Half Yearly Report

UDG Healthcare plc

Interim Report 2015

· Adjusted diluted earnings per share (EPS) increased by 23% (12% constant currency growth).

· Adjusted operating profit growth of 19% to €53.6 million, with profit before tax up 26%.

· Adjusted operating margin increased from 4.3% to 4.7%.

· Proposed 8% increase in interim dividend to 2.90 cent per share.

· Full year constant currency EPS guidance increased from a growth range of 5% - 8% to 7% - 9%.

· Robust profit growth from Ashfield and Sharp with a combined 55% increase in operating profits.

· Supply Chain operating profit is behind 24% primarily due to disposals in 2014.

· Ashfield operating profits increased by 55%, due to strong performance from healthcare communications

and the European commercial business.

· An exceptional charge of €10.7 million was incurred in the period, as the reshaping of the Group continues through restructuring and the integration of acquisitions.

· In Sharp, strong US performance resulted in the divisional operating profit increasing by 57%.

· Significant capacity expansion underway for Sharp US.

*Amortisation of acquired intangible assets, acquisition costs and exceptional items.

** EBITDA before acquisition costs and exceptional items for the twelve month period up to the reporting date, including annualised EBITDA of companies acquired and less EBITDA of companies disposed, during this twelve month period.

UDG Healthcare believes that 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.

Commenting on the 2015 interim performance, UDG Healthcare Chief Executive Officer, Liam FitzGerald said:

"The first half of 2015 has been a period of further strong advancement for the Group as our strategy to expand into higher growth areas continued to deliver robust profit growth. Our two growth platforms, Sharp and Ashfield, accounted for over 70% of the Group's operating profit in the period and in aggregate increased profits by 55%.

The Group delivered strong underlying growth whilst also benefiting from currency movements in the period. Profit before tax increased by 26% and EPS was 23% ahead of the prior period.

KnowledgePoint360 and Galliard have performed very well since we acquired them in 2014 and Ashfield Healthcare Communications now has a strong international market leading position with high growth potential.

UDG Healthcare continues to focus on developing strong market positions across the Group's operations to meet the growing demand from our healthcare industry clients. As we develop our services we have continued to underpin our expansion by investing in increased capacity, systems, quality and compliance structures. The Group has considerable long-term financing facilities available and good internally generated cash flows to support our growth objectives. Following growth in earnings during the period we have increased our guidance for the full year and remain positive about our long-term growth prospects."

Group outlook

Based on improved trading, we are increasing our guidance for constant currency adjusted diluted earnings per share (EPS)1 for the year to 30 September 2015 from a range of 5 to 8% previously, to be between 7% and 9% ahead of last year. This constant currency growth range is lower than performance in H1 2015 due to the timing of acquisitions and disposals in 2014.

The average 2014 financial year exchange rates were €1 = £0.8194 and $1.3574. If the average exchange rates for H1 2015 of €1 = £0.7670 and $1.1899 are sustained for the year, reported EPS growth will be in the range of 16% and 18%.

The Group has recognised an exceptional charge in the period of €10.7 million. The charge primarily relates to restructuring of the healthcare communications business following acquisitions in 2014, restructuring within the United Drug Supply Chain Services business along with the closure of Aquilant's UK laboratory distribution business. We anticipate a full year exceptional charge in the region of €13 to €15 million of which €4 to €5 million is non-cash.

The Group also expects to deliver a good underlying cashflow performance for the year with stronger cash generation in H2 2015 due to the timing of dividend payments and Sharp US capital expenditure. When combined with modest debt levels relative to earnings and significant financing facilities, this continues to leave the Group well positioned to support its future growth objectives both organically and through acquisition.

[1] before the amortisation of acquired intangible assets, acquisition costs and exceptional items (net of tax).

