Preliminary results

UDG Healthcare plc

Preliminary Announcement of Results

Year ended 30 September 2017

Strong full year performance, driven by organic growth and further acquisitions

28 November 2017: UDG Healthcare plc ("UDG Healthcare" or "Group"), a leading international healthcare services provider, announces its preliminary results for the year ended 30 September 2017, which reflects another year of strong growth and strategic progress for the Group.

Non-IFRS information

The Group reports certain financial measurements 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-IFRS measurements 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 measurements 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 measurements are explained on pages 34-37.

1 Adjusted operating profit, profit before tax and diluted EPS are stated before the amortisation of acquired intangible assets ($22.1m, pre-tax) and transaction costs ($4.0m, pre-tax).

2 Net revenue represents gross revenue adjusted for revenue associated with pass-through costs, for which the Group does not earn a margin.

3 The Group has classified its joint venture arrangement with Magir Limited as a discontinued operation and an asset held for sale. The discontinued operations in 2016 also included United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA. The Group's disposal of these operations was completed on 1 April 2016.

· Adjusted diluted earnings per share1 (EPS) from continuing operations increased by 17% (23% on a constant currency basis).

· Net revenue growth of 12% (16% on a constant currency basis) to $1,028.5 million.

· Adjusted operating profit1 growth of 12% (17% on a constant currency basis) to $129.3 million. Adjusted net operating margin3 stable at 12.6%.

· Adjusted profit before tax1 up 17% (23% on a constant currency basis) driven by:

o Underlying growth of 13% including the benefit of lower interest charges

o Acquisition growth of 10%

o Offset by adverse foreign exchange movements of 6%.

· Proposed 7.5% increase in final dividend to $9.72c per share, yielding a full year dividend increase of 7% to $13.3c per share.

· Net debt of $53.3 million at 30 September 2017 (0.32x net debt to EBITDA).

· Completed six acquisitions with a total capital commitment in excess of $270m, developing the Group's market leading positions and expanding its service offering.

· Ashfield's operating profit1 increased by 16% driven by a combination of underlying and acquisition growth (underlying growth2 of5% after a 3% additional Future Fit operating cost impact). Good performance by all acquired businesses since acquisition, with particularly strong growth from STEM Healthcare.

· Significant progress enhancing the Ashfield service offering across advisory, communications, commercial and clinical services.

· Sharp's operating profit1 increased by 8% (underlying growth2 of 11%), driven by Sharp Europe moving into profit and continued growth in Sharp US.

· Continued development of the Sharp offering through investments in new facilities, across both the commercial and clinical packaging businesses in both the US and Europe.

· Aquilant's underlying operating profit2 increased by 4%, with reported performance negatively impacted by adverse currency translation movements.

· Further progress on Future Fit investments in scalable infrastructure with the launch of Workday (Group HR system) and commencement of the implementation of Oracle Fusion (Ashfield finance system) to support continued sustainable growth.

· Alan Ralph, UDG Healthcare's CFO, has signalled his intention to retire from his role by the end of 2018. A comprehensive process is underway to appoint a suitable successor.

Commenting on the performance, Chief Executive Officer, Brendan McAtamney said:

 "2017 was another year of strong growth at UDG Healthcare, with adjusted earnings per share increasing by 17% (23% on a constant currency basis). All our divisions delivered good underlying profit growth, supplemented by the benefit of acquisitions.

We continued to transform UDG Healthcare, committing more than $270 million to six transactions during the year. These acquisitions enhance and broaden the range of capabilities we offer our healthcare clients. We are well positioned to continue to deliver organic growth and our strong balance sheet will enable us to execute further strategic acquisition opportunities as they arise.

UDG Healthcare's value proposition to our clients continues to expand and the Group also continues to benefit from the increasing trend in the healthcare industry to outsource specialist and non-core activities on an international basis."

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

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

3Operating 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.

Corporate development activity

In line with the Group's strategy of expanding into higher growth and higher margin areas, 2017 saw the Group commit more than $270 million to six acquisitions. The Group has now redeployed over two thirds of the net proceeds from the 2016 sale of the United Drug supply chain business to McKesson.

These acquisitions have a strong strategic fit with the Group's existing businesses and have added further capabilities for the Group's healthcare clients. All have performed well since acquisition and are:

· STEM Healthcare, a leading global provider of commercial, marketing and medical audits, completed October 2016;

· A pharmaceutical-grade packaging facility in Bethlehem, PA, completed April 2017;

· Sellxpert, a German and Swiss contract sales outsourcing business, completed July 2017;

· Vynamic, a US-based healthcare management consultancy, completed July 2017;

· Cambridge BioMarketing, a US-based communications agency focused on orphan and rare diseases, completed July 2017;

· MicroMass Communications, a US-based communications agency specialising in behavioural change, completed September 2017.

