposing a final dividend of 8.50 cents per share representing an increase of 5% on the 2015 final dividend of 8.10 cent per share. This represents 5% growth in the total dividend for the year to 11.55 cent per share. This continues the Group's record of consistently increasing dividends for over 25 years.

Subject to shareholder approval at the Company's 2017 Annual General Meeting, the proposed final dividend of 8.50 cent per share will be paid on 13 February 2017 to ordinary shareholders on the Company's register at 5.00 p.m. on 19 January 2017.

2016 Annual Report and Annual General Meeting

The 2016 Annual Report and Accounts will be published in December 2016 and the Annual General Meeting of the Company will be held on 7 February 2017.

Investor relations

UDG Healthcare's senior management team spend a significant amount of time meeting with shareholders and the international financial community. We have invested in dedicated investor relations resources and are focused on increasing the awareness of the Company among the investor and analyst community.

We communicate regularly with our shareholders throughout the year, specifically following the release of our interim and preliminary results, and at the time of major developments. During 2016, the executive management team attended eleven investor conferences and conducted over 250 institutional investor one-on-one / group meetings. In addition, the Group held two investor events during the year. In February 2016, the Group hosted a site visit to its Sharp headquarters in Allentown, Pennsylvania, US and in September 2016, the Group held a Capital Markets Day in London.

Our website www.udghealthcare.com, is the primary method of communication for the majority of our shareholders. We publish our annual report, preliminary results and other public announcements on our website. In addition, details of our conference calls and presentations are available through our website.

The Board of Directors considers it important to understand the views of shareholders and receive regular updates on investor perceptions.

Our investor relations department provides a point of contact for shareholders and full contact details are set out in the investor relations section of our website. Shareholders can also submit an information request through the shareholder services section of our website.

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

UDG Healthcare plc (the "Company") is a company domiciled in Ireland. The preliminary consolidated financial information of the Company for the year ended 30 September 2016, are comprised of the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in joint ventures and associates.

The financial information presented herein does not amount to statutory financial statements that are required by Section 347 of the Companies Act, 2014 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 2015 have been annexed to the annual return and filed with the Registrar of Companies. 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 statutory financial statements for the year ended 30 September 2016 will be annexed to the next annual return of the Company and filed with the Registrar of Companies.

2. Statement of compliance

This 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 accounting policies adopted are consistent with those of the previous year except for the following new and amended IFRSs and International Financial Reporting Interpretations Committee (IFRIC) that were adopted by the Group as of 1 October 2015 and that are effective for the Group's financial year ended 30 September 2016 but did not have a material effect on the results or financial position of the Group:

· Annual Improvements to IFRSs 2010-2012 Cycle

· Annual Improvements to IFRSs 2011-2013 Cycle

· IAS 19 Amendment: Defined Benefit Plans; Employee Contributions

The following standards, amendments to existing standards, and interpretations published by IASB are not yet effective for the year end 30 September 2016 and have not been early adopted in preparing the financial statements:

A number of the standards (*) set out above have not yet been endorsed by the EU. These standards, interpretations and amendments to existing standards will be applied for the purposes of the Group and Company financial statements with effect from their respective effective dates. The Group is currently considering the impact of these accounting standards.

3. Prior year adjustment

Reclassification of wages and salary expenses

The Ashfield Division contracts out employees to its customers to work on sales and marketing of their products in the marketplace. Wages and salaries paid to these employees in the amount of €51,849,000 have been classified as a cost of sale in the current year. These expenses were classified as selling and distribution expenses in 2015 and prior years. The Group considers the classification of this expense as a cost of sale to be a more appropriate classification given that Group revenue includes the amounts charged to customers for their service. As a result, €72,431,000 of wages and salaries has been reclassified from selling and distribution expenses to cost of sales in 2015 so that the results are presented on a consistent basis in both 2016 and 2015. There is no impact on operating profit.

A summary of the impact on the previously reported figures in 2015 is set out below:

4. Segmental analysis

The Group's operations are divided into the following operating segments each of which operates in a distinct sector of the healthcare services market:

Ashfield - Ashfield is a global leader in commercialisation services for the pharmaceutical and healthcare industry, operating across two broad areas of activity: commercial & clinical services, and communications services. It focuses on supporting healthcare professionals and patients at all stages of the product life cycle. The division provides field and contact centre sales teams, healthcare communications, patient support, audit, advisory, medical information and event management services to over 300 healthcare companies.

Sharp - Sharp is a global leader in contract commercial packaging and clinical trial packaging services for the pharmaceutical and biotechnology industries, operating from state of the art facilities across the US and Europe. Sharp is also a world leader in 'Track and Trace' serialisation services, which will require all prescription drugs to have a unique serial code for authentication and traceability.

Aquilant - Aquilant is a leading provider of outsourced sales, marketing, distribution and engineering services to the medical and scientific sectors in the UK, Ireland and the Netherlands.

At 30 September 2016 the Group has classified the joint venture investment in Magir Limited as a discontinued operation and an asset held for sale. Following this change, we have revised our segmental reporting and restated the prior year segmental disclosures as required by IFRS 8. Details of the discontinued operations are included in note 8. 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 as reviewed by the Group's Chief Operating Decision Maker (CODM), which the Group has defined as Brendan McAtamney (Chief Executive Officer).

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

5. Share of joint ventures' profit after tax

6. Exceptional items

There were no exceptional costs during the year.

Restructuring costs and other, for the year ended 30 September 2015, primarily included redundancy costs of €7,411,000 in relation to recently acquired and existing Group businesses. The closure of Aquilant Scientific (UK) Limited (a UK based distributor of laboratory equipment) was announced on 28 February 2015. This resulted in non-cash impairment charges in respect of goodwill (€2,216,000) and other assets (€2,092,000). Onerous lease costs were incurred in relation to the recently acquired and existing portfolio of leased properties that are no longer in use. Discontinued operations incurred redundancy costs of €1,335,000 during the prior year.

On 1 October 2014, the Group disposed of its shareholding in Ashfield KK as part of the Group entering into a joint venture agreement with CMIC Holdings Co., Ltd. On 30 November 2014, the Group disposed of its shareholding in Pharmaceutical Trade Services, Inc. On 22 May 2015, the Group disposed of its Physicians World Speakers Bureau business, a portfolio of agencies located in the US which was acquired as part of KnowledgePoint360 in 2014.

The following table details the (profit)/loss on each of these disposals:

Reconciliation to Group Income Statement - year ended 30 September 2015