Analyst presentation:

A presentation for investors and analysts will be held at the London Stock Exchange at 9.00 BST today, Thursday 14 May 2015. If you wish to attend please contact Powerscourt on the contact details below. Alternatively, to dial into the conference call, the details are as follows:

Standard International Access +44 (0) 20 3003 2666

UK Toll Free 0808 109 0700

Ireland +353 (0) 1 436 0959

Password UDG Healthcare

A playback facility will be available for seven days on +44 (0) 20 3350 6902 (Standard International Access) or 0800 640 1726 (UK Toll Free). The access code for the replay will be 7008564#.

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

Review of Operations

Ashfield Commercial & Medical Services

Ashfield delivered a very strong performance in H1 2015 with revenues up 35% at €292.8 million and operating profit 55% ahead at €25.9 million, with profits increasing across all geographies. The business benefitted from acquisitions and currency in the period, which supplemented good underlying growth of 9%. Operating margins of 8.9% increased 120bps on the prior period largely due to the increased contribution from healthcare communications and higher operating margins in Continental Europe. Adjusting for pass through revenues of €68.8 million in H1 2015, net revenue was €224.0 million and the underlying operating margin was 11.6% in the period.

UK revenues and profits increased substantially due to the acquisition of Knowledgepoint360 (KP360) and Galliard in 2014. Japan continued to show good progress in the period. Following the formation of the joint venture arrangement with CMIC in Japan on 1 October, we now only recognise our share of profit for this business.

North American revenues were significantly ahead, partially due to increased pass-through revenues. Profits were modestly higher due to a weakerperformance from the high margin US medical services business (pharmacovigilance and market access) relative to a very strong H1 2014. The US commercial business achieved good profit growth in the period and has developed a good pipeline of new business for 2016.

The European business performed strongly in the period as we continued to focus on improving the operating margins and revenue mix. This resulted in a slight increase in reported revenue, coupled with a very strong increase in margins resulting in operating profits more than doubling. With our broadened European platform we are beginning to deliver pan-European solutions to our pharmaceutical clients.

The healthcare communications business has performed strongly since the acquisition of KP360 and Galliard in 2014. They have now been integrated within our existing healthcare communications, meeting and events and strategic consulting businesses. In H1 2015 these businesses accounted for more than 50% of the division's operating profits. Ashfield Healthcare Communications is one of the largest global medical communications businesses and is well placed to sustain strong growth in this fragmented market.

Sharp Packaging Services

Sharp Packaging Services had a very strong performance in H1 2015 with revenues of €110.4 million and profits of €11.8 million, which were 35% and 57% ahead of the prior period respectively. Operating margins increased by 140bps to 10.6% during the period.

US revenues were 37% ahead of the prior period, while profits of €12.1 million were 60% ahead. The profit margin also increased strongly compared to H1 2014. Market dynamics remain favourable with strong growth across the bottling and biotech segments. We continue to benefit as customers move to new packaging formats and have a good pipeline of new business.

Serialisation of prescription products will be mandatory from November 2017 in the US. We expect this to be a driver of future growth in the packaging industry and will continue to invest in serialisation capabilities across Sharp. We currently have nine suites serialised and seven more are being enabled.

During the period we initiated the second phase of the capacity expansion programme at our Allentown facility in Pennsylvania to meet the consistent growth in demand for our services. The building acquisition is now completed and fit out work has commenced. We anticipate the first phase of packaging suites will become operational in H2 2016.

Sharp Europe reported a €0.3 million loss in the period, as we continue to re-configure our offering and business mix to be more consistent with our US operations.

We have begun to offer serialisation services in Europe and can now provide a more consistent global packaging offering to pharmaceutical manufacturers for both clinical and commercial needs. We are seeing increased activity from US customers which we expect to translate into improved European business over the medium term.

Supply Chain Services

The Supply Chain Services division performed in line with our expectations, as disposals impacted the financial performance in the current period.

Revenues of €728.2 million were 2% behind the prior period, mainly due to disposals. Operating profits of €15.9 million were 24% behind the prior period largely due to the sale of our 50% interest in the UniDrug joint venture in August 2014 and the disposal of the Specials businesses in February 2014. These businesses contributed operating profit of €4.0 million H1 2014.