At year end, the Group's net debt was $53.3m (0.32x net debt to EBITDA), leaving it well placed to execute further strategic acquisition opportunities as they arise.

Board and Management changes

After almost 20 years with the Group, UDG Healthcare Chief Financial Officer, Alan Ralph, has informed the Board that he intends to retire from his role by the end of 2018. Chief Executive Officer, Brendan McAtamney, commented "Alan has made a substantial contribution to the evolution of UDG Healthcare, particularly in his current role as Chief Financial Officer. Over the years, Alan has held many roles within the Group, including Managing Director of the Supply Chain Division. At all times, Alan has been a model professional and has made a significant input into the formulation of the Group's strategy and its successful international expansion. On behalf of the Group, we are very thankful for Alan's contribution to UDG Healthcare and we wish him and his family the very best for the future. On a personal note, I would like to thank Alan for his wise counsel and firm support since my appointment as Chief Executive. Whilst there is no firm retirement date as yet, Alan will remain with the Group to ensure a smooth succession." Planning for Chief Financial Officer succession is in progress and a replacement will be announced in due course.

In May 2017, Jez Moulding was appointed Chief Operating Officer of the Group and Executive Vice President of Ashfield. This followed the announcement in September 2016 of Chris Corbin's intention to retire from the Group in April 2019. Chris has transitioned to the role of Chairman of Ashfield and remains a director of the Group.

Gerard van Odjik has informed the Chairman that, having recently taken on a demanding new role, he will be unable to give UDG Healthcare the time and attention that his non-executive director role requires. He has therefore indicated that he will not seek re-election at the upcoming AGM on 30 January 2018. In the light of this, the Board has asked Philip Toomey, who was going to step down at the AGM, to put himself forward for a further year.

Ashfield service offering & office expansion

Driven by five acquisitions during the year, Ashfield continued to broaden and enhance its service proposition. The acquisitions of STEM Healthcare and Vynamic have significantly expanded Ashfield's advisory offering. Together with Sellxpert, Cambridge BioMarketing and MicroMass Communications, these acquisitions enable Ashfield to deliver a full range of end-to-end advisory, communication, commercial and clinical services to its clients. Over the past five years, Ashfield has transitioned from a UK focused commercial and clinical services business, to become a global commercialisation partner for its healthcare clients.

To facilitate continued growth of the Ashfield business, Ashfield's commercial and clinical operations in the US moved to a new facility in Fort Washington, PA, in 2017. This is 60% larger than the previous office, enabling continued expansion in the strategically important US market. Ashfield Communications also doubled the size of its office in Scotland and opened new offices in Ireland and Japan.

Sharp investments

Sharp continued to invest in new facilities in the US and the UK. During the second half of the year, Sharp's US clinical business commenced its relocation to the Bethlehem packaging facility acquired in April 2017. The relocation is expected to be completed over the next 18 months. The facility will offer clients an integrated clinical development, packaging and distribution service. In the UK, the relocation of the clinical packaging business to the recently purchased facility in South Wales will commence once the refurbishment of the facility is completed in late 2018.

Future Fit

As well as successfully executing these acquisitions and facility improvements, the Group remains focused on investing in scalable infrastructure across HR, finance and IT. In April 2017, the Group launched Workday, its human resource information system and commenced the implementation of Ashfield's new Oracle Fusion finance system, which will be rolled-out on a phased basis over the next 18 months. These investments will ensure the Group has the right infrastructure to deliver long term sustainable growth and ensure the seamless integration of acquired businesses.

The rollout of both systems resulted in $2.5m additional operating costs during the second half of this year (primarily in Ashfield). In H1 2018, a further $3.5m increase in operating costs is expected (annualised impact of c. $6m) which will moderate organic growth during the first half of 2018.

Outlook

During 2017 the Group made significant progress in the execution of its strategy. The market opportunity for UDG Healthcare remains robust and the Group is well positioned to deliver sustainable future growth, both organically and through further strategic acquisitions.

2018 will benefit from the full year contribution of acquisitions made in 2017 and the Group expects organic growth to accelerate during the second half of the year, after the impact of the additional Future Fit operating costs have been absorbed.

Review of Operations

Ashfield

1 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.

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

Ashfield delivered a strong financial performance during the year, driven by good underlying growth and the benefit of acquisitions. Net revenue was up 21% to $630.1m and operating profit was up 16% to $81.6m.

