Monday 19 August 2019

UDG chief: UK buys unaffected by Brexit

UDG Healthcare chief executive Brendan McAtamney
UDG Healthcare chief executive Brendan McAtamney
John Mulligan

John Mulligan

UDG Healthcare CEO Brendan McAtamney has said he would have "absolutely no issue" with buying another UK company despite the looming threat of Brexit.

The Irish company, listed on the FTSE-250, has made a number of acquisitions in the UK, including a deal in October last year to buy STEM Marketing for up to £84m (€94m).

Earlier this year, UDG also announced that it would spend £9m on a new clinical packaging facility in south Wales.

"We are sheltered a little bit because we provide that business for global clients as opposed to just UK-specific clients," he said.

Mr McAtamney was speaking as UDG reported a strong set of full-year results. Its group net revenue rose 12pc to $1.02bn (€858m) and was 16pc higher on a constant currency basis. Operating profit was up 12pc at $129.3m (€108.7m). The figure was 17pc higher on a constant currency basis.

At its Ashfield unit, which provides communications, advisory and clinical services, net revenue was 21pc higher at $630.1m, and up 13pc on an underlying basis.

The unit made an $81.6m operating profit, which was up 16pc, and 5pc higher on an underlying basis.

Its Sharp packaging division posted revenue of $302.1m and a $41.3m operating profit. The figures were 2pc and 11pc higher respectively on an underlying basis.

UDG Healthcare completed six acquisitions during the last financial year, involving capital commitments of more than $270m (€227m).

Mr McAtamney said that one potential "chunky" acquisition had come close to being finalised, but had not been sealed.

UDG had a net debt to ebitda (earnings before interest, tax, depreciation and amortisation) ratio of just 0.32 times at the end of September. Net debt was just $53m.

Mr McAtamney said that UDG Healthcare could deploy between $450m and $500m for acquisitions while remaining within a 2 to 2.5 times comfort zone.

He said he has no preference for either a single large deal or continuing with bolt-ons.

"At the end of the day, honestly it doesn't make a whole lot of difference," he said.

"With a transformative deal … the risk goes up with one. Being able to do six deals just de-risks it. That being said, if something came around, say a $200m to $300m [deal], would we look at it? Absolutely. We have the capability to do that."

He said diversification of revenue and profits, both geographically and operationally, remains important to the group. UDG shares fell as much as 5pc yesterday.

CFO Alan Ralph will retire next year.

Irish Independent

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