Revenues in pharma distribution (wholesale and pre-wholesale) were slightly behind the prior period as the share of the overall market held by lower priced generics continues to increase in Ireland. Nonetheless, we continued to increase our market share in the Irish wholesale market. Underlying operating profits were lower mainly due to the switch in 2014 by manufacturers of high-tech medicines to a direct to pharmacy model and the removal of the UniDrug Joint Venture profit contribution following its disposal.

Aquilant had a good performance in the period with revenues and operating profit well ahead of the prior period. Whilst the business added some new agencies, the majority of the growth was from existing clients.

We have invested significantly in creating future efficiencies in pharma distribution through increased automation (completed in H1 2014), transfer of the Ballina evening shift volumes to Dublin (completed in H1 2015) and the introduction of a new ERP (Enterprise Resource Planning) IT system, which is becoming operational in H2 2015 and will complete in 2016. These investments facilitate reduced operating costs and enable us to increase our cost efficiency. This should allow us to optimise performance in Ireland as the pricing environment normalises.

For reference:

Investors and Analysts:

Media:

Lisa Kavanagh

Powerscourt

Tel: +44-207-250-1446

About UDG Healthcare plc:

Listed on the London Stock Exchange, UDG Healthcare plc is a leading international provider of services to healthcare manufacturers and pharmacies, with operations in 20 countries including the US, UK, Ireland and Germany.

UDG Healthcare plc operates across three divisions: Ashfield Commercial & Medical Services, Sharp Packaging Services and Supply Chain Services.

Ashfield Commercial & Medical Services is a global leader in the provision of sales, marketing and healthcare communications services to pharmaceutical manufacturers with operations in major developed markets. It focuses on supporting healthcare professionals and patients at all stages of the product life cycle. The division provides sales teams, healthcare communications, telesales, nurse educators, medical information, pharmacovigilance, regulatory and event management services to healthcare companies in 19 countries.

Sharp Packaging Services is a leading international provider of pharmaceutical contract packaging and clinical trials materials services with facilities in the US, UK, the Netherlands and Belgium.

Supply Chain Services includes the United Drug Supply Chain Services and the Aquilant Specialist Healthcare Services businesses. The division provides logistics services to healthcare companies, pharmacies and hospitals in the UK and Ireland. United Drug Supply Chain Services is the largest pharmaceutical wholesaler and pre-wholesaler on the island of Ireland. Aquilant Specialist Healthcare Services is a leading provider of outsourced sales, marketing, distribution and engineering services to the medical and scientific sectors in Ireland and the UK.

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

Date for Preliminary Results

The Group will issue preliminary results for the year to 30 September 2015 on Tuesday 24 November, 2015.

Overview of results

Revenue

Revenue for the six months to 31 March 2015 was 9% ahead (4% on a constant currency basis) of the same period in 2014 at €1.13 billion. Both Ashfield Commercial & Medical Services and Sharp Packaging Services divisions reported revenue 35% ahead of the prior period. The Supply Chain Services divisional revenue was 2% down on 2014, mainly due to the disposal of the Specials businesses in February 2014.

Adjusted operating profit

Adjusted operating profit of €53.6 million is 19% ahead (10% on a constant currency basis) of H1 2014.

Adjusted operating margin

Adjusted operating margin for the period of 4.74% was higher than the margin of 4.32% in 2014. This continues the upward trend in operating margin in recent years as the Group focuses on operating efficiencies and acquiring businesses with higher operating margins.

Adjusted profit before tax

Net interest costs for the period of €7.0 million are 13% lower than H1 2014 primarily due to lower interest rates. This delivers a profit before tax of €46.6 million which is 26% ahead of 2014 (15% on a constant currency basis). Further details on the principal exchange rates used are provided in note 15.

Adjusted diluted earnings per share

Earnings per share is 23% ahead (12% on a constant currency basis) of 2014 at 15.23 cent.

Exceptional items

The Group incurred an exceptional charge of €10.7 million in the period, details of which are disclosed in note 5.

Cash flow

Net debt increased by €28.5 million in the period to €274.9 million. The net cash inflow from operating activities was €27.7 million including an outflow of €5.6 million relating to exceptional items.