Ashfield generated underlying net revenue growth of 13% and underlying operating profit growth of 5%, after adjusting for the negative impact of currency translation movements and the contribution of acquisitions.

Ashfield incurred additional operating costs during the second half of the year (expected to continue into the first half of 2018) related to the Future Fit investments. Ashfield generated 8% underlying operating profit growth during the year before these additional costs, which amounted to c. $2.5m in the second half of 2017.

Net operating margin (allowing for pass-through costs) declined from 13.5% to 12.9%. The positive margin impact of acquisitions was more than offset by the impact of the additional Future Fit operating costs and higher underlying revenue growth from the lower margin Commercial & Clinical business.

Ashfield Commercial & Clinical delivered good underlying net revenue and operating profit growth of 17% and 5% respectively during the year. This was principally due to strong growth in the German business and a good performance in the US, driven by increased activity on contract wins from 2016. The acquisition of Sellxpert has further strengthened Ashfield's capabilities and established it as market leader in Germany.

Ashfield Communications (including Advisory) delivered strong growth during the year. Including the benefit of acquisitions, net revenue increased by 39% and operating profit increased by 31%. Underlying net revenue growth improved during the second half of the year compared to the first half of the year. Since its acquisition in October 2016, STEM Healthcare has performed strongly and continues to gain momentum.

In addition to continued organic progress, Ashfield is well positioned for growth in 2018 following the acquisitions of Sellxpert, Vynamic, Cambridge BioMarketing and MicroMass Communications during the final quarter of 2017.

Sharp

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

Sharp delivered a good performance in 2017, with operating profit increasing by 8% to $41.3m (11% on an underlying basis). Operating margins increased to 13.7% during the year.

Sharp US generated underlying operating profit growth of 5%, with biotech delivering particularly strong growth. This was in part driven by the completion of the fit out of the additional capacity in Allentown, PA, which contains 13 packaging suites fully dedicated to biotech clients.

In addition, a new US state-of-the-art packaging site was acquired in Bethlehem, PA, in April 2017 to expand the commercial and clinical offering to Sharp's US clients. Sharp's US clinical business is currently relocating to this facility.

Sharp Europe moved into operating profit following a number of years of operating losses. Underlying revenue growth was 1% as the business exited some unprofitable contracts and shifted its focus to higher margin business. Sharp Europe is increasingly well positioned to deliver future profitable growth given the improving business development pipeline, focused on injectable biotech and biosimilar products.

The ongoing investment in Sharp's facilities continues to improve capabilities and expand capacity. Notwithstanding the one year delay in enforcement of the serialisation 'Track & Trace' requirement by the U.S. Food and Drug Administration (FDA) and supply chain disruptions with some clients following the recent hurricane in Puerto Rico, Sharp is well positioned to deliver underlying operating profit growth in line with the Group's medium-term guidance into 2018 and beyond.

Aquilant

1 Underlying growth adjusts for the impact of currency translation movements. There was no acquisition or disposal activity in 2016 or 2017.

Revenue was 6% behind the prior year. Adjusting for negative currency translation movements, underlying revenue was 2% ahead of 2016.

Underlying operating profit was 4% ahead of 2016 reflecting a continued improvement in sales mix, including capital equipment sales, and the full benefit of new business which came on stream in 2016. Reported operating profit was 7% behind the prior year due to adverse currency translation movements.

Analyst presentation

A presentation for investors and analysts will be held at the London Stock Exchange at 8.30 GMT today, Tuesday, 28 November 2017. If you wish to attend, please contact Powerscourt. Alternatively, to dial into the conference call or webcast, the details are as follows:

Audio webcast

https://edge.media-server.com/m6/p/ypnmwqt7

Conference call

UK number: +44-203-427-1916

Ireland number: + 353-1-246-5603

US number: +1-646-254-3366

Participant code: 9761269

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.

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 over 9,000 people with operations in 24 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 in the US and Europe.

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

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.

Finance Review

Revenue

Revenue of $1,219.8 million for the year was 13% ahead of 2016. Underlying revenue growth was 10% ahead, excluding the impact of foreign exchange and acquisitions. Ashfield increased underlying revenue by 14% while Sharp and Aquilant both reported revenue 2% ahead of 2016 excluding the impact of foreign exchange and acquisitions.

Adjusted operating profit

Adjusted operating profit from continuing operations of $129.3 million is 12% ahead (17% on a constant currency basis) of 2016.

Adjusted net operating margin

The adjusted net operating margin for the year of 12.6% was the same as 2016. The positive margin effect of acquisitions was offset by the impact of additional Future Fit operating costs and relatively higher revenue growth in the lower margin Ashfield Commercial & Clinical business.

