A year of further strategic progress with strong growth


2018 has been a year of good strategic progress as we consolidated the six acquisitions made in 2017 and added two more. This progress was reflected in our financial performance, with constant currency EPS growth of 22% benefiting from the impact of these acquisitions, US tax reform and continued underlying growth. Some variability within this underlying growth, which we signalled in our third quarter trading update, coupled with market turbulence, has led to share price volatility in recent months. Nonetheless our total shareholder return over the last three years remains in the top quartile of the FTSE 250 and we believe our strategy will continue to deliver good returns to shareholders over the long term.

In achieving our strong EPS performance, we generated 10% net revenue growth and 14% operating profit growth. In constant currency, Ashfield reported 5% underlying operating profit growth (excluding investments in new platform technologies – which we refer to as “Future Fit”), while Sharp reported very strong underlying operating profit growth of 11%, with an outstanding second half more than compensating for a slow first half.

Within Ashfield, the Communications & Advisory business generated strong underlying growth and now accounts for nearly two thirds of Ashfield’s profits. However, there were headwinds in the Clinical and Commercial market segment, as evidenced by the setbacks also suffered by our competitors in 2018. However, market research and our own experience and customer interactions continue to point to long term opportunity for integrated marketing support services, including contract sales teams and nurse advisors, particularly as new medications become more specialised and complex to promote and administer.

Our Return on Capital Employed (ROCE) was 12.7% compared to 12.8% last year. Influenced by the rapid pace of new acquisitions made in the last 18 months, and our significant ongoing investments in facilities in Sharp and in software for the Group and for Ashfield, we remain focused on enhancing this metric over time.

Based on the strong earnings growth achieved, the Board is pleased to recommend a 20% increase in dividend for the full year thus confidently continuing our 30-year upward dividend growth trajectory.


During the year, the final step in our strategic shift from a distributor for the pharma and medical device industry to a services provider in that industry was achieved when we sold our remaining distribution business, Aquilant, to a private equity buyer. The potential sale of Aquilant had been disrupted by Brexit uncertainty in the UK, which caused the withdrawal of a serious buyer, and which contributed, we believe, to the subsequent loss of some agencies, all of which compromised its value. Nonetheless, we have converted a no-longer-core asset into cash, ensured our management are now focused on our core growth businesses, and placed Aquilant with new owners intent on its development.

In addition to the two further acquisitions made during the year, the new facilities for our Sharp Clinical business in Pennsylvania and in Wales, and that for Sharp’s Commercial business in the Netherlands are nearing completion, while further progress was made on the rollout of our new financial platform for the Ashfield division. This activity will continue in 2019 and should underpin future growth.

As is appropriate in a group evolving as we are, adding and sometimes subtracting entities each year, we have undertaken a significant restructuring in 2018 to ensure efficiency, effectiveness and closer alignment of the businesses as we drive synergies between them.

Board and Governance

We discuss the activities of the Board in 2018 and some detail regarding governance in the Corporate Governance Report.

During the year we bade farewell to Alan Ralph who played a major part in the Group for over 20 years, latterly as CFO. He was hugely respected by his Board colleagues and by shareholders and we wish him well as he embarks on a new chapter in his life. We are also bidding farewell to Philip Toomey, who has been on the Board for 10 years and who will not go forward for re-election at our Annual General Meeting (AGM). Philip, who served as chair of the Audit Committee and as Senior Independent Director for many years, will be a much-missed sage voice. We welcome Nigel Clerkin, who has taken over from Alan, and Erik van Snippenberg, who joined us in July. Their bios are available here. We are also currently seeking some further appointees to prepare for the retirement of Chris Brinsmead in 2020 and to add candidates who could succeed me. As I have been on the Board since 2004, and have been Chairman since 2012, good governance demands that we begin to plan for my retirement. 

I mentioned last year that we were carrying out an employee survey in late 2017. The results of this were encouraging in terms of the Group’s culture. Strong positive responses were received in terms of the values the Group espouses and our employees buy-in to these values. The Board continues to reinforce culture through its own open and transparent dialogue with management at all levels, in different forums, and in the expectations it sets. As always with such surveys, there were areas highlighted for improvement including, for example, the clarity of our communication to employees about our strategy. The pace at which we have transformed the Group demands continuous communication to ensure our people understand the steps we are taking and the opportunities this creates for them.


As a Board, we devoted considerable time throughout 2018 reviewing our strategy with the management team in light of market dynamics, and as new acquisition and capital expenditure opportunities were presented. Now focused on Ashfield and Sharp, we continue to see strong underlying growth potential in both and we remain confident the strategy will deliver in both the near and long terms.

We have very low debt levels and have a good flow of potential acquisition opportunities for both divisions which would add scale and further broaden their range of services. While asset prices continue to be challenging, particularly in Sharp’s field, we are confident there are ample opportunities to further enhance shareholder value through strategically aligned acquisitions which integrate well with our current businesses.

In closing, I’d like to take this opportunity on behalf of shareholders and the Board to thank our executive team and all our 8,700 employees worldwide for their hard work and dedication in 2018 and offer them our encouragement and support for 2019.

Peter Gray