In addition, €31.5 million was invested in property, plant and equipment and computer software. This mainly comprised IT investment to enable our businesses to achieve future growth in an efficient manner and the €7.6 million property purchase in Sharp US. The investment in the Japanese joint venture arrangement resulted in a €6.1 million outflow.

Balance sheet

Net debt at the end of the period was €274.9 million. The net debt to annualised EBITDA ratio is 2.02 times and net interest is covered 8.7 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.

Dividends

The directors are proposing an interim dividend of 2.90 cent per share representing an increase of 8% on the 2014 interim dividend. The interim dividend is payable to shareholders on the Company's register at 5.00 pm on 22 May 2015 and will be paid on 3 July 2015. 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 interim dividend. The final date for receipt or cancellation of elections under the DRIP will be 15 June 2015.

Risk management

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, interest rate risk, currency risk and credit risk. The primary objective of the Group's policies is to minimise financial risk at a 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 swaps are used to manage the interest rate and currency risks and to achieve the desired currency profile of borrowings.

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

UDG Healthcare plc'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.

Credit risk management

The Group carries significant trade receivables and their recoverability is a material business risk. The Group uses a range of customer credit and collection procedures to actively manage its credit risk.

The Transparency (Directive 2004/109/EC) Regulations 2007 require the disclosure of the principal risks and uncertainties which could have a material impact on the Group's performance over the remainder of the financial year.

The Group operates within a highly regulated environment and the expectations of our key stakeholders, which include our clients and regulators, are very high. Our services include communicating to healthcare professionals appropriate product use, pharmaceutical packaging and the distribution of pharmaceutical products for normal use or clinical trials. We focus on making sure that we deliver these services correctly and in a compliant way. However, failure to do so could result in adverse consequences for patients and our clients, so the risks that we face in delivering our services are potentially significant.

The Group's ability to avoid or mitigate these risks is underpinned by detailed risk registers maintained by each of the Group's divisions and business units. These risk registers identify the risks, as well as the plans for addressing them, and the consolidated Group risk register is reviewed by the executive directors on a regular basis. The consolidated risk register is also reviewed by the Risk, Acquisitions and Finance Committee and the Chairman of that committee reports to the Board on the outcome of each review.

The principal risks and uncertainties identified by the risk management process as facing the Group are detailed below:

Statement of Directors

Each of the directors confirms that to the best of their knowledge and belief:

· the condensed set of interim financial statements comprising the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement, and the related notes have been prepared in accordance with IAS 34, Interim Financial Reporting as adopted by the EU;

· the half-yearly financial report includes a fair review of the information required by:

(a) Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

The Group's auditor has not reviewed this condensed half-yearly financial report.

On behalf of the Board(i)

13 May 2015

(i) The Board of UDG Healthcare plc is disclosed on the Company's website, www.udghealthcare.com.

Condensed consolidated income statement

Condensed consolidated statement of

comprehensive income

Condensed consolidated statement of changes in

equity

Condensed consolidated balance sheet

Condensed consolidated cash flow statement

Notes to the condensed interim financial statements

for the six months ended 31 March 2015

_____________________________________________________________________________________________

1. Reporting entity

UDG Healthcare plc (the "Company") is a company domiciled in Ireland. The unaudited condensed consolidated interim financial statements of the Company for the six months ended 31 March 2015 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 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 2014 will be 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.

2. Statement of compliance

These unaudited condensed consolidated interim financial statements ("the interim accounts") for the six months ended 31 March 2015 have been prepared in accordance with IAS 34, Interim Financial Reporting, as endorsed by the European Union. These interim accounts do not include all of the information required for full annual financial statements and should be read in conjunction with the most recent published consolidated financial statements of the Group. The accounting policies applied in the interim accounts are the same as those applied in the 2014 Annual Report.

The following standards and interpretations were also effective for the Group from 1 October 2014 but did not have a material effect on the results or the financial position of the Group:

The following standards, amendments to existing standards, and interpretations published by IASB are not yet effective for the period ended 31 March 2015 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.