Adjusted profit before tax

Net interest costs for the year of $10.4 million are 26% lower than 2016, which is as a result of the repayment of the RCF bank facility in April 2016 and increased interest income following the disposal of the United Drug Supply Chain businesses in 2016. This delivered a profit before tax from operations of $118.9 million which is 17% ahead of 2016 (23% on a constant currency basis).

Taxation

The effective taxation rate has decreased from 22.7% in 2016 to 22.2% in 2017.

Adjusted diluted earnings per share

Earnings per share (EPS) from continuing operations is 17% ahead (23% on a constant currency basis) of 2016 at 37.12 $ cent. Underlying EPS increased by 13% excluding acquisitions completed during the year and unfavourable currency movements.

US Dollar reporting

In August 2016, the Group announced that it would change its reporting currency to US Dollar for the 2017 financial year as the majority of Group profits are now derived from the US. This Preliminary Announcement is presented in US Dollar and further details on the change in presentational currency are included in note 20.

The Group operates in 24 countries, with its primary foreign exchange exposure being the translation of local income statements and balance sheets into US Dollar for Group reporting purposes. The primary non-Dollar currencies are Sterling and Euro. The re-translation of overseas profits to US Dollar has decreased constant currency EPS growth of 23% to a reported EPS growth rate of 17%, which is primarily due to the weakness in Sterling in the first nine months of 2017 versus the same period in 2016.

The average 2017 exchange rates were $1:€0.9047 and $1:£0.7891 (2016 $1:€0.9002 and $1:£0.7045).

Discontinued operations

The Group has classified its joint venture arrangement with Magir Limited as a discontinued operation and asset held for sale. Discontinued operations in the prior year also included United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA, which were disposed of on 1 April 2016.

Cash flow

The Group moved from a net cash position of $143.2 million in 2016 to a net debt position of $53.3 million in 2017. This was primarily as a result of 2017 acquisition activity. The net cash inflow from operating activities was $107.8 million.

$51.4 million was invested 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 UK. $198.4 million was paid in initial consideration for the acquisition of STEM Healthcare, the Bethlehem packaging facility, Vynamic, Cambridge BioMarketing, Sellxpert and MicroMass while the Group also paid $14.3 million in deferred contingent consideration associated with current and prior year acquisitions. Dividend payments of $31.3 million relating to the final 2016 dividend and the 2017 interim dividend were made during the year.

Balance sheet

Net debt at the end of the year was $53.3 million ($187.5 million cash and $240.8 million debt). The net (debt)/cash to annualised EBITDA ratio is 0.32 times debt (2016: 1.05 times cash) and net interest is covered 16.3 times (2016: 10.6 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 retained its long term private placement debt as it expects to make acquisitions and other capital investments in the coming years. The Group made a scheduled repayment of $63.3 million in September 2017 of maturing private placement notes. At 30 September 2017, the Group also had $259.7 million of undrawn overdraft and loan facilities.

Return on capital employed (ROCE)

The ROCE for continuing operations was 12.8%, down from 13.6% at the end of 2016. Details on how this was calculated are on page 37. ROCE was 13.2% excluding the impact of acquisitions, most of which were acquired in the final quarter. ROCE has been impacted by the capital expenditure investment in 2017.

Dividends

The directors are proposing a final dividend of 9.72 $ cent per share representing an increase of 7.5% on the 2016 final dividend of 9.04 $ cent per share. This represents 7% growth in the total dividend for the year to 13.30 $ cent per share. This continues the Group's 30 year history of consistently increasing dividends.

Subject to shareholder approval at the Company's Annual General Meeting, the proposed final dividend of 9.72 $ cent per share will be paid on 5 February 2018 to ordinary shareholders on the Company's register at 5.00 p.m. on 12 January 2018.

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 focussed on increasing the awareness of the Group among the investor and analyst community.

We communicate regularly with our shareholders during the year, specifically following the release of our interim and preliminary results, and at the time of major developments including M&A transactions. During 2017, the executive management team attended and presented at eleven investor conferences, including four in the US, and conducted over 230 institutional investor one-on-one meetings. In addition, our Chairman Peter Gray, held a number of governance meetings with existing shareholders during the year, both in the UK and US. The number of independent equity analysts covering the Group increased to ten during the year reflecting the growing interest in UDG Healthcare from the equity markets.

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

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.

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.

Group Income Statement

Group Statement of Comprehensive Income

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 for the year ended 30 September 2017 is for 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 represent 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 2016 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 2017 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 our more fully in the Group's last Annual Report.

The accounting policies adopted are consistent with those of the previous year except for the change in the Group's presentation currency from Euro to US Dollar and the following new and amended IFRSs and International Financial Reporting Interpretations Committee (IFRIC) interpretations that were adopted by the Group as of 1 October 2016:

· Amendments to IAS 27: Equity method in Separate Financial Statements

· Amendments to IAS 1: Disclosure initiative

· Amendments to IFRS 11: Accounting for acquisitions of interests in Joint Operations

· Annual Improvements to IFRSs 2012-2014 Cycle;

· Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation

These are effective for the Group's financial year ended 30 September 2017 but did not have a material effect on the results or financial position of the Group.

The IASB and the International Financial Reporting Interpretations Committee (IFRIC) have issued the following standards, amendments to existing standards and interpretations that are not yet effective for the Group:

· Annual Improvements to IFRSs 2014-2016 Cycle IFRS 14: Regulatory Deferral Accounts (*)

· IFRIC Interpretation 23: Uncertainty over Income Tax Treatments (*)

· IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (*)

· Amendments to IAS 7: Disclosure Initiative

· Amendments to IAS 12: Recognition of deferred tax assets for unrealised losses

· Amendments to IAS 28: Long term interests in Associates and Joint Ventures (*)

· Amendments to IAS 40: Transfers of Investment Property (*)

· Amendments to IFRS 2: Classification and measurement of share-based payment transactions (*)

· IFRS 9: Financial Instruments (2014)

· Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint ventures (*)

· Clarifications to IFRS 15: Revenue from Contracts with Customers (*)

· IFRS 16: Leases (*)

A number of the standards (*) set out above have not yet been EU endorsed. 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 the above interpretations and amendments.

3. Prior year reclassification

Reclassification of revenue

Pass-through revenues relate to the recharging of travel and other costs to customers at zero margin. There has been a reclassification of certain pass-through revenue from cost of sales to revenue. As a result, $35,771,000 (€32,200,000) has been reclassified from cost of sales to revenue so that the results are presented on a consistent basis in both 2017 and 2016. There is no impact on gross profit.

A summary of the impact on the previously reported figures 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 three broad areas of activity: advisory, communications and commercial & clinical 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 in the US and Europe.

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 2017 the Group has classified the joint venture investment in Magir Limited as a discontinued operation and an asset held for sale. Details of the discontinued operations are included in note 7. 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 by segment is as follows:

5. Share of joint ventures' profit after tax

6. Finance income and expense

7. Net result from discontinued operations, disposals and assets and liabilities classified as held for sale

On 1 April 2016, the Group completed the disposal of United Drug Supply Chain Services, United Drug Sangers, TCP Group and MASTA. In accordance with IFRS 5, these businesses were considered to be discontinued. The respective profit and losses on the disposal of these businesses were recognised in the Group Income Statement within discontinued operations.

Profit from discontinued operations after tax included in the prior year Group Income Statement is summarised in the table below:

The profit in the prior year from discontinued operations was fully attributable to the equity holders of the company.

In accordance with IFRS 5, depreciation of property, plant and equipment and amortisation of intangibles was not charged on the assets disposed of during the prior year. If the assets had continued to be depreciated and amortised during the prior year, the respective pre-tax charges for the year would have been $3,873,000 and $791,000.

(b) The following tables summarise the consideration received, the profit on disposal of discontinued operations and the net cash flow arising on the disposal of these businesses:

(c) During the current and prior year, the Group has treated the joint venture arrangement with Magir as a discontinued operation and asset held for sale in accordance with IFRS 5. Due to the absence of a power sharing administration in Northern Ireland a decision regarding historical and future drug reimbursement rates has not been made and agreeing a value on the business in the absence of this information has not been possible. It remains the intention of the Group to dispose of the asset once the valuation can be properly established.

The following table details the results of this discontinued operation included in the prior year Group Income Statement:

The assets and liabilities classified as held for sale in the Group Balance Sheet have a nil carrying value at 30 September 2017 (2016: nil).

8. Earnings per ordinary share

Non-GAAP information

The Group reports certain financial measurements 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 measurements provide 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 measurements 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.

1 Adjusted profit attributable to equity holders of the parent from continuing operations is stated before the amortisation of acquired intangible assets and transaction costs.

2 Adjusted profit attributable to equity holders of the parent from discontinued operations is stated after deducting the profit on disposal of the discontinued operations ($150.8m, net of tax), and adding back the impairment of the investment in Magir Limited, an asset held for sale ($18.8m, 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. 2,567,081 (2016: 2,273,772) anti-dilutive share options have been excluded from the calculation of diluted 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 year.

9. Property, plant and equipment

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