The preparation of interim financial statements requires the use of certain critical accounting estimates, judgements and assumptions. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, relate primarily to goodwill impairment testing, revenue recognition, valuation and ownership of inventory, valuation of trade receivables and provisions. The nature of the assumptions and estimates made in the preparation of the interim accounts are the same as those identified in our most recent annual report. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. There was no significant change to any of these key estimates or judgements in the six month period, other than a change to certain actuarial assumptions as set out in note 12.

The income tax expense for the six month period is calculated by applying the directors' best estimate of the annual effective tax rate to the profit for the period.

The directors have a reasonable expectation that the Company, and the Group as a whole, have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.

As permitted by the Transparency (Directive 2004/109/EC) Regulations 2007 this Interim Report is available on www.udghealthcare.com. However, if a physical copy is required, please contact the Company Secretary.

3. Segmental analysis

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

Ashfield Commercial & Medical Services - The Ashfield Commercial & Medical Services segment provides contract sales outsourcing, healthcare communications and related services to healthcare manufacturers.

Sharp Packaging Services - The Sharp Packaging Services segment provides outsourced commercial and clinical trial packaging services to healthcare companies.

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

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 Liam FitzGerald (Chief Executive Officer). The amount of revenue and operating profit under the Group's operating segments is as follows:

4. Share of joint ventures' profit after tax

5. Exceptional items

Restructuring costs and other primarily include redundancy costs of €5,343,000 in relation to recently acquired and existing Group businesses. The closure of Presearch Limited (a UK based distributor of laboratory equipment) was announced on 28 February 2015. This has resulted in non-cash impairment charges in respect of goodwill (€2,216,000) and other assets (€2,050,000).

Onerous lease costs were incurred in relation to the recently acquired and existing portfolio of leased properties that are no longer in use.

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. The profit on disposal arising was €209,000. Goodwill and intangible assets net of deferred tax ascribed to this business was nil and related disposal costs were €266,000. In addition, net foreign currency translation gains previously recognised in the foreign currency translation reserve of €146,000 were reclassified to the income statement. Net liabilities on disposal were €1,066,000. Total consideration (net of cash disposed) was an outflow of €737,000.

On 30 November 2014, the Group disposed of its shareholding in Pharmaceutical Trade Services, Inc. The profit on disposal arising was €59,000. Goodwill and intangible assets net of deferred tax ascribed to this business was €30,000 and related disposal costs were €78,000. In addition, net foreign currency translation gains previously recognised in the foreign currency translation reserve of €19,000 were reclassified to the income statement. Net assets on disposal were €1,037,000. Total consideration (net of cash disposed) was €1,080,000, while deferred contingent consideration of €105,000 was released on disposal.

Reconciliation to Group Income Statement

6. Finance income and expense

7. Earnings per ordinary share

** excluding amortisation of acquired intangible assets, acquisition costs and exceptional items (net of tax)

The adjusted figures for earnings per share are intended to demonstrate the results of the Group after eliminating the impact of amortisation of acquired intangible assets, acquisition costs and exceptional items and are deemed by management to be a key metric of monitoring Group performance.

Treasury shares have been excluded from the weighted average number of shares in issue used in the calculation of earnings per share. The average market value of the Company's shares for the purposes of calculating the dilutive effect of share options was based on quoted market prices for the period.

8. Movement in goodwill, intangible assets and investment in joint ventures and associates

On 26 February 2015, the Group announced the closure of Presearch Limited, a UK based distributor of laboratory equipment. The closure resulted in a non-cash goodwill impairment charge of €2,216,000.

The disposal in the period relates to Pharmaceutical Trade Services, Inc. See note 5 for further details.

On 1 October 2014, the Group entered into a joint venture agreement with CMIC Holdings Co., Ltd, a Japanese provider of contract sales outsourcing services, and invested €6,124,000 for a 49.9% share in the ordinary share capital of CMIC Ashfield Co., Ltd.

9. Other reserves

10. Net debt